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 (as defined
in the Indenture) 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 (as defined in the Indenture)
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 Trustee; (iii) Redemption Tax Opinion; (iv) Distribution;
(v) Dissolution Tax Opinion; (vi) No Recognition Opinion; (vii)
Property Trustee; (viii) Regular Trustees; (ix) Special Event; and
(x) Tax Event; 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 dated as of ____________________ 1995.
"Depository" means DTC (as defined hereinafter) 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 (as
defined in the Indenture) 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 (as defined hereinafter) in accordance with Section 2.2(b), the date
selected by the Company which is after the Scheduled Maturity Date (as
defined hereinafter) 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 (as
defined in Section 4.1 hereof), 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 its subsidiaries PacTel
Capital Resources and PacTel Capital Funding; and (vi) all obligations of
the type referred to in clauses (i) through (v) above 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, and (2) any indebtedness between or among such
obligor and its Affiliates (as defined in the Indenture), including all
other debt securities and guarantees in respect of those debt securities,
issued to (a) any other Pacific Telesis Trust (as defined in the Indenture)
or a trustee of such trust or (b) any other trust, or a trustee of such
trust, or any partnership or other entity affiliated with the Company that
is a financing vehicle of the Company ("Financing Entity") in connection
with the issuance by such Financing Entity of preferred securities or other
securities that 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
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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
principal amount to $_____ million, which amount shall be as set forth in
any written Company Order (as defined in the Indenture) 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 six quarters
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,
▇▇▇▇▇'▇ Investors Service, Inc., Fitch Investor Services,
Duff & ▇▇▇▇▇▇ 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 (as defined in the Indenture) 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 (as defined in the Indenture) 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 (as
defined in the Indenture). 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.
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(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
for a global Subordinated Debenture in an aggregate principal
amount equal to all Outstanding (as defined in the Indenture)
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 (as
defined in the Indenture) 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
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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 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 (as defined in the Indenture) 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 tax counsel rendering the Dissolution
Tax Opinion that a No Recognition Opinion cannot be delivered to
the Trust, then, notwithstanding Section 3.2 but subject to
Section 3.3(b), the Company shall have the right, 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 within 90 days following the occurrence
of such Tax Event (the "90 Day Period") at a redemption price
equal to 100% of the principal amount to be redeemed plus any
accrued and unpaid interest thereon to the date of such redemption
(the "Special Redemption Price"), 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 that
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
Ministerial Action pursuant to its obligations under the
Declaration. The Special Redemption Price shall be paid prior to
12:00 noon, New York time, on the date of such redemption or at
such earlier time as the Company determines and specifies in the
notice of redemption, provided the Company shall deposit with the
Trustee an amount sufficient to pay the Special Redemption Price
by 11:00 a.m. on the date such Special Redemption Price is to be
paid.
SECTION 3.2. Optional Redemption by Company.
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, 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.
SECTION 3.3 Partial Redemption
(a) 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.
(b) The Company may not redeem fewer than all of the Subordinated
Debentures unless all accrued and unpaid interest on the
Subordinated Debentures has been paid as of the Interest Payment
Date next preceding the Redemption Date.
ARTICLE FOUR
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1. Extension of Interest Payment Period.
The Company shall have the right, at any time during the term of the
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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 as of
the record date relating to the Interest Payment Date that corresponds to
the end of such Extended Interest Payment Period. Before the 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
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(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;
(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 (as defined in the Indenture) 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,
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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 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 Debentures 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
9
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 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 (as
defined in the Indenture) 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
10
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 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.
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,
11
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.
12
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
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
13
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 Subordinated Debenture
(or one or more Predecessor Securities, 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 Securities) 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______________________
14
{ }
Attest:
By_____________________
Secretary
(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 The First National Bank of Chicago as Trustee
as Trustee
By:_______________________
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
and (i) 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 if the Subordinated Debentures were distributed to the holders
of Preferred Securities and Common Securities in liquidation of such
holders' 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 to the
Trust, the Company shall have the right, upon not less than 30 nor more than
60 days' notice, to redeem the Subordinated Debentures in whole or in part
15
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 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 the holders of the Trust 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, 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,
which amendment, change interpretation or pronouncement is enacted,
promulgated, issued or announced or which action is taken, in each case on
or after the date of the Prospectus Supplement, 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 to the Trust on the Subordinated Debentures would not be
deductible, in whole or in part, 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 Trust 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 also contains provisions permitting the
16
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.
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 for 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, (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 and (c) Pacific Telesis shall not make any guarantee
payments with respect to the foregoing (other than pursuant to the Preferred
Securities Guarantee); provided, however, that restriction (a) above does
not apply to any stock dividends paid by Pacific Telesis 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.
The Company shall have the right, before the Maturity Date, to extend the
Maturity Date no more than one time for up to an additional 19 years,
provided that (a) the Company is not in bankruptcy or otherwise insolvent,
(b) the Company is not in default on any Securities issued to a Pacific
Telesis Trust or any trustee of such trust in connection with an issuance of
Trust Securities by such trust, (c) the Company has made timely payments on
the Subordinated Debentures for the immediately preceding six quarters
without deferrals, (d) the Trust is not in arrears on payments of
distributions on the Trust Securities of the Trust, and (e) the Subordinated
Debentures are rated investment grade by a nationally recognized statistical
rating organization.
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
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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.
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.
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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.
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 as of the day and year first above written.
PACIFIC TELESIS GROUP
By___________________________
Attest:
________________________
Secretary
The First National Bank of Chicago
as Trustee
By_____________________________
Attest:
__________________________________
Trust Officer
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