<PAGE> 1
RULE 424(b)(5)
PROSPECTUS SUPPLEMENT FILE NO. 33-60982
(TO PROSPECTUS DATED SEPTEMBER 14, 1994)
$750,000,000
TCI COMMUNICATIONS, INC.
MEDIUM-TERM NOTES, SERIES B
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
________________________
TCI Communications, Inc. (the "Company") may from time to time offer its
unsecured Medium-Term Notes, Series B (the "Notes"), for an aggregate principal
amount of up to $750,000,000 (or the equivalent thereof denominated in one or
more foreign currencies or currency units), subject to reduction as a result of
the sale of other Debt Securities (other than the Notes) pursuant to the
accompanying Prospectus. Prior to the date of this Prospectus Supplement, the
Company sold Notes pursuant to the Registration Statement of which this
Prospectus Supplement is a part for an aggregate principal amount of
$285,825,000. The Notes will be offered at varying maturities from nine months
or more from their dates of issue. Unless otherwise set forth in a Pricing
Supplement to this Prospectus Supplement (each, a "Pricing Supplement"), the
Notes may not be redeemed at the option of the Company or repaid at the option
of the holder thereof prior to maturity except in the case of a Put Event. See
"Description of Debt Securities -- Senior Debt Securities -- Change of Control"
in the accompanying Prospectus. The Notes will bear interest at fixed rates,
which may be zero in the case of certain Notes issued at a price representing a
discount from the principal amount payable at maturity, or variable rates
("Fixed Rate Notes" and "Floating Rate Notes", respectively). The interest rate
in the case of Fixed Rate Notes, the method of determining the interest rate in
the case of Floating Rate Notes, and the issue price and stated maturity date of
each Note will be established at the time of issuance of such Note and will be
set forth in the applicable Pricing Supplement. Interest rates, the methods of
determining interest rates and issue prices are subject to change by the
Company, but no such change will affect any Note theretofore issued or as to
which an offer to purchase has been accepted by the Company. Unless otherwise
described in the applicable Pricing Supplement, Notes denominated in U.S.
Dollars will be issued in denominations of $1,000 or any integral multiple of
$1,000. If the Notes are to be denominated in one or more foreign currencies or
currency units (each a "Specified Currency"), then the provisions with respect
thereto (including authorized denominations) will be set forth in a foreign
currency supplement hereto ("Multi-Currency Prospectus Supplement") and currency
exchange rate information will be set forth in the applicable Pricing
Supplement.
Each Note will be in fully registered form and represented either by a
global certificate registered in the name of a nominee of The Depository Trust
Company ("DTC") or another depositary (DTC or such other depositary, if any,
described in the applicable Pricing Supplement is herein referred to as the
"Depository") (each a "Book-Entry Note"), or a certificate issued in definitive
form ("Certificated Note"), as set forth in the applicable Pricing Supplement.
Beneficial ownership interests in a Book-Entry Note will be shown on, and the
transfer thereof will be effected only through, records maintained by the
Depository's participants. Owners of beneficial interests in Book-Entry Notes
will be entitled to physical delivery of Notes in certificated form equal in
principal amount to their respective beneficial interests only under the limited
circumstances described herein. See "Book-Entry System". Owners of beneficial
interests in Book-Entry Notes will not be considered the holders thereof.
Unless otherwise described in the applicable Pricing Supplement, interest on
each Fixed Rate Note will accrue from its Original Issue Date (as defined
herein) and will be payable semiannually on each February 15 and August 15 and
at maturity or, if applicable, upon redemption or repayment. The interest rate
on Floating Rate Notes will be calculated by reference to one or more of the "CD
Rate," the "Commercial Paper Rate," the "Federal Funds Rate," the "Prime Rate,"
"LIBOR," the "Treasury Rate," or such other interest rate basis or formula as
may be specified in the applicable Pricing Supplement, and may be adjusted by a
"Spread" or "Spread Multiplier", if any, each as defined herein. Interest on
each Floating Rate Note will accrue from its Original Issue Date and will be
payable as set forth therein and in the applicable Pricing Supplement and at
maturity or, if applicable, upon redemption or repayment.
________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT OR
THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<S> <C> <C> <C>
=========================================================================================================
PRICE TO AGENTS' PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(2)(3)
_________________________________________________________________________________________________________
Per Note..................... 100% .125%-.925% 99.875%-99.075%
Total........................ $750,000,000 $937,500-$6,937,500 $749,062,500-$743,062,500
=========================================================================================================
</TABLE>
(1) Each Note will be sold at 100% of its principal amount except as may be
provided in the applicable Pricing Supplement.
(2) The Company will pay a commission to Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, CS First Boston Corporation, Lehman
Brothers Inc. (including Lehman Special Securities Inc.) or Salomon Brothers
Inc or such other agents as the Company may select (each an "Agent" and
together the "Agents") in the form of a discount, ranging from .125% to
.925% of the principal amount of the Notes sold through such Agent,
depending upon the Stated Maturity Date (as herein defined) and the rating
assigned to such Notes by nationally recognized securities rating agencies.
The Company has reserved the right to sell Notes directly to investors on
its own behalf, in which case no commission will be payable. The Company may
sell Notes to an Agent, as principal. Unless otherwise indicated in the
applicable Pricing Supplement, any Note sold to an Agent as principal will
be purchased by such Agent at a price equal to 100% of the principal amount
thereof less a percentage equal to the commission applicable to an agency
sale of a Note with an identical Stated Maturity Date, and may be resold by
such Agent to investors or other purchasers at prevailing market prices at
the time or times of resale, to be determined by the Agent or, if so agreed,
at a fixed public offering price.
(3) Before deduction of expenses payable by the Company estimated to be
$200,000. The Company has agreed to indemnify each Agent against certain
liabilities including liabilities under the Securities Act of 1933.
The Notes are being offered on a continuous basis by the Company through the
Agents, each of which has agreed to use their reasonable best efforts to solicit
offers to purchase the Notes. Notes may also be sold to an Agent, as principal,
for resale to investors or other purchasers. The Company reserves the right to
sell Notes directly to investors on its own behalf in those jurisdictions where
it is authorized to do so. Unless otherwise specified in an applicable Pricing
Supplement, the Notes will not be listed on any securities exchange, and there
can be no assurance that the Notes offered hereby will be sold or that there
will be a secondary market for the Notes. The Company reserves the right to
withdraw, cancel or modify the offer made hereby without notice. The Company or
any Agent, if it solicits such offer, may reject any offer to purchase Notes, in
whole or in part. See "Plan of Distribution".
________________________
MERRILL LYNCH & CO.
CS FIRST BOSTON
LEHMAN BROTHERS
SALOMON BROTHERS INC
_________________________
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS OCTOBER 4, 1994.
<PAGE> 2
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby (referred to in the accompanying Prospectus as the "Offered Securities"
and "Senior Debt Securities") supplements, and to the extent inconsistent
therewith replaces, the description of the general terms and provisions of the
Debt Securities set forth under the heading "Description of Debt Securities" in
the Prospectus, to which reference is hereby made. The following description
will apply to each Note unless otherwise specified in a Multi-Currency
Prospectus Supplement or in the applicable Pricing Supplement. Capitalized terms
not defined herein have the meanings ascribed to them in the accompanying
Prospectus.
GENERAL
The Notes are a series of Senior Debt Securities to be issued under the
indenture, dated as of August 4, 1993, as amended and supplemented by a First
Supplemental Indenture, dated as of September 13, 1994 (the "Indenture") between
the Company and The Bank of New York, as trustee (the "Trustee"), which
Indenture is more fully described in the accompanying Prospectus. Whenever any
term defined in the Indenture or the Notes is referred to, such term is
incorporated by reference as part of the statements made herein and such
statements are qualified in their entirety by such reference.
The Indenture does not limit the aggregate principal amount of Senior Debt
Securities that may be issued thereunder, and provides that Senior Debt
Securities may be issued in one or more series up to the aggregate principal
amount that may be authorized from time to time by the Company. The Notes
constitute a single series of Senior Debt Securities for purposes of the
Indenture, which series is unlimited in aggregate principal amount. As of the
date of this Prospectus Supplement, the Company has authorized the issuance and
sale of up to $750,000,000 (or the equivalent thereof denominated in one or more
foreign currencies or currency units) aggregate principal amount of Notes, of
which $285,825,000 aggregate principal amount has previously been sold. The
aggregate principal amount of Notes that may be offered for sale and sold
pursuant to this Prospectus Supplement and the accompanying Prospectus is
limited to the remainder of such amount, subject to reduction as a result of the
sale after the date hereof of other Debt Securities (other than the Notes)
pursuant to the accompanying Prospectus. Unless otherwise indicated in the
applicable Pricing Supplement, currency amounts in this Prospectus Supplement,
the accompanying Prospectus and any Pricing Supplement are stated in United
States dollars ("$", "U.S.$" or "U.S. Dollars").
The Notes are being offered on a continuous basis and each Note will mature
on a Business Day (as defined below) nine months or more from its date of issue,
as selected by the initial purchaser and agreed to by the Company and as
specified in the applicable Pricing Supplement. Unless otherwise specified in a
Note and described in the applicable Pricing Supplement, a Note may not be
redeemed at the option of the Company or repaid at the option of the holder
thereof prior to its Stated Maturity Date (as defined below) except in the case
of a Put Event. See "Repayment and Redemption" and "Change of Control". If so
provided in a Note and described in the applicable Pricing Supplement, the
Stated Maturity Date of a Note may be extended at the option of the Company. See
"Extension of Maturity". The Notes will be unsecured and unsubordinated
obligations of the Company, will rank equally and ratably with other unsecured
and unsubordinated indebtedness of the Company and will not be convertible into
common stock of the Company.
Unless otherwise specified in such Note and described in a Multi-Currency
Prospectus Supplement and the applicable Pricing Supplement, the Notes will be
denominated in U.S. Dollars and payments of principal of, premium, if any, and
any interest on the Notes will be made in U.S. Dollars. If any Note is to be
denominated other than exclusively in U.S. Dollars, or if the principal of,
premium, if any, or any interest on any Note is to be payable in one or more
currencies (or currency units or in amounts determined by reference to an index
or indices) other than that in which such Note is denominated, additional
information with respect thereto (including authorized denominations and
applicable exchange rate information) will be provided in a Multi-Currency
Prospectus Supplement and the applicable Pricing Supplement. Unless otherwise
described in the applicable Pricing Supplement, Notes denominated in U.S.
Dollars will be issued in denominations of $1,000 or any integral multiple of
$1,000.
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Each Note will be issued initially as either a Book-Entry Note or a
Certificated Note in fully registered form without coupons. Except as set forth
under "Book-Entry System", owners of beneficial interests in Book-Entry Notes
will not be entitled to physical delivery of Notes in certificated form. All
references herein to holders will be, with respect to Book-Entry Notes, to the
Depository or its nominee. It is currently contemplated that only Notes
denominated in U.S. Dollars will be issued as Book-Entry Notes. See "Book-Entry
System".
Certificated Notes will be exchangeable for Certificated Notes in other
authorized denominations, in an equal aggregate principal amount and otherwise
bearing identical terms and provisions, in accordance with the provisions of the
Indenture. Certificated Notes may be presented for registration of transfer or
for exchange at the office of the Registrar in The City of New York designated
for such purpose (currently the Corporate Trust Department of the Trustee, 101
Barclay Street, Floor 21 West, New York, New York 10286). Beneficial interests
in Book-Entry Notes may be transferred through a participating member of the
Depository. See "Book-Entry System". No service charge will be made for any
registration of transfer or exchange of any Certificated Note, but the Company
may require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.
Each Note will bear interest at either (i) a fixed rate, which may be zero
in the case of Fixed Rate Notes issued at an Issue Price (as defined below)
representing a discount from the principal amount payable at maturity (a "Zero
Coupon Note"), or (ii) a floating rate determined by reference to an interest
rate basis or combination of interest rate bases (the "Interest Rate Basis" or
"Interest Rate Bases", as applicable) specified in such Floating Rate Note and
described in the applicable Pricing Supplement, which may be adjusted by a
Spread and/or Spread Multiplier (each as defined below), if any. See "Fixed Rate
Notes" and "Floating Rate Notes".
Unless otherwise specified in a Note and described in a Multi-Currency
Prospectus Supplement and the applicable Pricing Supplement, "Business Day"
means any day, other than a Saturday or Sunday, that is not a day on which
banking institutions are authorized or required by law or regulation to be
closed in The City of New York, and with respect to LIBOR Notes (as defined
below), is also a London Business Day. "London Business Day" means any day on
which dealings in deposits in U.S. Dollars are transacted in the London
interbank market.
"Original Issue Discount Note" means (i) a Note, including any Zero Coupon
Note, that has a stated redemption price at maturity that exceeds its Issue
Price by at least 0.25% of its principal amount multiplied by the number of full
years from the Original Issue Date to the Stated Maturity Date (each as defined
below) for such Note and (ii) any other Note issued with original issue discount
for United States federal income tax purposes as determined pursuant to Section
1273 of the Internal Revenue Code of 1986, as amended (the "Code").
The Pricing Supplement relating to each Note will describe the following
terms: (i) the price (expressed as a percentage of the aggregate principal
amount thereof) at which such Note will be issued (the "Issue Price"); (ii) the
date on which such Note will be issued (the "Original Issue Date"); (iii) the
date on which such Note will mature (the "Stated Maturity Date") and whether the
Stated Maturity Date may be extended by the Company, and if so, the Final
Maturity Date (as defined under "Extension of Maturity"); (iv) whether such Note
is a Fixed Rate Note or a Floating Rate Note; (v) if such Note is a Fixed Rate
Note, the rate per annum at which such Note will bear interest, if any, the
interest payment date or dates (if different from those set forth below under
"Fixed Rate Notes") and whether such rate may be changed by the Company prior to
the Stated Maturity Date; (vi) if such Note is a Floating Rate Note, the
Interest Rate Basis or Interest Rate Bases, as applicable, the Initial Interest
Rate, the Interest Reset Period, the Interest Reset Dates, the Interest Payment
Period, the Interest Payment Dates, the Index Maturity, the Maximum Interest
Rate, if any, the Minimum Interest Rate, if any, the Spread, if any, the Spread
Multiplier, if any (all as defined under "Interest Rate" and "Floating Rate
Notes"), and any other terms relating to the particular method of calculating
the interest rate for such Note, and whether any such Spread and/or Spread
Multiplier may be changed by the Company prior to the Stated Maturity Date;
(vii) whether such Note is an Original Issue Discount Note, and if so, the yield
to maturity; (viii) whether such Note will be issued initially as a Book-Entry
Note or a
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Certificated Note; (ix) whether such Note may be redeemed at the option of the
Company, or repaid at the option of the holder, prior to the Stated Maturity
Date, and, if so, the provisions relating to such redemption or repayment; and
(x) any other terms of such Note not inconsistent with the provisions of the
Indenture.
REPAYMENT AND REDEMPTION
If agreed to by the initial purchaser of a Note and the Company, such Note
will be subject to repayment at the option of the holder thereof in accordance
with its terms on each optional repayment date therefor, if any (each an
"Optional Repayment Date"). Optional Repayment Dates, if any, will be fixed at
the time of sale and set forth in the applicable Pricing Supplement and
specified in the applicable Note. If no Optional Repayment Date is so specified
with respect to a Note, such Note will not be repayable at the option of the
holder thereof prior to its Stated Maturity Date. Unless otherwise specified in
the Note and described in the applicable Pricing Supplement, on an Optional
Repayment Date, if any, the related Note will be repayable in whole or in part
(provided that the principal amount of the Note remaining outstanding after a
partial repayment is an authorized denomination) at the option of the holder
thereof at a price equal to 100% of the principal amount to be repaid, together
with accrued and unpaid interest thereon to but excluding the date of repayment
(except as otherwise provided below in the case of an Original Issue Discount
Note). In order for a Note to be repaid upon exercise of such repayment option,
the Paying Agent must receive, not more than 60 nor less than 30 days prior to
an Optional Repayment Date (except as otherwise provided under "Extension of
Maturity"), at the office in The City of New York designated for such purpose
(currently the Corporate Trust Department of the Trustee, at 101 Barclay Street,
Floor 21 West, New York, New York 10286), either (i) the Note, with the form
entitled "Option to Elect Repayment" included in the Note duly completed, or
(ii) a telegram, telex, facsimile transmission or letter from a member of a
national securities exchange or the National Association of Securities Dealers,
Inc. or a commercial bank or trust company in the United States setting forth
the name of the holder of the Note, the principal amount of the Note, the
principal amount of the Note to be repaid, the certificate number or a
description of the tenor and terms of the Note, a statement that the option to
elect repayment is being exercised thereby and a guarantee that the Note to be
repaid with the form entitled "Option to Elect Repayment" included in the Note
duly completed will be received by the Paying Agent not later than five Business
Days after the date of such telegram, telex, facsimile transmission or letter
and such Note and form duly completed are received by the Paying Agent by such
fifth Business Day. Exercise of such repayment option by the holder thereof will
be irrevocable with respect to each Note for which such repayment election is
made except as otherwise provided under "Extension of Maturity". No transfer or
exchange of any Note (or, in the event that any Note is to be repaid in part,
the portion of the Note to be repaid) will be permitted after exercise of a
repayment option. All questions as to the validity, eligibility (including time
of receipt) and acceptance of any Note for repayment will be determined by the
Company, which determination will be final, binding and non-appealable.
In the case of a Book-Entry Note, the Depository's nominee will be the
holder of such Note and therefore will be the only entity that can exercise a
right to repayment. In order to ensure that the Depository's nominee will timely
exercise a right to repayment with respect to a beneficial owner's interest in a
Book-Entry Note, such beneficial owner must instruct the broker or other direct
or indirect participant through which it holds an interest in such Note to
notify the Depository of its desire to exercise a right to repayment. Different
firms have different cut-off times for accepting instructions from their
customers and, accordingly, each beneficial owner should consult the broker or
other direct or indirect participant through which it holds an interest in a
Book-Entry Note in order to ascertain the cut-off time by which such an
instruction must be given in order for timely notice to be delivered to the
Depository.
The Notes will not have a sinking fund unless otherwise described in the
applicable Pricing Supplement. If agreed to by the initial purchaser of a Note
and the Company, such Note will be subject to redemption at the option of the
Company in accordance with its terms on and after a date, if any, fixed at the
time of sale and set forth in the applicable Pricing Supplement and specified in
the applicable Note ("Initial Redemption Date"). If no Initial Redemption Date
is so specified with respect to a Note, such Note will not be redeemable prior
to its Stated Maturity Date. Unless otherwise specified in the Note and
described in the applicable Pricing Supplement, on and after the Initial
Redemption Date, if any, the related Note will be redeemable at
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any time in whole or from time to time in part (provided that the principal
amount of the Note remaining outstanding after a partial redemption is an
authorized denomination) at the option of the Company at the applicable
Redemption Price (as defined below), together with accrued and unpaid interest
on the principal amount to be redeemed to but excluding the date of redemption,
on notice given by the Company or the Trustee to the holder thereof not more
than 60 nor less than 30 days prior to the date of redemption. Unless otherwise
specified in the Note and described in the applicable Pricing Supplement, and
except as otherwise provided below in the case of an Original Issue Discount
Note, the "Redemption Price" will initially be the Initial Redemption
Percentage, if any, specified in the Note and described in the applicable
Pricing Supplement, of the principal amount of such Note to be redeemed and, if
the Initial Redemption Percentage is greater than 100%, the Redemption Price
will decline at each anniversary of the Initial Redemption Date by the Annual
Redemption Percentage Reduction, if any, specified in the Note and described in
the applicable Pricing Supplement, of the principal amount thereof to be
redeemed until the Redemption Price is 100% of such principal amount. Whenever
less than all of the Notes of the Company at any time outstanding are to be
redeemed, the Company will select the particular Notes to be so redeemed,
provided that if less than all the Notes of the Company with identical terms at
any time outstanding are to be redeemed, the Notes to be so redeemed will be
selected by the Trustee by lot or such method as the Trustee considers fair and
appropriate.
Notwithstanding anything in this Prospectus Supplement to the contrary,
unless otherwise specified in a Note and described in the applicable Pricing
Supplement, if a Note is an Original Issue Discount Note, the amount payable on
such Note in the event of redemption at the option of the Company or repayment
at the option of a holder on an Optional Repayment Date prior to its Stated
Maturity Date shall be the Amortized Face Amount (as defined under "Payment of
Principal and Interest") of such Note calculated as of the date of such
redemption or the date of such repayment, as the case may be.
REPURCHASE
The Company may at any time purchase Notes at any price in the open market
or otherwise. Notes so purchased by the Company may be held or resold or, at the
discretion of the Company, may be surrendered to the Trustee for cancellation.
CHANGE OF CONTROL
As more fully described in the accompanying Prospectus under the caption
"Description of Debt Securities -- Senior Debt Securities -- Change of Control",
Section 4.02 of the Indenture provides that, if a Put Event occurs, each holder
of a Note will have the right, as provided in, and subject to the terms of, the
Indenture, to require the Company to repurchase all or any portion of such
holder's Notes at a purchase price equal to 100% of the principal amount thereof
plus accrued and unpaid interest, if any, to the date of repurchase (or if such
Notes are Original Issue Discount Notes, 100% of that portion of the principal
amount thereof that would be payable if the maturity thereof were accelerated
pursuant to the Indenture to the date of repurchase). See "Payment of Principal
and Interest". Unless otherwise specified in a Note and described in the
applicable Pricing Supplement, a Put Event will occur if, among other things,
there is a Change of Control of the Company or, for so long as the Company is a
subsidiary of Tele-Communications, Inc. ("Parent"), a Change of Control of the
Parent, at any time after the Original Issue Date of a Note and on or prior to
the Stated Maturity Date thereof (or, if the Stated Maturity Date is extended as
described under "Extension of Maturity", the Final Maturity Date). The
applicability of this covenant is limited. See "Description of Debt
Securities -- Senior Debt Securities -- Change of Control" and "-- Definitions"
in the accompanying Prospectus. Among other things, it would not apply to the
acquisition of shares of the Company's or the Parent's common stock by a
Controlling Person or by any other person if and for so long as the shares of
such company's common stock beneficially owned by the Controlling Persons (and,
in the case of the Company, by the Parent and subsidiaries of the Parent)
represent in the aggregate thirty percent (30%) or more of the combined voting
power of all shares of such company's common stock calculated on a fully diluted
basis. The term "Controlling Person" includes each of the Company's Chairman of
the Board, its President and each director of the Company as of the date the
Indenture was first executed, their respective family members, estates and
heirs, Kearns-Tribune Corporation and the trustee under the Parent's Employee
Stock Purchase
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Plan or any successor plan or any other employee stock ownership or other
employee benefit plan of the Parent or the Company or any subsidiary of the
Parent or the Company. See "Description of Debt Securities -- Senior Debt
Securities -- Definitions" in the accompanying Prospectus.
The Company's payment obligations with respect to the Notes, including its
obligation to pay the purchase price of a Note the holder of which has elected
to require the Company to repurchase such Note following the occurrence of a Put
Event, are unsecured, unsubordinated obligations of the Company and are pari
passu (equal and ratable) with other unsecured, unsubordinated indebtedness of
the Company. There are other issues of senior indebtedness of the Company
outstanding in addition to the Notes that would permit the holders to require
the Company to repurchase or repay such indebtedness upon the occurrence of a
Put Event or events similar thereto and the Company anticipates that it will
continue to issue indebtedness with similar covenants in the future.
Approximately $5.47 billion of the Company's approximately $5.85 billion of
total Debt at June 30, 1994 include provisions that would permit the holders to
require the Company to repurchase or repay such indebtedness upon the occurrence
of a Put Event, a Change of Control or events similar thereto, which obligation
of the Company would rank on a parity with its repurchase obligation with
respect to the Notes. In addition, approximately $2.60 billion of the
approximately $4.71 billion of total Debt of the Company's subsidiaries at June
30, 1994 include provisions that require the applicable subsidiary to repurchase
or repay such indebtedness upon a Change of Control or events similar thereto.
See "Description of Debt Securities" in the accompanying Prospectus. If a Put
Event were to occur, there can be no assurance that the Company would have
sufficient funds to satisfy its repurchase obligations with respect to the Notes
and such other indebtedness. The failure of the Company to repurchase a Note
which the holder has elected to require it to repurchase following the
occurrence of a Put Event would constitute an Event of Default with respect to
the Notes and may cause the acceleration of the maturity of other indebtedness
of the Company after notice and/or passage of time.
No amendment, supplement or waiver may be made to the Indenture or to the
Notes which would materially adversely affect the rights of any holder of Notes
to require the Company to purchase such Notes upon the occurrence of a Put Event
without the consent of the holder of each outstanding Note.
PAYMENT OF PRINCIPAL AND INTEREST
The principal of, premium, if any, and interest, if any, on each Note are
payable by the Company in U.S. Dollars, unless otherwise specified in a Note and
described in a Multi-Currency Prospectus Supplement and the applicable Pricing
Supplement.
Principal of, premium, if any, and interest, if any, on any Certificated
Note will be payable when due upon presentation and surrender of such Note at
the office of the Paying Agent in The City of New York designated for such
purpose (currently the Corporate Trust Department of the Trustee, 101 Barclay
Street, Floor 21 West, New York, New York 10286); provided, however, that
payment of interest, other than interest payable on the Stated Maturity Date or
on the date of redemption or repayment if a Note is redeemed or repaid prior to
maturity (such Stated Maturity Date or date of redemption or repayment with
respect to any Note, as the case may be, being collectively referred to herein
as the "Maturity Date" with respect to the amount of principal and any premium
and interest payable on such date) may be made by mailing a check to the holder
at the address of such holder appearing on the security register for the Notes
at the close of business on the applicable Regular Record Date (as defined
below). Notwithstanding the foregoing, a holder of $10,000,000 or more in
aggregate principal amount of Certificated Notes having the same Interest
Payment Dates (as defined below) shall be entitled to receive such interest
payments in U.S. Dollars by wire transfer of immediately available funds to an
account at a bank in The City of New York (or other bank consented to by the
Paying Agent and the Company) designated by such holder (provided that such bank
has appropriate facilities therefor), but only if appropriate payment
instructions in writing have been received by the Paying Agent not less than 16
calendar days prior to the applicable Interest Payment Date. Unless otherwise
specified in the applicable Pricing Supplement (and subject to extension as
provided under "Extension of Maturity"), payments of principal of and any
premium and interest on Certificated Notes will be made on the Maturity Date in
immediately available funds, provided that the Certificated Notes to be paid are
presented and surrendered to the Paying Agent as provided above in time for the
Paying Agent to make such payments in such funds in accordance with its normal
procedures. Such payments will be made by wire transfer to an
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account at a bank in The City of New York (or other bank consented to by the
Paying Agent and the Company) designated by the holder of the Notes (provided
that such bank has appropriate facilities therefor), provided that wire transfer
instructions in writing have been received by the Paying Agent not less than 16
calendar days prior to such Maturity Date. Beneficial owners of Book-Entry Notes
will be paid in accordance with the Depository's and its participants'
procedures in effect from time to time. See "Book-Entry System". If required by
applicable law or instructed by the Company or any governmental agency that
taxes or other governmental charges should be withheld, the Paying Agent shall
withhold any such taxes or other governmental charges on any payments made in
connection with any Note.
Unless otherwise specified in a Note and described in the applicable
Pricing Supplement, if the principal of any Original Issue Discount Note is
declared to be, or automatically becomes, due and payable immediately as
described in the accompanying Prospectus under "Description of Debt
Securities -- Defaults and Remedies", the amount of principal due and payable
with respect to such Note shall be the Amortized Face Amount of such Note
calculated as of the date of such acceleration of the maturity of such Note. The
"Amortized Face Amount" of an Original Issue Discount Note as of any date for
which a calculation is being made shall be an amount equal to (i) the Issue
Price set forth in the applicable Pricing Supplement plus (ii) the portion of
the difference between the Issue Price and the principal amount of such Note
that has accrued at the yield to maturity set forth in the Pricing Supplement
(computed in accordance with generally accepted United States bond yield
computation principles) to the date with respect to which such calculation is
being made, but in no event shall the Amortized Face Amount of an Original Issue
Discount Note exceed its principal amount.
Interest on any Note will be payable on each date specified on which an
installment of interest is due and payable ("Interest Payment Date") and at the
Maturity Date. Unless otherwise indicated in the applicable Pricing Supplement
and specified in the Note, the Interest Payment Dates for Fixed Rate Notes will
be as described below under "Fixed Rate Notes" and the Interest Payment Dates
for Floating Rate Notes will be determined in the manner described below under
"Floating Rate Notes". Unless otherwise indicated in the applicable Pricing
Supplement and specified in the Note, interest payable and punctually paid or
duly provided for on any Interest Payment Date will be paid to the person in
whose name such Note is registered at the close of business on the Regular
Record Date immediately preceding such Interest Payment Date; provided, however,
that unless otherwise specified in such Note and the applicable Pricing
Supplement the first payment of interest on any Note with an Original Issue Date
between a Regular Record Date and the next succeeding Interest Payment Date or
on an Interest Payment Date will be made on the Interest Payment Date following
the next succeeding Regular Record Date to the registered holder on such next
succeeding Regular Record Date; provided, further, that interest payable at the
Maturity Date will be payable to the person to whom principal shall be payable.
"Regular Record Date" means the date as of which a Note must be registered in a
person's name in order for such person to receive an interest payment on the
next succeeding Interest Payment Date. Unless otherwise indicated in the
applicable Pricing Supplement and specified in the Note, the Regular Record Date
for an Interest Payment Date will be the fifteenth calendar day (whether or not
a Business Day) immediately preceding such Interest Payment Date.
Unless otherwise specified in a Note and described in the applicable
Pricing Supplement, all percentages resulting from any calculations will be
rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point (with five one-millionths of a percentage point being rounded upward), and
all U.S. Dollar amounts used in or resulting from such calculation shall be
rounded to the nearest cent (with one-half cent being rounded upward).
The interest rate on the Notes will in no event be higher than the maximum
rate permitted by New York law as the same may be modified by United States laws
of general application. Under present New York law, the maximum rate of interest
is 25% per annum on a simple interest basis, with certain exceptions. This limit
may not apply to Notes in which $2,500,000 or more has been invested.
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<PAGE> 8
INTEREST RATE
The applicable Pricing Supplement relating to Fixed Rate Notes will
designate a fixed rate of interest per annum (which may be zero in the event
such Notes are Zero Coupon Notes) payable on such Notes. See "Fixed Rate Notes"
and "Zero Coupon Notes".
Each Floating Rate Note will bear interest at a rate determined by
reference to an Interest Rate Basis or two or more Interest Rate Bases which may
be adjusted in either case by adding or subtracting a Spread ("Spread" is the
number of basis points (one basis point equals one-hundredth of a percentage
point) specified in a Note and described in the applicable Pricing Supplement as
being applicable to the interest rate for such Floating Rate Note), if any, or
by multiplying by the Spread Multiplier ("Spread Multiplier" is the percentage
specified in a Note and described in the applicable Pricing Supplement as being
applicable to the interest rate for such Floating Rate Note), if any. The "Index
Maturity" is the period to maturity of the instrument or obligation with respect
to which the Interest Rate Basis or Bases will be calculated. A Floating Rate
Note may also have either or both of the following: (i) a maximum limitation, or
ceiling, on the rate of interest which may accrue during any interest period
("Maximum Interest Rate"); and (ii) a minimum limitation, or floor, on the rate
of interest which may accrue during any interest period ("Minimum Interest
Rate").
The applicable Pricing Supplement relating to Floating Rate Notes will
designate, and each Floating Rate Note will specify, one or more of the
following Interest Rate Bases as applicable to the relevant Note: (a) the
Commercial Paper Rate, in which case such Note will be a Commercial Paper Rate
Note, (b) the Certificate of Deposit Rate (the "CD Rate"), in which case such
Note will be a CD Rate Note; (c) the Federal Funds Rate, in which case such Note
will be a Federal Funds Rate Note; (d) the Prime Rate, in which case such Note
will be a Prime Rate Note; (e) London Interbank Offered Rate ("LIBOR"), in which
case such Note will be a LIBOR Note; (f) the Treasury Rate, in which case such
Note will be a Treasury Rate Note; or (g) such other interest rate basis or
formula as is set forth in such Pricing Supplement. A Floating Rate Note may
bear interest at a rate determined by reference to two or more Interest Rate
Bases (other than the Treasury Rate) and, if so, the applicable Pricing
Supplement will describe the Interest Rate Bases applicable to such Note.
Interest rates, interest rate formulas and other variable terms of a Note
are subject to change by the Company from time to time, but no such change will
affect any Note already issued or as to which an offer to purchase has been
accepted by the Company.
FIXED RATE NOTES
Unless otherwise described in the applicable Pricing Supplement, each Fixed
Rate Note will bear interest (which may be zero in the event such Note is a Zero
Coupon Note) from the Original Issue Date at the rate per annum stated on the
face thereof until the principal thereof is paid or made available for payment.
Unless otherwise specified in the Note and described in the applicable Pricing
Supplement and except as described below under "Extension of Maturity",
interest, to the extent payable, will be payable semiannually on the "Interest
Payment Dates" therefor (which will be on February 15 and August 15 of each
year) and on the Maturity Date. Interest will be computed on the basis of a
360-day year of twelve, 30-day months. Interest payments on a Fixed Rate Note
shall include interest accrued from and including the Original Issue Date of
such Note, or the most recent date to which interest has been paid or duly
provided for, as the case may be, to, but excluding, the related Interest
Payment Date or Maturity Date, as the case may be. If any Interest Payment Date
or Maturity Date for a Fixed Rate Note falls on a day that is not a Business
Day, the related payment of principal, premium, if any, and interest, if any,
will be made on the next succeeding Business Day as if it were made on the date
such payment were due, and no interest will accrue on the amount so payable for
the period from and after such Interest Payment Date or Maturity Date, as the
case may be.
FLOATING RATE NOTES
Each Floating Rate Note will specify and the applicable Pricing Supplement
will describe the Interest Rate Basis or Bases and the Spread and/or Spread
Multiplier, if any, and the Maximum Interest Rate and/or
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<PAGE> 9
Minimum Interest Rate, in each case if any, applicable to each Floating Rate
Note. In addition, each Floating Rate Note will specify and the applicable
Pricing Supplement will describe or particularize all applicable variable terms
of such Floating Rate Note. Unless otherwise described in the applicable Pricing
Supplement, each Floating Rate Note will bear interest at the rate or rates per
annum determined in accordance with the interest rate formula so specified
therein and described in the applicable Pricing Supplement from the Original
Issue Date until the principal thereof is paid or made available for payment.
Floating Rate Notes will have daily, weekly, monthly, quarterly, semiannual
or annual resets of the rate of interest (such period applicable to a Note being
the "Interest Reset Period" for such Note, and the first day of each Interest
Reset Period being an "Interest Reset Date"), which will be described in the
applicable Pricing Supplement and specified in the Note. Unless otherwise so
specified, the Interest Reset Date will be, in the case of Floating Rate Notes
which reset daily, each Business Day; in the case of Floating Rate Notes that
reset weekly, Wednesday of each week (with the exception of weekly reset
Treasury Rate Notes which will reset Tuesday of each week, except as specified
below); in the case of Floating Rate Notes which reset monthly, the third
Wednesday of each month; in the case of Floating Rate Notes which reset
quarterly, the third Wednesday of March, June, September and December; in the
case of Floating Rate Notes which reset semiannually, the third Wednesday of the
two months specified in such Note and described in the applicable Pricing
Supplement; and in the case of Floating Rate Notes which reset annually, the
third Wednesday of the month specified in such Note and described in the
applicable Pricing Supplement. If any Interest Reset Date for any Floating Rate
Note would otherwise be a day that is not a Business Day, such Interest Reset
Date will be postponed to the next succeeding day that is a Business Day, except
that in the case of a LIBOR Note, if such Business Day is in the next succeeding
calendar month, such Interest Reset Date shall be the next preceding Business
Day.
The interest rate applicable to each Interest Reset Period commencing on
the Interest Reset Date with respect to such Interest Reset Period will be the
rate determined by reference to the Interest Rate Basis or Bases on the
applicable "Interest Determination Date". The Interest Determination Date with
respect to the Commercial Paper Rate, the CD Rate, the Federal Funds Rate and
the Prime Rate will be the second Business Day preceding each Interest Reset
Date for the related Note. The Interest Determination Date with respect to LIBOR
will be the second London Business Day preceding each Interest Reset Date for
the related Note. The Interest Determination Date with respect to the Treasury
Rate, unless otherwise specified in the related Treasury Rate Note, will be the
day of the week in which the related Interest Reset Date falls on which Treasury
Bills (as defined under "Treasury Rate" below) of the applicable Index Maturity
are auctioned. Treasury Bills are normally sold at auction on Monday of each
week unless that day is a legal holiday, in which case the auction is normally
held on the following Tuesday, except that such auction may be held on the
preceding Friday. If, as a result of a legal holiday, an auction is so held on
the preceding Friday, such Friday will be the Interest Determination Date for
the Interest Reset Date occurring in the next succeeding week. If an auction
date falls on any Interest Reset Date for a Treasury Rate Note, then such
Interest Reset Date will instead be the first Business Day following such
auction date. The Interest Determination Date for a Floating Rate Note the
interest rate of which is determined by reference to two or more Interest Rate
Bases will be the first Business Day which is at least two Business Days prior
to the related Interest Reset Date for such Note on which each Interest Rate
Basis shall be determinable. Each Interest Rate Basis will be determined on the
Interest Determination Date, and the applicable interest rate shall take effect
on the related Interest Reset Date.
Interest on each Floating Rate Note will be payable monthly, quarterly,
semiannually or annually (the "Interest Payment Period"). Except as provided
below or in the applicable Pricing Supplement, interest will be payable in the
case of Floating Rate Notes which reset: (i) daily, weekly or monthly, on the
third Wednesday of each month or on the third Wednesday of March, June,
September and December of each year as specified in such Note and the applicable
Pricing Supplement; (ii) quarterly, on the third Wednesday of March, June,
September and December of each year; (iii) semiannually, on the third Wednesday
of the two months of each year specified in such Note and the applicable Pricing
Supplement; and (iv) annually, on the third Wednesday of the month of each year
specified in such Note and the applicable Pricing Supplement (each, an "Interest
Payment Date") and, in each case, at maturity. If any Interest Payment Date for
any
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<PAGE> 10
Floating Rate Note would otherwise be a day that is not a Business Day, such
Interest Payment Date will be postponed to the next day that is a Business Day
except, in the case of a LIBOR Note, if such Business Day is in the next
succeeding calendar month, such Interest Payment Date will be the immediately
preceding Business Day. If the Maturity Date of any Floating Rate Note falls on
a day that is not a Business Day, the related payment of principal, premium, if
any, and interest, will be made on the next succeeding Business Day as if it
were made on the date such payment was due, and no interest will accrue on the
amounts so payable for the period from and after such date.
Interest payments on each Interest Payment Date for Floating Rate Notes
(except in the case of Floating Rate Notes that reset daily or weekly) will
include accrued interest from and including the Original Issue Date, or the most
recent date to which interest has been paid or duly provided for, as the case
may be, to, but excluding, such Interest Payment Date or the Maturity Date, as
the case may be. Unless otherwise specified in such Note and described in the
applicable Pricing Supplement, in the case of Floating Rate Notes that reset
daily or weekly, interest payments will include accrued interest from and
including the Original Issue Date or from but excluding the last date in respect
of which interest has been paid or duly provided for, as the case may be, to,
and including, the Regular Record Date immediately preceding the applicable
Interest Payment Date, and at maturity the interest payments will include
accrued interest from and including the Original Issue Date, or from but
excluding the last date in respect of which interest has been paid or duly
provided for, as the case may be, to, but excluding, the Maturity Date.
With respect to each Floating Rate Note, accrued interest will be
calculated by multiplying the principal amount thereof by an accrued interest
factor. Such accrued interest factor will be computed by adding the interest
factors calculated for each day in the period for which accrued interest is
being calculated. The interest factor (expressed as a decimal) for each such day
will be computed by dividing the interest rate in effect for such day by 360, in
the case of Notes having as their Interest Rate Basis the CD Rate, Commercial
Paper Rate, Federal Funds Rate, LIBOR or the Prime Rate, or by the actual number
of days in the year, in the case of Notes having as their Interest Rate Basis
the Treasury Rate. The interest rate in effect on each day will be (a) if such
day is an Interest Reset Date, the interest rate with respect to the Interest
Determination Date pertaining to such Interest Reset Date, or (b) if such day is
not an Interest Reset Date, the interest rate with respect to the Interest
Determination Date pertaining to the next preceding Interest Reset Date, subject
in either case to any Maximum Interest Rate or Minimum Interest Rate limitation
and to any adjustment by a Spread and/or Spread Multiplier; provided, however,
that (i) the interest rate in effect for the period from the Original Issue Date
to the initial Interest Reset Date ("Initial Interest Reset Date") will be the
rate specified as such in the Floating Rate Note ("Initial Interest Rate") and
(ii) unless otherwise described in the applicable Pricing Supplement and
specified in the Note the interest rate in effect for the ten days immediately
prior to a Maturity Date will be that in effect on the tenth calendar day
preceding such Maturity Date. Unless otherwise described in the applicable
Pricing Supplement and specified in the Note, the interest factor for each
Floating Rate Note for which the interest rate is calculated with reference to
two or more Interest Rate Bases will be calculated in each period in the same
manner as if only one of the applicable Interest Rate Bases applied.
Unless otherwise specified in a Floating Rate Note and described in the
applicable Pricing Supplement, the Trustee will be the Calculation Agent with
respect to each Floating Rate Note. The Calculation Agent is currently located
at 101 Barclay Street, New York, New York 10286 (telephone number: (212)
815-5917; facsimile number: (212) 815-5915). Upon request of the holder of any
Floating Rate Note, the Calculation Agent will provide the interest rate then in
effect and, if determined, the interest rate that will become effective on the
next Interest Reset Date with respect to such Floating Rate Note. Any such
calculation by the Calculation Agent shall, absent manifest error, be conclusive
and binding for all purposes.
The "Calculation Date," if applicable, pertaining to any Interest
Determination Date will be the earlier of (i) the tenth calendar day after such
Interest Determination Date, or, if such day is not a Business Day, the next
succeeding Business Day or (ii) the Business Day immediately preceding the
applicable Interest Payment Date or Maturity Date, as the case may be.
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<PAGE> 11
CD RATE
Unless otherwise specified in such Note and described in the applicable
Pricing Supplement, "CD Rate" means, with respect to any Interest Determination
Date relating to a CD Rate Note or any Interest Determination Date for a
Floating Rate Note for which one of the Interest Rate Bases is the CD Rate (a
"CD Rate Interest Determination Date"), the rate on such date for negotiable
certificates of deposit having the Index Maturity described in the applicable
Pricing Supplement as published by the Board of Governors of the Federal Reserve
System in "Statistical Release H.15(519), Selected Interest Rates" or any
successor publication of the Board of Governors of the Federal Reserve System
("H.15(519)") under the heading "CDs (Secondary Market)" or, if not so published
by 3:00 p.m., New York City time, on the Calculation Date pertaining to such CD
Rate Interest Determination Date, the CD Rate will be the rate on such CD Rate
Interest Determination Date for negotiable certificates of deposit of the Index
Maturity described in the applicable Pricing Supplement as published by the
Federal Reserve Bank of New York in its daily statistical release, "Composite
3:30 p.m. Quotations for U.S. Government Securities" or any successor
publication of the Federal Reserve Bank of New York ("Composite Quotations")
under the heading "Certificates of Deposit". If such rate is not yet published
in either H.15(519) or Composite Quotations by 3:00 p.m., New York City time, on
the Calculation Date pertaining to such CD Rate Interest Determination Date,
then the CD Rate for such CD Rate Interest Determination Date will be calculated
by the Calculation Agent and will be the arithmetic mean (rounded, if necessary,
to the nearest one hundred-thousandth of a percentage point) of the secondary
market offered rates, as of approximately 10:00 a.m., New York City time, on
such CD Rate Interest Determination Date, of three leading nonbank dealers
(which, unless otherwise described in the applicable Pricing Supplement, may
include an affiliate of the Calculation Agent or an Agent) in negotiable U.S.
Dollar certificates of deposit in The City of New York selected by the
Calculation Agent, for negotiable certificates of deposit of major United States
money center banks (in the market for negotiable certificates of deposit) with a
remaining maturity closest to the Index Maturity designated in the Pricing
Supplement in a denomination of U.S. $5,000,000; provided, however, that if the
dealers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the CD Rate will be the CD Rate determined with
respect to the immediately preceding CD Rate Interest Determination Date or, in
the case of the first CD Rate Interest Determination Date, the Initial Interest
Rate.
CD Rate Notes and other Notes are not deposit obligations of a bank and are
not insured by the Federal Deposit Insurance Corporation.
COMMERCIAL PAPER RATE
Unless otherwise specified in such Note and described in the applicable
Pricing Supplement, "Commercial Paper Rate" means, with respect to any Interest
Determination Date relating to a Commercial Paper Rate Note or any Interest
Determination Date for a Floating Rate Note for which one of the Interest Rate
Bases is the Commercial Paper Rate (a "Commercial Paper Rate Interest
Determination Date"), the Money Market Yield (as defined below) of the rate on
such date for commercial paper having the Index Maturity described in the
applicable Pricing Supplement as published in H.15(519) under the heading
"Commercial Paper". In the event that such rate is not so published prior to
3:00 p.m., New York City time, on the Calculation Date pertaining to such
Commercial Paper Rate Interest Determination Date, then the Commercial Paper
Rate will be the Money Market Yield of the rate on such Commercial Paper Rate
Interest Determination Date for commercial paper of the Index Maturity described
in the applicable Pricing Supplement as published in Composite Quotations under
the heading "Commercial Paper". If by 3:00 p.m., New York City time, on the
Calculation Date pertaining to such Commercial Paper Rate Interest Determination
Date such rate is not yet published in either H.15(519) or Composite Quotations,
the Commercial Paper Rate for such Commercial Paper Rate Interest Determination
Date will be calculated by the Calculation Agent and will be the Money Market
Yield of the arithmetic mean (rounded, if necessary, to the nearest one
hundred-thousandth of a percentage point) of the offered rates, as of
approximately 11:00 a.m., New York City time on such Commercial Paper Rate
Interest Determination Date, of three leading dealers of commercial paper
(which, unless otherwise described in the applicable Pricing Supplement, may
include an affiliate of the Calculation Agent or an Agent) in The City of New
York selected by the Calculation Agent, for commercial paper having
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the Index Maturity described in the applicable Pricing Supplement placed for an
industrial issuer whose bond rating is "AA" or its equivalent, from a nationally
recognized securities rating agency; provided, however, that if the dealers
selected as aforesaid by the Calculation Agent are not quoting as mentioned in
this sentence, the Commercial Paper Rate will be the Commercial Paper Rate
determined with respect to the immediately preceding Commercial Paper Rate
Interest Determination Date or, in the case of the first Commercial Paper Rate
Interest Determination Date, the Initial Interest Rate.
"Money Market Yield" shall be a yield (expressed as a percentage rounded,
if necessary, to the nearest one hundred-thousandth of a percentage point)
calculated in accordance with the following formula:
<TABLE>
<S> <C> <C>
D X 360
MONEY MARKET YIELD = --------------------- X 100
360 - (D X M)
</TABLE>
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
FEDERAL FUNDS RATE
Unless otherwise specified in such Note and described in the applicable
Pricing Supplement, "Federal Funds Rate" means, with respect to any Interest
Determination Date relating to a Federal Funds Rate Note or any Interest
Determination Date for a Floating Rate Note for which one of the Interest Rate
Bases is the Federal Funds Rate (a "Federal Funds Rate Interest Determination
Date"), the rate on such date for Federal Funds as published in H.15(519) under
the heading "Federal Funds (Effective)" or, if not so published by 3:00 p.m.,
New York City time, on the Calculation Date pertaining to such Federal Funds
Rate Interest Determination Date, the Federal Funds Rate will be the rate on
such Federal Funds Rate Interest Determination Date for Federal Funds as
published in Composite Quotations under the heading "Federal Funds/Effective
Rate". If such rate is not yet published in either H.15(519) or Composite
Quotations by 3:00 p.m., New York City time on the Calculation Date pertaining
to such Federal Funds Rate Interest Determination Date, the Federal Funds Rate
for such Federal Funds Rate Interest Determination Date will be calculated by
the Calculation Agent and will be the arithmetic mean (rounded, if necessary, to
the nearest one hundred-thousandth of a percentage point) of the rates, as of
approximately 9:00 a.m., New York City time, on such Federal Funds Rate Interest
Determination Date, for the last transaction in overnight Federal Funds arranged
by three leading brokers of Federal Funds transactions in The City of New York
selected by the Calculation Agent; provided, however, that if the brokers
selected as aforesaid by the Calculation Agent are not quoting as mentioned in
this sentence, the Federal Funds Rate will be the Federal Funds Rate determined
with respect to the immediately preceding Federal Funds Rate Interest
Determination Date or, in the case of the first Federal Funds Rate Interest
Determination Date, the Initial Interest Rate.
PRIME RATE
Unless otherwise specified in such Note and described in the applicable
Pricing Supplement, "Prime Rate" means, with respect to any Interest
Determination Date relating to a Prime Rate Note or any Interest Determination
Date for a Floating Rate Note for which one of the Interest Rate Bases is the
Prime Rate (a "Prime Rate Interest Determination Date"), the arithmetic mean
(rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point), as calculated by the Calculation Agent, of the prime rates quoted on the
basis of the actual number of days in the year divided by 360 as of the close of
business on such Prime Rate Interest Determination Date by three major money
center banks in The City of New York selected by the Calculation Agent (after
consultation with the Company). If fewer than three quotations are provided, the
Prime Rate will be calculated by the Calculation Agent (as described above) on
the basis of the prime rates quoted in The City of New York by the appropriate
number of substitute banks or trust companies organized and doing business under
the laws of the United States, or any state thereof, each having total equity
capital of at least $500 million and being subject to supervision or examination
by a Federal or state authority, selected by the Calculation Agent (after
consultation with the Company) to quote such rate or rates; provided, however,
that if the banks or trust companies selected as aforesaid by the Calculation
Agent are not quoting as
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mentioned in this sentence, the Prime Rate will be the Prime Rate determined
with respect to the immediately preceding Prime Rate Interest Determination Date
or, in the case of the first Prime Rate Interest Determination Date, the Initial
Interest Rate.
LIBOR
Unless otherwise specified in such Note and described in the applicable
Pricing Supplement, "LIBOR" will be determined by the Calculation Agent in
accordance with the following provisions:
(i) With respect to any Interest Determination Date relating to a
LIBOR Note or any Interest Determination Date for a Floating Rate Note for
which one of the Interest Rate Bases is LIBOR ("LIBOR Interest
Determination Date"), LIBOR will be, as specified in the Note and described
in the applicable Pricing Supplement, either: (a) the arithmetic mean
(rounded, if necessary, to the nearest one hundred-thousandth of a
percentage point) of the offered rates, as calculated by the Calculation
Agent, for deposits in U.S. Dollars of not less than U.S. $1,000,000 having
the Index Maturity described in the applicable Pricing Supplement,
commencing on the second London Business Day immediately following such
LIBOR Interest Determination Date, which appear on the Reuters Screen LIBO
Page (as defined below) as of approximately 11:00 a.m., London time, on
such LIBOR Interest Determination Date, if at least two such offered rates
appear on the Reuters Screen LIBO Page ("LIBOR Reuters"), or (b) the rate
for deposits in U.S. Dollars of not less than U.S. $1,000,000 having the
Index Maturity designated in the applicable Pricing Supplement, commencing
on the second London Business Day immediately following such LIBOR Interest
Determination Date, which appears on the Telerate Page 3750 (as defined
below) as of approximately 11:00 a.m., London time, on such LIBOR Interest
Determination Date ("LIBOR Telerate"). "Reuters Screen LIBO Page" means the
display designated as page "LIBO" on the Reuters Monitor Money Rates
Service (or such other page as may replace the LIBO page on that service
for the purpose of displaying London interbank offered rates of major
banks). "Telerate Page 3750" means the display designated as page "3750" on
the Telerate Service (or such other page as may replace the 3750 page on
that service or such other service or services as may be nominated by the
British Bankers' Association for the purpose of displaying London interbank
offered rates for U.S. Dollar deposits). If neither LIBOR Reuters nor LIBOR
Telerate is specified in the Note and applicable Pricing Supplement, LIBOR
will be determined as if LIBOR Telerate had been specified. If fewer than
two offered rates appear on the Reuters Screen LIBO Page, or if no rate
appears on the Telerate Page 3750, as applicable, LIBOR in respect of that
LIBOR Interest Determination Date will be determined as if the parties had
specified the rate described in (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which
fewer than two offered rates appear on the Reuters Screen LIBO Page as
described in (i)(a) above, or on which no rate appears on Telerate Page
3750, as specified in (i)(b) above, as applicable, the Calculation Agent
shall request the principal London offices of each of four major reference
banks in the London interbank market selected by the Calculation Agent to
provide the Calculation Agent with a quotation of the rate at which
deposits in U.S. Dollars for the period of the Index Maturity described in
the applicable Pricing Supplement, commencing on the second London Business
Day immediately following such LIBOR Interest Determination Date, are
offered by it to prime banks in the London interbank market as of
approximately 11:00 a.m., London time, on such LIBOR Interest Determination
Date and in a principal amount equal to an amount of not less than U.S.
$1,000,000 that is representative for a single transaction in such market
at such time. If at least two such quotations are provided, LIBOR in
respect of such LIBOR Interest Determination Date will be the arithmetic
mean (rounded, if necessary, to the nearest one hundred-thousandth of a
percentage point) of such quotations as calculated by the Calculation
Agent. If fewer than two quotations are provided, LIBOR for such LIBOR
Interest Determination Date will be the arithmetic mean (rounded, if
necessary, to the nearest one hundred-thousandth of a percentage point) of
the rates quoted as of approximately 11:00 a.m., New York City time, on
such LIBOR Interest Determination Date by three major banks in The City of
New York selected by the Calculation Agent (after consultation with the
Company) for loans in U.S. Dollars to leading European banks, having the
Index Maturity described in the applicable Pricing Supplement commencing on
the second London
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Business Day immediately following such LIBOR Interest Determination Date
and in a principal amount equal to an amount of not less than U.S.
$1,000,000 that is representative for a single transaction in such market
at such time; provided, however, that if the banks selected as aforesaid by
the Calculation Agent are not quoting as mentioned in this sentence, LIBOR
will be the LIBOR determined with respect to the immediately preceding
LIBOR Interest Determination Date or, in the case of the first LIBOR
Interest Determination Date, the Initial Interest Rate.
TREASURY RATE
Unless otherwise specified in such Note and described in the applicable
Pricing Supplement, "Treasury Rate" means, with respect to any Interest
Determination Date relating to a Treasury Rate Note (a "Treasury Rate Interest
Determination Date"), the rate for the most recent auction of direct obligations
of the United States ("Treasury Bills") having the Index Maturity described in
the applicable Pricing Supplement, as such rate is published in H.15(519) under
the heading, "U.S. Government Securities -- Treasury Bills -- auction average
(investment)," or if not so published by 3:00 p.m., New York City time, on the
Calculation Date relating to such Treasury Rate Interest Determination Date, the
Treasury Rate will be the auction average rate (expressed as a bond equivalent,
rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, on the basis of a year of 365 or 366 days, as applicable, and applied on
a daily basis) as otherwise announced by the United States Department of the
Treasury. In the event that the results of the auction of Treasury Bills having
the Index Maturity described in the applicable Pricing Supplement are not
published or announced as described above by 3:00 p.m., New York City time, on
such Calculation Date, or if no such auction is held in a particular week, then
the Treasury Rate for such Treasury Rate Interest Determination Date will be
calculated by the Calculation Agent and will be a yield to maturity (expressed
as a bond equivalent, rounded, if necessary, to the nearest one
hundred-thousandth of a percentage point, on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis) of the arithmetic mean
(rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point) of the secondary market bid rates, as of approximately 3:30 p.m., New
York City time, on such Treasury Rate Interest Determination Date, of three
leading primary United States government securities dealers (which, unless
otherwise described in the applicable Pricing Supplement, may include an
affiliate of the Calculation Agent or an Agent) selected by the Calculation
Agent (after consultation with the Company), for the issue of Treasury Bills
with a remaining maturity closest to the Index Maturity described in the
applicable Pricing Supplement; provided, however, that if the dealers selected
as aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, the Treasury Rate will be the Treasury Rate determined with respect to
the immediately preceding Treasury Rate Interest Determination Date or, in the
case of the first Treasury Rate Interest Determination Date, the Initial
Interest Rate.
ZERO COUPON NOTES
Each Zero Coupon Note will be offered at a substantial discount from its
principal amount at maturity. There will be no periodic payments of interest
with respect to a Zero Coupon Note. The calculation of the accrual of Original
Issue Discount (the difference between the Issue Price and the principal amount
at maturity of a Zero Coupon Note) in the period during which a Zero Coupon Note
remains outstanding will be on a semiannual bond equivalent basis using a
360-day year composed of twelve 30-day months. Upon maturity, Original Issue
Discount will cease to accrue on a Zero Coupon Note. Each Zero Coupon Note will
set forth, among other things, the Original Issue Date, the Issue Price, the
yield to maturity, and the amount of Original Issue Discount applicable to such
Note. If a bankruptcy proceeding is commenced in respect of the Company, the
claim of the holder of a Zero Coupon Note is, under Title 11 of the United
States Code, limited to the Amortized Face Amount of such Zero Coupon Note
calculated as of the date of commencement of the proceeding.
EXTENSION OF MATURITY
Each Note will specify and the Pricing Supplement relating to each Note
will describe whether the Company has the option to extend the Stated Maturity
Date of such Note for one or more whole year periods
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(each an "Extension Period") up to but not beyond the date (the "Final Maturity
Date") specified in such Note and described in such Pricing Supplement and the
basis or formula, if any, for setting the interest rate or the Spread and/or
Spread Multiplier, if any, as the case may be, applicable to any such Extension
Period.
The Company may exercise such option with respect to a Note by notifying
the Trustee of such exercise at least 45 but not more than 60 days prior to the
Stated Maturity Date of such Note in effect prior to the exercise of such option
(the "Original Stated Maturity Date"). No later than 40 days prior to the
Original Stated Maturity Date, the Trustee will mail to the holder of such Note
a notice (the "Extension Notice") relating to such Extension Period, by first
class mail, postage prepaid, setting forth (i) the election of the Company to
extend the Stated Maturity Date of such Note, (ii) the new Stated Maturity Date,
(iii) in the case of a Fixed Rate Note, the interest rate applicable to the
Extension Period or, in the case of a Floating Rate Note, the Spread and/or
Spread Multiplier, if any, applicable to the Extension Period, and (iv) the
provisions, if any, for redemption at the option of the Company during the
Extension Period, including the date or dates on which or the period or periods
during which and the price or prices at which such redemption may occur during
the Extension Period. Upon the mailing by the Trustee of an Extension Notice to
the holder of a Note, the Stated Maturity Date of such Note shall be extended
automatically as set forth in the Extension Notice, and except as modified by
the Extension Notice and as described in the next paragraph, such Note will have
the same terms as prior to the mailing of such Extension Notice.
Notwithstanding the foregoing, not later than 20 days prior to the Original
Stated Maturity Date for a Note, the Company may, at its option, revoke the
interest rate, in the case of a Fixed Rate Note, or the Spread and/or Spread
Multiplier, in the case of a Floating Rate Note, provided for in the Extension
Notice and establish a higher interest rate, in the case of a Fixed Rate Note,
or a higher Spread and/or Spread Multiplier in the case of a Floating Rate Note,
for the Extension Period by mailing or causing the Trustee to mail notice of
such higher interest rate or higher Spread and/or Spread Multiplier, as the case
may be, first class mail, postage prepaid, to the holder of such Note. Such
notice shall be irrevocable. All Notes with identical terms with respect to
which the Stated Maturity Date is extended will bear such higher interest rate,
in the case of a Fixed Rate Note, or higher Spread and/or Spread Multiplier, as
the case may be, in the case of a Floating Rate Note, for the Extension Period.
If the Company elects to extend the Stated Maturity Date of a Note, the
holder of such Note may, if specified in such Note and described in the
applicable Pricing Supplement, have the option to elect repayment of such Note
by the Company on the Original Stated Maturity Date at a price equal to the
principal amount thereof plus any accrued and unpaid interest to such date or,
if such Note is an Original Issue Discount Note, the Amortized Face Amount of
such Note calculated as of such date. In order for a Note to be so repaid on the
Original Stated Maturity Date, the holder thereof must follow the procedures for
optional repayment set forth above under "Repayment and Redemption", except that
the period for delivery of such Note to the Trustee shall be at least 25 but not
more than 35 days prior to the Original Stated Maturity Date and except that a
holder who has tendered a Note for repayment pursuant to an Extension Notice
may, by written notice to the Trustee, revoke any such tender for repayment
until the close of business on the tenth day prior to the Original Stated
Maturity Date.
MULTI-CURRENCY NOTES AND INDEXED NOTES
If any Note is not to be denominated in U.S. Dollars, certain provisions
with respect thereto will be set forth in a Multi-Currency Prospectus Supplement
and an applicable Pricing Supplement which will specify the currency or
currencies, including composite currencies such as the European Currency Unit,
in which the principal, premium, if any, and interest, if any, with respect to
such Note are to be paid (the "Specified Currency"), along with any other terms
relating to the non-U.S. Dollar denomination.
The Notes also may be issued with the principal amount payable at maturity
to be determined with reference to the exchange rate of a Specified Currency
relative to an indexed currency (the "Indexed Currency") or other index, each as
set forth in the Multi-Currency Prospectus Supplement and an applicable Pricing
Supplement. Holders of such Notes may receive a principal amount at maturity
that is greater than or less than the face amount of the Note depending upon the
relative value at maturity of the Specified Currency
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compared to the Indexed Currency or other index. Information as to the method
for determining the principal amount payable at maturity, the relative value of
the Specified Currency compared to the applicable Indexed Currency or other
index and certain additional risks and tax considerations associated with
investment in such Notes will be set forth in the applicable Multi-Currency
Prospectus Supplement.
BOOK-ENTRY SYSTEM
The Notes may be issued in whole or in part as Book-Entry Notes represented
by a Global Security (as defined in the accompanying Prospectus) deposited with,
or on behalf of, the Depository and registered in the name of the Depository or
a nominee of the Depository. Unless otherwise specified in the applicable
Pricing Supplement, DTC will be the Depository.
So long as the Depository for a Global Security, or a nominee of the
Depository, is the registered owner of the Global Security, the Depository or
its nominee, as the case may be, will be considered the sole owner or holder of
the Book-Entry Notes represented by such Global Security for all purposes under
the Indenture. Except as provided below, owners of beneficial interests in
Book-Entry Notes represented by a Global Security will not be considered the
owners or holders thereof under the Indenture, will not be entitled to have
Book-Entry Notes represented by such Global Security registered in their names
and will not be entitled to physical delivery of Notes in certificated form
evidencing their respective beneficial interests therein. A Global Security may
not be transferred except as a whole by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any nominee to a successor of
the Depository or a nominee of such successor.
Payments of principal of and any premium and interest on Book-Entry Notes
represented by a Global Security registered in the name of a Depository or its
nominee will be made to the Depository or its nominee, as the case may be, as
the registered owner of the Global Security. Neither the Company, the Trustee,
any Paying Agent nor the Registrar will have any responsibility or liability for
any aspect of the records relating to or payments made on account of beneficial
ownership interests in Book-Entry Notes represented by a Global Security or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Company expects that the Depository or its nominee, upon receipt of any
payment of principal, premium, if any, or interest, if any, in respect of a
Global Security, will credit immediately participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such Global Security as shown on the records of such Depository or its
nominee. The Company also expects that payments by participants to owners of
beneficial interests in Book-Entry Notes represented by such Global Security
held through such participants will be governed by standing customer
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name", and
will be the responsibility of such participants.
If the Depository with respect to any Global Security is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by the Company within 90 days of such time, the
Company will issue Certificated Notes in exchange for each Book-Entry Note
represented by such Global Security. In addition, the Company may at any time
and in its sole discretion determine not to have the Notes represented by a
Global Security and, in such event, will issue Certificated Notes in exchange
for the Book-Entry Notes represented by such Global Security. In either
instance, an owner of a beneficial interest in a Book-Entry Note will be
entitled to have a Certificated Note or Notes equal in principal amount to such
beneficial interest registered in its name and will be entitled to physical
delivery of such Note or Notes.
DTC has advised the Company and the Agents as follows: DTC is a
limited-purpose trust company organized under the laws of the State of New York,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC was created to hold securities for persons that have accounts
with DTC ("participants") and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry
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changes in accounts of the participants, thereby eliminating the need for
physical movements of securities certificates. DTC's participants include
securities brokers and dealers (including the Agents), banks, trust companies,
clearing corporations, and certain other organizations, some of whom (and/or
their representatives) own DTC. Access to DTC's book-entry system is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a participant, either
directly or indirectly. Persons who are not participants may beneficially own
securities held by DTC only through participants.
DTC has also advised the Company and the Agents that, upon the issuance by
the Company of Book-Entry Notes represented by a Global Security, DTC will
credit on its book-entry registration and transfer system the respective
principal amounts of the Book-Entry Notes represented by such Global Security to
the accounts of participants. The accounts to be credited shall be designated by
the applicable Agent or by the Company if such Notes are offered and sold
directly by the Company. Ownership of beneficial interests in Book-Entry Notes
represented by a Global Security registered in the name of DTC or its nominee
will be limited to participants or persons that may hold interests through
participants. Ownership of beneficial interests in Book-Entry Notes represented
by a Global Security registered in the name of DTC or its nominee will be shown
on, and the transfer of that ownership will be effected only through, records
maintained by DTC or its nominee (with respect to beneficial interests of
participants), or by participants or persons that may hold interests through
participants (with respect to beneficial interests of persons other than
participants). The laws of some states may require that certain purchasers of
securities take physical delivery of such securities in certificated form. Such
limits and such laws may impair the ability to transfer beneficial interests in
Book-Entry Notes.
CERTAIN UNITED STATES TAX CONSIDERATIONS
UNITED STATES HOLDERS
The following is a summary of certain United States federal income tax
considerations that may be relevant to a holder of a Note that is a United
States person (as defined in the Code), or that otherwise is subject to United
States federal income taxation on a net income basis in respect of a Note. This
summary is based on laws, regulations, rulings and decisions now in effect, all
of which are subject to change. This summary deals only with holders that will
hold Notes as capital assets and does not address tax considerations applicable
to investors that may be subject to special tax rules, such as financial
institutions, tax-exempt organizations, insurance companies or dealers in
securities or currencies, or persons that will hold Notes as a position in a
"straddle" or as part of a hedging transaction for tax purposes. This summary
does not include a discussion of tax consequences to holders of any Note in
which principal, premium, if any, and interest, if any, with respect to such
Note are to be paid in a Specified Currency or which is an Indexed Currency
Note. Additional United States federal income tax considerations applicable to
particular Notes may be set forth in the applicable Multi-Currency Prospectus
Supplement or Pricing Supplement.
Investors should consult their own tax advisors in determining the tax
consequences to them of holding and disposing of Notes, including the
application to their particular situation of the tax considerations discussed
below, as well as the application of state, local, foreign or other tax laws.
Payments of Interest. Payments of Qualified Stated Interest (as defined
below) on a Note will be taxable to a holder as ordinary interest income at the
time that such payments are accrued or are received (in accordance with the
holder's method of tax accounting). In general, Qualified Stated Interest is
stated interest which is unconditionally payable in cash or property (other than
debt instruments of the issuer) at least annually at a single fixed rate. (For a
special rule in the case of Floating Rate Notes, see below.)
Purchase, Sale and Retirement of Notes. A holder's tax basis in a Note
generally will equal the cost of such Note to such holder, increased by any
amounts includible in income by the holder as original issue discount (and
accrued market discount, if any, if the holder has included such market discount
in income) and reduced by any amortized premium (each as described below) and
any payments other than payments of Qualified Stated Interest made on such Note.
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Upon the sale, exchange or retirement of a Note, a holder generally will
recognize gain or loss in an amount equal to the difference between the amount
realized on the sale, exchange or retirement (less any accrued and unpaid
interest, which will be taxable as such) and the holder's tax basis in the Note.
Except as otherwise discussed below, gain or loss recognized by a holder on
the sale, exchange or retirement of a Note generally will be long-term capital
gain or loss if the holder has held the Note for more than one year at the time
of disposition. Currently, for individuals, long-term capital gain is subject to
a maximum rate of taxation of 28%, as opposed to a maximum rate of 39.6% for
ordinary income. The distinction between capital gain or loss and ordinary
income or loss is also important for purposes of the limitations on a holder's
ability to offset capital losses against ordinary income.
Original Issue Discount. Holders of Original Issue Discount Notes generally
will be subject to the special tax accounting rules for original issue discount
obligations provided by the Code and certain Treasury Regulations issued on
January 27, 1994, (the "OID Regulations"). Holders of such Notes should be aware
that, as described in greater detail below, they generally must include original
issue discount in ordinary gross income for United States Federal income tax
purposes as it accrues, in advance of the receipt of cash attributable to that
income.
For United States federal income tax purposes, original issue discount is
the excess of the stated redemption price at maturity of a Note over its issue
price, if such excess equals or exceeds a de minimis amount (generally 1/4 of 1%
of the Note's stated redemption price at maturity multiplied by the number of
complete years to its maturity from its issue date). The issue price of an issue
of Notes equals the first price at which a substantial amount of such Notes has
been sold. The stated redemption price at maturity of a Note is the sum of all
payments provided by the Note other than payments of Qualified Stated Interest.
In addition, under the OID Regulations, if a Note bears interest for one or more
accrual periods at a rate below the rate applicable for the remaining term of
such Note (e.g., Notes with teaser rates or interest holidays), and if the
greater of either the resulting foregone interest on such Note or any "true"
discount on such Note (i.e., the excess of the Note's stated principal amount
over its issue price) equals or exceeds a specified de minimis amount, then part
or all of the stated interest on the Note would be treated entirely as original
issue discount rather than Qualified Stated Interest.
In general, each holder of an Original Issue Discount Note, whether such
holder uses the cash or the accrual method of tax accounting, will be required
to include in ordinary gross income the sum of the "daily portions" of original
issue discount on that Note for all days during the taxable year on which the
holder owns the Note. The daily portions of original issue discount on an
Original Issue Discount Note are determined by allocating to each day in any
accrual period a ratable portion of the original issue discount allocable to
that accrual period. An accrual period may be any length of time, and the
lengths may vary during the time the Note is outstanding, so long as no accrual
period is greater than one year and provided that each scheduled payment of
principal or interest occurs either on the final day of an accrual period or on
the first day of an accrual period. In the case of an initial holder, the amount
of original issue discount on an Original Issue Discount Note allocable to each
accrual period is determined by (i) multiplying the "adjusted issue price" (as
defined below) of the Note by the yield to maturity of the Note (as adjusted for
the length of the accrual period) and (ii) subtracting from that product the
amount, if any, of Qualified Stated Interest allocable to that accrual period.
The "adjusted issue price" of an Original Issue Discount Note at the
beginning of any accrual period will generally be the sum of its issue price and
the amount of original issue discount allocable to all prior accrual periods,
reduced by the amount of all payments other than payments of Qualified Stated
Interest, if any, made with respect to such Note in all prior accrual periods.
As discussed above, in order to determine the amount of original issue discount
allocable to an accrual period, the adjusted issue price of an Original Issue
Discount Note will be multiplied by the Note's yield to maturity (as adjusted
for the length of the accrual period). As a result of this "constant yield"
method of including original issue discount into income, the amounts so
includible in income by a holder, in respect of an Original Issue Discount Note,
are generally lesser in the early years and greater in the later years than the
amounts that would be includible on a straight-line basis.
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In the case of Floating Rate Notes, special rules apply. Such a Note will
qualify as a "variable rate debt instrument" if it (i) has an issue price which
does not exceed the total noncontingent principal payments by more than an
amount equal to the lesser of (a) .015 multiplied by the product of the total
noncontingent principal payments and the number of complete years to the
Floating Rate Note's maturity from its issue date or (b) 15 percent of the total
noncontingent principal payments; (ii) provides for stated interest, paid or
compounded at least annually, at current values of (a) one or more qualified
floating rates, (b) a single fixed rate and one or more qualified floating
rates, (c) a single fixed rate and a single objective rate that is a qualified
inverse floating rate or (d) a single objective rate. A floating rate is a
qualified floating rate if variations in the rate can reasonably be expected to
measure contemporaneous variations in the cost of newly borrowed funds in the
currency in which the Floating Rate Note is denominated. A multiple of a
qualified floating rate is generally not a qualified floating rate, except that
a multiple greater than zero and not more than 1.35 is permissible (and the
product can be decreased or increased by a fixed rate). An objective rate is a
rate (other than a qualified floating rate) which is determined using a single
fixed formula and which is based upon (i) either the yield or changes in the
price of one or more items of personal property that is actively traded (other
than stock or debt of the issuer or a related party); (ii) one or more qualified
floating rates; (iii) one or more rates where each rate would be a qualified
floating rate for a debt instrument denominated in a currency other than the
currency in which Floating Rate Note is denominated; or (iv) a combination of
the above rates. A qualified inverse floating rate is an objective rate in which
(i) the rate is equal to a fixed rate minus a qualified floating rate and (ii)
variations in the rate can reasonably be expected to inversely reflect
contemporaneous variations in the cost of newly borrowed funds. The fact that a
Floating Rate Note has a Maximum Interest Rate or a Minimum Interest Rate will
not affect the qualification of the Floating Rate Note as a "variable rate debt
instrument" if such Maximum or Minimum Interest Rates are fixed throughout the
term of the debt instruments, or such Maximum or Minimum Interest Rates are not
reasonably expected as of the issue date to cause the yield on the Note to be
significantly more or less than the yield would be without the restriction of
the Maximum or Minimum Interest Rate. The OID Regulations also provide that if a
Floating Rate Note provides for stated interest at a fixed rate for an initial
period of less than one year followed by a variable rate that is either a
qualified floating rate or an objective rate and if the variable rate on the
Floating Rate Note's issue date is intended to approximate the fixed rate (e.g.,
the value of the variable rate on the issue date does not differ from the value
of the fixed rate by more than 25 basis points), then the fixed rate and the
variable rate together will constitute either a single qualified floating rate
or objective rate, as the case may be.
If a Floating Rate Note that provides for stated interest at either a
single qualified floating rate or a single objective rate throughout the term
thereof qualifies as a "variable rate debt instrument" under the OID
Regulations, then any stated interest on such Note which is unconditionally
payable in cash or property (other than debt instruments of the issuer) at least
annually will constitute Qualified Stated Interest and will be taxed
accordingly. Thus, a Floating Rate Note that provides for stated interest at
either a single qualified floating rate or a single objective rate throughout
the term thereof and that qualifies as a "variable rate debt instrument" under
the OID Regulations will generally not be treated as having been issued with
original issue discount unless the Floating Rate Note is issued at a "true"
discount (i.e., at a price below the Note's stated principal amount) in excess
of a specified de minimis amount. Original issue discount on such a Floating
Rate Note arising from "true" discount is allocated to an accrual period using
the constant yield method described above.
In general, any other Floating Rate Note that qualifies as a "variable rate
debt instrument" will be deemed to be converted into an "equivalent" fixed rate
debt instrument for purposes of determining the amount and accrual of original
issue discount and Qualified Stated Interest on the Floating Rate Note. The OID
Regulations generally require that such a Floating Rate Note be treated as
converted into an "equivalent" fixed rate debt instrument by substituting any
qualified floating rate or qualified inverse floating rate provided for under
the terms of the Floating Rate Note with a fixed rate equal to the value of the
qualified floating rate or qualified inverse floating rate, as the case may be,
as of the Floating Rate Note's issue date. Any objective rate (other than a
qualified inverse floating rate) provided for under the terms of the Floating
Rate Note is converted into a fixed rate that reflects the yield that is
reasonably expected for the Floating Rate Note. In the case of a Floating Rate
Note that qualifies as a "variable rate debt instrument" and provides for
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stated interest at a fixed rate in addition to either one or more qualified
floating rates or a qualified inverse floating rate, the fixed rate is initially
converted into a qualified floating rate (or a qualified inverse floating rate,
if the Floating Rate Note provides for a qualified inverse floating rate). Under
such circumstances, the qualified floating rate or qualified inverse floating
rate that replaces the fixed rate must be such that the fair market value of the
Floating Rate Note as of the Floating Rate Note's issue date is approximately
the same as the fair market value of an otherwise identical debt instrument that
provides for either the qualified floating rate or qualified inverse floating
rate rather than the fixed rate. Subsequent to converting the fixed rate into
either a qualified floating rate or a qualified inverse floating rate, the
Floating Rate Note is then treated as converted into an "equivalent" fixed rate
debt instrument in the manner described above.
Once the Floating Rate Note is deemed converted into an "equivalent" fixed
rate debt instrument pursuant to the foregoing rules, the amount of original
issue discount and qualified stated interest, if any, are determined for the
"equivalent" fixed rate debt instrument by applying the general original issue
discount rules to the "equivalent" fixed rate debt instrument and a United
States holder of the Floating Rate Note will account for such original issue
discount and qualified stated interest as if the United States holder held the
"equivalent" fixed rate debt instrument. Each accrual period appropriate
adjustments will be made to the amount of qualified stated interest or original
issue discount assumed to have been accrued or paid with respect to the
"equivalent" fixed rate debt instrument in the event that such amounts differ
from the actual amount of interest accrued or paid on the Floating Rate Note
during the accrual period.
If a Floating Rate Note does not qualify for the above treatment, then the
Note will be an Original Issue Discount Note and the interest on such Note will
be treated as contingent interest. Contingent interest is generally includible
income as it becomes fixed, to the extent that such interest exceeds any minimum
stated interest. The regulations governing contingent interest are still in
proposed form, so that details of the law governing contingent interest are
still uncertain.
A subsequent holder of an Original Issue Discount Note that does not
purchase the Note at a cost which exceeds its stated redemption price at
maturity, reduced by the amount of any payment made on the Note prior to the
date of purchase other than payments of Qualified Stated Interest, also
generally will be required to include in gross income the daily portions of
original issue discount, calculated as described above. However, if the
subsequent holder acquires the Original Issue Discount Note at a lower yield to
maturity than the yield of the Note for original issue discount purposes with
respect to the initial holder of the Note, the subsequent holder may reduce its
periodic inclusions of original issue discount income to reflect the lower yield
to maturity of the Note.
In general, an individual or other cash method holder of an Original Issue
Discount Note that matures one year or less from the date of its issuance (a
"short-term Original Issue Discount Note") is not required to accrue original
issue discount for United States federal income tax purposes unless an election
is made to do so. United States holders who report income for federal income tax
purposes on the accrual method and certain other holders, including banks and
dealers in securities, are required to include original issue discount on such
short-term Original Issue Discount Notes on a straight-line basis, unless an
election is made to accrue the original issue discount according to a constant
interest method based on daily compounding. In the case of a holder who is not
required, and does not elect, to include original issue discount in income
currently, any gain realized on the sale, exchange or retirement of the
short-term Original Issue Discount Note will be ordinary income to the extent of
the original issue discount accrued on a straight-line basis (or, if elected,
according to a constant interest method based on daily compounding) through the
date of sale, exchange or retirement. In addition, such non-electing holders
which are not subject to the current inclusion requirement described in this
paragraph will be required to defer deductions for any interest paid on
indebtedness incurred or continued to purchase or carry such short-term Original
Issue Discount Notes in an amount not exceeding the deferred interest income,
until such deferred interest income is realized.
If any Note is issued with Optional Repayment Dates, the yield and maturity
on the Note will be calculated by assuming that the Note will be repaid on the
first Optional Repayment Date if such repayment would increase the yield on the
Note. If the Note is deemed to be repaid on the first Optional Repayment Date,
but is not in fact repaid on such date, then for purposes of calculating
original issue discount, a new Note
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will be deemed issued on such date for the Note's adjusted issue price on such
date, and the rules outlined in this and the previous sentence will apply with
respect to all subsequent Optional Repayment Dates.
If any Note is issued with Redemption Dates, the yield and maturity on such
Note will be calculated by assuming that the Note will be redeemed on the
Initial Redemption Date if such redemption would decrease the yield on the Note.
If the Note is deemed to be redeemed on the Initial Redemption Date, but is not
in fact redeemed on such date, then for purposes of calculating original issue
discount, a new Note will be deemed issued on such date for the Note's adjusted
issue price on such date, and the rules outlined in this and the previous
sentence will apply with respect to all subsequent Redemption Dates.
If any Note is subject to an Extension Period, then the yield and maturity
on such Note shall be calculated by deeming the Final Maturity Date to be the
Stated Maturity Date of the Note and treating the Original Stated Maturity Date
as being the date on which the Company has a call option on the Note. Such call
option will be deemed to be exercised on the Original Stated Maturity Date if,
and only if, by utilizing the Original Stated Maturity Date as the Maturity Date
and the redemption price on such date as the stated redemption price at
maturity, the yield to maturity of the Note is lower than it would be if the
Note were not redeemed on such date. If the Note is deemed to be repaid on the
Original Stated Maturity Date and is not in fact repaid on such date, then for
purposes of calculating original issue discount a new Note will be deemed issued
on the Original Stated Maturity Date for the Note's adjusted issue price on such
date and the rules outlined in this and the previous sentence will apply with
respect to all subsequent maturity dates. If the deemed call option is not
considered to be exercised, the option to extend shall be presumed to be
exercised.
Premium and Market Discount. A holder of a Note that purchases the Note at
a cost greater than the sum of all amounts payable on the Note after the
purchase (other than payments of Qualified Stated Interest) will be considered
to have purchased the Note at a premium and may amortize such premium, using a
constant yield method, over the remaining term of the Note.
If a holder of a Note purchases the Note at a price that produces a yield
to maturity higher than the yield to maturity at which such Note first was
issued, the Note generally will be considered to bear "market discount" in the
hands of such holder. In such case, the gain realized by the holder on the sale
or retirement of the Note generally will be treated as ordinary income to the
extent of the market discount that accrued on the Note while held by such
holder, unless such holder elected to accrue market discount into income
currently. In general terms, market discount on a Note will be treated as
accruing ratably over the term of such Note, or, at the election of the holder,
under a constant yield method. In addition, a portion of the interest expense
incurred or continued to purchase or carry a Note with market discount may be
deferred unless the holder elects to accrue market discount into income
currently.
The OID Regulations provide for an election whereby a holder on the accrual
basis of accounting may choose to treat all stated interest, original issue
discount, and market discount as original issue discount.
Treatment of Certain Interest. The treatment to a holder of income from an
Original Issue Discount Note may be affected by a provision of the Omnibus
Budget Reconciliation Act of 1989. To the extent this provision applies to an
Original Issue Discount Note and the holder of such Note is a corporation, then
solely for purposes of the deduction allowed by the Code to corporations for
dividends received from a domestic corporation, all or a portion of the original
issue discount from such Note may be treated as a dividend to such holder. For
this provision to apply (i) the maturity date of a debt instrument must be more
than 5 years from the date of issue, (ii) the yield to maturity on such
instrument must equal or exceed the sum of (A) the applicable federal rate in
effect under Section 1274(d) of the Code for the calendar month in which the
obligation is issued, plus (B) 5 percentage points, and (iii) such instrument
must have "significant original issue discount." A debt instrument will be
treated as having "significant original issue discount" if (i) the aggregate
amount which would be includible in gross income with respect to such instrument
for periods before the close of any accrual period ending after the date five
years after the date of issue, exceeds (ii) the sum of (A) the aggregate amount
of interest to be paid under the instrument before the close of such accrual
period, and (B) the product of the issue price of such instrument and its yield
to maturity. For purposes of applying this provision to a debt instrument, any
payment under the instrument will be assumed to be made on
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<PAGE> 22
the last day permitted under such instrument. The specific application of this
provision to an Original Issue Discount Note will depend upon the terms of such
Note.
NON-UNITED STATES HOLDERS
Under present United States federal income and estate tax law, and subject
to the discussion of backup withholding below:
(i) payments of principal and interest, including premium or original
issue discount ("Discount") on an Original Issue Discount Note, made by the
Company or any of its paying agents on a Note to any holder that is a
corporation, individual, fiduciary or partnership that is, as to the United
States, a foreign corporation, a nonresident alien individual, a
nonresident fiduciary of a foreign estate or trust, or a foreign
partnership one or more of the members of which is, as to the United
States, a foreign corporation, a nonresident alien individual or a
nonresident fiduciary of a foreign estate or trust (a "United States
Alien") will not be subject to United States withholding tax, provided that
in the case of Discount or interest, (a) the holder does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote, (b) the holder is not a
controlled foreign corporation that is related to the Company through stock
ownership, (c) the holder is not a bank receiving interest described in
Section 881(c)(3) of the Code, and (d) either (1) the beneficial owner of
the Note certifies to the Company or its agent, under penalties of perjury,
that it is not a United States person (as defined in the Code) and provides
its name and address or (2) a securities clearing organization, bank or
other financial institution that holds customers' securities in the
ordinary course of its trade or business (a "financial institution"), and
holds the Note on behalf of the beneficial owner, certifies to the Company
or its agent, under penalties of perjury, that such a certification from
the beneficial owner has been received by it or by a financial institution
between it and the beneficial owner and furnishes the payor with a copy
thereof,
(ii) a holder of a Note who is a United States Alien will not be
subject to United States federal income tax on gain realized on the sale,
exchange or retirement of the Note, unless (a) such gain is derived within
the United States and such holder is an individual who is present in the
United States for 183 days or more during the taxable year in which the
gain occurred or (b) such gain is effectively connected with a United
States trade or business of such holder; and
(iii) a Note held by an individual who at the time of death is not a
citizen or resident of the United States (as defined in the Code) will not
be subject to United States federal estate tax as a result of such
individual's death if the individual does not actually or constructively
own 10% or more of the total combined voting power of all classes of stock
of the Company entitled to vote and, at the time of the individual's death,
payments with respect to the Note would not have been effectively connected
to the conduct of a trade or business by the individual in the United
States.
If a United States Alien is engaged in a trade or business in the United
States and interest, including Discount, on the Note is effectively connected
with the conduct of such trade or business, the United States Alien, although
exempt from the withholding tax discussed in the preceding paragraph, may be
subject to United States income tax on such interest and Discount in the same
manner as if it were a United States holder. In addition, if such a holder is a
foreign corporation, it may be subject to a branch profits tax equal to 30% of
its effectively connected earnings and profits for the taxable year, subject to
adjustments. For this purpose, interest, including Discount, on a Note will be
included in earnings and profits if such interest and Discount is effectively
connected with the conduct by the United States Alien of a trade or business in
the United States.
Notwithstanding the above, certain contingent interest will be taxable to
non-resident alien individuals and foreign corporations unless such interest is
subject to a treaty exemption. For this purpose, subject to certain exceptions,
interest is deemed to be contingent if the amount of interest is determined by
reference to:
1. any receipts, sales or other cash flow of the Issuer or a related
person;
2. any income or profits of the Issuer or a related person;
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<PAGE> 23
3. any change in value of any property of the Issuer or a related person;
or
4. any dividend, partnership distribution or similar payments made by the
Issuer or a related person.
A "related person" for this purpose includes not only persons who would be
related under the rules of Section 267(b) and Section 707(b)(1) of the Code, but
also anyone who is a party to any arrangement undertaken for a tax avoidance
purpose. In addition, the Internal Revenue Service (the "IRS") may designate in
regulations other types of contingent interest which will fall under the scope
of this law.
Also, a Note providing only for contingent interest will be considered
situated within the United States for estate tax purposes, and will thus be
included in a decedent's gross estate. If a Note provides for both contingent
and non-contingent interest, an appropriate portion of the value of such an
instrument, as determined in a manner prescribed by the IRS, will be treated as
property within the U.S. and will thus be included in a decedent's gross estate.
Until regulations are issued to provide guidance as to the proper method for
determining the appropriate portion of such an instrument that is to be treated
as situated in the United States, taxpayers will be permitted to use any
reasonable method for making such determination.
The exact scope of the law relating to contingent interest Notes remains to
be determined by regulations. Prospective holders of Notes are urged to consult
their personal tax advisors with respect to the scope of the law.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Payments of principal (including Discount, if any) of and any premium and
interest on a Note made within the United States by the Company or the Paying
Agent are generally subject to information reporting and possibly to "backup
withholding" at a rate of 31%. Information reporting and "backup withholding"
generally do not apply to payments to certain "exempt recipients" such as
corporations. Also, information reporting and backup withholding do not apply to
payments of principal (including Discount, if any) of and any premium and
interest on a Note made outside the United States by the Company or the Paying
Agent if the certification described in clause (i) (d) under "Non-United States
Holders" is received, provided in each case that the payor does not have actual
knowledge that the holder is a United States person.
Payment of the proceeds from the sale of a Note to or through a foreign
office of a broker will not be subject to information reporting or backup
withholding, except that, if the broker is a United States person, a controlled
foreign corporation for United States tax purposes or a foreign person 50% or
more of whose gross income is from a United States trade or business,
information reporting and possibly backup withholding will apply to such
payments unless such broker has documentary evidence in its files of the owner's
foreign status and has no actual knowledge to the contrary (or the owner
otherwise establishes an exemption from information reporting and backup
withholding). Payment of the proceeds from the sale of a Note to or through the
United States office of a broker is subject to information reporting and backup
withholding unless the holder or beneficial owner certifies as to its United
States Alien status or otherwise establishes an exemption from information
reporting and backup withholding.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuous basis by the Company through
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, CS
First Boston Corporation, Lehman Brothers Inc. or Salomon Brothers Inc (each an
"Agent" and together the "Agents"). The Company reserves the right to sell Notes
through agents other than the Agents subject to the terms of the Distribution
Agreement between the Company and the Agents. The Company will pay the
applicable Agent a commission which, depending on the maturity of the Notes and
the rating assigned to the Notes by nationally recognized securities rating
agencies, will range from .125% to .925% of the principal amount or, in the case
of an Original Issue Discount Note, the Issue Price of any Note of the Company
sold through such Agent. The Company may sell the Notes to each of the Agents,
as principal, at a discount for their own account or for resale to investors or
other purchases at varying prices related to prevailing market prices at the
time of resale, to be determined by such Agent or, if so agreed, at a fixed
public offering price.
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<PAGE> 24
In addition, the Agents may offer the Notes they have purchased as
principal to other dealers. The Agents may sell Notes to any dealer at a
discount and, unless otherwise specified in an applicable Pricing Supplement,
such discount allowed to any dealer will not be in excess of the discount to be
received by such Agent from the Company. Unless otherwise indicated in an
applicable Pricing Supplement, any Note sold to an Agent as principal will be
purchased by such Agent at a price equal to 100% of the principal amount thereof
less a percentage equal to the commission applicable to any agency sale of a
Note of identical maturity, and may be resold by the Agent to investors and
other purchasers from time to time as described above. After the initial public
offering of Notes to be resold to investors and other purchasers, the public
offering price (in the case of a fixed price public offering), concession and
discount may be changed.
The Company reserves the right to withdraw, cancel or modify the offer made
hereby without notice and, in its sole discretion, may accept or reject orders
in whole or in part whether placed directly with the Company or through an
Agent. Each Agent will have the right, in its discretion reasonably exercised,
to reject any offer to purchase Notes received by it, in whole or in part.
Payment of the purchase price of the Notes will be required to be made in
immediately available funds in The City of New York, on the date of settlement.
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, CS
First Boston Corporation, Shearson Lehman Brothers Inc. and Salomon Brothers Inc
and certain affiliates thereof engage in transactions with and perform services
for the Company and certain of its subsidiaries in the ordinary course of
business.
The Company has agreed to indemnify the Agents against, or to contribute to
payments the Agents may be required to make in respect of, certain civil
liabilities, including liabilities under the Securities Act of 1933, as amended.
The Agents may be deemed to be underwriters within the meaning of such Act. The
Company has agreed to reimburse the Agents for certain expenses. The Agents may
engage in transactions with or perform services for the Company in the ordinary
course of business.
The Agents may from time to time purchase and sell Notes in the secondary
market, but they are not obligated to do so, and there can be no assurance that
there will be a secondary market for the Notes of the Company or liquidity in
the secondary market if one develops. From time to time, the Agents may make a
market in the Notes.
The Company has reserved the right to sell Notes directly to investors in
those jurisdictions where it is authorized to do so.
S-24
<PAGE> 25
PROSPECTUS
TCI COMMUNICATIONS, INC.
DEBT SECURITIES
________________________
TCI Communications, Inc. (the "Company") from time to time may offer its
debentures, notes, bonds or other evidences of indebtedness (the "Debt
Securities") for a maximum aggregate initial offering price of $3 billion (or
the equivalent thereof denominated in one or more foreign currencies, foreign
currency units or composite currencies). The Debt Securities may be offered as
separate series in amounts, at prices and on terms to be determined at the time
of sale and to be set forth in supplements to this Prospectus. The Debt
Securities may be issued in registered form without coupons attached
("Registered Debt Securities"), in bearer form with or without coupons attached
("Bearer Debt Securities") and in the form of one or more global securities
("Global Securities"). See "Description of Debt Securities." Bearer Debt
Securities will be offered only to non-United States persons (subject to certain
exceptions) and to branches, located outside the United States, of certain
United States financial institutions. See "Description of Debt
Securities -- Limitations on Issuance of Bearer Debt Securities". The Company
may sell Debt Securities on a negotiated or competitive bid basis to or through
underwriters or dealers designated from time to time, and also may sell Debt
Securities directly to other purchasers or through agents designated from time
to time. See "Plan of Distribution". Prior to the date of this Prospectus, the
Company sold Debt Securities pursuant to the Registration Statement of which
this Prospectus is a part for an aggregate initial offering price of
$1,135,825,000.
Certain terms of the Debt Securities in respect of which this Prospectus is
being delivered, including, where applicable, the specific designation
(including whether senior, senior subordinated or subordinated), 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 and any specific terms relating to the
adjustment thereof that are in addition to or different from those described
herein, 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, and any other specific terms of the
Debt Securities, will be set forth in a Prospectus Supplement accompanying this
Prospectus (the "Prospectus Supplement"). 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 the Prospectus Supplement related thereto. See "Description of Debt
Securities". The Debt Securities in respect of which this Prospectus is being
delivered are hereinafter referred to collectively as the "Offered Securities".
The terms of the offering and sale of the Offered Securities, including, where
applicable, the name or names of any agents, dealers or underwriters to be
utilized in connection with the offer and sale of the Offered Securities, the
principal amount of Debt Securities to be purchased by underwriters, the
purchase price of the Offered Securities and the proceeds to the Company from
such sale, any applicable commissions, discounts or other items constituting
compensation of such agents or underwriters, any initial public offering price
and any discounts or concessions allowed or reallowed or paid to dealers, will
also be set forth in the accompanying 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 of Debt Securities
unless accompanied by the Prospectus Supplement applicable to the Offered
Securities being sold.
________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
________________________
The date of this Prospectus is September 14, 1994.
<PAGE> 26
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. 33-60982) (together with all amendments and exhibits, referred
to as the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Debt Securities. This Prospectus
does not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. For further information pertaining to the Debt Securities and
the Company, reference is made to the Registration Statement. Statements
contained herein concerning the provisions of any document are not necessarily
complete and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Commission. Reports,
proxy statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549;
Suite 1400, 500 West Madison Street, Chicago, Illinois 60661; and at 7 World
Trade Center, New York, New York 10048; and copies of such material can be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates.
INCORPORATION OF DOCUMENTS BY REFERENCE
The Company hereby incorporates in this Prospectus by reference the
following documents filed by the Company with the Commission (Commission File
No. 0-5550): (i) the Company's Annual Report on Form 10-K for the year ended
December 31, 1993, as amended by Form 10-K/A (Amendment 1), (ii) the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1994, as amended
by Form 10-Q/A (Amendment 1), (iii) the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1994, (iv) the Company's Current Reports on Form
8-K dated February 15, 1994, February 25, 1994, April 6, 1994, May 27, 1994, as
amended by Form 8-K/A (Amendment 1), August 5, 1994, August 18, 1994 and August
26, 1994. 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 statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a Prospectus
is delivered, on the written or oral request of any such person, a copy of any
or all of the documents incorporated by reference herein, other than certain
exhibits to such documents. Such requests should be addressed to Stephen M.
Brett, Esq., Senior Vice President, TCI Communications, Inc., Terrace Tower II,
5619 DTC Parkway, Englewood, Colorado 80111-3000; telephone (303) 267-5500.
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<PAGE> 27
CERTAIN CONSIDERATIONS
The following factors, among others, should be considered carefully before
making an investment decision with respect to any Offered Securities.
Losses. The Company has incurred a net loss in each of the last three
fiscal years and losses from continuing operations in the fiscal years ended
December 31, 1993 and December 31, 1991. The Company had net earnings for the
six-month periods ended June 30, 1994 and 1993. Notwithstanding the losses it
has incurred, the Company has been able to, and expects to continue to be able
to, satisfy its debt service and other obligations as and when they become due.
The Company's operating income before depreciation, amortization and other
non-cash credits or charges ($1,858 million, $1,637 million and $1,430 million
for the years ended December 31, 1993, 1992 and 1991, respectively, and $902
million and $939 million for the six months ended June 30, 1994 and 1993,
respectively) has historically been sufficient to cover the Company's interest
expense ($731 million, $718 million and $826 million for the years ended
December 31, 1993, 1992 and 1991, respectively, and $363 million for each of the
six-month periods ended June 30, 1994 and 1993). The Company's interest coverage
ratio for the years ended December 31, 1993, 1992 and 1991 was 254%, 228%, and
173%, respectively, and for the six months ended June 30, 1994 and 1993 was 248%
and 259%, respectively.
Ratios of Earnings to Fixed Charges. The ratio of earnings to fixed charges
of the Company was 1.02 and 1.22 for the years ended December 31, 1992 and 1993,
respectively, and 1.36 and 1.18 for the six months ended June 30, 1993 and 1994,
respectively. The ratio of earnings to fixed charges was less than 1.00 for the
years ended December 31, 1989, 1990 and 1991; thus, earnings available for fixed
charges were inadequate to cover fixed charges for such periods. The amounts of
the coverage deficiencies were $430 million, $399 million and $177 million for
the years ended December 31, 1989, 1990 and 1991, respectively. For the ratio
calculations, earnings available for fixed charges consist of earnings (losses)
before income taxes plus fixed charges (minus capitalized interest),
distributions from and (earnings) losses of less than 50%-owned affiliates with
debt not guaranteed by the Company (net of earnings not distributed of less than
50%-owned affiliates), and minority interest in earnings (losses) of
consolidated subsidiaries (including an amount representing the pretax earnings
which would be required to cover preferred stock dividend requirements of
consolidated subsidiaries). Fixed charges consist of (i) interest (including
capitalized interest) on debt, excluding interest to 50%-owned affiliates, (ii)
the Company's proportionate share of interest of 50%-owned affiliates, (iii)
that portion of rental expense the Company believes to be representative of
interest (one third of rental expense), (iv) amortization of debt expense, (v)
that portion of minority interest in earnings of consolidated subsidiaries that
represents the amount of pretax earnings that would be required to cover
preferred stock dividend requirements excluding similarly adjusted preferred
stock dividend requirements of consolidated subsidiaries to 50%-owned
affiliates, and (vi) the amount representing the pretax earnings which would be
required to cover preferred stock dividend requirements of 50%-owned affiliates,
other than amounts to the Company. The Company has guaranteed the debt of
certain less than 50%-owned affiliates and certain other entities in which it
has an interest. Fixed charges of $745,000, $710,000, $506,000, $2,517,000 and
$13,833,000 relating to such guarantees for the years ended December 31, 1989,
1990, 1991, 1992 and 1993, respectively, and fixed charges of $1,258,000 and
$5,927,000 relating to such guarantees for the six months ended June 30, 1993
and 1994, respectively, have not been included in fixed charges.
THE COMPANY
The Company is a Delaware corporation incorporated in 1968 with executive
offices at Terrace Tower II, 5619 DTC Parkway, Englewood, Colorado 80111-3000;
telephone (303) 267-5500. Unless the context indicates otherwise and except as
used in the discussion under the captions "Description of Debt Securities", the
"Company" means TCI Communications, Inc. and its consolidated subsidiaries.
The Company or its predecessor companies have been principally engaged in
the acquisition, development and operation of cable television systems since the
early 1950's. The Company believes that, measured by the number of basic
subscribers, it is the largest provider of basic cable television services in
the United States. At June 30, 1994, the Company, through its subsidiaries and
affiliates, operated cable television
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<PAGE> 28
systems throughout the continental United States and Hawaii. Through certain
joint ventures, the Company also has cable television systems and related
investments in the United Kingdom and other parts of Europe.
On August 4, 1994, the Company and Liberty Media Corporation ("Liberty")
each merged (the "Mergers") with separate wholly owned subsidiaries of
TCI/Liberty Holding Company, a new holding company formed by the Company and
Liberty. Under the terms of the respective Mergers, the Company and Liberty were
the surviving corporations. In connection with the Mergers, TCI/Liberty Holding
Company changed its name to Tele-Communications, Inc. and the Company changed
its name to TCI Communications, Inc. As a result of the foregoing, each of the
Company and Liberty is now a wholly owned subsidiary of Tele-Communications,
Inc. The Company remains the sole obligor with respect to all indebtedness
(including Debt Securities) and other obligations of the Company outstanding at
the time the Mergers were consummated and will be the sole obligor with respect
to Debt Securities issued subsequent to the Mergers, and Tele-Communications,
Inc. has not assumed any of such indebtedness or other obligations.
USE OF PROCEEDS
The net proceeds from the sale of the Offered Securities, together with
internally generated funds, may be used to repay, redeem or repurchase
outstanding indebtedness; for general operations, including acquisitions,
capital expenditures and working capital requirements; to repurchase shares of
Tele-Communications, Inc.'s common and preferred stock; or for such other
purposes as may be specified in the Prospectus Supplement. All or a portion of
such proceeds may be advanced to Tele-Communications, Inc. in the form of
dividends or loans and to other affiliates of the Company in the form of loans
or as a contribution to capital. See "Description of Debt Securities".
A description of any indebtedness to be repaid with the proceeds of the
Offered Securities will be set forth in the Prospectus Supplement. The amount of
the Company's future capital expenditures for cable television operations will
be determined by acquisitions of additional cable television systems,
contractual obligations under existing franchises, expansions of existing
systems through rebuilds and upgrades, technological developments and various
other economic factors and market conditions. Specific plans, arrangements or
agreements, written or oral, with respect to any material acquisitions by the
Company by merger or otherwise, or with respect to any material disposition of
assets by the Company, if any, will, to the extent not disclosed in a document
incorporated by reference herein, be disclosed in the Prospectus Supplement.
Pending application of the net proceeds to the foregoing uses, the net
proceeds will be added to working capital and invested in short-term
interest-bearing obligations. Such investments will be subject to fluctuating
interest rates which may be lower than the rates applicable to the Debt
Securities.
The Company may borrow additional funds from time to time from public and
private sources on both a long-term and short-term basis and may sell commercial
paper to fund its future capital and working capital requirements in excess of
internally generated funds. Certain of such borrowings may rank senior in right
of payment to the indebtedness represented by the Debt Securities. See
"Description of Debt Securities".
DESCRIPTION OF DEBT SECURITIES
The Company may offer Debt Securities consisting of Senior Debt Securities,
Senior Subordinated Debt Securities or Subordinated Debt Securities, or any
combination of the foregoing, provided that the aggregate initial offering price
of the Debt Securities offered pursuant to the Registration Statement will not
exceed $3 billion (or the equivalent thereof denominated in one or more foreign
currencies, foreign currency units or composite currencies). Prior to the date
of this Prospectus, the Company sold Debt Securities under the Registration
Statement for an aggregate initial offering price of $1,135,825,000.
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
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<PAGE> 29
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 June 30, 1994, the Company had an aggregate of
approximately $5.85 billion of total Debt (as defined under "Senior Debt
Securities -- Definitions") (including guarantees of indebtedness of others and
the unaccreted portion of indebtedness issued at a discount, but excluding
indebtedness to subsidiaries), substantially all of which would rank on a parity
in right of payment with the Senior Debt Securities. At that date, the Company
also had an aggregate of approximately $198 million in undrawn lines of credit
(excluding amounts related to lines of credit which provide availability to
support commercial paper).
The Company is a holding company and its assets consist primarily of
investments in its subsidiaries. A substantial portion of the consolidated
liabilities of the Company have been incurred by its subsidiaries. Therefore,
the Company's rights and the rights of its creditors, including holders of Debt
Securities, to participate in the distribution of assets of any subsidiary upon
the latter's liquidation or reorganization will be subject to prior claims of
the subsidiary's creditors, including trade creditors, except to the extent that
the Company may itself be a creditor with recognized claims against the
subsidiary (in which case the claims of the Company would still be subject to
the prior claims of any secured creditor of such subsidiary and of any holder of
indebtedness of such subsidiary that is senior to that held by the Company). At
June 30, 1994, the Company's subsidiaries had total Debt of approximately $4.71
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 had an aggregate of
approximately $1.41 billion in undrawn lines of credit.
The Debt Securities will be obligations exclusively of the Company. The
Company's ability to service its indebtedness, including the Debt Securities, is
dependent primarily upon the earnings of its subsidiaries and the distribution
or other payment of such earnings to the Company in the form of dividends, loans
or advances, payment or reimbursement for management fees and expenses, and
repayment of loans and advances from the Company. The subsidiaries are separate
and distinct legal entities and have no obligation, contingent or otherwise, to
pay any amounts due pursuant to the Debt Securities or to make any funds
available therefor, whether by dividends, loans or other payments. The payment
of dividends or the making of loans and advances to the Company by its
subsidiaries may be subject to statutory or regulatory restrictions, are
contingent upon the earnings of those subsidiaries and are subject to various
business considerations. Further, certain of the Company's subsidiaries are
subject to loan agreements that prohibit or limit the transfer of funds by such
subsidiaries to the Company in the form of loans, advances or dividends and
require that such subsidiaries' indebtedness to the Company be subordinate to
the indebtedness under such loan agreements. The amount of net assets of
subsidiaries subject to such restrictions exceeds the Company's consolidated net
assets. Tele-Communications, Inc. is also a separate and distinct legal entity
and it has no obligation, contingent or otherwise, to pay any amounts due
pursuant to the Debt Securities or to make any funds available therefor, whether
by loans or other payments.
The Senior Debt Securities will be issued under an Indenture executed by
the Company and Shawmut Bank Connecticut, National Association, as Trustee,
dated as of July 26, 1993, as amended and supplemented by a First Supplemental
Indenture, dated as of September 13, 1994 (the "SBC Indenture") or under an
Indenture executed by the Company and The Bank of New York, as Trustee, dated as
of August 4, 1993, as amended and supplemented by a First Supplemental
Indenture, dated as of September 13, 1994 (the "BNY Indenture"; and together
with the SBC Indenture, the "Senior Indentures"); the Senior Subordinated Debt
Securities will be issued under an Indenture to be executed by the Company and
Shawmut Bank, N.A., as Trustee (the "Senior Subordinated Indenture"); and the
Subordinated Debt Securities will be issued under an Indenture executed by the
Company and Chemical Bank, as Trustee, dated as of April 1, 1991 (the
"Subordinated Indenture"). In this Prospectus, the SBC Indenture, the BNY
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 SBC Indenture, the Trustee under the BNY
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
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<PAGE> 30
include those stated in the respective Indentures and those made part of the
Indentures by reference to the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"), as in effect on the date of the Indentures. The
Indentures are filed as exhibits to the Registration Statement. The Debt
Securities are subject to all such terms and holders of Debt Securities are
referred to the respective Indentures and the Trust Indenture Act for a
statement of such terms. See "Additional Information".
The following summaries of certain provisions of the Indentures do not
purport to be complete and are subject to, and qualified in their entirety by
reference to, all provisions of the Indentures. As used in this section
"Description of Debt Securities", unless the context indicates otherwise, the
term "Company" means TCI Communications, Inc. and does not include any of its
subsidiaries. All other capitalized terms used in this section and not otherwise
defined have the meanings assigned to them in the Indentures.
GENERAL
The Indentures do not limit the amount of Debt Securities which can be
issued thereunder and provide that Debt Securities may be issued in one or more
series, in such form, with such terms and up to the aggregate principal amount
authorized from time to time by the Company. (Sections 2.01 and 2.02 of the
Indentures)
Reference is made to the Prospectus Supplement for the following terms of
the Offered Securities 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 covenants or
Events of Default that are in addition to or different from those described
herein; and (xii) any other specific terms.
If the purchase price of any Offered Securities is denominated in one or
more foreign currencies, foreign currency units or composite currencies, or if
the principal, premium, if any, and interest on any Offered Securities are
payable in one or more foreign currencies, foreign currency units or composite
currencies, the restrictions, elections, general tax considerations, specific
terms and other information with respect to such Offered Securities and such
foreign currency or currencies or foreign currency unit or units or composite
currencies will be set forth in the applicable Prospectus Supplement.
Debt Securities may be issued under the Indentures as Original Issue
Discount Securities to be sold at a substantial discount below their principal
amount ("original issue discount"). The issue price of Offered Securities that
are Original Issue Discount Securities, the amount of the original issue
discount with respect thereto, the manner and rate or rates per annum (which may
be fixed or variable) at which such original issue discount shall accrue, the
yield to maturity represented thereby, the date or dates from or to which or
period or periods during which such original issue discount shall accrue, the
portion of the principal amount of such Offered Securities that will be payable
upon acceleration of the maturity thereof or upon the optional or mandatory
redemption, purchase or exchange thereof, and any other specific terms thereof
will be described in the Prospectus Supplement relating thereto, together with
special federal income tax and other considerations applicable to such Offered
Securities.
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SENIOR DEBT SECURITIES
The Senior Indentures contain, among others, the following covenants which
will apply to Offered Securities that are Senior Debt Securities unless
otherwise provided in the Prospectus Supplement for such Offered Securities:
Change of Control. With respect to the Senior Debt Securities of any
series, if both (i) a Change of Control shall occur at any time after the date
on which Senior Debt Securities of such series are first issued and on or prior
to a date to be specified for such series in the related Prospectus Supplement
and (ii) on any date during the period commencing 90 days before and ending 90
days after a public filing has been made with the Commission or other general
public disclosure has been made indicating the occurrence of such Change of
Control, the then current rating of the Senior Debt Securities of such series by
Duff & Phelps Credit Rating Co. or its successor ("D&P") or by Moody's Investors
Service, Inc. or its successor ("Moody's") is downgraded to lower than BBB-, in
the case of D&P (or an equivalent successor rating), or lower than Baa3, in the
case of Moody's (or an equivalent successor rating) and, in the event that such
downgrading shall have occurred during the 90-day period prior to such public
disclosure, the rating assigned to such series of Senior Debt Securities by D&P
or Moody's as of the close of business on the date of such public disclosure
remains lower than BBB-or lower than Baa3, respectively (the occurrence of the
conditions specified in both (i) and (ii) above being a "Put Event"), then each
holder of Senior Debt Securities of such series shall have the right to require
the Company to repurchase all or any portion of such holder's Senior Debt
Securities of such series at a purchase price equal to 100% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of purchase
(or if the Senior Debt Securities of such series are Original Issue Discount
Securities, 100% of that portion of the principal amount specified in the terms
of that series that would be payable if the maturity thereof were accelerated
pursuant to the Indenture), all as provided in, and subject to the terms of, the
Senior Indentures, as either of such Senior Indentures may be supplemented in
connection with the issuance of Senior Debt Securities of such series
thereunder. Subsequent to the occurrence of a Put Event, the Company will give a
notice to each holder of Senior Debt Securities of such series setting forth,
among other things, details regarding the right of such holder to require the
Company to repurchase such holder's Senior Debt Securities of such series, the
purchase date, and the name and address of the Paying Agent (which for this
purpose will, in the case of Registered Securities, be the Trustee and, in the
case of Bearer Securities, will be a Paying Agent in a place of payment located
outside the United States) to which such Senior Debt Securities are to be
presented and surrendered. The Company will not be obligated, with respect to
the Senior Debt Securities of any series, to purchase such Senior Debt
Securities or give notice to the holders thereof with respect to more than one
Put Event. (Section 4.02 of the Senior Indentures) The obligation of the Company
to purchase Senior Debt Securities put to it pursuant to this covenant will rank
senior to its obligations in respect of the Senior Subordinated Debt Securities
and the Subordinated Debt Securities. The applicability of this covenant is
limited to the circumstances described above and this covenant is not designed
to, and may not, provide rights to the holders of Senior Debt Securities in all
circumstances in which the market value of the Senior Debt Securities held by
them may be adversely affected, whether as the result of the Company's engaging
in a highly leveraged transaction or otherwise.
The Company will comply with any applicable requirements of Rule 14e-1
promulgated under the Exchange Act and any applicable securities laws and
regulations in connection with the performance of its obligations under this
covenant.
Limitation on Liens. Subject to certain specified exceptions, as long as
any Senior Debt Securities of a series entitled to the benefit of this covenant
are outstanding, the Company will not, and will not permit any Restricted
Subsidiary to, create, incur or assume any Lien on Restricted Property to secure
the payment of Funded Debt of the Company or any Restricted Subsidiary if
immediately after the creation, incurrence or assumption of such Lien, the
aggregate outstanding principal amount of all Funded Debt of the Company and the
Restricted Subsidiaries that is secured by Liens on Restricted Property would
exceed fifteen percent (15%) of the Maximum Funded Debt Amount, unless effective
provision is made whereby the Senior Debt Securities (together with, if the
Company shall so determine, any other Funded Debt ranking equally with the
Senior Debt Securities, whether then existing or thereafter created) are secured
equally and ratably with (or
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prior to) such Funded Debt (but only for so long as such Funded Debt is so
secured). (Section 4.04 of the Senior Indentures)
Limitation on Restricted Subsidiary Funded Debt. As long as any Senior Debt
Securities of a series entitled to the benefit of this covenant are outstanding,
the Company will not permit any Restricted Subsidiary to incur or assume any
Funded Debt if immediately after the incurrence or assumption of such Funded
Debt, the aggregate outstanding principal amount of all Funded Debt of the
Restricted Subsidiaries would exceed fifteen percent (15%) of the Maximum Funded
Debt Amount. Notwithstanding the foregoing, any Restricted Subsidiary may incur
Funded Debt to extend, renew or replace Funded Debt of such Restricted
Subsidiary, provided that the principal amount of the Funded Debt so incurred
does not exceed the principal amount of the Funded Debt extended, renewed or
replaced thereby immediately prior to such extension, renewal or replacement
plus any premium, accrued and unpaid interest or capitalized interest payable
thereon. (Section 4.05 of the Senior Indentures). The Senior Indentures do not
limit the incurrence of Funded Debt, or any other debt, secured or unsecured, by
the Company, except as described under "Limitation on Liens", or by any
Unrestricted Subsidiary.
Designation of Restricted Subsidiaries. With respect to the Senior Debt
Securities of any series, the Company may designate an Unrestricted Subsidiary
as a Restricted Subsidiary or designate a Restricted Subsidiary as an
Unrestricted Subsidiary at any time, provided that (1) immediately after giving
effect to such designation, the Leverage Ratio of the Restricted Group is not
greater than 8.0:1 and the Company and the Restricted Subsidiaries are in
compliance with the "Limitation on Liens" and "Limitation on Restricted
Subsidiary Funded Debt" covenants, and (2) an Officers' Certificate with respect
to such designation is delivered to the Trustee within 75 days after the end of
the fiscal quarter of the Company in which such designation is made (or, in the
case of a designation made during the last fiscal quarter of the Company's
fiscal year, within 120 days after the end of such fiscal year), which Officers'
Certificate shall state the effective date of such designation. The Company
shall make the initial designation of Restricted Subsidiaries with respect to
the Senior Debt Securities of any series, and deliver the required Officers'
Certificate with respect thereto to the Trustee, on or prior to the date of
initial issuance of Senior Debt Securities of such series. (Section 4.03 of the
Senior Indentures)
Definitions. The following are certain of the terms defined in each of the
Senior Indentures (Section 1.01):
"Change of Control" means the occurrence of either of the following events
(to the extent applicable): (A) the acquisition by any person (other than the
Parent, the Company, any subsidiary of the Parent or the Company, any employee
stock ownership or other employee benefit plan of the Parent or the Company or
of any subsidiary of the Parent or the Company, or any Controlling Person)
during any period of twelve (12) consecutive months of beneficial ownership of
shares of the Common Stock or Class B Stock or both of the Company representing
in the aggregate thirty percent (30%) or more of the combined voting power of
all shares of the Company's Common Stock and Class B Stock, calculated on a
fully diluted basis as of the date immediately prior to the date of such
acquisition (or, if there be more than one acquisition during such twelve-month
period, the date of the last such acquisition); provided, however, that
notwithstanding the foregoing, no Change of Control shall be deemed to have
occurred if and for so long as the shares of the Common Stock and Class B Stock
of the Company beneficially owned by the Parent, the subsidiaries of the Parent
and the Controlling Persons represent in the aggregate 30% or more of the
combined voting power of all shares of the Company's Common Stock and Class B
Stock calculated on a fully diluted basis, or (B) for so long as the Company is
a subsidiary of the Parent, the acquisition by any person (other than the
Parent, any subsidiary of the Parent, any employee stock ownership plan or other
employee benefit plan of the Parent or any subsidiary of the Parent, or any
Controlling Person) during any period of twelve (12) consecutive months of
beneficial ownership of shares of the Class A or Class B Common Stock or both of
the Parent representing in the aggregate thirty percent (30%) or more of the
combined voting power of all shares of the Parent's Class A and Class B Common
Stock, calculated on a fully diluted basis as of the date immediately prior to
the date of such acquisition (or, if there be more than one acquisition during
such twelve-month period, the date of the last such acquisition); provided,
however, that notwithstanding the foregoing no Change of Control shall be deemed
to have occurred if and for so long as the shares of the Parent's Class A and
Class B Common Stock
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beneficially owned by the Controlling Persons represent in the aggregate 30% or
more of the combined voting power of all shares of the Parent's Class A and
Class B Common Stock calculated on a fully diluted basis.
"Company" means TCI Communications, Inc., a Delaware corporation, until a
successor replaces it pursuant to the applicable provisions of the applicable
Indenture and thereafter means the successor.
"Controlling Person" means each of (1) the Chairman of the Board of the
Company as of the date the applicable Indenture was first executed, (2) the
President of the Company as of the date the applicable Indenture was first
executed, (3) each of the directors of the Company as of the date the applicable
Indenture was first executed, (4) the respective family members, estates and
heirs of each of the persons referred to in clauses (1) through (3) above and
any trust or other investment vehicle for the primary benefit of any of such
persons or their respective family members or heirs, (5) Kearns-Tribune
Corporation, a Delaware corporation or any successor thereto by merger or
consolidation and (6) the trustee under the Parent's Employee Stock Purchase
Plan or any successor plan or any other employee stock ownership or other
employee benefit plan of the Parent or the Company or of any subsidiary of the
Parent or the Company. As used with respect to any person, the term "family
member" means the spouse, siblings and lineal descendants of such person. The
trustee under the Parent's Employee Stock Purchase Plan or any successor plan or
any other employee stock ownership or other employee benefit plan of the Parent
or the Company or of any subsidiary of the Parent or the Company shall be deemed
to have beneficial ownership of all shares of common stock of the Parent or the
Company held under the plan, whether or not allocated to or vested in
participants' accounts.
"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.
"Funded Debt" of any person means, as of the date as of which the amount
thereof is to be determined, without duplication, all indebtedness of such
person for borrowed money and all guaranties by such person of any indebtedness
of others for borrowed money, which by its terms has a final maturity, duration
or payment date more than one year from the date of determination thereof
(including, without limitation, any balance of such indebtedness which was
Funded Debt at the time of its creation maturing within one year from such date
of determination) or which has a final maturity, duration or payment date within
one year from such date of determination but which by its terms may be renewed
or extended at the option of such person for more than one year from such date
of determination, whether or not theretofore renewed or extended. When used with
respect to the Company or any Restricted Subsidiary, the term "Funded Debt"
excludes (1) any indebtedness of the Company or any Restricted Subsidiary to the
Company or another Restricted Subsidiary, (2) any guarantee by the Company or
any Restricted Subsidiary of indebtedness of the Company or another Restricted
Subsidiary, provided that such guarantee is not secured by a Lien on Restricted
Property, and (3) with respect to any series of Senior Debt Securities, any
indebtedness of the Company or any Restricted Subsidiary to any Unrestricted
Subsidiary which indebtedness is subordinated in right of payment to the prior
payment in full of the outstanding Senior Debt Securities of such series on
terms no less favorable to the holders of such Senior Debt Securities than those
contained in Article Ten of the Subordinated Indenture pursuant to which
Subordinated Debt Securities issued by the Company are subordinated to all
Senior Debt of the Company (as defined therein), without giving effect to any
amendment, modification or supplement to, or discharge of, the Subordinated
Indenture after the date of the Senior Indenture, and which indebtedness is not
secured by a Lien on Restricted Property. For purposes of determining the
outstanding principal amount of Funded Debt at any date, the amount of
indebtedness issued at a price less than the principal amount thereof shall be
equal to the amount of the liability in respect thereof at such date determined
in accordance with generally accepted accounting principles.
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"Leverage Ratio" with respect to the Restricted Group means, as of the date
of and after giving effect to any designation of an Unrestricted Subsidiary as a
Restricted Subsidiary and/or any designation of a Restricted Subsidiary as an
Unrestricted Subsidiary, in each case in accordance with the "Designation of
Restricted Subsidiaries" covenant, the ratio of (1) the aggregate outstanding
principal amount of all Funded Debt of the Restricted Group as of such date to
(2) the product of four times the Restricted Group Cash Flow for the most recent
full fiscal quarter for which financial information is available on such date.
"Lien" means any mortgage, pledge, lien, security interest, or other
similar encumbrance.
"Maximum Funded Debt Amount" means, as of any date of determination
thereof, that amount which is equal to the product of (i) eight and (ii) the
product of (x) the Restricted Group Cash Flow for the most recent full fiscal
quarter for which financial information is available on such date and (y) four.
"Parent" means Tele-Communications, Inc., a Delaware corporation, and any
successor thereof.
"Principal Property" means, as of any date of determination, any property
or assets owned by any Restricted Subsidiary other than (1) any such property
which, in the good faith opinion of the Board of Directors, is not of material
importance to the business conducted by the Company and its Restricted
Subsidiaries taken as a whole and (2) any shares of any class of stock or any
other security of any Unrestricted Subsidiary.
"Restricted Group" means, as of any date of determination, the Company and
the Restricted Subsidiaries as of such date after giving effect to any
designation being made on such date in accordance with the "Designation of
Restricted Subsidiaries" covenant.
"Restricted Group Cash Flow" for any period means the Restricted Group Net
Income (as defined below) for such period, plus (A) the sum (without
duplication) of the aggregate of each of the following items of the Company and
the Restricted Subsidiaries for such period to the extent taken into account as
charges to Restricted Group Net Income for such period: (i) interest expense,
(ii) income tax expense, (iii) depreciation and amortization expense and other
noncash charges, (iv) extraordinary items and (v) after-tax losses on sales of
assets outside of the ordinary course of business not otherwise included in
extraordinary items in accordance with generally accepted accounting principles,
minus (B) the sum (without duplication) of the aggregate of each of the
following items of the Company and the Restricted Subsidiaries for such period
to the extent taken into account as credits to Restricted Group Net Income for
such period: (i) noncash credits, (ii) extraordinary items, and (iii) after-tax
gains on sales of assets outside of the ordinary course of business not
otherwise included in extraordinary items in accordance with generally accepted
accounting principles.
For purposes of this definition, (1) "Restricted Group Net Income" for any
period means the aggregate of the net income (loss) for such period of the
Company and the Restricted Subsidiaries, determined on a consolidated basis in
accordance with generally accepted accounting principles; provided, however,
that (i) the net income (loss) of any person accounted for by the equity method
of accounting and the net income (loss) of any Unrestricted Subsidiary shall be
excluded, except that the net income of any such person or Unrestricted
Subsidiary shall be included to the extent of the amount of dividends or
distributions paid by such person or Unrestricted Subsidiary to the Company or a
Restricted Subsidiary during such period, and (ii) except as otherwise provided
in clause (2) below, the net income (loss) of any other person acquired by the
Company or any Restricted Subsidiary in a transaction accounted for as a pooling
of interests for any period prior to the date of such acquisition shall be
excluded; and (2) if the Company or any Restricted Subsidiary consummated any
acquisition or disposition of assets during the period for which Restricted
Group Cash Flow is being calculated, or consummated any acquisition or
disposition of assets subsequent to such period and on or prior to the date as
of which the Leverage Ratio or Maximum Funded Debt Amount, as applicable, is to
be determined, then, in each such case, the Restricted Group Cash Flow for such
period shall be calculated on a pro forma basis as if such acquisition or
disposition had occurred at the beginning of such period.
"Restricted Property" means, as of any date of determination, any Principal
Property and any shares of stock of a Restricted Subsidiary owned by the Company
or a Restricted Subsidiary.
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"Restricted Subsidiary" means, as of any date of determination, a
corporation a majority of whose voting stock is owned by the Company and/or one
or more Restricted Subsidiaries, which corporation has been, or is then being,
designated a Restricted Subsidiary in accordance with the "Designation of
Restricted Subsidiaries" covenant, unless and until designated an Unrestricted
Subsidiary in accordance with such covenant.
"Subsidiary" means a corporation a majority of whose voting stock is owned
by the Company and/or one or more Subsidiaries. Voting stock is capital stock
having voting power under ordinary circumstances to elect directors.
"Unrestricted Subsidiary" means, as of any date of determination, any
Subsidiary of the Company that is not a Restricted Subsidiary.
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 Indenture)
The Indenture for the Senior Debt Securities contains a cross-acceleration
provision that would, among other things, permit the acceleration of the
maturity of any outstanding Senior Debt Securities in the event that the
maturity of any outstanding Senior Subordinated Debt Securities or Subordinated
Debt Securities were accelerated. See "Defaults and Remedies" below. The
instruments and agreements pursuant to which all or substantially all of the
Company's Senior Debt has been incurred also contain cross-default or cross-
acceleration provisions.
Securities Senior to Junior Subordinated Debt. The indebtedness evidenced
by the Senior Subordinated Debt Securities will be superior in right of payment
to all Junior Subordinated Debt as described below. Upon maturity (by
acceleration or otherwise) of the Senior Subordinated Debt Securities of any
series, payment in full must be made thereon, or duly provided for, before any
payment is made on or in respect of any Junior Subordinated Debt (except
payments made in capital stock of the Company or in warrants, rights or options
to
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<PAGE> 36
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 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 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 Indenture)
Definitions. The following are certain of the terms defined in the
Indenture (Sections 4.06 and 10.01):
"Junior Subordinated Debt" means the principal of (premium, if any) and
interest on Debt of the Company created or incurred after the date of the
Indenture which by its terms is subordinate in right of payment to the Senior
Subordinated Debt Securities, including any Subordinated Debt Securities issued
under the Subordinated Indenture.
"Senior Debt" means the principal of (premium, if any) and interest on Debt
of the Company outstanding at any time other than (i) the Senior Subordinated
Debt Securities, (ii) the Company's outstanding 11 1/8% senior subordinated
debentures due October 1, 2003, which shall rank pari passu with the Senior
Subordinated Debt Securities, (iii) any Subordinated Debt Securities issued
under the Subordinated Indenture, and (iv) Debt which by its terms is not
superior in right of payment to the Senior Subordinated Debt Securities.
The definition of "Debt" in the Senior Subordinated Indenture is the same
as that in the Senior Indenture.
Nothing in the Indenture affords holders of Senior Subordinated Debt
Securities protection in the event of a highly leveraged transaction,
reorganization, restructuring, merger or similar transaction involving the
Company.
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
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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 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). The
Indenture for the Senior Debt Securities contains a cross-acceleration provision
that would, among other things, permit the acceleration of the maturity of any
outstanding Senior Debt Securities in the event that the maturity of any
outstanding Senior Subordinated Debt Securities or Subordinated Debt Securities
were accelerated. See "Defaults and Remedies" below. The instruments and
agreements pursuant to which all or substantially all of the Company's Senior
Debt has been incurred also contain cross-default or cross-acceleration
provisions.
"Senior Debt" means the principal of (premium, if any) and interest on Debt
of the Company outstanding at any time other than (i) the Subordinated Debt
Securities, and (ii) Debt which by its terms is not superior in right of payment
to the Subordinated Debt Securities. The definition of "Debt" in the
Subordinated Indenture is the same as that in the Senior Indenture.
Nothing in the Indenture affords holders of Subordinated Debt Securities
protection in the event of a highly leveraged transaction, reorganization,
restructuring, merger or similar transaction involving the Company.
DENOMINATIONS 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 SBC, Senior Subordinated and Subordinated Indentures and
Sections 2.01 and 2.03 of the BNY Indenture) Under the BNY 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 BNY Indenture provides that Debt Securities may be denominated or payable in
one or more foreign currencies, foreign currency units or composite currencies.
(Sections 2.01 and 2.02 of the BNY 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 BNY 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 BNY
Indenture) 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
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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
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") and an office or agency where Debt Securities of each
series may be presented for payment ("Paying Agent"). The Company may have one
or more co-Registrars and one or more additional Paying 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. 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. The Company may change any Paying Agent, Registrar or
co-Registrar at any time without notice to the holders of Debt Securities,
except as described below with respect to Debt Securities issued under the BNY
Indenture. The Company will promptly notify the Trustee of the name and address
of any such Agent. (Section 2.05 of the Indentures)
The BNY Indenture also provides that if Debt Securities of a series are
issuable as Bearer Debt Securities, the Company will maintain (i) in the Borough
of Manhattan, The City of New York, an office or agency where any Registered
Debt Securities of that series may be presented or surrendered for payment and
for registration of transfer, where Debt Securities of that series may be
surrendered for exchange and where Bearer Debt Securities of that series and
related coupons may be presented or surrendered for payment in the circumstances
described under "Payment" below, and (ii) subject to any laws or regulations
applicable thereto, in a place of payment for Debt Securities of that series
located outside the United States, an office or agency where any Registered Debt
Securities of that series may be surrendered for registration of transfer, where
Debt Securities of that series may be surrendered for exchange and where Debt
Securities of that series and any related coupons may be presented and
surrendered for payment, provided that if the Debt Securities of that series are
listed on The International Stock Exchange of the United Kingdom and the
Republic of Ireland, the Luxembourg Stock Exchange or any other stock exchange
located outside the United States and such stock exchange shall so require, the
Company will maintain a Paying Agent for the Debt Securities of that series in
London, Luxembourg or any other required city located outside the United States,
as the case may be, so long as the Debt Securities of that series are listed on
such exchange. Any Paying Agents outside the United States initially designated
by the Company for the Offered Securities will be named in the applicable
Prospectus Supplement. The Company will promptly notify the Trustee and the
holders of 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 BNY 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 BNY 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 BNY Indenture. Unless otherwise specified in the
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applicable Prospectus Supplement, Bearer Debt Securities will not be issued in
exchange for Registered Debt Securities. (Section 2.08 of the BNY 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 BNY 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 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 BNY Indenture)
The SBC 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 SBC, the
Senior Subordinated and the Subordinated Indentures) The BNY 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 BNY Indenture)
Prior to due presentment of a Registered Debt Security for registration of
transfer, the person in whose name such Registered Debt Security is registered
may be treated as the owner of it for all purposes. (Section 2.14 of the
Indentures) The bearer of any Bearer Debt Security and the bearer of any coupon
appertaining thereto may be treated as the owner of such Bearer Debt Security or
coupon for all purposes. (Section 2.14 of the BNY Indenture)
GLOBAL SECURITIES
The BNY Indenture provides 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 either registered or bearer
form and in either temporary or permanent form. (Sections 2.10 and 2.11 of the
BNY Indenture) 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 BNY Indenture) 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 BNY
Indenture) 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
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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 BNY Indenture)
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 BNY Indenture. Further, if so specified by the Company with respect to the
Debt Securities of a series and described in the applicable Prospectus
Supplement, an owner of a beneficial interest in a Global Security representing
Debt Securities of such series may, on terms acceptable to the Company and the
depositary for such Global Security, receive Debt Securities of such series in
definitive form. In any such instance, an owner of a beneficial interest in a
Global Security will be entitled to physical delivery in definitive form of Debt
Securities in authorized denominations and of like tenor of the series
represented by such Global Security, equal in principal amount to such
beneficial interest, and to have such Debt Securities registered in its name (if
the Debt Securities of such series are issuable as Registered Debt Securities).
(Section 2.08 of the BNY Indenture) 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 BNY 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 interests 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 a 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 BNY Indenture)
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.
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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 Regulation Section 1.163-5(c)(2)(i)(D)(7), in the United
States or its possessions or to United States persons (each as defined below)
other than to (i) a Qualifying Foreign Branch of a United States Financial
Institution (as defined below), (ii) a United States person who acquires and
holds the obligation through the Qualifying Foreign Branch of a United States
Financial Institution, (iii) a United States office of an "exempt distributor",
as defined in Treasury Regulation section 1.163-5(c) (2)(i)(D)(5), (iv) the
United States office of an international organization, as defined in Section
7701(a)(18) of the Internal Revenue Code of 1986, as amended (the "Code") and
the regulations thereunder, or (v) the United States office of a foreign central
bank, as defined in Section 895 of the Code and the regulations thereunder. In
addition, Bearer Debt Securities may not be delivered within the United States
or its possessions in connection with a sale that occurred during the restricted
period. Any underwriters, agents and dealers participating in the offering of
Offered Securities must agree that they will not offer any Bearer Debt
Securities for sale or resale in the United States or its possessions or to
United States persons (other than a person specified in clause (i), (ii), (iii),
(iv) or (v) above) or deliver Bearer Debt Securities within the United States or
its possessions. The term "Qualifying Foreign Branch of a United States
Financial Institution" means a branch located outside the United States of a
United States financial institution (as defined in Treasury Regulation Section
1.165-12(c)(1)(v)) that provides a certificate within a reasonable time (or a
blanket certificate in the year the Debt Security is issued or either of the
preceding two calendar years) stating that it agrees to comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the Code and the regulations
thereunder. The term "United States person" means a citizen or resident of the
United States, a corporation, partnership or other entity created or organized
in or under the laws of the United States or any political subdivision thereof
and an estate or trust the income of which is subject to United States federal
income taxation regardless of its source; 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)(l)(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 BNY 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 BNY Indenture) The BNY 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 BNY
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
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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.
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 BNY 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 BNY
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 BNY 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 BNY Indenture, by wire transfer to an
account designated by such person. Payment of any installment of interest on
Registered Debt Securities will be made to the person in whose name such
Registered Debt Security is registered at the close of business on the regular
record date (or, in the case of defaulted interest, special record date) for
such interest payment. (Section 2.13 of the Indentures)
All moneys paid by the Company to a Paying Agent for the payment of
principal of or any premium or interest on any Debt Security which remain
unclaimed at the end of two years after such principal, premium or interest
shall have become due and payable will be repaid to the Company and the holder
of such Debt Security or any coupon appertaining thereto will thereafter look
only to the Company for payment thereof unless an applicable abandoned property
law designates another person. (Section 8.03 of the Indentures)
AMENDMENT, SUPPLEMENT, WAIVER
Subject to certain exceptions, the Indentures or the Debt Securities may be
amended or supplemented, and any past default or compliance with any provision
may be waived, insofar as the Debt Securities of any series are concerned, with
the consent of the holders of a majority in aggregate principal amount of the
outstanding Debt Securities of such series. (Sections 6.04 and 9.02 of the
Indentures) Without the consent of any holder of Debt Securities, the Company
and the Trustee may amend or supplement the Indentures or the Debt Securities to
cure any ambiguity, defect or inconsistency, to permit or facilitate the
issuance of Debt Securities in bearer form or to provide for uncertificated Debt
Securities in global form in addition to certificated Debt Securities (so long
as any "registration-required obligation" within the meaning of Section
163(f)(2) of the Code, is in registered form for purposes of the Code) or to
make certain other specified changes or any change that does not materially
adversely affect the rights of any holder of Debt Securities. (Section 9.01 of
the Indentures)
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SUCCESSOR CORPORATION
The Company may not consolidate with or merge into, or transfer its
properties and assets substantially as an entirety to, another corporation
unless (i) the successor corporation, which shall be a corporation organized
under the laws of the United States or a State thereof, assumes by supplemental
indenture all the obligations of the Company under the Debt Securities and the
Indentures, and (ii) after giving effect to such transaction, no Event of
Default shall have occurred and be continuing. Thereafter, unless otherwise
specified in the Prospectus Supplement, all such obligations of the Company
terminate. (Section 5.01 of the Indentures)
DEFAULTS AND REMEDIES
An Event of Default with respect to Debt Securities of any series is: (i)
default for 30 days in payment of any interest on the Debt Securities of that
series; (ii) default in payment of principal, premium or any other amount (other
than interest) due in respect of the Debt Securities of that series at maturity,
upon redemption (including default in the making of any mandatory sinking fund
payment), upon purchase by the Company at the option of the holder or otherwise;
(iii) failure by the Company for 30 days after receipt of written notice as
provided in the Indentures to comply with any of its other agreements in the
Indentures (other than agreements expressly included in the Indentures solely
for the benefit of a series of Debt Securities other than that series or
expressly made inapplicable to the Debt Securities of such series) or the Debt
Securities of that series; (iv) (for purposes of the Senior Indentures only)
acceleration of the maturity of any Debt of the Company (including Senior Debt
Securities of any other series) if the aggregate principal amount (or, if
applicable, issue price plus accrued original issue discount) of the Debt the
maturity of which has been accelerated exceeds five percent (5%) of the
aggregate principal amount of the Company's Funded Debt then outstanding and
such Debt is not paid, or such acceleration is not rescinded or annulled or such
acceleration is not contested by appropriate proceedings and all consequences
thereof that would have a material adverse effect on the Company stayed, within
30 days after receipt of written notice as provided in the SBC Indenture or the
BNY Indenture, as applicable; provided, however, that if, after the expiration
of such 30-day period, the event of default that resulted in the acceleration of
the maturity of such Debt of the Company is remedied or cured by the Company or
waived by the holders of such Debt in any authorized manner or otherwise ceases
to exist, then the Event of Default described in this clause (iv) resulting from
such acceleration will be deemed cured and not continuing; and (v) certain
events of bankruptcy or insolvency. (Section 6.01 of the Indentures) If an Event
of Default occurs with respect to the Debt Securities of any series and is
continuing, the Trustee or the holders of at least 25% in aggregate principal
amount of the Debt Securities of that series may declare to be due and payable
immediately (i) the principal amount of that series (or, if the Debt Securities
of that series are Original Issue Discount Securities, that portion of the
principal amount specified in the terms of that series) and (ii) accrued
interest, if any, thereon. The Indentures provide for automatic acceleration of
the maturity of such amounts upon the occurrence of certain events of bankruptcy
or insolvency. (Section 6.02 of the Indentures) The Senior Indentures provide
that a declaration of acceleration of the maturity of the Senior Debt Securities
of any series as a result of an Event of Default described in clause (iv) above
will be automatically annulled if (x) the acceleration of the Debt that is the
subject of such Event of Default is declared void ab initio as a result of the
Company's contest thereof or (y) the declaration of acceleration of such Debt is
rescinded or annulled in any manner authorized by the instrument evidencing or
creating such Debt within 90 days of the declaration of acceleration of the
Senior Debt Securities of such series and, in the case of clause (y), the
annulment of the declaration of acceleration under the SBC Indenture or the BNY
Indenture, as applicable, would not conflict with any judgment or decree, and,
in the case of either clause (x) or (y), all other existing Events of Default
(other than the non-payment of amounts that have become due with respect to such
Senior Debt Securities solely by such acceleration) with respect to Senior Debt
Securities of that series have been cured or waived. (Section 6.02 of the Senior
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
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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 Indentures 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 11.11 of the Senior
Indentures and Section 12.11 of the Senior Subordinated and Subordinated
Indentures)
SATISFACTION AND DISCHARGE
The Company's obligations under the Debt Securities of any series and the
applicable Indenture with respect to such series (except for the obligation to
pay the principal of and premium and interest, if any, on the Debt Securities of
such series and certain other specified obligations) will be satisfied and
discharged in accordance with the provisions of the Indenture if either (i) all
Debt Securities of such series and coupons, if any, appertaining thereto
previously authenticated and delivered (other than destroyed, lost or
wrongfully-taken Debt Securities or coupons which have been replaced or paid,
Debt Securities or coupons for whose payment money has theretofore been held in
trust and, after remaining unclaimed for two years, has been repaid to the
Company, and certain coupons appertaining to Bearer Securities surrendered for
exchange, redemption or purchase) have been delivered to the Trustee for
cancellation or (ii) the Company irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations (or, in the case of the BNY Indenture,
Government Obligations) sufficient to pay the principal of and premium and
interest, if any, on all Debt Securities of such series and coupons, if any,
appertaining thereto not theretofore cancelled or delivered to the Trustee for
cancellation (other than Debt Securities and coupons referred to in the
parenthetical in clause (i) above) to maturity or redemption, as the case may
be. (Section 8.01 of the Indentures)
THE TRUSTEES
The Bank of New York acts as depository for funds of, makes loans to, and
performs other services for the Company and certain of its affiliates in the
normal course of business and acts as trustee with respect to certain
outstanding senior indebtedness of the Company. The Bank of New York serves as
transfer agent and registrar for Tele-Communications, Inc.'s Class A and Class B
Common Stock and Class B 6% Cumulative Redeemable Exchangeable Junior Preferred
Stock. John C. Malone, President and a director of the Company, is a director of
The Bank of New York.
Shawmut Bank Connecticut, National Association (formerly known as The
Connecticut National Bank) has loaned funds to a subsidiary of the Company, acts
as trustee with respect to certain outstanding indebtedness of a subsidiary of
the Company and acts as trustee with respect to certain outstanding senior
indebtedness of the Company. Shawmut Bank, N.A. is an affiliate of Shawmut Bank
Connecticut, National Association and acts as trustee with respect to the
Company's outstanding 11 1/8% senior subordinated debentures due October 1,
2003. Shawmut Bank Connecticut, National Association or Shawmut Bank, N.A. may
loan money or perform other services for the Company or its subsidiaries in the
future.
Chemical Bank has loaned funds to certain subsidiaries of the Company and
performs other services for the Company and certain of its subsidiaries in the
normal course of business.
Each of the Trustees 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 are exhibits to the Registration Statement. Anyone who
receives this Prospectus may obtain copies of the Indentures without charge by
writing to Stephen M. Brett, Esq., Senior Vice President of the Company, at the
address set forth under "The Company". The foregoing summaries of certain
provisions of the
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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.
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities on a negotiated or competitive
bid basis 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 Offered Securities are offered on a competitive bid basis, the Company
will receive bids by telephone or otherwise prior to a designated time. Each bid
will be required to be made for all Offered Securities and the Company will
reserve the right to reject all bids. In the case of Debt Securities offered
alone or with Warrants, if any bid is accepted, the Company will accept the
qualified bid which in its sole and final determination will result in the
lowest annual cost of money to it for the Offered Securities. No underwriter
will be entitled to submit or participate as a bidder in more than one bid.
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. Such
underwriters may include Bear, Stearns & Co. Inc., Citicorp Securities Markets,
Inc., Donaldson, Lufkin & Jenrette Securities Corporation, The First Boston
Corporation, Furman & Selz, Goldman, Sachs & Co., Lehman Brothers, Shearson
Lehman Brothers Inc. (including Lehman Special Securities Inc.), Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated,
Oppenheimer & Co., Inc., PaineWebber Incorporated or Salomon Brothers Inc, or
may be a group of underwriters represented by firms including one or more of
such firms.
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
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<PAGE> 46
offering price set forth in the Prospectus Supplement pursuant to delayed
delivery 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.
Such contracts will be subject only to those conditions set forth in the
Prospectus Supplement and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
Agents, underwriters and dealers may be entitled under agreements entered
into with the Company 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
Certain legal matters with respect to the Debt Securities offered hereby
will be passed upon for the Company by Baker & Botts, L.L.P., 885 Third Avenue,
New York, New York 10022-4834. Jerome H. Kern, a partner of Baker & Botts,
L.L.P. is a director of Tele-Communications, Inc. Mr. Kern holds options to
purchase shares of Tele-Communications, Inc. Class A Common Stock. In addition,
certain partners of Baker & Botts, L.L.P. serve as Assistant Secretaries of
Tele-Communications, Inc.
EXPERTS
The consolidated balance sheets of the Company and subsidiaries as of
December 31, 1993 and 1992, and the related consolidated statements of
operations, stockholders' equity, and cash flows for each of the years in the
three-year period ended December 31, 1993, and the related financial statement
schedules, which appear in the Company's Annual Report on Form 10-K for the year
ended December 31, 1993, as amended, have been incorporated by reference herein
in reliance upon the reports, dated March 21, 1994, of KPMG Peat Marwick LLP,
independent auditors, incorporated by reference herein, and upon the authority
of said firm as experts in auditing and accounting.
The consolidated balance sheets of Liberty Media Corporation and
subsidiaries as of December 31, 1993 and 1992, and the related consolidated
statements of operations, stockholders' equity, and cash flows for the years
December 31, 1993 and 1992 and the period from April 1, 1991 to December 31,
1991 and the consolidated statements of operations, stockholders' equity, and
cash flows of "Liberty Media" (a combination of certain programming interests
and cable television assets of the Company) for the period from January 1, 1991
to March 31, 1991, which appear in the Company's Current Report on Form 8-K,
dated April 6, 1994, have been incorporated by reference herein in reliance upon
the reports, dated March 18, 1994, of KPMG Peat Marwick LLP, independent
auditors, incorporated by reference herein, and upon the authority of said firm
as experts in auditing and accounting.
The financial statements of TeleCable Corporation as of December 31, 1993
and 1992 and for each of the two years in the period ended December 31, 1993
incorporated in this Prospectus by reference to the Company's Current Report on
Form 8-K dated August 26, 1994 have been so incorporated in reliance on the
report of Price Waterhouse LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
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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 SUPPLEMENT, THE PROSPECTUS OR ANY PRICING SUPPLEMENT IN CONNECTION
WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT, THE PROSPECTUS OR ANY PRICING
SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY AGENT, DEALER OR
UNDERWRITER. THIS PROSPECTUS SUPPLEMENT, THE PROSPECTUS AND ANY PRICING
SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION BY ANYONE IN ANY
STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY
OF THIS PROSPECTUS SUPPLEMENT, THE PROSPECTUS OR ANY PRICING SUPPLEMENT NOR ANY
SALE MADE HEREUNDER OR THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THE INFORMATION HEREIN OR IN THE PROSPECTUS OR ANY PRICING
SUPPLEMENT IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THEREOF OR
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THEREOF.
________________________
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
Description of Notes................... S-2
Book-Entry System...................... S-16
Certain United States Tax
Considerations....................... S-17
Plan of Distribution................... S-23
PROSPECTUS
Available Information.................. 2
Incorporation of Documents by
Reference............................ 2
Certain Considerations................. 3
The Company............................ 3
Use of Proceeds........................ 4
Description of Debt Securities......... 4
Plan of Distribution................... 21
Legal Matters.......................... 22
Experts................................ 22
TCI COMMUNICATIONS, INC.
$750,000,000
MEDIUM-TERM NOTES, SERIES B
DUE NINE MONTHS OR
MORE FROM DATE OF ISSUE
__________________________________
PROSPECTUS SUPPLEMENT
__________________________________
MERRILL LYNCH & CO.
CS FIRST BOSTON
LEHMAN BROTHERS
SALOMON BROTHERS INC
================================================================================
