SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 9, 1999
COMCAST CORPORATION
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(Exact name of registrant as specified in its charter)
Pennsylvania 0-6983 23-1709202
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(State or other (Commission file (IRS employer
jurisdiction of number) identification
incorporation) no.)
1500 Market Street, Philadelphia, PA 19102
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 665-1700
Item 5. Other Events.
An exhibit is filed herewith in connection with the
Registration Statement on Form S-3 (File No. 33-50785) originally filed
October 27, 1993 and the abbreviated registration statement on Form S-3 to
register additional securities, filed March 11, 1999, in each case, by Comcast
Corporation (the "Company").
The Company filed on March 9, 1999 a preliminary prospectus
supplement dated March 9, 1999 and filed on March 15, 1999 a final prospectus
supplement dated March 11, 1999, in each case pursuant to Rule 424(b) of the
Securities Act of 1933, as amended, relating to Exchangeable Extendable
Subordinated Debentures due 2029 (the "Debentures", each also referred to as a
"PHONES"). The form of such Debentures is filed as an exhibit hereto.
The form of Debenture states, among other things, (i) that each
PHONES is exchangeable at the option of the holder at any time after March 17,
2000, on such terms and conditions as are further prescribed therein and (ii)
further that amounts under clause (4) under the definition of "Final Period
Distribution" are determined in accordance with the following formula: E x
(1-0.05n), which formula is further explained therein.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
4. Form of Exchangeable Extendable Subordinated Debentures
Due 2029.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Dated: March 16, 1999 COMCAST CORPORATION
By: /s/ Arthur R. Block
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Name: Arthur R. Block
Title: Senior Deputy General Counsel
and Vice President
EXHIBIT INDEX
Exhibit No. Exhibit
4 Form of Exchangeable Extendable Subordinated Debenture
Due 2029
Certificate Number R-
Number of PHONES[SM] represented hereby:__________
(representing $___________ in aggregate original principal amount)
Unless this certificate is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) ("DTC"), to the
Company (as defined below) or its agent for registration of transfer, exchange
or payment, and any certificate issued is registered in the name of Cede & Co.
or such other name as is requested by an authorized representative of DTC (and
any payment is made to Cede & Co. or to such other entity as is requested by
an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.
Unless and until it is exchanged in whole or in part for securities in
definitive registered form, this certificate may not be transferred except as
a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or another
nominee of DTC or by DTC or any such nominee to a successor Depositary or a
nominee of such successor Depositary.
COMCAST CORPORATION
EXCHANGEABLE EXTENDABLE
SUBORDINATED DEBENTURE DUE 2029
(each a "PHONES")
CUSIP 200300 40 8
COMCAST CORPORATION, a corporation duly organized and existing
under the laws of the Commonwealth of Pennsylvania (herein called the
"Company", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
Cede & Co. or its registered assigns,
the Maturity Amount
in any coin or currency of the United States of America which, at the time of
payment is legal tender for public and private debts, upon presentation and
surrender of this Debenture, on the 15th day of May, 2029 (or on the 15th day
of May, 2059 if the maturity of this Debenture is so extended as provided for
herein), at the office or agency of the Company in New York, New York, and to
pay interest on the original principal amount at the Interest Rate, in like
coin or currency, from the original date of issuance of this Debenture or from
the most recent February 15, May 15, August 15 or November 15 to which
interest has been paid or duly provided for, quarterly in arrears on the 15th
day of February, May, August and November of each year, commencing May 15,
1999, until payment of said Maturity Amount, or if earlier redeemed, the
Redemption Amount, has been in either case made or duly provided for. For
purposes of this Debenture, the "Interest Rate" means a rate of 1.75% per
annum plus the amount of the Reference Shares Dividend Amount; provided that
the initial interest payment on May 15, 1999 shall be calculated at an annual
rate of 1.75% on the original principal amount from the original issue date
of the Debentures to May 15, 1999, plus the Reference Shares Dividend Amount
applicable to the Debentures between February 15, 1999 and May 15, 1999.
Additional Interest will be distributed as specified on the reverse hereof.
Changes in the Contingent Principal Amount will not affect the Interest Rate.
Interest may be deferred, at the election of the Company as specified on the
reverse hereof. Any such interest payable on any February 15, May 15, August
15 or November 15 shall (subject to exceptions provided in the Indenture
referred to on the reverse hereof) be paid to the person in whose name this
Debenture or the Debentures in exchange or substitution for which this
Debenture shall have been issued, shall have been registered at the close of
business on February 1, May 1, August 1 or November 1, as the case may be next
preceding such February 15, May 15, August 15 or November 15 whether or not
such February 1, May 1, August 1 or November 1 is a Business Day. Capitalized
terms used on the face hereof without definition have the meaning specified on
the reverse hereof.
THE PROVISIONS OF THIS DEBENTURE ARE CONTINUED ON THE REVERSE
HEREOF AND SUCH CONTINUED PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME
EFFECT AS THOUGH FULLY SET FORTH AT THIS PLACE.
This Debenture shall not be entitled to any benefit under the
Indenture referred to on the reverse hereof or any indenture supplemental
thereto, or become valid or obligatory for any purpose until the Trustee under
said Indenture, or a successor trustee thereunder, shall have signed the form
of certificate of authentication appearing hereon.
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[SM] Service Mark of Merrill Lynch & Co., Inc.
* * *
IN WITNESS WHEREOF, COMCAST CORPORATION has caused this
instrument to be duly executed under its corporate seal.
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Debentures of the series
referred to on the reverse hereof.
Bankers Trust Company,
as Trustee,
By:
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Authorized Officer
COMCAST CORPORATION
By:
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Title:
Attest:
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Title:
[Reverse of Debentures]
EXCHANGEABLE EXTENDABLE
SUBORDINATED DEBENTURE DUE 2029
General
This Debenture is one of a duly authorized issue of debentures,
notes, bonds or other evidences of indebtedness of the Company (herein called
the "Securities") of the series hereinafter specified, all issued or to be
issued under an indenture dated as of February 20, 1991, as supplemented by
the First Supplemental Indenture dated as of March 15, 1999 (as supplemented,
herein called the "Indenture"), each executed between the Company and Bankers
Trust Company, a New York banking corporation with its principal offices in
New York, New York (hereinafter called the "Trustee"), to which indenture and
all indentures supplemental thereto reference is hereby made for a
specification of the rights and limitations of rights thereunder of the
registered holders of the Debentures, the rights and obligations thereunder of
the Company and the rights, duties and immunities thereunder of the Trustee
and the terms upon which the Debentures are, and are to be, authenticated and
delivered. The terms of the Indenture are hereby incorporated by reference
herein. The Securities may be issued in one or more series, which different
series may be issued in various aggregate principal amounts, may mature at
different times, may bear interest (if any) at different rates, may be subject
to different redemption or repayment provisions (if any), may be subject to
different sinking, purchase or analogous funds (if any) and may otherwise vary
as provided in the Indenture. This Debenture is one of a series designated as
Exchangeable Extendable Subordinated Debentures due 2029 (hereinafter called
the "PHONES") of the Company, each PHONES representing $82.5625 in original
principal amount, limited in aggregate number to 8,700,000 (or $718,293,750 in
aggregate original principal amount) or 10,000,000 (or $825,625,000 in
aggregate original principal amount if the underwriters' over-allotment
option is exercised in full).
The Debentures will be unsecured, subordinated obligations of
the Company. The indebtedness evidenced by the Debentures is, to the extent
provided in the Indenture, subordinate and subject in right and payment to the
prior payment in full of all Senior Indebtedness as defined in the Indenture,
and each holder of this Debenture, by accepting the same, agrees to and shall
be bound by the provisions of the Indenture.
The Maturity Amount, the Redemption Amount, Additional
Interest, if any, and interest on the PHONES will be payable at the office or
agency the Company maintains for such purpose within The City and State of New
York or, at the Company's option, payment of cash interest may be made by
check mailed to the holders of the PHONES at their respective addresses set
forth in the register of holders of PHONES; provided that all cash payments
with respect to PHONES to a holder of a minimum of 100,000 PHONES who has
given written wire transfer instructions, on or prior to the relevant record
date, to the paying agent, will be made by wire transfer of immediately
available funds to the accounts specified by such holders. Until otherwise
designated by the Company, the Company's office or agency in New York will be
the office of the Trustee maintained for such purpose. The PHONES will be
issued in denominations of one PHONES and integral multiples thereof.
Interest and Additional Interest
The Company shall pay interest to the holder of this Debenture
in such amounts and at such times as specified on the face of this Debenture.
At least five (5) Business Days prior to each Interest Payment Date the
Company shall deliver an Officers' Certificate to the Trustee setting forth:
(i) the amount of interest per PHONES due for that interest period, (ii) the
applicable Reference Shares Dividend Amount and (iii) the total payment due
for that period on all PHONES outstanding. "Reference Shares Dividend Amount"
means, in respect of any quarterly interest period, an amount per PHONES equal
to the amount of all quarterly cash dividends paid on the Reference Shares
attributable to a PHONES.
In addition, the Company shall also distribute, as additional
interest on each PHONES ("Additional Interest"), a proportionate amount of any
property, including cash (other than the Reference Shares Dividend Amount),
distributed on or with respect to the Reference Shares attributable to each
PHONES (other than publicly traded equity securities). If any property that is
not publicly traded is distributed on the Reference Shares, the Company will
pay each holder of PHONES the proportionate amount the fair market value of
that property as determined in good faith by the Board of Directors of the
Company (as defined in the Indenture). The Company will distribute Additional
Interest on the 20th Business Day after such property is distributed on the
Reference Shares to holders of the PHONES on the tenth Business Day after the
date of distribution. Each PHONES shall initially be entitled to dividends
and distributions on or with respect to one Reference Share as of the original
date of issuance of the PHONES, subject to adjustment as provided herein.
At least five (5) Business Days prior to any distribution of
Additional Interest on the PHONES, the Company shall deliver an Officers
Certificate to the Trustee setting forth: (i) the exact amount of property to be
distributed on or with respect to the Reference Shares per PHONES and (ii) the
total amount of property to be distributed on or with respect to the Reference
Shares for all outstanding PHONES at the date of such distribution. If any
distribution is made of any property that is not publicly traded, then at least
five (5) Business Days prior to such distribution, the Company shall deliver to
the Trustee: (i) a certified copy of the resolution of the Board of Directors
establishing the fair market value of the property and setting a special record
date for such distribution, (ii) an Officers' Certificate setting forth the
exact amount of property to be distributed on the Reference Shares per PHONES
and (iii) the total amount of property that is not publicly traded to be
distributed on the Reference Shares for all outstanding PHONES. In each case
described above, the Company will state whether it will distribute such
Additional Interest in property or cash. The Trustee is only responsible for
distributing property in the form of global book entry securities which are DTC
eligible. The Company is responsible for acting as its own paying agent to make
all other distributions of property. The Company will prepare a press release
relating to any such distribution to be provided to DTC for dissemination
through the DTC broadcast facility.
If interest is payable on a date that is not a Business Day (as
defined at the end of this paragraph), payment will be made on the next
Business Day (and without any interest or other payment in respect of such
delay). However, if the next Business Day is in the next calendar year,
payment of interest will be made on the preceding Business Day. A "Business
Day" means each day except Saturday, Sunday and any day on which banking
institutions in The City of New York are authorized or required by law to
close.
Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months. The Company will pay interest on any overdue Maturity
Amount at 9.30% per annum, compounded quarterly, and it shall pay interest on
overdue installments of interest and the fair market value of Additional
Interest (without regard to any applicable grace period) at the same rate
compounded quarterly.
Deferral of Interest Payments
If no Event of Default (as defined in the Indenture) has
occurred and is continuing under the PHONES, the Company may, at any time and
from time to time, defer quarterly interest payments on the Debentures for up
to 20 consecutive quarterly periods; provided that a deferral of interest
payments may not extend beyond the maturity date of the PHONES. The Company
may not defer distributions of Additional Interest. If the Company defers
quarterly payments of interest, the Contingent Principal Amount (as defined
below) of the PHONES shall be increased by the amount of the deferral and the
Early Exchange Ratio (as defined below) will increase to 100% from the date of
the deferral. After the Company makes all accrued interest payments on the
PHONES, with accrued interest at an annual rate of 3.35% compounded quarterly,
the Contingent Principal Amount shall be reduced by the amount of the
deferral, the Early Exchange Ratio shall decrease to 95%, and the Company may
thereafter again postpone interest payments as described above. During any
deferral period, so long as the Current Market Value of the Reference Shares
attributable to the PHONES exceeds the original principal amount of the
PHONES, the Company may at its option, but is not obligated to, increase the
amount of Reference Shares attributable to each PHONES by an annual rate of
3.35% compounded quarterly. If the Company elects to make this increase in an
interest payment period, the holder shall have no right to claim accrued
interest in that period and the Company shall be deemed current on that
quarterly payment of interest. The Company shall give the Trustee notice if
the Company decides to defer interest payments on the PHONES as described
below and will prepare a press release to be provided to DTC for dissemination
through the DTC broadcast facility. The Company shall give that notice one
Business Day before the earlier of (i) the record date for the next date
interest on the PHONES is payable; or (ii) the date the Company is required to
give notice to the NYSE (or any other applicable self-regulatory organization)
or to holders of the PHONES of the record date or the date any distribution is
payable.
The notice described above shall be in the form of an Officers'
Certificate to the Trustee setting forth: (i) the period with respect to
which it is electing to defer payment of interest, (ii) the exact amount of
increase of Contingent Principal Amount per PHONES, (iii) the total amount of
increase of Contingent Principal Amount for all outstanding PHONES, (iv) a
statement that the Early Exchange Ratio will increase to 100% prospectively
from that date and (v) that no Event of Default (as defined in the Indenture)
has occurred and is continuing under the PHONES. The Company is required to
deliver such an Officers' Certificate for each interest payment deferred.
If and when the Company pays all of its deferred interest and
accrued interest, it must deliver to the Trustee an Officers' Certificate
setting forth the calculation of accrued interest owed per PHONES and the
total amount owed on all outstanding PHONES.
If the Company elects to increase the amount of Reference
Shares payable for each PHONES as provided for above in lieu of paying accrued
interest for that quarter, it shall deliver an Officers' Certificate to the
Trustee setting forth: (i) the amount of such increase and the total amount,
after such increase, of Reference Shares applicable to each PHONES and (ii)
the total amount of Reference Shares applicable to all outstanding PHONES.
Principal Amount
The original principal amount per PHONES is equal to $82.5625.
The minimum amount payable upon redemption or maturity of a PHONES (the
"Contingent Principal Amount") shall initially be equal to the original
principal amount. If the Reference Shares Dividend Amount is greater than
$0.33, the Contingent Principal Amount for a PHONES shall be reduced on a
quarterly basis to the extent necessary so that the yield to the date of
computation (including all quarterly interest payments and the fair market
value of any additional interest payments) does not exceed 3.35%. In no event
will the Contingent Principal Amount be less than zero. The Contingent
Principal Amount per PHONES will be increased on a quarterly basis to the
extent that the Reference Shares Dividend Amount is less than $0.33.
At maturity a holder will be entitled to receive for each
PHONES the Maturity Amount. The "Maturity Amount" means the higher of (a) the
Contingent Principal Amount per PHONES and (b) the sum of the Current Market
Value of the Reference Shares attributable to a PHONES on the maturity date
plus any unpaid quarterly payments of interest due per PHONES, plus, in either
case, the Final Period Distribution attributable to one PHONES.
"Final Period Distribution" means, in respect of (a) the
maturity date, a distribution determined in accordance with clauses (2), (3)
and (4) below and (b) a redemption date, a distribution determined in
accordance with clauses (1), (2), (3) and (4) below. In the case of a
redemption date in connection with a Rollover Offering, the distribution
determined in accordance with clause (4) shall be all dividends and
distributions on or in respect of the Reference Shares which a holder of
Reference Shares on the Pricing Date would be entitled to receive.
(1) Unless (a) the scheduled redemption date of the PHONES is
also a scheduled quarterly Interest Payment Date or (b)
quarterly interest has been deferred for the then
current quarterly dividend period, an amount equal to an
annual rate of 1.75% on the original principal amount of
the PHONES from the most recent scheduled Interest
Payment Date to the date of redemption, plus
(2) all dividends and distributions on or in respect of the
Reference Shares declared by the applicable Reference
Company and for which the record date falls during the
period from the date of original issuance of the PHONES
to the most recent scheduled Interest Payment Date and
which have not been distributed to holders of Reference
Shares prior to the most recent scheduled Interest
Payment Date, plus
(3) all dividends and distributions on or in respect of the
reference shares which a holder of reference shares
during the period from the most recent scheduled
quarterly Interest Payment Date to the date immediately
preceding the first Trading Day of the Averaging Period
is entitled to receive, plus
(4) a distribution equal to the sum of, for each successive day
in the Averaging Period that is anticipated on the first
day of the Averaging Period to be a Trading Day, the
amounts determined in accordance with the following
formula:
E x (1 - 0.05n)
where:
E = all dividends and distributions on or in respect of
the Reference Shares which a holder of Reference
Shares on the applicable day would be entitled
to receive, provided that a record date that
occurs on a day that is not a scheduled Trading
Day shall be deemed to have occurred on the next
preceding scheduled Trading Day; and
n = the number of scheduled trading days that have
elapsed in the Averaging Period with the first
Trading Day of the Averaging Period being
counted as zero,
A holder of Debentures is only entitled to receive
distributions determined in accordance with clauses (2), (3) or (4) to the
extent actually distributed by the Reference Company. Cash amounts paid by a
Reference Company on Reference Shares as described in clauses (2), (3) or (4)
before the redemption date or the maturity date, as the case may be, shall be
paid on the redemption date or the maturity date, as the case may be. All
other property distributed, or the cash value of the property, shall be
distributed within 20 business days after it is distributed on the Reference
Shares.
Upon maturity of the PHONES the Company shall deliver to the
Trustee an Officers' Certificate informing the Trustee of the applicable
Maturity Amount per PHONES and in the aggregate for all outstanding PHONES and
its calculation thereof and directing the Trustee to adjust its records and to
request DTC to adjust its records.
Exchange Option
Holders of the PHONES may at any time after March 17, 2000
exchange a PHONES for an amount of cash equal to 95% (the "Early Exchange
Ratio") of the Exchange Market Value of the Reference Shares attributable to
one PHONES. If the maturity of the PHONES is extended to May 15, 2059, the
Early Exchange Ratio shall be 100% and holders may exchange a PHONES at any
time following May 15, 2029 for an amount of cash equal to the Exchange Market
Value of the Reference Shares attributable to one PHONES. The Company will
pay a holder the amount due upon exchange as soon as reasonably practicable
after a holder delivers an exchange notice to the Trustee, but in no event
earlier than three Trading Days after the date of such notice or later than
ten Trading Days after the date of such notice.
"Exchange Market Value" means the Closing Price on the Trading
Day following the date a holder of PHONES delivers an exchange notice to the
Trustee, unless more than 1,000,000 PHONES have been delivered for exchange on
such date. If more than 1,000,000 PHONES have been delivered for exchange,
then the Exchange Market Value shall be the average Closing Price on the five
Trading Days following such date. If more than 1,000,000 PHONES are delivered
for exchange on any one day, the Company shall give notice of that fact by
issuing a press release prior to 9:00 a.m. New York City time on the next
Trading Day, by providing notice to DTC for dissemination through the DTC
broadcast facility and by providing notice to the Trustee. The Company's
failure to provide these notices, however, will not affect the determination of
Exchange Market Value as described above.
If the PHONES are held through DTC, a holder of PHONES may
exercise such right through the relevant direct participant in DTC through the
DTC ATOP system by delivering an agent's message and delivering the holder's
PHONES to the Trustee's DTC participant account. If the PHONES are held in
certificated form, a holder may exercise such right of exchange as follows:
the holder shall (i) complete and manually sign an exchange notice in the form
available from the Trustee and deliver such notice to the Trustee at the
office maintained by the Trustee for such purpose, (ii) surrender the
Debentures to the Trustee, (iii) if required, furnish appropriate endorsements
and transfer documents, and (iv) if required, pay all transfer or similar
taxes.
By 12:00 noon New York City time on each Business Day following
receipt by the Trustee of notification from DTC that they have received an
agent's message from a DTC participant electing to exercise their Exchange
Option with respect to their PHONES and delivery of such PHONES into the
Trustee's DTC participant account or following receipt of a complete manually
signed exchange notice and receipt of Debentures from a holder, the Trustee
shall notify the Company of the amount of PHONES which were tendered. The
Company shall deliver an Officers' Certificate to the Trustee setting forth
the exact amount to be paid to the tendering holder and shall deposit such
amount with the Trustee. Upon receipt of such payment from the Company, the
Trustee shall pay DTC, as soon as practicable or in the case of PHONES that are
held in certificated form, as directed by the tendering holder.
Pursuant to the Indenture, the date on which all of the
foregoing requirements have been satisfied is the redemption date with respect
to the Debentures delivered for exchange.
Redemption
The Company may redeem the Debentures in whole but not in part
at a redemption price per PHONES (the "Redemption Amount") equal to the sum of
(a) the higher of the Contingent Principal Amount per PHONES or the sum of the
Current Market Value of the Reference Shares attributable to a PHONES plus any
deferred quarterly payments of interest, plus, in either case, the Final
Period Distribution and (b) $3.71531 if the Company redeems the PHONES prior
to May 15, 2000, $2.47688 if the Company redeems the PHONES prior to May 15,
2001, $1.23844 if the Company redeems the PHONES prior to May 15, 2002, or
zero if the Company redeems the PHONES any time on or after May 15, 2002.
The "Current Market Value" (other than in the case of a
Rollover Offering, as defined below) is defined as the average Closing Price
per Reference Share on the twenty Trading Days (the "Averaging Period")
immediately prior to (but not including) the fifth Business Day preceding the
redemption date; provided, however, that for purposes of determining the
payment required upon a redemption in connection with a Rollover Offering,
"Current Market Value" means the Closing Price per Reference Share on the
Trading Day immediately preceding the date that the Rollover Offering is
priced (the "Pricing Date") or, if the Rollover Offering is priced after 4:00
p.m., New York City Time, on the Pricing Date, the Closing Price per share on
the Pricing Date, except that if there is not a Trading Day immediately
preceding the Pricing Date or (where pricing occurs after 4:00 p.m., New York
City Time, on the Pricing Date) if the Pricing Date is not a Trading Day,
"Current Market Value" means the market value per Reference Share as of the
redemption date as determined by a nationally recognized independent
investment banking firm retained by the Company. "Rollover Offering" means an
offering or refinancing of the PHONES or sale of the Reference Shares effected
not earlier than May 15, 2002 by means of a completed public offering or
offerings (which may include one or more exchange offers) by the Company. The
Trustee will notify holders of any election to redeem such holder's PHONES in
connection with a Rollover Offering not less than 30 Business Days nor more
than 60 Business Days prior to the redemption date.
The "Closing Price" of any security on any date of
determination means the closing sale price (or, if no Closing Price is
reported, the last reported sale price) of such security (regular way) on the
NYSE on such date or, if such security is not listed for trading on the NYSE
on any such date, as reported in the composite transactions for the principal
United States securities exchange on which such security is so listed, or if
such security is not so listed on a United States national or regional
securities exchange, as reported by the Nasdaq National Market, or if such
security is not so reported, the last quoted bid price for such security in
the over-the-counter market as reported by the National Quotation Bureau or
similar organization. In the event that no such quotation is available for
any day, the Board of Directors shall be entitled to determine the Closing
Price on the basis of such quotations as it considers appropriate. For
purposes of determining the redemption price, the Closing Price of any
security on any day prior to any "ex-dividend" date occurring during the
relevant five Trading Day period for any dividend paid or to be paid with
respect to such security shall be reduced by the amount of such dividend.
A "Trading Day" is defined as a day on which the security, the
Closing Price of which is being determined, (a) is not suspended from trading
on any national or regional securities exchange or association or
over-the-counter market at the close of business and (b) has traded at least
once on the national or regional securities exchange or association or
over-the-counter market that is the primary market for the trading of such
security.
In case of any redemption, the Company shall give 33 Business
Days notice to the Trustee (unless such shorter period shall be satisfactory
to the Trustee) together with an Officers' Certificate setting forth on a per
PHONES and an aggregate basis, the Redemption Amount, and the Contingent
Principal Amount, Current Market Value of the Reference Shares, deferred
quarterly interest payments and the Final Period Distribution. The Company
shall give holders 30 Business Days notice before any redemption of PHONES and
will irrevocably deposit with the Trustee sufficient funds to pay the
Redemption Amount for the PHONES. Distributions to be paid on or before the
redemption date for the PHONES will be payable to the holders on the record
dates for the related dates of distribution, except to the extent such
distributions are payable as part of the Final Period Distribution.
Once notice of redemption is given and funds are irrevocably
deposited, interest on the PHONES will cease to accrue on and after the date
of redemption and all rights of the holders of the PHONES called for
redemption will cease, except for the right of holders to receive the
Redemption Amount (but without interest on such Redemption Amount), including,
if applicable, the Final Period Distribution.
If any redemption date is not a Business Day, then the
Redemption Amount will be payable on the next Business Day (and without any
interest or other payment in respect of any such delay). However, if the next
Business Day is in the next calendar year, the Redemption Amount will be
payable on the preceding Business Day. If payment of the Redemption Amount
for any PHONES called for redemption is improperly withheld or refused and not
paid by the Company, interest on the PHONES will continue to accrue at an
annual rate of 9.30% from the original redemption date scheduled to the actual
date of payment. In such a case, the actual payment date will be the
redemption date for purposes of calculating the Redemption Amount. The Final
Period Distribution will be deemed paid on the original redemption date
scheduled to the extent paid as set forth in the definition of "Final Period
Distribution" above.
Reference Share Adjustments
For purposes hereof "Reference Company" means AT&T Corp., a New
York corporation, and any other issuer of a Reference Share. A "Reference
Share" means, collectively (a) one share of AT&T common stock and (b) each
share of publicly traded equity securities received by a holder of a Reference
Share in respect of such share of the AT&T common stock or other Reference
Shares (either directly or as the result of successive applications of this
paragraph) upon the following events: (i) the distribution on or in respect of
a Reference Share in Reference Shares, (ii) the combination of Reference
Shares into a smaller number of shares or other units, (iii) the subdivision
of outstanding shares or other units of Reference Shares, (iv) the conversion
or reclassification of Reference Shares by issuance or exchange of other
securities, (v) any consolidation or merger of a Reference Company, or any
surviving entity or subsequent surviving entity of a Reference Company (a
"Reference Company Successor"), with or into another entity (other than a
merger or consolidation in which the Reference Company is the continuing
corporation and in which the Reference Company common stock outstanding
immediately prior to the merger or consolidation is not exchanged for cash,
securities or other property of the Reference Company or another corporation),
(vi) any statutory exchange of securities of Reference Company or any
Reference Company Successor with another corporation (other than in connection
with a merger or acquisition and other than a statutory exchange of securities
in which the Reference Company is the continuing corporation and in which the
Reference Company common stock outstanding immediately prior to the statutory
exchange is not exchanged for cash, securities or other property of the
Reference Company or another corporation), and (vii) any liquidation,
dissolution or winding up of the Reference Company or any Reference Company
Successor. As described above under "Interest and Additional Interest," the
Company will pay as Additional Interest to holders of the Debentures any
property received in distribution on or in respect of a Reference Share,
unless it is also a Reference Share, in which case it shall become part of a
Reference Share. Upon any distribution of fractional shares or units of
securities, other than fractional Reference Shares, the Company shall pay the
holders cash in lieu of distribution of such fractional shares or other units.
During the pendency of a bona fide tender offer for more than
50% of the Reference Shares, the Early Exchange Ratio will increase to 100%. A
tender offer shall only be deemed to be made if (a) made for more than 50% of
the Reference Shares issued by any Reference Company and (b) the Current
Market Value of the Reference Shares that are the subject of the tender offer
is more than 50% of the Current Market Value of all Reference Shares by
application of the definition of "Current Market Value" as if the term
"redemption date" in the definition was replaced by "date of announcement of
the tender offer." No other adjustments will be made in the case of a tender or
exchange offer for all or any portion of the Reference Shares.
Events of Default
In case an Event of Default, as defined in the Indenture, shall
occur and be continuing, the Maturity Amount of all PHONES then outstanding
under the Indenture may be declared, or may become, due and payable upon the
conditions and in the manner and with the effect provided in the Indenture.
Amount Payable upon Bankruptcy
Upon dissolution, winding-up, liquidation or reorganization,
whether voluntary or involuntary or in bankruptcy, insolvency, receivership or
other similar proceedings in respect of the Company, holders of the PHONES
should be entitled to a claim against the Company in an amount equal to the
higher of (a) the Contingent Principal Amount of the PHONES or (b) the sum of
the Current Market Value (without giving effect to the provisions relating to
Rollover Offerings) of the Reference Shares plus any deferred quarterly
payments of interest, plus, in either case, the Final Period Distribution.
Calculations in Respect of the PHONES
The Company will be responsible for making all calculations
called for under the PHONES. These calculations include, but are not limited
to, determination of the Contingent Principal Amount of the PHONES; the
Current Market Value of Reference Shares; the Exchange Market Value of
Reference Shares; the Final Period Distribution on the PHONES; the cash value
of any property distributed on the Reference Shares; the composition of a
Reference Share; and the amount of accrued interest payable upon redemption or
at maturity of the PHONES.
The Company must make all these calculations in good faith and
such calculations are final and binding on holders of the PHONES, absent
manifest error. The Company will provide a schedule of its calculations to
the Trustee and the Trustee is entitled to rely upon the accuracy of such
calculations, without independent verification. The Trustee shall be entitled
to conclusively rely on the accuracy of the information and calculations
contained in each Officers' Certificate delivered under this Debenture and
shall have no responsibility for verifying the accuracy thereof.
Modifications
To the extent permitted by, and as provided in the Indenture,
modifications or alterations of the Indenture, or of any indenture
supplemental thereto, and of the rights and obligations of the Company and of
the holders of the Securities, may be made by the Company with the consent of
the holders of not less than 66 2/3% of the principal amount (for the purposes
of the PHONES, the principal amount of the PHONES for consenting holders and
all holders shall be calculated by reference to the original principal amount
of such PHONES) of the Securities then Outstanding of each series affected
thereby; provided, however, that no such modification or alteration shall (i)
extend the time or times of payment of the principal of, premium, if any, or
the interest on, any Security, or reduce the principal amount or premium, if
any, or the rate of interest on, any Security (and/or such other amount or
amounts as any Securities or supplemental indentures with respect thereto may
provide to be due and payable upon declaration of acceleration of the maturity
thereof pursuant to Section 7.1 of the Indenture) or change the currency of
payment of principal of, premium, if any, or interest on, any Security or
reduce any amount payable on redemption thereof, or alter or impair the right
to convert the same at the rate and upon the terms provided in the Indenture,
or alter or impair the right to require redemption at the option of the
holder, without the consent of the holder of each Security so affected, or
(ii) reduce the percentage of Securities, the vote or consent of the holders
of which, is required for such modifications and alterations, without the
consent of the holders of all Securities then Outstanding of such Series under
the Indenture. It is also provided in the Indenture that the holders of a
majority in aggregate principal amount (the principal amount of the PHONES for
consenting holders and all holders shall be calculated by reference to the
original principal amount of such PHONES) of the PHONES then Outstanding may
on behalf of the holders of all the PHONES under circumstances specified in the
Indenture, waive a past Event of Default under the Indenture and its
consequences, except a default in the payment of the principal of, premium, if
any, or interest on the PHONES. Any such consent or waiver by the holder of
this Debenture shall be conclusive and binding upon such holder and upon all
future holders of this Debenture and of any Debenture or Debentures issued in
exchange or substitution herefor, irrespective of whether or not any notation
of such consent or waiver is made in this Debenture.
Miscellaneous
Except with respect to the rights of the holders of Senior
Indebtedness set forth in this Debenture and in the Indenture, no reference
herein to the Indenture and no provision of this Debenture or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of, premium, if any, or interest on this
Debenture at the place, at the respective times, at the rate, and in the coin
or currency herein prescribed.
The Indenture permits covenant defeasance (but not legal
defeasance) of the PHONES pursuant to Section 6.1(b) of the Indenture.
The Indenture contains provisions setting forth certain
conditions to the institution of proceedings by holders of the PHONES with
respect to this Debenture and the Indenture and the enforcement of remedies
under this Debenture and the Indenture, including, without limitation, the
appointment of a receiver or trustee. However, no reference herein to the
Indenture and no provision of this Debenture or the Indenture shall impair or
affect the right of any holder of any Debenture to receive payment of the
principal of, premium, if any, and interest on such Debenture on or after the
respective dates expressed in this Debenture, or to institute suit for the
enforcement of any such payment on or after such respective dates and any such
right or such enforcement thereof shall not require the consent of any other
such holder.
The transfer of this Debenture is registrable by the registered
holder hereof, in person or by his attorney duly authorized in writing, on the
books of the Company to be kept for that purpose at the office or agency of
the Company in New York, New York, upon surrender and cancellation of this
Debenture and upon presentation of a duly executed written instrument of
transfer, and thereupon a new Debenture or Debentures of authorized
denominations for the same aggregate principal amount will be issued to the
transferee or transferees in exchange herefor; and this Debenture may be in
like manner exchanged for one or more Debentures of other authorized
denominations but of the same aggregate principal amount, all in the manner
and subject to the conditions in the Indenture contained and without payment
of any service or other charge, except for any stamp or other tax or
governmental charge in connection therewith. Prior to due presentment of this
Debenture for registration or transfer, the Company, the Trustee, any paying
agent and any Debenture registrar may deem and treat the person in whose name
this Debenture is registered as the absolute owner hereof for the purpose of
receiving payment hereof or on account hereof or of interest hereon (subject
to the provisions of the first paragraph on the face hereof) and for all other
purposes.
No recourse shall be had for the payment of the principal of,
premium, if any, or interest on this Debenture or for any claim based hereon
or otherwise in any manner in respect hereof, or in respect of the Indenture,
against any subsidiary, incorporator, stockholder, officer, director or
employee, as such past, present or future, of the Company or any subsidiary,
incorporator, stockholder, officer, director or employee, as such, past,
present or future, of any predecessor or successor corporation, whether by
virtue of any constitutional provision or statute or rule of law, or by the
enforcement of any assessment or penalty or in any other manner, all such
liability being expressly waived and released by the acceptance hereof and as
part of the consideration for the issue hereof.
The Indenture and this Debenture shall be deemed to be a
contract made under the laws of the Commonwealth of Pennsylvania, and for all
purposes shall be construed in accordance with the laws of said jurisdiction,
except that the rights, duties, obligations, immunities and limitations of
rights of the Trustee pursuant to the Indenture and the Debenture shall be
governed by and construed in accordance with the laws of the State of New York.
All capitalized terms used in this Debenture and not otherwise
defined herein shall have the meanings ascribed to them in the Indenture.
The following abbreviations, when used in the inscription on
the face of this Debenture, shall be construed as though they were written
out in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT-..........Custodian........
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act
in common ---------------------
(State)
Additional abbreviations may also be used though not in the above list.
---------------------------
For Value Received, ___________ hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
: :
- --------------------------------------:
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(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF
ASSIGNEE)
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- ------------------------------------------------------------------------------
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the within Debenture and all rights thereunder, irrevocably constituting and
appointing
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Attorney to transfer said Debenture on the books of the within named
Company with full power of substitution in the premises.
Dated:
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NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND
WITH THE NAME AS WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
