EXHIBIT 4-H
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FORM OF SUPPLEMENTAL INDENTURE
to be used in connection with the issuance of
SUBORDINATED DEBT SECURITIES AND PREFERRED SECURITIES
FIRST SUPPLEMENTAL INDENTURE, dated as of _________, 1995 (the "First
Supplemental Indenture"), between Pacific Telesis Group, a Nevada corporation
(the "Company"), and The First National Bank of Chicago, as trustee (the
"Trustee") under the Indenture dated as of ________, 1995 between the Company
and the Trustee (the "Indenture").
WHEREAS, the Company executed and delivered the Indenture to the Trustee to
provide for the future issuance of the Company's unsecured debt securities to
be issued from time to time in one or more series as might be determined by
the Company under the Indenture, in an unlimited aggregate principal amount
which may be authenticated and delivered as provided in the Indenture;
WHEREAS, pursuant to the terms of the Indenture, the Company desires to
provide for the establishment of a new series of its Securities to be known as
its ___% Subordinated Deferrable Interest Debentures due 2025 (the
"Subordinated Debentures"), the form and substance of such Subordinated
Debentures and the terms, provisions and conditions thereof to be set forth as
provided in the Indenture and this First Supplemental Indenture;
WHEREAS, Pacific Telesis Financing I, a Delaware statutory business trust (the
"Trust"), has offered to the public $_________ aggregate liquidation amount of
its ___% Trust Originated Preferred Securities (the "Preferred Securities"),
representing undivided beneficial interests in the assets of the Trust and
proposes to invest the proceeds from such offering in $_________ aggregate
principal amount of the Subordinated Debentures; and
WHEREAS, the Company has requested that the Trustee execute and deliver this
First Supplemental Indenture and all requirements necessary to make this First
Supplemental Indenture a valid instrument in accordance with its terms and to
make the Subordinated Debentures, when executed by the Company and
authenticated and delivered by the Trustee, the valid obligations of the
Company have been performed, and the execution and delivery of this First
Supplemental Indenture has been duly authorized in all respects:
NOW THEREFORE, in consideration of the purchase and acceptance of the
Subordinated Debentures by the Holders thereof, and for the purpose of setting
forth, as provided in the Indenture, the form and substance of the
Subordinated Debentures and the terms, provisions and conditions thereof, the
Company covenants and agrees with the Trustee as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.1. Definition of Terms.
Unless the context otherwise requires:
(a) a term defined in the Indenture has the same meaning when used in
this First Supplemental Indenture;
(b) a term defined anywhere in this First Supplemental Indenture has the
same meaning throughout;
(c) the singular includes the plural and vice versa;
(d) a reference to a Section or Article is to a Section or Article of
this First Supplemental Indenture;
(e) headings are for convenience of reference only and do not affect
interpretation;
(f) the following terms have the meanings given to them in the
Declaration (as defined hereafter): (i) Business Day; (ii) Delaware
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Trustee; (iii) Redemption Tax Opinion; (iv) Distribution; (v)
Dissolution Tax Opinion; (vi) No Recognition Opinion; (vii) Property
Trustee; (viii) Preferred Security; (ix) Regular Trustees; (x)
Special Event; (xi) Tax Event and (xii) Trust; and
(g) the following terms have the meanings given to them in this Section
1.1(g):
"Declaration" means the Amended and Restated Declaration of Trust of Pacific
Telesis Financing I, a Delaware statutory business trust, dated as of
____________________ 1995.
"Depository" means DTC or its successor hereunder.
"Dissolution Event" means that as a result of the occurrence and continuation
of a Special Event, the Trust is to be dissolved in accordance with the
Declaration, and the Subordinated Debentures held by the Property Trustee are
to be distributed to the holders of the Trust Securities issued by the Trust
pro rata in accordance with the Declaration.
"DTC" means The Depository Trust Company, the initial Depository hereunder.
"Extended Maturity Date" means, if the Company elects to extend the Maturity
Date in accordance with Section 2.2(b), the date selected by the Company which
is after the Scheduled Maturity Date but before _________, 2044.
"Maturity Date" means the date on which the Subordinated Debentures mature and
on which the principal shall be due and payable together with all accrued and
unpaid interest thereon including Compounded Interest, if any.
"Scheduled Maturity Date" means ______________, 2025.
"Senior Indebtedness" means with respect to the Company, all indebtedness of
such obligor, whether now existing or hereafter created, but excluding trade
accounts payable arising in the ordinary course of business. Without limiting
the generality of the foregoing, Senior Indebtedness" shall include (i) the
principal, premium, if any, and interest in respect of (A) indebtedness of
such obligor for money borrowed and (B) indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by such obligor; (ii)
all capital lease obligations of such obligor; (iii) all obligations of such
obligor issued or assumed as the deferred purchase price of property, all
conditional sale obligations of such obligor and all obligations of such
obligor under any title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business); (iv) all obligations of
such obligor for the reimbursement on any letter of credit, banker's
acceptance, security purchase facility or similar credit transaction; (v) all
obligations of the type referred to in clauses (i) through (iv) of other
persons for the payment of which such obligor is responsible or liable as
obligor, guarantor or otherwise, including, without limitation, under all
support agreements or guarantees by the Company of debentures, notes and other
securities issued by PacTel Capital Resources; and (vi) all obligations of the
type referred to in clauses (i) through (v) of other persons secured by any
lien on any property or asset of such obligor (whether or not such obligation
is assumed by such obligor), except for (1) any such indebtedness that is by
its terms subordinated to or pari passu with the Subordinated Debentures, as
the case may be, and (2) any indebtedness between or among any obligor and its
Affiliates, including all other debt securities and guarantees in respect of
those debt securities, issued to (y) any other Pacific Telesis Trust or (z)
any trusts, partnerships or any other entities affiliated with the Company
which is a financing vehicle of the Company ("Financing Entity") in connection
with an issuance by such Financing Entity of preferred securities or other
securities which rank pari passu with or junior to the Preferred Securities.
Such Senior Indebtedness shall continue to be Senior Indebtedness and be
entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any term of such Senior Indebtedness.
ARTICLE TWO
GENERAL TERMS AND CONDITIONS OF THE SUBORDINATED DEBENTURES
SECTION 2.1. Designation and Principal Amount.
There is hereby authorized a series of Securities designated the "_____%
Subordinated Deferrable Interest Debentures due 2025", limited in aggregate
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principal amount to $_____ million, which amount shall be as set forth in any
written Company Order for the authentication and delivery of Subordinated
Debentures pursuant to Section 303 of the Indenture.
SECTION 2.2. Maturity.
(a) The Maturity Date will be either:
(i) the Scheduled Maturity Date; or
(ii) if the Company elects to extend the Maturity Date beyond the
Scheduled Maturity Date in accordance with Section 2.2(b), the
Extended Maturity Date;
(b) the Company may at any time before the day which is 90 days before
the Scheduled Maturity Date, elect to extend the Maturity Date only
once to the Extended Maturity Date, provided that the following
conditions in this Section 2.2(b) are satisfied both at the date the
Company gives notice in accordance with Section 2.2(c) of its
election to extend the Maturity Date and at the Scheduled Maturity
Date:
(i) the Company is not in bankruptcy or otherwise insolvent;
(ii) the Company is not in default on any Securities issued to any
Pacific Telesis Trust or any trustee of such Pacific Telesis
Trust in connection with the issuance of Trust Securities by
such Pacific Telesis Trust;
(iii) the Company has made timely payments on the Subordinated
Debentures for the immediately preceding 18 months without
deferrals;
(iv) the Trust is not in arrears on payments of Distributions on the
Trust Securities issued by it; and
(v) the Subordinated Debentures are rated investment grade or the
equivalent by any one of Standard & Poor's Corporation, Xxxxx'x
Investors Service, Inc., Fitch Investor Services, Duff & Xxxxxx
Credit Rating Company or any other nationally recognized
statistical rating organization; and
(c) if the Company elects to extend the Maturity Date in accordance with
Section 2.2(b), the Company shall give notice to Holders of the
Subordinated Debentures, the Property Trustee, the Trust and the
Trustee of the extension of the Maturity Date and the Extended
Maturity Date at least 90 days before the Scheduled Maturity Date.
SECTION 2.3. Form and Payment.
Except as provided in Section 2.4, the Subordinated Debentures shall be issued
as Registered Securities in fully registered certificated form without
interest coupons. Principal and interest on the Subordinated Debentures
issued in certificated form will be payable, the transfer of such Subordinated
Debentures will be registrable and such Subordinated Debentures will be
exchangeable for Subordinated Debentures bearing identical terms and
provisions at the Corporate Trust Office of the Trustee; provided, however,
that payment of interest may be made at the option of the Company by check
mailed to the Holder at such address as shall appear in the Security Register.
Notwithstanding the foregoing, so long as the Holder of any Subordinated
Debentures is the Property Trustee, the payment of the principal of and
interest (including Compounded Interest, if any) on such Subordinated
Debentures held by the Property Trustee will be made by wire transfer in
immediately available funds at such place and to such account as may be
designated by the Property Trustee. Payment of principal of the Subordinated
Debentures will only be made upon surrender of the Subordinated Debentures to
the Trustee.
SECTION 2.4. Global Subordinated Debenture.
(a) In connection with a Dissolution Event;
(i) the Subordinated Debentures in certificated form may be
presented to the Trustee by the Property Trustee in exchange
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for a global Subordinated Debenture in an aggregate principal
amount equal to all Outstanding Subordinated Debentures (a
"Global Subordinated Debenture"), to be registered in the name
of the Depository, or its nominee, and delivered by the Trustee
to the Depository for crediting to the accounts of its
participants pursuant to the instructions of the Regular
Trustees. The Company upon any such presentation shall execute
a Global Subordinated Debenture in such aggregate principal
amount and deliver the same to the Trustee for authentication
and delivery in accordance with the Indenture and this First
Supplemental Indenture. Payments on the Subordinated
Debentures issued as a Global Subordinated Debenture will be
made to the Depository; and
(ii) if any Preferred Securities are held in non book-entry
certificated form, the Subordinated Debentures in certificated
form may be presented to the Trustee by the Property Trustee
and any Preferred Security which represents Preferred
Securities other than Preferred Securities held by the
Depository or its nominee ("Non Book-Entry Preferred
Securities") will be deemed to represent beneficial interests
in Subordinated Debentures presented to the Trustee by the
Property Trustee having an aggregate principal amount equal to
the aggregate liquidation amount of the Non Book-Entry
Preferred Securities until such Preferred Securities are
presented to the Security Registrar for transfer or reissuance
at which time such Preferred Securities will be canceled and a
Subordinated Debenture registered in the name of the holder of
the Preferred Security or the transferee of the holder of such
Preferred Security, as the case may be, with an aggregate
principal amount equal to the aggregate liquidation amount of
the Preferred Security canceled will be executed by the Company
and delivered to the Trustee for authentication and delivery in
accordance with the Indenture and this First Supplemental
Indenture. On issue of such Subordinated Debentures,
Subordinated Debentures with an equivalent aggregate principal
amount that were presented by the Property Trustee to the
Trustee will be deemed to have been canceled.
(b) Unless and until it is exchanged for Subordinated Debentures in
registered certificated form, a Global Subordinated Debenture may be
transferred, in whole but not in part only to another nominee of the
Depository or to the Depository, or to a successor Depository
selected or approved by the Company or to a nominee of such
successor Depository.
(c) If at any time the Depository notifies the Company that it is
unwilling or unable to continue as Depository or if at any time the
Depository for such series shall no longer be registered or in good
standing under the Securities Exchange Act of 1934, as amended, or
other applicable statute or regulation, the Company shall appoint a
successor Depository. If a successor Depository for such series is
not appointed by the Company within 90 days after the Company
receives such notice or becomes aware of such condition, as the case
may be, the Company will execute, and, subject to Article Two of the
Indenture, the Trustee will authenticate and deliver the
Subordinated Debentures in definitive registered form without
coupons, in authorized denominations, and in an aggregate principal
amount equal to the principal amount of the Global Subordinated
Debenture in exchange for such Global Subordinated Debenture. In
addition, the Company may at any time determine that the
Subordinated Debentures shall no longer be represented by a Global
Subordinated Debenture. In such event the Company will execute and
upon receipt of a Company Request evidencing such determination by
the Company, the Trustee will authenticate and deliver the
Subordinated Debentures in definitive registered form without
coupons, in authorized denominations, and in an aggregate principal
amount equal to the principal amount of the Global Subordinated
Debenture in exchange for such Global Subordinated Debenture. Upon
the exchange of the Global Subordinated Debenture for such
Subordinated Debentures in definitive registered form without
coupons, in authorized denominations, the Global Subordinated
Debenture shall be canceled by the Trustee. Such Subordinated
Debentures in definitive registered form issued in exchange for the
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Global Subordinated Debenture shall be registered in such names and
in such authorized denominations as the Depository, pursuant to
instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee. The Trustee shall deliver such
registered certificated Subordinated Debentures in definitive form
in exchange for the Global Subordinated Debenture to the Depository
for delivery to the Persons in whose names such Subordinated
Debentures are so registered.
(d) The Company and the Trustee shall have no responsibility, obligation
or liability with respect to: (x) the maintenance, review or
accuracy of the records of the Depository or of any of its
participating organizations with respect to any ownership interest
in or payments with respect to such Global Subordinated Debentures,
(y) any communication with or delivery of any notice (including
notices of redemption) with respect to the Subordinated Debentures
represented by any Global Subordinated Debenture to any Person
having any ownership interest in such Global Subordinated Debenture
or to any of the Depository's participating organizations or (z) any
payment made on account of any beneficial ownership interest in such
Global Subordinated Debenture.
SECTION 2.5. Interest.
(a) Each Subordinated Debenture will bear interest at the rate of ___%
per annum (the "Coupon Rate") from the original date of issuance or
from the most recent Interest Payment Date (as hereinafter defined)
to which interest has been paid or duly provided for until the
principal thereof becomes due and payable, and on any overdue
principal and (to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of
interest at the Coupon Rate, compounded quarterly, payable (subject
to the provisions of Article Four) quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year (each, an
"Interest Payment Date"), commencing on __________, 1995, to the
Person in whose name such Subordinated Debenture or any predecessor
Subordinated Debenture is registered, at the close of business on
the regular record date for such interest installment, which, with
respect to any Subordinated Debentures of which the Property Trustee
is the Holder or with respect to a Global Subordinated Debenture,
shall be the close of business on the Business Day next preceding
that Interest Payment Date. Notwithstanding the foregoing sentence,
if the Preferred Securities are no longer in book-entry only form or
if pursuant to the Indenture and this First Supplemental Indenture
the Subordinated Debentures are not represented by a Global
Subordinated Debenture, the Company may select a regular record date
for such interest installment which shall conform to the rules of
any securities exchange on which the Subordinated Debentures are
listed, and which shall be at least one Business Day but less than
60 Business Days before an Interest Payment Date.
(b) The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months. Except as
provided in the following sentence, the amount of interest payable
for any period shorter than a full quarterly period for which
interest is computed, will be computed on the basis of the actual
number of days elapsed in such a 30-day month. In the event that
any date on which interest is payable on the Subordinated Debentures
is not a Business Day, then payment of interest payable on such date
will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if made
on such date.
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ARTICLE THREE
REDEMPTION OF THE SUBORDINATED DEBENTURES
SECTION 3.1. Tax Event Redemption.
If a Tax Event has occurred and is continuing and
(a) the Company has received a Redemption Tax Opinion or
(b) after receiving a Dissolution Tax Opinion, the Regular Trustees
shall have been informed by a nationally recognized independent tax
counsel experienced in such matters rendering the Dissolution Tax
Opinion that a No Recognition Opinion cannot be delivered to the
Trust, then, notwithstanding Section 3.2(a) but subject to Section
3.2(b), the Company shall have the right at any time, upon not less
than 30 days nor more than 60 days notice to the Holders of the
Subordinated Debentures, to redeem the Subordinated Debentures, in
whole or in part, for cash at the Optional Redemption Price (as
hereinafter defined) within 90 days following the occurrence of such
Tax Event (the "90 Day Period"), provided that, if at the time there
is available to the Company the opportunity to eliminate within the
90 Day Period, the Tax Event by taking some ministerial action
("Ministerial Action"), such as filing a form or making an election,
or pursuing some other similar reasonable measure which has no
adverse effect on the Company, the Trust or the holders of the Trust
Securities issued by the Trust, the Company shall pursue such
Ministerial Action in lieu of redemption, and provided, further,
that the Company shall have no right to redeem the Subordinated
Debentures while the Trust is pursuing any such Ministerial Action
pursuant to its obligations under the Declaration.
SECTION 3.2. Optional Redemption by Company.
(a) Subject to the provisions of Section 3.2(b) and to the provisions of
Article Eleven of the Indenture, except as otherwise may be
specified in this First Supplemental Indenture, the Company shall
have the right to redeem the Subordinated Debentures, in whole or in
part, at any time and from time to time, on or after ____________,
2000, at a redemption price equal to 100% of the principal amount to
be redeemed plus any accrued and unpaid interest thereon, including
Compounded Interest (as hereinafter defined), if any, to the date of
such redemption (the "Optional Redemption Price"). Any redemption
pursuant to this paragraph will be made upon not less than 30 nor
more than 60 days' notice to the Holder of the Subordinated
Debentures, at the Optional Redemption Price.
(b) If a partial redemption of the Subordinated Debentures would result
in the delisting of the Preferred Securities issued by the Trust
from any national securities exchange or other organization on which
the Preferred Securities are then listed, the Company shall not be
permitted to effect such partial redemption and may only redeem the
Subordinated Debentures in whole.
ARTICLE FOUR
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1. Extension of Interest Payment Period.
So long as the Company is not in default in the payment of interest on the
Subordinated Debentures, the Company shall have the right, at any time during
the term of the Subordinated Debentures, from time to time to defer payments
of interest by extending the interest payment period of such Subordinated
Debentures for up to 20 consecutive quarters (the "Extended Interest Payment
Period"), during which Extended Interest Payment Period no interest shall be
due and payable; provided that no Extended Interest Payment Period may extend
beyond the Maturity Date of the Subordinated Debentures. At the end of the
Extended Interest Payment Period, the Company shall pay all interest accrued
and unpaid on the Subordinated Debentures (together with interest thereon to
the extent permitted by applicable law, at the Coupon Rate, compounded
quarterly ( Compounded Interest")) to the Holders of the Subordinated
Debentures on the record date relating to the Interest Payment Date that
corresponds to the end of such Extended Interest Payment Period. Before the
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termination of any Extended Interest Payment Period, the Company may further
extend such period, provided that such period together with all such further
extensions thereof shall not exceed 20 consecutive quarters, or extend beyond
the Maturity Date of the Subordinated Debentures. Upon the termination of any
Extended Interest Payment Period and upon the payment of all Deferred Interest
then due, the Company may commence a new Extended Interest Payment Period,
subject to the foregoing requirements. No interest shall be due and payable
during an Extended Interest Payment Period, except at the end thereof, but the
Company may prepay at any time all or any portion of the interest accrued
during an Extended Interest Payment Period.
SECTION 4.2. Notice of Extension.
(a) If the Property Trustee is the only registered Holder of the
Subordinated Debentures at the time the Company selects an Extended
Interest Payment Period, the Company shall give written notice to
the Regular Trustees, the Property Trustee and the Trustee of its
selection of such Extended Interest Payment Period one Business Day
before the earlier of (a) the next succeeding date on which
Distributions on the Trust Securities issued by the Trust are
payable, or (b) the date the Trust is required to give notice of the
record date or the date such Distributions are payable to the New
York Stock Exchange or other applicable self-regulatory organization
or to holders of the Preferred Securities issued by the Trust, but
in any event at least one Business Day before such record date.
(b) If the Property Trustee is not the only Holder of the Subordinated
Debentures at the time the Company selects an Extended Interest
Payment Period, the Company shall give the Holders of the
Subordinated Debentures and the Trustee written notice of its
selection of such Extended Interest Payment Period 10 Business Days
before the earlier of (i) the next succeeding Interest Payment Date,
or (ii) the date the Company is required to give notice of the
record or payment date of such interest payment to the New York
Stock Exchange or other applicable self-regulatory organization or
to Holders of the Subordinated Debentures.
(c) The quarter in which any notice is given pursuant to paragraphs (a)
or (b) of this Section 4.2 shall be counted as one of the 20
quarters permitted in the maximum Extended Interest Payment Period
permitted under Section 4.1.
ARTICLE FIVE
EXPENSES
SECTION 5.1. Payment of Expenses.
In connection with the offering, sale and issuance of the Subordinated
Debentures to the Property Trustee in connection with the sale of the Trust
Securities by the Trust and during the existence of the Trust, the Company
shall:
(a) pay for all costs and expenses relating to the offering, sale and
issuance of the Subordinated Debentures, including commissions to
the underwriters payable pursuant to the Underwriting Agreement and
the Pricing Agreement and compensation of the Trustee under the
Indenture in accordance with the provisions of Section 606 of the
Indenture;
(b) pay for all costs and expenses of the Trust (including, but not
limited to, costs and expenses relating to the organization of the
Trust, the offering, sale and issuance of the Trust Securities
(including commissions to the underwriters in connection therewith),
the fees and expenses of the Property Trustee and the Delaware
Trustee, the costs and expenses relating to the operation of the
Trust, including without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services,
expenses for printing and engraving and computing or accounting
equipment, paying agent(s), registrar(s), transfer agent(s),
duplicating, travel and telephone and other telecommunications
expenses and costs and expenses incurred in connection with the
acquisition, financing, and disposition of Trust assets);
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(c) be primarily liable for any indemnification obligations arising with
respect to the Declaration; and
(d) pay any and all taxes, duties, assessments or governmental charges
of whatever nature (other than withholding taxes) imposed on the
Trust or its assets and all liabilities, costs and expenses of the
Trust with respect to such taxes, duties, assessments or
governmental charges.
ARTICLE SIX
SUBORDINATION
SECTION 6.1. Agreement to Subordinate.
The Company covenants and agrees, and each Holder of Subordinated Debentures
issued hereunder by such Holder's acceptance thereof likewise covenants and
agrees, that all Subordinated Debentures shall be issued subject to the
provisions of this Article Six; and each Holder of a Subordinated Debenture,
whether upon original issue or upon transfer or assignment thereof, accepts
and agrees to be bound by such provisions.
The payment by the Company of the principal of and interest on all
Subordinated Debentures issued hereunder shall, to the extent and in the
manner hereinafter set forth, be subordinated and junior in right of payment
to the prior payment in full of all Senior Indebtedness of the Company,
whether outstanding at the date of this Indenture or thereafter incurred.
No provision of this Article Six shall prevent the occurrence of any default
or Event of Default hereunder.
SECTION 6.2. Default on Senior Indebtedness.
In the event and during the continuation of any default by the Company in the
payment of principal, premium, interest or any other payment due on any Senior
Indebtedness of the Company, or in the event that the maturity of any Senior
Indebtedness of the Company has been accelerated because of a default, then,
in either case, no payment shall be made by the Company with respect to the
principal (including redemption payments) of or interest on the Subordinated
Debentures.
In the event that, notwithstanding the foregoing or the provisions of Section
6.3, any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, prohibited by the
foregoing or by Section 6.3, shall be received by the Trustee before all
Senior Indebtedness of the Company is paid in full, or provision is made for
such payment in money in accordance with its terms, such payment or
distribution shall be held in trust for the benefit of and shall be paid over
or delivered to the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior
Indebtedness may have been issued, as their respective interests may appear,
as calculated by the Company, for application to the payment of all Senior
Indebtedness of the Company remaining unpaid to the extent necessary to pay
such Senior Indebtedness in full in money in accordance with its terms, after
giving effect to any concurrent payment or distribution to or for the holders
of such Senior Indebtedness.
SECTION 6.3. Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Company or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, to creditors
upon any dissolution or winding-up or liquidation or reorganization of the
Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due upon all Senior
Indebtedness of the Company shall first be paid in full, or payment thereof
provided for in money in accordance with its terms, before any payment is made
by the Company on account of the principal or interest on the Subordinated
Debentures; and upon any such dissolution or winding-up or liquidation or
reorganization, any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
which the Holders of the Subordinated Debentures or the Trustee would be
entitled to receive from the Company, except for the provisions of this
Article Six, shall be paid by the Company or by any receiver, trustee in
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bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the Holders of the Subordinated Debentures or by the
Trustee under this Indenture if received by them or it, directly to the
holders of Senior Indebtedness of the Company (pro rata to such holders on the
basis of the respective amounts of Senior Indebtedness held by such holders,
as calculated by the Company) or their representative or representatives, or
to the trustee or trustees under any indenture pursuant to which any
instruments evidencing such Senior Indebtedness may have been issued, as their
respective interests may appear, to the extent necessary to pay such Senior
Indebtedness in full, in money or money's worth, after giving effect to any
concurrent payment or distribution to or for the holders of such Senior
Indebtedness, before any payment or distribution is made to the Holders of
Subordinated Debentures or to the Trustee.
For purposes of this Article Six, the words "cash, property or securities"
shall not be deemed to include shares of stock of the Company as reorganized
or readjusted, or securities of the Company or any other corporation provided
for by a plan of reorganization or readjustment, the payment of which is
subordinated at least to the extent provided in this Article Six with respect
to the Subordinated Debentures to the payment of all Senior Indebtedness of
the Company that may at the time be outstanding, provided that (i) such Senior
Indebtedness is assumed by the new corporation, if any, resulting from any
such reorganization or readjustment, and (ii) the rights of the holders of
such Senior Indebtedness are not, without the consent of such holders, altered
by such reorganization or readjustment. The consolidation of the Company
with, or the merger of the Company into, another corporation or the
liquidation or dissolution of the Company following the conveyance or transfer
of its property as an entirety, or substantially as an entirety, to another
corporation upon the terms and conditions provided for in Article Eight of the
Indenture shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section 6.3 if such other corporation
shall, as a part of such consolidation, merger, conveyance or transfer, comply
with the conditions stated in Article Eight of the Indenture. Nothing in
Section 6.2 or in this Section 6.3 shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 606 of the Indenture.
SECTION 6.4. Prior Payment to Senior Indebtedness Upon Acceleration of
Subordinated Debentures.
In the event that the Subordinated Debentures are declared due and payable
before the Maturity Date, then and in such event the holders of the Senior
Indebtedness outstanding at the time such Subordinated Dentures so become due
and payable shall be entitled to receive payment in full of all amounts due or
to become due on or in respect of all Senior Indebtedness, or provision shall
be made for such payment in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of such Senior Indebtedness, before the Holders of
the Subordinated Debentures are entitled to receive any principal of or
interest on the Subordinated Debentures (including any payment which may be
payable by reason of the payment of any other indebtedness of the Company
being subordinated to the payment of the Subordinated Debentures).
In the event that, notwithstanding the foregoing, the Company shall make any
payment of principal or interest on the Subordinated Debentures to the Trustee
or any Holder prohibited by the foregoing provisions of this Section, and if
such fact shall, at or prior to the time of such payment, have been made known
to the Trustee or, as the case may be, such Holder, then and in such event
such payment shall be paid over and delivered forthwith to the Company.
SECTION 6.5. Subrogation.
Subject to the payment in full of all amounts due or to become due on or in
respect of Senior Indebtedness of the Company, the rights of the Holders of
the Subordinated Debentures shall be subrogated (equally and ratably with the
Holders of all indebtedness of the Company which by its express terms is
subordinated to indebtedness of the Company to substantially the same extent
as the Subordinated Debentures are subordinated and is entitled to like rights
of subrogation) to the rights of the holders of such Senior Indebtedness to
receive payments or distributions of cash, property or securities of the
Company applicable to such Senior Indebtedness until the principal of and
interest on the Subordinated Debentures shall be paid in full; and, for the
purposes of such subrogation, no payments or distributions to the holders of
such Senior Indebtedness of any cash, property or securities to which the
Holders of the Subordinated Debentures or the Trustee would be entitled except
for the provisions of this Article Six, and no payment over pursuant to the
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provisions of this Article Six to or for the benefit of the holders of such
Senior Indebtedness by Holders of the Subordinated Debentures or the Trustee,
shall, as between the Company, its creditors other than Holders of Senior
Indebtedness of the Company, and the holders of the Subordinated Debentures,
be deemed to be a payment by the Company to or on account of such Senior
Indebtedness. It is understood that the provisions of this Article Six are
and are intended solely for the purposes of defining the relative rights of
the Holders of the Subordinated Debentures, on the one hand, and the holders
of such Senior Indebtedness on the other hand.
Nothing contained in this Article Six or elsewhere in this Indenture or in the
Subordinated Debentures is intended to or shall impair, as between the
Company, its creditors other than the holders of Senior Indebtedness of the
Company, and the Holders of the Subordinated Debentures, the obligation of the
Company, which is absolute and unconditional, to pay to the Holders of the
Subordinated Debentures the principal of and interest on the Subordinated
Debentures as and when the same shall become due and payable in accordance
with their terms, or is intended to or shall affect the relative rights of the
Holders of the Subordinated Debentures and creditors of the Company, other
than the holders of Senior Indebtedness of the Company, nor shall anything
herein or therein prevent the Trustee or the Holder of any Subordinated
Debenture from exercising all remedies otherwise permitted by applicable law
upon default under the Indenture, subject to the rights, if any, under this
Article Six of the holders of such Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.
Upon any payment or distribution of assets of the Company referred to in this
Article Six, the Trustee, subject to the provisions of Section 602 of the
Indenture, and the Holders of the Subordinated Debentures shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction in
which such dissolution, winding-up, liquidation or reorganization proceedings
are pending, or a certificate of the receiver, trustee in bankruptcy,
liquidation trustee, agent or other Person making such payment or
distribution, delivered to the Trustee or to the Holders of the Subordinated
Debentures, for the purposes of ascertaining the Persons entitled to
participate in such distribution, the holders of Senior Indebtedness and other
indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto
or to this Article Six.
SECTION 6.6. Trustee to Effectuate Subordination.
Each Holder of Subordinated Debentures by such Holder's acceptance thereof
authorizes and directs the Trustee on such Holder's behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article Six and appoints the Trustee such Holder's attorney-in-fact for
any and all such purposes.
SECTION 6.7. Notice by the Company.
The Company shall give prompt written notice to a Responsible Officer of the
Trustee of any fact known to the Company that would prohibit the making of any
payment of moneys to or by the Trustee in respect of the Subordinated
Debentures pursuant to the provisions of this Article Six. Notwithstanding
the provisions of this Article Six or any other provision of the Indenture and
this First Supplemental Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts that would prohibit the making of any
payment of moneys to or by the Trustee in respect of the Subordinated
Debentures pursuant to the provisions of this Article Six, unless and until a
Responsible Officer of the Trustee shall have received written notice thereof
from the Company or a holder or holders of Senior Indebtedness or from any
trustee therefor; and before the receipt of any such written notice, the
Trustee, subject to the provisions of Section 602 of the Indenture, shall be
entitled in all respects to assume that no such facts exist; provided,
however, that, if the Trustee shall not have received the notice provided for
in this Section 6.7 at least two Business Days prior to the date upon which by
the terms hereof any money may become payable for any purpose (including,
without limitation, the payment of the principal of (or premium, if any) or
interest on any Subordinated Debenture), then, anything herein contained to
the contrary notwithstanding, the Trustee shall have full power and authority
to receive such money and to apply the same to the purposes for which they
were received, and shall not be affected by any notice to the contrary that
may be received by it within two Business Days prior to such date.
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The Trustee, subject to the provisions of Section 602 of the Indenture, shall
be entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness of the Company (or
a trustee on behalf of such holder) to establish that such notice has been
given by a holder of such Senior Indebtedness or a trustee on behalf of any
such holder or holders. In the event that the Trustee determines in good
faith that further evidence is required with respect to the right of any
Person as a holder of such Senior Indebtedness to participate in any payment
or distribution pursuant to this Article Six, the Trustee may request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as to
the amount of such Senior Indebtedness held by such Person, the extent to
which such Person is entitled to participate in such payment or distribution
and any other facts pertinent to the rights of such Person under this Article
Six, and, if such evidence is not furnished, the Trustee may defer any payment
to such Person pending judicial determination as to the right of such Person
to receive such payment.
SECTION 6.8. Rights of the Trustee; Holders of Senior Indebtedness.
The Trustee in its individual capacity shall be entitled to all the rights set
forth in this Article Six in respect of any Senior Indebtedness at any time
held by it, to the same extent as any other holder of Senior Indebtedness, and
nothing in this Indenture shall deprive the Trustee of any of its rights as
such holder.
With respect to the holders of Senior Indebtedness of the Company, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Six, and no implied covenants or
obligations with respect to the holders of such Senior Indebtedness shall be
read into this Indenture against the Trustee. The Trustee shall not be deemed
to owe any fiduciary duty to the holders of such Senior Indebtedness and,
subject to the provisions of Section 602 of the Indenture, the Trustee shall
not be liable to any holder of such Senior Indebtedness if it shall pay over
or deliver to Holders of Subordinated Debentures, the Company or any other
Person money or assets to which any holder of such Senior Indebtedness shall
be entitled by virtue of this Article Six or otherwise.
SECTION 6.9. Subordination May Not Be Impaired.
No right of any present or future holder of any Senior Indebtedness of the
Company to enforce subordination as herein provided shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such holder, or
by any noncompliance by the Company with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof that any such holder
may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness of the Company may, at any time and from time
to time, without the consent of or notice to the Trustee or the Holders of the
Subordinated Debentures, without incurring responsibility to the Holders of
the Subordinated Debentures and without impairing or releasing the
subordination provided in this Article Six or the obligations hereunder of the
Holders of the Subordinated Debentures to the holders of such Senior
Indebtedness, do any one or more the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, such
Senior Indebtedness, or otherwise amend or supplement in any manner such
Senior Indebtedness or any instrument evidencing the same or any agreement
under which such Senior Indebtedness is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing such Senior Indebtedness; (iii) release any Person liable in any
manner for the collection of such Senior Indebtedness; and (iv) exercise or
refrain from exercising any rights against the Company and any other Person.
ARTICLE SEVEN
COVENANT TO LIST ON EXCHANGE
SECTION 7.1. Listing on an Exchange.
If the Subordinated Debentures are to be issued as a Global Subordinated
Debenture in connection with the distribution of the Subordinated Debentures
to the holders of the Preferred Securities issued by the Trust upon a
Dissolution Event, the Company will use its best efforts to list such
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Subordinated Debentures on the New York Stock Exchange or on such other
exchange as the Preferred Securities are then listed.
ARTICLE EIGHT
FORM OF SUBORDINATED DEBENTURE
SECTION 8.1. Form of Subordinated Debenture.
The Subordinated Debentures and the Trustee's Certificate of Authentication to
be endorsed thereon are to be substantially in the following forms:
(FORM OF FACE OF SUBORDINATED DEBENTURE)
{IF THE SUBORDINATED DEBENTURE IS TO BE A GLOBAL SUBORDINATED DEBENTURE,
INSERT - This Subordinated Debenture is a Global Subordinated Debenture within
the meaning of the Indenture hereinafter referred to and is registered in the
name of a Depository or a nominee of a Depository. This Subordinated
Debenture is exchangeable for Subordinated Debentures registered in the name
of a person other than the Depository or its nominee only in the limited
circumstances described in the Indenture, and no transfer of this Subordinated
Debenture (other than a transfer of this Subordinated Debenture as a whole by
the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository) may be
registered except in limited circumstances.
Unless this Subordinated Debenture is presented by an authorized
representative of The Depository Trust Company, a New York corporation ( DTC")
to the issuer or its agent for registration of transfer, exchange or payment,
and any Subordinated Debenture issued is registered in the name of Cede & Co.
or such other name as requested by an authorized representative of DTC (and
any payment hereon 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 since
the registered owner hereof, Cede & Co., has an interest herein.}
No. __________________
$_____________
CUSIP No._____________
____________________
____% SUBORDINATED DEFERRABLE INTEREST SUBORDINATED DEBENTURE
DUE 2025
Pacific Telesis Group, a Nevada corporation (the "Company", which term
includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to _______________, or
registered assigns, the principal sum of _____________ Dollars on
____________, 2025, (or on such later date before ______, 2044, if the Company
elects to extend the Maturity Date as further described herein), and to pay
interest on said principal sum from ____________, 1995, or from the most
recent interest payment date (each such date, an "Interest Payment Date") to
which interest has been paid or duly provided for, quarterly (subject to
deferral as set forth herein) in arrears on March 31, June 30, September 30
and December 31 of each year commencing _____________, 1995, at the rate of
_____% per annum until the principal hereof shall have become due and payable,
and on any overdue principal and (without duplication and to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest at the same rate per annum compounded quarterly. The
amount of interest payable on any Interest Payment Date shall be computed on
the basis of a 360-day year of twelve 30-day months. In the event that any
date on which interest is payable on this Subordinated Debenture is not a
Business Day, then payment of interest payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on such date. The interest installment so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in the Indenture, be paid to the person in whose name this
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Subordinated Debenture (or one or more Predecessor Subordinated Debentures, as
defined in said Indenture) is registered at the close of business on the
regular record date for such interest installment, which shall be the close of
business on the Business Day next preceding such Interest Payment Date. {IF
PURSUANT TO THE PROVISIONS OF THE INDENTURE THE SUBORDINATED DEBENTURES ARE NO
LONGER REPRESENTED BY A GLOBAL SUBORDINATED DEBENTURE -- which shall be the
close of business on the ____ Business Day next preceding such Interest
Payment Date.} Any such interest installment not punctually paid or duly
provided for shall forthwith cease to be payable to the registered Holders on
such regular record date and may be paid to the Person in whose name this
Subordinated Debenture (or one or more Predecessor Subordinated Debentures) is
registered at the close of business on a special record date to be fixed by
the Trustee for the payment of such defaulted interest, notice whereof shall
be given to the registered Holders of this series of Subordinated Debentures
not less than 10 days prior to such special record date, or may be paid at any
time in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Subordinated Debentures may be listed, and
upon such notice as may be required by such exchange, all as more fully
provided in the Indenture. The principal of and the interest on this
Subordinated Debenture shall be payable at the office or agency of the Trustee
maintained for that purpose in any coin or currency of the United States of
America that at the time of payment is legal tender for payment of public and
private debts; provided, however, that payment of interest may be made at the
option of the Company by check mailed to the registered Holder at such address
as shall appear in the Security Register. Notwithstanding the foregoing, so
long as the Holder of this Subordinated Debenture is the Property Trustee, the
payment of the principal of and interest on this Subordinated Debenture will
be made by wire transfer in immediately available funds at such place and to
such account as may be designated by the Property Trustee. Payment of
principal of the Subordinated Debentures will only be made upon surrender of
the Subordinated Debentures to the Trustee.
The indebtedness evidenced by this Subordinated Debenture is, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of all Senior Indebtedness, and this Subordinated
Debenture is issued subject to the provisions of the Indenture with respect
thereto. Each Holder of this Subordinated Debenture, by accepting the same,
(a) agrees to and shall be bound by such provisions, (b) authorizes and
directs the Trustee on his or her behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination so
provided and (c) appoints the Trustee his or her attorney-in-fact for any and
all such purposes. Each Holder hereof, by his or her acceptance hereof,
hereby waives all notice of the acceptance of the subordination provisions
contained herein and in the Indenture by each holder of Senior Indebtedness,
whether now outstanding or hereafter incurred, and waives reliance by each
such holder upon said provisions.
This Subordinated Debenture shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any
purpose until the Certificate of Authentication hereon shall have been signed
by or on behalf of the Trustee.
The provisions of this Subordinated Debenture are continued on the reverse
side hereof and such continued provisions shall for all purposes have the same
effect as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed.
Dated___________________
PACIFIC TELESIS GROUP
By______________________
{ }
Attest:
By_____________________
Secretary
13
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Subordinated Debentures of the series of Subordinated
Debentures described in the within-mentioned Indenture.
The First National Bank of Chicago as Trustee
The First National Bank of Chicago By:________________________
as Trustee or as Authenticating Agent
By:_______________________________ By:________________________
Authorized Officer Authorized Officer
(FORM OF REVERSE OF SUBORDINATED DEBENTURE)
This Subordinated Debenture is one of a duly authorized series of Subordinated
Debentures of the Company (herein sometimes referred to as the Subordinated
Debentures"), specified in the Indenture, all issued or to be issued in one or
more series under and pursuant to an Indenture dated as of ______________,
1995, duly executed and delivered between the Company and The First National
Bank of Chicago, as Trustee (the "Trustee"), as supplemented by the First
Supplemental Indenture dated as of ____________, 1995, between the Company and
the Trustee (the Indenture as so supplemented, the "Indenture"), to which
Indenture and all indentures supplemental thereto reference is hereby made for
a description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the Holders of the
Subordinated Debentures, and to all of which provisions the Holder of this
Subordinated Debenture, by acceptance hereof, assents and agrees. By the
terms of the Indenture, the Subordinated Debentures are issuable in series
that may vary as to amount, date of maturity, rate of interest and in other
respects as provided in the Indenture. This series of Subordinated Debentures
is limited in aggregate principal amount as specified in said First
Supplemental Indenture.
Except as provided in the next paragraph, the Subordinated Debentures may not
be redeemed by the Company prior to __________, 2000. The Company shall have
the right to redeem this Subordinated Debenture at the option of the Company,
without premium or penalty, in whole or in part at any time and from time to
time on or after __________, 2000 (an Optional Redemption"), at a redemption
price equal to 100% of the principal amount plus any accrued but unpaid
interest, including any Compounded Interest, if any, to the date of such
redemption (the Optional Redemption Price"). Any redemption pursuant to this
paragraph will be made upon not less than 30 nor more than 60 days' notice, at
the Optional Redemption Price.
If, at any time, a Tax Event (as defined below) shall occur or be continuing
after receipt of a Dissolution Tax Opinion (as defined below) and (i) the
Regular Trustees and the Company shall have received an opinion (a Redemption
Tax Opinion") of a nationally recognized independent tax counsel experienced
in such matters that, as a result of a Tax Event, there is more than an
insubstantial risk that the Company would be precluded from deducting the
interest on the Subordinated Debentures for United States federal income tax
purposes even after the Subordinated Debentures were distributed to the
Holders of Preferred Securities and Common Securities in liquidation of such
holder's interest in the Trust as set forth in the Declaration of Trust or
(ii) the Regular Trustees shall have been informed by such tax counsel that a
No Recognition Opinion (as defined below) cannot be delivered, the Company
shall have the right at any time, upon not less than 30 nor more than 60 days'
notice, to redeem the Subordinated Debentures in whole or in part for cash at
the Optional Redemption Price within 90 days following the occurrence of such
Tax Event; provided, however, that, if at that time there is available to the
Company or the Trust the opportunity to eliminate, within such 90 day period,
the Tax Event by taking some ministerial action ( Ministerial Action"), such
as filing a form or making an election, or pursuing some other similar
reasonable measure, which has no adverse effect on the Trust, the Company or
14
the Holders of the Preferred Securities, the Company or the Trust will pursue
such measure in lieu of redemption and provided further that the Company shall
have no right to redeem the Subordinated Debentures while the Trust is
pursuing any such Ministerial Action.
Tax Event" means that the Regular Trustees shall have obtained an opinion of
nationally recognized independent tax counsel experienced in such matters (a
Dissolution Tax Opinion") to the effect that on or after __________, 1995, as
a result of (a) any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein,
(b) any amendment to, or change in, an interpretation or application of any
such laws or regulations by any legislative body, court, governmental agency
or regulatory authority (including the enactment of any legislation and the
publication of any judicial decision or regulatory determination), (c) any
interpretation or pronouncement that provides for a position with respect to
such laws or regulations that differs from the theretofore generally accepted
position or (d) any action taken by any governmental agency or regulatory
authority, which amendment or change is enacted, promulgated, issued or
announced or which interpretation or pronouncement is issued or announced or
which action is taken, in each case on or after __________, 1995, there is
more than an insubstantial risk that (i) the Trust would be subject to United
States federal income tax with respect to income accrued or received on the
Subordinated Debentures, (ii) the Trust would be subject to more than a de
minimis amount of taxes, duties or other governmental charges or (iii)
interest payable by the Company to the Trust on the Subordinated Debentures
would not be deductible by the Company for United States federal income tax
purposes.
"No Recognition Opinion" means an opinion of a nationally recognized
independent tax counsel experienced in such matters, which opinion may rely on
published revenue rulings of the Internal Revenue Service, to the effect that
the Holders of the Preferred Securities will not recognize any gain or loss
for United States federal income tax purposes as a result of a dissolution of
the Trust and distribution of the Subordinated Debentures as provided in the
Declaration of Trust.
If the Debentures are only partially redeemed by the Company pursuant to an
Optional Redemption or as a result of a Tax Event as described above, the
Debentures will be redeemed pro rata or by lot or in some other equitable
manner determined by the Trustee. Notwithstanding the foregoing, if a partial
redemption of the Subordinated Debentures would result in the delisting of the
Preferred Securities by any national securities exchange or other organization
on which the Preferred Securities are then listed, the Company shall not be
permitted to effect such partial redemption and will only redeem the
Subordinated Debentures in whole.
In the event of redemption of this Subordinated Debenture in part only, a new
Subordinated Debenture or Subordinated Debentures of this series for the
unredeemed portion hereof will be issued in the name of the Holder hereof upon
the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have occurred
and be continuing, the principal of all of the Subordinated Debentures may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions and limitations provided
in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee, with
the consent of the Holders of not less than a majority in aggregate principal
amount of the Subordinated Debentures of each series affected at the time
outstanding, as defined in the Indenture, to execute supplemental indentures
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any supplemental
indenture or of modifying in any manner the rights of the Holders of the
Subordinated Debentures; provided, however, that no such supplemental
indenture shall (i) extend the fixed maturity of any Subordinated Debentures
of any series, or reduce the principal amount thereof, or reduce the rate or
extend the time of payment of interest thereon, or reduce any premium payable
upon the redemption thereof, without the consent of the Holder of each
Subordinated Debenture so affected, or (ii) reduce the aforesaid percentage of
Subordinated Debentures, the Holders of which are required to consent to any
such supplemental indenture, without the consent of the Holders of each
Subordinated Debenture then outstanding and affected thereby. The Indenture
15
also contains provisions permitting the Holders of a majority in aggregate
principal amount of the Subordinated Debentures of any series at the time
outstanding affected thereby, on behalf of all of the Holders of the
Subordinated Debentures of such series, to waive any past default in the
performance of any of the covenants contained in the Indenture, or established
pursuant to the Indenture with respect to such series, and its consequences,
except a default in the payment of the principal of or premium, if any, or
interest on any of the Subordinated Debentures of such series. Any such
consent or waiver by the registered Holder of this Subordinated Debenture
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such Holder and upon all future Holders and owners of this Subordinated
Debenture and of any Subordinated Debenture issued in exchange herefor or in
place hereof (whether by registration of transfer or otherwise), irrespective
of whether or not any notation of such consent or waiver is made upon this
Subordinated Debenture.
No reference herein to the Indenture and no provision of this Subordinated
Debenture or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest on this Subordinated Debenture at the time and
place and at the rate and in the money herein prescribed.
So long as the Company is not in default in the payment of interest on the
Subordinated Debentures, the Company shall have the right at any time during
the term of the Subordinated Debentures from time to time to extend the
interest payment period of such Subordinated Debentures to up to 20
consecutive quarters not to extend beyond the Maturity Date of the
Subordinated Debentures (an "Extended Interest Payment Period"), at the end of
which period the Company shall pay all interest then accrued and unpaid
(together with interest thereon at the rate specified for the Subordinated
Debentures to the extent that payment of such interest is enforceable under
applicable law). In the event that Pacific Telesis exercises this right to
defer interest payments, then, prior to the payment of all accrued interest on
outstanding Subordinated Debentures, (a) Pacific Telesis shall not declare or
pay dividends on, or make a distribution with respect to, or redeem, purchase
or acquire, or make a liquidation payment with respect to, any of its capital
stock and (b) Pacific Telesis shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by Pacific Telesis that rank pari passu with or junior to
the Subordinated Debentures; provided, however, that restriction (a) above
does not apply to any stock dividends paid by Pacific Telesis, or any of its
subsidiaries, where the dividend stock is the same stock as that on which the
dividend is being paid. Before the termination of any such Extended Interest
Payment Period, the Company may further extend such Extended Interest Payment
Period, provided that such Extended Interest Payment Period together with all
such further extensions thereof shall not exceed 20 consecutive quarters and
shall not extend beyond the Maturity Date of the Subordinated Debentures. At
the termination of any such Extended Interest Payment Period and upon the
payment of all accrued and unpaid interest and any additional amounts then
due, the Company may commence a new Extended Interest Payment Period.
As provided in the Indenture and subject to certain limitations therein set
forth, this Subordinated Debenture is transferable by the registered Holder
hereof on the Security Register of the Company, upon surrender of this
Subordinated Debenture for registration of transfer at the Corporate Trust
Office of the Trustee accompanied by a written instrument or instruments of
transfer in form satisfactory to the Company or the Trustee duly executed by
the registered Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Subordinated Debentures of authorized denominations
and for the same aggregate principal amount and series will be issued to the
designated transferee or transferees. No service charge will be made for any
such transfer, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this Subordinated
Debenture, the Company, the Trustee, any paying agent and any Security
Registrar may deem and treat the registered holder hereof as the absolute
owner hereof (whether or not this Subordinated Debenture shall be overdue and
notwithstanding any notice of ownership or writing hereon made by anyone other
than the Security Registrar) for the purpose of receiving payment of or on
account of the principal hereof and premium, if any, and interest due hereon
and for all other purposes, and neither the Company nor the Trustee nor any
paying agent nor any Subordinated Debenture Registrar shall be affected by any
notice to the contrary.
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No recourse shall be had for the payment of the principal of or the interest
on this Subordinated Debenture, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether
by virtue of any constitution, statute or rule of law, or by the enforcement
of any assessment or penalty or otherwise, all such liability being, by the
acceptance hereof and as part of the consideration for the issuance hereof,
expressly waived and released.
{The Subordinated Debentures of this series are issuable only in registered
form without coupons in denominations of $25 and any integral multiple thereof
provided that this Global Subordinated Debenture is exchangeable for
Subordinated Debentures in definitive form only under certain limited
circumstances set forth in the Indenture. Subordinated Debentures of this
series so issued are issuable only in registered form without coupons in
denominations of $25 and any integral multiple thereof.} As provided in the
Indenture and subject to certain limitations {herein and} therein set forth,
Subordinated Debentures of this series {so issued} are exchangeable for a like
aggregate principal amount of Subordinated Debentures of this series of a
different authorized denomination, as requested by the Holder surrendering the
same. All terms used in this Subordinated Debenture that are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
ARTICLE NINE
ORIGINAL ISSUE OF SUBORDINATED DEBENTURES
SECTION 9.1. Original Issue of Subordinated Debentures.
Subordinated Debentures in the aggregate principal amount of $________ may,
upon execution of this First Supplemental Indenture, be executed by the
Company and delivered to the Trustee for authentication, and the Trustee shall
thereupon authenticate and deliver said Subordinated Debentures to or upon the
written order of the Company, signed by its Chairman, its President, its Chief
Financial Officer, or any Executive Vice President or Vice President and its
Treasurer or an Assistant Treasurer, without any further action by the
Company.
ARTICLE TEN
MISCELLANEOUS
SECTION 10.1. Ratification of Indenture.
The Indenture, as supplemented by this First Supplemental Indenture, is in all
respects ratified and confirmed, and this First Supplemental Indenture shall
be deemed part of the Indenture in the manner and to the extent herein and
therein provided.
SECTION 10.2. Trustee Not Responsible for Recitals.
The recitals herein contained are made by the Company and not by the Trustee,
and the Trustee assumes no responsibility for the correctness thereof. The
Trustee makes no representation as to the validity or sufficiency of this
First Supplemental Indenture.
SECTION 10.3. Governing Law.
This First Supplemental Indenture and each Subordinated Debenture shall be
deemed to be a contract made under the internal laws of the State of
California, and for all purposes shall be construed in accordance with the
laws of said State.
SECTION 10.4. Separability.
In case any one or more of the provisions contained in this First Supplemental
Indenture or in the Subordinated Debentures shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provisions of this First
Supplemental Indenture or of the Subordinated Debentures, but this First
Supplemental Indenture and the Subordinated Debentures shall be construed as
if such invalid or illegal or unenforceable provision had never been contained
herein or therein.
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SECTION 10.5. Counterparts.
This First Supplemental Indenture may be executed in any number of
counterparts each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, on the date or dates indicated in the
acknowledgments and as of the day and year first above written.
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PACIFIC TELESIS GROUP
By___________________________
Attest:
________________________
Secretary
The First National Bank of Chicago
as Trustee
By_____________________________
Attest:
__________________________________
Trust Officer
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