<PAGE> 1
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As filed with the Securities and Exchange Commission on November 9, 1995
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Form S-3
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
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<C> <C> <C>
TCI COMMUNICATIONS, INC. DELAWARE 84-0588868
TELE-COMMUNICATIONS, INC. DELAWARE 84-1260157
(Exact name of registrant (State or other jurisdiction of (I.R.S. Employer
as specified in its charter) incorporation or organization) Identification No.)
TERRACE TOWER II STEPHEN M. BRETT, ESQ.
5619 DTC PARKWAY TCI COMMUNICATIONS, INC.
ENGLEWOOD, COLORADO 80111-3000 TERRACE TOWER II
(303) 267-5500 5619 DTC PARKWAY
(Address, including zip code, and telephone number, ENGLEWOOD, COLORADO 80111-3000
including area code, of each registrant's principal (303) 267-5500
executive offices) (Name, address, including zip code, and telephone
number,
including area code, of agent for service for each
registrant)
COPIES TO:
ROBERT W. MURRAY JR., ESQ. NORMAN D. SLONAKER, ESQ.
BAKER & BOTTS, L.L.P. BROWN & WOOD
885 THIRD AVENUE ONE WORLD TRADE CENTER
NEW YORK, NEW YORK 10022-4834 NEW YORK, NEW YORK 10048-0557
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. /X/
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CALCULATION OF REGISTRATION FEE
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<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS AGGREGATE AMOUNT OFFERING PRICE AGGREGATE OFFERING REGISTRATION FEE
OF SECURITIES TO BE REGISTERED TO BE REGISTERED PER UNIT (1) PRICE (1) (1)
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<S> <C> <C> <C> <C>
TCI Communications, Inc. % Cumulative
Exchangeable Preferred Stock, Series A
("Series A Preferred Stock") 2,300,000 $50 $115,000,000 $39,655
Tele-Communications, Inc., Series A TCI
Group Common Stock (2)
Guarantees of Series A Preferred Stock by
Tele-Communications, Inc. (3)
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(i) and Rule 457(n).
(2) Includes such presently indeterminate number of shares that may be (a)
deliverable from time to time upon exchange of the Series A Preferred
Stock registered hereunder, (b) necessary to adjust the number of shares
from time to time deliverable upon such exchange in accordance with the
anti-dilution provisions of the Series A Preferred Stock as a result of
a stock split, stock dividend or other adjustment to or change in the
outstanding shares of Series A TCI Group Common Stock and (c)
deliverable from time to time in payment of dividend, redemption and/or
liquidation payments in accordance with the terms of the Series A
Preferred Stock or under the Guarantee Agreement entered into by
Tele-Communications, Inc. for the benefit of the holders of the Series A
Preferred Stock (the "Guarantee Agreement").
(3) Includes the rights of holders from time to time of the Series A
Preferred Stock under the Guarantee Agreement.
------------------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED NOVEMBER 9, 1995
PROSPECTUS
2,000,000 SHARES
TCI COMMUNICATIONS, INC.
% CUMULATIVE EXCHANGEABLE PREFERRED STOCK, SERIES A
(LIQUIDATION PREFERENCE OF $50 PER SHARE)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY, AND
EXCHANGEABLE FOR SERIES A TCI GROUP COMMON STOCK OF,
TELE-COMMUNICATIONS, INC.
------------------------
Each of the 2,000,000 shares of % Cumulative Exchangeable Preferred Stock,
Series A (the "Series A Preferred Stock"), is exchangeable (unless previously
redeemed), at the option of the holder commencing , 2000, for
shares of Series A TCI Group Common Stock (the "Series A TCI Group
Common Stock") of Tele-Communications, Inc. (the "Parent"), subject to
adjustment in certain events. TCI Communications, Inc. (the "Company") is a
wholly owned subsidiary of the Parent. The Series A TCI Group Common Stock is
traded in the Nasdaq National Market under the symbol "TCOMA." On ,
1995, the last reported sale price of the Series A TCI Group Common Stock on the
Nasdaq National Market was $ per share.
(continued on next page)
------------------------
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.
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNTS(2) COMPANY(3)
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Per share of Series A Preferred Stock...... $ $ $
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Total(4)................................... $ $ $
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</TABLE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These Securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws at any such State.
(1) Plus accrued dividends, if any, from , 1995.
(2) The Company and the Parent have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933,
as amended. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated at $ .
(4) The Company has granted to the Underwriters an option, exercisable within 30
days after the date of this Prospectus, to purchase up to 300,000 additional
shares of Series A Preferred Stock to cover over-allotments, if any. If such
option is exercised in full, the total Price to Public, Underwriting
Discount and Proceeds to Company will be $ , $ and
$ , respectively. See "Underwriting."
------------------------
The shares of Series A Preferred Stock are offered by the Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, and
subject to approval of certain legal matters by counsel for the Underwriters and
certain other conditions. The Underwriters reserve the right to withdraw, cancel
or modify such offer and to reject orders in whole or in part. It is expected
that delivery of the shares of Series A Preferred Stock offered hereby will be
made in New York, New York on or about , 1995.
------------------------
MERRILL LYNCH & CO.
CS FIRST BOSTON
LEHMAN BROTHERS
MORGAN STANLEY & CO.
INCORPORATED
------------------------
The date of this Prospectus is , 1995.
<PAGE> 3
(continued from previous page)
Dividends on the Series A Preferred Stock will accrue and be cumulative
from the original date of issue and will be payable quarterly in arrears on
, , and of each year, commencing
, 1996, in an amount equal to $ per share, when, as and if declared by
the Board of Directors of the Company.
The Series A Preferred Stock is not redeemable prior to , 2000.
The Series A Preferred Stock will thereafter be redeemable at the option of the
Company at any time, in whole or in part, initially at a redemption price of
$ per share and thereafter at prices declining ratably annually to $50 per
share on and after , 2004, plus accrued and unpaid dividends to the
date of redemption. The Series A Preferred Stock will be subject to mandatory
redemption by the Company on , 2005. The liquidation preference of the
Series A Preferred Stock is $50 per share, plus accrued and unpaid dividends.
The Company may elect to make any dividend, redemption or liquidation
payment in cash, by the delivery of shares of Series A TCI Group Common Stock
or by any combination of the foregoing forms of consideration elected by the
Company. If the Company elects to deliver Series A TCI Group Common Stock, each
holder will receive a number of shares of Series A TCI Group Common Stock equal
to the amount of such payment (or a designated portion thereof) divided by the
Cash Equivalent Amount (which is equal to 95% of the Average Market Price (as
defined herein)) determined as of the record date for such dividend or as of
the date of such redemption or liquidation payment. The number of shares of
Series A TCI Group Common Stock that a holder of a share of Series A Preferred
Stock will receive in payment of a dividend on, or in redemption or liquidation
of, such share (if such payment is made, in whole or in part, through the
delivery of shares of Series A TCI Group Common Stock), and the value of the
shares of Series A TCI Group Common Stock received upon an exchange by such
holder, will vary depending upon the market price of the Series A TCI Group
Common Stock (i) in the case of a dividend, determined as of the record date
for such dividend, and (ii) in the case of a redemption, liquidation or
exchange, determined as of such redemption, liquidation or exchange.
The Parent will irrevocably and unconditionally guarantee, on a
subordinated basis and to the extent set forth herein, the payment of dividends
by the Company on the Series A Preferred Stock (but only if and to the extent
declared by the Company's Board of Directors from assets of the Company legally
available therefor), the redemption price (including accumulated and unpaid
dividends) payable with respect to the Series A Preferred Stock (but only to the
extent of the assets of the Company legally available therefor) and payments on
liquidation with respect to the Series A Preferred Stock (but only to the extent
of the assets of the Company legally available for distribution to holders of
the Series A Preferred Stock) (the "Guarantee"). The Guarantee will be unsecured
and will be subordinate to all liabilities of the Parent and will rank pari
passu with the most senior preferred stock now or hereafter issued by the
Parent. The Parent may elect to satisfy its obligations under the Guarantee with
a cash payment, with shares of Series A TCI Group Common Stock or with any
combination of the foregoing. As of September 30, 1995, the Parent had
liabilities to third parties of approximately $80 million to which payments
under the Guarantee would have been subordinated had the Guarantee been
outstanding at that date.
Application has been made to list the Series A Preferred Stock on the
Nasdaq National Market under the symbol "TCICP." For a discussion of certain
federal income tax consequences to holders of Series A Preferred Stock, see
"Certain Federal Income Tax Considerations."
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES A
PREFERRED STOCK OFFERED HEREBY OR THE SERIES A TCI GROUP COMMON STOCK, OR BOTH,
AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
DURING THIS OFFERING, CERTAIN PERSONS AFFILIATED WITH PERSONS
PARTICIPATING IN THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN
ACCOUNTS OR FOR THE ACCOUNTS OF OTHERS IN SERIES A TCI GROUP COMMON STOCK
PURSUANT TO EXEMPTIONS FROM RULES 10B-6, 10B-7 AND 10B-8 UNDER THE SECURITIES
EXCHANGE ACT OF 1934.
AVAILABLE INFORMATION
The Company and the Parent have filed with the Securities and Exchange
Commission (the "Commission") a combined registration statement on Form S-3
(Registration No. 33- )(herein, 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 securities
offered hereby. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement. Statements
contained herein concerning the provisions of any document are not necessarily
complete and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such reference.
Each of the Company and the Parent is subject to the 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 and other information filed under the Exchange Act by the
Company and/or the Parent can be inspected and copied at the public reference
facilities maintained by the Commission at Judiciary Plaza, Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of
the Commission: 500 West Madison Street, Suite 1400, Chicago, Illinois 60661;
and 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission by the Company
(File No. 0-5550) and by the Parent (File No. 0-20421) and are hereby
incorporated into this Prospectus by reference and made a part hereof: (i) the
combined Annual Report on Form 10-K of the Parent and the Company for the year
ended December 31, 1994 (as amended by Form 10-K/A (Amendment No. 1)); (ii) the
combined Quarterly Reports on Form 10-Q of the Parent and the Company for the
quarters ended March 31, 1995 and June 30, 1995; (iii) the combined Current
Reports on Form 8-K of the Parent and the Company dated January 23, 1995,
February 3, 1995 (as amended by Form 8-K/A (Amendment No. 1)), April 6, 1995,
April 20, 1995 (as amended by Form 8-K/A (Amendment No. 1)), May 4, 1995 (as
amended by Form 8-K/A (Amendment No. 1)), and July 26, 1995; (iv) the Current
Reports on Form 8-K of the Company dated August 1, 1995 and September 13, 1995;
(v) the Current Reports on Form 8-K of the Parent dated February 13, 1995,
February 15, 1995 and August 10, 1995; (vi) the financial statements and notes
thereto of TeleCable Corporation as of December 31, 1993 and 1992 and for each
of the years in the two-year period ended December 31, 1993, included in the
combined Current Report on Form 8-K of the Parent and the Company dated August
26, 1994; and (vii) the description of the Series A TCI Group Common Stock
included in Items 3 and 4 of the Parent's registration statement on Form 8-B (as
amended by Form 8-B/A (Amendments No. 1, 2, 3 and 4)) and Item 1 of the Parent's
registration statement on Form 8-A (as amended by Form 8-A/A (Amendments No. 1
and 2)).
All documents filed by the Company and/or the Parent with the Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date hereof and prior to the termination of the offering of the securities
offered hereby shall be deemed to be incorporated herein by reference and to be
a part hereof from
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the respective dates of the filing of such documents. Any statement contained in
a document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such previous statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company and the Parent will provide without charge to each person to
whom this Prospectus is delivered, on the written or oral request of any such
person, a copy of any or all of the documents incorporated by reference herein,
other than certain exhibits to such documents. 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.
4
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SUMMARY
The following summary information should be read in conjunction with, and
is qualified in its entirety by, the more detailed information and financial
statements, including the notes thereto, appearing in the documents incorporated
herein by reference or appearing elsewhere in this Prospectus. Unless otherwise
indicated, all information in this Prospectus assumes that the over-allotment
option granted to the Underwriters will not be exercised.
THE COMPANY
The Company is principally engaged in the construction, acquisition,
ownership and operation of cable television systems. The Company is the largest
provider of cable television services in the United States, based on the number
of basic subscribers served by the Company and its subsidiaries and affiliates
at June 30, 1995. At that date, the Company, through its subsidiaries and
affiliates, owned cable television systems serving approximately 12.1 million
basic subscribers throughout the continental United States and Hawaii. The
Company, two other cable television companies and Sprint Corporation ("Sprint")
have formed a series of partnerships to engage in the business of providing
wireless communications services and local wireline communications services to
residences and businesses on a nationwide basis under the "Sprint" brand. The
Company owns a 30% interest in this joint venture. See "The Company."
The executive offices of the Company are located at Terrace Tower II, 5619
DTC Parkway, Englewood, Colorado 80111-3000; telephone (303) 267-5500. Unless
the context indicates otherwise and except as used in the discussion under the
caption "Description of the Series A Preferred Stock," the "Company" means TCI
Communications, Inc. and its consolidated subsidiaries.
THE PARENT
The Parent, through its subsidiaries (including the Company) and
affiliates, is principally engaged in the construction, acquisition, ownership
and operation of cable television systems and in the provision of satellite
delivered programming services to various distribution media, principally cable
television systems. The Parent also has interests in cable and
telecommunications operations and television programming in certain
international markets as well as investments in companies and joint ventures
involved in developing and providing programming for new television and
telecommunications technologies.
The Parent is organized into four principal business groups: Domestic Cable
and Communications; Domestic Programming; International Cable and Programming;
and Technology/Venture Capital. The Company is currently a wholly owned
subsidiary of the Parent, and its business operations comprise the Parent's
Domestic Cable and Communications group. See "The Parent." Immediately following
this offering, the Parent will continue to hold all of the outstanding common
stock of the Company.
The executive offices of the Parent are located at Terrace Tower II, 5619
DTC Parkway, Englewood, Colorado 80111-3000; telephone (303) 267-5000. Unless
the context indicates otherwise and except as used in the discussion under the
caption "Description of the Guarantee," the "Parent" means Tele-Communications,
Inc. and its consolidated subsidiaries (including the Company).
THE OFFERING
Securities................. 2,000,000 shares of % Cumulative Exchangeable
Preferred Stock, Series A, excluding the
Underwriters' option to purchase up to 300,000
additional shares of Series A Preferred Stock to
cover over-allotments. The liquidation preference
of the Series A Preferred Stock is $50 per share,
plus accrued and unpaid dividends (the "Liquidation
Preference").
Dividends.................. Dividends will accrue and be cumulative from the
original date of issue and will be payable
quarterly in arrears on each ,
, and or, if any such date is
not a business day, on the next
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succeeding business day, commencing ,
1996, in an amount equal to $ per share, when,
as and if declared by the Board of Directors. The
Company may elect to make dividend payments (i) in
cash, (ii) by delivery of Series A TCI Group Common
Stock or (iii) by any combination of the foregoing
forms of consideration elected by the Company. See
"Description of the Series A Preferred Stock --
Dividends."
Exchange at the Option of
the
Holder..................... Each of the 2,000,000 shares of Series A Preferred
Stock is exchangeable, commencing , 2000,
at the option of the holder (unless previously
redeemed), in whole or in part, for shares of
Series A TCI Group Common Stock, subject to
adjustment in certain events. The value of the
shares of Series A TCI Group Common Stock received
upon any exchange will vary depending upon the
market price of the Series A TCI Group Common Stock
at the time of such exchange. See "Description of
the Series A Preferred Stock -- Exchange at Option
of Holder."
Optional Redemption by
Company.................... The Series A Preferred Stock is not redeemable
prior to , 2000. At any time and from
time to time on or after that date, the Company may
redeem any or all of the outstanding shares of
Series A Preferred Stock, initially at a redemption
price of $ per share and thereafter at prices
declining ratably on each to $50 per
share on and after , 2004, plus accrued
and unpaid dividends to the date of redemption. The
Company may elect to make any optional redemption
payment (i) in cash, (ii) by delivery of Series A
TCI Group Common Stock or (iii) by any combination
of the foregoing forms of consideration elected by
the Company. See "Description of the Series A
Preferred Stock -- Redemption -- Optional
Redemption."
Mandatory Redemption by
Company.................... The Series A Preferred Stock is subject to
mandatory redemption by the Company on ,
2005, at a redemption price of $50 per share, plus
accrued and unpaid dividends to the date of
redemption. The Company may elect to make any
mandatory redemption payment (i) in cash, (ii) by
delivery of Series A TCI Group Common Stock or
(iii) by any combination of the foregoing forms of
consideration elected by the Company. See
"Description of the Series A Preferred Stock --
Redemption -- Mandatory Redemption."
Company May Pay Dividend,
Redemption and Liquidation
Payments with Series A TCI
Group Common Stock......... The Company may elect to make dividend payments,
redemption payments (optional or mandatory) or
payments on any dissolution, liquidation or winding
up of the Company to holders of Series A Preferred
Stock (i) in cash, (ii) by delivery of Series A TCI
Group Common Stock or (iii) by any combination of
the foregoing forms of consideration elected by the
Company. If the Company elects to make any such
payment (or a designated portion thereof) through
the delivery of shares of Series A TCI Group Common
Stock, each holder will receive a number of shares
of Series A TCI Group Common Stock determined by
dividing the amount of such payment (or designated
portion thereof) by the Cash Equivalent Amount. The
"Cash Equivalent Amount" means an amount equal to
95% of the average of the closing sale prices for a
share of Series A TCI Group Common Stock on the
Nasdaq National Market for the 10 consecutive
trading days ending on the third business day prior
to (i) in the case of dividends, the relevant
record date and (ii) in the case of a redemption or
the dissolution, liquidation or winding
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up of the Company, the date of the redemption or
liquidation payment. The market price of the Series
A TCI Group Common Stock may vary between the date
of such determination and the subsequent delivery
of shares.
If the Company elects to pay make a dividend,
redemption or liquidation payment with shares of
Series A TCI Group Common Stock, the number of such
shares that a holder of Series A Preferred Stock
will receive in connection with such dividend,
redemption of liquidation payment will vary
depending on the market price of the Series A TCI
Group Common Stock at the time of the record date
for such dividend or at the time of such redemption
or liquidation payment, as the case may be.
In the case of a dividend or redemption payment
that is made through delivery of shares of Series
A TCI Group Common Stock, if the average closing
price upon which the Cash Equivalent Amount is
determined is more than 5.26% higher than the
market value of such shares on the dividend
payment date or the redemption date and the holder
sells such shares of Series A TCI Group Common
Stock at such lower price, (x) in the case of such
dividend, the holder's actual dividend yield for
the dividend period in respect of which such
dividend was paid would be lower than the stated
dividend yield on the Series A Preferred Stock and
(y) in the case of such redemption, the actual
sales proceeds received by such holder would be
lower than the stated redemption price for the
Series A Preferred Stock. In addition, in
connection with any such sale the holder is likely
to incur commissions and other transaction costs.
Guarantee.................. The Parent will irrevocably and unconditionally
agree, on a subordinated basis, to pay in full
to the extent not paid by the Company: (i) any
dividends on the Series A Preferred Stock, to the
extent declared by the Company's Board of Directors
from assets of the Company legally available
therefor, (ii) the redemption price (both optional
and mandatory) to the extent of assets of the
Company legally available therefor and (iii) upon
any dissolution, liquidation or winding up of the
Company, the lesser of (x) the aggregate
Liquidation Preference and (y) the remaining assets
of the Company available for distribution to
holders of Series A Preferred Stock. The Guarantee
will be unsecured and subordinated to all
liabilities of the Parent and will rank pari passu
with the most senior preferred stock now or
hereafter issued by the Parent. The Parent may
elect to satisfy its obligations under the
Guarantee with a cash payment, with shares of
Series A TCI Group Common Stock or with any
combination of the foregoing forms of consideration
elected by the Parent. If the Parent elects to make
any guarantee payment (or a designated portion
thereof) to the holders of Series A Preferred Stock
through the delivery of shares of Series A TCI
Group Common Stock, each such holder will receive
the same number of shares of Series A TCI Group
Common Stock as such holder would have received
from the Company, had the Company made such payment
when originally due through the delivery of shares
of Series A TCI Group Common Stock (or the same
designated portion of such payment as that selected
by the Parent). See "Description of the Guarantee."
As of September 30, 1995, the Parent had
liabilities to third parties of approximately $80
million to
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which payments under the Guarantee would have been
subordinated had the Guarantee been outstanding at
that date.
Voting Rights.............. The Series A Preferred Stock and the Company's
common stock will vote as a single class in any
general election of directors of the Company. If
at any time accrued dividends on the Series A
Preferred Stock are in arrears and unpaid for six
or more quarterly dividend periods (whether or not
consecutive), holders of the Series A Preferred
Stock will have the right to elect two additional
directors to the Company's Board of Directors,
voting as a separate class with the holders of any
Parity Stock and/or Senior Stock (each as defined
herein) upon which like voting rights have been
conferred and are vested, until such dividend
arrearage is eliminated. The holders of Series A
Preferred Stock will have no other voting rights,
except that the affirmative vote of at least 66
2/3% of the Series A Preferred Stock (voting
separately as a class) will be required before (i)
the Company may amend, alter or repeal any
provision of the Company's Restated Certificate of
Incorporation which would adversely affect the
powers, preferences or rights of the holders of
the shares of Series A Preferred Stock, (ii) the
Company or the Board of Directors may authorize
the creation or issue of any class or series of
Preferred Stock of the Company that ranks senior
to the Series A Preferred Stock as to dividend
payments, payments on redemption or payments of
amounts distributable upon the dissolution,
liquidation or winding up of the Company ("Senior
Stock") or (iii) the Company may effect a
reclassification of the Series A Preferred Stock,
in each case subject to certain exceptions. See
"Description of the Series A Preferred Stock --
Voting Rights." However, the Company may create
additional classes and series of Preferred Stock,
ranking pari passu with the Series A Preferred
Stock as to dividend payments, payments on
redemption or payments of amounts distributable
upon the dissolution, liquidation or winding up of
the Company ("Parity Stock"), and additional
classes and series of junior stock, increase the
number of authorized shares of Preferred Stock
(other than Series A Preferred Stock) or decrease
(but not below the number of authorized shares
then outstanding) the number of authorized shares
of Preferred Stock (other than Series A
Preferred Stock) without the consent of any holder
of Series A Preferred Stock. Immediately following
this offering, the Parent will own all of the
outstanding common stock of the Company and,
except when dividends are in arrears on the Series
A Preferred Stock for six or more quarterly
dividend periods, the Parent will be able to elect
all of the members of the Board of Directors of
the Company.
Listing.................... Application has been made to list the Series A
Preferred Stock on the Nasdaq National Market under
the symbol "TCICP." The Series A TCI Group Common
Stock is listed on the Nasdaq National Market under
the symbol "TCOMA."
Use of Proceeds............ The net proceeds from the sale of the shares of
Series A Preferred Stock offered hereby will be
used to retire maturing over-night commercial
paper.
8
<PAGE> 10
USE OF PROCEEDS
The net proceeds from the sale of the shares of Series A Preferred Stock
offered hereby, after deducting expenses, will be $ ($ if the
Underwriters' over-allotment option is exercised in full). The net proceeds from
this offering will be used by the Company to retire maturing over-night
commercial paper issued pursuant to its Commercial Paper Program. The over-night
commercial paper sold by the Company on November 7, 1995 was issued with an
average weighted interest rate of 6.026% per annum.
SELECTED FINANCIAL DATA
The following tables set forth selected historical financial data for
the Company and the Parent for each of the five fiscal years in the period
ended December 31, 1994 and for the six months ended June 30, 1994 and 1995.
The selected financial data for each of the five fiscal years in the period
ended December 31, 1994 are derived from the consolidated financial statements
of the Company and the Parent, respectively. The selected financial data for
the interim periods are derived from unaudited consolidated financial
statements which have been prepared on the same basis as the Company's and the
Parent's respective audited consolidated financial statements and, in the
opinion of management, contain all adjustments, consisting of only normal
recurring adjustments, necessary for a fair presentation of the respective
financial position and results of operations of the Company and the Parent for
those periods. The following information is qualified in its entirety by, and
should be read in conjunction with, the respective consolidated financial
statements and notes thereto of the Company and the Parent incorporated by
reference herein. See "Incorporation of Documents by Reference."
THE COMPANY
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
----------------- ----------------------------------------------
1995 1994 1994 1993 1992 1991 1990
------ ------ ------ ------ ------ ------ ------
(IN MILLIONS, EXCEPT PER SHARE AND RATIO AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS DATA:
Revenue................................................ $2,431 $2,141 $4,318 $4,153 $3,574 $3,214 $2,940
Operating income....................................... 438 439 818 916 864 674 546
Earnings (loss) from:
Continuing operations................................ (24) 38 92 (7) 7 (78) (191)
Discontinued operations.............................. -- -- -- -- (15) (19) (63)
------ ------ ------ ------ ------ ------ ------
Dividend requirement on redeemable preferred stocks.... -- -- -- (2) (15) -- --
------ ------ ------ ------ ------ ------ ------
Net earnings (loss) attributable to common
stockholders......................................... $ (24) $ 38 $ 92 $ (9) $ (23) $ (97) $ (254)
====== ====== ====== ====== ====== ====== ======
Ratio of earnings to fixed charges and preferred stock
dividends(1)......................................... -- 1.18x 1.22x 1.22x 1.02x -- --
OTHER DATA:
Operating income before depreciation, amortization and
non-cash operating expenses(2)....................... $1,015 $ 902 $1,801 $1,858 $1,637 $1,430 $1,262
Consolidated domestic basic cable and satellite
subscribers.......................................... 12.2 10.9 11.1 10.7 10.2 8.9 8.5
</TABLE>
9
<PAGE> 11
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
-------- ---------------------------------------------------
1995 1994 1993 1992 1991 1990
-------- ------- ------- ------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
SUMMARY BALANCE SHEET DATA:
Property and equipment, net............................... $ 6,562 $ 5,579 $ 4,935 $ 4,562 $ 4,081 $ 4,156
Franchise costs, net...................................... 11,139 9,297 9,197 9,300 8,104 7,348
Net assets of discounted operations....................... -- -- -- -- 242 54
Total assets.............................................. 19,458 15,880 16,520 16,310 15,166 14,106
Debt...................................................... 11,983 10,712 9,900 10,285 9,455 8,922
Stockholders' equity...................................... 2,049 646 2,112 1,726 1,570 748
Shares outstanding (net of treasury shares)(3):
Class A Common Stock.................................... 1 1 403 382 370 310
Class B Common Stock.................................... -- -- 47 48 49 48
</TABLE>
- ---------------
(1) The ratio of earnings to combined fixed charges and preferred stock
dividends of the Company was 1.02, 1.22, and 1.22 for the years ended
December 31, 1992, 1993 and 1994, respectively, and 1.18 for the six months
ended June 30, 1994. The ratio of earnings to combined fixed charges and
preferred stock dividends of the Company was less than 1.00 for the years
ended December 31, 1990 and 1991, and for the six months ended June 30,
1995; thus, earnings available for combined fixed charges and preferred
stock dividends were inadequate to cover combined fixed charges and
preferred stock dividends for such periods. The amounts of the coverage
deficiencies were $399 million and $177 million for the years ended
December 31, 1990 and 1991, respectively, and $22 million for the six
months ended June 30, 1995. For the ratio calculations, earnings available
for combined fixed charges and preferred stock dividends consists of
earnings (losses) before income taxes plus combined fixed charges and
preferred stock dividends (minus capitalized interest), distributions from
and (earnings) loss 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). Combined fixed charges and
preferred stock dividends 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 interests in earnings of consolidated
subsidiaries that represent 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 payable 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. Combined
fixed charges and preferred stock dividends of $710,000, $506,000,
$2,517,000, $13,833,000 and $12,471,000 relating to such guarantees for the
years ended December 31, 1990, 1991, 1992, 1993 and 1994, respectively, and
combined fixed charges and preferred stock dividends of $5,927,000 and
$6,673,000 relating to such guarantees for the six months ended June 30,
1994 and 1995, respectively, have not been included in combined fixed
charges and preferred stock dividends.
(2) Operating income before depreciation, amortization and non-cash operating
expenses should not be considered as an alternative to net income or to
cash flows provided by operating activities or to any other measure of
performance or liquidity as an indicator of an entity's operating
performance.
(3) On August 4, 1994, each 500. 3735 shares of Class A common stock and Class
B common stock issued and outstanding on that date was reclassified and
changed into one share of Class A common stock and one share of Class B
common stock.
10
<PAGE> 12
THE PARENT
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
----------------- ----------------------------------------------
1995 1994 1994 1993 1992 1991 1990
------ ------ ------ ------ ------ ------ ------
(IN MILLIONS, EXCEPT PER SHARE AND RATIO AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS DATA:
Revenue................................................ $3,184 $2,141 $4,936 $4,153 $3,574 $3,214 $2,940
Operating income....................................... 331 439 788 916 864 674 546
Earnings (loss) from:
Continuing operations................................ (128) 38 55 (7) 7 (78) (191)
Discontinued operations.............................. -- -- -- -- (15) (19) (63)
------ ------ ------ ------ ------ ------ ------
(128) 38 55 (7) (8) (97) (254)
Dividend requirement on redeemable preferred stocks.... (17) -- (8) (2) (15) -- --
------ ------ ------ ------ ------ ------ ------
Net earnings (loss) attributable to common
stockholders......................................... $ (145) $ 38 $ .47 $ (9) $ (23) $ (97) $ (254)
====== ====== ====== ====== ====== ====== ======
Primary earnings (loss) attributable to common
stockholders per common and common equivalent shares:
Continuing operations.................................. $ (.22) $ .08 $ .09 $ (.02) $ (.01) $ (.22) $ (.54)
Discontinued operations................................ -- -- -- -- (.04) (.05) $ (.18)
------ ------ ------ ------ ------ ------ ------
$ (.22) $ .08 $ .09 $ (.02) $ (.05) $ (.27) $ (.72)
====== ====== ====== ====== ====== ====== ======
Primary weighted average common shares outstanding
TCI Class A and Class B Common Stock................. 645 492 541 433 424 360 355
Ratio of earnings to fixed charges (1)................. -- 1.18x 1.14x 1.22x 1.02x -- --
OTHER DATA:
Operating income before depreciation, amortization and
non-cash operating expenses(2)....................... $ 968 $ 902 $1,798 $1,858 $1,637 $1,430 $1,262
Consolidated domestic basic cable and satellite
subscribers.......................................... 13.3 10.9 11.7 10.7 10.2 8.9 8.5
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
-------- ---------------------------------------------------
1995 1994 1993 1992 1991 1990
-------- ------- ------- ------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
SUMMARY BALANCE SHEET DATA:
Property and equipment, net............................... $ 6,981 $ 5,876 $ 4,935 $ 4,562 $ 4,081 $ 4,156
Franchise costs, net...................................... 11,841 9,444 9,197 9,300 8,104 7,348
Net assets of discontinued operations..................... -- -- -- -- 242 54
Total assets.............................................. 23,901 19,528 16,520 16,310 15,166 14,106
Debt...................................................... 12,520 11,162 9,900 10,285 9,455 8,922
Stockholders' equity...................................... 4,620 2,971 2,112 1,726 1,570 748
Shares outstanding (net of treasury shares):
Class A Common Stock.................................... 571 491 403 382 370 31
Class B Common Stock.................................... 85 85 47 48 49 48
</TABLE>
- ---------------
(1) The ratio of earnings to fixed charges of the Parent was 1.02,
1.22, and 1.14 for the years ended December 31, 1992, 1993 and 1994,
respectively, and 1.18 for the six months ended June 30, 1994. The ratio of
earnings to fixed charges of the Parent was less than 1.00 for the years
ended December 31, 1990 and 1991, and for the six months ended June 30,
1995; thus, earnings available for fixed charges were inadequate to cover
fixed charges for such periods. The amounts of the coverage deficiencies
were $399 million and $177 million for the years ended December 31, 1990
and 1991, respectively, and $167 million for the six months ended June 30,
1995. For the ratio calculations, earnings available for fixed charges
consists of earnings (losses) before income taxes plus fixed charges (minus
capitalized interest), distributions from and (earnings) loss of less than
50%-owned affiliates with debt not guaranteed by the Parent (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%-
11
<PAGE> 13
owned affiliates, (ii) the Parent's proportionate share of interest of
50%-owned affiliates, (iii) that portion of rental expense the Parent
believes to be representative of interest (one-third of rental expense),
(iv) amortization of debt expense, (v) that portion of minority interests
in earnings of consolidated subsidiaries that represent 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 payable to the Parent. The Parent has guaranteed the debt of
certain less than 50%-owned affiliates and certain other entities in which
it has an interest. Fixed charges of $710,000, $506,000, $2,517,000,
$13,833,000 and $13,092,000 relating to such guarantees for the years ended
December 31, 1990, 1991, 1992, 1993 and 1994, respectively, and fixed
charges of $5,927,000 and $7,979,000 relating to such guarantees for the
six months ended June 30, 1994 and 1995, respectively, have not been
included in fixed charges.
(2) Operating income before depreciation, amortization and non-cash operating
expenses should not be considered as an alternative to net income or to
cash flows provided by operating activities or to any other measure of
performance or liquidity as an indicator of an entity's operating
performance.
PRICE RANGE OF SERIES A TCI GROUP COMMON STOCK AND DIVIDENDS
The Series A TCI Group Common Stock is traded on the Nasdaq National Market
under the symbol "TCOMA." The following table sets forth the high and low sales
prices of Series A TCI Group Common Stock for the periods indicated as reported
by the Nasdaq National Market. The prices have been rounded up to the nearest
eighth and do not include retail markups, markdowns or commissions.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1993
First Quarter............................................. $25 1/2 $20 3/4
Second Quarter............................................ 24 17 1/2
Third Quarter............................................. 26 3/4 21 5/8
Fourth Quarter............................................ 33 1/4 24 7/8
YEAR ENDED DECEMBER 31, 1994
First Quarter............................................. 30 1/4 20 3/8
Second Quarter............................................ 23 3/8 18 1/4
Third Quarter............................................. 23 7/8 19 3/4
Fourth Quarter............................................ 25 20 1/4
YEAR ENDED DECEMBER 31, 1995
First Quarter............................................. 23 3/4 19 7/8
Second Quarter............................................ 24 1/2 17 1/4
Third Quarter (through August 2).......................... 25 1/4 22 5/8
Third Quarter (from August 3)............................. 26 1/4 16 7/8
Fourth Quarter (through ).................................
</TABLE>
Certain of the foregoing prices were affected by (i) the acquisition by
the Parent, by means of a merger, of all of the outstanding shares of Liberty
Media Corporation on August 4, 1994 or (ii) the reclassification of the Parent's
Class A and Class B Common Stock on August 3, 1995 into Series A and Series B
TCI Group Common Stock, respectively, and the distribution of one-fourth of one
share of Series A and Series B Liberty Media Group Common Stock of the Parent on
each share of Parent's Class A and Class B Common Stock, respectively, to the
holders of record as of August 3, 1995. The Liberty Media Group Common Stock is
intended to reflect the separate performance of the Parent's Domestic
Programming group and the TCI Group
12
<PAGE> 14
Common Stock is intended to reflect the performance of the remaining business
groups of the Parent. See "The Parent" and "The Company" for a description of
the four business groups of the Parent.
The Parent has historically not paid cash dividends on the Series A TCI
Group Common Stock or on any other series of common stock of the Parent and has
no present intention of doing so. Payment of cash dividends, if any, in the
future will be determined by the Parent's Board of Directors in light of the
Parent's earnings, financial condition and other relevant considerations. As a
holding company, the Parent's ability to pay cash dividends is dependent upon
its ability to receive cash dividends and advances from its subsidiaries.
Certain loan agreements to which certain subsidiaries of the Parent are parties
or are subject contain restricted payment provisions that limit the amount of
dividends, other than stock dividends, that those companies may pay. Future loan
agreements of the Parent may contain similar provisions.
THE COMPANY
The Company is the largest provider of cable television services in the
United States, based on the number of basic subscribers served by the Company
and its subsidiaries and affiliates at June 30, 1995. At that date, the Company,
through its subsidiaries and affiliates, owned cable television systems serving
approximately 12.1 million basic subscribers throughout the continental United
States and Hawaii. The Company also has an investment in Primestar Partners, a
partnership which operates direct broadcast service and at June 30, 1995, the
Company had approximately 150,000 Primestar Partners subscribers.
Subsidiaries of the Company, Comcast Corporation ("Comcast"), Cox
Communications, Inc. ("Cox") and Sprint have formed a series of partnerships
(collectively, the "Telephony Joint Venture") to engage in the business of
providing wireless communications services and local wireline communications
services to residences and businesses on a nationwide basis under the "Sprint"
brand. The Company owns a 30% interest in the Telephony Joint Venture.
With respect to wireless communications, the Telephony Joint Venture has
been participating in the auctions being conducted by the Federal Communications
Commission ("FCC") of broadband personal communications services ("PCS")
licenses and was the winning bidder in 29 of 51 markets in the first round
auction which was conducted in the first quarter of 1995. The Telephony Joint
Venture also has a 49% limited partnership interest in a company that holds a
PCS license for the Washington, D.C.-Baltimore market and is negotiating
definitive agreements for a 40% interest in a partnership that will hold a PCS
license for the Los Angeles-San Diego market. The Company also owns a 35.3%
interest in a partnership with subsidiaries of Sprint and Cox which was the
winning bidder for a PCS license in the Philadelphia market.
With respect to wireline communications, the Telephony Joint Venture will
serve its customers primarily through the cable television facilities of cable
television operators that affiliate with the Telephony Joint Venture in exchange
for agreed-upon compensation. The modification of existing regulations and laws
governing the local telephone market will be necessary in order for the
Telephony Joint Venture to provide its proposed wireline communications services
on a competitive basis in most states. Subject to agreement upon a business
plan, a schedule for the upgrading of its cable television facilities in
selected markets and certain other matters, the Company has agreed to affiliate
certain of its cable systems with the Telephony Joint Venture. Subsidiaries of
the Company, Comcast and Cox and another cable television operator own Teleport
Communications, Inc. ("TCG"). TCG has informed the Company that it believes
that, based on the number of route miles served by TCG and its subsidiaries and
affiliates, it is the nation's largest competitive access provider. The Company,
Comcast and Cox have agreed, subject to certain conditions, to contribute their
respective interests in TCG and its affiliates to the Telephony Joint Venture.
THE PARENT
The Parent, through its subsidiaries and affiliates (including the
Company), is principally engaged in the construction, acquisition, ownership and
operation of cable television systems and the provision of satellite-delivered
video entertainment, information and electronic retailing programming services
to various video distribution media, principally cable television systems. The
Parent also has interests in cable and telecommu-
13
<PAGE> 15
nications operations and television programming in certain international markets
as well as investments in companies and joint ventures involved in developing
and providing programming for new television and telecommunications
technologies.
The Parent is organized into four principal business groups: Domestic Cable
and Communications; Domestic Programming; International Cable and Programming;
and Technology/Venture Capital. The business operations of the Company comprise
the Parent's Domestic Cable and Communications group. See "The Company." The
Company is a currently a wholly owned subsidiary of the Parent, and immediately
following this offering the Parent will continue to hold all of the outstanding
common stock of the Company. The remaining business groups of the Parent are
described below.
Domestic Programming. The Parent's domestic programming business is
conducted through the Liberty Media Group ("Liberty Media Group") and is
primarily engaged in two principal lines of business: (i) production,
acquisition and distribution through all available formats and media of branded
entertainment, educational and informational programming and software including
multimedia products and (ii) electronic retailing, direct marketing, advertising
sales relating to programming services, infomercials and transaction processing.
The Liberty Media Group has ownership interests in several domestic programming
businesses, including Turner Broadcasting System, Inc.; Discovery
Communications, Inc.; Home Shopping Network Inc.; QVC, Inc.; Encore Media
Corporation; BET Holdings, Inc.; International Family Entertainment; E!
Entertainment Television; and five national and 15 regional sports networks. The
Liberty Media Group, through its wholly owned subsidiary Netlink USA, is also a
provider of programming packages to home satellite dish owners.
International Cable and Programming. The Parent, through its subsidiary
Tele-Communications International, Inc. ("International"), has significant
interests in cable and telecommunications operations and television programming
in international markets. The activities of International are currently
concentrated in Europe, Latin America and Asia, with particular focus on the
United Kingdom, Argentina and Japan. International seeks to invest in markets
with favorable regulatory environments and attractive growth opportunities.
Among its overseas investments, International has an indirect 26.7% interest in
TeleWest Communications plc, the largest provider of cable television and
residential and business cable telephony in the United Kingdom. International
also has a majority interest in Flextech plc, which provides television
programming in the United Kingdom through its interests in Bravo, The Children's
Channel, UK Gold, UK Living, Discovery Channel Europe and The Family Channel UK.
Through certain other joint ventures, International has interests in cable
television systems and television programming in Hungary, Norway, Sweden,
Israel, Ireland, Malta, France, Chile, Puerto Rico, the Dominican Republic, New
Zealand, Australia, Singapore and Japan. International also has a majority
interest in Cablevision, S.A., the largest cable operator in Buenos Aires,
Argentina.
On July 18, 1995, International completed an initial public offering of its
Series A Common Stock. The Parent currently owns 83% of the outstanding shares
of common stock of International, which represent approximately 91% of the
combined voting power of all of the outstanding shares of common stock of
International. International's Series A Common Stock is listed on the Nasdaq
National Market under the symbol "TINTA."
Technology/Venture Capital. The Parent's technology/venture capital
business in conducted through its subsidiary TCI Technology Ventures, Inc. ("TCI
Technology") and TCI Technology's subsidiaries and affiliates. TCI Technology is
an investor in companies and joint ventures involved in developing and providing
services for new television and telecommunications technologies. Current
investments and technologies under development include interactive and set-top
box technology, entertainment software and other services for wireline and
wireless switched broadband interactive networks. TCI Technology, Sega of
America and Time Warner Entertainment Company, L.P. have entered into a joint
venture which produces and markets the first video game channel distributed on
cable television systems, "The Sega Channel." In addition, TCI Technology has
investments in TSX Corporation, a producer of communications equipment, Acclaim
Entertainment, Inc. ("Acclaim"), a publisher of interactive entertainment
software, the Microsoft Network, a partnership controlled by Microsoft
Corporation ("Microsoft") which will operate Microsoft's proposed on-
14
<PAGE> 16
line service, and Netscape Communications Corporation, which develops and
markets software used to access the Internet. TCI Technology and Acclaim have
also formed a joint venture to develop, acquire and distribute games and other
interactive entertainment software over various telecommunications networks. TCI
Technology also owns the National Digital Television Center, an entity formed by
the Parent to provide digital compression and authorization services to
programming suppliers and to cable television systems and other video
distribution outlets. In addition to its technological investments, TCI
Technology operates Western Tele-Communications, Inc., a wholesale provider of
long-distance video, voice, data and other telecommunications services.
DESCRIPTION OF THE SERIES A PREFERRED STOCK
The following summary of the terms of the Series A Preferred Stock does not
purport to be complete and is subject to and qualified in its entirety by the
provisions of the Company's Restated Certificate of Incorporation and the
Certificate of Designations (the "Certificate of Designations") relating to the
shares of Series A Preferred Stock, copies of which have been filed as exhibits
to the Registration Statement of which this Prospectus is a part.
The Company's Restated Certificate of Incorporation authorizes the issuance
from time to time of one or more series of preferred stock, par value $.01 per
share ("Preferred Stock"), with such designations, preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions, as shall be stated and expressed in resolutions providing for
the issuance thereof adopted by the Board of Directors. The Company's Board of
Directors has adopted resolutions authorizing the issuance of up to 2,300,000
shares of % Cumulative Exchangeable Preferred Stock, Series A, with a stated
value of $50 per share (the "Stated Value"). The Board of Directors has not
authorized any other series of Preferred Stock, and immediately following this
offering the only outstanding series of Preferred Stock of the Company will be
the Series A Preferred Stock.
The Series A Preferred Stock will rank senior to the Company's common
stock with respect to the payment of dividends, payments on redemption and
payments of amounts distributable upon dissolution, liquidation or winding up
of the Company. While any shares of Series A Preferred Stock are outstanding,
the Company may not create, and the Board of Directors may not authorize, any
class or series of Senior Stock without the prior affirmative vote of at least
66 2/3% of the then outstanding shares of the Series A Preferred Stock, voting
as a separate class. See "Voting Rights" below.
DIVIDENDS
Payments of Dividends; Method of Payment. Holders of shares of Series A
Preferred Stock will be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available therefor, cumulative accrued
dividends from the date (the "Issue Date") of initial issuance of the shares of
Series A Preferred Stock at the rate per annum of % of the Stated Value per
share, or $ per share of Series A Preferred Stock annually. Dividends
on the Series A Preferred Stock will be payable quarterly in arrears on each
, , and (or, if any such date is not a
business day, on the next succeeding business day (each a "Dividend Payment
Date")), commencing , 1996. Dividends payable on any Dividend Payment
Date will be paid to holders of record as they appear on the stock register of
the Company on the day of the month in which such Dividend Payment
Date shall occur, as and if designated by the Board of Directors (the "Record
Date"). Dividends on shares of Series A Preferred Stock will accrue on a daily
basis (without interest or compounding) whether or not there are unrestricted
funds legally available for the payment of such dividends and whether or not
such dividends are declared. For purposes of calculating the amount of dividends
"accrued" (i) as of the first Dividend Payment Date and any other date that is
not a Dividend Payment Date, such amount shall be calculated on the basis of the
rate per annum specified above for actual days elapsed from the Issue Date (in
the case of the first Dividend Payment Date and any date prior to the first
Dividend Payment Date) or the last preceding Dividend Payment Date (in the case
of any other date) to but excluding the date as of which such determination is
being made, based on a 365- or 366-day year, as the case may be, and (ii) as
of any Dividend Payment Date
15
<PAGE> 17
(other than the first Dividend Payment Date), such amount shall be calculated on
the basis of the foregoing rate per annum, based on a 360-day year of twelve
30-day months. The first dividend period will be from the Issue Date to but
excluding , 1996, and the first dividend will be payable on
, 1996.
Whenever a Redemption Date (as defined below) occurs during a dividend
period, the Board of Directors may, at its option, declare accrued dividends to,
and pay such dividends on, such Redemption Date, in which case such dividends
will be payable on such Redemption Date to the holders of shares of Series A
Preferred Stock as of a special record date to be designated by the Board of
Directors for such dividend payment.
Any dividends may be paid, at the election of the Company, (i) out of funds
legally available therefor, (ii) through the delivery of shares of Series A TCI
Group Common Stock or (iii) through any combination of the foregoing forms of
consideration elected by the Company. If the Company elects to pay any dividend
payment, in whole or in part, by delivery of shares of Series A TCI Group Common
Stock, the amount of such dividend payment to be paid per share of Series A
Preferred Stock in shares of Series A TCI Group Common Stock (the "Stock
Dividend Amount") will be paid through the delivery to the holders of record of
such shares of Series A Preferred Stock on the Record Date for such dividend
payment of a number of shares of Series A TCI Group Common Stock determined by
dividing the Stock Dividend Amount by an amount (the "Cash Equivalent Amount")
equal to 95% of the Average Market Price (as defined below) per share of Series
A TCI Group Common Stock (determined as of the Record Date for such dividend
payment). No fractional shares of Series A TCI Group Common Stock will be
delivered to a holder of shares of Series A Preferred Stock, but the Company
shall instead pay a cash adjustment determined as described under "Adjustment
for Fractional Shares" below.
The "Average Market Price" per share of Series A TCI Group Common Stock on
any date of determination means the average of the daily closing sale prices of
the Series A TCI Group Common Stock on the Nasdaq National Market (or, if the
New York Stock Exchange or the American Stock Exchange becomes the principal
trading market for such stock, on such exchange) for the ten consecutive dates
on which the Nasdaq National Market, the New York Stock Exchange, and the
American Stock Exchange Market (or any successor to any thereof) are open for
the transaction of business (each a "Trading Date") ending on the third business
day preceding the date of determination (appropriately adjusted to take into
account the actual occurrence, during the period following the first of such ten
consecutive Trading Dates and ending on the business day immediately preceding
the date of determination, of any event of a type described under "Exchange at
Option of Holder Exchange Adjustments" below).
The market price of the Series A TCI Group Common Stock may vary from the
Average Market Price between the date of determination of such Average Market
Price and the subsequent delivery of shares of Series A TCI Group Common Stock,
in payment of a dividend, to holders of Series A Preferred Stock. If such
Average Market Price is more than 5.26% higher than the market value of such
shares on the Dividend Payment Date and the holder sells such shares of Series A
TCI Group Common Stock at such lower price, the holder's actual dividend yield
for the dividend period in respect of which such dividend was paid would be
lower than the stated dividend yield on the Series A Preferred Stock. In
addition, in connection with any such sale the holder is likely to incur
commissions and other transaction costs.
If the Company elects to make any dividend payment, in whole or in part,
through the delivery of shares of Series A TCI Group Common Stock, it will give
notice of such determination (which shall include the number of shares of Series
A TCI Group Common Stock and cash, if any, to be delivered in respect of each
share of Series A Preferred Stock) by publication, on the Record Date for such
dividend payment, of such election in a daily newspaper of national circulation.
Certain Limitations. As long as any shares of Series A Preferred Stock are
outstanding, (i) no dividends (other than dividends payable in shares of, or
warrants, rights or options exercisable for or convertible into shares of, stock
ranking junior to the Series A Preferred Stock as to dividend rights, payments
on redemption or payments of amounts distributable upon the dissolution,
liquidation or winding up of the Company ("Junior Stock") and cash in lieu of
fractional shares in connection with any such dividend) shall be paid or
declared in cash or otherwise, nor will any other distribution be made (other
than a distribution payable in Junior Stock or warrants, rights or options
exercisable for or convertible into Junior Stock and cash
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<PAGE> 18
in lieu of fractional shares in connection with any such distribution), on any
Junior Stock and (ii) no shares of any Junior Stock may be purchased, redeemed,
or otherwise acquired by the Company or any majority owned subsidiary of the
Company (except in connection with a reclassification or exchange of any Junior
Stock through the issuance of other Junior Stock and/or warrants, rights or
options exercisable for or convertible into Junior Stock (and cash in lieu of
fractional shares in connection therewith) or the purchase, redemption, or other
acquisition of any Junior Stock (x) with Junior Stock and/or warrants, rights or
options exercisable for or convertible into Junior Stock (and cash in lieu of
fractional shares in connection therewith) or (y) from any wholly owned
subsidiary of the Company), nor may any funds be set aside or made available for
any sinking fund for the purchase or redemption of any Junior Stock, unless: (a)
full dividends on the Series A Preferred Stock and any Parity Stock have been
paid, or declared and set aside for payment, for all dividend periods
terminating on or prior to the date of such Junior Stock dividend or
distribution payment, to the extent such dividends are cumulative; (b) the
Company has paid or set aside all amounts, if any, then or theretofore required
to be paid or set aside for all purchase, retirement, and sinking funds, if any,
for any Parity Stock; and (c) the Company is not in default on any of its
obligations to redeem any Series A Preferred Stock or any Parity Stock. As of
the date of this Prospectus, the Company does not have issued or outstanding any
Parity Stock and the Company's common stock represents the only Junior Stock of
the Company.
Subject to the foregoing, such dividends or distributions (payable in
cash, property, Junior Stock or warrants, rights or options exercisable for or
convertible into Junior Stock), as may be determined by the Board of
Directors, may be declared and paid on the shares of any Junior Stock from
time to time and Junior Stock may be purchased, redeemed or otherwise acquired
by the Company of any of its majority owned subsidiaries from time to time. In
the event of the declaration and payment of any such dividends or other
distributions to the holders of Junior Stock, the holders of such Junior Stock
will be entitled, to the exclusion of holders of shares of Series A Preferred
Stock, to share therein according to their respective interests.
As long as any shares of Series A Preferred Stock are outstanding,
dividends or other distributions may not be declared or paid on the Series A
Preferred Stock or on any Parity Stock (other than dividends or other
distributions payable in Junior Stock and/or warrants, rights or options
exercisable for or convertible into Junior Stock and cash in lieu of fractional
shares in connection therewith), and the Company may not purchase, redeem or
otherwise acquire any Series A Preferred Stock or Parity Stock (except (x) with
any Junior Stock and/or warrants, rights or options exercisable for or
convertible into Junior Stock and cash in lieu of fractional shares in
connection therewith, (y) from any wholly owned subsidiary of the Company or (z)
in connection with a mandatory conversion or exchange of such Parity Stock or a
conversion or exchange of Series A Preferred Stock or such Parity Stock at the
option of the holder for stock other than Parity Stock or Senior Stock), unless
either: (a)(i) full dividends on the Series A Preferred Stock and any Parity
Stock have been paid, or declared and set aside for payment, for all dividend
periods terminating on or prior to the date of such Series A Preferred Stock or
Parity Stock dividend, distribution, purchase, redemption or other acquisition
payment, to the extent such dividends are cumulative; (ii) the Company has paid
or set aside all amounts, if any, then or theretofore required to be paid or set
aside for all purchase, retirement, and sinking funds, if any, for any Parity
Stock; and (iii) the Company is not in default on any of its obligations to
redeem any Series A Preferred Stock or Parity Stock; or (b) with respect to the
payment of dividends only, any such dividends are declared and paid pro rata so
that the amounts of any dividends declared and paid per share on shares of
Series A Preferred Stock and shares of any Parity Stock will in all cases bear
to each other the same ratio that accrued and unpaid dividends (including any
accumulation with respect to unpaid dividends for prior dividend periods, if
such dividends are cumulative) per share on shares of Series A Preferred Stock
and shares of Parity Stock bear to each other.
Notwithstanding the foregoing, nothing will prevent (i) the payment of
dividends on any Junior Stock solely in shares of Junior Stock and/or warrants,
rights or options exercisable for or convertible into Junior Stock or the
redemption, purchase or other acquisition of Junior Stock solely in exchange for
(together with a cash adjustment for fractional shares, if any), or through the
application of the proceeds from the sale of, shares of Junior Stock and/or
warrants, rights or options exercisable for or convertible into Junior Stock;
(ii) the payment of dividends on the Series A Preferred Stock or any class or
series of Parity Stock solely in shares of Junior Stock and/or warrants, rights
or options exercisable for or convertible into Junior Stock or the
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<PAGE> 19
redemption, exchange, purchase or other acquisition of Series A Preferred Stock
or any class or series of Parity Stock solely in exchange for (together with a
cash adjustment for fractional shares, if any), or through the application of
the proceeds from the sale of, shares of Junior Stock and/or warrants, rights or
options exercisable for or convertible into Junior Stock; or (iii) the exchange
of Series A Preferred Stock for shares of Series A TCI Group Common Stock
(together with a cash adjustment for fractional shares, if any) pursuant to an
exchange at the option of the holder as described under "Exchange at Option of
Holder" below.
Payment of dividends to the holders of Series A Preferred Stock shall be
subject to the prior preferences and other rights of any future class or series
of Senior Stock.
EXCHANGE AT OPTION OF HOLDER
Exchange Privilege. Each share of Series A Preferred Stock is
exchangeable, in whole or in part, at the option of the holder thereof, at any
time on and after , 2000, unless previously redeemed, for
shares of Series A TCI Group Common Stock (the "Exchange Rate"), subject to
adjustment as described below. The right to exchange shares of Series A
Preferred Stock called for redemption will terminate immediately before the
close of business on the related Redemption Date. See "Redemption" below.
The exchange of shares of Series A Preferred Stock at the option of the
holder for shares of Series A TCI Group Common Stock may be effected by
delivering (i) the certificates evidencing such holder's shares of Series A
Preferred Stock, together with written notice of exchange specifying the number
of shares of Series A Preferred Stock to be exchanged and specifying the name or
names (with addresses) in which the certificate or certificates representing the
Series A TCI Group Common Stock deliverable on such exchange are to be
registered, and (ii) a proper assignment of such certificates to the Parent (or
in blank) of the certificates for the shares of Series A Preferred Stock
surrendered for exchange, to the office or agency to be maintained by the Parent
for that purpose and otherwise in accordance with exchange procedures
established by the Parent. Initially such office will be the principal corporate
trust office of the Transfer Agent (as hereinafter defined). Each notice of
exchange will be irrevocable and each exchange will be deemed to be effective
immediately before the close of business on the date (the "Exchange Date") on
which all of the requirements for such exchange have been satisfied. The
exchange will be at the Exchange Rate in effect immediately prior to the close
of business on the Exchange Date.
Holders of shares of Series A Preferred Stock at the close of business on a
Record Date for any payment of declared dividends will be entitled to receive
the dividend payable on such shares of Series A Preferred Stock on the
corresponding Dividend Payment Date notwithstanding the effective exchange of
such shares following such Record Date and prior to the corresponding Dividend
Payment Date. However, shares of Series A Preferred Stock surrendered for
exchange after the close of business on a Record Date for any payment of
dividends and before the opening of business on the next succeeding Dividend
Payment Date must be accompanied by payment in cash of an amount equal to the
dividend thereon attributable to the current quarterly dividend period which is
to be paid on such Dividend Payment Date (unless such shares of Series A
Preferred Stock are subject to redemption on a Redemption Date falling between
such Record Date and such Dividend Payment Date). A holder of shares of Series A
Preferred Stock called for redemption on any Dividend Payment Date will (if such
holder is the registered holder on the applicable Record Date) receive the
dividend on such shares payable on that date and will be able to exchange such
shares after the Record Date for such dividend without paying an amount equal to
such dividend to the Company upon exchange. Except as provided above, upon any
exchange of shares of Series A Preferred Stock for shares of Series A TCI Group
Common Stock the Company will not make any payment or allowance for unpaid
dividends, whether or not in arrears, on exchanged shares of Series A Preferred
Stock or for previously declared dividends or distributions on the shares of
Series A TCI Group Common Stock issued upon such exchange.
If the shares of Preferred Stock represented by a certificate surrendered
for exchange are exchanged in part only, the Company will cause to be issued and
delivered to the holder, without charge therefor, a new certificate or
certificates representing in the aggregate the number of unexchanged shares. In
connection with
18
<PAGE> 20
any exchange, no fractional shares of Series A TCI Group Common Stock will be
delivered, but the Company shall instead pay a cash adjustment determined as
described under "Adjustment for Fractional Shares" below.
Exchange Adjustments. The Exchange Rate is subject to adjustment upon the
occurrence of certain events involving the Parent including, without limitation:
(i) the payment by Parent of dividends (and other distributions) on outstanding
shares of Series A TCI Group Common Stock in shares of Series A TCI Group Common
Stock; (ii) subdivisions or combinations of Series A TCI Group Common Stock;
(iii) the issuance by Parent, in reclassification of its outstanding shares of
Series A TCI Group Common Stock, of any other shares of common stock of Parent;
(iv) the issuance by Parent to all holders of Series A TCI Group Common Stock of
rights, warrants or options entitling holders of such rights, warrants or
options (for a period not exceeding fortyfive days) to purchase shares of Series
A TCI Group Common Stock at a price per share less than the Average Market
Price; and (v) the payment by Parent of dividends (or other distributions)
consisting of capital stock, evidences of its indebtedness or other assets of
the Parent (other than those dividends, rights, warrants, options and
distributions referred to above and excluding cash dividends or distributions
other than Extraordinary Cash Distributions (as defined below)) to all holders
of outstanding shares of Series A TCI Group Common Stock. "Extraordinary Cash
Distributions" means, with respect to any consecutive 12-month period, all cash
dividends and cash distributions on the outstanding shares of Series A TCI Group
Common Stock during such period to the extent such dividends or distributions
exceed, on a per share of Series A TCI Group Common Stock basis, 10% of the
average daily closing sale price of the Series A TCI Group Common Stock during
such period (other than cash dividends or cash distributions for which a prior
adjustment to the Exchange Rate was made). The Company reserves the right, in
lieu of making an adjustment to the Exchange Rate, to distribute to the holders
of Series A Preferred Stock, or reserve for delivery with shares of Series A TCI
Group Common Stock upon surrender of shares of Series A TCI Group Common Stock
in exchange therefor, any dividend or distribution described above. All
adjustments to the Exchange Rate will be calculated to the nearest 1/1000th of a
share of Series A TCI Group Common Stock. No adjustment in the Exchange Rate
will be required unless such adjustment would require an increase or decrease of
at least one percent therein; provided, however, that any adjustment which is
not required to be made will be carried forward and taken into account in any
subsequent adjustment. In addition to the foregoing adjustments, the Parent may
direct the Company to make increases in the Exchange Rate that the Parent
considers to be advisable in order that any event treated for federal income tax
purposes as a dividend of stock or stock rights will not be taxable to the
holders of Series A TCI Group Common Stock.
If an adjustment is required to be made in the Exchange Rate, the Parent
may, in its sole discretion, elect to defer the following until after the
occurrence of the event requiring such adjustment: (i) delivering to the holder
of any Series A Preferred Stock surrendered for exchange the additional shares
of Series A TCI Group Common Stock deliverable upon such exchange over the
shares of Series A TCI Group Common Stock deliverable before giving effect to
such adjustment and (ii) paying to such holder any amount in cash in lieu of a
fractional share of Series A TCI Group Common Stock. In addition, no adjustment
need be made for rights to purchase shares of Series A TCI Group Common Stock or
for sales of shares of Series A TCI Group Common Stock which in either case are
made pursuant to a plan providing for reinvestment of dividends or interest or
pursuant to a bona fide employee stock option or stock purchase plan of the
Parent or any of its wholly owned subsidiaries (including the Company).
Whenever the Exchange Rate is required to be adjusted, the Company will
forthwith compute such adjusted Exchange Rate and file with the transfer
agent(s) for the shares of Series A Preferred Stock and the Series A TCI Group
Common Stock a certificate with respect to such adjustment, and mail a notice to
holders of the Series A Preferred Stock providing information with respect to
such adjustment. At least 10 days before the record date or other date set for
definitive action, the Company will notify holders of Series A Preferred Stock
of (i) any action which would require an adjustment to the Exchange Rate, (ii)
certain mergers or combinations involving the Parent or (iii) the dissolution,
liquidation or winding up of the Parent.
Adjustment for Consolidation or Merger of Parent. In case of (i) any
consolidation or merger to which the Parent is a party, (ii) any sale or
transfer to another corporation of the property of the Parent as an entirety or
substantially as an entirety or (iii) any statutory exchange of securities by
the Parent with another
19
<PAGE> 21
corporation (other than in connection with a merger or acquisition), in each
case as a result of which shares of Series A TCI Group Common Stock shall be
converted into the right to receive stock, securities or other property
(including cash or any combination thereof), each share of Series A Preferred
Stock which is not converted into the right to receive stock, securities or
other property in connection with such transaction will, after consummation of
such transaction, be subject to exchange at the option of the holder into the
kind and amount of securities, cash or other property receivable upon
consummation of such transaction by a holder of the number of shares of Series A
TCI Group Common Stock into which such share of Series A Preferred Stock might
have been exchanged immediately prior to consummation of such transaction and
assuming in each case that such holder of Series A TCI Group Common Stock failed
to exercise rights of election, if any, as to the kind or amount of securities,
cash or other property receivable upon consummation of such transaction
(provided that if the kind or amount of securities, cash or other property
receivable upon consummation of such transaction is not the same for each
non-electing share, then the kind and amount of securities, cash or other
property receivable upon consummation of such transaction for each non-electing
share will be deemed to be the kind and amount so receivable per share by a
plurality of the non-electing shares). The kind and amount of securities into
which shares of Series A Preferred Stock will be exchangeable after consummation
of such transaction will be subject to adjustment, as nearly as may be
practicable, as described above under "Exchange Adjustments" following the date
of consummation of such transaction. Pursuant to the Guarantee, the Parent has
agreed not to become a party to any such transaction unless the terms thereof
are consistent with the foregoing.
REDEMPTION
Mandatory Redemption. Each share of Series A Preferred Stock (if not
earlier exchanged or redeemed) will be subject to mandatory redemption by the
Company on , 2005 (the "Mandatory Redemption Date"), at a redemption
price (the "Mandatory Redemption Price") equal to the Liquidation Preference.
Optional Redemption. Shares of Series A Preferred Stock will also be
subject to optional redemption by the Company on or after , 2000 (the
"Initial Redemption Date"). At any time and from time to time on or after the
Initial Redemption Date and until the Mandatory Redemption Date, the Company
will have the right to redeem, in whole or in part, the outstanding shares of
Series A Preferred Stock at the following per share call prices, together with
accrued but unpaid dividends (whether or not declared) to the date fixed for
redemption (each an "Optional Redemption Price," such price and the Mandatory
Redemption Price being sometimes referred to collectively herein as a
"Redemption Price"), if redeemed during the twelve-month periods beginning on
in the years shown below.
<TABLE>
<CAPTION>
YEAR CALL PRICE
---------------------------------------------------------- ----------
<S> <C>
2000...................................................... $
2001......................................................
2002......................................................
2003......................................................
2004 and thereafter....................................... 50.00
</TABLE>
If fewer than all the outstanding shares of Series A Preferred Stock are to
be redeemed as of any date (an "Optional Redemption Date", such date and the
Mandatory Redemption Date being sometimes referred to collectively herein as a
"Redemption Date"), the shares of Series A Preferred Stock to be redeemed will
be selected by the Company from outstanding shares of Series A Preferred Stock
by lot or pro rata (as nearly as may be practicable) or by any other method
determined by the Board of Directors in its sole discretion to be equitable.
Manner of Payment of Redemption Price. The Company may effect the
redemption of shares of Series A Preferred Stock upon the mandatory or optional
redemption thereof, at the election of the Company, (i) out of funds legally
available therefor, (ii) through the delivery of shares of Series A TCI Group
Common Stock or (iii) through any combination of the foregoing forms of
consideration elected by the Company. If the Company elects to pay, in whole or
in part, the Redemption Price in respect of shares of Series A Preferred Stock
through the delivery of shares of Series A TCI Group Common Stock, then the
Company shall deliver
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<PAGE> 22
to each holder of shares of Series A Preferred Stock to be redeemed on the
applicable Redemption Date a number of shares of Series A TCI Group Common Stock
equal to the amount determined by dividing (i) the aggregate Redemption Price
(or designated portion thereof) of such shares of Series A Preferred Stock by
(ii) the Cash Equivalent Amount (determined as of such Redemption Date). The
number of shares of Series A TCI Group Common Stock that a holder of Series A
Preferred Stock will receive upon mandatory or optional redemption, if the
Redemption Price is to be paid in whole or in part through the delivery of
shares of Series A TCI Group Common Stock, will vary depending upon the Average
Market Price (as defined in "Dividends -- Payments of Dividends; Method of
Payment" above) used in determining the Cash Equivalent Amount for purposes of
such redemption. The market price of the Series A TCI Group Common Stock may
vary from such Average Market Price between the date of determination of such
Average Market Price and the subsequent delivery of shares of Series A TCI Group
Common Stock, in payment of the Redemption Price, to holders in respect of
shares of Series A Preferred Stock called for redemption. If such Average Market
Price is more than 5.26% higher than the market value of the Series A TCI Group
Common Stock on the Redemption Date and the holder sells such shares of Series A
TCI Group Common Stock at such lower price, the holder's actual proceeds from
the sale of such shares would be lower that the stated Redemption Price for the
Series A Preferred Stock. In addition, in connection with any such sale the
holder is likely to incur commissions and other transaction costs.
No fractional shares of Series A TCI Group Common Stock will be delivered
to a holder upon redemption of his shares of Series A Preferred Stock, but the
Company will instead pay a cash adjustment determined as described under
"Adjustment for Fractional Shares" below.
Dividends on shares of Series A Preferred Stock selected for redemption
will cease to accrue, and the right of the holders of such shares to exercise
their right to exchange such shares for Series A TCI Group Common Stock will
terminate immediately prior to the close of business, on the related Redemption
Date.
Notice of Redemption. The Company will provide notice (a "Redemption
Notice") of any redemption of shares of Series A Preferred Stock to holders of
record of Series A Preferred Stock to be called for redemption not less than 15
nor more than 60 days prior to the applicable Redemption Date. The Redemption
Notice will be provided by mail sent to each holder of record of shares of
Series A Preferred Stock to be redeemed, at such holder's address as it appears
on the stock register of the Company; provided, however, that neither failure to
give such notice nor any defect therein will affect the validity of the
proceeding for the redemption of any shares of Series A Preferred Stock to be
redeemed except as to the holders to whom the Company has failed to give said
notice or whose notice was defective.
Each Redemption Notice sent to a holder will include, without limitation,
the following information: (i) the Redemption Date; (ii) if less than all
outstanding shares of Series A Preferred Stock are to be redeemed, the number of
shares held by such holder to be redeemed; (iii) the Redemption Price and the
form or forms of consideration that the Company has elected to pay and/or
deliver upon such redemption and, if more than one form of consideration has
been elected by the Company, the designated portions of the Redemption Price to
be paid in each form of consideration so elected; (iv) if the Company has
elected to deliver shares of Series A TCI Group Common Stock in payment of the
Redemption Price (or a designated portion thereof), the method of determining
the number of shares of Series A TCI Group Common Stock so deliverable; (v) the
place or places where certificates for Series A Preferred Stock to be redeemed
are to be surrendered for payment of the Redemption Price; (vi) that dividends
on the shares of Series A Preferred Stock to be redeemed shall cease to accrue
on the Redemption Date; and (vii) the then current Exchange Rate and that the
exchange privilege will terminate immediately prior to the close of the business
day on the Redemption Date.
On or after the Redemption Date, each holder of shares of Series A
Preferred Stock to be redeemed must present and surrender his certificate or
certificates for such shares to the Company at the place designated in the
Redemption Notice and thereupon the Redemption Price of such shares will paid to
or on the order of the person whose name appears on such certificate or
certificates as the record owner thereof, and each surrendered certificate will
be cancelled. Should fewer than all the shares represented by a certificate be
redeemed, a new certificate will be issued representing the unredeemed shares.
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<PAGE> 23
If a Redemption Notice with respect to shares of Series A Preferred Stock
to be redeemed pursuant to a mandatory or optional redemption has been timely
given by the Company, and if on or before the applicable Redemption Date the
Company has deposited with the redemption agent for the Series A Preferred Stock
(or, if there is no redemption agent, shall have set apart so as to be available
for such purpose and only such purpose) cash (including cash for any adjustment
in lieu of delivering fractional securities) and/or shares of Series A TCI Group
Common Stock, as applicable, sufficient to pay in full the aggregate Redemption
Price for such shares of Series A Preferred Stock on such Redemption Date, then
effective as of the close of business on such Redemption Date the shares of
Series A Preferred Stock to be so redeemed will no longer be deemed outstanding
(notwithstanding that any certificate therefor may not have been surrendered for
cancellation), dividends with respect to the shares so called for redemption
shall cease to accrue on the Redemption Date (except that holders of shares of
Series A Preferred Stock at the close of business on a Record Date for any
payment of dividends shall be entitled to receive the dividend payable on such
shares on the corresponding Dividend Payment Date notwithstanding the redemption
of such shares following such Record Date and prior to such Dividend Payment
Date) and all rights with respect to the shares so called for redemption will
forthwith after such date cease and terminate, except the right of such holders,
upon the surrender of certificates evidencing the shares of Series A Preferred
Stock so redeemed, to receive the cash and/or Series A TCI Group Common Stock,
as applicable, payable or deliverable in payment of the Redemption Price and the
applicable cash adjustment, if any, in lieu of fractional shares, without
interest. Any cash and/or shares of Series A TCI Group Common Stock so deposited
or set apart and unclaimed at the end of one year from such Redemption Date will
be repaid and released to the Company, after which the holder or holders of such
shares of Series A Preferred Stock so called for redemption will look only to
the Company for delivery of such cash and/or shares of Series A TCI Group Common
Stock.
The ability of the Company to redeem the Series A Preferred Stock shall be
subject to the prior preferences and rights of any future class or series of
Senior Stock.
LIQUIDATION RIGHTS
In the event of any voluntary or involuntary dissolution, liquidation or
winding up of the Company, the holders of shares of Series A Preferred Stock
then outstanding will be entitled to receive, after payment or provision for
payment of the debts and other liabilities of the Company and payment or
provision for payment of any distribution on shares of any Senior Stock, an
amount per share equal to the Liquidation Preference, before any distribution of
assets is made to the holders of Junior Stock or any other capital stock of the
Company ranking junior to the Series A Preferred Stock upon liquidation,
dissolution or winding up. After payment of the Liquidation Preference, holders
of shares of Series A Preferred Stock will not be entitled to any further
participation in any distribution of assets of the Company.
If, upon any dissolution, liquidation or winding up of the Company, the
assets of the Company available for distribution to the holders of the shares of
Series A Preferred Stock shall be insufficient to pay in full (i) the aggregate
Liquidation Preference payable to holders of Series A Preferred Stock and (ii)
the liquidation preference payable to holders of shares of all outstanding
classes and series of Parity Stock (as set forth in the instrument or
instruments creating such Parity Stock), the holders of shares of Series A
Preferred Stock and such Parity Stock shall share ratably in such distribution
of assets in proportion to the amount which would be payable on such
distribution if the amounts to which the holders of outstanding shares of Series
A Preferred Stock and the holders of outstanding shares of such Parity Stock
were paid in full. The sale, lease, transfer or exchange of all or substantially
all of the assets of the Company, the consolidation or merger of the Company
with one or more other corporations (whether or not the Company is the
corporation surviving such consolidation or merger), and the consummation of a
statutory binding share exchange involving the Company will not be deemed a
liquidation, dissolution or winding up of the Company.
Upon any voluntary or involuntary dissolution, liquidation or winding up of
the Company, the Company may pay any Liquidating Payment (as defined below), at
the election of the Company, (i) out of funds legally available therefor, (ii)
through the delivery of shares of Series A TCI Group Common Stock or (iii)
through any combination of the foregoing forms of consideration elected by the
Company. If the Company elects to make, in whole or in part, a Liquidating
Payment by delivery of shares of Series A TCI Group Common
22
<PAGE> 24
Stock, the number of shares so deliverable to any holder of Series A Preferred
Stock shall be equal to the aggregate Liquidating Payment (or designated portion
thereof) payable in respect of such shares divided by the Cash Equivalent Amount
(determined as of the date of payment of such Liquidating Payment). In
connection with any Liquidating Payment, no fractional shares of Series A TCI
Group Common Stock shall be delivered, but the Company shall instead pay a cash
adjustment determined as described under "Adjustment for Fractional Shares"
below. "Liquidating Payment," as used herein, means the Liquidation Preference
payable to the holders or Series A Preferred Stock upon the liquidation,
dissolution or winding up of the Company or, if less, the amount available for
distribution to holders of Series A Preferred Stock in liquidation of the
Company.
CONDITIONS TO DELIVERY OF SHARES OF SERIES A TCI GROUP COMMON STOCK FOR
DIVIDEND, REDEMPTION OR LIQUIDATION PAYMENTS.
The Company's right to elect to make any dividend, redemption or
liquidation payment (or designated portions thereof) through the delivery of
shares of Series A TCI Group Common Stock will be conditioned upon: (i) the
shares of Series A TCI Group Common Stock to be so delivered being fully paid
and nonassessable and free from any preemptive rights, liens or adverse claims;
(ii) the delivery of such shares being exempt from the registration or
qualification requirements of the Securities Act and applicable state securities
laws or, if no such exemption is available, the delivery of such shares having
been duly registered or qualified under the Securities Act and applicable state
securities laws; and (iii) the shares of Series A TCI Group Common Stock to be
so delivered being listed, and upon delivery being eligible for trading, on the
Nasdaq National Market or on a national securities exchange. If such conditions
have not been satisfied prior to or on the date of any such dividend, redemption
or liquidation payment, such payment shall be made solely in cash.
ADJUSTMENT FOR FRACTIONAL SHARES
No fractional shares or scrip representing fractional shares of Series A
TCI Group Common stock will be delivered upon the redemption or exchange of any
shares of Series A Preferred Stock or in connection with any dividend payment or
any liquidation, dissolution or winding up of the Company. Whether or not a
fractional share would be delivered to a holder of Series A Preferred Stock
shall be based upon (i), in the case of an exchange, on the total number of
shares of Series A Preferred Stock such holder is at the time exchanging into
Series A TCI Group Common Stock and the total number of shares of Series A TCI
Group Common Stock otherwise deliverable upon such exchange and (ii), in the
case of the payment, in whole or in part, of a dividend, redemption or
liquidation payment through the delivery of shares of Series A TCI Group Common
Stock, on the total number of shares of Series A Preferred Stock at the time
held by such holder and the total number of shares of Series A TCI Group Common
Stock otherwise deliverable in respect thereof. In lieu of the issuance of a
fraction of a share of Series A TCI Group Common Stock or scrip, the Company
shall pay instead an amount in cash by its check equal to the same fraction of
(i), in the case of an exchange, the Average Market Price (determined as of the
Exchange Date) and (ii), in the case of a dividend, redemption or liquidation
payment, the Cash Equivalent Amount (determined as of the record date of such
dividend or the date of such redemption or liquidation payment).
VOTING RIGHTS
The holders of shares of Series A Preferred Stock will have no voting
rights, except as otherwise required by law and except as set forth below. When
and if the holders of Series A Preferred Stock are entitled to vote, each holder
will be entitled to one vote per share.
The holders of shares of Series A Preferred Stock will have the right to
vote, voting as a class with the holders of the Company's common stock (and with
the holders of any other class or series of Preferred Stock entitled to vote
with such common stock in the general election of directors), in any general
election of directors of the Company. However, immediately following this
offering the Parent will own all of the outstanding shares of common stock of
the Company and, except under the circumstances described in the next paragraph,
will be able to elect all of the members of the Board of Directors.
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If at any time accrued dividends payable on the shares of Series A
Preferred Stock are in arrears and unpaid in an aggregate amount equal to or
exceeding the aggregate amount of dividends payable thereon for six quarterly
dividend periods, the holders of the shares of Series A Preferred Stock, voting
separately as a class (with the holders of all other shares of Parity Stock and
Senior Stock upon which like voting rights have been conferred and are
exercisable), will have the right to vote for the election of two directors (the
"Preferred Stock Directors") to the Board of Directors of the Company, such
directors to be in addition to the number of directors constituting the Board of
Directors immediately prior to the accrual of such right. Such right of the
holders of shares of Series A Preferred Stock to vote for the election of two
Preferred Stock Directors will continue until all dividends in arrears on the
shares of Series A Preferred Stock have been paid in full. The term of office of
each Preferred Stock Director shall terminate on the earlier of (i) the next
annual meeting of stockholders of the Company at which a successor shall have
been elected and qualified (irrespective of whether the Board of Directors of
the Company is divided into staggered classes) or (ii) the termination of the
right of the holders of shares of Series A Preferred Stock (and any such other
shares of Parity Stock and Senior Stock) to vote for Preferred Stock Directors.
For as long as any shares of Series A Preferred Stock remain outstanding,
the affirmative vote of the holders of at least 66 2/3% of such outstanding
shares (voting separately as a class), given in person or by proxy at any annual
meeting or special meeting called for such purpose, will be necessary: (i)
before the Company may amend, alter or repeal any of the provisions of the
Company's Restated Certificate of Incorporation which would adversely affect the
powers, preferences or rights of the holders of the shares of Series A Preferred
Stock then outstanding; provided, however, that (x) any such amendment,
alteration or repeal that would authorize, create or increase the authorized
amount of any additional shares of Junior Stock and (y) any such amendment that
would increase the number of authorized shares of Preferred Stock (other than
Series A Preferred Stock) or that would decrease (but not below the number of
authorized shares then outstanding) the number of authorized shares of Preferred
Stock (other than Series A Preferred Stock), will be deemed not to adversely
affect such powers, preferences or rights and shall not be subject to approval
by the holders of shares of Series A Preferred Stock; (ii) before the Company or
the Board or Directors may create or issue any class or series of Senior Stock;
or (iii) before the Company may effect any reclassification of the Series A
Preferred Stock (other than a reclassification that does not adversely affect
the powers, preferences or rights of the holders of shares of Series A Preferred
Stock outstanding immediately prior to such reclassification). No vote of the
holders of Series A Preferred Stock in respect of an amendment, alteration or
repeal of any provision of the Company's Restated Certificate of Incorporation
or the creation or issue of any class or series of Senior Stock will be required
if, at or prior to the time when such amendment, alteration or repeal or
creation or issue is to take effect, as the case may be, provision is made for
the redemption of all shares of Series A Preferred Stock at the time outstanding
(except that no such provision may be made prior to the Initial Redemption
Date).
Except as required by law, the holders of Series A Preferred Stock will not
be entitled to vote on any merger or consolidation involving the Company or a
sale of all or substantially all of the assets of the Company.
TRANSFER AGENT AND REGISTRAR
The Bank of New York, 101 Barclay Street, New York, New York 10286, will
act as paying, exchange and redemption agent and registrar for the shares of
Series A Preferred Stock.
MISCELLANEOUS
Upon issuance, the shares of Series A Preferred Stock will be fully paid
and nonassessable. Holders of shares of Series A Preferred Stock will have no
preemptive rights. The Parent has agreed to at all times reserve and keep
available out of its authorized and unissued Series A TCI Group Common Stock,
solely for issuance upon the exchange of shares of Series A Preferred Stock,
such number of shares of Series A TCI Group Common Stock as will from time to
time be deliverable upon the exchange of all shares of Series A Preferred Stock
then outstanding. Shares of Series A Preferred Stock redeemed by the Company
will be retired and resume the status of authorized and unissued shares of
Preferred Stock, without designation as to
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series, until such shares are once more designated as part of a particular
series of Preferred Stock by the Board of Directors.
DESCRIPTION OF THE GUARANTEE
The following is a summary of the principal terms of the Guarantee
Agreement (the "Guarantee"), executed and delivered by the Parent for the
benefit of the holders from time to time of the Series A Preferred Stock. The
summary does not purport to be complete and is subject to and qualified in its
entirety by the text of the Guarantee Agreement, a copy of which has been filed
as an exhibit to the Registration Statement of which this Prospectus is part.
GUARANTEE PAYMENTS
Pursuant to the Guarantee, the Parent will irrevocably and unconditionally
agree, to the extent set forth therein, to pay in full to the holders of the
Series A Preferred Stock the Guarantee Payments (except to the extent paid by
the Company), as and when due, regardless of any defense, right of set-off or
counterclaim which the Company may have or assert. The following payments (the
"Guarantee Payments"), to the extent not paid by the Company, will be subject to
the Guarantee (without duplication): (i) any accrued and unpaid dividends on the
Series A Preferred Stock which have theretofore been declared by the Board of
Directors out of assets legally available therefor; (ii) the Mandatory
Redemption Price payable on the Mandatory Redemption Date, to the extent the
Company has assets legally available therefor; (iii) the Optional Redemption
Price payable on any Optional Redemption Date, with respect to any shares of
Series A Preferred Stock called for redemption by the Company and to the extent
the Company has assets legally available therefor; and (iv) upon a voluntary or
involuntary dissolution, liquidation or winding up of the Company, the lesser of
(a) the aggregate Liquidation Preference payable in respect of the outstanding
shares of Series A Preferred Stock and (b) the amount of assets of the Company
legally available for distribution to the holders of outstanding shares of
Series A Preferred Stock. The Guarantee does not provide for the making of any
payment by the Parent to the extent the Company does not itself have assets
legally available therefor.
The Parent's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Parent to the holders of Series A
Preferred Stock or by causing the Company to pay such amounts to such holders.
MANNER OF MAKING GUARANTEE PAYMENTS
The Parent may satisfy its obligation to make a Guarantee Payment, at
the election of the Parent, (i) in cash, (ii) through the issuance and delivery
of shares of Series A TCI Group Common Stock or (iii) through any combination
of the foregoing forms of consideration elected by the Parent. If the Parent
elects to pay, in whole or in part, a Guarantee Payment (or a designated
portion thereof) to the holders of Series A Preferred Stock through the
delivery of shares of Series A TCI Group Common Stock, each such holder will
receive the same number of shares of Series A TCI Group Common Stock as the
holder would have received from the Company, had the Company made the
payment, in respect of which such Guaranteed Payment is being made, when
originally due through the delivery of shares of Series A TCI Group Common
Stock (or the same designated portion of such payment as that selected by the
Parent). No fractional shares of Series A TCI Group Common Stock will be issued
and delivered to a holder, but the Parent will instead pay a cash adjustment
determined in the manner described under "Description of the Series A Preferred
Stock -- Adjustment for Fractional Shares."
The Parent's right to elect to make any Guarantee Payment (or designated
portion thereof) through the issuance and delivery of shares of Series A TCI
Group Common Stock will be conditioned upon: (i) the shares of Series A TCI
Group Common Stock to be so issued and delivered being fully paid and
nonassessable and free from any preemptive rights, liens or adverse claims; (ii)
the delivery of such shares being exempt from the registration or qualification
requirements of the Securities Act and applicable state securities laws or, if
no such exemption is available, the delivery of such shares having been duly
registered or qualified under the
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Securities Act and applicable state securities laws; and (iii) the shares of
Series A TCI Group Common Stock to be so issued and delivered being listed, and
upon delivery being eligible for trading, on the Nasdaq National Market or on a
national securities exchange. If such conditions have not been satisfied prior
to or on the date of any Guarantee Payment, such payment shall be made solely in
cash.
The Guarantee will be a full and unconditional guarantee with respect to
the Series A Preferred Stock from the Issue Date, but will not apply to any
dividend or redemption payment, or payment made upon any dissolution,
liquidation or winding up of the Company, except to the extent the Company shall
have assets legally available therefor.
CERTAIN COVENANTS OF THE PARENT
In the Guarantee, the Parent will covenant that, so long as any shares of
Series A Preferred Stock remain outstanding, if there shall have occurred and be
continuing any event that would constitute an Event of Default (as defined
below) under the Guarantee, then the Parent shall not declare or pay any cash
dividend on, make any cash distributions with respect to, or redeem, purchase or
otherwise acquire, any of its capital stock; provided, however that the Parent
may (a) declare cash dividends or cash distributions on, or redeem, purchase or
otherwise acquire, shares of preferred stock of the Parent where, under the
terms of the instrument creating such preferred stock, the failure to do so
would constitute a default or event of default under such instrument and (b)
redeem, purchase or otherwise acquire shares of preferred stock of the Parent
upon the exercise by the holders thereof of conversion, exchange or redemption
rights.
As part of the Guarantee, the Parent will agree that it will honor all
obligations relating to the exchange of Series A Preferred Stock for Series A
TCI Group Common Stock, described in "Description of the Series A Preferred
Stock -- Exchange at Option of Holder."
MODIFICATION OF THE GUARANTEE; ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of Series A Preferred Stock (in which case no vote will be required),
the Guarantee may be amended only with the prior approval of the holders of not
less than 66 2/3% of the outstanding shares of Series A Preferred Stock. All
covenants and agreements contained in the Guarantee shall bind the successors,
assigns, receivers, trustees and representatives of the Parent and inure to the
benefit of the holders from time to time of the Series A Preferred Stock. Except
in the manner described under "Consolidation, Merger or Sale of Assets" below,
the Parent may not assign its rights or delegate its obligations under the
Guarantee without the consent of the holders of at least 66 2/3% of the
outstanding shares of Series A Preferred Stock.
CONSOLIDATION, MERGER OR SALE OF ASSETS
The Guarantee provides that the Parent may merge or consolidate with or
into another entity (whether or not the Parent is the surviving corporation),
enter into a binding share exchange with another entity, or sell, transfer or
lease all or substantially all of its assets to another entity if (i) at such
time no Event of Default shall have occurred and be continuing and (ii) the
survivor of such merger, consolidation or share exchange (if other than the
Parent) or the entity to which Parent's assets are sold, transferred or leased
is an entity organized under the laws of the United States or any state thereof
and assumes all of the obligations of the Parent under the Guarantee.
TERMINATION
The Parent's obligation to make Guarantee Payments under the Guarantee will
terminate as to each holder of Series A Preferred Stock, and be of no further
force or effect, upon (a) the full payment of the Redemption Price of such
holder's Series A Preferred Stock, (b) full payment of the amount payable to
such holder upon any dissolution, liquidation or winding up of the Company or
(c) the exchange of such holder's shares of Series A Preferred Stock for the
requisite number of shares of Series A TCI Group Common Stock (any cash in lieu
of any fractional share, if any). The Guarantee will continue to be effective or
will be reinstated, as the case may be, if at any time any holder of Series A
Preferred Stock must restore payment of
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any amount paid by the Company (under the Certificate of Designations) or the
Parent (under the Guarantee) in respect of such shares.
EVENTS OF DEFAULT
An "Event of Default" under the Guarantee will occur upon the failure of
the Company: (i) to make a dividend payment, if the payment of such dividend was
declared by the Board of Directors of the Company, to the extent the Company has
assets legally available for the payment of such dividend on the applicable
Dividend Payment Date; (ii) to pay the Mandatory Redemption Price on the
Mandatory Redemption Date, to the extent the Company has assets legally
available for the payment of the Mandatory Redemption Price to the holders of
outstanding shares of Series A Preferred Stock on the Mandatory Redemption Date;
(iii) to pay the Optional Redemption Price on any Optional Redemption Date in
respect of shares of Series A Preferred Stock called for redemption on such date
by the Company, to the extent the Company has assets legally available for the
payment of the Optional Redemption Price to the holders of the shares of Series
A Preferred Stock so called for redemption on the applicable Optional Redemption
Date; and (iv), in the event of the dissolution, liquidation or winding up of
the Company, to pay the lesser of (x) the aggregate Liquidation Preference
payable to the holders of outstanding shares of Series A Preferred Stock or (y)
the amount of remaining assets of the Company legally available for distribution
to the holders of outstanding shares of Series A Preferred Stock in liquidation
of the Company.
SUBORDINATION
The Guarantee provides that the Parent's obligation to make Guarantee
Payments are subordinated and junior in right of payment to all liabilities of
the Parent (other than those in respect of its capital stock) ("Senior
Liabilities"). No payment may be made under the Guarantee if any Senior
Liability of the Parent is not paid when due, any applicable grace period with
respect to such default has ended, and such default has not been cured or waived
or ceased to exist. Upon any distribution of assets of the Parent to creditors
upon any dissolution, winding-up, liquidation or reorganization, whether
voluntary or involuntary or in bankruptcy, insolvency, receivership or other
proceedings, all amounts due or to become due on all Senior Liabilities of the
Parent must be paid in full before the holders of Series A Preferred Stock are
entitled to receive or retain any payments under the Guarantee. The rights of
the holders of the Series A Preferred Stock in respect of payments under the
Guarantee will be subrogated to the rights of the holder of all Senior
Liabilities to receive payments or distributions applicable to such liabilities
until all amounts owing on the Guarantee are paid in full.
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Parent and
will rank (i) subordinate and junior in right of payment to all other
liabilities of the Parent, (ii) pari passu with the most senior preferred stock
now or hereafter issued by the Parent and (iii) senior to the Parent's common
stock. The terms of the Certificate of Designations provide that each holder of
Series A Preferred Stock, by acceptance thereof, agrees to the subordination and
other provisions of the Guarantee.
The Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the guarantor to enforce its rights under the guarantee without instituting a
legal proceeding against any other person or entity).
As of September 30, 1995, the Parent had (i) liabilities to third
parties of approximately $80 million, to which payments under the Guarantee
would have been subordinated, and (ii) outstanding shares of preferred stock
with an aggregate liquidation preference of approximately $474 million, with
which payments under the Guarantee would have ranked pari passu, had the
Guarantee been outstanding at that date. The Parent is a holding company and
its assets consist almost entirely of investments in its subsidiaries.
Therefore, the Parent's rights and the rights of its creditors, including
holders of the Series A Preferred Stock with respect to the Parent's
obligations under the Guarantee, 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
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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 Parent
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 Parent). At June 30, 1995, the Parent's subsidiaries had
total Debt of approximately $4.52 billion (including guarantees of
indebtedness of others and the unaccreted portion of indebtedness issued at a
discount, but excluding indebtedness owed to the Parent).
The Parent's ability to service its indebtedness and pay its other
liabilities, including its liability under the Guarantee, is dependent upon the
earnings of the Parent's subsidiaries and the distribution or other payment of
such earnings to the Parent in the form of dividends, loans or advances, payment
or reimbursement for management fees and expenses, and repayment of loans and
advances from the Parent. The subsidiaries are separate and distinct legal
entities and have no obligation, contingent or otherwise, to pay any amounts due
pursuant to the Guarantee 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 Parent 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 Parent's subsidiaries are subject to loan agreements that
prohibit or limit the transfer of funds by such subsidiaries to the Parent in
the form of loans, advances or dividends and require that such subsidiaries'
indebtedness to the Parent be subordinate to the indebtedness under such loan
agreements. The amount of net assets of subsidiaries subject to such
restrictions exceeds the Parent's consolidated net assets.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain United States federal
income tax considerations relevant to purchasers of the Series A Preferred
Stock, but does not purport to be a complete analysis of all the potential tax
considerations relating thereto. This discussion is based upon the Internal
Revenue Code of 1986, as amended (the "Code"), Treasury Regulations and Internal
Revenue Service ("IRS") rulings and judicial decisions now in effect, all of
which are subject to change (possibly with retroactive effect) or different
interpretations. This discussion does not purport to deal with all aspects of
federal income taxation that may be relevant to a particular investor's decision
to purchase the Series A Preferred Stock, and it is not intended to be wholly
applicable to all categories of investors, some of which, such as dealers in
securities, banks, insurance companies, tax-exempt organizations and non-United
States persons, may be subject to special rules. For a discussion of certain
special federal tax considerations for non-United States persons, see "Certain
Special Federal Tax Considerations For Non-United States Holders." In addition,
this discussion is limited to persons that will hold the Series A Preferred
Stock as a "capital asset" (within the meaning of section 1221 of the Code).
ALL PROSPECTIVE PURCHASERS OF THE SERIES A PREFERRED STOCK ARE ADVISED TO
CONSULT THEIR OWN TAX ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN
TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP, EXCHANGE AND DISPOSITION OF THE
SERIES A PREFERRED STOCK.
DIVIDENDS ON SERIES A PREFERRED STOCK
Dividend distributions paid on the Series A Preferred Stock will be taxable
to a holder as ordinary income to the extent of the Company's current or
accumulated earnings and profits (if any) for federal income tax purposes. To
the extent that the amount of such a distribution exceeds the Company's earnings
and profits, the distribution to the holder will be treated first as a tax-free
return of capital to the extent of the holder's basis in the Series A Preferred
Stock and thereafter as capital gain from the sale or exchange of the Series A
Preferred Stock. Such gain will be long-term or short-term depending on the
holder's holding period for the Series A Preferred Stock.
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Dividends paid out of the Company's earnings and profits to corporate
holders may be eligible for the 70% dividends-received deduction, subject to the
minimum holding period requirement under section 246(c) of the Code (generally
at least 46 days) and other applicable requirements. Under section 246A of the
Code, the dividends-received deduction may be reduced or eliminated if the
holder's shares of Series A Preferred Stock are debt-financed. Under certain
circumstances, a corporate holder may be subject to the alternative minimum tax
with respect to a portion of its dividends-received deduction.
Under certain circumstances, a corporation that receives an "extraordinary
dividend," as defined in section 1059(c) of the Code, will be required to reduce
its basis in the Series A Preferred Stock by the portion of such dividend that
is not taxed pursuant to the dividends-received deduction if the holder does not
meet minimum holding period requirements (generally two years). In most
circumstances, quarterly dividends on the Series A Preferred Stock, if not in
arrears, should not constitute extraordinary dividends under section 1059(c). In
addition, under section 1059(f) of the Code, any dividend with respect to
"disqualified preferred stock" is treated as an "extraordinary dividend,"
regardless of the holder's holding period. The Company believes that the Series
A Preferred Stock will not constitute "disqualified preferred stock."
REDEMPTION PREMIUM
Under Section 305 of the Code and the applicable Treasury Regulations,
since the Series A Preferred Stock is subject to optional redemption by the
Company (beginning on the fifth anniversary of the date of issuance), the
excess of the redemption price of the Series A Preferred Stock over its issue
price (the "redemption premium") will be treated as distributed to the holder
of such stock, on an economic accrual basis, if redemption by the Company
pursuant to this right is more likely than not to occur. However, the Company
believes that the optional redemption will not be deemed to be more likely than
not to occur by virtue of a regulatory safe harbor, since (i) the Company and
the holders of the Series A Preferred Stock are not sufficiently related to
each other, (ii) there are no arrangements that effectively require the Company
to redeem the Series A Preferred Stock pursuant to its optional redemption
rights, and (iii) given the redemption premium required of the Company if it
exercises this right of redemption, such exercise would not reduce the yield of
the Series A Preferred Stock. In addition, a deemed distribution in the amount
of any redemption premium will be triggered by the mandatory redemption on the
tenth anniversary of the date of issuance (over this ten-year period) if such
redemption premium exceeds a "de minimis" amount (as determined under the
principles of Section 1273(a)(3) of the Code). The premium payable as a result
of the redemption in exchange for Series A TCI Group Common Stock will depend
on whether the Series A Preferred Stock is redeemed for Series A TCI Group
Common Stock and, if so, the fair market value of the Series A TCI Group
Common Stock ultimately received; thus the amount of any such premium is
unclear given that (i) in determining the Cash Equivalent Amount, an "average"
closing sales price (using 10 consecutive trading days) of the Series A TCI
Group Common Stock is used, (ii) a 5% discount is applied to the relevant
average closing sales price and (iii) there could be changes in the market
price of the Series A TCI Group Common Stock between the time the Cash
Equivalent Amount is set and the time such stock is ultimately received by the
redeemed holders of redeemed shares of the Series A Preferred Stock. Although
there appears to be no redemption premium with respect to the Company's
obligation for mandatory redemption if the redemption price is paid in cash
(assuming that the issue price of the Series A Preferred Stock is at least
equal to its liquidation preference), the above uncertainties regarding the
ultimate fair market value of any Series A TCI Group Common Stock received in
redemption makes it unclear as to whether any constructive dividends will be
required to be taken into account in the event that Series A TCI Group Common
Stock is used for the mandatory redemption.
REDEMPTION SERIES A PREFERRED STOCK
A redemption of the Series A Preferred Stock for cash or Series A TCI Group
Common Stock will be treated under Section 302 of the Code as a distribution
that is taxable as a dividend (to the extent of the Company's current or
accumulated earnings and profits) unless the redemption (i) results in a
"complete termination" of the holder's stock interest in the Company under
Section 302(b) of the Code, or (ii) is "substantially disproportionate" with
respect to the holder under Section 302(b)(2) of the Code, or (iii) is "not
essentially equivalent to a dividend" with respect to the holder under Section
302(b)(1) of the Code. In determining whether any of these tests has been met,
shares of stock considered to be owned by the
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holder by reason of certain constructive ownership rules set forth in Section
318 of the Code, as well as shares actually owned, generally must be taken into
account.
If the redemption does not satisfy any of the Section 302 tests, it will be
treated as a dividend in the amount of the lesser of (x) the amount of cash or
the fair market value of the Series A TCI Group Common Stock received (as
described below) and (y) the Company's current or accumulated earnings and
profits. Such a dividend will be ordinary income and may qualify for the
dividends received deduction for corporate recipients. To the extent that the
amount of the distribution exceeds the Company's current or accumulated earnings
and profits, the excess would be treated as a return of capital to the extent of
the holder's tax basis in the Series A Preferred Stock (probably after
reduction, for corporate holders, of that tax basis under the extraordinary
dividend rules discussed below). Any amount in excess of the amount of the
dividend and the return of capital would be treated as a capital gain. If the
holder retains a stockholding in the Company, the remaining tax basis in the
Series A Preferred Stock (reduced, for corporate holders, by any amounts treated
as extraordinary dividends, as discussed below, or as a return of capital) would
be transferred to the retained stockholdings; otherwise the tax basis may be
transferred to any shares of stock owned by a related person, or such remaining
basis may be lost.
In the case of a redemption that is not pro-rata as to all shareholders or
that is part of a partial liquidation (within the meaning of Section 302(e) of
the Code) of the redeeming corporation, any amount treated as a dividend with
respect to such redemption generally will be treated as an "extraordinary
dividend" under section 1059 of the Code, regardless of the holder's holding
period for the redeemed stock or the size of the distribution. A redemption that
is pro-rata with respect to all shareholders and that is treated as a dividend
will generally be an "extraordinary dividend" if it exceeds the "threshold
percentage" set forth in section 1059(e) of the Code and the holder does not
meet certain holding period requirements. Furthermore, it is possible that under
the aggregation rule of Section 1059 of the Code, quarterly dividends preceding
a redemption of the Series A Preferred Stock that is treated as a dividend might
be aggregated with the redemption distribution and themselves be treated as
"extraordinary dividends." See the discussion under "Dividends on Series A
Preferred Stock" above.
If a redemption is not treated as a distribution that is taxable as a
dividend, it will result in taxable gain or loss equal to the difference between
the amount of cash or the fair market value of Series A TCI Group Common Stock
received by the redeeming shareholder and such holder's tax basis in the Series
A Preferred Stock redeemed. Such gain or loss will be capital gain or loss and
will be long-term or short-term depending on the holder's holding period for the
Series A Preferred Stock redeemed.
EXCHANGE FOR SERIES A TCI GROUP COMMON STOCK
While the question is not entirely free from doubt, the Company believes
that the exchange of the Series A Preferred Stock for Series A TCI Group Common
Stock will qualify as a tax-free reorganization under section 368(a)(1)(B) of
the Code, and therefore such exchange will be tax-free to the holders of the
Series A Preferred Stock. However, gain realized upon the receipt of cash paid
in lieu of fractional shares of Series A TCI Group Common Stock will be taxed
immediately. Except to the extent that basis is utilized when cash is paid in
lieu of fractional shares of Series A TCI Group Common Stock, the adjusted basis
for the shares of Series A TCI Group Common Stock received upon the exchange
will be equal to the adjusted basis of the Series A Preferred Stock exchanged,
and the holding period of the shares of Series A TCI Group Common Stock received
will include the holding period of the Series A Preferred Stock exchanged.
If this exchange does not qualify as a tax-free reorganization, it will be
taxed in the same manner as a redemption of the Series A Preferred Stock for
Series A TCI Group Common Stock, as described under "Redemption of Series A
Preferred Stock" above.
ADJUSTMENT OF EXCHANGE RATE
Treasury Regulations promulgated under section 305 of the Code treat
holders of exchangeable stock as having received a constructive distribution
where the exchange ratio of such exchangeable stock is adjusted if (i) as a
result, the proportionate interest of the holders of such exchangeable stock in
the assets or earnings
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and profits of the corporation into which the stock is exchangeable is increased
and (ii) the adjustment is not made pursuant to a bona fide, reasonable
anti-dilution formula. An adjustment in the exchange ratio is not considered to
be made pursuant to such a formula where the adjustment is made to compensate
for certain taxable distributions with respect to the stock into which such
exchangeable stock is exchangeable. Thus, under certain circumstances (for
example, in the case of an adjustment for certain dividends paid by Parent on
the Series A TCI Group Common Stock, other than dividends paid in shares of
Series A TCI Group Common Stock), a reduction in the exchange rate for the
Series A Preferred Stock is likely to be taxable to the holders thereof as a
dividend to the extent of the earnings and profits of the Parent. In the case of
a corporate holder, it is possible that such a dividend (and other dividends,
including regular quarterly dividends) could be treated as an "extraordinary
dividend" under section 1059 of the Code. See the discussion under "Dividends on
Series A Preferred Stock" above. In addition, the failure to fully adjust the
exchange rate of the Series A Preferred Stock to reflect distributions of stock
dividends with respect to the Series A TCI Group Common Stock (or rights to
acquire Series A TCI Group Common Stock) may result in a taxable dividend to the
holders of the Series A TCI Group Common Stock and holders of rights to acquire
Series A TCI Group Common Stock.
BACKUP WITHHOLDING
Certain non-corporate holders of the Series A Preferred Stock may be
subject to backup withholding at the rate of 31% with respect to dividends on
the Series A Preferred Stock and certain consideration received upon the
exchange for or redemption of the Series A Preferred Stock. Generally, backup
withholding applies only when the taxpayer (i) fails to furnish or certify his
correct taxpayer identification number to the payor in the manner required, (ii)
is notified by the IRS that he has failed to report payments of interest and
dividends properly or (iii) under certain circumstances, fails to certify that
he has not been notified by the IRS that he is subject to backup withholding for
failure to report interest and dividend payments. Holders should consult their
tax advisors regarding their qualification for exemption from backup withholding
and the procedure for obtaining any applicable exemption.
CERTAIN SPECIAL FEDERAL TAX CONSIDERATIONS
FOR NON-UNITED STATES HOLDERS
The following is a general discussion of certain special United States
federal income and estate tax considerations relevant to non-United States
holders of the Series A Preferred Stock, but does not purport to be a complete
analysis of all the potential tax considerations relating thereto.
As used herein, "non-United States holder" means a corporation, individual
or partnership that is, as to the United States, a foreign corporation, a
non-resident alien individual or a foreign partnership, and it means any estate
or trust which is not subject to United States taxation on income from sources
without the United States that is not effectively connected with the conduct of
a trade or business within the United States.
This discussion is based upon the Code, Treasury Regulations, IRS rulings
and judicial decisions now in effect, all of which are subject to change
(possibly with retroactive effect) or different interpretations. This discussion
does not purport to deal with all aspects of federal income and estate taxation
that may be relevant to a particular non-United States holder's decision to
purchase the Series A Preferred Stock. For a discussion of certain United States
federal income tax considerations, some of which may also be relevant to
non-United States holders, see "Certain Federal Income Tax Considerations."
ALL PROSPECTIVE NON-UNITED STATES HOLDERS OF THE SERIES A PREFERRED STOCK
ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE UNITED STATES
FEDERAL, STATE AND LOCAL AND FOREIGN TAX CONSEQUENCES OF THE PURCHASE,
OWNERSHIP, EXCHANGE AND DISPOSITION OF THE SERIES A PREFERRED STOCK AND OF THE
OWNERSHIP AND DISPOSITION OF THE SERIES A TCI GROUP COMMON STOCK ISSUED IN
EXCHANGE FOR THE SERIES A PREFERRED STOCK.
31
<PAGE> 33
DIVIDENDS
Dividends (including a redemption or exchange of the Series A Preferred
Stock which is treated as a dividend or certain adjustments to the exchange rate
which are considered taxable stock dividends under section 305 of the Code) paid
to a non-United States holder of the Series A Preferred Stock (or the Series A
TCI Group Common Stock issued in exchange thereof) will generally be subject to
withholding of United States federal income tax at a 30% rate or such lower rate
as may be specified by an applicable income tax treaty. (Currently, dividends
paid to an address in a foreign country are presumed to be paid to a resident of
such country in determining the applicability of a treaty for such purposes.) A
non-United States holder that is eligible for a reduced rate of United States
withholding tax pursuant to a tax treaty may obtain a refund of any excess
amounts withheld by filing an appropriate claim for refund with the IRS.
Except as may be otherwise provided in an applicable income tax treaty, a
non-United States holder will be taxed at ordinary federal income tax rates (on
a net income basis) on dividends that are effectively connected with the conduct
of a trade or business of such non-United States holder within the United States
and will not be subject to the withholding tax described above. If such
non-United States holder is a foreign corporation, it may also be subject to a
United States branch profits tax at a 30% rate or such lower rate as may be
specified by any applicable income tax treaty. Non-United States holders must
comply with certain certification and disclosure requirements to claim treaty
benefits or an exemption from withholding tax under the foregoing rules.
DISPOSITION OF STOCK
Non-United States holders generally will not be subject to United States
federal income tax in respect of gain recognized on a disposition (including a
redemption that is not treated as a dividend) of the Series A Preferred Stock
(or the Series A TCI Group Common Stock issued in exchange therefor) unless (i)
the gain is effectively connected with a trade or business conducted by the
non-United States holder within the United States (in which case the branch
profits tax described under "Dividends" above may also apply if the holder is a
foreign corporation), or (ii) in the case of a non-United States holder who is a
non-resident alien individual and holds the Series A Preferred Stock (or the
Series A TCI Group Common Stock issued in exchange therefor) as a capital asset,
such holder is present in the United States for 183 or more days in the taxable
year of the disposition and either the income for the disposition is
attributable to an office or other fixed place of business maintained by the
holder in the United States or the holder has a "tax home" in the United States
(within the meaning of the Code). (The foregoing is based on the assumption that
the Company is not and has not been a "United States real property holding
corporation" for federal income tax purposes. The Company does not believe it
has been or is currently, and does not anticipate becoming, such a corporation.)
As noted under "Certain Federal Income Tax Considerations -- Redemption of
Series A Preferred Stock," a redemption may be treated as a dividend under
certain circumstances, which could result in the imposition of withholding tax
(at a 30% rate in the absence of an applicable tax treaty) on the full amount of
the consideration received upon such redemption.
FEDERAL ESTATE TAXES
Series A Preferred Stock (or Series A TCI Group Common Stock issued in
exchange for the Series A Preferred Stock) that is owned or treated as being
owned by a non-United States holder at the time of death will be included in
such holder's gross estate for United States federal estate tax purposes, unless
an applicable estate tax treaty provides otherwise.
INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING
United States information reporting requirements (other than the reporting
of dividend payments for purposes of the withholding tax discussed under
"Dividends" above) and 31% backup withholding tax will not apply to dividends
paid on the Series A Preferred Stock (or the Series A TCI Group Common Stock
issued in exchange therefor) to a non-United States holder at an address outside
the United States provided that the holder certifies to its non-United States
status on the appropriate form and the payer has no actual knowledge
32
<PAGE> 34
that the holder is a United States person. As a general matter, information
reporting and backup withholding will also not apply to a payment of the
proceeds of a sale effected outside the United States of Series A Preferred
Stock (or Series A TCI Group Common Stock issued in exchange therefor) by a
foreign office of a foreign broker. However, information reporting requirements
(but under current proposed Treasury regulations, not backup withholding) will
apply to a payment of the proceeds of a sale effected outside the United States
of Series A Preferred Stock (or Series A TCI Group Common Stock issued in
exchange therefor) by a foreign office of a broker that (i) is a United States
person, (ii) is a foreign person that derives 50% or more of its gross income
for certain periods from the conduct of a trade or business in the United States
or (iii) is a "controlled foreign corporation" (generally, a foreign corporation
controlled by United States shareholders) with respect to the United States,
unless the broker has documentary evidence in its records that the holder is a
non-United States holder and certain conditions are met, or the holder otherwise
establishes an exemption. Payment by a United States office of a broker of the
proceeds of a sale of Series A Preferred Stock (or Series A TCI Group Common
Stock issued in exchange therefor) is subject to both backup withholding and
information reporting unless the holder certifies to the payor in the manner
required as to its non-United States status under penalties of perjury or
otherwise establishes an exemption.
A non-United States holder may obtain a refund of any amounts withheld
under the backup withholding rules by filing an appropriate claim for refund
with the IRS.
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"Purchase Agreement") among the Company, the Parent, Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch"), CS First Boston
Corporation, Lehman Brothers Inc. and Morgan Stanley & Co. Incorporated (the
"Underwriters"), the Company has agreed to sell to the Underwriters, and the
Underwriters severally have agreed to purchase from the Company, the number of
shares of Series A Preferred Stock set forth opposite each Underwriter's name.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
UNDERWRITER SERIES A PREFERRED STOCK
----------------------------------------------------- ------------------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................
CS First Boston Corporation..........................
Lehman Brothers Inc. ................................
Morgan Stanley & Co. Incorporated....................
------------
Total...........................................
=================
</TABLE>
In the Purchase Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all of the shares of Series
A Preferred Stock being sold pursuant to the Purchase Agreement if any of the
shares of Series A Preferred Stock being sold pursuant to the Purchase Agreement
are purchased. Under certain circumstances, the commitments of non-defaulting
Underwriters may be increased.
The Underwriters have advised the Company that they propose initially to
offer the shares of Series A Preferred Stock to the public at the public
offering price set forth on the cover page of this Prospectus. After the
initial public offering, the public offering price may be changed.
The Company has granted to the Underwriters an option, exercisable for 30
days following the date of this Prospectus, to purchase up to 300,000 shares of
Series A Preferred Stock at the price to the public set forth on the cover page
of this Prospectus less the underwriting discount. The Underwriters may exercise
this option only to cover over-allotments, if any, made on the sale of shares of
Series A Preferred Stock offered
33
<PAGE> 35
hereby. To the extent that the Underwriters exercise this option, each of the
Underwriters will have a firm commitment, subject to certain conditions, to
purchase the same percentage of shares of Series A Preferred Stock as the number
of shares of Series A Preferred Stock to be purchased by such Underwriter shown
in the foregoing table bears to the total number of shares of Series A Preferred
Stock initially offered hereby.
The Company and the Parent have agreed, for a period of 60 days after the
date of this Prospectus, to not, without the prior consent of Merrill Lynch,
directly or indirectly, sell, offer to sell or grant any option for the sale
of, any shares of the capital stock of the Company or shares of Series A and
Series B TCI Group Common Stock or securities convertible into or exchangeable
for capital stock of the Company or shares of Series A and Series B TCI Group
Common Stock other than to the Underwriters pursuant to the Purchase Agreement,
subject to certain exceptions set forth in the Purchase Agreement.
Prior to this offering there has been no public market for the shares of
Series A Preferred Stock. The initial public offering price for the shares of
Series A Preferred Stock was determined in negotiations between the Company and
the Underwriters. In determining the terms of the shares of Series A Preferred
Stock, including the initial public offering price, the Company and the
Underwriters took cognizance of the Company's recent results of operations, the
future prospects of the Company and the industry in general, market prices and
terms of, and yields on, securities of other companies considered to be
comparable to the Company and prevailing conditions in the securities market.
There can be no assurance that an active trading market will develop for the
shares of Series A Preferred Stock or that the shares of Series A Preferred
Stock will trade in the public market subsequent to the offering at or above the
initial public offering price.
The Company and the Parent have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act, and
to contribute to payments that the Underwriters may be required to make in
respect thereof.
Certain of the Underwriters have provided various investment banking
services to the Company, the Parent and certain of the Parent's other
subsidiaries.
LEGAL MATTERS
The legality of securities offered hereby will be passed upon for the
Company and the Parent 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 Series A TCI Group Common Stock and Series A Liberty Media Group Common
Stock. Certain legal matters in connection with the offering will be passed
upon for the Underwriters by Brown & Wood, One World Trade Center, New York,
New York 10048-0557.
EXPERTS
The consolidated balance sheets of Tele-Communications, Inc. and
subsidiaries as of December 31, 1994 and 1993, 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, 1994, and the related
financial statement schedules, which appear in Tele-Communications, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1994, as amended,
have been incorporated by reference herein in reliance upon the reports, dated
March 27, 1995, of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein and upon the authority of said
firm as experts in accounting and auditing. The reports of KPMG Peat Marwick LLP
covering the December 31, 1994 consolidated financial statements refer to the
adoption of Statement of Financial Accounting Standard No. 115, "Accounting for
Certain Investments in Certain Debt and Equity Securities," in 1994.
The consolidated balance sheets of TCI Communications Inc. (formerly
Tele-Communications, Inc.) and subsidiaries as of December 31, 1994 and 1993,
and the related consolidated statements of operations, stockholder's(s)' equity,
and cash flows for each of the years in the three year period ended December 31,
1994, and the related financial statement schedules, which appear in TCI
Communications, Inc.'s Annual Report on Form 10-K for the year ended December
31, 1994, as amended, have been incorporated by reference herein in reliance
upon the reports, dated March 27, 1995, of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein and upon the
authority of said firm as experts in accounting and auditing. The reports of
KPMG Peat Marwick LLP covering the December 31,
34
<PAGE> 36
1994 consolidated financial statements refer to the adoption of Statement of
Financial Standards No. 115, "Accounting for Certain Investments in Certain Debt
and Equity Securities," in 1994.
The consolidated balance sheets of TeleWest Communications plc and
subsidiaries as of 31 December 1994 and 1993, and the related consolidated
statements of operations and cash flows for each of the years in the three year
period ended 31 December 1994, which appear in the 31 December 1994 Annual
Report on Form 10-K of Tele-Communications, Inc., as amended, have been
incorporated by reference herein in reliance upon the report of KPMG,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
The combined balance sheets of Cablevision (a combination of certain cable
television assets of Cablevision S.A., Television Belgrano S.A., Construred S.A.
and Univent's S.A.) as of December 31, 1994 and 1993, and the related combined
statements of operations and deficit and cash flows for each of the years in the
three-year period ended December 31, 1994, which appear in the Current Report on
Form 8-K of Tele-Communications, Inc. dated April 20, 1995, as amended, have
been incorporated by reference herein in reliance upon the report of KPMG
Finsterbush Pickenhayn Sibille, independent certified public accounts,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
The consolidated balance sheets of QVC, Inc. and subsidiaries as of January
31, 1994 and 1993, and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the years in the three-year
period ended January 31, 1994, which appear in the current Report on Form 8-K of
Tele-Communications, Inc. dated February 3, 1995, as amended, have been
incorporated by reference herein in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, incorporated by reference
herein and upon the authority of said firm as experts in accounting and
auditing. The report of KPMG Peat Marwick LLP covering the January 31, 1994
consolidated financial statements refers to a change in the method of accounting
for income taxes.
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 combined Current Report on
Form 8-K of Tele-Communications, Inc. and TCI Communications, Inc., 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.
35
<PAGE> 37
------------------------------------- ---------------------------------
------------------------------------- ---------------------------------
NO DEALER, SALESPERSON OR OTHER
INDIVIDUAL HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATION OTHER THAN THOSE 2,000,000 SHARES
CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY
THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED TCI COMMUNICATIONS, INC.
UPON AS HAVING BEEN AUTHORIZED BY
THE COMPANY, THE PARENT OR THE
UNDERWRITERS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION BY ANYONE IN ANY STATE % CUMULATIVE EXCHANGEABLE
IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PREFERRED STOCK, SERIES A
PERSON MAKING SUCH OFFER OR SOLICITATION
IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE (LIQUIDATION PREFERENCE OF
SUCH OFFER OR SOLICITATION. NEITHER $50 PER SHARE)
THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION GUARANTEED TO THE EXTENT SET FORTH
THAT THE INFORMATION HEREIN IS HEREIN BY,
CURRENT AS OF ANY TIME SUBSEQUENT AND EXCHANGEABLE FOR SHARES OF
TO THE DATE HEREOF OR THAT THERE HAS SERIES A
BEEN NO CHANGE IN THE AFFAIRS OF THE TCI GROUP COMMON STOCK OF,
COMPANY OR THE PARENT SINCE THE DATE
HEREOF. TELE-COMMUNICATIONS, INC.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------ -------------------------
PROSPECTUS
-------------------------
<S> <C>
Summary................................ 5
Available Information.................. 3
Incorporation of Documents by
Reference............................ 3
Use of Proceeds........................ 9
Selected Financial Data................ 9
Price Range of Series A TCI Group MERRILL LYNCH & CO.
Common Stock and Dividends........... 12
The Company............................ 13 CS FIRST BOSTON
The Parent............................. 13
Description of the Series A LEHMAN BROTHERS
Preferred Stock...................... 15
Description of the Guarantee........... 25 MORGAN STANLEY & CO.
Certain Federal Income Tax INCORPORATED
Considerations....................... 28
Certain Special Federal Tax
Considerations for Non-United States
Holders.............................. 31
Underwriting........................... 33
Legal Matters.......................... 34 , 1995
Experts................................ 34
</TABLE>
- ------------------------------------- ---------------------------------
- ------------------------------------- ---------------------------------
<PAGE> 38
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The aggregate estimated expenses, other than underwriting discounts and
commissions, in connection with the offering pursuant to this Registration
Statement are currently anticipated to be as follows:
<TABLE>
<S> <C>
- Registration Fee........................................................... $ 39,655
- Blue Sky Fees and Expenses (including counsel fees)........................ 15,000
- Printing and Engraving Expenses............................................ 125,000
- Legal Fees and Expenses.................................................... 100,000
- Accounting Fees and Expenses............................................... 15,000
- Rating Agency Fees......................................................... 50,000
- Miscellaneous.............................................................. 5,345
---------
Total................................................................... $350,000
=========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides, generally,
that a corporation shall have the power to indemnify any person who was or is a
party or is threatened to be made a party to any action, suit or proceeding
(except actions by or in the right of the corporation) by reason of the fact
that such person is or was a director or officer of the corporation against all
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. A corporation may similarly indemnify such person for expenses
actually and reasonably incurred by him in connection with the defense or
settlement of any action or suit by or in the right of the corporation provided
such person acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation, and, in the case of
claims, issues and matters as to which such person shall have been adjudged
liable to the corporation, provided that a court shall have determined, upon
application, that, despite the adjudication of liability but in view of all of
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such court shall deem proper.
Section 102(b)(7) of the Delaware General Corporation Law provides,
generally, that the certificate of incorporation may contain a provision
eliminating or limiting the personal liability of a director to the corporation
or its stockholders for monetary damages for beach of fiduciary duty as a
director, provided that such provision may not eliminate or limit the liability
of a director (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
section 174 of Title 8, or (iv) for any transaction from which the director
derived an improper personal benefit. No such provision may eliminate or limit
the liability of a director for any act or omission occurring prior to the date
when such provision becomes effective.
Articles SEVENTH and EIGHTH of the Company's Restated Certificate of
Incorporation provide as follows:
SEVENTH. Any Person who was or is a party or is threatened to be made a
party to any threatened, pending, or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (whether or not by
or in the right of the corporation) by reason of the fact that he is or was
a director, officer, incorporator, employee, or agent of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
incorporator, employee, partner, trustee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise (including an
employee benefit plan), shall be entitled to be indemnified by the
Corporation to the full extent then permitted by law against expenses
(including attorney's fees), judgements, fines (including excise taxes
assessed on a person with respect to an employee benefit plan), and amounts
paid in settlement incurred by him in connection with such action, suit, or
proceeding. Such right of indemnification shall inure whether or not the
claim asserted is based on matters which antedate the adoption of this
Article SEVENTH. Such right of indemnification shall continue as to a person
who has ceased to be a director, officer, incorporator, employee, partner,
trustee, or agent and shall inure to the benefit of the heirs and personal
representatives of such a person. The indemnification provided by this
Article SEVENTH shall not be deemed exclusive of any other rights which may
be provided now or in the future under any provision currently in effect
or hereafter adopted of the bylaws, by any agreement, by vote of
stockholders, by resolution of disinterested directors, by provision of law,
or otherwise.
EIGHTH. No director of the Corporation shall be liable to the
Corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, or (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which the
director derived an improper personal benefit.
The Company's Restated Certificate of Incorporation will be amended
prior to issuance of the Series A Preferred Stock and the foregoing Articles
will be amended to read substantially the same as Article V, Section E of the
Parent's Restated Certificate of Incorporation, which is described below.
II-1
<PAGE> 39
Article V, Section E of the Parent's Restated Certificate of Incorporation
provides as follows:
"1. Limitation on Liability.
To the fullest extent permitted by the Delaware General Corporation
Law as the same exists or may hereafter be amended, a director of the
Corporation shall not be liable to the Corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a
director. Any repeal or modification
II-2
<PAGE> 40
of this paragraph 1 shall be prospective only and shall not adversely
affect any limitation, right or protection of a director of the Corporation
existing at the time of such repeal or modification.
2. Indemnification.
(a) RIGHT TO INDEMNIFICATION. The Corporation shall indemnify and
hold harmless, to the fullest extent permitted by applicable law as it
presently exists or may hereafter be amended, any person who was or is made
or is threatened to be made a party or is otherwise involved in any action,
suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding") by reason of the fact that he, or a person
for whom he is the legal representative, is or was a director or officer of
the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust, enterprise or nonprofit entity,
including service with respect to employee benefit plans, against all
liability and loss suffered and expenses (including attorneys' fees)
reasonably incurred by such person. Such right of indemnification shall
inure whether or not the claim asserted is based on matters which antedate
the adoption of this Section E. The Corporation shall be required to
indemnify a person in connection with a proceeding (or part thereof)
initiated by such person only if the proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation.
(b) PREPAYMENT OF EXPENSES. The Corporation shall pay the expenses
(including attorneys' fees) incurred in defending any proceeding in advance
of its final disposition, provided, however, that the payment of expenses
incurred by a director or officer in advance of the final disposition of
the proceeding shall be made only upon receipt of an undertaking by the
director or officer to repay all amounts advanced if it should be
ultimately determined that the director or officer is not entitled to be
indemnified under this paragraph or otherwise.
(c) CLAIMS. If a claim for indemnification or payment of expenses
under this paragraph is not paid in full within 60 days after a written
claim therefor has been received by the Corporation, the claimant may file
suit to recover the unpaid amount of such claim and, if successful in whole
or in part, shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden of proving
that the claimant was not entitled to the requested indemnification or
payment of expenses under applicable law.
(d) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any person by
this paragraph shall not be exclusive of any other rights which such person
may or hereafter acquires under any statute, provision of this
Certificate, the Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise.
(e) OTHER INDEMNIFICATION. The Corporation's obligation, if any, to
indemnify any person who was or is serving at its request as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust, enterprise or nonprofit entity shall be reduced by any
amount such person may collect as indemnification from such other
corporation, partnership, joint venture, trust, enterprise or nonprofit
entity.
3. Amendment or Repeal.
Any repeal or modification of the foregoing provisions of this Section
E shall not adversely affect any right or protection hereunder of any
person in respect of any act or omission occurring prior to the time of
such repeal or modification."
Article II, Section 2.9 of the Parent's Bylaws also contains an indemnity
provision, requiring the Parent to indemnify members of the Board of Directors
and officers of the Parent and their respective heirs, personal representatives
and successors in interest for on account of any action performed on behalf of
the Corporation, to the fullest extent provided by the laws of the State of
Delaware and the Parent's Certificate of Incorporation, as then or thereafter in
effect.
II-3
<PAGE> 41
The Parent has also entered into indemnification agreements with each of
its directors (each director, an "indemnitee"). The indemnification agreements
provide (i) for the prompt indemnification to the fullest extent permitted by
law against any and all expenses, including attorneys' fees and all other
costs, expenses and obligations paid or incurred in connection with
investigating, defending, being a witness or participating in (including on
appeal), or in preparing for ("Expenses"), any threatened, pending or completed
action, suit or proceeding, or any inquiry or investigation ("Claim"), related
to the fact that such indemnitee is or was a director, officer, employee, agent
or fiduciary of the Parent or is or was serving at the Parent's request as a
director, officer, employee, trustee, agent or fiduciary of another
corporation, partnership, joint venture, employee benefit plan, trust or other
enterprise, or by reason of anything done or not done by a director or officer
in any such capacity, and against any and all judgments, fines, penalties and
amounts paid in settlement (including all interest, assessments and other
charges paid or payable in connection therewith) of any Claim, unless the
Reviewing Party (one or more members of the Board of Directors or other person
appointed by the Board of Directors, who is not a party to the particular
claim, or independent legal counsel) determines that such indemnification is
not permitted under applicable law and (ii) for the prompt advancement of
Expenses, and for reimbursement to the Parent if the Reviewing Party determines
that such indemnitee is not entitled to such indemnification under applicable
law. In addition, the indemnification agreements provide (x) a mechanism
through which an indemnitee may seek court relief in event the Reviewing Party
determines that the indemnitee would not be permitted to be indemnified under
applicable law (and therefore is not entitled to indemnification or expense
advancement under the indemnification agreement) and (y) indemnification
against all expenses (including attorneys' fees), and advancement thereof if
requested, incurred by the indemnitee in seeking to collect an indemnity claim
or advancement of expenses from the Parent or incurred in seeking to recover
under a directors' and officers' liability insurance policy, regardless of
whether successful or not. Furthermore, the indemnification agreements provide
that after there has been a "change in control" of the Parent (as defined in
the indemnification agreements), other than a change in control approved by a
majority of directors who were directors prior to such change, then, with
respect to all determinations regarding a right to indemnity and the right to
advancement of Expenses, the Parent will seek legal advice only from
independent legal counsel selected by the indemnitee and approved by the
Parent.
The indemnification agreements impose upon the Parent the burden of proving
that an indemnitee is not entitled to indemnification in any particular case and
negate certain presumptions that may otherwise be drawn against an indemnitee
seeking indemnification in connection with the termination of actions in certain
circumstances. Indemnitees' rights under the indemnification agreements are not
exclusive of any other rights they may have under Delaware law, the Parent's
Bylaws or otherwise. Although not requiring the maintenance of directors' and
officers' liability insurance, the indemnification agreements require that
Indemnitees be provided with the maximum coverage available for any Parent
director or officer if there is such a policy.
The Company and the Parent may purchase liability insurance policies
covering its directors and officers.
In addition, pursuant to Section 6 of the form of Underwriting Agreement,
the Underwriters will agree to indemnify and hold harmless the Company, the
Parent and their respective directors and officers and each person, if
any, who controls the Company or the Parent within the meaning of the
Securities Act of 1933, as amended, against certain civil liabilities including
civil liabilities under the Securities Act.
II-4
<PAGE> 42
ITEM 16. EXHIBITS.
<TABLE>
<C> <S>
1 Form of Underwriting Agreement.*
4.1 Restricted Certificate of Incorporation of the Company dated as of August 4, 1994.
(Incorporated herein by reference to Exhibit 3.3 of the Company's Annual Report on
Form 10-K for the year ended December 31, 1994, as amended by Form 10-K/A (Amendment
No. 1) (Commission File No. 0-5550)).
4.2 Form of Restated Certificate of Incorporation of the Company.
4.3 Restated Certificate of Incorporation of the Parent dated August 4, 1994, as amended
on August 4, 1994, August 16, 1994, October 11, 1994, October 21, 1994, January 26,
1995, August 3, 1995, and August 3, 1995. (Incorporated herein by reference to
Exhibit 99.1 of the Parent's Current Report on Form 8-K, dated August 10, 1995
(Commission File No. 0-20421)).
4.4 Bylaws of the Company as adopted August 4, 1994 (Incorporated herein by reference to
Exhibit 3.4 of the Company's Annual Report on Form 10-K for the year ended December
31, 1994, as amended by Form 10K/A (Amendment No. 1) (Commission File No. 0-5550)).
4.5 Form of Bylaws of the Company.
4.6 Bylaws of the Parent as adopted June 16, 1994 (Incorporated herein by reference to
Exhibit 3.2 of the Parent's Annual Report on Form 10-K for the year ended December
31, 1994, as amended by Form 10-K/A (Amendment No. 1) (Commission File No.
0-20421)).
4.7 Certificate of Designation of % Cumulative Exchangeable Preferred Stock, Series A
of the Company.
4.8 Form of stock certificate for Series A Preferred Stock.*
4.9 Form of Guarantee Agreement to be entered into by the Parent and the Company.*
5 Opinion of Baker & Botts, L.L.P. regarding the legality of the securities being
registered.*
8 Opinion of Baker & Botts, L.L.P. regarding certain tax matters.*
12.1 Calculation of Ratios of Earnings to Combined Fixed Charges and Preferred Stock
Dividends of the Company.
12.2 Calculation of Ratios of Earnings to Fixed Charges of the Parent.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of KPMG.
23.4 Consent of KPMG Finsterbush Pickenhayn Sibille.
23.5 Consent of KPMG Peat Marwick LLP.
23.6 Consent of Price Waterhouse, LLP.
23.7 Consent of Baker & Botts, L.L.P. (included in Exhibit 5 and Exhibit 8).
24 Power of Attorney (included on pages II-8 and II-9).
</TABLE>
- ---------------
* To be filed by amendment.
II-5
<PAGE> 43
ITEM 17. UNDERTAKINGS
The undersigned Registrants hereby undertake:
(1) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrants' annual report pursuant to section
13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(2) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(3) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the provisions described under Item 15 above, or
otherwise, the Registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrants of expenses incurred or paid by a director,
officer or controlling person of the Registrants in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrants will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
II-6
<PAGE> 44
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Greenwood Village, State of Colorado, on ,
1995.
TCI COMMUNICATIONS, INC.
By: /s/ Stephen M. Brett
---------------------
Name: Stephen M. Brett
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Greenwood Village, State of Colorado, on ,
1995.
TELE-COMMUNICATIONS, INC.
By: /s/ Stephen M. Brett
-------------------------
Name: Stephen M. Brett
Title: Executive Vice President
II-7
<PAGE> 45
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Stephen M. Brett, Esq., and Robert W. Murray Jr.,
Esq. and each of them, his true and lawful attorneys-in-fact and agents with
full power of substitution and re-substitution for him and in his name, place
and stead, in any and all capacities, to sign any or all amendments (including
post-effective amendments) to this Registration Statement and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents and each of them full power and authority, to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
to all intents and purposes and as fully as they might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
their substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- ------------------------------------ ------------------
<C> <S> <C>
Chairman of the Board and
/s/ Bob Magness Director of TCI Communications, Inc. 11/9/95
- -------------------------------------
(Bob Magness)
/s/ John C. Malone Director of TCI Communications, Inc. 11/9/95
- -------------------------------------
(John C. Malone)
/s/ Donne F. Fisher Director of TCI Communications, Inc. 11/9/95
- -------------------------------------
(Donne F. Fisher)
President of TCI Communications,
- ------------------------------------- Inc.
(Brendan R. Clouston) (Principal Executive Officer)
Senior Vice President and
- ------------------------------------- Controller of TCI Communications,
(Gary K. Bracken) Inc.
(Principal Financial and Accounting
Officer)
</TABLE>
II-8
<PAGE> 46
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Stephen M. Brett, Esq., and Robert W. Murray Jr.,
Esq. and each of them, his true and lawful attorneys-in-fact and agents with
full power of substitution and re-substitution for him and in his name, place
and stead, in any and all capacities, to sign any or all amendments (including
post-effective amendments) to this Registration Statement and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents and each of them full power and authority, to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
to all intents and purposes and as fully as they might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
their substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- ------------------------------------ ------------------
<C> <S> <C>
Chairman of the Board and Director 11/9/95
/s/ Bob Magness of Tele-Communications, Inc.
- -------------------------------------
(Bob Magness)
/s/ John C. Malone President and Director of 11/9/95
- ------------------------------------- Tele-Communications, Inc. (Principal
(John C. Malone) Executive Officer)
/s/ Donne F. Fisher Executive Vice President and 11/9/95
- ------------------------------------- Director of Tele-Communications,
(Donne F. Fisher) Inc. (Principal Financial and
Accounting Officer)
Director of Tele-Communications,
- ------------------------------------- Inc.
(John W. Gallivan)
/s/ Kim Magness Director of Tele-Communications, 11/9/95
- ------------------------------------- Inc.
(Kim Magness)
Director of Tele-Communications,
- ------------------------------------- Inc.
(Robert A. Naify)
/s/ Jerome H. Kern Director of Tele-Communications, 11/9/95
- ------------------------------------- Inc.
(Jerome H. Kern)
/s/ Tony Coelho Director of Tele-Communications, 11/9/95
- ------------------------------------- Inc.
(Tony Coelho)
</TABLE>
II-9
<PAGE> 47
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE NO.
------ ------------------------------------------------------------------------ --------
<C> <S> <C>
1 Form of Underwriting Agreement.*........................................
4.1 Restricted Certificate of Incorporation of the Company dated as of
August 4, 1994. (Incorporated herein by reference to Exhibit 3.3 of the
Company's Annual Report on Form 10-K for the year ended December 31,
1994, as amended by Form 10-K/A (Amendment No. 1) (Commission File No.
0-5550))................................................................
4.2 Form of Restated Certificate of Incorporation of the Company dated as of
, 1995...........................................................
4.3 Restated Certificate of Incorporation of the Parent dated August 4,
1994, as amended on August 4, 1994, August 16, 1994, October 11, 1994,
October 21, 1994, January 26, 1995, August 3, 1995, and August 3, 1995.
(Incorporated herein by reference to Exhibit 99.1 of the Parent's
Current Report on Form 8-K, dated August 10, 1995 (Commission File No.
0-20421))...............................................................
4.4 Bylaws of the Company as adopted August 4, 1994 (Incorporated herein by
reference to Exhibit 3.4 of the Company's Annual Report on Form 10-K for
the year ended December 31, 1994, as amended by Form 10K/A (Amendment
No. 1) (Commission File No. 0-5550))....................................
4.5 Form of Bylaws of the Company as adopted , 1995..................
4.6 Bylaws of the Parent as adopted June 16, 1994 (Incorporated herein by
reference to Exhibit 3.2 of the Parent's Annual Report on Form 10-K for
the year ended December 31, 1994, as amended by Form 10-K/A (Amendment
No. 1) (Commission File No. 0-20421))...................................
4.7 Certificate of Designation of % Cumulative Exchangeable Preferred
Stock, Series A of the Company dated , 1995......................
4.8 Form of stock certificate for Series A Preferred Stock.*
4.9 Form of Guarantee Agreement between the Parent and the Company.*........
5 Opinion of Baker & Botts, L.L.P. regarding the legality of the
securities being registered.*...........................................
8 Opinion of Baker & Botts, L.L.P. regarding certain tax matters.*........
12.1 Calculation of Ratios of Earnings to Combined Fixed Charges and
Preferred Stock Dividends of the Company................................
12.2 Calculation of Ratios of Earnings to Fixed Charges of the Parent........
23.1 Consent of KPMG Peat Marwick LLP........................................
23.2 Consent of KPMG Peat Marwick LLP........................................
23.3 Consent of KPMG.........................................................
23.4 Consent of KPMG Finsterbush Pickenhayn Sibille..........................
23.5 Consent of KPMG Peat Marwick LLP........................................
23.6 Consent of Price Waterhouse, LLP........................................
23.7 Consent of Baker & Botts, L.L.P. (included in Exhibit 5 and Exhibit
8)......................................................................
24 Power of Attorney (included on pages II-8 and II-9).....................
</TABLE>
- ---------------
* To be filed by amendment.
II-10
<PAGE> 1
Exhibit 4.2
FORM OF
RESTATED CERTIFICATE OF INCORPORATION
OF
TCI COMMUNICATIONS, INC.
TCI COMMUNICATIONS, INC., a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), hereby certifies
as follows:
(1) The name of the Corporation is TCI Communications,
Inc. The original Certificate of Incorporation of the Corporation was
filed on August 20, 1968. The name under which the Corporation was
originally incorporated is American Tele-Communications, Inc. The
Certificate of Incorporation of the Corporation has heretofore been
restated twice with Restated Certificates of Incorporation for the
Corporation being filed on July 19, 1979 and August 4, 1994,
respectively.
(2) This Restated Certificate of Incorporation (the
"Certificate") further amends and restates the Certificate of
Incorporation of the Corporation.
(3) Pursuant to Sections 242 and 245 of the General
Corporation Law of the State of Delaware, the text of the Certificate
of Incorporation is hereby amended and restated to read in its
entirety as follows:
ARTICLE I
NAME
The name of the corporation is TCI Communications,
Inc. (the "Corporation").
<PAGE> 2
ARTICLE II
REGISTERED OFFICE
The address of the Corporation's registered office in the
State of Delaware is The Prentice-Hall Corporation System, Inc., 32 Loockerman
Square, Suite L-100, Dover, Kent County, Delaware 19904. The name of its
registered agent at such address is The Prentice-Hall Corporation System, Inc.
ARTICLE III
PURPOSE
The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the Delaware General
Corporation Law.
ARTICLE IV
AUTHORIZED STOCK
The total number of shares of capital stock which the
Corporation shall have authority to issue is 6,005,000 shares, of which
1,005,000 shares shall be common stock ("Common Stock") and five million
5,000,000 shares shall be preferred stock ("Preferred Stock"). Said shares of
Common Stock shall be all of one class and shall be divided into the following
series: (a) 905,553 shares shall be designated as Series A Common Stock with a
par value of $1.00 per share ("Series A Common Stock"); and (b) 94,447 shares
shall be designated as Series B Common Stock with a par value of $1.00 per
share ("Series B Common Stock"). Said shares of Preferred Stock shall be all
of one class with a par value of $.01 per share, and shall be issued in one or
more series as set forth in Section B below.
2
<PAGE> 3
Upon this Certificate becoming effective in accordance with
the General Corporation Law of the State of Delaware (the "Effective Time"):
(i) each share of Class A Common Stock issued and
outstanding immediately prior to the Effective Time shall be reclassified and
changed into one (1) validly issued, fully paid and nonassessable share of
Series A Common Stock.
(ii) each certificate that theretofore represented shares
of Class A Common Stock shall thereafter represent the number of shares of
Series A Common Stock into which the shares of Class A Common Stock represented
by such certificate shall have been reclassified;
(iii) each share of Class B Common Stock issued and
outstanding immediately prior to the Effective Time shall be reclassified and
changed into one (1) validly issued, fully paid and nonassessable share of
Series B Common Stock; and
(iv) each certificate that theretofore represented shares
of Class B Common Stock shall thereafter represent the number of shares of
Series B Common Stock into which the shares of Class B Common Stock represented
by such certificate shall have been reclassified.
SECTION A
SERIES A COMMON STOCK AND SERIES B COMMON STOCK
Each share of the Series A Common Stock and each share of the
Series B Common Stock of the Corporation shall, except as otherwise provided in
this Article IV, Section A, be identical in all respects and shall have equal
rights and privileges.
1. Voting Rights.
Holders of Series A Common Stock shall be entitled to
100 votes for each share of such stock held, and holders of Series B Common
Stock shall be entitled to 1,000
3
<PAGE> 4
votes for each share of such stock held, on all matters presented to such
stockholders. Except as may otherwise be required by the laws of the State of
Delaware and, with respect to any series of Preferred Stock, except as may be
provided in any resolution or resolutions providing for the establishment of
such series pursuant to authority vested in the Board of Directors by Article
IV, Section B, of this Certificate, the holders of outstanding shares of Series
A Common Stock, the holders of outstanding shares of Series B Common Stock and
the holders of outstanding shares of each series of Preferred Stock shall vote
together as one class with respect to (i) any general election of directors and
(ii) all other matters to be voted on by stockholders of the Corporation
(including, without limitation, any proposed amendment to this Certificate that
would increase the number of authorized shares of any class of Common Stock or
any series of Preferred Stock or decrease the number of authorized shares of
any such class or series of stock (but not below the number of shares thereof
then outstanding)), and no separate vote or consent of the holders of shares of
Series A Common Stock, Series B Common Stock or any series of Preferred Stock
shall be required for the approval of any such matter.
2. Conversion Rights.
Each share of Series B Common Stock shall be convertible, at
the option of the holder thereof, into one share of Series A Common Stock. Any
such conversion may be effected by any holder of Series B Common Stock by
surrendering such holder's certificate or certificates for the Series B Common
Stock to be converted, duly endorsed, at the office of the Corporation or any
transfer agent for the Series B Common Stock, together with a written notice to
the Corporation at such office that such holder elects to convert all or a
specified
4
<PAGE> 5
number of shares of Series B Common Stock represented by such certificate and
stating the name or names in which such holder desires the certificate or
certificates for Series A Common Stock to be issued. If so required by the
Corporation, any certificate for shares surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the
Corporation, duly executed by the holder of such shares or the duly authorized
representative of such holder. Promptly thereafter, the Corporation shall
issue and deliver to such holder or such holder's nominee or nominees, a
certificate or certificates for the number of shares of Series A Common Stock
to which such holder shall be entitled as herein provided. Such conversion
shall be deemed to have been made at the close of business on the date of
receipt by the Corporation or any such transfer agent of the certificate or
certificates, notice and, if required, instruments of transfer referred to
above, and the person or persons entitled to receive the Series A Common Stock
issuable on such conversion shall be treated for all purposes as the record
holder or holders of such Series A Common Stock on that date. A number of
shares of Series A Common Stock equal to the number of shares of Series B
Common Stock outstanding from time to time shall be set aside and reserved for
issuance upon conversion of shares of Series B Common Stock. Shares of Series
B Common Stock that have been converted hereunder shall remain treasury shares
to be disposed of by resolution of the Board of Directors. Shares of Series A
Common Stock shall not be convertible into shares of Series B Common Stock.
3. Dividends. Subject to subparagraph 4 of this Section
A, whenever a dividend is paid to the holders of Series A Common Stock, the
Corporation also shall pay to the holders of Series B Common Stock a dividend
per share at least equal to the dividend per
5
<PAGE> 6
share paid to the holders of the Series A Common Stock. Subject to
subparagraph 4 of this Section A, whenever a dividend is paid to the holders of
Series B Common Stock, the Corporation shall also pay to the holders of the
Series A Common Stock a dividend per share at least equal to the dividend per
share paid to the holders of the Series B Common Stock. Dividends shall be
payable only as and when declared by the Board of Directors out of funds
legally available therefor.
4. Share Distributions. If at any time a distribution
paid in Series A Common Stock, Series B Common Stock, or any other securities
of the Corporation or any other entity (hereinafter sometimes called a "share
distribution") is to be made with respect to the Series A Common Stock or
Series B Common Stock, such share distribution may be declared and paid only as
follows:
(i) a share distribution consisting of shares of Series A
Common Stock (or convertible securities convertible into or
exercisable or exchangeable for shares of Series A Common Stock) to
holders of Series A Common Stock and Series B Common Stock, on an
equal per share basis; or consisting of shares of Series B Common
Stock (or convertible securities convertible into or exercisable or
exchangeable for shares of Series B Common Stock) to holders of Series
B Common Stock and Series A Common Stock, on an equal per share basis;
or consisting of shares of Series A Common Stock (or convertible
securities convertible into or exercisable or exchangeable for shares
of Series A Common Stock) to holders of Series A Common Stock and, on
an equal per share basis, shares of Series B Common stock (or like
convertible securities convertible into
6
<PAGE> 7
or exercisable or exchangeable for shares of Series B Common Stock) to
holders of Series B Common Stock; and
(ii) a share distribution consisting of any class or
series of securities of the Corporation or any other entity other than
Series A Common Stock or Series B Common Stock (or convertible
securities convertible into or exercisable or exchangeable for shares
of Series A Common Stock or Series B Common Stock), either on the
basis of a distribution of identical securities, on an equal per share
basis, to holders of Series A Common Stock and Series B Common Stock
or on the basis of a distribution of one class or series of securities
to holders of Series A Common Stock and another class or series of
securities to holders of Series B Common Stock, provided that the
securities so distributed (and, if the distribution consists of
convertible securities, the securities into which such convertible
securities are convertible or for which they are exercisable or
exchangeable) do not differ in any respect other than their relative
voting rights and related differences in designation, conversion,
redemption and share distribution provisions, with holders of the
shares of Series B Common Stock receiving the class or series having
the higher relative voting rights (without regard to whether such
rights differ to a greater or lesser extent than the corresponding
differences in voting rights, designation, conversion, redemption and
share distribution provisions between the Series A Common Stock and
the Series B Common Stock), provided that if the securities so
distributed constitute capital stock of a subsidiary of the
Corporation, such rights shall not differ to a greater extent than the
corresponding differences in voting rights, designation, conversion,
redemption and share distribution provisions between the Series
7
<PAGE> 8
A Common Stock and the Series B Common Stock, and provided in each
case that such distribution is otherwise made on an equal per share
basis.
The Corporation shall not reclassify, subdivide or combine the
Series A Common Stock without reclassifying, subdividing or combining the
Series B Common Stock, on an equal per share basis. The Corporation shall not
reclassify, subdivide or combine the Series B Common Stock without
reclassifying, subdividing or combining the Series A Common Stock, on an equal
per share basis.
5. Liquidation and Mergers. Subject to the prior
payment in full of the preferential amounts to which any Preferred Stock is
entitled, the holders of Series A Common Stock and the holders of Series B
Common Stock shall share equally, on a share for share basis, in any
distribution of the Corporation's assets upon any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, after payment
or provisions for payment of the debts and other liabilities of the
Corporation. Neither the consolidation or merger of the Corporation with or
into any other corporation or corporations nor the sale, transfer or lease of
all or substantially all of the assets of the Corporation shall itself be
deemed to be a liquidation, dissolution or winding up of the Corporation within
the meaning of this subparagraph 5.
SECTION B
PREFERRED STOCK
The Preferred Stock may be issued, from time to time, in one
or more series, with such powers, designations, preferences and relative,
participating, optional or other rights, and qualifications, limitations or
restrictions thereof, as shall be stated and expressed in a
8
<PAGE> 9
resolution or resolutions providing for the issue of each such series adopted
by the Board of Directors. The Board of Directors, in such resolution or
resolutions (a copy of which shall be filed and recorded as required by law),
is also expressly authorized to fix with respect to each series:
(i) the distinctive serial designations and the division
of such shares into series and the number of shares of a particular
series, which may be increased or decreased, but not below the number
of shares thereof then outstanding, by a certificate made, signed,
filed and recorded as required by law;
(ii) the dividend rate or amounts, if any, for the
particular series, the date or dates from which dividends on all
shares of such series shall be cumulative, if dividends on stock of
the particular series shall be cumulative and the relative rights of
priority, if any, or participation, if any, with respect to payment of
dividends on shares of that series;
(iii) the rights of the shares of each series in the event
of voluntary or involuntary liquidation, dissolution or winding up of
the Corporation, and the relative rights of priority, if any, of
payment of shares of each series;
(iv) the right, if any, of the holders of a particular
series to convert or exchange such stock into or for other classes or
series of a class of stock or indebtedness of the Corporation or of
another entity, and the terms and conditions of such conversion or
exchange, including provision for the adjustment of the conversion or
exchange rate in such events as the Board of Directors may determine;
9
<PAGE> 10
(v) the voting rights, if any, of the holders of a
particular series (which may be in addition to or in lieu of those
specified in this Certificate); and
(vi) the terms and conditions, if any, for the Corporation
to purchase or redeem shares of a particular series.
ARTICLE V
DIRECTORS
SECTION A
NUMBER OF DIRECTORS
The governing body of the Corporation shall be a Board of
Directors. Subject to any rights of the holders of any series of Preferred
Stock to elect additional directors (and the automatic increase of the number
of directors during the period such rights are vested if the resolution or
resolutions providing for the establishment of such series so provides), the
number of directors shall not be less than three (3) and the exact number of
directors shall be fixed by the Board of Directors by resolution. Election of
directors need not be by written ballot.
SECTION B
REMOVAL OF DIRECTORS
Subject to the rights of the holders of any series of Preferred Stock
with respect to directors especially elected by such holders, directors may be
removed from office with or without cause upon the affirmative vote of the
holders of at least 66 2/3% of the total voting power of the then outstanding
Series A Common Stock, Series B Common Stock and any series of Preferred Stock
entitled to vote at an any general election of directors, voting together as a
single class.
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SECTION C
NEWLY CREATED DIRECTORSHIPS AND VACANCIES
Subject to the rights of the holders of any series of Preferred Stock
with respect to directors especially elected by such holders, vacancies on the
Board of Directors resulting from death, resignation, removal, disqualification
or other cause, and newly created directorships resulting from any increase in
the number of directors on the Board of Directors, shall be filled by the
affirmative vote of a majority of the remaining directors then in office (even
though less than a quorum) or by the sole remaining director. Any director
elected in accordance with the preceding sentence shall hold office for the
remainder of the full term of the director whose vacancy he has filled. No
decrease in the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director, except as may be provided in the
terms of any series of Preferred Stock with respect to any additional director
especially elected by the holders of such series of Preferred Stock.
SECTION D
LIMITATION ON LIABILITY AND INDEMNIFICATION
1. Limitation On Liability.
To the fullest extent permitted by the Delaware General
Corporation Law as the same exists or may hereafter be amended, a director of
the Corporation shall not be liable to the Corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a director.
Any repeal or modification of this paragraph 1 shall be prospective only and
shall not adversely affect any limitation, right or protection of a director of
the Corporation existing at the time of such repeal or modification.
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2. Indemnification.
(a) RIGHT TO INDEMNIFICATION. The Corporation shall
indemnify and hold harmless, to the fullest extent permitted by applicable law
as it presently exists or may hereafter be amended, any person who was or is
made or is threatened to be made a party or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding") by reason of the fact that he, or a person for
whom he is the legal representative, is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust, enterprise or nonprofit entity, including
service with respect to employee benefit plans, against all liability and loss
suffered and expenses (including attorneys' fees) reasonably incurred by such
person. Such right of indemnification shall inure whether or not the claim
asserted is based on matters which antedate the adoption of this Section D.
The Corporation shall be required to indemnify a person in connection with a
proceeding (or part thereof) initiated by such person only if the proceeding
(or part thereof) was authorized by the Board of Directors of the Corporation.
(b) PREPAYMENT OF EXPENSES. The Corporation shall pay
the expenses (including attorneys' fees) incurred by a director or officer in
defending any proceeding in advance of its final disposition, provided,
however, that the payment of expenses incurred by a director or officer in
advance of the final disposition of the proceeding shall be made only upon
receipt of an undertaking by the director or officer to repay all amounts
advanced if it should be ultimately determined that the director or officer is
not entitled to be indemnified under this paragraph or otherwise.
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<PAGE> 13
(c) CLAIMS. If a claim for indemnification or payment
of expenses under this paragraph is not paid in full within 60 days after a
written claim therefor has been received by the Corporation, the claimant may
file suit to recover the unpaid amount of such claim and, if successful in
whole or in part, shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden of proving
that the claimant was not entitled to the requested indemnification or payment
of expenses under applicable law.
(d) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on
any person by this paragraph shall not be exclusive of any other rights which
such person may have or hereafter acquires under any statute, provision of this
Certificate, the Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise.
(e) OTHER INDEMNIFICATION. The Corporation's obligation,
if any, to indemnify any person who was or is serving at its request as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, enterprise or nonprofit entity shall be reduced by any amount
such person may collect as indemnification from such other corporation,
partnership, joint venture, trust, enterprise or nonprofit entity.
3. Amendment or Repeal.
Any repeal or modification of the foregoing provisions of this
Section D shall not adversely affect any right or protection hereunder of any
person in respect of any act or omission occurring prior to the time of such
repeal or modification.
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SECTION E
AMENDMENT OF BYLAWS
The Board of Directors of the Corporation is authorized to
adopt, amend, or repeal the bylaws of the Corporation except as and to the
extent provided in the bylaws.
ARTICLE VI
TERM
The term of existence of this Corporation shall be perpetual.
ARTICLE VII
STOCK NOT ASSESSABLE
The capital stock of this Corporation shall not be assessable
if fully paid. It shall be issued as fully paid, and the private property of
the stockholders shall not be liable for the debts, obligations or liabilities
of this Corporation.
ARTICLE VIII
MEETINGS OF STOCKHOLDERS
SECTION A
ANNUAL AND SPECIAL MEETINGS
Subject to the rights of the holders of any series of Preferred Stock,
stockholder action may be taken only at an annual or special meeting. Except
as otherwise provided in the terms of any series of Preferred Stock or unless
otherwise prescribed by law or by another provision of this Certificate,
special meetings of the stockholders of the Corporation, for any purpose or
purposes, shall be called by the Secretary of the Corporation only (i) upon the
written request of the holders of not less than 25% of the total voting power
of the outstanding Voting Securities (as defined
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<PAGE> 15
hereinafter) or (ii) at the request of at least 75% of the members of the Board
of Directors then in office. The term "Voting Securities" shall include the
Series A Common Stock, the Series B Common Stock and any series of Preferred
Stock entitled to vote with the holders of Common Stock generally upon all
matters which may be submitted to a vote of stockholders at any annual meeting
or special meeting thereof.
SECTION B
STOCKHOLDER ACTION WITHOUT A MEETING
Except as otherwise provided in the terms of any series of Preferred
Stock, no action required to be taken or which may be taken at any annual
meeting or special meeting of stockholders may be taken without a meeting, and
the power of stockholders to consent in writing, without a meeting, is
specifically denied.
ARTICLE IX
CERTAIN COMPROMISES OR ARRANGEMENTS
Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this Corporation under the provisions of Section 279 of Title 8
of the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this Corporation, as the
case may be, to be summoned in
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such manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
IN WITNESS WHEREOF, said TCI COMMUNICATIONS, INC. has caused
this Restated Certificate of Incorporation to be signed by its President this
_______ day of ________, 1995.
TCI COMMUNICATIONS INC.
By:
------------------------------
Name:
Title:
16
<PAGE> 1
Exhibit 4.5
FORM OF
BYLAWS
of
TCI COMMUNICATIONS, INC.
As adopted ____________, 1995
<PAGE> 2
TCI COMMUNICATIONS, INC.
A Delaware Corporation
BYLAWS
ARTICLE I
STOCKHOLDERS
Section 1.1 Annual Meeting.
An annual meeting of stockholders for the purpose of electing
directors and of transacting such other business as may come before it shall be
held each year at such date, time, and place, either within or without the
State of Delaware, as may be specified by the Board of Directors.
Section 1.2 Special Meetings.
Except as otherwise provided in the Certificate of
Incorporation, as amended from time to time (the "Certificate"), a special
meeting of stockholders shall be called by the Secretary (i) upon the written
request, stating time, place, and the purpose or purposes of the meeting, of
stockholders who together own of record not less than 25% in voting power of
the outstanding capital stock entitled to vote at such meeting or (ii) at the
request of at least 75% of the members of the Board of Directors then in
office. Special meetings of stockholders for any purpose or purposes may be
held at such time and place either within or without the State of Delaware as
may be stated in the notice.
Section 1.3 Notice of Meetings.
Written notice of stockholders meetings, stating the place,
date, and hour thereof, and, in the case of a special meeting, the purpose or
purposes for which the meeting is called,
<PAGE> 3
shall be given by the Chairman of the Board, if any, the President, the
Secretary, or any other officer, to each stockholder entitled to vote thereat
at least ten days but not more than sixty days before the date of the meeting,
unless a different period is prescribed by law or the Certificate.
Section 1.4 Quorum.
Except as otherwise provided by law or in the Certificate or
elsewhere in these Bylaws, at any meeting of stockholders the holders of a
majority in voting power of the outstanding shares of capital stock entitled to
vote at the meeting shall be present or represented by proxy in order to
constitute a quorum for the transaction of any business. In the absence of a
quorum, a majority in voting power of the stockholders present or the chairman
of the meeting may adjourn the meeting from time to time in the manner provided
in Section 1.5 of these Bylaws until a quorum shall attend.
Section 1.5 Adjournment.
Any meeting of stockholders, annual or special, may adjourn
from time to time to reconvene at the same or some other place, and notice need
not be given of any such adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken. At the adjourned
meeting, the Corporation may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder
of record entitled to vote at the meeting.
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Section 1.6 Organization.
The Chairman of the Board, if any, or in his absence the
President, shall call to order meetings of stockholders and shall act as
chairman of such meetings. The Board of Directors or, if the Board of
Directors fails to act, the stockholders may appoint any stockholder, director,
or officer of the Corporation to act as chairman of any meeting in the absence
of the Chairman of the Board or the President.
The Secretary of the Corporation shall act as secretary of all
meetings of stockholders, but, in the absence of the Secretary, the chairman of
the meeting may appoint any other person to act as secretary of the meeting.
Section 1.7 Voting.
Except as otherwise provided by law, the Certificate or
elsewhere in these Bylaws and except for the election of directors, at any
meeting duly called and held at which a quorum is present, a majority of the
votes cast at such meeting upon a given question by the holders of shares of
capital stock of the Corporation entitled to vote thereon, who are present in
person or by proxy, shall decide such question. At any meeting duly called and
held for the election of directors at which a quorum is present, directors
shall be elected by a plurality of the votes cast by the holders (acting as
such) of shares of capital stock of the Corporation entitled to elect such
directors who are present in person or by proxy.
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ARTICLE II
BOARD OF DIRECTORS
Section 2.1 Number and Term of Office.
Except as otherwise provided in the Certificate, the business,
property, and affairs of the Corporation shall be managed by or under the
direction of a Board of Directors consisting of at least three directors;
provided, however, that the Board of Directors, by resolution adopted by vote
of a majority of the then authorized number of directors, may increase or
decrease the number of directors (but not below three directors). Subject to
Article IV of these Bylaws, the directors shall be elected by the holders of
shares entitled to vote thereon at the annual meeting of stockholders, and each
shall serve (subject to the provisions of said Article IV) until the next
succeeding annual meeting of stockholders and until his respective successor
has been elected and qualified.
Section 2.2 Chairman of the Board.
The directors may elect one of their members to be Chairman of
the Board of Directors. The Chairman shall be subject to the control of and
may be removed from such office by the Board of Directors. He shall perform
such duties as may from time to time be assigned to him by the Board of
Directors.
Section 2.3 Meetings.
The annual meeting of the Board of Directors, for the election
of officers and the transaction of such other business as may come before the
meeting, shall be held without notice at the same place as, and immediately
following, the annual meeting of the stockholders.
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Regular meetings of the Board of Directors may be held without
notice at such time and place as shall from time to time be determined by the
Board of Directors.
Special meetings of the Board of Directors shall be held at
such time and place as shall be designated in the notice of the meeting
whenever called by the Chairman of the Board, if any, the President or by a
majority of the directors then in office.
Section 2.4 Notice of Special Meetings.
The Secretary, or in his absence any other officer of the
Corporation, shall give each director notice of the time and place of holding
of special meetings of the Board of Directors by mail at least 5 days before
the meeting, or by telegram, cable, facsimile transmission or personal service
at least 24 hours before the meeting. Unless otherwise stated in the notice
thereof, any and all business may be transacted at any meeting without
specification of such business in the notice.
Section 2.5 Quorum and Organization of Meetings.
A majority of the total number of members of the Board of
Directors as constituted from time to time shall constitute a quorum for the
transaction of business, but, if at any meeting of the Board of Directors
(whether or not adjourned from a previous meeting) there shall be less than a
quorum present, a majority of those present may adjourn the meeting to another
time and place, and the meeting may be held as adjourned without further notice
or waiver. Except as otherwise provided by law, the Certificate or these
Bylaws, a majority of the directors present at any meeting at which a quorum is
present may decide any question brought before such meeting. Meetings shall be
presided over by the Chairman of the Board, if any, or in his absence by the
President or in the absence of both by such other person as the directors
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may select. The Secretary of the Corporation shall act as secretary of the
meeting, but in his absence the chairman of the meeting may appoint any person
to act as secretary of the meeting.
Section 2.6 Committees.
The Board of Directors may, by resolution passed by a majority
of the whole Board of Directors, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation. The
Board of Directors may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of the committee. In the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business, property, and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it; but no such committee shall have power or
authority in reference to amending the Certificate (except that a committee
may, to the extent authorized in the resolution or resolutions providing for
the issuance of shares of stock adopted by the Board of Directors pursuant to
authority expressly granted to the Board of Directors by the Certificate, fix
with respect to each series of such stock the designations and any of the
preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class
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or classes of stock of the corporation or fix the number of shares of any
series of stock or authorize the increase or decrease of the shares of any
series) adopting an agreement of merger or consolidation under Section 251 or
252 of the General Corporation Law of the State of Delaware, recommending to
the stockholders the sale, lease, or exchange of all or substantially all of
the Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of a dissolution, or amending
these Bylaws; and, unless the resolution expressly so provides, no such
committee shall have the power or authority to declare a dividend, to authorize
the issuance of stock, or to adopt a certificate of ownership and merger
pursuant to Section 253 of the General Corporation Law of the State of
Delaware. Each committee which may be established by the Board of Directors
pursuant to these Bylaws may fix its own rules and procedures. Notice of
meetings of committees, other than of regular meetings provided for by such
rules, shall be given to committee members. All action taken by committees
shall be recorded in minutes of the meetings.
Section 2.7 Action Without Meeting.
Nothing contained in these Bylaws shall be deemed to restrict
the power of members of the Board of Directors or any committee designated by
the Board of Directors to take any action required or permitted to be taken by
them without a meeting.
Section 2.8 Telephone Meetings.
Nothing contained in these Bylaws shall be deemed to restrict
the power of members of the Board of Directors, or any committee designated by
the Board of Directors, to participate in a meeting of the Board of Directors,
or committee, by means of conference
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telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other.
ARTICLE III
OFFICERS
Section 3.1 Executive Officers.
The executive officers of the Corporation shall be a Chairman,
a President and a Secretary, each of whom shall be elected by the Board of
Directors. The Board of Directors may elect or appoint such other officers
(including a Treasurer and one or more Assistant Secretaries) as it may deem
necessary or desirable. Each officer shall hold office for such term as may be
prescribed by the Board of Directors from time to time. Any person may hold at
one time two or more offices.
Section 3.2 Powers and Duties.
The Chairman of the Board, if any, or, in his absence, the
President shall preside at all meetings of the stockholders and of the Board of
Directors. The President shall be the chief executive officer of the
Corporation. In the absence of the President, an officer appointed by the
President, or if the President fails to make such appointment, by the Board of
Directors, shall perform all the duties of the President. The officers and
agents of the Corporation shall each have such powers and authority and shall
perform such duties in the management of the business, property, and affairs of
the Corporation as generally pertain to their respective offices, as well as
such powers and authorities and such duties as from time to time may be
prescribed by the Board of Directors.
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ARTICLE IV
RESIGNATIONS, REMOVALS AND VACANCIES
Section 4.1 Resignations.
Any director or officer of the corporation, or any member of
any committee, may resign at any time by giving written notice to the Board of
Directors, the Chairman, the President, or the Secretary of the Corporation.
Any such resignation shall take effect at the time specified therein or, if the
time be not specified therein, then upon receipt thereof. The acceptance of
such resignation shall not be necessary to make it effective.
Section 4.2 Removals.
The Board of Directors, by a vote of not less than a majority
of the entire Board of Directors, at any meeting thereof, or by unanimous
written consent, at any time, may, to the extent permitted by otherwise
applicable Delaware law, remove with or without cause from office or terminate
the employment of any officer or member of any committee and may, with or
without cause, disband any committee.
Section 4.3 Vacancies.
Subject to the Certificate, any vacancy in the office of any
director or officer through death, resignation, removal, disqualification, or
other cause, and any additional directorship resulting from increase in the
number of directors, may be filled at any time by a majority of the directors
then in office (even though less than a quorum remains) or, in the case of any
vacancy in the office of any director, by the stockholders, and, subject to the
provisions of this Article IV, the person so chosen shall hold office until his
successor shall have been elected and qualified; or, if the person so chosen is
a director elected to fill a vacancy, he shall
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(subject to the provisions of this Article IV) hold office for the unexpired
term of his predecessor.
ARTICLE V
CAPITAL STOCK
Section 5.1 Stock Certificates.
The certificates for shares of the capital stock of the
Corporation shall be in such form as shall be prescribed by law and approved,
from time to time, by the Board of Directors.
Section 5.2 Transfer of Shares.
Shares of the capital stock of the Corporation may be
transferred on the books of the Corporation only by the holder of such shares
or by his duly authorized attorney, upon the surrender to the Corporation or
its transfer agent of the certificate representing such stock properly
endorsed.
Section 5.3 Fixing Record Date.
In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion, or exchange of stock, or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a record
date, which, unless otherwise provided by law, shall not be more than sixty nor
less than ten days before the date of such meeting, nor more than sixty days
prior to any other action.
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Section 5.4 Lost Certificates.
The Board of Directors or any transfer agent of the
Corporation may direct a new certificate or certificates representing stock of
the Corporation to be issued in place of any certificate or certificates
theretofore issued by the Corporation, alleged to have been lost, stolen, or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate to be lost, stolen, or destroyed. When authorizing such issue
of a new certificate or certificates, the Board of Directors (or any transfer
agent of the Corporation authorized to do so by a resolution of the Board of
Directors) may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, or his legal representative, to give the Corporation a bond in
such sum as the Board of Directors (or any transfer agent so authorized) shall
direct to indemnify the Corporation against any claim that may be made against
the Corporation with respect to the certificate alleged to have been lost,
stolen, or destroyed or the issuance of such new certificates, and such
requirement may be general or confined to specific instances.
Section 5.5 Regulations.
The Board of Directors shall have power and authority to make
all such rules and regulations as it may deem expedient concerning the issue,
transfer, registration, cancellation, and replacement of certificates
representing stock of the Corporation.
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ARTICLE VI
MISCELLANEOUS
Section 6.1 Corporate Seal.
The corporate seal shall have inscribed thereon the name of
the Corporation, the year of its organization, and the words "Corporate Seal"
and "Delaware".
Section 6.2 Fiscal Year.
The fiscal year of the Corporation shall be determined by
resolution of the Board of Directors.
Section 6.3 Notices and Waivers Thereof.
Whenever any notice whatsoever is required by law, the
Certificate or these Bylaws to be given to any stockholder, director or
officer, such notice, except as otherwise provided by law, may be given
personally, or by mail, or, in the case of directors or officers, by telegram,
cable or facsimile transmission, addressed to such person at his or her address
as it appears on the books of the Corporation. Any notice given by telegram,
cable or facsimile transmission shall be deemed to have been given when it
shall have been delivered for transmission and any notice given by mail shall
be deemed to have been given when it shall have been deposited in the United
States mail with postage thereon prepaid.
Whenever any notice is required to be given by law, the
Certificate or these Bylaws, a written waiver thereof, signed by the person
entitled to such notice, whether before or after the meeting or the time stated
therein, shall be deemed equivalent in all respects to such notice to the full
extent permitted by law.
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Section 6.4 Stock of Other Corporations or Other
Interests.
Unless otherwise ordered by the Board of Directors, the
President, the Secretary, and such attorneys or agents of the Corporation as
may be from time to time authorized by the Board of Directors or the President,
shall have full power and authority on behalf of this Corporation to attend and
to act and vote in person or by proxy at any meeting of the holders of
securities of any corporation or other entity in which this Corporation may own
or hold shares or other securities, and at such meetings shall possess and may
exercise all the rights and powers incident to the ownership of such shares or
other securities which this Corporation, as the owner or holder thereof, might
have possessed and exercised if present. The President, the Secretary, or such
attorneys or agents, may also execute and deliver on behalf of this Corporation
powers of attorney, proxies, consents, waivers, and other instruments relating
to the shares or securities owned or held by this Corporation.
ARTICLE VII
AMENDMENTS
The holders of shares of capital stock entitled at the time to
vote in any general election of directors shall have power to adopt, amend, or
repeal the Bylaws of the Corporation by vote of the holders of not less than a
majority in voting power of such shares, and except as otherwise provided by
law, the Board of Directors shall have power equal in all respects to that of
the stockholders to adopt, amend, or repeal the Bylaws by vote of not less than
a majority of the entire Board. However, any Bylaw adopted by the Board may be
amended or repealed by vote of the holders of a majority in voting power of the
shares of capital stock entitled at the time to vote in any general election of
directors.
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Exhibit 4.7
TCI COMMUNICATIONS, INC.
FORM OF CERTIFICATE OF DESIGNATIONS
------------------------
SETTING FORTH A COPY OF A RESOLUTION
CREATING AND AUTHORIZING THE ISSUANCE
OF A SERIES OF PREFERRED STOCK DESIGNATED AS
% CUMULATIVE EXCHANGEABLE PREFERRED STOCK, SERIES A
------------------------
The undersigned, a Vice President of TCI COMMUNICATIONS, INC., a Delaware
corporation (the "Company"), HEREBY CERTIFIES that (i) the Board of Directors,
in accordance with Article IV, Section B of the Company's Restated Certificate
of Incorporation, has authorized the creation of the series of Preferred Stock
hereafter provided for and has established the voting and exchange rights
thereof and has authorized, in accordance with Section 141(c) of the Delaware
General Corporation Law (the "DGCL"), an Executive Committee of the Board of
Directors (the "Executive Committee") to adopt the following resolution (which
includes the voting and exchange rights of such series as authorized by the
Board of Directors) and (ii) the Executive Committee has adopted the following
resolution, creating the following new series of the Company's Preferred Stock:
"BE IT RESOLVED, that pursuant to authority expressly granted by the
provisions of Article IV, Section B of the Restated Certificate of Incorporation
of the Company to the Board of Directors, there is hereby created and authorized
the issuance of a new series of the Company's Preferred Stock, par value $.01
per share ("Preferred Stock"), with the following powers, designations, dividend
rights, voting powers, rights on liquidation, exchange rights, redemption rights
and other preferences and relative, participating, optional or other special
rights and with the qualifications, limitations or restrictions of the shares of
such series (in addition to the powers, designations, preferences and relative,
participating, limitations or restrictions thereof set forth in the Restated
Certificate of Incorporation that are applicable to each series of Preferred
Stock) hereinafter set forth:
(1) DESIGNATION; NUMBER OF SHARES. The designation of the series of
Preferred Stock, par value $.01 per share, of the Company created hereby shall
be " % Cumulative Exchangeable Preferred Stock, Series A" (the "Series A
Preferred Stock"). The authorized number of shares of Series A Preferred Stock
shall be 2,300,000. Each share of Series A Preferred Stock shall have a stated
value of $50 ("Stated Value").
Any shares of Series A Preferred Stock redeemed or otherwise acquired by
the Company shall be retired and shall resume the status of authorized and
unissued shares of Preferred Stock, without designation as to series, until such
shares are once more designated as part of a particular series of Preferred
Stock by the Board of Directors.
(2) CERTAIN DEFINITIONS. Unless the context otherwise requires, the terms
defined in this paragraph (2) shall have, for all purposes of this Certificate
of Designations, the meanings herein specified:
"Average Market Price" per share of Series A TCI Group Common Stock at any
date of determination shall mean the average of the daily Closing Prices for the
ten consecutive Trading Dates ending on the third Business Day preceding such
date of determination, appropriately adjusted to take into account the actual
occurrence, during the period following the first of such 10 consecutive Trading
Dates and ending on the Business Day immediately preceding the date of
determination, of any event of a type described in subparagraph 5(b).
"Board of Directors" shall mean the Board of Directors of the Company, and,
unless the context indicates otherwise, shall also mean, to the extent permitted
by law, any committee thereof authorized, with respect to
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any particular matter, to exercise the power of the Board of Directors of the
Company with respect to such matter.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which banking institutions in The City of New York, New York are authorized or
obligated by law or executive order to close.
"Cash Equivalent Amount" at any date of determination shall mean an amount
equal to 95% of the Average Market Price per share of Series A TCI Group Common
Stock as of such date of determination.
"Closing Price" shall mean, on any day, (i) the last sale price (or, if no
sale price is reported on that day, the average of the bid and asked prices) of
the Series A TCI Group Common Stock on the Nasdaq National Market on such day,
or (ii), if the primary trading market for the Series A TCI Group Common Stock
is not the Nasdaq National Market, then the closing sale price regular way on
such day, or, in case no such sale takes place on such day, the reported closing
bid price regular way on such day, in each case on the New York Stock Exchange
or, if the Series A TCI Group Common Stock is not listed or admitted to trading
on such Exchange, then on the American Stock Exchange, or (iii) if the Closing
Price on such day is not available pursuant to one of the methods specified
above, then the average of the bid and asked prices for the Series A TCI Group
Common Stock on such day as furnished by any New York Stock Exchange member firm
selected from time to time by the Board of Directors for that purpose.
"Convertible Securities" shall mean rights, options or warrants to purchase
or subscribe for corporate stock.
"Dividend Payment Date" shall mean, for any Dividend Period, the last day
of such Dividend Period, which shall be the day of each ,
, and commencing with , 1996, or the
next succeeding Business Day if any such day is not a Business Day.
"Dividend Period" shall mean the period from the Issue Date to but
excluding the first Dividend Payment Date and, thereafter, each quarterly period
from and including a Dividend Payment Date to but excluding the next Dividend
Payment Date.
"Exchange Rate" shall initially mean shares of Series A TCI Group
Common Stock for each share of Series A Preferred Stock exchanged, subject to
adjustment as set forth in subparagraph 5(b).
"Exchange Date" shall have the meaning set forth in subparagraph (5)(a).
"Guarantee" shall mean the Guarantee Agreement, dated as of ,
1995, entered into by the Parent in favor of the holders from time to time of
the Series A Preferred Stock, as such agreement may be amended or supplemented
from time to time.
"Initial Exchange Date" and "Initial Redemption Date" shall each mean
, 2000.
"Issue Date" shall mean the date on which shares of Series A Preferred
Stock are first issued.
"Junior Stock" shall mean (i) each class or series of common stock of the
Company, (ii) any other class or series of capital stock of the Company
hereafter created, other than (A) any class or series of Parity Stock (except to
the extent provided under clause (iii) hereof) and (B) any class or series of
Senior Stock, and (iii) any class or series of Parity Stock to the extent that
it ranks junior to the Series A Preferred Stock as to dividend rights, rights of
redemption or rights on liquidation, as the case may be. For purposes of clause
(iii) above, a class or series of Parity Stock shall rank junior to the Series A
Preferred Stock as to dividend rights, rights of redemption or rights on
liquidation if the holders of shares of Series A Preferred Stock shall be
entitled to dividend payments, payments on redemption or payments of amounts
distributable upon dissolution, liquidation or winding up of the Company, as the
case may be, in preference or priority to the holders of shares of such class or
series.
"Liquidation Preference" measured per share of the Series A Preferred Stock
as of any date in question shall mean an amount equal to the sum of (a) the
Stated Value per share and (b) an amount equal to all dividends accrued but
unpaid on such share as of such date.
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<PAGE> 3
"Liquidating Payment" shall mean an amount equal to the Liquidation
Preference of a share of Series A Preferred Stock or, if less, the amount
payable in respect of one share of Series A Preferred Stock pursuant to
subparagraph (6)(a) upon the voluntary or involuntary liquidation, dissolution
or winding up of the affairs of the Company.
"Mandatory Redemption Date" shall mean , 2005.
"Mandatory Redemption Price," as to any share of Series A Preferred Stock
which is to be redeemed on the Mandatory Redemption Date, shall mean the
Liquidation Preference thereof on such date.
"Optional Redemption Price" shall have the meaning set forth in
subparagraph 4(b).
"Other Property" shall mean any security, other than Series A TCI Group
Common Stock, or other property deliverable upon the surrender of shares of
Series A Preferred Stock for exchange in accordance with the provisions of
paragraph (5).
"Parent" means Tele-Communications, Inc., a Delaware corporation.
"Parity Stock" shall mean the Series A Preferred Stock and any class or
series of capital stock, whether now existing or hereafter created, of the
Company ranking on a parity basis with the Series A Preferred Stock as to
dividend rights, rights of redemption or rights on liquidation. Capital stock of
any class or series, whether now existing or hereafter created, shall rank on a
parity as to dividend rights, rights of redemption or rights on liquidation with
the Series A Preferred Stock, whether or not the dividend rates, dividend
payment dates, redemption or liquidation prices per share or sinking fund or
mandatory redemption provisions, if any, are different from those of the Series
A Preferred Stock, if the holders of shares of such class or series shall be
entitled to dividend payments, payments on redemption or payments of amounts
distributable upon dissolution, liquidation or winding up of the Company, as the
case may be, in proportion to their respective accumulated and accrued and
unpaid dividends, redemption prices or liquidations prices, respectively,
without preference or priority, one over the other, as between the holders of
shares of such class or series and the holders of Series A Preferred Stock. No
class or series of capital stock that ranks junior to the Series A Preferred
Stock as to rights on liquidation shall rank or be deemed to rank on a parity
basis with the Series A Preferred Stock as to dividend rights or rights of
redemption, unless the instrument creating or evidencing such class or series of
capital stock otherwise expressly provides.
"Preferred Stock Directors" has the meaning set forth in Section (10)(b).
"Record Date" for the dividends payable on any Dividend Payment Date shall
mean the day of the month during which such Dividend Payment Date
shall occur, as and if designated by the Board of Directors.
"Redemption Date," as to any share of Series A Preferred Stock, shall mean
(i), for purposes of subparagraph 4(a), the Mandatory Redemption Date and (ii),
for purposes of subparagraph (4)(b), the date fixed by the Board of Directors
for the redemption of such share; provided, that no such date will be a
Redemption Date unless the applicable of the Mandatory Redemption Price or the
Optional Redemption Price is actually paid in full on such date for such share.
"Redemption Notice" shall have the meaning set forth in subparagraph
(4)(d).
"Redemption Price," as to any share of Series A Preferred Stock, shall mean
(i), if such share is to be redeemed pursuant to subparagraph (4)(a), the
Mandatory Redemption Price and (ii), if such share is to be redeemed pursuant to
subparagraph (4)(b), the applicable Optional Redemption Price.
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time, or any successor statute, and the rules and regulations
promulgated thereunder.
"Senior Stock" shall mean any class or series of capital stock of the
Company hereafter created ranking prior to the Series A Preferred Stock as to
dividend rights, rights of redemption or rights on liquidation. Capital stock of
any class or series shall rank prior to the Series A Preferred Stock as to
dividend rights, rights of redemption or rights on liquidation if the holders of
shares of such class or series shall be entitled to
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<PAGE> 4
dividend payments, payments on redemption or payments of amounts distributable
upon dissolution, liquidation or winding up of the Company, as the case may be,
in preference or priority to the holders of shares of Series A Preferred Stock.
No class or series of capital stock that ranks on a parity basis with or junior
to the Series A Preferred Stock as to rights on liquidation shall rank or be
deemed to rank prior to the Series A Preferred Stock as to dividend rights or
rights of redemption, notwithstanding that the dividend rate, dividend payment
dates, sinking fund provisions, if any, or mandatory redemption provisions
thereof are different from those of the Series A Preferred Stock, unless the
instrument creating or evidencing such class or series of capital stock
otherwise expressly provides.
"Series A Preferred Stock" shall have the meaning set forth in paragraph
(1).
"Series A TCI Group Common Stock" shall mean the Tele-Communications, Inc.
Series A TCI Group Common Stock, par value $1.00 per share, of Parent, which
term shall include, where appropriate, in the case of any reclassification,
recapitalization or other change in the Series A TCI Group Common Stock, or in
the case of a consolidation or merger of Parent with or into another entity
affecting the Series A TCI Group Common Stock, such capital stock to which a
holder of Series A TCI Group Common Stock shall be entitled upon the occurrence
of such event.
"Stated Value" shall have the meaning set forth in paragraph (1).
"Stock Dividend Amount" shall have the meaning set forth in subparagraph
(3)(c).
"Subsidiary" shall mean (i) a corporation a majority of the capital stock
of which, having voting power under ordinary circumstances to elect directors,
is at the time, directly or indirectly, owned by the Company and/or one or more
Subsidiaries and (ii) any other entity (other than a corporation) in which the
Company and/or one or more Subsidiaries, directly or indirectly, has the power
to elect or direct the election of a majority of the members of the governing
body of such entity.
"Trading Date" shall mean a date on which the Nasdaq National Market, the
New York Stock Exchange and the American Stock Exchange (or any successor to any
thereof) are open for the transaction of business.
"Wholly Owned Subsidiary" means (i) a corporation all of the capital stock
of which, having voting power under ordinary circumstances to elect directors,
is at the time, directly or indirectly, owned by the Company and/or one or more
Wholly Owned Subsidiaries and (ii) any other entity (other than a corporation)
in which the Company and/or one or more Wholly Owned Subsidiaries, directly or
indirectly, has the power to elect or direct the election of all of the members
of the governing body of such entity.
(3) DIVIDENDS.
(a) PAYMENT. The holders of shares of Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available therefor, cumulative dividends, in preference to
dividends on any Junior Stock, from the Issue Date at the rate per annum of %
of the Stated Value per share, rounded to the nearest cent (or a dividend rate
per share of $ per annum or $ per quarter for each share of
Series A Preferred Stock), and no more, payable quarterly for each share of
Series A Preferred Stock in arrears on each Dividend Payment Date; provided,
however, that, with respect to any Dividend Period during which a redemption
occurs, the Board of Directors may, at its option, declare accrued dividends to,
and pay such dividends on, the related Redemption Date, in which case such
dividends would be payable on such Redemption Date to the holders of the shares
of Series A Preferred Stock as of a special record date (not to exceed 45 days
preceding the payment date) for such dividend payment. Each dividend on the
shares of Series A Preferred Stock shall be payable to holders of record as they
appear on the stock register of the Company on the Record Date for such dividend
and, for purposes of calculating the accrual of dividends, dividends will accrue
to, but not including, the date fixed for payment. For purposes of determining
the amount of dividends "accrued" (i) as of the first Dividend Payment Date and
as of any date that is not a Dividend Payment Date, such amount shall be
calculated on the basis of the rate per annum specified above for actual days
elapsed from the Issue Date (in the case of the First Dividend Payment Date and
any date prior to the first Dividend Payment Date) or the last preceding
Dividend Payment Date (in the case of any other date) to but excluding the date
as of which such determination is being made, based on a
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<PAGE> 5
365-or 366-day year, as the case may be, and (ii) as of any Dividend Payment
Date (other than the first Dividend Payment Date), such amount shall be
calculated on the basis of the foregoing rate per annum, based on a 360-day year
of twelve 30-day months. The first Dividend Period shall be from the Issue Date
to but excluding , 1996, and the first dividend (if, as and when
declared by the Board of Directors) will be payable on , 1996 in the
amount of $ per share of Series A Preferred Stock.
Dividends on the shares of Series A Preferred Stock will accrue on a daily
basis (without interest or compounding) whether or not there are unrestricted
funds legally available for the payment of such dividends and whether or not
such dividends are declared. No interest, or sum of money in lieu of interest,
shall be payable in respect of any dividend payment or payments on the Series A
Preferred Stock that may be in arrears. Dividends will cease to accrue in
respect of shares of Series A Preferred Stock on the date of their redemption or
exchange.
Accrued and unpaid dividends for any past Dividend Period or Dividend
Periods may be declared and paid at any time, without reference to any Dividend
Payment Date, to holders of record on such date, not exceeding 45 days preceding
the payment date thereof, as may be fixed by the Board of Directors.
(b) COMPANY'S RIGHT TO ELECT MANNER OF PAYMENT OF DIVIDENDS. Any dividends
may be paid, at the election of the Company, (i) out of funds legally available
therefor, (ii) through the delivery of shares of Series A TCI Group Common Stock
or (iii) through any combination of the foregoing forms of consideration elected
by the Company. If any dividend declared by the Board of Directors is to be
paid, in whole or in part, through the delivery of shares of Series A TCI Group
Common Stock, each holder of Series A Preferred Stock shall receive the same
proportion of cash and/or shares of Series A TCI Group Common Stock (except for
cash paid in lieu of fractional shares) delivered in payment of such dividend to
other holders of shares of Series A Preferred Stock.
(c) PAYMENT OF DIVIDENDS BY DELIVERY OF SERIES A TCI GROUP COMMON
STOCK. If the Company elects to pay any dividend payment, in whole or in part,
by delivery of shares of Series A TCI Group Common Stock, the amount of such
dividend payment to be paid per share of Series A Preferred Stock in shares of
Series A TCI Group Common Stock (the "Stock Dividend Amount") shall be paid
through the delivery to the holders of record of such shares of Series A
Preferred Stock on the Record Date for such dividend payment of a number of
shares of Series A TCI Group Common Stock determined by dividing the Stock
Dividend Amount by the Cash Equivalent Amount (determined as of such Record
Date). No fractional shares of Series A TCI Group Common Stock shall be
delivered to a holder of shares of Series A Preferred Stock (determined on the
basis of the total number of shares of Series A Preferred Stock held by such
holder on the Record Date), but the Company shall instead pay a cash adjustment
determined as provided in paragraph (7).
If the Company elects to pay any dividend, in whole in part, through the
delivery of shares of Series A TCI Group Common Stock, the Company will give
notice of such determination (which shall include the number of shares of Series
A TCI Group Common Stock and cash, if any, to be delivered in respect of each
share of Series A Preferred Stock) by publication, on the Record Date for such
dividend, of such election in a daily newspaper of national circulation.
The Company's right to make any dividend payment (or a designated portion
thereof) through the delivery of shares of Series A TCI Group Common Stock shall
be conditioned upon: (i) the shares of Series A TCI Group Common Stock to be so
delivered being fully paid and nonassessable and free from any preemptive
rights, liens or adverse claims; (ii) the delivery of such shares of Series A
TCI Group Common Stock being exempt from the registration or qualification
requirements of the Securities Act and applicable state securities laws or, if
no such exemption is available, the delivery of such shares of Series A TCI
Group Common Stock having been duly registered or qualified under the Securities
Act and applicable state securities laws; and (iii) the shares of Series A TCI
Group Common Stock to be so delivered being listed, and upon delivery being
eligible for trading, on the Nasdaq National Market or on a national securities
exchange. If the conditions set forth in this subparagraph (3)(c) have not been
satisfied prior to or on the applicable Dividend Payment Date, then such
dividend payment shall be paid solely in cash.
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<PAGE> 6
(d) LIMITATIONS ON DIVIDENDS AND REDEMPTIONS IN RESPECT OF COMPANY
STOCK. As long as any shares of Series A Preferred Stock are outstanding, no
dividends (other than dividends payable in shares of Junior Stock and/or
Convertible Securities exercisable for or convertible into shares of Junior
Stock and cash in lieu of fractional shares in connection with any such
dividend) shall be paid or declared in cash or otherwise, nor will any other
distribution be made (other than a distribution payable in shares of Junior
Stock and/or Convertible Securities exercisable for or convertible into shares
of Junior Stock and cash in lieu of fractional shares in connection with any
such distribution), on any Junior Stock unless: (i) full dividends on all Parity
Stock have been paid, or declared and set aside for payment, for all dividend
periods terminating on or prior to the date of such Junior Stock dividend or
distribution payment, to the extent such dividends are cumulative; (ii) the
Company has paid or set aside all amounts, if any, then or theretofore required
to be paid or set aside for all purchase, retirement, and sinking funds, if any,
for any Parity Stock; and (iii) the Company is not in default on any of its
obligations to redeem any Parity Stock.
In addition, as long as any shares of Series A Preferred Stock are
outstanding, no shares of any Junior Stock may be purchased, redeemed, or
otherwise acquired by the Company or any of its Subsidiaries (except in
connection with a reclassification or exchange of any Junior Stock through the
issuance of other Junior Stock and/or Convertible Securities exercisable for or
convertible into shares of Junior Stock and cash in lieu of fractional shares in
connection therewith or the purchase, redemption, or other acquisition of any
Junior Stock (x) with any Junior Stock and/or Convertible Securities exercisable
for or convertible into shares of Junior Stock and cash in lieu of fractional
shares in connection therewith or (y) from any Wholly Owned Subsidiary) nor may
any funds be set aside or made available for any sinking fund for the purchase
or redemption of any Junior Stock, unless: (i) full dividends on all Parity
Stock have been paid, or declared and set aside for payment, for all dividend
periods terminating on or prior to the date of such purchase, redemption or
acquisition, to the extent such dividends are cumulative; (ii) the Company has
paid or set aside all amounts, if any, then or theretofore required to be paid
or set aside for all purchase, retirement, and sinking funds, if any, for any
Parity Stock; and (iii) the Company is not in default on any of its obligations
to redeem any Parity Stock.
Subject to the provisions described above, such dividends or
distributions (payable in cash, property, Junior Stock and/or Convertible
Securities exercisable for or convertible into shares of Junior Stock), as may
be determined by the Board of Directors, may be declared and paid on the shares
of any Junior Stock from time to time and Junior Stock may be purchased,
redeemed or otherwise acquired by the Company or any of its Subsidiaries from
time to time. In the event of the declaration and payment of any such dividends
or other distributions, the holders of such Junior Stock will be entitled, to
the exclusion of holders of shares of Series A Preferred Stock, to share
therein according to their respective interests.
As long as any shares of Series A Preferred Stock are outstanding,
dividends or other distributions may not be declared or paid on any Parity Stock
(other than dividends or other distributions payable in Junior Stock and/or
Convertible Securities exercisable for or convertible into shares of Junior
Stock and cash in lieu of fractional shares in connection therewith), and the
Company may not purchase, redeem or otherwise acquire any Parity Stock (except
(x) with any Junior Stock and/or Convertible Securities exercisable for or
convertible into shares of Junior Stock and cash in lieu of fractional shares in
connection therewith, (y) from any Wholly Owned Subsidiary or (z) in connection
with a mandatory conversion or exchange of such Parity Stock or a conversion or
exchange of such Parity Stock at the option of the holder for securities other
than Parity Stock or Senior Stock and cash in lieu of fractional shares in
connection therewith), unless either: (a)(i) full dividends on all Parity Stock
have been paid, or declared and set aside for payment, for all dividend periods
terminating on or prior to the date of such Parity Stock dividend, distribution,
purchase, redemption or other acquisition payment, to the extent such dividends
are cumulative; (ii) the Company has paid or set aside all amounts, if any, then
or theretofore required to be paid or set aside for all purchase, retirement,
and sinking funds, if any, for any Parity Stock; and (iii) the Company is not in
default on any of its obligations to redeem any Parity Stock; or (b) with
respect to the payment of dividends only, any such dividends are declared and
paid pro rata so that the amounts of any dividends declared and paid per share
on shares of Series A Preferred Stock and each other share of such Parity Stock
will in all cases bear to each other the same ratio that accrued and unpaid
dividends (including any accumulation with respect to unpaid dividends for prior
dividend periods,
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<PAGE> 7
if such dividends are cumulative) per share on shares of Series A Preferred
Stock and such other share of Parity Stock bear to each other.
Nothing contained in this subparagraph (3)(d) shall prevent (i) the payment
of dividends on any Junior Stock solely in shares of Junior Stock and/or
Convertible Securities exercisable for or convertible into shares of Junior
Stock (together with a cash adjustment for fractional shares, if any) or the
redemption, purchase or other acquisition of Junior Stock solely in exchange for
(together with a cash adjustment for fractional shares, if any), or through the
application of the proceeds from the sale of, shares of Junior Stock and/or
Convertible Securities exercisable for or convertible into shares of Junior
Stock; (ii) the payment of dividends on any class or series of Parity Stock
solely in shares of Junior Stock and/or Convertible Securities exercisable for
or convertible into shares of Junior Stock (together with a cash adjustment for
fractional shares, if any), or the redemption, exchange, purchase or other
acquisition of any class or series of Parity Stock solely in exchange for
(together with a cash adjustment for fractional shares, if any), or through the
application of the proceeds from the sale of, shares of Junior Stock and/or
Convertible Securities exercisable for or convertible into shares of Junior
Stock; or (iii) the exchange of Series A Preferred Stock for shares of Series A
TCI Group Common Stock (together with a cash adjustment for fractional shares,
if any) pursuant to the provisions of paragraph (5).
The provisions of the first four paragraphs of this subparagraph (3)(d)
are for the sole benefit of the holders of Series A Preferred Stock and any
other class or series of Parity Stock having the terms described therein and
accordingly, at any time when (i) there are no shares of any such other class
or series of Parity Stock outstanding or if the holders of each such other
class or series of Parity Stock have, by such vote or consent of the holders
thereof as may be provided for in the instrument creating or evidencing such
class or series, waived in whole or in part the benefit of such provisions
(either generally or in the specific instance), and (ii) the holders of shares
of Series A Preferred Stock shall have waived (as provided in paragraph (11))
in whole or in part the benefit of such provision (either generally or in the
specific instance), then the provisions of the first four paragraphs of this
subparagraph (3)(d) shall not (to the extent waived, in the case of any partial
waiver) restrict the payment of dividends on, or the redemption, purchase or
other acquisition of any shares of, Series A Preferred Stock, any other class
or series of Parity Stock or any Junior Stock.
(e) CREDIT. Any dividend payment made on the shares of Series A Preferred
Stock shall first be credited against the earliest accrued but unpaid dividend
due with respect to the shares of Series A Preferred Stock.
(f) PRO RATA. All dividends paid with respect to the shares of Series A
Preferred Stock shall be paid pro rata to the holders entitled thereto.
(g) PRIORITY. Payment of dividends to the holders of shares of Series A
Preferred Stock shall be subject to the prior preferences and other rights of
any Senior Stock.
(4) REDEMPTIONS.
(a) MANDATORY REDEMPTION BY THE COMPANY. The Company shall redeem on the
Mandatory Redemption Date all shares of Series A Preferred Stock remaining
outstanding at the Mandatory Redemption Price.
(b) OPTIONAL REDEMPTION BY THE COMPANY. Shares of Series A Preferred Stock
are not redeemable by the Company prior to the Initial Redemption Date. At any
time and from time to time on or after the Initial Redemption Date and prior to
the Mandatory Redemption Date, the Company shall have the right to redeem, in
whole or from time to time in part, the outstanding shares of Series A Preferred
Stock at the following per share call prices, together with an amount equal to
all dividends accrued but unpaid thereon to the date fixed for redemption (the
"Optional Redemption Price"), if redeemed during the twelve-month period
beginning of the year indicated below:
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<TABLE>
<CAPTION>
YEAR CALL PRICE
---------------------------------------------------------- ----------
<S> <C>
2000...................................................... $
2001......................................................
2002......................................................
2003......................................................
2004 and thereafter....................................... 50.00
</TABLE>
If fewer than all the outstanding shares of Series A Preferred Stock are to
be redeemed, shares of Series A Preferred Stock to be redeemed shall be selected
by the Company from outstanding shares of Series A Preferred Stock not
previously redeemed by lot or pro rata (as nearly as may be practicable) or by
any other method determined by the Board of Directors in its sole discretion to
be equitable.
(c) COMPANY'S RIGHT TO ELECT MANNER OF PAYMENT OF REDEMPTION PRICE. The
Company may effect the redemption of shares of Series A Preferred Stock at the
Redemption Price pursuant to subparagraph (4)(a) or (b) above, at the Company's
election, (i) out of funds legally available therefor, (ii) through the delivery
of shares of Series A TCI Group Common Stock or (iii) through any combination of
the foregoing forms of consideration elected by the Company. Each holder whose
shares of Series A Preferred Stock are redeemed shall receive in payment of the
Redemption Price the same proportion of cash and/or shares of Series A TCI Group
Common Stock (except for cash paid in lieu of fractional shares) paid to other
holders of shares of Series A Preferred Stock redeemed on the same Redemption
Date.
(d) NOTICE OF REDEMPTION. The Company shall provide notice of any
redemption of shares of Series A Preferred Stock to holders of record of Series
A Preferred Stock to be called for redemption not less than 10 nor more than 60
days prior to the date fixed for such redemption. Such notice (a "Redemption
Notice") shall be provided by mailing notice of such redemption first class
postage prepaid, to each holder of record of shares of Series A Preferred Stock
to be redeemed, at such holder's address as it appears on the stock register of
the Company; provided, however, that neither failure to give such notice nor any
defect therein shall affect the validity of the proceeding for the redemption of
any shares of Series A Preferred Stock to be redeemed except as to the holders
to whom the Company has failed to give said notice or whose notice was
defective.
In addition to any information required by law or by the applicable rules
of the Nasdaq National Market or any national securities exchange, each
Redemption Notice shall state, as appropriate, the following (and may contain
such other information as the Company deems advisable):
(A) the Redemption Date;
(B) that all outstanding shares of Series A Preferred Stock are to be
redeemed or, in the case of a call for redemption of fewer than all
outstanding shares of Series A Preferred Stock, the number of shares held
by such holder to be redeemed;
(C) the applicable Redemption Price and the form or forms of
consideration that the Company has elected to pay and/or deliver upon such
redemption and, if more than one form of consideration has been elected by
the Company, the designated portions of the Redemption Price to be paid in
each form of consideration so elected;
(D) if the Company has elected to deliver shares of Series A TCI Group
Common Stock in payment of the Redemption Price (or a designated portion
thereof), the method of determining the number of shares of Series A TCI
Group Common Stock so deliverable as provided in subparagraph 4(e) below;
(E) the place or places where certificates for Series A Preferred
Stock to be redeemed are to be surrendered for redemption;
(F) that dividends on the shares of Series A Preferred Stock to be
redeemed shall cease to accrue on the Redemption Date (except as otherwise
provided herein); and
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<PAGE> 9
(G) the then current Exchange Rate and the place or places where
certificates for Series A Preferred Stock may be surrendered for exchange
pursuant to paragraph (5), and shall further state that the exchange
privilege will terminate immediately prior to the close of business on the
Redemption Date.
(e) REDEMPTION BY DELIVERY OF SERIES A TCI GROUP COMMON STOCK. If the
Company elects to pay, in whole or in part, the Redemption Price in respect of
shares of Series A Preferred Stock through the delivery of shares of Series A
TCI Group Common Stock, then the Company shall deliver to each holder of shares
of Series A Preferred Stock to be redeemed on the applicable Redemption Date a
number of shares of Series A TCI Group Common Stock equal to the aggregate
Redemption Price (or designated portion thereof) of such shares of Series A
Preferred Stock divided by the Cash Equivalent Amount (determined as of such
Redemption Date).
The Company's right to elect to pay any Redemption Payment (or designated
portion thereof) through the delivery of shares of Series A TCI Group Common
Stock shall be conditioned upon: (i) the Company's having timely given a
Redemption Notice setting forth such election; (ii) the shares of Series A TCI
Group Common Stock to be so delivered being fully paid and nonassessable and
free from any preemptive rights, liens or adverse claims; (iii) the delivery of
such shares of Series A TCI Group Common Stock being exempt from the
registration or qualification requirements of the Securities Act and applicable
state securities laws or, if no such exemption is available, the delivery of
such shares of Series A TCI Group Common Stock having been duly registered or
qualified under the Securities Act and applicable state securities laws; and
(iv) the shares of Series A TCI Group Common Stock being listed, and upon
delivery being eligible for trading, on the Nasdaq National Market or on a
national securities exchange. If the conditions set forth in this subparagraph
(4)(e) have not been satisfied prior to or on the Redemption Date, the
Redemption Price to be paid on such Redemption Date shall be paid solely in
cash.
(f) DEPOSIT OF FUNDS AND/OR SHARES. If the Redemption Notice with respect
to shares of Series A Preferred Stock to be redeemed pursuant to this paragraph
(4) shall have been timely given by the Company, and if on or before the
applicable Redemption Date the Company shall have deposited with the redemption
agent for the Series A Preferred Stock (or, if there is no redemption agent,
shall have set apart so as to be available for such purpose and only such
purpose) cash (including cash for any adjustment in lieu of delivering
fractional securities) and/or shares of Series A TCI Group Common Stock, as
applicable, sufficient to pay in full the aggregate Redemption Price for such
shares of Series A Preferred Stock on such Redemption Date, and provided that
all conditions set forth in subparagraph (4)(e) to the delivery of shares of
Series A TCI Group Common Stock shall have been satisfied (if applicable), then
effective as of the close of business on such Redemption Date, such shares of
Series A Preferred Stock shall no longer be deemed outstanding (notwithstanding
that any certificate therefor shall not have been surrendered for cancellation),
dividends with respect to the shares so called for redemption shall cease to
accrue on the Redemption Date (except that holders of shares of Series A
Preferred Stock at the close of business on a Record Date for any payment of
dividends shall be entitled to receive the dividend payable on such shares on
the corresponding Dividend Payment Date notwithstanding the redemption of such
shares following such Record Date and prior to such Dividend Payment Date) and
all rights with respect to the shares so called for redemption shall forthwith
after such date cease and terminate, except the right of such holders, upon the
surrender of certificates evidencing the shares of Series A Preferred Stock so
redeemed, to receive the cash and/or Series A TCI Group Common Stock, as
applicable, payable or deliverable in payment of the Redemption Price therefor,
and the applicable cash adjustment, if any, in lieu of fractional shares,
without interest. Any cash and/or shares of Series A TCI Group Common Stock so
deposited or set apart and unclaimed at the end of one year from such Redemption
Date shall be repaid and released to the Company, after which the holder or
holders of such shares of Series A Preferred Stock so called for redemption
shall look only to the Company for delivery of such cash and/or shares of Series
A TCI Group Common Stock. If any shares of Series A Preferred Stock so called
for redemption are exchanged, in accordance with paragraph (5), between the date
such cash and/or shares of Series A TCI Group Common Stock are so deposited or
set apart and the close of business on the Redemption Date, then the cash
(including cash for any adjustment in lieu of delivering fractional securities)
and/or shares of Series A TCI Group Common Stock, as applicable, deposited or
set apart for the redemption of such
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<PAGE> 10
shares so exchanged shall be promptly thereafter returned to the Company or
shall no longer be deemed set apart for such purpose.
(g) SURRENDER OF CERTIFICATES; STATUS. Each holder of shares of Series A
Preferred Stock to be redeemed shall surrender the certificates evidencing such
shares (properly endorsed or assigned to the Company in blank and with
signatures guaranteed, if the Company shall so require and the Redemption Notice
shall so state) to the redemption agent (or to the Company if there is no
redemption agent) at the place designated in the Redemption Notice for such
redemption and shall thereupon be entitled to receive the consideration for such
shares specified in the Redemption Notice (subject to subparagraph (4)(e)) in an
aggregate amount equal to the Redemption Price for such shares. In case fewer
than all the shares of Series A Preferred Stock represented by any such
surrendered certificate are called for redemption, a new certificate shall be
issued at the expense of the Company representing the unredeemed shares. Holders
of shares of Series A Preferred Stock that are redeemed on any Redemption Date
shall not be entitled to receive dividends declared and paid on any shares of
Series A TCI Group Common Stock deliverable in payment of the Redemption Price
(or designated portion thereof) for such shares of Series A Preferred Stock, and
such shares of Series A TCI Group Common Stock shall not be entitled to vote,
until such shares of Series A TCI Group Common Stock are delivered upon the
surrender of the certificates representing such shares of Series A Preferred
Stock. Upon such surrender, such holders shall be entitled to receive such
dividends declared and paid on such shares of Series A TCI Group Common Stock
subsequent to such Redemption Date and prior to such delivery.
(h) PRIORITY. The right of the Company to redeem shares of Series A
Preferred pursuant to this paragraph (4) shall be subject to the prior
preferences and other rights of any Senior Stock.
(5) EXCHANGE AT OPTION OF HOLDER.
(a) Subject to the provisions of this paragraph (5), shares of Series A
Preferred Stock are exchangeable, in whole or from time to time in part, at the
option of the holders thereof, at any time from and after the Initial Exchange
Date and prior to the close of business on the Mandatory Redemption Date, unless
previously redeemed, into shares of Series A TCI Group Common Stock at the
Exchange Rate. The right to exchange shares of Series A Preferred Stock called
for redemption shall terminate immediately prior to the close of business on the
related Redemption Date.
Exchange of shares of Series A Preferred Stock at the option of the holder
may be effected by delivering certificates evidencing such shares, together with
(i) written notice of exchange specifying the number of shares of Series A
Preferred Stock to be exchanged and specifying the name or names (with
addresses) in which the certificate or certificates representing the Series A
TCI Group Common Stock and Other Property deliverable on such exchange are to be
registered and (ii) a proper assignment to the Parent (or in blank) of the
certificate(s) for the shares of Series A Preferred Stock surrendered for
exchange, to the office or agency to be maintained by the Parent for that
purpose and otherwise in accordance with exchange procedures established by the
Parent and the Company. Each notice of exchange shall be irrevocable, and each
exchange shall be deemed to have been effected immediately prior to the close of
business on the date (the "Exchange Date") on which all of the requirements for
such exchange shall have been satisfied. The exchange shall be at the Exchange
Rate in effect immediately prior to the close of business on the Exchange Date.
As promptly as practicable after the surrender of certificates for shares
of Series A Preferred Stock by a holder as aforesaid, the Parent, in accordance
with the provisions of this paragraph (5) and the Guarantee, shall issue and
deliver at said office or agency to such holder, or on his or her written order,
a certificate or certificates for the number of full shares of Series A TCI
Group Common Stock issuable upon exchange of such shares in accordance with the
provisions of this paragraph (5), and any fractional interest shall be settled
by the Company in accordance with subparagraph (7).
The person in whose name the certificate for shares of Series A TCI Group
Common Stock is issued upon such exchange shall be treated for all purposes as
the stockholder of record of such shares of Series A TCI Group Common Stock as
of the close of business on the Exchange Date; provided, however, that no
surrender of Series A Preferred Stock on any date when the stock transfer books
of the Parent are closed for
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<PAGE> 11
any purpose shall be effective to constitute the person or persons entitled to
receive the shares of Series A TCI Group Common Stock deliverable upon such
exchange as the record holder(s) of such shares of Series A TCI Group Common
Stock on such date, but surrender shall be effective (assuming all other
requirements for the valid exchange of such shares have been satisfied) to
constitute such person or persons as the record holder(s) of such shares of
Series A TCI Group Common Stock for all purposes as of the opening of business
on the next succeeding day on which such stock transfer books are open, and such
exchange shall be at the Exchange Rate in effect on the date that such shares of
Series A Preferred Stock were surrendered for exchange (and such other
requirements satisfied) as if the stock transfer books of the Company had not
been closed on such date. Upon exchange of shares of Series A Preferred Stock,
the rights of the holder of such shares, as a holder thereof, shall cease.
Holders of shares of Series A Preferred Stock at the close of business on a
Record Date for any payment of declared dividends shall be entitled to receive
the dividend payable on such shares on the corresponding Dividend Payment Date
notwithstanding the effective exchange of such shares following such Record Date
and prior to the corresponding Dividend Payment Date. However, shares of Series
A Preferred Stock surrendered for exchange after the close of business on a
Record Date for any payment of dividends and before the opening of business on
the next succeeding Dividend Payment Date must be accompanied by payment in cash
of an amount equal to the dividend thereon attributable to the current quarterly
Dividend Period which is to be paid on such Dividend Payment Date (unless such
shares are subject to redemption on a Redemption Date between such Record Date
and such Dividend Payment Date). A holder of shares of Series A Preferred Stock
called for redemption on any Dividend Payment Date shall (if such holder is the
registered holder on the applicable Record Date) receive the dividend on such
shares payable on that date and will be able to exchange such shares after the
Record Date for such dividend without paying an amount equal to such dividend to
the Company upon exchange. Except as provided above, upon any exchange of shares
of Series A Preferred Stock pursuant to this paragraph (5), the Company shall
make no payment or allowance for unpaid dividends, whether or not in arrears, on
exchanged shares of Series A Preferred Stock or for previously declared
dividends or distributions on the shares of Series A TCI Group Common Stock
issued upon such exchange (or on any Other Property issued upon such exchange
pursuant to this paragraph (5)).
If the shares of Series A Preferred Stock represented by a certificate
surrendered for exchange are exchanged in part only, the Company shall cause to
be issued and delivered to the holder, without charge therefor, a new
certificate or certificates representing in the aggregate the number of
unexchanged shares.
(b) EXCHANGE RATE ADJUSTMENTS. The Exchange Rate shall be subject to
adjustment from time to time as provided below in this subparagraph (5)(b).
(i) If the Parent shall, after the Issue Date:
(A) pay a stock dividend or make a distribution on the outstanding
shares of Series A TCI Group Common Stock in shares of Series A TCI
Group Common Stock,
(B) subdivide or split the outstanding shares of Series A TCI Group
Common Stock into a greater number of shares,
(C) combine the outstanding shares of Series A TCI Group Common
Stock into a smaller number of shares, or
(D) issue by reclassification of its outstanding shares of Series A
TCI Group Common Stock any shares of its common stock,
then, in any such event, the Exchange Rate in effect immediately prior to
the opening of business on the record date for determination of
stockholders entitled to receive such dividend or distribution or the
effective date of such subdivision, split, combination or reclassification,
as the case may be, shall be adjusted so that the holder of shares of
Series A Preferred Stock shall thereafter be entitled to receive, upon
exchange at the option of such holder, the number of shares of Series A TCI
Group Common Stock or other common stock of the Parent which such holder
would have owned or been entitled to receive immediately following such
action if such holder had exchanged his shares of Series A Preferred Stock
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<PAGE> 12
immediately prior to the record date for, or effective date of, as the case
may be, such event. Such adjustment shall be made successively whenever any
event listed above shall occur.
For a dividend or distribution, the adjustment shall become effective
at the opening of business on the Business Day next following the record
date for such dividend or distribution. For a subdivision, split,
combination or reclassification, the adjustment shall become effective
immediately after the effectiveness of such subdivision, split, combination
or reclassification.
(ii) If the Parent shall, after the Issue Date, issue rights, warrants
or options to all holders of its outstanding shares of Series A TCI Group
Common Stock entitling them (for a period not exceeding forty-five days
from the record date referred to below) to subscribe for or purchase shares
of Series A TCI Group Common Stock at a price per share less than the
Average Market Price per share of the Series A TCI Group Common Stock
(determined as of the record date for the determination of stockholders
entitled to receive such rights, warrants or options), then, in any such
event, the Exchange Rate shall be adjusted by multiplying the Exchange Rate
in effect immediately prior to the opening of business on such record date
by a fraction, of which the numerator shall be the number of shares of
Series A TCI Group Common Stock outstanding on such record date plus the
maximum number of additional shares of Series A TCI Group Common Stock
offered for subscription pursuant to such rights, warrants or options, and
of which the denominator shall be the number of shares of Series A TCI
Group Common Stock outstanding on such record date plus the maximum number
of additional shares of Series A TCI Group Common Stock which the aggregate
offering price of the maximum number of shares of Series A TCI Group Common
Stock so offered for subscription or purchase pursuant to such rights,
warrants or options would purchase at such Average Market Price (determined
by multiplying such maximum number of shares by the exercise price of such
rights, warrants or options (plus any other consideration received by the
Parent upon the issuance or exercise of such rights, warrants or options)
and dividing the product so obtained by such Average Market Price). Such
adjustment shall become effective at the opening of business on the
Business Day next following the record date for the determination of
stockholders entitled to receive such rights, warrants or options. To the
extent that shares of Series A TCI Group Common Stock are not delivered
after the expiration of such rights, warrants or options, the Exchange Rate
shall be readjusted to the Exchange Rate which would then be in effect had
the adjustments made upon the record date for the determination of
stockholders entitled to receive such rights, warrants or options been made
upon the basis of delivery of only the number of shares of Series A TCI
Group Common Stock actually delivered and the amount actually paid
therefor. Such adjustment shall be made successively whenever any such
rights, warrants or options are issued. In determining whether any rights,
warrants or options entitle the holders to subscribe for or purchase shares
of Series A TCI Group Common Stock at a price per share less than such
Average Market Price, there shall be taken into account any consideration
received by the Parent upon issuance and upon exercise of such rights,
warrants or options. The value of such consideration, if other than cash,
shall be determined by the Board of Directors, whose determination shall be
conclusive.
(iii) If the Parent shall, after the Issue Date, pay a dividend or
make a distribution to all holders of its outstanding shares of Series A
TCI Group Common Stock of capital stock, cash, evidences of its
indebtedness or other assets of the Parent, but excluding (x) any cash
dividends or distributions (other than Extraordinary Cash Distributions (as
hereinafter defined)) and (y) dividends or distributions referred to in
subparagraph (5)(b)(i) above, or shall issue to all holders of its
outstanding shares of Series A TCI Group Common Stock rights, warrants or
options to subscribe for or purchase any securities (other than those
referred to in subparagraph (5)(b)(ii) above), then, in any such event, the
Exchange Rate shall be adjusted by multiplying the Exchange Rate in effect
immediately prior to the opening of business on the record date for the
determination of stockholders entitled to receive such dividend or
distribution or such rights, warrants or options by a fraction, of which
the numerator shall be the Average Market Price per share of the Series A
TCI Group Common Stock (determined as of such record date), and of which
the denominator shall be such Average Market Price less either (A) the fair
market value (as determined by the Board of Directors, whose determination
shall be conclusive), as of such record date, of the portion of the capital
stock, assets or evidences of indebtedness to be so
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<PAGE> 13
distributed, or of such rights, warrants or options to be so issued,
applicable to one share of Series A TCI Group Common Stock or (B), if
applicable, the amount of the Extraordinary Cash Distribution to be
distributed per share of Series A TCI Group Common Stock. The adjustment
pursuant to the foregoing provisions of this subparagraph (5)(b)(iii) shall
be made successively whenever any dividend or distribution or issuance of
rights, warrants or options to which this subparagraph (5)(b)(iii) applies
is made, and shall become effective at the opening of business on the
Business Day next following the record date for the determination of
stockholders entitled to receive such dividend or distribution or such
rights, warrants or options. As used in this subparagraph (5)(b)(iii), the
term "Extraordinary Cash Distributions" means, with respect to any
consecutive 12-month period, all cash dividends and cash distributions on
the outstanding shares of Series A TCI Group Common Stock during such
period (other than cash dividends or cash distributions for which a prior
adjustment to the Exchange Rate was previously made) to the extent such
cash dividends and cash distributions exceed, on a per share of Series A
TCI Group Common Stock basis, 10% of the average daily Closing Price of the
Series A TCI Group Common Stock over such period.
(iv) In lieu of making an adjustment to the Exchange Rate pursuant to
subparagraph (5)(b) (i), (ii) or (iii) above for a dividend or distribution
or an issue of rights, warrants or options, the Parent or the Company may
distribute to the holders of Series A Preferred Stock, or reserve for
distribution with each share of Series A TCI Group Common Stock delivered
to a person exchanging a share of Series A Preferred Stock pursuant to this
paragraph (5), such dividend or distribution or such rights, warrants or
options; provided however, in the case of such a reservation, on the date,
if any, on which a person exchanging a share of Series A Preferred Stock
would no longer be entitled to receive such dividend or distribution or
rights, warrants or options, such dividend or distribution shall be deemed
to have occurred, or such rights, warrants or options shall be deemed to
have issued, and the Exchange Rate shall be adjusted as provided in
subparagraph (5)(b)(i), (ii) or (iii), as the case may (with such
termination date being the relevant date of determination for purposes of
determining the Average Market Price).
(v) Any shares of Series A TCI Group Common Stock issuable in payment
of a dividend shall be deemed to have been issued immediately prior to the
close of business on the record date for such dividend for purposes of
calculating the number of outstanding shares of Series A TCI Group Common
Stock under this subparagraph (5)(b). Shares of Series A TCI Group Common
Stock owned by or held for the account of the Company or any of its Wholly
Owned Subsidiaries shall not be deemed outstanding for the purposes of this
subparagraph (5)(b).
(vi) In any case in which this subparagraph (5)(b) shall require that
an adjustment be made in the Exchange Rate, the Company may, in its sole
discretion, elect to defer the following until after the occurrence of the
event which requires such adjustment: (A) issuing to the holder of any
Series A Preferred Stock surrendered for exchange the additional shares of
Series A TCI Group Common Stock issuable upon such exchange over the shares
of Series A TCI Group Common Stock issuable before giving effect to such
adjustment and (B) paying to such holder any amount in cash in lieu of a
fractional share of Series A TCI Group Common Stock.
(vii) All adjustments to the Exchange Rate shall be calculated to the
nearest 1/100th of a share of Series A TCI Group Common Stock or Other
Property. No adjustment in the Exchange Rate shall be required unless such
adjustment would require an increase or decrease of at least one percent
therein; provided, however, that any adjustment which by reason of this
subparagraph is not required to be made shall be carried forward and taken
into account in any subsequent adjustment. In addition, no adjustment need
be made for rights to purchase shares of Series A TCI Group Common Stock or
for sales of shares of Series A TCI Group Common Stock which in either case
are made pursuant to a plan providing for reinvestment of dividends or
interest or pursuant to a bona fide employee stock option or stock purchase
plan (x) of the Parent or any wholly owned subsidiary of the Parent or (y)
of the Company or any Wholly Owned Subsidiary. No adjustment need be made
for a change in the par value of the Series A TCI Group Common Stock.
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<PAGE> 14
(viii) The Company shall be entitled, at the direction of the Parent
and to the extent permitted by law, to make such increases in the Exchange
Rate, in addition to those referred to above in this subparagraph 5(b), as
the Parent determines to be advisable in order that any stock dividends,
subdivisions of shares, reclassification or combination of shares,
distribution of rights, options or warrants to purchase stock or
securities, or a distribution of other assets (other than cash dividends)
hereafter made by the Parent to its stockholders shall not be taxable.
(ix) There shall be no adjustment to the Exchange Rate in the event of
the issuance of any stock or other securities or assets of the Parent in a
reorganization, acquisition or other similar transaction except as
specifically provided in this paragraph (5). In the event this subparagraph
(5)(b) requires adjustments to the Exchange Rate under more than one of
subparagraph (5)(b)(i), (ii) or (iii), and the record dates for the
dividends or distributions giving rise to such adjustments shall occur on
the same date, then such adjustments shall be made by applying first, the
provisions of subparagraph (5)(b)(i), second, the provisions of
subparagraph (5)(b)(iii) and third, the provisions of subparagraph
(5)(b)(ii).
(c) FRACTIONAL SHARES OF SERIES A PREFERRED STOCK. No fractional shares of
Series A Preferred Stock may be tendered for exchange pursuant to this paragraph
(5).
(d) ADJUSTMENT FOR CONSOLIDATION OR MERGER OF PARENT. In case of any
consolidation or merger to which the Parent is a party, or in the case of any
sale or transfer to another corporation of the property of the Parent as an
entirety or substantially as an entirety, or in case of any statutory exchange
of securities with another corporation (other than in connection with a merger
or acquisition) (each of the foregoing being referred to herein as a
"Transaction"), in each case as a result of which shares of Series A TCI Group
Common Stock shall be converted into the right to receive stock, securities or
other property (including cash or any combination thereof), proper provision
shall be made so that each share of Series A Preferred Stock which is not
converted into the right to receive stock, securities or other property in
connection with such Transaction shall, after consummation of such Transaction,
be subject to exchange at the option of the holder into the kind and amount of
stock, securities or other property receivable upon consummation of such
Transaction by a holder of the number of shares of Series A TCI Group Common
Stock (and/or any Other Property into which the Series A Preferred Stock may be
exchangeable in accordance with this paragraph (5)) into which such share of
Series A Preferred Stock might have been exchanged immediately prior to
consummation of such Transaction (assuming in each case that such holder of
Series A TCI Group Common Stock (or such Other Property) failed to exercise
rights of election, if any, as to the kind or amount of stock, securities or
other property receivable upon consummation of such Transaction (provided that
if the kind or amount of stock, securities or other property receivable upon
consummation of such Transaction is not the same for each non-electing share,
then the kind and amount of stock, securities or other property receivable upon
consummation of such Transaction for each non-electing share shall be deemed to
be the kind and amount so receivable per share by a plurality of the
non-electing shares)). The kind and amount of stock or securities into which the
shares of Series A Preferred Stock shall be exchangeable after consummation of
such Transaction shall be subject to adjustment, as nearly as may be
practicable, as described in subparagraph (5)(b) following the date of
consummation of such Transaction. Pursuant to the Guarantee, the Parent has
agreed not to become a party to any Transaction unless the terms thereof are
consistent with this subparagraph (5)(d). The provisions of this subparagraph
(5)(d) shall similarly apply to successive Transactions.
(e) NOTICE OF ADJUSTMENTS. Whenever the Exchange Rate is adjusted as
herein provided, the Company shall:
(i) forthwith compute the adjusted Exchange Rate in accordance
herewith and prepare a certificate signed by an officer of the Company
setting forth the adjusted Exchange Rate, the method of calculation thereof
in reasonable detail and the facts requiring such adjustment and upon which
such adjustment is based, which certificate shall be conclusive, final and
binding evidence of the correctness of the adjustment (absent manifest
error), and file such certificate forthwith with the transfer agent for the
shares of Series A Preferred Stock and the Series A TCI Group Common Stock;
and
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<PAGE> 15
(ii) mail a notice to the holders of the outstanding shares of Series
A Preferred Stock stating that the Exchange Rate has been adjusted, the
facts requiring such adjustment and upon which such adjustment is based and
setting forth the adjusted Exchange Rate, such notice to be mailed at or
prior to the time the Company mails an interim statement, if any, to its
stockholders covering the fiscal quarter during which the facts requiring
such adjustment occurred, but in any event within 45 days following the end
of such fiscal quarter.
(f) NOTICE OF CERTAIN TRANSACTIONS. In case, at any time while any of the
shares of Series A Preferred Stock are outstanding,
(i) the Parent takes any action which would require an adjustment to
the Exchange Rate; or
(ii) the Parent shall authorize (x) any consolidation, merger or
binding share exchange to which the Parent is a party and for which
approval of any stockholders of the Parent is required (except for a merger
of the Parent into one of its Wholly Owned Subsidiaries solely for the
purpose of changing the corporate domicile of the Parent to another state
of the United States and in connection with which there is no substantive
change in the rights or privileges of any securities of the Parent other
than changes resulting from differences in the corporate statutes of the
then existing and the new state of domicile), or (y) the sale or transfer
of all or substantially all of the assets of the Parent; or
(iii) the Parent shall authorize the voluntary dissolution,
liquidation or winding up of the Parent or the Parent is the subject of an
involuntary dissolution, liquidation or winding up;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of exchange of the shares of Series A Preferred Stock, and shall
cause to be mailed to the holders of shares of Series A Preferred Stock at their
last addresses as they shall appear on the stock register, at least 10 days
before the record date or other date set for definitive action if there shall be
no record date, a notice stating the action or event for which such notice is
being given and the record date for and the anticipated effective date of such
action or event; provided, however, that any notice required hereunder shall in
any event be given no later than the time that notice is given to the holders of
the Series A TCI Group Common Stock. The failure to give or receive the notice
required by this subparagraph (5)(e) or any defect therein shall not affect the
legality or validity of any action or any vote thereon.
(g) ACTIONS IN RESPECT OF SERIES A TCI GROUP COMMON STOCK. The Company
shall take, and the Parent has agreed to take pursuant to the Guarantee, such
reasonable action which may, in the opinion of the Company's or Parent's legal
counsel, be necessary in order that (i) the Company may validly and legally
deliver fully paid and nonassessable shares of Series A TCI Group Common Stock
upon any surrender of shares of Series A Preferred Stock for exchange pursuant
to this paragraph (5), (ii) the delivery of shares of Series A TCI Group Common
Stock in accordance with this paragraph (5) is exempt from the registration or
qualification requirements of the Securities Act and applicable state securities
laws or, if no such exemption is available, that the offer and exchange of such
shares of Series A TCI Group Common Stock have been duly registered or qualified
under the Securities Act and applicable state securities laws, (iii) the shares
of Series A TCI Group Common Stock delivered upon such exchange are listed for
trading on the Nasdaq National Market or on a national securities exchange (upon
official notice of issuance) and (iv) the shares of Series A TCI Group Common
Stock delivered upon such exchange are free of preemptive rights and any liens
or adverse claims.
Pursuant to the Guarantee, the Parent has agreed to at all times reserve
and keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Series A TCI Group Common Stock and/or its issued Series
A TCI Group Common Stock held in its treasury, for the purpose of effecting any
exchange of shares of Series A Preferred Stock at the option of the holder
pursuant to this paragraph (5), the full number of shares of Series A TCI Group
Common Stock then deliverable upon the exchange of all then outstanding shares
of Series A Preferred Stock (assuming for this purpose that all of the
outstanding shares of Series A Preferred Stock are held by a single holder).
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<PAGE> 16
(6) LIQUIDATION RIGHTS.
(a) PAYMENT OF LIQUIDATION PREFERENCE. In the event of any liquidation,
dissolution, or winding up of the affairs of the Company, whether voluntary or
involuntary, the holders of shares of Series A Preferred Stock then outstanding,
after payment or provision for payment of the debts and other liabilities of the
Company and the payment or provision for payment of any distribution on any
shares of Senior Stock, and before any distribution to the holders of Junior
Stock, shall be entitled to be paid out of the assets of the Company available
for distribution to its stockholders an amount per share of Series A Preferred
Stock in cash equal to the Liquidation Preference. In the event the assets of
the Company available for distribution to the holders of the shares of Series A
Preferred Stock upon any dissolution, liquidation or winding up of the Company
shall be insufficient to pay in full the Liquidation Preference payable to the
holders of outstanding shares of Series A Preferred Stock and the liquidation
preference payable to all other shares of Parity Stock (as set forth in the
instrument or instruments creating such Parity Stock), the holders of shares of
Series A Preferred Stock and of all other shares of Parity Stock shall share
ratably in such distribution of assets in proportion to the amount which would
be payable on such distribution if the amounts to which the holders of
outstanding shares of Series A Preferred Stock and the holders of outstanding
shares of such Parity Stock were paid in full. Except as provided in this
subparagraph (6)(a), holders of Series A Preferred Stock shall not be entitled
to any distribution in the event of the liquidation, dissolution or winding up
of the affairs of the Company.
(b) CERTAIN EVENTS NOT DEEMED LIQUIDATION, ETC. For the purposes of this
paragraph (6), none of the following shall be deemed to be a voluntary or
involuntary liquidation, dissolution or winding up of the Company:
(i) the sale, lease, transfer or exchange of all or substantially all
of the assets of the Company; or
(ii) the consolidation or merger of the Company with one or more other
corporations (whether or not the Company is the corporation surviving such
consolidation or merger) or the consummation of a statutory binding share
exchange involving the Company.
(c) COMPANY'S RIGHT TO ELECT MANNER OF PAYMENT OF LIQUIDATING PAYMENT. Any
Liquidating Payment may be paid, at the election of the Company, (i) out of
funds legally available therefor, (ii) through the delivery of shares of Series
A TCI Group Common Stock or (iii) through any combination of the foregoing forms
of consideration elected by the Company. Upon the liquidation, dissolution or
winding up of the affairs of the Company, each holder of Series A Preferred
Stock shall receive the same proportion of cash and/or shares of Series A TCI
Group Common Stock (except for cash paid in lieu of fractional shares) delivered
in payment of the Liquidating Payment made to other holders of shares of Series
A Preferred Stock.
(d) PAYMENT OF LIQUIDATING PAYMENT BY DELIVERY OF SERIES A TCI GROUP COMMON
STOCK. The Company may elect to make, in whole or in part, the Liquidating
Payment in respect of shares of Series A Preferred Stock by delivery to the
holders thereof of a number of shares of Series A TCI Group Common Stock equal
to the aggregate Liquidating Payment (or designated portion thereof) payable in
respect of such shares divided by the Cash Equivalent Amount (determined as of
the date of payment of such Liquidating Payment). In connection with any
Liquidating Payment, no fractional shares of Series A TCI Group Common Stock
shall be delivered to a holder of shares of Series A Preferred Stock (determined
on the basis of the total number of shares of Series A Preferred Stock held by
such holder on the date of payment of such Liquidating Payment), but the Company
shall instead pay a cash adjustment determined as provided in paragraph (7).
The Company's right to elect to make any Liquidating Payment (or designated
portion thereof) through the delivery of shares of Series A TCI Group Common
Stock shall be conditioned upon: (i) the shares of Series A TCI Group Common
Stock to be so delivered being fully paid and nonassessable and free from any
preemptive rights, liens or adverse claims; (ii) the delivery of such shares of
Series A TCI Group Common Stock being exempt from the registration or
qualification requirements of the Securities Act and applicable state securities
laws or, if no such exemption is available, the delivery of such shares of
Series A TCI Group Common Stock having been duly registered or qualified under
the Securities Act and applicable state securities laws; and (iii) the shares of
Series A TCI Group Common Stock to be so delivered being listed, and
16
<PAGE> 17
upon delivery being eligible for trading, on the Nasdaq National Market or on a
national securities exchange. If the conditions set forth in this subparagraph
(6)(d) have not been satisfied prior to or on the date of payment of any
Liquidating Payment, such Liquidating Payment shall be paid solely in cash.
(7) NO FRACTIONAL SHARES OF SERIES A TCI GROUP COMMON STOCK. No fractional
shares of Series A TCI Group Common Stock or scrip shall be issued upon the
exchange of Series A Preferred Stock for Series A TCI Group Common Stock or in
connection with the delivery of shares of Series A TCI Group Common Stock in
payment, in whole or in part, of any dividend, Redemption Price or Liquidating
Payment. Whether or not a fractional share would be delivered to a holder of
Series A Preferred Stock shall be based upon (i), in the case of an exchange
pursuant to paragraph (5), on the total number of shares of Series A Preferred
Stock such holder is at the time exchanging into Series A TCI Group Common Stock
and the total number of shares of Series A TCI Group Common Stock otherwise
deliverable upon such exchange and (ii), in the case of the payment, in whole or
in part, of dividends, a Redemption Price or a Liquidating Payment pursuant to
paragraphs (3), (4) or (6), respectively, through the delivery of shares of
Series A TCI Group Common Stock, on the total number of shares of Series A
Preferred Stock at the time held by such holder and the total number of shares
of Series A TCI Group Common Stock otherwise deliverable in respect thereof. In
lieu of the issuance of a fraction of a share of Series A TCI Group Common Stock
or scrip, the Company shall pay instead an amount in cash by its check equal to
the same fraction of (i), in the case of an exchange, the Average Market Price
per share of Series A TCI Group Common Stock on the Exchange Date and (ii), in
the case of a payment, in whole or in part, of dividends, a Redemption Price or
a Liquidating Payment through the delivery of shares of Series A TCI Group
Common Stock, the Cash Equivalent Amount, determined as of the record date of
such dividend and as of the date of payment of such Redemption Price or
Liquidating Payment.
(8) PAYMENT OF TAXES. The Company shall pay any and all documentary, stamp
or similar transfer taxes payable in respect of the delivery of shares of Series
A TCI Group Common Stock pursuant to paragraphs (3), (4), (5) or (6); provided,
however, that the Company shall not be required to pay any tax which may be
payable in respect of any registration of transfer involved in the delivery of
shares of Series A TCI Group Common Stock in a name other than that of the
registered holder of the shares of Series A Preferred Stock in respect of which
such shares of Series A TCI Group Common Stock are delivered, and no such
delivery shall be made unless and until the person requesting such delivery has
paid to the Company or its designated agent the amount of any such tax or has
established, to the satisfaction of the Company or such agent, that such tax has
been paid.
(9) NO PREEMPTIVE RIGHTS. The holders of shares of Series A Preferred
Stock shall have no preemptive rights, including preemptive rights with respect
to any shares of capital stock or other securities of the Company convertible
into or carrying rights or options to purchase any such shares.
(10) VOTING RIGHTS. The holders of shares of Series A Preferred Stock
shall have no voting rights, except as otherwise required by law and except as
set forth in this paragraph (10). When and if the holders of Series A Preferred
Stock are entitled to vote by law or pursuant to this paragraph (10), each
holder will be entitled to one vote per share. Shares of Series A Preferred
Stock held by the Parent or any direct or indirect majority-owned subsidiary of
the Parent (including any Subsidiary) shall not be counted for quorum purposes
and shall be deemed shares not entitled to vote on any matter presented to the
holders of Series A Preferred Stock, except to the extent otherwise required by
law.
(a) GENERAL ELECTION OF DIRECTORS; NUMBER OF VOTES. The holders of shares
of Series A Preferred Stock shall have the right to vote, voting as a class with
the holders of the Company's common stock (and with the holders of any other
class or series of Preferred Stock entitled to vote with such common stock as a
class in the general election of directors), in any general election of
directors of the Company.
(b) ELECTION OF PREFERRED STOCK DIRECTORS. (i) If at any time accrued
dividends payable on the shares of Series A Preferred Stock are in arrears and
unpaid in an aggregate amount equal to or exceeding the aggregate amount of
dividends payable thereon for six quarterly dividend periods, the holders of the
shares of Series A Preferred Stock, voting separately as a class (with the
holders of all other shares of Parity Stock upon which like voting rights have
been conferred and are exercisable), shall have the right to vote for the
election
17
<PAGE> 18
of two directors (the "Preferred Stock Directors") to the Board of Directors of
the Company, such directors to be in addition to the number of directors
constituting the Board of Directors immediately prior to the accrual of such
right. Such right of the holders of shares of Series A Preferred Stock to vote
for the election of two Preferred Stock Directors shall, when vested, continue
until all dividends in arrears on the shares of Series A Preferred Stock shall
have been paid in full and, when so paid, such right shall cease, subject always
to the same provisions for the vesting of such right of the holders of the
shares of Series A Preferred Stock to elect two Preferred Stock Directors in the
case of future dividend defaults. The Preferred Stock Directors shall be elected
by a plurality of the votes cast by the holders of Series A Preferred Stock and
any class or other series of Parity Stock (in addition to the Series A Preferred
Stock) upon which like voting rights have been conferred and are exercisable.
(ii) At any time when the holders of shares of the Series A Preferred Stock
(with the holders of all other shares of Parity Stock and Senior Stock upon
which like voting rights have been conferred and are exercisable) are entitled
to elect two Preferred Stock Directors, the Company shall, upon the written
request (a "Request") of the holders of record of not less than the greater of
(i) 10% of the outstanding shares of Series A Preferred Stock or (ii) 10% of the
outstanding shares of all classes and series of Parity Stock (including the
Series A Preferred Stock) entitled to vote for such Preferred Stock Directors,
call a special meeting of holders of the Series A Preferred Stock (and such
other Parity Stock) for the election of the two Preferred Stock Directors.
Notice of the special meeting shall be given in accordance with the requirements
of Delaware law, and such meeting shall be held not more that 60 days after the
Company's receipt of the Request. The Preferred Stock Directors shall be
nominated by the persons who submit the Request, except that at any meeting
after the first meeting at which the Preferred Stock Directors are elected, the
Preferred Stock Directors shall be nominated, subject to subparagraph 10(d)
below, by the existing Preferred Stock Directors.
(iii) The term of office of each Preferred Stock Director shall terminate
on the earlier of (i) the next annual meeting of stockholders of the Company at
which a successor shall have been elected and qualified (irrespective of whether
the Board of Directors is divided into staggered classes) or (ii) the
termination of the right of the holders of shares of Series A Preferred Stock
and any such other shares of Parity Stock and to vote for Preferred Stock
Directors pursuant to this subparagraph 10(b). If, prior to the end of the term
of any Preferred Stock Director elected as aforesaid, a vacancy in the office of
such director shall occur, such vacancy shall be filled for the unexpired term
by the appointment by the remaining Preferred Stock Director elected as
aforesaid of a new director for the unexpired term of such former Preferred
Stock Director. If both Preferred Stock Directors so elected by the holders of
shares of Series A Preferred Stock (and such other Parity Stock) shall cease to
serve as directors before their terms shall expire, the holders of the shares of
Series A Preferred Stock (together with the holders of such other Parity Stock,
if any) may, at a special meeting of the holders called as provided in
subparagraph (10)(b)(ii) above, nominate and elect successors to hold office for
the unexpired terms of such Preferred Stock Directors.
(c) CERTAIN CHANGES TO CHARTER; RECLASSIFICATIONS. For as long as any
shares of Series A Preferred Stock remain outstanding, the affirmative vote of
the holders of at least 66 2/3% of such outstanding shares (voting separately as
a class), given in person or by proxy at any annual meeting or special meeting
called for such purpose, shall be necessary (i) before the Company may amend,
alter or repeal any of the provisions of this Certificate of Designations or the
Restated Certificate of Incorporation which would adversely affect the powers,
preferences or rights of the holders of the shares of Series A Preferred Stock
then outstanding or reduce the minimum time required for any notice to which
holders of shares of Series A Preferred Stock then outstanding may be entitled;
provided, however, that (x) any such amendment, alteration or repeal that would
authorize, create or increase the authorized amount of any additional shares of
Junior Stock or shares of any other class or series of Parity Stock (whether or
not already authorized) and (y) any such amendment that would increase the
number of authorized shares of Preferred Stock (but not the number of authorized
shares of Series A Preferred Stock) or that would decrease (but not below the
number of shares then outstanding) the number of authorized shares of Preferred
Stock (but not the the number of authorized shares of Series A Preferred Stock),
shall be deemed not to adversely affect such powers, preferences or rights and
shall not be subject to approval by the holders of shares of Series A Preferred
Stock; and (ii) before the Company may
18
<PAGE> 19
reclassify the outstanding shares of Series A Preferred Stock into another class
or series of capital stock of the Company (unless such reclassification would
not adversely affect the powers, preferences or rights of the holders of the
shares of Series A Preferred Stock then outstanding or reduce the minimum time
required for any notice to which holders of shares of Series A Preferred Stock
then outstanding may be entitled); provided, however, that no consent described
in clause (i) of this paragraph of the holders of the shares of Series A
Preferred Stock shall be required if, at or prior to the time when such
amendment, alteration or repeal is to take effect provision is made for the
redemption of all shares of Series A Preferred Stock at the time outstanding
(except that no such provision may be made prior to the Initial Redemption
Date).
(d) CREATION OF SENIOR STOCK. For as long as any shares of Series A
Preferred Stock remain outstanding, the affirmative vote of the holders of at
least 66 2/3 of such outstanding shares (voring separately as a class), given in
person or by proxy at any annual meeting or special meeting called for such
purpose, shall be necessary before the Company or the Board of Directors may
create or issue any Senior Stock; provided, however, that no such consent shall
be necessary if, at or prior to the time of such creation or issue, provision is
made for the redemption of all of the outstanding shares of Series A Preferred
Stock (except that no such provision may be made prior to the Initial Redemption
Date).
(e) NO OTHER VOTE. Except as otherwise set forth in this paragraph (10) or
as required by law, the holders of Series A Preferred Stock shall not have any
relative, participating, optional or other special voting rights and powers and
the consent or vote of such holders shall not be required for the taking of any
corporate action by the Company or the Board of Directors. The provisions of
this paragraph 10 are in lieu of, and not in addition to, any voting rights
specified in the Restated Certificate of Incorporation as applicable to all
series of Preferred Stock (except where the instrument creating such series
otherwise provides).
(11) WAIVER. Any provision of this Certificate of Designations which, for
the benefit of the holders of Series A Preferred Stock, prohibits, limits or
restricts actions by the Company may be waived in whole or in part, or the
application of all or any part of such provision in any particular circumstance
or generally may be waived, in each case with the consent of the holders of at
least 66 2/3% of the number of shares of Series A Preferred Stock then
outstanding, either in writing or by vote at a meeting called for such purpose
at which the holders of Series A Preferred Stock shall vote as a separate class.
(12) EXCLUSION OF OTHER RIGHTS. Except as may otherwise be required by
law, the shares of Series A Preferred Stock shall not have any designations,
preferences, limitations or relative rights other than those specifically set
forth in this Certificate of Designations."
The undersigned has signed this Certificate of Designations on this
day of , 1995.
Vice President of TCI Communications,
Inc.
Attest:
19
<PAGE> 1
EXHIBIT 12.1
TCI COMMUNICATIONS, INC.
AND CONSOLIDATED SUBSIDIARIES
CALCULATION OF RATIOS OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
(AMOUNTS IN MILLIONS, EXCEPT FOR RATIOS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------ -----------------
1994 1993(a) 1992(a) 1991 1990 1995 1994(a)
------ ------- ------- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings (losses) from continuing operations
before income taxes............................ $ 223 161 45 (108) (308) (34) 90
Add:
Interest on debt................................. 777 738 815 928 990 464 367
Interest Portion of Rentals...................... 25 23 22 23 23 16 12
Amortization of debt expense..................... 12 12 9 6 6 6 5
Distributions from and (earnings) losses of less
than 50%-owned affiliates with debt not
guaranteed by TCIC............................. (20) 26 (10 ) (27) 34 24 (11 )
Minority interests in earnings (losses) of
consolidated subsidiaries, including preferred
stock dividend requirement of consolidated
subsidiaries................................... 8 13 277 24 (63) (3) 4
Elimination of preferred stock dividend
requirement of consolidated subsidiaries to
50%-owned affiliates........................... -- -- (250 ) (42) (36) -- --
Preferred stock dividend requirement of 50%-owned
affiliates, other than amounts to TCIC......... -- -- 175 23 15 -- --
------ ------- ------- ------ ------ ------ -------
Earnings available for combined fixed charges and
preferred stock dividends...................... $1,025 973 1,083 827 661 473 467
====== ======= ======= ====== ====== ====== =======
Fixed charges:
Interest on debt:
TCIC and consolidated subsidiaries............... 777 731 718 826 868 464 363
Elimination of interest of consolidated
subsidiaries to 50%-owned affiliates........... -- -- (36 ) (47) (51) -- --
TCIC's proportionate share of interest of
50%-owned affiliates........................... 0 7 133 149 173 0 4
------ ------- ------- ------ ------ ------ -------
777 738 815 928 990 464 367
Interest portion of rentals...................... 25 23 22 23 23 16 12
Amortization of debt expense..................... 12 12 9 6 6 6 5
Preferred stock dividend requirements of
consolidated subsidiaries...................... 10 14 281 61 56 4 7
Elimination of preferred stock dividend
requirement of consolidated subsidiaries to
50%-owned affiliates........................... -- -- (250 ) (42) (36) -- --
Preferred stock dividend requirement of 50%-owned
affiliates, other than amounts to TCIC......... -- -- 175 23 15 -- --
Capitalized interest............................. 15 9 6 5 6 5 6
------ ------- ------- ------ ------ ------ -------
Total fixed charges.............................. $ 839 796 1,058 1,004 1,060 495 397
====== ======= ======= ====== ====== ====== =======
Ratio of earnings to combined fixed charges and
preferred stock dividends...................... 1.22 1.22 1.02 -- -- 1.18
Deficiency....................................... $ -- -- -- (177) (399) (22) --
</TABLE>
- ---------------
(a) Preferred stock dividend requirements have been increased to an amount
representing the pretax earnings which would be required to cover each
dividend requirements. The effective income tax rate utilized for purposes
of increasing preferred stock dividend requirements in 1993 has been
adjusted to exclude the effect of the federal income tax rate change in the
third quarter of 1993.
2
<PAGE> 2
TCI COMMUNICATIONS, INC.
AND CONSOLIDATED SUBSIDIARIES
CALCULATION OF RATIOS OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
(AMOUNTS IN MILLIONS, EXCEPT FOR RATIOS)
(UNAUDITED)
Fixed Charges related to interest on debt of less than 50%-owned affiliates
guaranteed by TCI Communications:
<TABLE>
<CAPTION>
<S> <C>
Year ended December 31,
1990................................................. 710
1991................................................. 506
1992................................................. 2,517
1993................................................. 13,833
1994................................................. 12,471
Three months ended March 31,
1994................................................. 3,458
1995................................................. 3,336
Six months ended June 30,
1994................................................. 5,927
1995................................................. 6,673
</TABLE>
3
<PAGE> 1
EXHIBIT 12.2
TELE-COMMUNICATIONS, INC.
AND CONSOLIDATED SUBSIDIARIES
CALCULATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(AMOUNTS IN MILLIONS, EXCEPT FOR RATIOS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------------------------ -----------------
1994 1993(a) 1992(a) 1991 1990 1995 1994(a)
------ ------- ------- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings (losses) from continuing operations before
income taxes..................................... $ 166 161 45 (108) (308) (34) 90
Add:
Interest on debt................................... 804 738 815 928 990 499 367
Interest portion of rentals........................ 27 23 22 23 23 20 12
Amortization of debt expense....................... 13 12 9 6 6 7 5
Distributions from and (earnings) losses of less
than 50%-owned affiliates with debt not
guaranteed by TCI................................ (11) 26 (10 ) (27) 34 85 (11 )
Minority interests in earnings (losses) of
consolidated subsidiaries, including preferred
stock dividend requirement of consolidated
subsidiaries..................................... 0 13 277 24 (63) (19) 4
Elimination of preferred stock dividend requirement
of consolidated subsidiaries to 50%-owned
affiliates....................................... -- -- (250 ) (42) (36) -- --
Preferred stock dividend requirement of 50%-owned
affiliates, other than amounts to TCI............ -- -- 175 23 15 -- --
------ ------- ------- ------ ------ ------ -------
Earnings available for fixed charges............... $ 999 973 1,083 827 661 397 467
====== ======= ======= ====== ====== ====== =======
Fixed charges:
Interest on debt:
TCI and consolidated subsidiaries.................. $ 785 731 718 826 868 483 363
Elimination of interest of consolidated
subsidiaries to 50%-owned affiliates............. -- -- (36 ) (47) (51) -- --
TCI's proportionate share of interest of 50%-owned
affiliates....................................... 19 7 133 149 173 16 4
------ ------- ------- ------ ------ ------ -------
804 738 815 928 990 499 367
Interest portion of rentals........................ 27 23 22 23 23 20 12
Amortization of debt expense....................... 13 12 9 6 6 7 5
Preferred stock dividend requirements of
consolidated subsidiaries........................ 20 14 281 61 56 33 7
Elimination of preferred stock dividend requirement
of consolidated subsidiaries to 50%-owned
affiliates....................................... -- -- (250 ) (42) (36) -- --
Preferred stock dividend requirement of 50%-owned
affiliates, other than amounts to TCI............ -- -- 175 23 15 -- --
Capitalized interest............................... 16 9 6 5 6 5 6
------ ------- ------- ------ ------ ------ -------
Total fixed charges................................ $ 880 796 1,058 1,004 1,060 564 397
====== ======= ======= ====== ====== ====== =======
Ratio of earnings to fixed charges................. 1.14 1.22 1.02 -- -- 1.18
Deficiency......................................... $ -- -- -- (177) (399) (167) --
</TABLE>
- ---------------
(a) Preferred stock dividend requirements have been increased to an amount
representing the pretax earnings which would be required to cover such
dividend requirements. The effective income tax rate utilized for purposes
of increasing preferred stock dividend requirements in 1993 has been
adjusted to exclude the effect of the federal income tax rate change in the
third quarter of 1993.
(continued)
4
<PAGE> 2
TELE-COMMUNICATIONS, INC.
AND CONSOLIDATED SUBSIDIARIES
CALCULATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(AMOUNTS IN MILLIONS, EXCEPT FOR RATIOS)
(UNAUDITED)
Fixed Charges related to interest on debt of less than 50%-owned affiliates
guaranteed by TCI:
<TABLE>
<S> <C>
Year ended December 31,
1990................................................. 710
1991................................................. 506
1992................................................. 2,517
1993................................................. 13,833
1994................................................. 13,092
Three Months Ended March 31,
1994................................................. 3,458
1995................................................. 3,989
Six Months ended June 30,
1994................................................. 5,927
1995................................................. 7,979
</TABLE>
5
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the registration statement on
Form S-3 of TCI Communications, Inc. and Tele-Communications, Inc. of our
reports dated March 27, 1995, relating to the consolidated balance sheets of
Tele-Communications, Inc. and subsidiaries as of December 31, 1994 and 1993,
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, 1994, and the related financial statement schedules, which reports appear
in the December 31, 1994 Annual Report on Form 10-K, as amended, of
Tele-Communications, Inc. and to the reference to our firm under the heading
"Experts" in the registration statement. Our reports covering the December 31,
1994 consolidated financial statements refer to the adoption of Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," in 1994.
KPMG PEAT MARWICK, LLP
Denver, Colorado
November 8, 1995
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the registration statement on
Form S-3 of TCI Communications, Inc. and Tele-Communications, Inc. of our
reports dated March 27, 1995, relating to the consolidated balance sheets of
TCI Communications, Inc. (formerly Tele-Communications, Inc.) and subsidiaries
as of December 31, 1994 and 1993, and the related consolidated statements of
operations, stockholder'(s') equity, and cash flows for each of the years in
the three-year period ended December 31, 1994, and the related financial
statement schedules, which reports appear in the December 31, 1994 Annual
Report on Form 10-K, as amended, of TCI Communications, Inc. and to the
reference to our firm under the heading "Experts" in the registration
statement. Our reports covering the December 31, 1994 consolidated financial
statements refer to the adoption of Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity Securities," in
1994.
KPMG PEAT MARWICK, LLP
Denver, Colorado
November 8, 1995
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the registration statement on
Form S-3 of TCI Communications, Inc. and Tele-Communications, Inc. of our
report dated 21 March, 1995, relating to the consolidated balance sheet of
TeleWest Communications plc and subsidiaries as of 31 December 1994 and 1993,
and the related consolidated statements of operations and cash flows for each
of the years in the three-year period ended 31 December 1994, which report
appears in the 31 December 1994 Annual Report on Form 10-K of
Tele-Communications, Inc. and TCI Communications, Inc., as amended, and to the
reference to our firm under the heading "Experts" in the registration
statement.
KPMG
London, England
8 November 1995
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the registration statement on
Form S-3 of TCI Communications, Inc. and Tele-Communications, Inc. of our
report dated March 24, 1995, relating to the combined balance sheets of
Cablevision (A combination of certain cable television assets of Cablevision
S.A., Televisora Belgrano S.A., Construred S.A. and Univent's S.A.) as of
December 31, 1994 and 1993, and the related combined statements of operations
and deficit and cash flows for each of the years in the three-year period ended
December 31, 1994, which appear in the Current Report on Form 8-K of
Tele-Communications, Inc. and TCI Communications, Inc. dated April 20, 1995, as
amended, and to the reference to our firm under the heading "Experts" in the
registration statement.
KPMG FINSTERBUSCH PICKENHAYN SIBILLE
Juan Carlos PickenHayn
Partner
Buenos Aires, Argentina
November 8, 1995
<PAGE> 1
EXHIBIT 23.5
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the registration statement on
Form S-3 of TCI Communications, Inc. and Tele-Communications, Inc. of our
report dated March 4, 1994, relating to the consolidated balance sheets of QVC,
Inc. and subsidiaries as of January 31, 1994 and 1993, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
each of the years in the three-year period ended January 31, 1994, which report
appears in the Current Report on Form 8-K of Tele-Communications, Inc. and TCI
Communications, Inc. dated February 3, 1995, as amended, and to the reference
to our firm under the heading "Experts" in the registration statement. Our
report refers to a change in the method of accounting for income taxes.
KPMG PEAT MARWICK LLP
Philadelphia, Pennsylvania
November 8, 1995
<PAGE> 1
EXHIBIT 23.6
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 of TCI
Communications, Inc. and Tele-Communications, Inc. of our report dated February
4, 1994, relating to the consolidated financial statements of TeleCable
Corporation which appears on page 12 of the TCI Communications, Inc. and
Tele-Communications, Inc. Current Report on Form 8-K dated August 26, 1994. We
also consent to the reference to us under the heading "Experts" in such
Prospectus.
PRICE WATERHOUSE LLP
Norfolk, Virginia
November 8, 1995
