<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 23, 1994
REGISTRATION NOS. 33-53495
33-53495-01
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
GTE DELAWARE, L.P. GTE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED (EXACT NAME OF REGISTRANT AS SPECIFIED
IN CHARTER) IN CHARTER)
DELAWARE NEW YORK
(STATE OR OTHER JURISDICTION OF (STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION) INCORPORATION OR ORGANIZATION)
06-1395851 13-1678633
(I.R.S. EMPLOYER IDENTIFICATION NO.) (I.R.S. EMPLOYER IDENTIFICATION NO.)
C/O J. MICHAEL KELLY J. MICHAEL KELLY
SENIOR VICE PRESIDENT-FINANCE SENIOR VICE PRESIDENT-FINANCE
GTE CORPORATION GTE CORPORATION
ONE STAMFORD FORUM ONE STAMFORD FORUM
STAMFORD, CONNECTICUT 06904 STAMFORD, CONNECTICUT 06904
203-965-2000 203-965-2000
(Address, including zip code, and (Address, including zip code, and
telephone number, including area code, telephone number, including area code,
of Registrant's principal executive of Registrant's principal executive
offices and agent for service) offices and agent for service)
--------------
COPY OF CORRESPONDENCE TO:
GEORGE J. FORSYTH, ESQ.
MILBANK, TWEED, HADLEY & MCCLOY
1 CHASE MANHATTAN PLAZA
NEW YORK, NEW YORK 10005
212-530-5000
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of the Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
--------------
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TITLE OF EACH PROPOSED MAXIMUM PROPOSED MAXIMUM
CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(1) PER UNIT(1)(2)(3) PRICE(1)(2)(3) REGISTRATION FEE(1)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GTE Delaware, L.P. Pre-
ferred Securities......
- ------------------------------------------------------------------------------------------------
GTE Corporation Junior
Subordinated Deben-
tures..................
- ------------------------------------------------------------------------------------------------
GTE Corporation Guaran-
tee with respect to
GTE Delaware, L.P. Pre-
ferred Securities(4)...
- ------------------------------------------------------------------------------------------------
Total............... $1,000,000,000 100% $1,000,000,000 $344,830.00(5)
- ------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
(1) Pursuant to Rule 457(o) under the Securities Act of 1933, which permits
the registration fee to be calculated on the basis of the maximum offering
price of all the securities listed, the table does not specify by each
class information as to the amount to be registered, proposed maximum
offering price per unit or proposed maximum aggregate offering price.
(2) Estimated solely for the purpose of determining the registration fee.
(3) Exclusive of accrued interest and dividends, if any.
(4) No separate consideration will be received for the GTE Corporation
Guarantee.
(5) Previously paid in connection with the initial filing of the Registration
Statement.
--------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Registration Statement contains three forms of Prospectus Supplement to
the Prospectus included herein: the first form is to be used in connection
with an offering by GTE Corporation of Junior Subordinated Debentures, the
second form is to be used in connection with an offering by GTE Delaware, L.P.
of fixed rate Cumulative Monthly Income Preferred Securities, and the third
form is to be used in connection with an offering by GTE Delaware, L.P. of
adjustable rate Cumulative Monthly Income Preferred Securities.
<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 23, 1994
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 1994
$
GTE CORPORATION LOGO
% JUNIOR SUBORDINATED DEBENTURES, SERIES A, DUE 2024
----------
Interest on the % Junior Subordinated Debentures, Series A, Due 2024 (the
"Series A Junior Subordinated Debentures") is payable semi-annually on June 30
and December 31 of each year, commencing December 31, 1994. The Series A Junior
Subordinated Debentures will be redeemable at the option of GTE Corporation
("GTE"), in whole or in part, on or after , 2004 at the redemption prices
set forth herein. The Series A Junior Subordinated Debentures will be issued
only in registered form in denominations of $1,000 and integral multiples
thereof. See "Description of the Series A Junior Subordinated Debentures".
The obligations of GTE under the Series A Junior Subordinated Debentures are
subordinate and junior in right of payment to Senior Indebtedness (as defined
in the accompanying Prospectus) of GTE. At May 31, 1994, Senior Indebtedness of
GTE aggregated approximately $6.4 billion. Senior Indebtedness includes only
indebtedness of GTE on an unconsolidated basis.
----------
SEE "INVESTMENT CONSIDERATIONS" FOR CERTAIN INFORMATION RELEVANT TO AN
INVESTMENT IN THE SERIES A JUNIOR SUBORDINATED DEBENTURES, INCLUDING THE PERIOD
AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENT OF INTEREST ON THE SERIES A
JUNIOR SUBORDINATED DEBENTURES MAY BE DEFERRED AND THE RELATED FEDERAL INCOME
TAX CONSEQUENCES.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) COMMISSION(2) GTE (1)(3)
----------------- ------------- -----------
<S> <C> <C> <C>
Per Series A Junior Subordinated
Debenture......................... % % %
Total.............................. $ $ $
</TABLE>
- -----
(1) Plus accrued interest, if any, from , 1994.
(2) GTE has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deducting estimated expenses of $ payable by GTE.
----------
The Series A Junior Subordinated Debentures are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them
and subject to their right to reject any order in whole or in part. It is
expected that the Series A Junior Subordinated Debentures will be ready for
delivery in New York, New York, on or about , 1994.
GOLDMAN, SACHS & CO.
----------
The date of this Prospectus Supplement is , 1994.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
----------------
FOR NORTH CAROLINA PURCHASERS: THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA,
NOR HAS THE COMMISSIONER OF INSURANCE RULED UPON THE ACCURACY OR ADEQUACY OF
THIS DOCUMENT.
----------------
INVESTMENT CONSIDERATIONS
Prospective purchasers of Series A Junior Subordinated Debentures should
carefully review the information contained elsewhere in this Prospectus
Supplement and in the accompanying Prospectus and should particularly consider
the following matters:
SUBORDINATION OF SERIES A JUNIOR SUBORDINATED DEBENTURES. The obligations of
GTE under the Series A Junior Subordinated Debentures are subordinate and
junior in right of payment to Senior Indebtedness of GTE. At May 31, 1994,
Senior Indebtedness of GTE aggregated approximately $6.4 billion. Senior
Indebtedness includes only indebtedness of GTE on an unconsolidated basis.
There are no terms in the Series A Junior Subordinated Debentures that limit
GTE's ability to incur additional indebtedness, including indebtedness that
ranks senior to the Series A Junior Subordinated Debentures. See "Description
of the Junior Subordinated Debentures--Subordination" in the accompanying
Prospectus.
OPTION TO EXTEND INTEREST PAYMENT PERIOD. GTE has the right under the
Indenture (as defined herein) to extend the interest payment period from time
to time on the Series A Junior Subordinated Debentures to a period not
exceeding 60 consecutive months, and, as a consequence, semi-annual interest
payments on the Series A Junior Subordinated Debentures would be deferred (but
would continue to accrue with interest thereon) during any such extended
interest payment period. In the event that GTE exercises this right, GTE may
not declare or pay dividends on, or redeem, purchase or acquire, any of its
capital stock. Prior to the termination of any such extension period, GTE may
further extend the interest payment period, provided that such extension
period together with all such previous and further extensions thereof may not
exceed 60 consecutive months. Upon the termination of any extension period and
the payment of all amounts then due, GTE may select a new extension period,
subject to the above requirements. GTE believes that the extension of an
interest payment period on the Series A Junior Subordinated Debentures is
unlikely. See "Description of the Series A Junior Subordinated Debentures--
Option to Extend Interest Payment Period".
Should an extended interest payment period occur, holders of the Series A
Junior Subordinated Debentures will continue to accrue income for United
States federal income tax purposes even though interest is not being paid on a
current basis. As a result, such a holder will include such interest in gross
income for United States federal income tax purposes in advance of the receipt
of cash, and will not receive the cash from GTE related to such income if such
a holder disposes of his or her Series A Junior Subordinated Debentures prior
to the record date for payment of interest. See "United States Taxation--
United States Holders".
S-2
<PAGE>
USE OF PROCEEDS
The net proceeds, exclusive of accrued interest, from the sale of the Series
A Junior Subordinated Debentures will be used to reduce short-term
obligations, including current maturities (at May 31, 1994, totaling
approximately $2.0 billion, at an average interest cost of approximately
4.45%), and for general corporate purposes.
DESCRIPTION OF THE SERIES A JUNIOR SUBORDINATED DEBENTURES
The following description of specific terms of the Series A Junior
Subordinated Debentures offered hereby supplements and should be read in
conjunction with the description of the general terms and provisions of the
Junior Subordinated Debentures set forth in the accompanying Prospectus under
the caption "Description of the Junior Subordinated Debentures". The following
description does not purport to be complete and is qualified in its entirety
by reference to the description in the accompanying Prospectus and the
Indenture, dated as of June 1, 1994, between GTE and The Bank of New York, as
Trustee, as supplemented by a First Supplemental Indenture, dated as of ,
1994 (the Indenture, as so supplemented, is hereinafter referred to as the
"Indenture").
PRINCIPAL AMOUNT, INTEREST AND MATURITY
The Series A Junior Subordinated Debentures will be issued as a series of
Junior Subordinated Debentures under the Indenture. The Series A Junior
Subordinated Debentures will be limited in aggregate principal amount to $
million.
The Series A Junior Subordinated Debentures are to mature , 2024 and
will bear interest at the rate per annum shown in the title thereof payable
semi-annually on June 30 and December 31, commencing December 31, 1994, to the
person in whose name the Series A Junior Subordinated Debenture is registered
at the close of business on the preceding June 15 or December 15,
respectively. The amount of interest payable for any period will 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 the Series A Junior Subordinated
Debentures is not a Business Day, then payment of the 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. A "Business Day" shall
mean any day other than a day on which banking institutions in The City of New
York are authorized or required by law to close.
FORM AND DENOMINATION
The Series A Junior Subordinated Debentures will be issued only in
registered form in denominations of $1,000 and integral multiples thereof.
S-3
<PAGE>
REDEMPTION
The Series A Junior Subordinated Debentures will be redeemable at the option
of GTE, as a whole or in part, at any time on or after , 2004 and prior
to maturity, upon not less than 30 nor more than 60 days' notice, at the
respective redemption prices (expressed in percentage of the principal amount
to be redeemed) during the twelve-month periods commencing on of the
years indicated:
<TABLE>
<CAPTION>
REDEMPTION REDEMPTION
YEAR PRICE YEAR PRICE
- ---- ---------- ---- ----------
<S> <C> <C> <C>
2004........................ % 2014........................ 100.00%
2005........................ % 2015........................ 100.00%
2006........................ % 2016........................ 100.00%
2007........................ % 2017........................ 100.00%
2008........................ % 2018........................ 100.00%
2009........................ % 2019........................ 100.00%
2010........................ % 2020........................ 100.00%
2011........................ % 2021........................ 100.00%
2012........................ % 2022........................ 100.00%
2013........................ % 2023........................ 100.00%
</TABLE>
in each case, together with accrued interest to the redemption date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
GTE shall have the right at any time during the term of the Series A Junior
Subordinated Debentures to extend the interest payment period from time to
time to a period not exceeding 60 consecutive months (the "Extension Period"),
at the end of which Extension Period GTE shall pay all interest then accrued
and unpaid (together with interest thereon at the rate specified for the
Series A Junior Subordinated Debentures to the extent permitted by applicable
law); provided, that, during any such Extension Period, GTE shall not declare
or pay any dividend on, or redeem, purchase, acquire or make a liquidation
payment with respect to, any of its capital stock. Prior to the termination of
any such Extension Period, GTE may further extend the interest payment period,
provided that such Extension Period together with all such previous and
further extensions thereof may not exceed 60 consecutive months. Upon the
termination of any Extension Period and the payment of all amounts then due,
GTE may select a new Extension Period, subject to the above requirements. No
interest during an Extension Period, except at the end thereof, shall be due
and payable. GTE shall give the holders of the Series A Junior Subordinated
Debentures notice of its selection of such Extension Period ten Business Days
prior to the earlier of (i) the next interest payment date or (ii) the date
GTE is required to give notice to holders of the Series A Junior Subordinated
Debentures (or, if applicable, to the New York Stock Exchange or other
applicable self-regulatory organization) of the record or payment date of such
interest payment, but in any event not less than two Business Days prior to
such record date.
PAYING AGENT AND REGISTRAR
The Bank of New York will act as paying agent and registrar for the Series A
Junior Subordinated Debentures.
S-4
<PAGE>
UNITED STATES TAXATION
GENERAL
This section is a summary of certain United States federal income tax
considerations that may be relevant to prospective purchasers of Series A
Junior Subordinated Debentures and represents the opinion of Sullivan &
Cromwell, special tax counsel to GTE, insofar as it relates to matters of law
and legal conclusions. This section is based upon current provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), existing and proposed
regulations thereunder and current administrative rulings and court decisions,
all of which are subject to change. Subsequent changes may cause tax
consequences to vary substantially from the consequences described below.
No attempt has been made in the following discussion to comment on all United
States federal income tax matters affecting purchasers of Series A Junior
Subordinated Debentures. Moreover, the discussion focuses on holders of Series
A Junior Subordinated Debentures who are individual citizens or residents of
the United States that hold the Series A Junior Subordinated Debentures as a
capital asset and has only limited application to corporations, estates, trusts
or non-resident aliens. Accordingly, each prospective purchaser of Series A
Junior Subordinated Debentures should consult, and should depend on, his or her
own tax advisor in analyzing the federal, state, local and foreign tax
consequences of the purchase, ownership or disposition of Series A Junior
Subordinated Debentures.
UNITED STATES HOLDERS
For purposes of this discussion, a United States Holder is a beneficial owner
who or that is (i) a citizen or resident of the United States, (ii) a domestic
corporation or (iii) otherwise subject to United States federal income taxation
on a net income basis in respect of the Series A Junior Subordinated
Debentures.
Interest on Series A Junior Subordinated Debentures will be included in the
income of a United States Holder as it accrues, rather than when it is paid,
regardless of the United States Holder's regular method of accounting for tax
purposes. United States holders may therefore include interest in income for
taxable years prior to the year in which the interest is actually received.
This should only occur, however, during an Extension Period or in the case of a
United States Holder who has not adopted a calendar tax year.
A United States Holder will generally recognize gain or loss on the sale or
retirement of a Series A Junior Subordinated Debenture equal to the difference
between the amount realized from the sale or retirement and the tax basis of
the Series A Junior Subordinated Debenture. Such gain or loss will be capital
gain or loss, and will be long-term capital gain or loss if the Series A Junior
Subordinated Debenture has been held for more than one year. The tax basis of
the Series A Junior Subordinated Debenture will generally equal the amount paid
for it, increased by the amount of any accrued but unpaid interest.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any holder
who or which is (i) a nonresident alien individual or (ii) a foreign
corporation, partnership or estate or trust, in either case not subject to
United States federal income tax on a net income basis in respect of a Series A
Junior Subordinated Debenture.
Under current United States federal income tax law, subject to the discussion
below with respect to backup withholding:
(i) Payments by GTE or any of its paying agents to any holder of a Series
A Junior Subordinated Debenture who or which is a United States Alien
Holder will not be subject to United
S-5
<PAGE>
States federal withholding tax provided that (a) the beneficial owner of
the Series A Junior Subordinated Debenture does not actually or
constructively own 10%, or more of the total combined voting power of all
classes of capital stock of GTE entitled to vote, (b) the beneficial owner
of the Series A Junior Subordinated Debenture is not a controlled foreign
corporation that is related to GTE through stock ownership and (c) either
(x) the beneficial owner of the Series A Junior Subordinated Debenture
certifies to GTE or its agent, under penalties of perjury, that it is a
United States Alien Holder and provides its name and address or (y) the
holder of the Series A Junior Subordinated Debenture is a securities
clearing organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business (a
"financial institution"), and such holder certifies to GTE or its agent
under penalties of perjury that such statement has been received from the
beneficial owner by it or by a financial institution between it and the
beneficial owner and furnishes GTE or its agent with a copy thereof; and
(ii) a United States Alien Holder of a Series A Junior Subordinated
Debenture will generally not be subject to United States federal
withholding tax on any gain realized on the sale or exchange of a Series A
Junior Subordinated Debenture unless such holder is present in the United
States for 183 days or more in the taxable year of sale and either has a
"tax home" in the United States or certain other requirements are met.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to payments of
principal and interest on a Series A Junior Subordinated Debenture, and the
proceeds of the sale of a Series A Junior Subordinated Debenture prior to
maturity within the United States, with respect to non-corporate United States
Holders, and "backup withholding" at a rate of 31% will apply to such payments
if the United States Holder fails to provide an accurate taxpayer
identification number or to report all interest and dividends required to be
shown on its federal income tax returns.
Information reporting and backup withholding will not apply to payments of
principal and interest made by GTE or a paying agent to a United States Alien
Holder on a Series A Junior Subordinated Debenture if the certification
described in clause (i) (c) under "United States Alien Holders" above is
received, provided that the payor does not have actual knowledge that the
holder is a United States Holder.
Payments of the proceeds from the sale by a United States Alien Holder of a
Series A Junior Subordinated Debenture made to or through a foreign office of
a broker will not be subject to information reporting or backup withholding,
except that if the broker is a United States person, a controlled foreign
corporation for United States tax purposes or a foreign person 50% or more of
whose gross income is effectively connected with a United States trade or
business for a specified three-year period, information reporting may apply to
such payments. Payments of proceeds from the sale of a Series A Junior
Subordinated Debenture to or through the United States office of a broker is
subject to information reporting and backup withholding unless the United
States Alien Holder or beneficial owner certifies as to its non-United States
status or otherwise establishes an exemption from information reporting and
backup withholding.
S-6
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, GTE has
agreed to sell to each of the Underwriters named below (the "Underwriters"),
and each of the Underwriters has severally agreed to purchase from GTE, the
principal amount of Series A Junior Subordinated Debentures set forth opposite
its name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
OF SERIES A
JUNIOR
SUBORDINATED
UNDERWRITER DEBENTURES
----------- ----------------
<S> <C>
Goldman, Sachs & Co...................................... $
-------
$
=======
</TABLE>
The Underwriting Agreement provides that the Underwriters will be obligated
to purchase all of the Series A Junior Subordinated Debentures if any are
purchased.
The Underwriters have advised GTE that they propose initially to offer the
Series A Junior Subordinated Debentures to the public at the initial public
offering price set forth on the cover page of this Prospectus Supplement, and
to certain dealers at such price less a concession not in excess of % of the
principal amount of the Series A Junior Subordinated Debentures. The
Underwriters may allow, and such dealers may reallow, a concession not in
excess of % of the principal amount of the Series A Junior Subordinated
Debentures to certain brokers and dealers. After the Series A Junior
Subordinated Debentures are released for sale to the public, the offering
price and other selling terms may from time to time be varied by the
Underwriters.
The Series A Junior Subordinated Debentures are a new issue of securities
with no established trading market. GTE has been advised by the Underwriters
that they intend to make a market in the Series A Junior Subordinated
Debentures, but they are not obligated to do so and may discontinue such
market- making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Series A Junior Subordinated
Debentures.
GTE has agreed to indemnify the Underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, as amended.
Certain of the Underwriters engage in transactions with, and from time to
time have performed services for, GTE and its subsidiaries in the ordinary
course of business.
LEGAL MATTERS
Statements as to United States taxation in the Prospectus Supplement under
the caption "United States Taxation" have been passed upon for GTE by Sullivan
& Cromwell, special tax counsel to GTE, and are stated herein on their
authority.
S-7
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS OR AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
---------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Investment Considerations................................................. S-2
Use of Proceeds........................................................... S-3
Description of the Series A Junior Subordinated Debentures................ S-3
United States Taxation.................................................... S-5
Underwriting.............................................................. S-7
Legal Matters............................................................. S-7
PROSPECTUS
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
GTE Delaware.............................................................. 3
GTE Corporation........................................................... 3
Consolidated Ratios of Earnings to Fixed Charges and Earnings to Combined
Fixed Charges and Preferred Stock Dividends of GTE Corporation........... 3
Use of Proceeds........................................................... 4
Description of the Preferred Securities................................... 4
Description of the Guarantee.............................................. 5
Description of the Junior Subordinated Debentures......................... 7
Plan of Distribution...................................................... 12
Experts................................................................... 13
Legal Opinions............................................................ 13
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$
GTE CORPORATION LOGO
% JUNIOR SUBORDINATED DEBENTURES, SERIES A, DUE 2024
---------------
PROSPECTUS SUPPLEMENT
---------------
GOLDMAN, SACHS & CO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 23, 1994
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 1994
PREFERRED SECURITIES
GTE DELAWARE
% CUMULATIVE MONTHLY INCOME PREFERRED SECURITIES, SERIES A ("MIPS"*)
(LIQUIDATION PREFERENCE $25 PER PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
GTE CORPORATION LOGO
----------
The % Cumulative Monthly Income Preferred Securities, Series A (the "Series
A Preferred Securities"), representing the limited partner interests offered
hereby are being issued by GTE Delaware, L.P., a limited partnership formed
under the laws of the State of Delaware ("GTE Delaware"). GTE Corporation, a
New York corporation ("GTE"), is the general partner in GTE Delaware. GTE
Delaware exists for the sole purpose of issuing its limited partnership
interests and investing the proceeds thereof in debt securities of GTE. The
limited partner interests represented by the Series A Preferred Securities will
have a preference with respect to cash distributions and amounts payable on
liquidation over the general partner's interest in GTE Delaware.
Holders of the Series A Preferred Securities will be entitled to receive
cumulative cash distributions at an annual rate of % of the liquidation
preference of $25 per Series A Preferred Security, accruing from the date of
original issuance and payable monthly in arrears on the last day of each
calendar month of each year, commencing , 1994 ("dividends"). The payment
of dividends, out of moneys held by GTE Delaware, and payments on liquidation
of GTE Delaware or the redemption of Series A Preferred Securities, as set
forth below, are guaranteed by GTE to the extent described herein and in the
accompanying Prospectus (the "Guarantee"). See "Description of the Guarantee"
in the accompanying Prospectus. If GTE fails to make interest payments on its
debt securities purchased by GTE Delaware, GTE Delaware will have insufficient
funds to pay dividends on the Series A Preferred Securities. The Guarantee does
not cover payment of dividends when GTE Delaware does not have sufficient funds
to pay such dividends. In such event, the remedy of a holder of Series A
Preferred Securities is to enforce the rights of GTE Delaware under the debt
securities purchased by GTE Delaware from GTE.
The Series A Preferred Securities are redeemable at the option of GTE
Delaware, in whole or in part, from time to time, on or after , 1999, at
$25 per Series A Preferred Security plus accrued and unpaid dividends thereon
to the date fixed for redemption (the "Redemption Price"). See "Description of
the Series A Preferred Securities--Optional Redemption".
In addition, upon the occurrence of certain special events arising from a
change in law or a change in legal interpretation, the Series A Preferred
Securities are redeemable in whole at the Redemption Price at the option of
GTE, in its capacity as the general partner of GTE Delaware (the "General
Partner"), or the General Partner may dissolve GTE Delaware and cause to be
distributed to the holders of the Series A Preferred Securities, on a pro rata
basis, Series A Junior Subordinated Debentures (as defined herein) in lieu of
any cash distribution. If the Series A Junior Subordinated Debentures are
distributed to the holders of the Series A Preferred Securities, GTE will use
its best efforts to have the Series A Junior Subordinated Debentures listed on
the New York Stock Exchange or on such other exchange as the Series A Preferred
Securities are then listed. The obligations of GTE under the Series A Junior
Subordinated Debentures are subordinate and junior in right of payment to
Senior Indebtedness (as defined in the accompanying Prospectus) of GTE. At May
31, 1994, Senior Indebtedness of GTE aggregated approximately $6.4 billion.
Senior Indebtedness includes only indebtedness of GTE on an unconsolidated
basis. See "Description of the Series A Preferred Securities--Special Event
Redemption or Distribution" and "Description of the Series A Junior
Subordinated Debentures".
In the event of the dissolution of GTE Delaware, the holders of the Series A
Preferred Securities will be entitled to receive for each Series A Preferred
Security a liquidation preference of $25 plus accrued and unpaid dividends
thereon to the date of payment, subject to certain limitations, unless, in
connection with such dissolution, Series A Junior Subordinated Debentures are
distributed to the holders of the Series A Preferred Securities. See
"Description of the Series A Preferred Securities--Liquidation Distribution
Upon Dissolution".
----------
SEE "INVESTMENT CONSIDERATIONS" FOR CERTAIN INFORMATION RELEVANT TO AN
INVESTMENT IN THE SERIES A PREFERRED SECURITIES, INCLUDING THE PERIOD AND
CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS ON THE SERIES A PREFERRED
SECURITIES AND SERIES A JUNIOR SUBORDINATED DEBENTURES MAY BE DEFERRED AND THE
RELATED FEDERAL INCOME TAX CONSEQUENCES.
----------
Application has been made to list the Series A Preferred Securities on the
New York Stock Exchange.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE COMMISSION(1) GTE DELAWARE(2)(3)
-------------- ------------- ------------------
<S> <C> <C> <C>
Per Series A Preferred
Security...................... $ (2) $
Total.......................... $ (2) $
</TABLE>
- -----
(1) GTE Delaware and GTE have agreed to indemnify the several Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting".
(2) In view of the fact that the proceeds of the sale of the Series A Preferred
Securities will ultimately be invested in Series A Junior Subordinated
Debentures, the Underwriting Agreement provides that GTE will pay to the
Underwriters, as compensation ("Underwriters' Compensation") for their
arranging the investment therein of such proceeds, $ per Series A
Preferred Security (or $ in the aggregate); provided, that such
compensation will be $ per Series A Preferred Security sold to certain
institutions. Therefore, to the extent that Series A Preferred Securities
are sold to such institutions, the actual amount of Underwriters'
Compensation will be less than the amount specified in the preceding
sentence. See "Underwriting".
(3) Expenses of the offering which are payable by GTE are estimated to be $ .
----------
The Series A Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, and subject to receipt and acceptance by
them and subject to their right to reject any order in whole or in part. It is
expected that delivery of the Series A Preferred Securities will be made only
in book-entry form through the facilities of The Depository Trust Company on or
about , 1994.
- -----
* An application has been filed by Goldman, Sachs & Co. with the United
States Patent and Trademark Office for the registration of the MIPS
servicemark.
GOLDMAN, SACHS & CO.
----------
The date of this Prospectus Supplement is , 1994.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.
----------------
FOR NORTH CAROLINA PURCHASERS: THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA,
NOR HAS THE COMMISSIONER OF INSURANCE RULED UPON THE ACCURACY OR ADEQUACY OF
THIS DOCUMENT.
----------------
S-2
<PAGE>
GTE DELAWARE
GTE Delaware is a limited partnership which was formed under the Delaware
Revised Uniform Limited Partnership Act (the "Partnership Act") by filing a
certificate of limited partnership with the Delaware Secretary of State on May
3, 1994. The initial partners in GTE Delaware are GTE, as general partner, and
GTE Finance Corporation, a Delaware corporation and a wholly-owned subsidiary
of GTE ("GTE Finance"), as limited partner. Upon the issuance of the Series A
Preferred Securities, which securities represent limited partner interests in
GTE Delaware, GTE Finance will remain as a limited partner, but will have no
interest in the profits and dividends or in the assets of GTE Delaware. The
General Partner will agree to contribute capital to the extent required to
maintain its capital at an amount equal to at least 3% of the total capital
contributions to GTE Delaware. GTE and GTE Finance entered into a limited
partnership agreement dated as of May 3, 1994. Such limited partnership
agreement will be amended and restated in its entirety (as so amended and
restated, the "Limited Partnership Agreement") substantially in the form filed
as an exhibit to the Registration Statement of which this Prospectus
Supplement and the accompanying Prospectus form a part.
GTE Delaware is managed by the General Partner and exists for the sole
purpose of issuing its limited partnership interests and investing the
proceeds thereof in junior subordinated debentures of GTE ("Junior
Subordinated Debentures"). The rights of the holders of the Series A Preferred
Securities, including economic rights, rights to information and voting
rights, are set forth in the Limited Partnership Agreement and the Partnership
Act. See "Description of the Series A Preferred Securities".
GTE CORPORATION
GTE is the fourth-largest publicly-held telecommunications company in the
world, the largest U.S.-based local telephone company and the second-largest
provider of cellular-mobile telephone services in the United States in terms
of population in the areas served. As of March 31, 1994, through Telephone
Operations, GTE provided local telephone services to approximately 17.2
million customer access lines in 33 states within the United States and
approximately 5.1 million customer access lines in British Columbia and
Quebec, Canada, the Dominican Republic and Venezuela. Through
Telecommunications Products and Services, GTE provides cellular-mobile
communications, command, control and communication systems, information
marketing and networking services, satellite services and air-to-ground
communications, and publishes yellow pages telephone directories. As of March
31, 1994, GTE's cellular operations served a potential subscriber population
of approximately 53.1 million "POPs" in the United States.
S-3
<PAGE>
INVESTMENT CONSIDERATIONS
Prospective purchasers of Series A Preferred Securities should carefully
review the information contained elsewhere in this Prospectus Supplement and
in the accompanying Prospectus and should particularly consider the following
matters:
SUBORDINATION OF GUARANTEE AND SERIES A JUNIOR SUBORDINATED DEBENTURES.
GTE's obligations under the Guarantee are subordinate and junior in right of
payment to all other liabilities of GTE. The obligations of GTE under the %
Junior Subordinated Debentures, Series A, Due 2024 of GTE described under
"Description of the Series A Junior Subordinated Debentures" (the "Series A
Junior Subordinated Debentures") are subordinate and junior in right of
payment to Senior Indebtedness of GTE. At May 31, 1994, Senior Indebtedness of
GTE aggregated approximately $6.4 billion. Senior Indebtedness includes only
indebtedness of GTE on an unconsolidated basis. There are no terms in the
Series A Preferred Securities, the Series A Junior Subordinated Debentures or
the Guarantee that limit GTE's ability to incur additional indebtedness,
including indebtedness that ranks senior to the Series A Junior Subordinated
Debentures and the Guarantee. See "Description of the Guarantee--Status of the
Guarantee" and "Description of the Junior Subordinated Debentures--
Subordination" in the accompanying Prospectus.
OPTION TO EXTEND INTEREST PAYMENT PERIOD. GTE has the right under the
Indenture to extend the interest payment period from time to time on the
Series A Junior Subordinated Debentures to a period not exceeding 60
consecutive months, and, as a consequence, monthly dividends on the Series A
Preferred Securities would be deferred (but would continue to accrue with
interest thereon) by GTE Delaware during any such extended interest payment
period. In the event that GTE exercises this right, GTE may not declare or pay
dividends on, or redeem, purchase or acquire, any of its capital stock. Prior
to the termination of any such extension period, GTE may further extend the
interest payment period, provided that such extension period together with all
such previous and further extensions thereof may not exceed 60 consecutive
months. Upon the termination of any extension period and the payment of all
amounts then due, GTE may select a new extension period, subject to the above
requirements. GTE Delaware and GTE believe that the extension of a payment
period on the Series A Junior Subordinated Debentures is unlikely. See
"Description of the Series A Preferred Securities--Dividends" and "Description
of the Series A Junior Subordinated Debentures--Option to Extend Interest
Payment Period".
Should an extended interest payment period occur, GTE Delaware will continue
to accrue income for United States federal income tax purposes which will be
allocated, but not distributed, to holders of record of Series A Preferred
Securities. As a result, such a holder will include such interest in gross
income for United States federal income tax purposes in advance of the receipt
of cash, and will not receive the cash from GTE Delaware related to such
income if such a holder disposes of his or her Series A Preferred Securities
prior to the record date for payment of dividends. See "United States
Taxation--Potential Extension of Interest Payment Period".
SPECIAL EVENT REDEMPTION OR DISTRIBUTION. Upon the occurrence of a Special
Event (as defined herein), the General Partner will elect to either (i) redeem
the Series A Preferred Securities in whole or (ii) dissolve GTE Delaware and
cause Series A Junior Subordinated Debentures to be distributed to the holders
of the Series A Preferred Securities in connection with the liquidation of GTE
Delaware. The Series A Junior Subordinated Debentures will initially be issued
at face value as a Global Security (as defined herein) and will be limited in
aggregate principal amount to approximately $ million, such amount being the
sum of the aggregate stated liquidation preference of the Series A Preferred
Securities and the General Partnership Payment (as defined herein). In the
case of a Tax Event (as defined herein), the General Partner may also elect to
cause the Series A Preferred Securities to remain outstanding. See
"Description of the Series A Preferred Securities--Special Event Redemption or
Distribution" and "Description of the Series A Junior Subordinated
Debentures--General".
S-4
<PAGE>
Under current United States federal income tax law, such a distribution
would not be a taxable event to holders of the Series A Preferred Securities.
Under a change in law, a change in legal interpretation or the other
circumstances giving rise to a Special Event, however, the dissolution could
be a taxable event to holders of the Series A Preferred Securities. In the
judgment of special tax counsel to GTE and GTE Delaware, the series of events
which would result in the recognition of taxable gain by holders of the Series
A Preferred Securities, by reason of a dissolution of GTE Delaware in response
to a Special Event, is unlikely to occur. There can be no assurance in this
regard, however. See "United States Taxation--Receipt of Series A Junior
Subordinated Debentures Upon Liquidation of GTE Delaware".
S-5
<PAGE>
SUMMARY FINANCIAL AND OPERATING INFORMATION OF GTE
The selected data presented below under the captions "Income Statement Data"
and "Operating and Other Data" for each of the years in the five-year period
ended December 31, 1993 and "Balance Sheet Data" as of the end of each of such
years has been derived from the books, records and the consolidated financial
statements of GTE, which have been audited by Arthur Andersen & Co.,
independent certified public accountants. The selected data presented below as
of and for each of the quarters ended March 31, 1994 and 1993 has been derived
from the books, records and the consolidated financial statements of GTE,
which have not been audited. The consolidated financial statements as of
December 31, 1993 and 1992, and for each of the years in the three-year period
ended December 31, 1993, and the independent auditors' report thereon, and the
consolidated financial statements as of and for each of the quarters ended
March 31, 1994 and 1993, have been incorporated by reference herein. See
"Incorporation of Certain Documents by Reference" in the accompanying
Prospectus. This financial information should be read in conjunction with such
consolidated financial statements and the notes thereto.
<TABLE>
<CAPTION>
QUARTERS ENDED
MARCH 31,
YEARS ENDED DECEMBER 31, (UNAUDITED)
------------------------------------------------ ------------------
1989 1990 1991 1992 1993 1993 1994
-------- -------- -------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE DATA AND CELLULAR SUBSCRIBERS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues and Sales...... $ 18,251 $ 19,157 $ 19,621 $ 19,984 $ 19,748 $ 4,826 $ 4,746
Operating Income(a)..... 3,577 3,787 3,742 4,216 2,565 1,101 1,118
Net Income (Loss)(a):
Continuing Operations. 1,503 1,579 1,492 1,761 972 456 500
Consolidated.......... 1,611 1,671 1,543 (780) 882 456 500
Per Common Share:
Net Income (Loss)(a):
Continuing Opera-
tions.............. 1.75 1.82 1.69 1.95 1.03 .48 .52
Consolidated........ 1.87 1.93 1.75 (.86) .93 .48 .52
Common Dividends De-
clared............... 1.40 1.52 1.64 1.76 1.85 .455 .47
Consolidated Ratio of
Earnings to Fixed
Charges (Unaudited)(b). 2.52 2.35 2.22 2.66 2.07 2.94 3.69
Consolidated Ratio of
Earnings to Combined
Fixed Charges and
Preferred Stock
Dividends
(Unaudited)(b)......... 2.42 2.28 2.17 2.61 2.04 2.90 3.61
OPERATING AND OTHER DA-
TA:
Telephone Operations:
Revenues and Sales.... $ 15,072 $ 15,393 $ 15,652 $ 15,862 $ 15,829 $ 3,915 $ 3,865
Operating Income(c)... 3,528 3,771 3,807 4,034 2,694 1,041 1,025
Access Minutes of Use. 39,994 44,533 47,979 51,976 55,616 13,613 14,172
Percentage
Increase(d)........ 12.1% 11.3% 7.7% 8.3% 7.2% 9.2% 6.6%
Network Access Lines:
U.S.(e)............. 15.2 15.8 16.2 16.8 17.1 17.0 17.2
Worldwide(e)........ 17.6 18.3 20.5 21.4 22.1 21.6 22.3
U.S. Cellular-Mobile Op-
erations (Unaudited):
Service Revenues...... $ 260 $ 478 $ 675 $ 853 $ 1,082 $ 238 $ 335
Operating Income...... 4 9 10 62 134 29 50
Operating Cash Flow
(Operating Income
Before Depreciation
and Amortization).... 43 107 183 266 356 78 113
Adjusted "POPS"(f).... 39.2 51.7 52.2 53.1 53.0 53.2 53.1
Subscribers (In thou-
sands)............... 282 594 811 1,090 1,585 1,156 1,718
<CAPTION>
QUARTERS ENDED
MARCH 31,
AS OF DECEMBER 31, (UNAUDITED)
------------------------------------------------ ------------------
1989 1990 1991 1992 1993 1993 1994
-------- -------- -------- -------- -------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Property, Plant and
Equipment-Net.......... $ 27,666 $ 28,688 $ 29,323 $ 29,820 $ 28,720 $ 29,830 $ 28,670
Total Assets............ 36,921 40,178 42,437 42,144 41,575 41,473 41,353
Short-Term Obligations,
including Current Matu-
rities................. 1,227 3,013 2,291 2,692 1,644 2,232 2,679
Long-Term Debt and Re-
deemable Preferred
Stock.................. 13,137 14,130 16,252 14,356 13,175 13,595 12,127
Common Shareholders' Eq-
uity................... 9,516 10,264 10,854 9,964 9,482 10,097 9,612
</TABLE>
- --------
(a) Operating income in 1993 was reduced by a one-time $1.8 billion pre-tax
restructuring charge primarily for the implementation of a re-engineering
plan at Telephone Operations and the reduction in the carrying value of
satellite communication and certain other assets to estimated net
realizable value. Operating income in 1993 was also reduced by a $74
million pre-tax charge
S-6
<PAGE>
for the cost of voluntary separation programs at Telephone Operations.
Consolidated net income in 1993 also included an after-tax extraordinary
charge of $90 million for the early retirement of high-coupon debt as well
as a $91 million after-tax gain on the sales of certain non-strategic
telephone properties. These special items reduced consolidated net income by
$1.2 billion, or $1.27 per share.
The consolidated net loss in 1992 included a non-cash, after-tax charge of
$2.4 billion, or $2.70 per share, for the cumulative effect of accounting
changes for postretirement health care and life insurance benefits and
income taxes; and charges totaling $100 million, or $.11 per share,
associated with the sale of the Electrical Products Group, which was
accounted for as a discontinued operation.
Operating income in 1991 was reduced by pre-tax costs of $342 million
incurred in connection with the merger and integration of GTE and Contel
Corporation. These costs, net of a gain on the transfer of certain cellular
properties, reduced 1991 net income by $204 million, or $.23 per share.
(b) For purposes of computing the consolidated ratios, earnings consist of
income from continuing operations before income taxes and fixed charges.
Fixed charges consist of interest expense, preferred stock dividends of
subsidiaries, the additional income requirement to cover preferred
dividends of subsidiaries and the portion of rent expense representing
interest. Amounts applicable to entities that are at least 50%-owned have
been added to both earnings and fixed charges, and amounts applicable to
minority interests have been deducted from both earnings and fixed
charges. Excluding from 1993 the effect of the one-time restructuring
charge, the cost of voluntary separation programs at Telephone Operations
and the gain on the sale of non-strategic telephone properties (see note
(a)), the consolidated ratio of earnings to fixed charges would have been
3.31 and the consolidated ratio of earnings to combined fixed charges and
preferred stock dividends would have been 3.26.
(c) Operating income of Telephone Operations in 1993 was reduced by a one-time
$1.4 billion pre-tax restructuring charge primarily for the implementation
of a re-engineering plan and a $74 million pre-tax charge for the cost of
voluntary separation programs.
(d) Excludes impact of non-strategic telephone properties sold in 1993.
(e) Access lines as of December 31, 1993 and March 31, 1994 exclude 440,000
net lines sold during 1993. Worldwide access lines include 2.0 million,
1.8 million and 1.6 million lines served by Compania Anonima Nacional
Telefonos de Venezuela ("CANTV") in Venezuela in 1993-1991, respectively.
GTE acquired operating control of CANTV in 1991.
(f) Represents total United States population served times GTE's percentage
interest in the market.
S-7
<PAGE>
CAPITALIZATION OF GTE
The following table sets forth the consolidated short-term obligations and
capitalization of GTE as of March 31, 1994, and as adjusted to reflect the
application of the estimated net proceeds from the sale of the Series A
Preferred Securities. See "Use of Proceeds".
<TABLE>
<CAPTION>
MARCH 31, 1994
--------------------
ACTUAL AS ADJUSTED
------- -----------
(IN MILLIONS)
<S> <C> <C>
Short-term obligations, including current maturities...... $ 2,679 $
======= =======
Long-term debt(a)......................................... $12,004 $12,004
------- -------
Minority interests in equity of subsidiaries.............. 1,117
------- -------
Preferred Stock, subject to mandatory redemption.......... 123 123
------- -------
Shareholders' equity:
Preferred stock......................................... 11 11
Common stock............................................ 48 48
Amounts paid in, in excess of par value................. 7,375 7,375
Reinvested earnings..................................... 2,828 2,828
Guaranteed ESOP obligations............................. (639) (639)
------- -------
Total shareholders' equity............................ 9,623 9,623
------- -------
Total capitalization (excluding short-term
obligations)......................................... $22,867 $
======= =======
</TABLE>
- --------
(a) Senior Indebtedness of GTE, for purposes of the subordination provisions
of the Series A Junior Subordinated Debentures, includes only indebtedness
of GTE on an unconsolidated basis. As of March 31, 1994, such Senior
Indebtedness aggregated approximately $6.3 billion.
USE OF PROCEEDS
The proceeds from the sale of the Series A Preferred Securities will be
invested in the Series A Junior Subordinated Debentures issued pursuant to the
Indenture described herein, and ultimately will be used by GTE to reduce
short-term obligations, including current maturities (at May 31, 1994,
totaling approximately $2.0 billion, at an average interest cost of
approximately 4.45%), and for general corporate purposes.
S-8
<PAGE>
DESCRIPTION OF THE SERIES A PREFERRED SECURITIES
GENERAL
All of the partnership interests in GTE Delaware, other than the Series A
Preferred Securities offered hereby, are owned directly or indirectly by GTE.
The Limited Partnership Agreement authorizes and creates the Series A
Preferred Securities, which represent limited partner interests in GTE
Delaware (the "Preferred Securities"). Preferred Securities may be issued from
time to time in one or more series as described in the accompanying
Prospectus. The limited partner interests represented by the Series A
Preferred Securities will have a preference with respect to dividends and
amounts payable on liquidation over the General Partner's interest in GTE
Delaware. The Limited Partnership Agreement does not permit the issuance of
any Preferred Securities ranking, as to participation in profits and dividends
and in the assets of GTE Delaware, senior or junior to the Series A Preferred
Securities or the incurrence of any indebtedness by GTE Delaware. The summary
of certain terms and provisions of the Series A Preferred Securities set forth
below does not purport to be complete and is subject to, and qualified in its
entirety by reference to, the Limited Partnership Agreement and the
Partnership Act.
DIVIDENDS
The dividends payable on each Series A Preferred Security will be fixed at a
rate per annum of % of the stated liquidation preference of $25 per
Preferred Security. Dividends in arrears for more than one month will bear
interest thereon at the rate per annum of % thereof. The term "dividends" as
used herein includes any such interest payable unless otherwise stated. The
amount of dividends payable for any period will be computed on the basis of a
360-day year of twelve 30-day months.
Dividends on the Series A Preferred Securities will be cumulative, will
accrue from the date of initial issuance and will be payable monthly in
arrears, on the last day of each calendar month of each year, commencing
, 1994, when, as and if available and determined to be so payable by GTE, as
the General Partner, except as otherwise described below. GTE has the right
under the Indenture to extend the interest payment period from time to time on
the Series A Junior Subordinated Debentures to a period not exceeding 60
consecutive months, and, as a consequence, monthly dividends on the Series A
Preferred Securities would be deferred (but would continue to accrue with
interest) by GTE Delaware during any such extended interest payment period. In
the event that GTE exercises this right, GTE may not declare or pay dividends
on, or redeem, purchase or acquire, any of its capital stock. Prior to the
termination of any such extension period, GTE may further extend the interest
payment period, provided that such extension period together with all such
previous and further extensions thereof may not exceed 60 consecutive months.
Upon the termination of any extension period and the payment of all amounts
then due, GTE may select a new extension period, subject to the above
requirements. See "Description of the Series A Junior Subordinated
Debentures--Interest" and "--Option to Extend Interest Payment Period".
Dividends on the Series A Preferred Securities must be paid on the dates
payable to the extent that GTE Delaware has (i) funds legally available for
the payment of such dividends and (ii) cash on hand sufficient to permit such
payments. It is anticipated that GTE Delaware's earnings available for
distribution to the holders of the Series A Preferred Securities will be
limited to payments under the Series A Junior Subordinated Debentures in which
GTE Delaware will invest the proceeds from the issuance and sale of the Series
A Preferred Securities and the General Partner's capital contribution. See
"Description of the Series A Junior Subordinated Debentures". The payment of
dividends, out of moneys held by GTE Delaware, are guaranteed by GTE as set
forth under "Description of the Guarantee" in the accompanying Prospectus.
S-9
<PAGE>
Dividends on the Series A Preferred Securities will be payable to the
holders thereof as they appear on the books and records of GTE Delaware on the
relevant record dates, which, as long as the Series A Preferred Securities
remain in book-entry-only form, will be one business day (as defined below)
prior to the relevant payment dates. Subject to any applicable laws and
regulations and the provisions of the Limited Partnership Agreement, each such
payment will be made as described under "Book-Entry-Only Issuance--The
Depository Trust Company" below. In the event the Series A Preferred
Securities shall not continue to remain in book-entry-only form, the General
Partner shall have the right to select relevant record dates which shall be
more than one Business Day prior to the relevant payment dates. In the event
that any date on which dividends are payable on the Series A Preferred
Securities is not a Business Day, then payment of the dividend 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. A "Business Day" shall
mean any day other than a day on which banking institutions in The City of New
York are authorized or required by law to close.
CERTAIN RESTRICTIONS ON GTE DELAWARE
If dividends have not been paid in full on the Series A Preferred
Securities, GTE Delaware shall not:
(i) pay, or set aside for payment, any dividends on any other series of
Preferred Securities, unless the amount of any dividends declared on any
other series of Preferred Securities is paid on such other series of
Preferred Securities and the Series A Preferred Securities on a pro rata
basis on the date such dividends are paid on such other series of Preferred
Securities, so that
(x) the aggregate amount of dividends paid on the Series A Preferred
Securities bears to the aggregate amount of dividends paid on such
other series of Preferred Securities the same ratio as
(y) the aggregate of all accrued and unpaid dividends in respect of the
Series A Preferred Securities bears to the aggregate of all accrued and
unpaid dividends in respect of such other series of Preferred
Securities; or
(ii) redeem, purchase or otherwise acquire any other Preferred Securities;
until, in each case, such time as all accrued and unpaid dividends on the
Series A Preferred Securities shall have been paid in full for all dividend
periods terminating on or prior to, in the case of clause (i), such payment
and, in the case of clause (ii), the date of such redemption, purchase or
acquisition.
As of the date of this Prospectus Supplement, there are no series of
Preferred Securities outstanding.
OPTIONAL REDEMPTION
The Series A Preferred Securities are redeemable, at the option of GTE
Delaware, in whole or in part, from time to time, on or after , 1999,
upon not less than 30 nor more than 60 days' notice, at the Redemption Price.
In the event that fewer than all the outstanding Series A Preferred Securities
are to be so redeemed, the Series A Preferred Securities to be redeemed will
be selected as described under "Book-Entry-Only Issuance--The Depository Trust
Company" below. If a partial redemption would result in the delisting of the
Series A Preferred Securities, GTE Delaware may only redeem the Series A
Preferred Securities in whole.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
If a Tax Event or an Investment Company Event (each, as defined below, and,
each, a "Special Event") shall occur and be continuing, the General Partner
shall elect to either (i) redeem the Series A Preferred Securities in whole
(and not in part), upon not less than 30 or more than 60 days' notice at
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the Redemption Price within 90 days following the occurrence of such Special
Event; provided, that, if at the time there is available to the General
Partner the opportunity to eliminate, within such 90 day period, the Special
Event by taking some ministerial action, such as filing a form or making an
election, or pursuing some other similar reasonable measure, which has no
adverse effect on GTE Delaware or GTE, the General Partner will pursue such
measure in lieu of redemption, or (ii) dissolve GTE Delaware and cause Series
A Junior Subordinated Debentures to be distributed to the holders of the
Series A Preferred Securities in liquidation of GTE Delaware, within 90 days
following the occurrence of such Special Event. In the case of a Tax Event,
the General Partner may also elect to cause the Series A Preferred Securities
to remain outstanding.
"Tax Event" means that the General Partner shall have obtained an opinion of
nationally recognized independent tax counsel experienced in such matters 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
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 on or after
such date) or (c) any interpretation or pronouncement that provides for a
position with respect to such laws or regulations that differs from the
generally accepted position on , 1994, which amendment or change is
effective or such interpretation or pronouncement is announced on or after
, 1994, there is more than an insubstantial risk that (i) GTE Delaware is
subject to federal income tax with respect to interest received on the Series
A Junior Subordinated Debentures, (ii) interest payable to GTE Delaware on the
Series A Junior Subordinated Debentures will not be deductible for federal
income tax purposes or (iii) GTE Delaware is subject to more than a de minimis
amount of other taxes, duties or other governmental charges.
"Investment Company Event" means the occurrence of a change in law or
regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law") to the effect that GTE Delaware is or
will be considered an "investment company" which is required to be registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), which
Change in 1940 Act Law becomes effective on or after , 1994; provided,
that no Investment Company Event shall be deemed to have occurred if the
General Partner obtains a written opinion of nationally recognized independent
counsel experienced in practice under the 1940 Act to the effect that the
General Partner has successfully issued an additional or supplemental
irrevocable and unconditional guarantee (x) of accrued and unpaid dividends
(whether or not determined to be paid out of moneys legally available
therefor) on the Series A Preferred Securities and (y) of the full amount of
the Liquidation Distribution (as hereinafter defined) on the Series A
Preferred Securities upon a liquidation of GTE Delaware (regardless of the
amount of assets of GTE Delaware otherwise available for distribution in such
liquidation) to avoid such Change in 1940 Act Law so that in the opinion of
such counsel, notwithstanding such Change in 1940 Act Law, GTE Delaware is not
required to be registered as an "investment company" within the meaning of the
1940 Act.
After the date fixed for any distribution of Series A Junior Subordinated
Debentures, upon dissolution of GTE Delaware, (i) the Series A Preferred
Securities will no longer be deemed to be outstanding, (ii) The Depository
Trust Company (the "Depository" or "DTC") or its nominee, as the record holder
of the Series A Preferred Securities, will receive a registered global
certificate or certificates representing the Series A Junior Subordinated
Debentures to be delivered upon such distribution and (iii) any certificates
representing Series A Preferred Securities not held by DTC or its nominee will
be deemed to represent Series A Junior Subordinated Debentures having a
principal amount equal to the aggregate of the stated liquidation preference
of, and accrued and unpaid dividends on, such Series A Preferred Securities
until such certificates are presented to GTE or its agent for transfer or
reissuance.
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MANDATORY REDEMPTION
Upon the repayment of the Series A Junior Subordinated Debentures at
maturity, the proceeds from such repayment will be applied to redeem the
Series A Preferred Securities, in whole, upon not less than 30 nor more than
60 days' notice, at the Redemption Price.
REDEMPTION PROCEDURES
GTE Delaware may not redeem fewer than all the outstanding Series A
Preferred Securities unless all accrued and unpaid dividends have been paid on
all Series A Preferred Securities for all monthly dividend periods terminating
on or prior to the date of redemption.
If GTE Delaware gives a notice of redemption in respect of Series A
Preferred Securities (which notice will be irrevocable), then, by 12:00 noon,
New York time, on the redemption date, GTE Delaware will irrevocably deposit
with DTC funds sufficient to pay the applicable Redemption Price and will give
DTC irrevocable instructions and authority to pay the Redemption Price to the
holders of the Series A Preferred Securities. See "Book-Entry-Only Issuance--
The Depository Trust Company". If notice of redemption shall have been given
and funds deposited as required, then upon the date of such deposit, all
rights of holders of such Series A Preferred Securities so called for
redemption will cease, except the right of the holders of such Series A
Preferred Securities to receive the Redemption Price, but without interest on
such Redemption Price. In the event that any date fixed for redemption of
Series A Preferred Securities is not a Business Day, then payment of the
Redemption Price 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 falls in the next
calendar year, such payment will be made on the immediately preceding Business
Day. In the event that payment of the Redemption Price in respect of Series A
Preferred Securities is improperly withheld or refused and not paid either by
GTE Delaware or by GTE pursuant to the Guarantee described under "Description
of the Guarantee" in the accompany Prospectus, dividends on such Series A
Preferred Securities will continue to accrue at the then applicable rate, from
the original redemption date to the date of payment, in which case the actual
payment date will be considered the date fixed for redemption for purposes of
calculating the Redemption Price.
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), GTE or its subsidiaries may at any
time and from time to time purchase outstanding Series A Preferred Securities
by tender, in the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary dissolution, winding-up or
termination of GTE Delaware, the holders of the Series A Preferred Securities
at the time will be entitled to receive out of the assets of GTE Delaware
available for distribution to partners after satisfaction of liabilities of
creditors as required by the Partnership Act, before any distribution of
assets is made to the General Partner, but together with the holders of every
other series of Preferred Securities outstanding, an amount equal to, in the
case of holders of Series A Preferred Securities, the aggregate of the stated
liquidation preference of $25 per Series A Preferred Security and accrued and
unpaid dividends thereon to the date of payment (the "Liquidation
Distribution"), unless, in connection with such dissolution, winding-up or
termination, Series A Junior Subordinated Debentures in an aggregate principal
amount equal to the Liquidation Distribution have been distributed on a pro
rata basis to the holders of the Series A Preferred Securities.
If, upon any such dissolution, the Liquidation Distribution can be paid only
in part because GTE Delaware has insufficient assets available to pay in full
the aggregate Liquidation Distribution and the aggregate maximum liquidation
distributions on any other series of Preferred Securities, then the amounts
payable directly by GTE Delaware on the Series A Preferred Securities and on
such other series of Preferred Securities shall be paid on a pro rata basis,
so that
(i) the aggregate amount paid in respect of the Liquidation Distribution
bears to the aggregate amount paid as liquidation distributions on the
other series of Preferred Securities the same ratio as
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(ii) the aggregate Liquidation Distribution bears to the aggregate
maximum liquidation distributions on the other series of Preferred
Securities.
Pursuant to the Limited Partnership Agreement, GTE Delaware shall be
dissolved and its affairs shall be wound up: (i) on December 31, 2093, the
expiration of the term of GTE Delaware, (ii) upon the bankruptcy of the
General Partner, (iii) upon the assignment by the General Partner of its
entire interest in GTE Delaware when the assignee is not admitted to GTE
Delaware as a general partner of GTE Delaware in accordance with the Limited
Partnership Agreement, or the filing of a certificate of dissolution or its
equivalent with respect to the General Partner, or the revocation of the
General Partner's charter and the expiration of 90 days after the date of
notice to the General Partner of revocation without a reinstatement of its
charter, or any other event occurs which causes the General Partner to cease
to be a general partner of GTE Delaware under the Partnership Act, unless the
business of GTE Delaware is continued in accordance with the Partnership Act,
(iv) in accordance with the provisions of the Series A Preferred Securities,
(v) upon the entry of a decree of a judicial dissolution or (vi) upon the
written consent of all partners of GTE Delaware.
MERGER, CONSOLIDATION OR AMALGAMATION OF GTE DELAWARE
GTE Delaware may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described below. GTE Delaware may, without the consent of the holders of the
Series A Preferred Securities, consolidate, amalgamate, merge with or into, or
be replaced by a limited partnership or a trust organized as such under the
laws of any state of the United States of America; provided, that (i) such
successor entity either (x) expressly assumes all of the obligations of GTE
Delaware under the Series A Preferred Securities or (y) substitutes for the
Series A Preferred Securities other securities having substantially the same
terms as the Series A Preferred Securities (the "Successor Securities") so
long as the Successor Securities rank, with respect to participation in the
profits and dividends or in the assets of the successor entity, at least as
high as the Series A Preferred Securities rank with respect to participation
in the profits and dividends or in the assets of GTE Delaware, (ii) GTE
expressly acknowledges such successor entity as the holder of the Series A
Junior Subordinated Debentures, (iii) the Series A Preferred Securities or any
Successor Securities are listed, or any Successor Securities will be listed
upon notification of issuance, on any national securities exchange or other
organization on which the Series A Preferred Securities are then listed, (iv)
such merger, consolidation, amalgamation or replacement does not cause the
Series A Preferred Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization, (v)
such merger, consolidation, amalgamation or replacement does not adversely
affect the powers, preferences and other special rights of the holders of the
Series A Preferred Securities (including any Successor Securities) in any
material respect, (vi) such successor entity has a purpose substantially
identical to that of GTE Delaware and (vii) prior to such merger,
consolidation, amalgamation or replacement, GTE has received an opinion of
nationally recognized independent counsel to GTE Delaware experienced in such
matters to the effect that (x) such successor entity will be treated as a
partnership for federal income tax purposes, (y) following such merger,
consolidation, amalgamation or replacement, GTE and such successor entity will
be in compliance with the 1940 Act without registering thereunder as an
investment company and (z) such merger, consolidation, amalgamation or
replacement will not adversely affect the limited liability of the holders of
the Series A Preferred Securities.
VOTING RIGHTS
Except as provided below and under "Description of the Guarantee--Amendments
and Assignment" in the accompanying Prospectus and as otherwise required by
law and the Limited Partnership Agreement, the holders of the Series A
Preferred Securities will have no voting rights.
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If (i) GTE Delaware fails to pay dividends in full on the Series A Preferred
Securities for 18 consecutive monthly dividend periods; (ii) an Event of
Default (as defined in the Indenture) occurs and is continuing on the Series A
Junior Subordinated Debentures; or (iii) GTE is in default on any of its
payment or other obligations under the Guarantee (as described under
"Description of the Guarantee--Certain Covenants of GTE" in the accompanying
Prospectus), then the holders of the Series A Preferred Securities, together
with the holders of any other series of Preferred Securities having the right
to vote for the appointment of a special representative of GTE Delaware and
the limited partners (a "Special Representative") in such event, acting as a
single class, will be entitled by the majority vote of such holders to appoint
and authorize a Special Representative to enforce GTE Delaware's creditor
rights under the Series A Junior Subordinated Debentures, to enforce the
rights of the holders of the Series A Preferred Securities under the Guarantee
and to enforce the rights of the holders of the Series A Preferred Securities
to receive dividends on the Series A Preferred Securities. The Special
Representative shall not be admitted as a partner in GTE Delaware or otherwise
be deemed to be a partner in GTE Delaware and shall have no liability for the
debts, obligations or liabilities of GTE Delaware. For purposes of determining
whether GTE Delaware has failed to pay dividends in full for 18 consecutive
monthly dividend periods, dividends shall be deemed to remain in arrears,
notwithstanding any payments in respect thereof, until full cumulative
dividends have been or contemporaneously are paid with respect to all monthly
dividend periods terminating on or prior to the date of payment of such full
cumulative dividends. Not later than 30 days after such right to appoint a
Special Representative arises, the General Partner will convene a meeting for
the purpose of appointing a Special Representative. If the General Partner
fails to convene such meeting within such 30-day period, the holders of 10% in
liquidation preference of the outstanding Preferred Securities will be
entitled to convene such meeting. The provisions of the Limited Partnership
Agreement relating to the convening and conduct of the meetings of the
partners will apply with respect to any such meeting. Any Special
Representative so appointed shall cease to be a Special Representative of GTE
Delaware and the limited partners if GTE Delaware (or GTE pursuant to the
Guarantee) shall have paid in full all accrued and unpaid dividends on the
Preferred Securities or such default or breach, as the case may be, shall have
been cured, and GTE, in its capacity as the General Partner shall continue the
business of GTE Delaware without dissolution. Notwithstanding the appointment
of any such Special Representative, GTE shall continue as General Partner and
shall retain all rights under the Indenture, including the right to extend the
interest payment period from time to time to a period not exceeding 60
consecutive months as provided under "Description of the Series A Junior
Subordinated Debentures--Option to Extend Interest Payment Period".
If any proposed amendment to the Limited Partnership Agreement provides for,
or the General Partner otherwise proposes to effect, (i) any action which
would adversely affect the powers, preferences or special rights of the Series
A Preferred Securities, whether by way of amendment to the Limited Partnership
Agreement or otherwise (including, without limitation, the authorization or
issuance of any limited partner interests in GTE Delaware ranking, as to
participation in the profits and dividends or in the assets of GTE Delaware,
senior to the Series A Preferred Securities), or (ii) the dissolution,
winding-up or termination of GTE Delaware, other than (x) in connection with
the distribution of Series A Junior Subordinated Debentures upon the
occurrence of a Special Event or (y) as described under "Merger, Consolidation
or Amalgamation of GTE Delaware" above, then the holders of outstanding Series
A Preferred Securities will be entitled to vote on such amendment or proposal
of the General Partner (but not on any other amendment or proposal) as a class
with all other holders of series of Preferred Securities similarly affected,
and such amendment or proposal shall not be effective except with the approval
of the holders of 66 2/3% in liquidation preference of such outstanding
Preferred Securities having a right to vote on the matter; provided, however,
that no such approval shall be required if the dissolution, winding-up or
termination of GTE Delaware is proposed or initiated upon the initiation of
proceedings, or after proceedings have been initiated, for the dissolution,
winding-up, liquidation or termination of GTE.
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The rights attached to the Series A Preferred Securities will be deemed not
to be adversely affected by the creation or issue of, and no vote will be
required for the creation of, any further limited partner interests of GTE
Delaware ranking pari passu with the Series A Preferred Securities with regard
to participation in the profits and dividends or in the assets of GTE
Delaware. Holders of Series A Preferred Securities have no preemptive rights.
So long as any Series A Junior Subordinated Debentures are held by GTE
Delaware, the General Partner shall not (i) direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
executing any trust or power conferred on the Trustee with respect to such
series, (ii) waive any past default which is waivable under Section 6.06 of
the Indenture, (iii) exercise any right to rescind or annul a declaration that
the principal of all the Series A Junior Subordinated Debentures shall be due
and payable or (iv) consent to any amendment, modification or termination of
the Indenture, where such consent shall be required, without, in each case,
obtaining the prior approval of the holders of at least 66 2/3% in liquidation
preference of all series of Preferred Securities affected thereby, acting as a
single class; provided, however, that where a consent under the Indenture
would require the consent of each holder affected thereby, no such consent
shall be given by the General Partner without the prior consent of each holder
of all series of Preferred Securities affected thereby. The General Partner
shall not revoke any action previously authorized or approved by a vote of any
series of Preferred Securities. The General Partner shall notify all holders
of the Series A Preferred Securities of any notice of default received from
the Trustee with respect to the Series A Junior Subordinated Debentures.
Any required approval of holders of Series A Preferred Securities may be
given at a separate meeting of holders of Preferred Securities convened for
such purpose, at a meeting of all of the partners in GTE Delaware or pursuant
to written consent. GTE Delaware will cause a notice of any meeting at which
holders of Series A Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such holders is to be taken, to
be mailed to each holder of record of Series A Preferred Securities. Each such
notice will include a statement setting forth (i) the date of such meeting or
the date by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such holders are
entitled to vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents.
No vote or consent of the holders of Series A Preferred Securities will be
required for GTE Delaware to redeem and cancel Series A Preferred Securities
in accordance with the Limited Partnership Agreement.
Notwithstanding that holders of Series A Preferred Securities are entitled
to vote or consent under any of the circumstances described above, any of the
Series A Preferred Securities and any other series of Preferred Securities
that are entitled to vote or consent with such Series A Preferred Securities
as a single class at such time that are owned by GTE or any entity owned more
than 50% by GTE, either directly or indirectly, shall not be entitled to vote
or consent and shall, for purposes of such vote or consent, be treated as if
they were not outstanding.
Holders of the Series A Preferred Securities will have no rights to remove
or replace the General Partner.
BOOK-ENTRY-ONLY ISSUANCE--THE DEPOSITORY TRUST COMPANY
DTC will act as securities depository for the Series A Preferred Securities.
The Series A Preferred Securities will be issued only as fully-registered
securities registered in the name of Cede & Co. (DTC's nominee). One or more
fully-registered global Series A Preferred Security certificates will be
issued, representing in the aggregate the total number of Series A Preferred
Securities, and will be deposited with DTC.
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DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). DTC holds securities
that its participants ("Participants") deposit with DTC. DTC also facilitates
the settlement among Participants of securities transactions, such as
transfers and pledges, in deposited securities through electronic computerized
book-entry changes in Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. Direct Participants include
securities brokers and dealers, banks, trust companies, clearing corporations,
and certain other organizations ("Direct Participants"). DTC is owned by a
number of its Direct Participants and by the New York Stock Exchange, Inc.
(the "New York Stock Exchange"), the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks and
trust companies that clear through or maintain a custodial relationship with a
Direct Participant, either directly or indirectly ("Indirect Participants").
The rules applicable to DTC and its Participants are on file with the
Securities and Exchange Commission.
Purchases of Series A Preferred Securities within the DTC system must be
made by or through Direct Participants, which will receive a credit for the
Series A Preferred Securities on DTC's records. The ownership interest of each
actual purchaser of each Series A Preferred Security ("Beneficial Owner") is
in turn to be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC of their
purchases, but Beneficial Owners are expected to receive written confirmations
providing details of the transactions, as well as periodic statements of their
holdings, from the Direct or Indirect Participants through which the
Beneficial Owners purchased Series A Preferred Securities. Transfers of
ownership interests in the Series A Preferred Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in Series A Preferred Securities,
except in the event that use of the book-entry system for the Series A
Preferred Securities is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Series A
Preferred Securities; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Series A Preferred Securities are
credited, which may or may not be the Beneficial Owners. The Participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Series A Preferred Securities are being redeemed, DTC's practice is to
determine by lot the amount of the interest of each Direct Participant in such
series to be redeemed.
Although voting with respect to the Series A Preferred Securities is
limited, in those cases where a vote is required, neither DTC nor Cede & Co.
will itself consent or vote with respect to Series A Preferred Securities.
Under its usual procedures, DTC would mail an Omnibus Proxy to GTE Delaware as
soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts the
Series A Preferred Securities are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
Dividend payments on the Series A Preferred Securities will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective
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holdings shown on DTC's records unless DTC has reason to believe that it will
not receive payments on such payment date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices and will be the responsibility of such Participant and not of DTC,
GTE Delaware or GTE, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of dividends to DTC is the
responsibility of GTE Delaware, disbursement of such payments to Direct
Participants is the responsibility of DTC, and disbursement of such payments
to the Beneficial Owners is the responsibility of Direct and Indirect
Participants.
DTC may discontinue providing its services as securities depository with
respect to the Series A Preferred Securities at any time by giving reasonable
notice to GTE Delaware. Under such circumstances, in the event that a
successor securities depository is not obtained, Series A Preferred Security
certificates are required to be printed and delivered. Additionally, GTE
Delaware (with the consent of GTE) may decide to discontinue use of the system
of book-entry transfers through DTC (or a successor depository). In that
event, certificates for the Series A Preferred Securities will be printed and
delivered. In each of the above circumstances, the General Partner will
appoint a paying agent with respect to the Series A Preferred Securities.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that GTE Delaware believes to be reliable, but
GTE Delaware takes no responsibility for the accuracy thereof.
REGISTRAR AND TRANSFER AGENT
The First National Bank of Boston will act as registrar and transfer agent
for the Series A Preferred Securities.
Registration of transfers of Series A Preferred Securities will be effected
without charge by or on behalf of GTE Delaware, but upon payment (with the
giving of such indemnity as GTE Delaware or GTE may require) in respect of any
tax or other government charges which may be imposed in relation to it.
GTE Delaware will not be required to register or cause to be registered the
transfer of Series A Preferred Securities after such Series A Preferred
Securities have been called for redemption.
MISCELLANEOUS
Application has been made to list the Series A Preferred Securities on the
New York Stock Exchange.
The General Partner is authorized and directed to conduct its affairs and to
operate GTE Delaware in such a way that GTE Delaware will not be deemed to be
an "investment company" required to be registered under the 1940 Act or taxed
as a corporation for federal income tax purposes and so that the Series A
Junior Subordinated Debentures will be treated as indebtedness of GTE for
federal income tax purposes. In this connection, the General Partner is
authorized to take any action, not inconsistent with applicable law, the
certificate of limited partnership or the Limited Partnership Agreement, that
the General Partner determines in its discretion to be necessary or desirable
for such purposes, as long as such action does not adversely affect the
interests of the holders of the Series A Preferred Securities.
Holders of the Series A Preferred Securities have no preemptive rights.
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DESCRIPTION OF THE SERIES A JUNIOR SUBORDINATED DEBENTURES
Set forth below is a description of the specific terms of the Series A
Junior Subordinated Debentures in which GTE Delaware will invest with the
proceeds of the issuance and sale of (i) the Series A Preferred Securities and
(ii) the General Partner's capital contribution with respect to the Series A
Preferred Securities (the "General Partnership Payment"). This description
supplements the description of the general terms and provisions of the Junior
Subordinated Debentures set forth in the accompanying Prospectus under the
caption "Description of the Junior Subordinated Debentures". The following
description does not purport to be complete and is qualified in its entirety
by reference to the description in the accompanying Prospectus and the
Indenture, dated as of June 1, 1994, between GTE and The Bank of New York, as
Trustee, as supplemented by a First Supplemental Indenture, dated as of ,
1994 (the Indenture, as so supplemented, is hereinafter referred to as the
"Indenture").
Under certain circumstances involving the dissolution of GTE Delaware
following the occurrence of a Special Event, Series A Junior Subordinated
Debentures may be distributed to the holders of the Series A Preferred
Securities in liquidation of GTE Delaware. See "Description of the Series A
Preferred Securities--Special Event Redemption or Distribution".
GENERAL
The Series A Junior Subordinated Debentures will be issued as a series of
Junior Subordinated Debentures under the Indenture. The Series A Junior
Subordinated Debentures will be limited in aggregate principal amount to
approximately $ million, such amount being the sum of the aggregate stated
liquidation preference of the Series A Preferred Securities and the General
Partnership Payment.
The entire principal amount of the Series A Junior Subordinated Debentures
will become due and payable, together with any accrued and unpaid interest
thereon, including Additional Interest (as hereinafter defined), if any, on
, 2024.
The Series A Junior Subordinated Debentures if distributed to holders of
Series A Preferred Securities in dissolution will initially be so issued as a
Global Security (as defined below). As described herein, under certain limited
circumstances Series A Junior Subordinated Debentures may be issued in
certificated form in exchange for a Global Security (as defined below). See
"Book-Entry and Settlement" below. In the event that Series A Junior
Subordinated Debentures are issued in certificated form, such Series A Junior
Subordinated Debentures will be in denominations of $25 and integral multiples
thereof and may be transferred or exchanged at the offices described below.
Payments on Series A Junior Subordinated Debentures issued as a Global
Security will be made to DTC, as the depository for the Series A Junior
Subordinated Debentures. In the event Series A Junior Subordinated Debentures
are issued in certificated form, principal and interest will be payable, the
transfer of the Series A Junior Subordinated Debentures will be registrable
and Series A Junior Subordinated Debentures will be exchangeable for Series A
Junior Subordinated Debentures of other denominations of a like aggregate
principal amount at the corporate trust office of the Trustee in The City of
New York; provided, that payment of interest may be made at the option of GTE
by check mailed to the address of the persons entitled thereto.
If the Series A Junior Subordinated Debentures are distributed to the
holders of Series A Preferred Securities upon the dissolution of GTE Delaware,
GTE will use its best efforts to list the Series A Junior Subordinated
Debentures on the New York Stock Exchange or on such other exchange as the
Series A Preferred Securities are then listed and traded on the same part of
any such exchange.
S-18
<PAGE>
MANDATORY PREPAYMENT
If GTE Delaware redeems Series A Preferred Securities in accordance with the
terms thereof, the Series A Junior Subordinated Debentures will become due and
payable in a principal amount equal to the aggregate stated liquidation
preference of the Series A Preferred Securities so redeemed, together with any
accrued and unpaid interest, including Additional Interest, if any. Any
payment pursuant to this provision shall be made prior to 12:00 noon, New York
time, on the date of such redemption or at such other time on such earlier
date as the parties thereto shall agree.
OPTIONAL REDEMPTION
If there shall be no Series A Preferred Securities outstanding, GTE shall
have the right to redeem the Series A Junior Subordinated Debentures, in whole
or in part, from time to time, on or after , 1999, upon not less than 30
nor more than 60 days' notice, at a redemption price equal to 100% of the
principal amount to be redeemed plus any accrued and unpaid interest,
including Additional Interest, if any, to the redemption date.
INTEREST
Each Series A Junior Subordinated Debenture will bear interest at the rate
of % per annum from the original date of issuance, payable monthly in
arrears on the last day of each calendar month of each year (each, an
"Interest Payment Date"), commencing , 1994, to the person in whose name
such Series A Junior Subordinated Debenture is registered, subject to certain
exceptions, at the close of business on the Business Day next preceding such
Interest Payment Date. In the event the Series A Junior Subordinated
Debentures shall not continue to remain in book-entry-only form, GTE shall
have the right to select record dates which shall be more than one Business
Day prior to the Interest Payment Date.
The amount of interest payable for any period will 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 the Series A Junior Subordinated Debentures is not a
Business Day, then payment of the 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. A "Business Day" shall mean any day other than
a day on which banking institutions in The City of New York are authorized or
required by law to close.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
GTE shall have the right at any time during the term of the Series A Junior
Subordinated Debentures to extend the interest payment period from time to
time to a period not exceeding 60 consecutive months (the "Extension Period"),
at the end of which Extension Period GTE shall pay all interest then accrued
and unpaid (together with interest thereon at the rate specified for the
Series A Junior Subordinated Debentures to the extent permitted by applicable
law); provided, that, during any such Extension Period, GTE shall not declare
or pay any dividend on, or redeem, purchase, acquire or make a liquidation
payment with respect to, any of its capital stock. Prior to the termination of
any such Extension Period, GTE may further extend the interest payment period,
provided that such Extension Period together with all such previous and
further extensions thereof may not exceed 60 consecutive months. Upon the
termination of any Extension Period and the payment of all amounts then due,
GTE may select a new Extension Period, subject to the above requirements. No
interest during an Extension Period, except at the end thereof, shall be due
and payable. If GTE Delaware shall be the sole holder of the Series A Junior
Subordinated Debentures, GTE shall give GTE Delaware notice of its selection
S-19
<PAGE>
of such Extension Period one Business Day prior to the earlier of (i) the date
the dividends on the Series A Preferred Securities are payable or (ii) the
date GTE Delaware is required to give notice to the New York Stock Exchange or
other applicable self-regulatory organization or to holders of the Series A
Preferred Securities of the record date or the date such dividend is payable,
but in any event not less than one Business Day prior to such record date. GTE
shall cause GTE Delaware to give notice of GTE's selection of such Extension
Period to the holders of the Series A Preferred Securities. If GTE Delaware
shall not be the sole holder of the Series A Junior Subordinated Debentures,
GTE shall give the holders of the Series A Junior Subordinated Debentures
notice of its selection of such Extension Period ten Business Days prior to
the earlier of (i) the Interest Payment Date or (ii) the date GTE is required
to give notice to the New York Stock Exchange or other applicable self-
regulatory organization, or to holders of the Series A Junior Subordinated
Debentures, of the record or payment date of such related interest payment,
but in any event not less than two Business Days prior to such record date.
ADDITIONAL INTEREST
If at any time GTE Delaware shall be required to pay any interest on
dividends in arrears in respect of the Series A Preferred Securities pursuant
to the terms thereof, then GTE will pay as interest to GTE Delaware as the
holder of the Series A Junior Subordinated Debentures ("Additional Interest")
an amount equal to such interest on dividends in arrears. In addition, if GTE
Delaware would be required to pay any taxes, duties, assessments or
governmental charges of whatever nature (other than withholding taxes) imposed
by the United States, or any other taxing authority, then, in any such case,
GTE also will pay as Additional Interest such amounts as shall be required so
that the net amounts received and retained by GTE Delaware after paying any
such taxes, duties, assessments or governmental charges will be not less than
the amounts GTE Delaware would have received had no such taxes, duties,
assessments or governmental charges been imposed.
SET-OFF
Notwithstanding anything to the contrary in the Indenture, GTE shall have
the right to set-off any payment it is otherwise required to make thereunder
with and to the extent GTE has theretofore made, or is concurrently on the
date of such payment making, a payment under the Guarantee.
EVENTS OF DEFAULT
In the case any Event of Default (as defined in the Indenture) shall occur
and be continuing, GTE Delaware will have the right to declare the principal
of and the interest on the Series A Junior Subordinated Debentures (including
any Additional Interest) and any other amounts payable under the Indenture to
be forthwith due and payable and to enforce its other rights as a creditor
with respect to the Series A Junior Subordinated Debentures. See "Enforcement
of Certain Rights by Special Representative" below for a discussion of certain
rights available to holders of the Series A Preferred Securities upon the
occurrence of an Event of Default.
ENFORCEMENT OF CERTAIN RIGHTS BY SPECIAL REPRESENTATIVE
If (i) GTE Delaware fails to pay dividends in full on the Series A Preferred
Securities for 18 consecutive monthly dividend periods; (ii) an Event of
Default occurs and is continuing on the Series A Junior Subordinated
Debentures; or (iii) GTE is in default on any of its payment of other
obligations under the Guarantee, under the terms of the Series A Preferred
Securities, the holders of outstanding Series A Preferred Securities will have
the rights referred to under "Description of the Series A Preferred
Securities--Voting Rights", including the right to appoint a Special
Representative, which Special Representative shall be authorized to exercise
GTE Delaware's right to accelerate the principal amount of the Series A Junior
Subordinated Debentures and to enforce GTE Delaware's other creditor rights
under the Series A Junior Subordinated Debentures. Notwithstanding the
appointment of any such Special Representative, GTE shall continue as General
Partner and shall retain all rights under the Indenture, including the right
to extend the interest payment period from time to time to a period not
exceeding 60 consecutive months.
S-20
<PAGE>
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Series A Preferred Securities in connection
with the dissolution of GTE Delaware as a result of the occurrence of a
Special Event, the Series A Junior Subordinated Debentures will be issued in
the form of one or more global certificates (each, a "Global Security")
registered in the name of the nominee of DTC. Except under the limited
circumstances described below, Series A Junior Subordinated Debentures
represented by the Global Security will not be exchangeable for, and will not
otherwise be issuable as, Series A Junior Subordinated Debentures in
definitive form. The Global Securities described above may not be transferred
except by DTC to a nominee of DTC or by a nominee of DTC to DTC or another
nominee of DTC or to a successor depository or its nominee.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such laws may
impair the ability to transfer beneficial interests in such a Global Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Series A Junior
Subordinated Debentures in definitive form and will not be considered the
Holders (as defined in the Indenture) thereof for any purpose under the
Indenture, and no Global Security representing Series A Junior Subordinated
Debentures shall be exchangeable, except for another Global Security of like
denomination and tenor to be registered in the name of DTC or its nominee or
to a successor depository or its nominee. Accordingly, each beneficial owner
must rely on the procedures of DTC and, if such person is not a Participant,
on the procedures of the Participant through which such person owns its
interest, to exercise any rights of a Holder under the Indenture.
THE DEPOSITORY. DTC will act as security depository for the Series A Junior
Subordinated Debentures. For a description of DTC and the specific terms of
the depository arrangements, see "Description of the Series A Preferred
Securities--Book-Entry-Only Issuance--The Depository Trust Company". As of the
date of this Prospectus Supplement, the description therein of DTC's book-
entry system and DTC's practices as they relate to purchases, transfers,
notices and payments with respect to the Series A Preferred Securities apply
in all material respects to any debt obligations represented by one or more
Global Securities held by DTC.
Neither GTE, the Trustee, any paying agent nor any other agent of GTE or the
Trustee will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in a Global Security for such Series A Junior Subordinated
Debentures or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
DISCONTINUANCE OF THE DEPOSITORY'S SERVICES. A Global Security shall be
exchangeable for Series A Junior Subordinated Debentures registered in the
names of persons other than DTC or its nominee only if (i) DTC notifies GTE
that it is unwilling or unable to continue as a depository for such Global
Security and no successor depository shall have been appointed, or if any time
DTC ceases to be a clearing agency registered under the Exchange Act at a time
when DTC is required to be so registered to act as such depository, (ii) GTE
in its sole discretion determines that such Global Security shall be so
exchangeable or (iii) there shall have occurred an Event of Default with
respect to such Series A Junior Subordinated Debentures. Any Global Security
that is exchangeable pursuant to the preceding sentence shall be exchangeable
for Series A Junior Subordinated Debentures registered in such names as the
Depository shall direct. It is expected that such instructions will be based
upon directions received by the Depository from its Participants with respect
to ownership of beneficial interests in such Global Security.
MISCELLANEOUS
For restrictions on certain actions of the General Partner with respect to
Series A Junior Subordinated Debentures held by GTE Delaware, see "Description
of the Series A Preferred Securities--Voting Rights".
S-21
<PAGE>
UNITED STATES TAXATION
GENERAL
This section is a summary of certain United States federal income tax
considerations that may be relevant to prospective purchasers of Series A
Preferred Securities and represents the opinion of Sullivan & Cromwell,
special tax counsel to GTE and GTE Delaware, insofar as it relates to matters
of law and legal conclusions. This section is based upon current provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), existing and
proposed regulations thereunder and current administrative rulings and court
decisions, all of which are subject to change. Subsequent changes may cause
tax consequences to vary substantially from the consequences described below.
No attempt has been made in the following discussion to comment on all
United States federal income tax matters affecting purchasers of Series A
Preferred Securities. Moreover, the discussion focuses on holders of Series A
Preferred Securities who are individual citizens or residents of the United
States that hold the Series A Preferred Securities as a capital asset and has
only limited application to corporations, estates, trusts or non-resident
aliens. Accordingly, each prospective purchaser of Series A Preferred
Securities should consult, and should depend on, his or her own tax advisor in
analyzing the federal, state, local and foreign tax consequences of the
purchase, ownership or disposition of Series A Preferred Securities.
INCOME FROM SERIES A PREFERRED SECURITIES
In the opinion of Sullivan & Cromwell, GTE Delaware will be a partnership
for federal income tax purposes. Accordingly, each holder of Series A
Preferred Securities (a "Preferred Securityholder") will be required to
include in gross income the Preferred Securityholder's distributive share of
the net income of GTE Delaware. Such income will not exceed the dividends
received on such Series A Preferred Securities, except in limited
circumstances as described below under "Potential Extension of Interest
Payment Period". No portion of such income will be eligible for the dividends
received deduction.
DISPOSITION OF SERIES A PREFERRED SECURITIES
Gain or loss will be recognized on a sale of Series A Preferred Securities,
including a redemption for cash, equal to the difference between the amount
realized and the Preferred Securityholder's tax basis for the Series A
Preferred Securities sold. Gain or loss recognized by a Preferred
Securityholder on the sale or exchange of a Series A Preferred Security held
for more than one year will generally be taxable as long-term capital gain or
loss.
RECEIPT OF SERIES A JUNIOR SUBORDINATED DEBENTURES UPON LIQUIDATION OF GTE
DELAWARE
Under certain circumstances, as described under the caption "Description of
the Series A Preferred Securities--Special Event Redemption or Distribution",
Series A Junior Subordinated Debentures may be distributed to the holders of
the Series A Preferred Securities in liquidation of GTE Delaware. Under
current United States federal income tax law, such a distribution would be
treated as a non-taxable exchange to each holder of Series A Preferred
Securities and would result in the holder of Series A Preferred Securities
receiving an aggregate tax basis in the Series A Junior Subordinated
Debentures equal to such holder's aggregate tax basis in its Series A
Preferred Securities. A holder's holding period in the Series A Junior
Subordinated Debentures so received in liquidation of GTE Delaware would
include the period for which the Series A Preferred Securities were held by
such holder. Under a change in law, a change in legal interpretation or the
other circumstances giving rise to a Special Event, however, the dissolution
could be a taxable event to holders of the Series A Preferred Securities. In
the judgment of special tax counsel to GTE and GTE Delaware, the series of
events which would result in the recognition of taxable gain by holders of the
Series A Preferred Securities, by reason of a dissolution of GTE Delaware in
response to a Special Event, is unlikely to occur. There can be no assurance
in this regard, however.
S-22
<PAGE>
GTE DELAWARE INFORMATION RETURNS AND AUDIT PROCEDURES
GTE, as the General Partner in GTE Delaware, will furnish each Series A
Preferred Securityholder with a Schedule K-1 each year setting forth such
Series A Preferred Securityholder's allocable share of income for the prior
calendar year. GTE is required to furnish such Schedule K-1 as soon as
practicable following the end of the year, but in any event prior to March 31.
Any person who holds Series A Preferred Securities as a nominee for another
person is required to furnish to GTE Delaware (a) the name, address and
taxpayer identification number of the beneficial owner and the nominee; (b)
information as to whether the beneficial owner is (i) a person that is not a
United States person, (ii) a foreign government, an international organization
or any wholly-owned agency or instrumentality of either of the foregoing, or
(iii) a tax-exempt entity; (c) the amount and description of Series A
Preferred Securities held, acquired or transferred for the beneficial owner;
and (d) certain information including the dates of acquisitions and transfers,
means of acquisitions and transfers, and acquisition cost for purchases, as
well as the amount of net proceeds from sales. Brokers and financial
institutions are required to furnish additional information, including whether
they are United States persons and certain information on Series A Preferred
Securities they acquire, hold or transfer for their own accounts. A penalty of
$50 per failure (up to a maximum of $100,000 per calendar year) is imposed by
the Code for failure to report such information to GTE Delaware. The nominee
is required to supply the beneficial owners of the Series A Preferred
Securities with the information furnished to GTE Delaware.
POTENTIAL EXTENSION OF INTEREST PAYMENT PERIOD
Under the Indenture, GTE has the right to extend from time to time the
interest payment period on the Series A Junior Subordinated Debentures to a
period not exceeding 60 consecutive months. In the event that the interest
payment period is extended, GTE Delaware will continue to accrue income equal
to the amount of the interest payment due at the end of the Extension Period,
on an economic basis over the length of the Extension Period.
Accrued income will be allocated, but not distributed, to holders of record
on the Business Day preceding the last day of each calendar month. As a
result, holders of record during an Extension Period will include interest in
gross income in advance of the receipt of cash, and any such holders who
dispose of Series A Preferred Securities prior to the record date for the
payment of dividends following such Extension Period will include interest in
gross income but will not receive any cash related thereto from GTE Delaware.
The tax basis of a Series A Preferred Security will be increased by the amount
of any interest that is included in income without a receipt of cash, and will
be decreased again when and if such cash is subsequently received from GTE
Delaware.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
holder who or which is (i) a nonresident alien individual or (ii) a foreign
corporation, partnership or estate or trust, in either case not subject to
United States federal income tax on a net income basis in respect of a Series
A Preferred Security.
Under current United States federal income tax law, subject to the
discussion below with respect to backup withholding:
(i) Payments by GTE Delaware or any of its paying agents to any holder of
a Series A Preferred Security who or which is a United States Alien Holder
will not be subject to United States federal withholding tax provided that
(a) the beneficial owner of the Series A Preferred Security does not
actually or constructively own 10%, or more of the total combined voting
power of all classes of capital stock of GTE entitled to vote, (b) the
beneficial owner of the Series A Preferred Security is not a controlled
foreign corporation that is related to GTE through stock ownership and
S-23
<PAGE>
(c) either (x) the beneficial owner of the Series A Preferred Security
certifies to GTE Delaware or its agent, under penalties of perjury, that it
is a United States Alien Holder and provides its name and address or (y)
the holder of the Series A Preferred Security is a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "financial
institution"), and such holder certifies to GTE Delaware or its agent under
penalties of perjury that such statement has been received from the
beneficial owner by it or by a financial institution between it and the
beneficial owner and furnishes GTE Delaware or its agent with a copy
thereof; and
(ii) a United States Alien Holder of a Series A Preferred Security will
generally not be subject to United States federal withholding tax on any
gain realized on the sale or exchange of a Series A Preferred Security
unless such holder is present in the United States for 183 days or more in
the taxable year of sale and either has a "tax home" in the United States
or certain other requirements are met.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to payments to
noncorporate United States holders of the proceeds of the sale of Series A
Preferred Securities within the United States and "backup withholding" at a
rate of 31% will apply to such payments if the United States holder fails to
provide an accurate taxpayer identification number.
Payments of the proceeds from the sale by a United States Alien Holder of
Series A Preferred Securities made to or through a foreign office of a broker
generally will not be subject to information reporting or backup withholding,
except that, if the broker is a United States person, a controlled foreign
corporation for United States tax purposes, or a foreign person 50% or more of
whose gross income is effectively connected with a United States trade or
business for a specified three-year period, information reporting may apply to
such payments. Payments of the proceeds from the sale of Series A Preferred
Securities to or through the United States office of a broker is subject to
information reporting and backup withholding unless the holder or beneficial
owner certifies as to its non-United States status or otherwise establishes an
exemption from information reporting and backup withholding.
S-24
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, GTE
Delaware has agreed to sell to each of the Underwriters named below, and each
of the Underwriters, for whom Goldman, Sachs & Co., and , are
acting as Representatives, has severally agreed to purchase from GTE Delaware
the respective number of Series A Preferred Securities set forth opposite its
name below:
<TABLE>
<CAPTION>
NUMBER OF
PREFERRED
UNDERWRITER SECURITIES
----------- ----------
<S> <C>
Goldman, Sachs & Co............................................
----
Total........................................................
====
</TABLE>
The Underwriters propose to offer the Series A Preferred Securities in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus Supplement, and in part to certain securities
dealers at such price less a concession of $ per Series A Preferred
Security. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of $ per Series A Preferred Security to certain
brokers and dealers. After the Series A Preferred Securities are released for
sale to the public, the offering price and other selling terms may from time
to time be varied by the Representatives.
In view of the fact that the proceeds of the sale of the Series A Preferred
Securities will ultimately be used to purchase the Series A Junior
Subordinated Debentures, the Underwriting Agreement provides that GTE will pay
as compensation ("Underwriters' Compensation"), for the Underwriters'
arranging the investment therein of such proceeds, an amount in New York
Clearing House (next day) funds of $ per Series A Preferred Security ($
per Series A Preferred Security sold to certain institutions) for the accounts
of the several Underwriters.
GTE and GTE Delaware have agreed, during the period beginning from the date
of the Underwriting Agreement and continuing to and including the earlier of
(i) the date, after the closing date, on which the distribution of the Series
A Preferred Securities and the Guarantee ceases, as determined by the
Underwriters, or (ii) 90 days after the closing date, not to offer, sell,
contract to sell, or otherwise dispose of any Series A Preferred Securities,
any limited partnership interests of GTE Delaware, or any preferred stock or
any other securities of GTE Delaware or GTE which are substantially similar to
the Series A Preferred Securities including the Guarantee, or any securities
convertible into or exchangeable for Series A Preferred Securities, limited
partnership interests, preferred stock or such substantially similar
securities of either GTE Delaware or GTE, without the prior written consent of
the Underwriters.
S-25
<PAGE>
Prior to this offering, there has been no public market for the Series A
Preferred Securities. In order to meet one of the requirements for listing the
Series A Preferred Securities on the New York Stock Exchange, the Underwriters
will undertake to sell lots of 100 or more Series A Preferred Securities to a
minimum of 400 beneficial holders.
GTE Delaware and GTE have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933,
as amended.
Certain of the Underwriters engage in transactions with, and from time to
time have performed services for, GTE and its subsidiaries in the ordinary
course of business.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Series A
Preferred Securities, the validity of the Limited Partnership Agreement and
the formation of GTE Delaware are being passed upon by Richards, Layton &
Finger, P.A., special Delaware counsel to GTE and GTE Delaware. The validity
of the Indenture, the Guarantee and the Series A Junior Subordinated
Debentures will be passed upon on behalf of GTE Delaware and GTE by Michael T.
Masin, Esq., Vice Chairman and Acting General Counsel of GTE, and on behalf of
the Underwriters by Milbank, Tweed, Hadley & McCloy, counsel to the
Underwriters. Mr. Masin will rely on Richards, Layton & Finger, P.A. as to
certain matters of Delaware law. Statements as to United States taxation in
the Prospectus Supplement in the second paragraph under the caption
"Investment Considerations--Special Event Redemption or Distribution", and
under the caption "United States Taxation", have been passed upon for GTE and
GTE Delaware by Sullivan & Cromwell, special tax counsel to GTE and GTE
Delaware, and are stated herein on their authority.
S-26
<PAGE>
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- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS OR AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
---------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GTE Delaware.............................................................. S-3
GTE Corporation........................................................... S-3
Investment Considerations................................................. S-4
Summary Financial and Operating Information of GTE........................ S-6
Capitalization of GTE..................................................... S-8
Use of Proceeds........................................................... S-8
Description of the Series A Preferred Securities.......................... S-9
Description of the Series A Junior Subordinated Debentures................ S-18
United States Taxation.................................................... S-22
Underwriting.............................................................. S-25
Legal Matters............................................................. S-26
PROSPECTUS
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
GTE Delaware.............................................................. 3
GTE Corporation........................................................... 3
Consolidated Ratios of Earnings to Fixed Charges and Earnings to Combined
Fixed Charges and Preferred Stock Dividends of GTE Corporation........... 3
Use of Proceeds........................................................... 4
Description of the Preferred Securities................................... 4
Description of the Guarantee.............................................. 5
Description of the Junior Subordinated Debentures......................... 7
Plan of Distribution...................................................... 12
Experts................................................................... 13
Legal Opinions............................................................ 13
</TABLE>
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- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PREFERRED SECURITIES
GTE DELAWARE
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
GTE CORPORATION LOGO
% CUMULATIVE
MONTHLY INCOME PREFERRED SECURITIES,
SERIES A
---------------
PROSPECTUS SUPPLEMENT
---------------
GOLDMAN, SACHS & CO.
REPRESENTATIVES OF THE UNDERWRITERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 23, 1994
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 1994
PREFERRED SECURITIES
GTE DELAWARE
CUMULATIVE ADJUSTABLE RATE MONTHLY INCOME PREFERRED SECURITIES, SERIES A
("MIPS"*)
(LIQUIDATION PREFERENCE $25 PER PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
GTE CORPORATION LOGO
----------
The Cumulative Adjustable Rate Monthly Income Preferred Securities, Series A
(the "Series A Preferred Securities"), representing the limited partner
interests offered hereby are being issued by GTE Delaware, L.P., a limited
partnership formed under the laws of the State of Delaware ("GTE Delaware").
GTE Corporation, a New York corporation ("GTE"), is the general partner in GTE
Delaware. GTE Delaware exists for the sole purpose of issuing its limited
partnership interests and investing the proceeds thereof in debt securities of
GTE. The limited partner interests represented by the Series A Preferred
Securities will have a preference with respect to cash distributions and
amounts payable on liquidation over the general partner's interest in GTE
Delaware.
Holders of the Series A Preferred Securities will be entitled to receive
cumulative cash distributions accruing from the date of original issuance and
payable monthly in arrears on the last day of each calendar month of each year,
commencing , 1994 ("dividends"). The dividend rate will be adjusted
quarterly. The rate for the initial period from the date of initial issuance to
, 1994 will be % per annum, which is equivalent to $ per Series A
Preferred Security per annum. Thereafter, dividends on the Series A Preferred
Securities will be payable at the "Applicable Rate" from time to time in
effect. The Applicable Rate for any quarter will be equal to % of the highest
of the "Treasury Bill Rate", the "Ten Year Constant Maturity Rate" and the
"Thirty Year Constant Maturity Rate" determined in advance of such quarter. The
Applicable Rate for any quarter will not be less than % per annum nor greater
than % per annum. See "Description of the Series A Preferred Securities--
Dividends".
The payment of dividends, out of moneys held by GTE Delaware, and payments on
liquidation of GTE Delaware or the redemption of Series A Preferred Securities,
as set forth below, are guaranteed by GTE to the extent described herein and in
the accompanying Prospectus (the "Guarantee"). See "Description of the
Guarantee" in the accompanying Prospectus. If GTE fails to make interest
payments on its debt securities purchased by GTE Delaware, GTE Delaware will
have insufficient funds to pay dividends on the Series A Preferred Securities.
The Guarantee does not cover payment of dividends when GTE Delaware does not
have sufficient funds to pay such dividends. In such event, the remedy of a
holder of Series A Preferred Securities is to enforce the rights of GTE
Delaware under the debt securities purchased by GTE Delaware from GTE.
The Series A Preferred Securities are redeemable at the option of GTE
Delaware, in whole or in part, from time to time, on or after , 1999, at
$25 per Series A Preferred Security plus accrued and unpaid dividends thereon
to the date fixed for redemption (the "Redemption Price"). See "Description of
the Series A Preferred Securities--Optional Redemption".
In addition, upon the occurrence of certain special events arising from a
change in law or a change in legal interpretation, the Series A Preferred
Securities are redeemable in whole at the Redemption Price at the option of
GTE, in its capacity as the general partner of GTE Delaware (the "General
Partner"), or the General Partner may dissolve GTE Delaware and cause to be
distributed to the holders of the Series A Preferred Securities, on a pro rata
basis, Series A Junior Subordinated Debentures (as defined herein) in lieu of
any cash distribution. If the Series A Junior Subordinated Debentures are
distributed to the holders of the Series A Preferred Securities, GTE will use
its best efforts to have the Series A Junior Subordinated Debentures listed on
the New York Stock Exchange or on such other exchange as the Series A Preferred
Securities are then listed. The obligations of GTE under the Series A Junior
Subordinated Debentures are subordinate and junior in right of payment to
Senior Indebtedness (as defined in the accompanying Prospectus) of GTE. At May
31, 1994, Senior Indebtedness of GTE aggregated approximately $6.4 billion.
Senior Indebtedness includes only indebtedness of GTE on an unconsolidated
basis. See "Description of the Series A Preferred Securities--Special Event
Redemption or Distribution" and "Description of the Series A Junior
Subordinated Debentures".
In the event of the dissolution of GTE Delaware, the holders of the Series A
Preferred Securities will be entitled to receive for each Series A Preferred
Security a liquidation preference of $25 plus accrued and unpaid dividends
thereon to the date of payment, subject to certain limitations, unless, in
connection with such dissolution, Series A Junior Subordinated Debentures are
distributed to the holders of the Series A Preferred Securities. See
"Description of the Series A Preferred Securities--Liquidation Distribution
Upon Dissolution".
----------
SEE "INVESTMENT CONSIDERATIONS" FOR CERTAIN INFORMATION RELEVANT TO AN
INVESTMENT IN THE SERIES A PREFERRED SECURITIES, INCLUDING THE PERIOD AND
CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS ON THE SERIES A PREFERRED
SECURITIES AND SERIES A JUNIOR SUBORDINATED DEBENTURES MAY BE DEFERRED AND THE
RELATED FEDERAL INCOME TAX CONSEQUENCES.
----------
Application has been made to list the Series A Preferred Securities on the
New York Stock Exchange.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE COMMISSION(1) GTE DELAWARE(2)(3)
-------------- ------------- ------------------
<S> <C> <C> <C>
Per Series A Preferred
Security...................... $ (2) $
Total.......................... $ (2) $
</TABLE>
- -----
(1) GTE Delaware and GTE have agreed to indemnify the several Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting".
(2) In view of the fact that the proceeds of the sale of the Series A Preferred
Securities will ultimately be invested in Series A Junior Subordinated
Debentures, the Underwriting Agreement provides that GTE will pay to the
Underwriters, as compensation ("Underwriters' Compensation") for their
arranging the investment therein of such proceeds, $ per Series A
Preferred Security (or $ in the aggregate); provided, that such
compensation will be $ per Series A Preferred Security sold to certain
institutions. Therefore, to the extent that Series A Preferred Securities
are sold to such institutions, the actual amount of Underwriters'
Compensation will be less than the amount specified in the preceding
sentence. See "Underwriting".
(3) Expenses of the offering which are payable by GTE are estimated to be $ .
----------
The Series A Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, and subject to receipt and acceptance by
them and subject to their right to reject any order in whole or in part. It is
expected that delivery of the Series A Preferred Securities will be made only
in book-entry form through the facilities of The Depository Trust Company on or
about , 1994.
- -----
* An application has been filed by Goldman, Sachs & Co. with the United
States Patent and Trademark Office for the registration of the MIPS
servicemark.
GOLDMAN, SACHS & CO.
----------
The date of this Prospectus Supplement is , 1994.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.
----------------
FOR NORTH CAROLINA PURCHASERS: THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA,
NOR HAS THE COMMISSIONER OF INSURANCE RULED UPON THE ACCURACY OR ADEQUACY OF
THIS DOCUMENT.
----------------
S-2
<PAGE>
GTE DELAWARE
GTE Delaware is a limited partnership which was formed under the Delaware
Revised Uniform Limited Partnership Act (the "Partnership Act") by filing a
certificate of limited partnership with the Delaware Secretary of State on May
3, 1994. The initial partners in GTE Delaware are GTE, as general partner, and
GTE Finance Corporation, a Delaware corporation and a wholly-owned subsidiary
of GTE ("GTE Finance"), as limited partner. Upon the issuance of the Series A
Preferred Securities, which securities represent limited partner interests in
GTE Delaware, GTE Finance will remain as a limited partner, but will have no
interest in the profits and dividends or in the assets of GTE Delaware. The
General Partner will agree to contribute capital to the extent required to
maintain its capital at an amount equal to at least 3% of the total capital
contributions to GTE Delaware. GTE and GTE Finance entered into a limited
partnership agreement dated as of May 3, 1994. Such limited partnership
agreement will be amended and restated in its entirety (as so amended and
restated, the "Limited Partnership Agreement") substantially in the form filed
as an exhibit to the Registration Statement of which this Prospectus
Supplement and the accompanying Prospectus form a part.
GTE Delaware is managed by the General Partner and exists for the sole
purpose of issuing its limited partnership interests and investing the
proceeds thereof in junior subordinated debentures of GTE ("Junior
Subordinated Debentures"). The rights of the holders of the Series A Preferred
Securities, including economic rights, rights to information and voting
rights, are set forth in the Limited Partnership Agreement and the Partnership
Act. See "Description of the Series A Preferred Securities".
GTE CORPORATION
GTE is the fourth-largest publicly-held telecommunications company in the
world, the largest U.S.-based local telephone company and the second-largest
provider of cellular-mobile telephone services in the United States in terms
of population in the areas served. As of March 31, 1994, through Telephone
Operations, GTE provided local telephone services to approximately 17.2
million customer access lines in 33 states within the United States and
approximately 5.1 million customer access lines in British Columbia and
Quebec, Canada, the Dominican Republic and Venezuela. Through
Telecommunications Products and Services, GTE provides cellular-mobile
communications, command, control and communication systems, information
marketing and networking services, satellite services and air-to-ground
communications, and publishes yellow pages telephone directories. As of March
31, 1994, GTE's cellular operations served a potential subscriber population
of approximately 53.1 million "POPs" in the United States.
S-3
<PAGE>
INVESTMENT CONSIDERATIONS
Prospective purchasers of Series A Preferred Securities should carefully
review the information contained elsewhere in this Prospectus Supplement and
in the accompanying Prospectus and should particularly consider the following
matters:
SUBORDINATION OF GUARANTEE AND SERIES A JUNIOR SUBORDINATED DEBENTURES.
GTE's obligations under the Guarantee are subordinate and junior in right of
payment to all other liabilities of GTE. The obligations of GTE under the
Adjustable Rate Junior Subordinated Debentures, Series A, Due 2024 of GTE
described under "Description of the Series A Junior Subordinated Debentures"
(the "Series A Junior Subordinated Debentures") are subordinate and junior in
right of payment to Senior Indebtedness of GTE. At May 31, 1994, Senior
Indebtedness of GTE aggregated approximately $6.4 billion. Senior Indebtedness
includes only indebtedness of GTE on an unconsolidated basis. There are no
terms in the Series A Preferred Securities, the Series A Junior Subordinated
Debentures or the Guarantee that limit GTE's ability to incur additional
indebtedness, including indebtedness that ranks senior to the Series A Junior
Subordinated Debentures and the Guarantee. See "Description of the Guarantee--
Status of the Guarantee" and "Description of the Junior Subordinated
Debentures--Subordination" in the accompanying Prospectus.
OPTION TO EXTEND INTEREST PAYMENT PERIOD. GTE has the right under the
Indenture to extend the interest payment period from time to time on the
Series A Junior Subordinated Debentures to a period not exceeding 60
consecutive months, and, as a consequence, monthly dividends on the Series A
Preferred Securities would be deferred (but would continue to accrue with
interest thereon) by GTE Delaware during any such extended interest payment
period. In the event that GTE exercises this right, GTE may not declare or pay
dividends on, or redeem, purchase or acquire, any of its capital stock. Prior
to the termination of any such extension period, GTE may further extend the
interest payment period, provided that such extension period together with all
such previous and further extensions thereof may not exceed 60 consecutive
months. Upon the termination of any extension period and the payment of all
amounts then due, GTE may select a new extension period, subject to the above
requirements. GTE Delaware and GTE believe that the extension of a payment
period on the Series A Junior Subordinated Debentures is unlikely. See
"Description of the Series A Preferred Securities--Dividends" and "Description
of the Series A Junior Subordinated Debentures--Option to Extend Interest
Payment Period".
Should an extended interest payment period occur, GTE Delaware will continue
to accrue income for United States federal income tax purposes which will be
allocated, but not distributed, to holders of record of Series A Preferred
Securities. As a result, such a holder will include such interest in gross
income for United States federal income tax purposes in advance of the receipt
of cash, and will not receive the cash from GTE Delaware related to such
income if such a holder disposes of his or her Series A Preferred Securities
prior to the record date for payment of dividends. See "United States
Taxation--Potential Extension of Interest Payment Period".
SPECIAL EVENT REDEMPTION OR DISTRIBUTION. Upon the occurrence of a Special
Event (as defined herein), the General Partner will elect to either (i) redeem
the Series A Preferred Securities in whole or (ii) dissolve GTE Delaware and
cause Series A Junior Subordinated Debentures to be distributed to the holders
of the Series A Preferred Securities in connection with the liquidation of GTE
Delaware. The Series A Junior Subordinated Debentures will initially be issued
at face value as a Global Security (as defined herein) and will be limited in
aggregate principal amount to approximately $ million, such amount being
the sum of the aggregate stated liquidation preference of the Series A
Preferred Securities and the General Partnership Payment (as defined herein).
In the case of a Tax Event (as
S-4
<PAGE>
defined herein), the General Partner may also elect to cause the Series A
Preferred Securities to remain outstanding. See "Description of the Series A
Preferred Securities--Special Event Redemption or Distribution" and
"Description of the Series A Junior Subordinated Debentures--General".
Under current United States federal income tax law, such a distribution
would not be a taxable event to holders of the Series A Preferred Securities.
Under a change in law, a change in legal interpretation or the other
circumstances giving rise to a Special Event, however, the dissolution could
be a taxable event to holders of the Series A Preferred Securities. In the
judgment of special tax counsel to GTE and GTE Delaware, the series of events
which would result in the recognition of taxable gain by holders of the Series
A Preferred Securities, by reason of a dissolution of GTE Delaware in response
to a Special Event, is unlikely to occur. There can be no assurance in this
regard, however. See "United States Taxation--Receipt of Series A Junior
Subordinated Debentures Upon Liquidation of GTE Delaware".
S-5
<PAGE>
SUMMARY FINANCIAL AND OPERATING INFORMATION OF GTE
The selected data presented below under the captions "Income Statement Data"
and "Operating and Other Data" for each of the years in the five-year period
ended December 31, 1993 and "Balance Sheet Data" as of the end of each of such
years has been derived from the books, records and the consolidated financial
statements of GTE, which have been audited by Arthur Andersen & Co.,
independent certified public accountants. The selected data presented below as
of and for each of the quarters ended March 31, 1994 and 1993 has been derived
from the books, records and the consolidated financial statements of GTE,
which have not been audited. The consolidated financial statements as of
December 31, 1993 and 1992, and for each of the years in the three-year period
ended December 31, 1993, and the independent auditors' report thereon, and the
consolidated financial statements as of and for each of the quarters ended
March 31, 1994 and 1993, have been incorporated by reference herein. See
"Incorporation of Certain Documents by Reference" in the accompanying
Prospectus. This financial information should be read in conjunction with such
consolidated financial statements and the notes thereto.
<TABLE>
<CAPTION>
QUARTERS ENDED
MARCH 31,
YEARS ENDED DECEMBER 31, (UNAUDITED)
------------------------------------------------ ------------------
1989 1990 1991 1992 1993 1993 1994
-------- -------- -------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE DATA AND CELLULAR SUBSCRIBERS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues and Sales...... $ 18,251 $ 19,157 $ 19,621 $ 19,984 $ 19,748 $ 4,826 $ 4,746
Operating Income(a)..... 3,577 3,787 3,742 4,216 2,565 1,101 1,118
Net Income (Loss)(a):
Continuing Operations. 1,503 1,579 1,492 1,761 972 456 500
Consolidated.......... 1,611 1,671 1,543 (780) 882 456 500
Per Common Share:
Net Income (Loss)(a):
Continuing Opera-
tions.............. 1.75 1.82 1.69 1.95 1.03 .48 .52
Consolidated........ 1.87 1.93 1.75 (.86) .93 .48 .52
Common Dividends De-
clared............... 1.40 1.52 1.64 1.76 1.85 .455 .47
Consolidated Ratio of
Earnings to Fixed
Charges (Unaudited)(b). 2.52 2.35 2.22 2.66 2.07 2.94 3.69
Consolidated Ratio of
Earnings to Combined
Fixed Charges and
Preferred Stock
Dividends
(Unaudited)(b)......... 2.42 2.28 2.17 2.61 2.04 2.90 3.61
OPERATING AND OTHER DA-
TA:
Telephone Operations:
Revenues and Sales.... $ 15,072 $ 15,393 $ 15,652 $ 15,862 $ 15,829 $ 3,915 $ 3,865
Operating Income(c)... 3,528 3,771 3,807 4,034 2,694 1,041 1,025
Access Minutes of Use. 39,994 44,533 47,979 51,976 55,616 13,613 14,172
Percentage
Increase(d)........ 12.1% 11.3% 7.7% 8.3% 7.2% 9.2% 6.6%
Network Access Lines:
U.S.(e)............. 15.2 15.8 16.2 16.8 17.1 17.0 17.2
Worldwide(e)........ 17.6 18.3 20.5 21.4 22.1 21.6 22.3
U.S. Cellular-Mobile Op-
erations (Unaudited):
Service Revenues...... $ 260 $ 478 $ 675 $ 853 $ 1,082 $ 238 $ 335
Operating Income...... 4 9 10 62 134 29 50
Operating Cash Flow
(Operating Income
Before Depreciation
and Amortization).... 43 107 183 266 356 78 113
Adjusted "POPS"(f).... 39.2 51.7 52.2 53.1 53.0 53.2 53.1
Subscribers (In thou-
sands)............... 282 594 811 1,090 1,585 1,156 1,718
<CAPTION>
QUARTERS ENDED
MARCH 31,
AS OF DECEMBER 31, (UNAUDITED)
------------------------------------------------ ------------------
1989 1990 1991 1992 1993 1993 1994
-------- -------- -------- -------- -------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Property, Plant and
Equipment-Net.......... $ 27,666 $ 28,688 $ 29,323 $ 29,820 $ 28,720 $ 29,830 $ 28,670
Total Assets............ 36,921 40,178 42,437 42,144 41,575 41,473 41,353
Short-Term Obligations,
including Current Matu-
rities................. 1,227 3,013 2,291 2,692 1,644 2,232 2,679
Long-Term Debt and Re-
deemable Preferred
Stock.................. 13,137 14,130 16,252 14,356 13,175 13,595 12,127
Common Shareholders' Eq-
uity................... 9,516 10,264 10,854 9,964 9,482 10,097 9,612
</TABLE>
- -------
(a) Operating income in 1993 was reduced by a one-time $1.8 billion pre-tax
restructuring charge primarily for the implementation of a re-engineering
plan at Telephone Operations and the reduction in the carrying value of
satellite communication and certain other assets to estimated net
realizable value. Operating income in 1993 was also reduced by a $74
million pre-tax charge for the cost of voluntary
S-6
<PAGE>
separation programs at Telephone Operations. Consolidated net income in 1993
also included an after-tax extraordinary charge of $90 million for the early
retirement of high-coupon debt as well as a $91 million after-tax gain on
the sales of certain non-strategic telephone properties. These special items
reduced consolidated net income by $1.2 billion, or $1.27 per share.
The consolidated net loss in 1992 included a non-cash, after-tax charge of
$2.4 billion, or $2.70 per share, for the cumulative effect of accounting
changes for postretirement health care and life insurance benefits and
income taxes; and charges totaling $100 million, or $.11 per share,
associated with the sale of the Electrical Products Group, which was
accounted for as a discontinued operation.
Operating income in 1991 was reduced by pre-tax costs of $342 million
incurred in connection with the merger and integration of GTE and Contel
Corporation. These costs, net of a gain on the transfer of certain cellular
properties, reduced 1991 net income by $204 million, or $.23 per share.
(b) For purposes of computing the consolidated ratios, earnings consist of
income from continuing operations before income taxes and fixed charges.
Fixed charges consist of interest expense, preferred stock dividends of
subsidiaries, the additional income requirement to cover preferred
dividends of subsidiaries and the portion of rent expense representing
interest. Amounts applicable to entities that are at least 50%-owned have
been added to both earnings and fixed charges, and amounts applicable to
minority interests have been deducted from both earnings and fixed charges.
Excluding from 1993 the effect of the one-time restructuring charge, the
cost of voluntary separation programs at Telephone Operations and the gain
on the sale of non-strategic telephone properties (see note (a)), the
consolidated ratio of earnings to fixed charges would have been 3.31 and
the consolidated ratio of earnings to combined fixed charges and preferred
stock dividends would have been 3.26.
(c) Operating income of Telephone Operations in 1993 was reduced by a one-time
$1.4 billion pre-tax restructuring charge primarily for the implementation
of a re-engineering plan and a $74 million pre-tax charge for the cost of
voluntary separation programs.
(d) Excludes impact of non-strategic telephone properties sold in 1993.
(e) Access lines as of December 31, 1993 and March 31, 1994 exclude 440,000 net
lines sold during 1993. Worldwide access lines include 2.0 million, 1.8
million and 1.6 million lines served by Compania Anonima Nacional Telefonos
de Venezuela ("CANTV") in Venezuela in 1993-1991, respectively. GTE
acquired operating control of CANTV in 1991.
(f) Represents total United States population served times GTE's percentage
interest in the market.
S-7
<PAGE>
CAPITALIZATION OF GTE
The following table sets forth the consolidated short-term obligations and
capitalization of GTE as of March 31, 1994, and as adjusted to reflect the
application of the estimated net proceeds from the sale of the Series A
Preferred Securities. See "Use of Proceeds".
<TABLE>
<CAPTION>
MARCH 31, 1994
--------------------
ACTUAL AS ADJUSTED
------- -----------
(IN MILLIONS)
<S> <C> <C>
Short-term obligations, including current maturities...... $ 2,679 $
======= =======
Long-term debt(a)......................................... $12,004 $12,004
------- -------
Minority interests in equity of subsidiaries.............. 1,117
------- -------
Preferred Stock, subject to mandatory redemption.......... 123 123
------- -------
Shareholders' equity:
Preferred stock......................................... 11 11
Common stock............................................ 48 48
Amounts paid in, in excess of par value................. 7,375 7,375
Reinvested earnings..................................... 2,828 2,828
Guaranteed ESOP obligations............................. (639) (639)
------- -------
Total shareholders' equity............................ 9,623 9,623
------- -------
Total capitalization (excluding short-term
obligations)......................................... $22,867 $
======= =======
</TABLE>
- --------
(a) Senior Indebtedness of GTE, for purposes of the subordination provisions
of the Series A Junior Subordinated Debentures, includes only indebtedness
of GTE on an unconsolidated basis. As of March 31, 1994, such Senior
Indebtedness aggregated approximately $6.3 billion.
USE OF PROCEEDS
The proceeds from the sale of the Series A Preferred Securities will be
invested in the Series A Junior Subordinated Debentures issued pursuant to the
Indenture described herein, and ultimately will be used by GTE to reduce
short-term obligations, including current maturities (at May 31, 1994,
totaling approximately $2.0 billion, at an average interest cost of
approximately 4.45%), and for general corporate purposes.
S-8
<PAGE>
DESCRIPTION OF THE SERIES A PREFERRED SECURITIES
GENERAL
All of the partnership interests in GTE Delaware, other than the Series A
Preferred Securities offered hereby, are owned directly or indirectly by GTE.
The Limited Partnership Agreement authorizes and creates the Series A
Preferred Securities, which represent limited partner interests in GTE
Delaware (the "Preferred Securities"). Preferred Securities may be issued from
time to time in one or more series as described in the accompanying
Prospectus. The limited partner interests represented by the Series A
Preferred Securities will have a preference with respect to dividends and
amounts payable on liquidation over the General Partner's interest in GTE
Delaware. The Limited Partnership Agreement does not permit the issuance of
any Preferred Securities ranking, as to participation in profits and dividends
and in the assets of GTE Delaware, senior or junior to the Series A Preferred
Securities or the incurrence of any indebtedness by GTE Delaware. The summary
of certain terms and provisions of the Series A Preferred Securities set forth
below does not purport to be complete and is subject to, and qualified in its
entirety by reference to, the Limited Partnership Agreement and the
Partnership Act.
DIVIDENDS
Dividends on the Series A Preferred Securities will be cumulative, will
accrue from the date of initial issuance thereof and will be payable monthly
in arrears, on the last day of each calendar month of each year, commencing
, 1994, when, as and if available and determined to be so payable by GTE,
as the General Partner, except as otherwise described below. Dividends in
arrears for more than one month will bear interest thereon at the rate per
annum equal to the dividend rate during the period of arrearage. The term
"dividends" as used herein includes any such interest payable unless otherwise
stated. The amount of dividends payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months.
The dividend rate will be adjusted quarterly. The rate for the initial
period from the date of initial issuance to , 1994 will be % per annum,
which is equivalent to $ per Series A Preferred Security per annum.
Thereafter, dividends on the Series A Preferred Securities will be payable at
the "Applicable Rate" (as defined below) from time to time in effect.
GTE has the right under the Indenture to extend the interest payment period
from time to time on the Series A Junior Subordinated Debentures to a period
not exceeding 60 consecutive months, and, as a consequence, monthly dividends
on the Series A Preferred Securities would be deferred (but would continue to
accrue with interest) by GTE Delaware during any such extended interest
payment period. In the event that GTE exercises this right, GTE may not
declare or pay dividends on, or redeem, purchase or acquire, any of its
capital stock. Prior to the termination of any such extension period, GTE may
further extend the interest payment period, provided that such extension
period together with all such previous and further extensions thereof may not
exceed 60 consecutive months. Upon the termination of any extension period and
the payment of all amounts then due, GTE may select a new extension period,
subject to the above requirements. See "Description of the Series A Junior
Subordinated Debentures--Interest" and "--Option to Extend Interest Payment
Period".
Dividends on the Series A Preferred Securities must be paid on the dates
payable to the extent that GTE Delaware has (i) funds legally available for
the payment of such dividends and (ii) cash on hand sufficient to permit such
payments. It is anticipated that GTE Delaware's earnings available for
distribution to the holders of the Series A Preferred Securities will be
limited to payments under the Series A Junior Subordinated Debentures in which
GTE Delaware will invest the proceeds from the issuance and sale of the Series
A Preferred Securities and the General Partner's capital contribution. See
"Description of the Series A Junior Subordinated Debentures". The payment of
dividends, out of moneys held by GTE Delaware, are guaranteed by GTE as set
forth under "Description of the Guarantee" in the accompanying Prospectus.
S-9
<PAGE>
Dividends on the Series A Preferred Securities will be payable to the
holders thereof as they appear on the books and records of GTE Delaware on the
relevant record dates, which, as long as the Series A Preferred Securities
remain in book-entry-only form, will be one business day (as defined below)
prior to the relevant payment dates. Subject to any applicable laws and
regulations and the provisions of the Limited Partnership Agreement, each such
payment will be made as described under "Book-Entry-Only Issuance--The
Depository Trust Company" below. In the event the Series A Preferred
Securities shall not continue to remain in book-entry-only form, the General
Partner shall have the right to select relevant record dates which shall be
more than one Business Day prior to the relevant payment dates. In the event
that any date on which dividends are payable on the Series A Preferred
Securities is not a Business Day, then payment of the dividend 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. A "Business Day" shall
mean any day other than a day on which banking institutions in The City of New
York are authorized or required by law to close.
Except as provided below in this paragraph, the "Applicable Rate" for any
quarter (other than the initial period) will be equal to % of the Effective
Rate (as defined below), but not less than % per annum nor more than % per
annum. The "Effective Rate" for any quarter will be equal to the highest of
the Treasury Bill Rate, the Ten Year Constant Maturity Rate and the Thirty
Year Constant Maturity Rate (each as defined below) for such quarter. The
Applicable Rate will be rounded to the nearest five hundredth of a percent. In
the event that GTE Delaware determines in good faith that for any reason:
(i) any one of the Treasury Bill Rate, the Ten Year Constant Maturity
Rate or the Thirty Year Constant Maturity Rate cannot be determined for any
quarter, then the Effective Rate for such quarter will be equal to the
higher of whichever two of such rates can be so determined;
(ii) only one of the Treasury Bill Rate, the Ten Year Constant Maturity
Rate and the Thirty Year Constant Maturity Rate can be determined for any
quarter, then the Effective Rate for such quarter will be equal to
whichever such rate can be so determined; or
(iii) none of the Treasury Bill Rate, the Ten Year Constant Maturity Rate
and the Thirty Year Constant Maturity Rate can be determined for any
quarter, then the Effective Rate for the preceding quarter will be
continued for such quarter.
Except as described below in this paragraph, the "Treasury Bill Rate" for
each quarter will be the arithmetic average of the two most recent weekly per
annum secondary market discount rates (or the one weekly per annum secondary
market discount rate, if only one such rate is published during the relevant
Calendar Period (as defined below)) for three-month U.S. Treasury bills, as
published weekly by the Federal Reserve Board (as defined below) during the
Calendar Period immediately preceding the last ten calendar days preceding the
quarter for which the dividend rate on the Series A Preferred Securities is
being determined. In the event that the Federal Reserve Board does not publish
such a weekly per annum secondary market discount rate during any such
Calendar Period, then the Treasury Bill Rate for such quarter will be the
arithmetic average of the two most recent weekly per annum secondary market
discount rates (or the one weekly per annum secondary market discount rate, if
only one such rate is published during the relevant Calendar Period) for
three-month U.S. Treasury bills, as published weekly during such Calendar
Period by any Federal Reserve Bank or by any U.S. Government department or
agency selected by GTE Delaware. In the event that a per annum secondary
market discount rate for three-month U.S. Treasury bills is not published by
the Federal Reserve Board or by any Federal Reserve Bank or by any U.S.
Government department or agency during such Calendar Period, then the Treasury
Bill Rate for such quarter will be the arithmetic average
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of the two most recent weekly per annum secondary market discount rates (or
the one weekly per annum secondary market discount rate, if only one such rate
is published during the relevant Calendar Period) for all of the U.S. Treasury
bills then having remaining maturities of not less than 80 nor more than 100
days, as published during such Calendar Period by the Federal Reserve Board,
or if the Federal Reserve Board does not publish such rates, by any Federal
Reserve Bank or by any U.S. Government department or agency selected by GTE
Delaware. In the event that GTE Delaware determines in good faith that for any
reason no such U.S. Treasury bill rates are published as provided above during
such Calendar Period, then the Treasury Bill Rate for such quarter will be the
arithmetic average of the per annum secondary market discount rates based upon
the closing bids during such Calendar Period for each of the issues of
marketable non-interest-bearing U.S. Treasury securities with a remaining
maturity of not less than 80 nor more than 100 days from the date of each such
quotation, as chosen and quoted daily for each business day in New York City
(or less frequently if daily quotations are not generally available) to GTE
Delaware by at least three recognized dealers in U.S. Government securities
selected by GTE Delaware. In the event that GTE Delaware determines in good
faith that for any reason GTE Delaware cannot determine the Treasury Bill Rate
for any quarter as provided above in this paragraph, the Treasury Bill Rate
for such quarter will be the arithmetic average of the per annum secondary
market discount rate based upon the closing bids during such Calendar Period
for each of the issues of marketable interest-bearing U.S. Treasury securities
with a remaining maturity of not less than 80 nor more than 100 days, as
chosen and quoted daily for each business day in New York City (or less
frequently if daily quotations are not generally available) to GTE Delaware by
at least three recognized dealers in U.S. Government securities selected by
GTE Delaware.
Except as described below in this paragraph, the "Ten Year Constant Maturity
Rate" for each quarter will be the arithmetic average of the two most recent
weekly per annum Ten Year Average Yields (as defined below) (or the one weekly
per annum Ten Year Average Yield, if only one such yield is published during
the relevant Calendar Period), as published weekly by the Federal Reserve
Board during the Calendar Period immediately preceding the last ten calendar
days preceding the quarter for which the dividend rate on the Series A
Preferred Securities is being determined. In the event that the Federal
Reserve Board does not publish such a weekly per annum Ten Year Average Yield
during such Calendar Period, then the Ten Year Constant Maturity Rate for such
quarter will be the arithmetic average of the two most recent weekly per annum
Ten Year Average Yields (or the one weekly per annum Ten Year Average Yield,
if only one such yield is published during the relevant Calendar Period), as
published weekly during such Calendar Period by any Federal Reserve Bank or by
any U.S. Government department or agency selected by GTE Delaware. In the
event that a per annum Ten Year Average Yield is not published by the Federal
Reserve Board or by the Federal Reserve Bank or by any U.S. Government
department or agency during such Calendar Period, then the Ten Year Constant
Maturity Rate for such quarter will be the arithmetic average of the two most
recent weekly per annum average yields to maturity (or the one weekly per
annum average yield to maturity, if only one such yield is published during
the relevant Calendar Period) for all of the actively traded marketable U.S.
Treasury fixed interest rate securities (other than Special Securities (as
defined below)) then having remaining maturities of not less than eight nor
more than twelve years, as published during such Calendar Period by the
Federal Reserve Board or, if the Federal Reserve Board does not publish such
yields, by any Federal Reserve Bank or by any U.S. Government department or
agency selected by GTE Delaware. In the event that GTE Delaware determines in
good faith that for any reason GTE Delaware cannot determine the Ten Year
Constant Maturity Rate for any quarter as provided above in this paragraph,
then the Ten Year Constant Maturity Rate for such quarter will be the
arithmetic average of the per annum average yields to maturity based upon the
closing bids during such Calendar Period for each of the issues of actively
traded marketable U.S. Treasury fixed interest rate securities (other than
Special Securities) with a final maturity date not less than eight or more
than twelve years from the date of each such quotation, as chosen and quoted
daily for each business day in New York City (or less frequently if daily
quotations are not generally available) to GTE Delaware by at least three
recognized dealers in U.S. Government securities selected by GTE Delaware.
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Except as described below in this paragraph, the "Thirty Year Constant
Maturity Rate" for each quarter will be the arithmetic average of the two most
recent weekly per annum Thirty Year Average Yields (as defined below) (or the
one weekly per annum Thirty Year Average Yield, if only one such yield is
published during the relevant Calendar Period), as published weekly by the
Federal Reserve Board during the Calendar Period immediately preceding the
last ten calendar days preceding the quarter for which the dividend rate on
the Series A Preferred Securities is being determined. In the event that the
Federal Reserve Board does not publish such a weekly per annum Thirty Year
Average Yield during such Calendar Period, then the Thirty Year Constant
Maturity Rate for such quarter will be the arithmetic average of the two most
recent weekly per annum Thirty Year Average Yields (or the one weekly per
annum Thirty Year Average Yield, if only one such yield is published during
the relevant Calendar Period), as published weekly during such Calendar Period
by any Federal Reserve Bank or by any U.S. Government department or agency
selected by GTE Delaware. In the event that a per annum Thirty Year Average
Yield is not published by the Federal Reserve Board or by any Federal Reserve
Bank or by any U.S. Government department or agency during such Calendar
Period, then the Thirty Year Constant Maturity Rate for such quarter will be
the arithmetic average of the two most recent weekly per annum average yields
to maturity (or the one weekly per annum average yield to maturity, if only
one such yield is published during the relevant Calendar Period) for all of
the actively traded marketable U.S. Treasury fixed interest rate securities
(other than Special Securities) then having remaining maturities of not less
than twenty-eight nor more than thirty-two years, as published during such
Calendar Period by the Federal Reserve Board or, if the Federal Reserve Board
does not publish such yields, by any Federal Reserve Bank or by any U.S.
Government department or agency selected by GTE Delaware. In the event that
GTE Delaware determines in good faith that for any reason GTE Delaware cannot
determine the Thirty Year Constant Maturity Rate for any quarter as provided
above in this paragraph, then the Thirty Year Constant Maturity Rate for such
quarter will be the arithmetic average of the per annum average yields to
maturity based upon the closing bids during such Calendar Period for each of
the issues of actively traded marketable U.S. Treasury fixed interest rate
securities (other than Special Securities) with a final maturity date not less
than twenty-eight nor more than thirty-two years from the date of each such
quotation, as chosen and quoted daily for each business day in New York City
(or less frequently if daily quotations are not generally available) to GTE
Delaware by at least three recognized dealers in U.S. Government securities
selected by GTE Delaware.
The Treasury Bill Rate, the Ten Year Constant Maturity Rate and the Thirty
Year Constant Maturity Rate will each be rounded to the nearest one hundredth
of a percent.
The Applicable Rate with respect to each quarter (other than the initial
period) will be calculated as promptly as practicable by GTE Delaware
according to the appropriate method described above. GTE Delaware will cause
each Applicable Rate to be published in a newspaper of general circulation in
New York City before the commencement of the quarter to which it applies and
will cause notice of such Applicable Rate to be given to The Depository Trust
Company (the "Depository" or "DTC"), New York, New York, the securities
depository for the Series A Preferred Securities. See "Book-Entry-Only
Issuance--The Depository Trust Company" below.
As used above, the term "Calendar Period" means a period of fourteen
calendar days; the term "Federal Reserve Board" means the Board of Governors
of the Federal Reserve System; the term "Special Securities" means securities
which can, at the option of the holder, be surrendered at face value in
payment of any Federal estate tax or which provide tax benefits to the holder
and are priced to reflect such tax benefits or which were originally issued at
a deep or substantial discount; the term "Ten Year Average Yield" means the
average yield to maturity for actively traded marketable U.S. Treasury fixed
interest rate securities adjusted to constant maturities of ten years; and the
term "Thirty Year Average Yield" means the average yield to maturity for
actively traded marketable U.S. Treasury fixed interest rate securities
adjusted to constant maturities of thirty years.
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CERTAIN RESTRICTIONS ON GTE DELAWARE
If dividends have not been paid in full on the Series A Preferred
Securities, GTE Delaware shall not:
(i) pay, or set aside for payment, any dividends on any other series of
Preferred Securities, unless the amount of any dividends declared on any
other series of Preferred Securities is paid on such other series of
Preferred Securities and the Series A Preferred Securities on a pro rata
basis on the date such dividends are paid on such other series of Preferred
Securities, so that
(x) the aggregate amount of dividends paid on the Series A Preferred
Securities bears to the aggregate amount of dividends paid on such
other series of Preferred Securities the same ratio as
(y) the aggregate of all accrued and unpaid dividends in respect of the
Series A Preferred Securities bears to the aggregate of all accrued and
unpaid dividends in respect of such other series of Preferred
Securities; or
(ii) redeem, purchase or otherwise acquire any other Preferred Securities;
until, in each case, such time as all accrued and unpaid dividends on the
Series A Preferred Securities shall have been paid in full for all dividend
periods terminating on or prior to, in the case of clause (i), such payment
and, in the case of clause (ii), the date of such redemption, purchase or
acquisition.
As of the date of this Prospectus Supplement, there are no series of
Preferred Securities outstanding.
OPTIONAL REDEMPTION
The Series A Preferred Securities are redeemable, at the option of GTE
Delaware, in whole or in part, from time to time, on or after , 1999,
upon not less than 30 nor more than 60 days' notice, at the Redemption Price.
In the event that fewer than all the outstanding Series A Preferred Securities
are to be so redeemed, the Series A Preferred Securities to be redeemed will
be selected as described under "Book-Entry-Only Issuance--The Depository Trust
Company" below. If a partial redemption would result in the delisting of the
Series A Preferred Securities, GTE Delaware may only redeem the Series A
Preferred Securities in whole.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
If a Tax Event or an Investment Company Event (each, as defined below, and,
each, a "Special Event") shall occur and be continuing, the General Partner
shall elect to either (i) redeem the Series A Preferred Securities in whole
(and not in part), upon not less than 30 or more than 60 days' notice at the
Redemption Price within 90 days following the occurrence of such Special
Event; provided, that, if at the time there is available to the General
Partner the opportunity to eliminate, within such 90 day period, the Special
Event by taking some ministerial action, such as filing a form or making an
election, or pursuing some other similar reasonable measure, which has no
adverse effect on GTE Delaware or GTE, the General Partner will pursue such
measure in lieu of redemption, or (ii) dissolve GTE Delaware and cause Series
A Junior Subordinated Debentures to be distributed to the holders of the
Series A Preferred Securities in liquidation of GTE Delaware, within 90 days
following the occurrence of such Special Event. In the case of a Tax Event,
the General Partner may also elect to cause the Series A Preferred Securities
to remain outstanding.
"Tax Event" means that the General Partner shall have obtained an opinion of
nationally recognized independent tax counsel experienced in such matters 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
such laws or regulations
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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 on or after such date) or (c)
any interpretation or pronouncement that provides for a position with respect
to such laws or regulations that differs from the generally accepted position
on , 1994, which amendment or change is effective or such interpretation
or pronouncement is announced on or after , 1994, there is more than an
insubstantial risk that (i) GTE Delaware is subject to federal income tax with
respect to interest received on the Series A Junior Subordinated Debentures,
(ii) interest payable to GTE Delaware on the Series A Junior Subordinated
Debentures will not be deductible for federal income tax purposes or (iii) GTE
Delaware is subject to more than a de minimis amount of other taxes, duties or
other governmental charges.
"Investment Company Event" means the occurrence of a change in law or
regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law") to the effect that GTE Delaware is or
will be considered an "investment company" which is required to be registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), which
Change in 1940 Act Law becomes effective on or after , 1994; provided,
that no Investment Company Event shall be deemed to have occurred if the
General Partner obtains a written opinion of nationally recognized independent
counsel experienced in practice under the 1940 Act to the effect that the
General Partner has successfully issued an additional or supplemental
irrevocable and unconditional guarantee (x) of accrued and unpaid dividends
(whether or not determined to be paid out of moneys legally available
therefor) on the Series A Preferred Securities and (y) of the full amount of
the Liquidation Distribution (as hereinafter defined) on the Series A
Preferred Securities upon a liquidation of GTE Delaware (regardless of the
amount of assets of GTE Delaware otherwise available for distribution in such
liquidation) to avoid such Change in 1940 Act Law so that in the opinion of
such counsel, notwithstanding such Change in 1940 Act Law, GTE Delaware is not
required to be registered as an "investment company" within the meaning of the
1940 Act.
After the date fixed for any distribution of Series A Junior Subordinated
Debentures, upon dissolution of GTE Delaware, (i) the Series A Preferred
Securities will no longer be deemed to be outstanding, (ii) DTC or its
nominee, as the record holder of the Series A Preferred Securities, will
receive a registered global certificate or certificates representing the
Series A Junior Subordinated Debentures to be delivered upon such distribution
and (iii) any certificates representing Series A Preferred Securities not held
by DTC or its nominee will be deemed to represent Series A Junior Subordinated
Debentures having a principal amount equal to the aggregate of the stated
liquidation preference of, and accrued and unpaid dividends on, such Series A
Preferred Securities until such certificates are presented to GTE or its agent
for transfer or reissuance.
MANDATORY REDEMPTION
Upon the repayment of the Series A Junior Subordinated Debentures at
maturity, the proceeds from such repayment will be applied to redeem the
Series A Preferred Securities, in whole, upon not less than 30 nor more than
60 days' notice, at the Redemption Price.
REDEMPTION PROCEDURES
GTE Delaware may not redeem fewer than all the outstanding Series A
Preferred Securities unless all accrued and unpaid dividends have been paid on
all Series A Preferred Securities for all monthly dividend periods terminating
on or prior to the date of redemption.
If GTE Delaware gives a notice of redemption in respect of Series A
Preferred Securities (which notice will be irrevocable), then, by 12:00 noon,
New York time, on the redemption date, GTE Delaware will irrevocably deposit
with DTC funds sufficient to pay the applicable Redemption Price and will give
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DTC irrevocable instructions and authority to pay the Redemption Price to the
holders of the Series A Preferred Securities. See "Book-Entry-Only Issuance--
The Depository Trust Company". If notice of redemption shall have been given
and funds deposited as required, then upon the date of such deposit, all
rights of holders of such Series A Preferred Securities so called for
redemption will cease, except the right of the holders of such Series A
Preferred Securities to receive the Redemption Price, but without interest on
such Redemption Price. In the event that any date fixed for redemption of
Series A Preferred Securities is not a Business Day, then payment of the
Redemption Price 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 falls in the next
calendar year, such payment will be made on the immediately preceding Business
Day. In the event that payment of the Redemption Price in respect of Series A
Preferred Securities is improperly withheld or refused and not paid either by
GTE Delaware or by GTE pursuant to the Guarantee described under "Description
of the Guarantee" in the accompany Prospectus, dividends on such Series A
Preferred Securities will continue to accrue at the then applicable rate, from
the original redemption date to the date of payment, in which case the actual
payment date will be considered the date fixed for redemption for purposes of
calculating the Redemption Price.
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), GTE or its subsidiaries may at any
time and from time to time purchase outstanding Series A Preferred Securities
by tender, in the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary dissolution, winding-up or
termination of GTE Delaware, the holders of the Series A Preferred Securities
at the time will be entitled to receive out of the assets of GTE Delaware
available for distribution to partners after satisfaction of liabilities of
creditors as required by the Partnership Act, before any distribution of
assets is made to the General Partner, but together with the holders of every
other series of Preferred Securities outstanding, an amount equal to, in the
case of holders of Series A Preferred Securities, the aggregate of the stated
liquidation preference of $25 per Series A Preferred Security and accrued and
unpaid dividends thereon to the date of payment (the "Liquidation
Distribution"), unless, in connection with such dissolution, winding-up or
termination, Series A Junior Subordinated Debentures in an aggregate principal
amount equal to the Liquidation Distribution have been distributed on a pro
rata basis to the holders of the Series A Preferred Securities.
If, upon any such dissolution, the Liquidation Distribution can be paid only
in part because GTE Delaware has insufficient assets available to pay in full
the aggregate Liquidation Distribution and the aggregate maximum liquidation
distributions on any other series of Preferred Securities, then the amounts
payable directly by GTE Delaware on the Series A Preferred Securities and on
such other series of Preferred Securities shall be paid on a pro rata basis,
so that
(i) the aggregate amount paid in respect of the Liquidation Distribution
bears to the aggregate amount paid as liquidation distributions on the
other series of Preferred Securities the same ratio as
(ii) the aggregate Liquidation Distribution bears to the aggregate
maximum liquidation distributions on the other series of Preferred
Securities.
Pursuant to the Limited Partnership Agreement, GTE Delaware shall be
dissolved and its affairs shall be wound up: (i) on December 31, 2093, the
expiration of the term of GTE Delaware, (ii) upon the bankruptcy of the
General Partner, (iii) upon the assignment by the General Partner of its
entire interest in GTE Delaware when the assignee is not admitted to GTE
Delaware as a general partner of GTE Delaware in accordance with the Limited
Partnership Agreement, or the filing of a certificate of dissolution or its
equivalent with respect to the General Partner, or the revocation of the
General
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Partner's charter and the expiration of 90 days after the date of notice to
the General Partner of revocation without a reinstatement of its charter, or
any other event occurs which causes the General Partner to cease to be a
general partner of GTE Delaware under the Partnership Act, unless the business
of GTE Delaware is continued in accordance with the Partnership Act, (iv) in
accordance with the provisions of the Series A Preferred Securities, (v) upon
the entry of a decree of a judicial dissolution or (vi) upon the written
consent of all partners of GTE Delaware.
MERGER, CONSOLIDATION OR AMALGAMATION OF GTE DELAWARE
GTE Delaware may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described below. GTE Delaware may, without the consent of the holders of the
Series A Preferred Securities, consolidate, amalgamate, merge with or into, or
be replaced by a limited partnership or a trust organized as such under the
laws of any state of the United States of America; provided, that (i) such
successor entity either (x) expressly assumes all of the obligations of GTE
Delaware under the Series A Preferred Securities or (y) substitutes for the
Series A Preferred Securities other securities having substantially the same
terms as the Series A Preferred Securities (the "Successor Securities") so
long as the Successor Securities rank, with respect to participation in the
profits and dividends or in the assets of the successor entity, at least as
high as the Series A Preferred Securities rank with respect to participation
in the profits and dividends or in the assets of GTE Delaware, (ii) GTE
expressly acknowledges such successor entity as the holder of the Series A
Junior Subordinated Debentures, (iii) the Series A Preferred Securities or any
Successor Securities are listed, or any Successor Securities will be listed
upon notification of issuance, on any national securities exchange or other
organization on which the Series A Preferred Securities are then listed, (iv)
such merger, consolidation, amalgamation or replacement does not cause the
Series A Preferred Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization, (v)
such merger, consolidation, amalgamation or replacement does not adversely
affect the powers, preferences and other special rights of the holders of the
Series A Preferred Securities (including any Successor Securities) in any
material respect, (vi) such successor entity has a purpose substantially
identical to that of GTE Delaware and (vii) prior to such merger,
consolidation, amalgamation or replacement, GTE has received an opinion of
nationally recognized independent counsel to GTE Delaware experienced in such
matters to the effect that (x) such successor entity will be treated as a
partnership for federal income tax purposes, (y) following such merger,
consolidation, amalgamation or replacement, GTE and such successor entity will
be in compliance with the 1940 Act without registering thereunder as an
investment company and (z) such merger, consolidation, amalgamation or
replacement will not adversely affect the limited liability of the holders of
the Series A Preferred Securities.
VOTING RIGHTS
Except as provided below and under "Description of the Guarantee--Amendments
and Assignment" in the accompanying Prospectus and as otherwise required by
law and the Limited Partnership Agreement, the holders of the Series A
Preferred Securities will have no voting rights.
If (i) GTE Delaware fails to pay dividends in full on the Series A Preferred
Securities for 18 consecutive monthly dividend periods; (ii) an Event of
Default (as defined in the Indenture) occurs and is continuing on the Series A
Junior Subordinated Debentures; or (iii) GTE is in default on any of its
payment or other obligations under the Guarantee (as described under
"Description of the Guarantee--Certain Covenants of GTE" in the accompanying
Prospectus), then the holders of the Series A Preferred Securities, together
with the holders of any other series of Preferred Securities having the right
to vote for the appointment of a special representative of GTE Delaware and
the limited partners (a "Special Representative") in such event, acting as a
single class, will be entitled by the majority vote of such holders to appoint
and authorize a Special Representative to enforce GTE Delaware's
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creditor rights under the Series A Junior Subordinated Debentures, to enforce
the rights of the holders of the Series A Preferred Securities under the
Guarantee and to enforce the rights of the holders of the Series A Preferred
Securities to receive dividends on the Series A Preferred Securities. The
Special Representative shall not be admitted as a partner in GTE Delaware or
otherwise be deemed to be a partner in GTE Delaware and shall have no
liability for the debts, obligations or liabilities of GTE Delaware. For
purposes of determining whether GTE Delaware has failed to pay dividends in
full for 18 consecutive monthly dividend periods, dividends shall be deemed to
remain in arrears, notwithstanding any payments in respect thereof, until full
cumulative dividends have been or contemporaneously are paid with respect to
all monthly dividend periods terminating on or prior to the date of payment of
such full cumulative dividends. Not later than 30 days after such right to
appoint a Special Representative arises, the General Partner will convene a
meeting for the purpose of appointing a Special Representative. If the General
Partner fails to convene such meeting within such 30-day period, the holders
of 10% in liquidation preference of the outstanding Preferred Securities will
be entitled to convene such meeting. The provisions of the Limited Partnership
Agreement relating to the convening and conduct of the meetings of the
partners will apply with respect to any such meeting. Any Special
Representative so appointed shall cease to be a Special Representative of GTE
Delaware and the limited partners if GTE Delaware (or GTE pursuant to the
Guarantee) shall have paid in full all accrued and unpaid dividends on the
Preferred Securities or such default or breach, as the case may be, shall have
been cured, and GTE, in its capacity as the General Partner shall continue the
business of GTE Delaware without dissolution. Notwithstanding the appointment
of any such Special Representative, GTE shall continue as General Partner and
shall retain all rights under the Indenture, including the right to extend the
interest payment period from time to time to a period not exceeding 60
consecutive months as provided under "Description of the Series A Junior
Subordinated Debentures--Option to Extend Interest Payment Period".
If any proposed amendment to the Limited Partnership Agreement provides for,
or the General Partner otherwise proposes to effect, (i) any action which
would adversely affect the powers, preferences or special rights of the Series
A Preferred Securities, whether by way of amendment to the Limited Partnership
Agreement or otherwise (including, without limitation, the authorization or
issuance of any limited partner interests in GTE Delaware ranking, as to
participation in the profits and dividends or in the assets of GTE Delaware,
senior to the Series A Preferred Securities), or (ii) the dissolution,
winding-up or termination of GTE Delaware, other than (x) in connection with
the distribution of Series A Junior Subordinated Debentures upon the
occurrence of a Special Event or (y) as described under "Merger, Consolidation
or Amalgamation of GTE Delaware" above, then the holders of outstanding Series
A Preferred Securities will be entitled to vote on such amendment or proposal
of the General Partner (but not on any other amendment or proposal) as a class
with all other holders of series of Preferred Securities similarly affected,
and such amendment or proposal shall not be effective except with the approval
of the holders of 66 2/3% in liquidation preference of such outstanding
Preferred Securities having a right to vote on the matter; provided, however,
that no such approval shall be required if the dissolution, winding-up or
termination of GTE Delaware is proposed or initiated upon the initiation of
proceedings, or after proceedings have been initiated, for the dissolution,
winding-up, liquidation or termination of GTE.
The rights attached to the Series A Preferred Securities will be deemed not
to be adversely affected by the creation or issue of, and no vote will be
required for the creation of, any further limited partner interests of GTE
Delaware ranking pari passu with the Series A Preferred Securities with regard
to participation in the profits and dividends or in the assets of GTE
Delaware. Holders of Series A Preferred Securities have no preemptive rights.
So long as any Series A Junior Subordinated Debentures are held by GTE
Delaware, the General Partner shall not (i) direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
executing any trust or power conferred on the Trustee with respect to such
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series, (ii) waive any past default which is waivable under Section 6.06 of
the Indenture, (iii) exercise any right to rescind or annul a declaration that
the principal of all the Series A Junior Subordinated Debentures shall be due
and payable or (iv) consent to any amendment, modification or termination of
the Indenture, where such consent shall be required, without, in each case,
obtaining the prior approval of the holders of at least 66 2/3% in liquidation
preference of all series of Preferred Securities affected thereby, acting as a
single class; provided, however, that where a consent under the Indenture
would require the consent of each holder affected thereby, no such consent
shall be given by the General Partner without the prior consent of each holder
of all series of Preferred Securities affected thereby. The General Partner
shall not revoke any action previously authorized or approved by a vote of any
series of Preferred Securities. The General Partner shall notify all holders
of the Series A Preferred Securities of any notice of default received from
the Trustee with respect to the Series A Junior Subordinated Debentures.
Any required approval of holders of Series A Preferred Securities may be
given at a separate meeting of holders of Preferred Securities convened for
such purpose, at a meeting of all of the partners in GTE Delaware or pursuant
to written consent. GTE Delaware will cause a notice of any meeting at which
holders of Series A Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such holders is to be taken, to
be mailed to each holder of record of Series A Preferred Securities. Each such
notice will include a statement setting forth (i) the date of such meeting or
the date by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such holders are
entitled to vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents.
No vote or consent of the holders of Series A Preferred Securities will be
required for GTE Delaware to redeem and cancel Series A Preferred Securities
in accordance with the Limited Partnership Agreement.
Notwithstanding that holders of Series A Preferred Securities are entitled
to vote or consent under any of the circumstances described above, any of the
Series A Preferred Securities and any other series of Preferred Securities
that are entitled to vote or consent with such Series A Preferred Securities
as a single class at such time that are owned by GTE or any entity owned more
than 50% by GTE, either directly or indirectly, shall not be entitled to vote
or consent and shall, for purposes of such vote or consent, be treated as if
they were not outstanding.
Holders of the Series A Preferred Securities will have no rights to remove
or replace the General Partner.
BOOK-ENTRY-ONLY ISSUANCE--THE DEPOSITORY TRUST COMPANY
DTC will act as securities depository for the Series A Preferred Securities.
The Series A Preferred Securities will be issued only as fully-registered
securities registered in the name of Cede & Co. (DTC's nominee). One or more
fully-registered global Series A Preferred Security certificates will be
issued, representing in the aggregate the total number of Series A Preferred
Securities, and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). DTC holds securities
that its participants ("Participants") deposit with DTC. DTC also facilitates
the settlement among Participants of securities transactions, such as
transfers and pledges, in deposited securities through electronic computerized
book-entry changes in Participants' accounts, thereby eliminating the need for
physical movement of
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securities certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other
organizations ("Direct Participants"). DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc. (the "New York Stock
Exchange"), the American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others
such as securities brokers and dealers, banks and trust companies that clear
through or maintain a custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and its Participants are on file with the Securities and Exchange Commission.
Purchases of Series A Preferred Securities within the DTC system must be
made by or through Direct Participants, which will receive a credit for the
Series A Preferred Securities on DTC's records. The ownership interest of each
actual purchaser of each Series A Preferred Security ("Beneficial Owner") is
in turn to be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC of their
purchases, but Beneficial Owners are expected to receive written confirmations
providing details of the transactions, as well as periodic statements of their
holdings, from the Direct or Indirect Participants through which the
Beneficial Owners purchased Series A Preferred Securities. Transfers of
ownership interests in the Series A Preferred Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in Series A Preferred Securities,
except in the event that use of the book-entry system for the Series A
Preferred Securities is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Series A
Preferred Securities; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Series A Preferred Securities are
credited, which may or may not be the Beneficial Owners. The Participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Series A Preferred Securities are being redeemed, DTC's practice is to
determine by lot the amount of the interest of each Direct Participant in such
series to be redeemed.
Although voting with respect to the Series A Preferred Securities is
limited, in those cases where a vote is required, neither DTC nor Cede & Co.
will itself consent or vote with respect to Series A Preferred Securities.
Under its usual procedures, DTC would mail an Omnibus Proxy to GTE Delaware as
soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts the
Series A Preferred Securities are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
Dividend payments on the Series A Preferred Securities will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe that it will
not receive payments on such payment date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices and will be the responsibility of such Participant and not of DTC,
GTE Delaware or GTE, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of dividends to DTC is the
responsibility of GTE Delaware, disbursement of such payments to Direct
Participants is the responsibility of DTC, and disbursement of such payments
to the Beneficial Owners is the responsibility of Direct and Indirect
Participants.
S-19
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DTC may discontinue providing its services as securities depository with
respect to the Series A Preferred Securities at any time by giving reasonable
notice to GTE Delaware. Under such circumstances, in the event that a
successor securities depository is not obtained, Series A Preferred Security
certificates are required to be printed and delivered. Additionally, GTE
Delaware (with the consent of GTE) may decide to discontinue use of the system
of book-entry transfers through DTC (or a successor depository). In that
event, certificates for the Series A Preferred Securities will be printed and
delivered. In each of the above circumstances, the General Partner will
appoint a paying agent with respect to the Series A Preferred Securities.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that GTE Delaware believes to be reliable, but
GTE Delaware takes no responsibility for the accuracy thereof.
REGISTRAR AND TRANSFER AGENT
The First National Bank of Boston will act as registrar and transfer agent
for the Series A Preferred Securities.
Registration of transfers of Series A Preferred Securities will be effected
without charge by or on behalf of GTE Delaware, but upon payment (with the
giving of such indemnity as GTE Delaware or GTE may require) in respect of any
tax or other government charges which may be imposed in relation to it.
GTE Delaware will not be required to register or cause to be registered the
transfer of Series A Preferred Securities after such Series A Preferred
Securities have been called for redemption.
MISCELLANEOUS
Application has been made to list the Series A Preferred Securities on the
New York Stock Exchange.
The General Partner is authorized and directed to conduct its affairs and to
operate GTE Delaware in such a way that GTE Delaware will not be deemed to be
an "investment company" required to be registered under the 1940 Act or taxed
as a corporation for federal income tax purposes and so that the Series A
Junior Subordinated Debentures will be treated as indebtedness of GTE for
federal income tax purposes. In this connection, the General Partner is
authorized to take any action, not inconsistent with applicable law, the
certificate of limited partnership or the Limited Partnership Agreement, that
the General Partner determines in its discretion to be necessary or desirable
for such purposes, as long as such action does not adversely affect the
interests of the holders of the Series A Preferred Securities.
Holders of the Series A Preferred Securities have no preemptive rights.
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DESCRIPTION OF THE SERIES A JUNIOR SUBORDINATED DEBENTURES
Set forth below is a description of the specific terms of the Series A
Junior Subordinated Debentures in which GTE Delaware will invest with the
proceeds of the issuance and sale of (i) the Series A Preferred Securities and
(ii) the General Partner's capital contribution with respect to the Series A
Preferred Securities (the "General Partnership Payment"). This description
supplements the description of the general terms and provisions of the Junior
Subordinated Debentures set forth in the accompanying Prospectus under the
caption "Description of the Junior Subordinated Debentures". The following
description does not purport to be complete and is qualified in its entirety
by reference to the description in the accompanying Prospectus and the
Indenture, dated as of June 1, 1994, between GTE and The Bank of New York, as
Trustee, as supplemented by a First Supplemental Indenture, dated as of ,
1994 (the Indenture, as so supplemented, is hereinafter referred to as the
"Indenture").
Under certain circumstances involving the dissolution of GTE Delaware
following the occurrence of a Special Event, Series A Junior Subordinated
Debentures may be distributed to the holders of the Series A Preferred
Securities in liquidation of GTE Delaware. See "Description of the Series A
Preferred Securities--Special Event Redemption or Distribution".
GENERAL
The Series A Junior Subordinated Debentures will be issued as a series of
Junior Subordinated Debentures under the Indenture. The Series A Junior
Subordinated Debentures will be limited in aggregate principal amount to
approximately $ million, such amount being the sum of the aggregate stated
liquidation preference of the Series A Preferred Securities and the General
Partnership Payment.
The entire principal amount of the Series A Junior Subordinated Debentures
will become due and payable, together with any accrued and unpaid interest
thereon, including Additional Interest (as hereinafter defined), if any, on
, 2024.
The Series A Junior Subordinated Debentures if distributed to holders of
Series A Preferred Securities in dissolution will initially be so issued as a
Global Security (as defined below). As described herein, under certain limited
circumstances Series A Junior Subordinated Debentures may be issued in
certificated form in exchange for a Global Security (as defined below). See
"Book-Entry and Settlement" below. In the event that Series A Junior
Subordinated Debentures are issued in certificated form, such Series A Junior
Subordinated Debentures will be in denominations of $25 and integral multiples
thereof and may be transferred or exchanged at the offices described below.
Payments on Series A Junior Subordinated Debentures issued as a Global
Security will be made to DTC, as the depository for the Series A Junior
Subordinated Debentures. In the event Series A Junior Subordinated Debentures
are issued in certificated form, principal and interest will be payable, the
transfer of the Series A Junior Subordinated Debentures will be registrable
and Series A Junior Subordinated Debentures will be exchangeable for Series A
Junior Subordinated Debentures of other denominations of a like aggregate
principal amount at the corporate trust office of the Trustee in The City of
New York; provided, that payment of interest may be made at the option of GTE
by check mailed to the address of the persons entitled thereto.
If the Series A Junior Subordinated Debentures are distributed to the
holders of Series A Preferred Securities upon the dissolution of GTE Delaware,
GTE will use its best efforts to list the Series A Junior Subordinated
Debentures on the New York Stock Exchange or on such other exchange as the
Series A Preferred Securities are then listed and traded on the same part of
any such exchange.
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MANDATORY PREPAYMENT
If GTE Delaware redeems Series A Preferred Securities in accordance with the
terms thereof, the Series A Junior Subordinated Debentures will become due and
payable in a principal amount equal to the aggregate stated liquidation
preference of the Series A Preferred Securities so redeemed, together with any
accrued and unpaid interest, including Additional Interest, if any. Any
payment pursuant to this provision shall be made prior to 12:00 noon, New York
time, on the date of such redemption or at such other time on such earlier
date as the parties thereto shall agree.
OPTIONAL REDEMPTION
If there shall be no Series A Preferred Securities outstanding, GTE shall
have the right to redeem the Series A Junior Subordinated Debentures, in whole
or in part, from time to time, on or after , 1999, upon not less than 30
nor more than 60 days' notice, at a redemption price equal to 100% of the
principal amount to be redeemed plus any accrued and unpaid interest,
including Additional Interest, if any, to the redemption date.
INTEREST
Each Series A Junior Subordinated Debenture shall bear interest at an
interest rate which will be adjusted quarterly. The rate for the initial
period from the date of initial issuance to , 1994 will be % per annum.
Thereafter, interest on the Series A Junior Subordinated Debentures will be
payable at the "Applicable Rate" in effect from time to time. The Applicable
Rate for any quarter will be equal to % of the highest of the "Treasury Bill
Rate", the "Ten Year Constant Maturity Rate" and the "Thirty Year Constant
Maturity Rate" determined in advance of such quarter. The Applicable Rate for
any quarter will not be less than % per annum nor greater than % per
annum. The "Treasury Bill Rate", the "Ten Year Constant Maturity Rate" and the
"Thirty Year Constant Maturity Rate" with respect to any quarter shall be
determined by GTE Delaware in the same manner as, and consistent with its
determinations with respect to, quarters for the purposes of dividends payable
on the Series A Preferred Securities. See "Description of the Series A
Preferred Securities--Dividends".
Such interest is payable monthly in arrears on the last day of each calendar
month of each year (each, an "Interest Payment Date"), commencing , 1994,
to the person in whose name such Series A Junior Subordinated Debenture is
registered, subject to certain exceptions, at the close of business on the
Business Day next preceding such Interest Payment Date. In the event the
Series A Junior Subordinated Debentures shall not continue to remain in book-
entry-only form, GTE shall have the right to select record dates which shall
be more than one Business Day prior to the Interest Payment Date.
The amount of interest payable for any period will 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 the Series A Junior Subordinated Debentures is not a
Business Day, then payment of the 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. A "Business Day" shall mean any day other than
a day on which banking institutions in The City of New York are authorized or
required by law to close.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
GTE shall have the right at any time during the term of the Series A Junior
Subordinated Debentures to extend the interest payment period from time to
time to a period not exceeding 60
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consecutive months (the "Extension Period"), at the end of which Extension
Period GTE shall pay all interest then accrued and unpaid (together with
interest thereon at the rate specified for the Series A Junior Subordinated
Debentures to the extent permitted by applicable law); provided, that, during
any such Extension Period, GTE shall not declare or pay any dividend on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any
of its capital stock. Prior to the termination of any such Extension Period,
GTE may further extend the interest payment period, provided that such
Extension Period together with all such previous and further extensions
thereof may not exceed 60 consecutive months. Upon the termination of any
Extension Period and the payment of all amounts then due, GTE may select a new
Extension Period, subject to the above requirements. No interest during an
Extension Period, except at the end thereof, shall be due and payable. If GTE
Delaware shall be the sole holder of the Series A Junior Subordinated
Debentures, GTE shall give GTE Delaware notice of its selection of such
Extension Period one Business Day prior to the earlier of (i) the date the
dividends on the Series A Preferred Securities are payable or (ii) the date
GTE Delaware is required to give notice to the New York Stock Exchange or
other applicable self-regulatory organization or to holders of the Series A
Preferred Securities of the record date or the date such dividend is payable,
but in any event not less than one Business Day prior to such record date. GTE
shall cause GTE Delaware to give notice of GTE's selection of such Extension
Period to the holders of the Series A Preferred Securities. If GTE Delaware
shall not be the sole holder of the Series A Junior Subordinated Debentures,
GTE shall give the holders of the Series A Junior Subordinated Debentures
notice of its selection of such Extension Period ten Business Days prior to
the earlier of (i) the Interest Payment Date or (ii) the date GTE is required
to give notice to the New York Stock Exchange or other applicable self-
regulatory organization, or to holders of the Series A Junior Subordinated
Debentures, of the record or payment date of such related interest payment but
in any event not less than two Business Days prior to such record date.
ADDITIONAL INTEREST
If at any time GTE Delaware shall be required to pay any interest on
dividends in arrears in respect of the Series A Preferred Securities pursuant
to the terms thereof, then GTE will pay as interest to GTE Delaware as the
holder of the Series A Junior Subordinated Debentures ("Additional Interest")
an amount equal to such interest on dividends in arrears. In addition, if GTE
Delaware would be required to pay any taxes, duties, assessments or
governmental charges of whatever nature (other than withholding taxes) imposed
by the United States, or any other taxing authority, then, in any such case,
GTE also will pay as Additional Interest such amounts as shall be required so
that the net amounts received and retained by GTE Delaware after paying any
such taxes, duties, assessments or governmental charges will be not less than
the amounts GTE Delaware would have received had no such taxes, duties,
assessments or governmental charges been imposed.
SET-OFF
Notwithstanding anything to the contrary in the Indenture, GTE shall have
the right to set-off any payment it is otherwise required to make thereunder
with and to the extent GTE has theretofore made, or is concurrently on the
date of such payment making, a payment under the Guarantee.
EVENTS OF DEFAULT
In the case any Event of Default (as defined in the Indenture) shall occur
and be continuing, GTE Delaware will have the right to declare the principal
of and the interest on the Series A Junior Subordinated Debentures (including
any Additional Interest) and any other amounts payable under the Indenture to
be forthwith due and payable and to enforce its other rights as a creditor
with respect to the Series A Junior Subordinated Debentures. See "Enforcement
of Certain Rights by Special Representative" below for a discussion of certain
rights available to holders of the Series A Preferred Securities upon the
occurrence of an Event of Default.
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<PAGE>
ENFORCEMENT OF CERTAIN RIGHTS BY SPECIAL REPRESENTATIVE
If (i) GTE Delaware fails to pay dividends in full on the Series A Preferred
Securities for 18 consecutive monthly dividend periods; (ii) an Event of
Default occurs and is continuing on the Series A Junior Subordinated
Debentures; or (iii) GTE is in default on any of its payment of other
obligations under the Guarantee, under the terms of the Series A Preferred
Securities, the holders of outstanding Series A Preferred Securities will have
the rights referred to under "Description of the Series A Preferred
Securities--Voting Rights", including the right to appoint a Special
Representative, which Special Representative shall be authorized to exercise
GTE Delaware's right to accelerate the principal amount of the Series A Junior
Subordinated Debentures and to enforce GTE Delaware's other creditor rights
under the Series A Junior Subordinated Debentures. Notwithstanding the
appointment of any such Special Representative, GTE shall continue as General
Partner and shall retain all rights under the Indenture, including the right
to extend the interest payment period from time to time to a period not
exceeding 60 consecutive months.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Series A Preferred Securities in connection
with the dissolution of GTE Delaware as a result of the occurrence of a
Special Event, the Series A Junior Subordinated Debentures will be issued in
the form of one or more global certificates (each, a "Global Security")
registered in the name of the nominee of DTC. Except under the limited
circumstances described below, Series A Junior Subordinated Debentures
represented by the Global Security will not be exchangeable for, and will not
otherwise be issuable as, Series A Junior Subordinated Debentures in
definitive form. The Global Securities described above may not be transferred
except by DTC to a nominee of DTC or by a nominee of DTC to DTC or another
nominee of DTC or to a successor depository or its nominee.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such laws may
impair the ability to transfer beneficial interests in such a Global Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Series A Junior
Subordinated Debentures in definitive form and will not be considered the
Holders (as defined in the Indenture) thereof for any purpose under the
Indenture, and no Global Security representing Series A Junior Subordinated
Debentures shall be exchangeable, except for another Global Security of like
denomination and tenor to be registered in the name of DTC or its nominee or
to a successor depository or its nominee. Accordingly, each beneficial owner
must rely on the procedures of DTC and, if such person is not a Participant,
on the procedures of the Participant through which such person owns its
interest, to exercise any rights of a Holder under the Indenture.
THE DEPOSITORY. DTC will act as security depository for the Series A Junior
Subordinated Debentures. For a description of DTC and the specific terms of
the depository arrangements, see "Description of the Series A Preferred
Securities--Book-Entry-Only Issuance--The Depository Trust Company". As of the
date of this Prospectus Supplement, the description therein of DTC's book-
entry system and DTC's practices as they relate to purchases, transfers,
notices and payments with respect to the Series A Preferred Securities apply
in all material respects to any debt obligations represented by one or more
Global Securities held by DTC.
Neither GTE, the Trustee, any paying agent nor any other agent of GTE or the
Trustee will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in a Global Security for such Series A Junior Subordinated
Debentures or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
DISCONTINUANCE OF THE DEPOSITORY'S SERVICES. A Global Security shall be
exchangeable for Series A Junior Subordinated Debentures registered in the
names of persons other than DTC or its nominee only if (i) DTC notifies GTE
that it is unwilling or unable to continue as a depository for such
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Global Security and no successor depository shall have been appointed, or if
any time DTC ceases to be a clearing agency registered under the Exchange Act
at a time when DTC is required to be so registered to act as such depository,
(ii) GTE in its sole discretion determines that such Global Security shall be
so exchangeable or (iii) there shall have occurred an Event of Default with
respect to such Series A Junior Subordinated Debentures. Any Global Security
that is exchangeable pursuant to the preceding sentence shall be exchangeable
for Series A Junior Subordinated Debentures registered in such names as the
Depository shall direct. It is expected that such instructions will be based
upon directions received by the Depository from its Participants with respect
to ownership of beneficial interests in such Global Security.
MISCELLANEOUS
For restrictions on certain actions of the General Partner with respect to
Series A Junior Subordinated Debentures held by GTE Delaware, see "Description
of the Series A Preferred Securities--Voting Rights".
UNITED STATES TAXATION
GENERAL
This section is a summary of certain United States federal income tax
considerations that may be relevant to prospective purchasers of Series A
Preferred Securities and represents the opinion of Sullivan & Cromwell,
special tax counsel to GTE and GTE Delaware, insofar as it relates to matters
of law and legal conclusions. This section is based upon current provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), existing and
proposed regulations thereunder and current administrative rulings and court
decisions, all of which are subject to change. Subsequent changes may cause
tax consequences to vary substantially from the consequences described below.
No attempt has been made in the following discussion to comment on all
United States federal income tax matters affecting purchasers of Series A
Preferred Securities. Moreover, the discussion focuses on holders of Series A
Preferred Securities who are individual citizens or residents of the United
States that hold the Series A Preferred Securities as a capital asset and has
only limited application to corporations, estates, trusts or non-resident
aliens. Accordingly, each prospective purchaser of Series A Preferred
Securities should consult, and should depend on, his or her own tax advisor in
analyzing the federal, state, local and foreign tax consequences of the
purchase, ownership or disposition of Series A Preferred Securities.
INCOME FROM SERIES A PREFERRED SECURITIES
In the opinion of Sullivan & Cromwell, GTE Delaware will be a partnership
for federal income tax purposes. Accordingly, each holder of Series A
Preferred Securities (a "Preferred Securityholder") will be required to
include in gross income the Preferred Securityholder's distributive share of
the net income of GTE Delaware. Such income will not exceed the dividends
received on such Series A Preferred Securities, except in limited
circumstances as described below under "Potential Extension of Interest
Payment Period". No portion of such income will be eligible for the dividends
received deduction.
DISPOSITION OF SERIES A PREFERRED SECURITIES
Gain or loss will be recognized on a sale of Series A Preferred Securities,
including a redemption for cash, equal to the difference between the amount
realized and the Preferred Securityholder's tax basis for the Series A
Preferred Securities sold. Gain or loss recognized by a Preferred
Securityholder on the sale or exchange of a Series A Preferred Security held
for more than one year will generally be taxable as long-term capital gain or
loss.
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RECEIPT OF SERIES A JUNIOR SUBORDINATED DEBENTURES UPON LIQUIDATION OF GTE
DELAWARE
Under certain circumstances, as described under the caption "Description of
the Series A Preferred Securities--Special Event Redemption or Distribution",
Series A Junior Subordinated Debentures may be distributed to the holders of
the Series A Preferred Securities in liquidation of GTE Delaware. Under
current United States federal income tax law, such a distribution would be
treated as a non-taxable exchange to each holder of Series A Preferred
Securities and would result in the holder of Series A Preferred Securities
receiving an aggregate tax basis in the Series A Junior Subordinated
Debentures equal to such holder's aggregate tax basis in its Series A
Preferred Securities. A holder's holding period in the Series A Junior
Subordinated Debentures so received in liquidation of GTE Delaware would
include the period for which the Series A Preferred Securities were held by
such holder. Under a change in law, a change in legal interpretation or the
other circumstances giving rise to a Special Event, however, the dissolution
could be a taxable event to holders of the Series A Preferred Securities. In
the judgment of special tax counsel to GTE and GTE Delaware, the series of
events which would result in the recognition of taxable gain by holders of the
Series A Preferred Securities, by reason of a dissolution of GTE Delaware in
response to a Special Event, is unlikely to occur. There can be no assurance
in this regard, however.
GTE DELAWARE INFORMATION RETURNS AND AUDIT PROCEDURES
GTE, as the General Partner in GTE Delaware, will furnish each Series A
Preferred Securityholder with a Schedule K-1 each year setting forth such
Series A Preferred Securityholder's allocable share of income for the prior
calendar year. GTE is required to furnish such Schedule K-1 as soon as
practicable following the end of the year, but in any event prior to March 31.
Any person who holds Series A Preferred Securities as a nominee for another
person is required to furnish to GTE Delaware (a) the name, address and
taxpayer identification number of the beneficial owner and the nominee; (b)
information as to whether the beneficial owner is (i) a person that is not a
United States person, (ii) a foreign government, an international organization
or any wholly-owned agency or instrumentality of either of the foregoing, or
(iii) a tax-exempt entity; (c) the amount and description of Series A
Preferred Securities held, acquired or transferred for the beneficial owner;
and (d) certain information including the dates of acquisitions and transfers,
means of acquisitions and transfers, and acquisition cost for purchases, as
well as the amount of net proceeds from sales. Brokers and financial
institutions are required to furnish additional information, including whether
they are United States persons and certain information on Series A Preferred
Securities they acquire, hold or transfer for their own accounts. A penalty of
$50 per failure (up to a maximum of $100,000 per calendar year) is imposed by
the Code for failure to report such information to GTE Delaware. The nominee
is required to supply the beneficial owners of the Series A Preferred
Securities with the information furnished to GTE Delaware.
POTENTIAL EXTENSION OF INTEREST PAYMENT PERIOD
Under the Indenture, GTE has the right to extend from time to time the
interest payment period on the Series A Junior Subordinated Debentures to a
period not exceeding 60 consecutive months. In the event that the interest
payment period is extended, GTE Delaware will continue to accrue income on an
economic basis over the course of the Extension Period.
Accrued income will be allocated, but not distributed, to holders of record
on the Business Day preceding the last day of each calendar month. As a
result, holders of record during an Extension Period will include interest in
gross income in advance of the receipt of cash, and any such holders who
dispose of Series A Preferred Securities prior to the record date for the
payment of dividends following such Extension Period will include interest in
gross income but will not receive any cash
S-26
<PAGE>
related thereto from GTE Delaware. The tax basis of a Series A Preferred
Security will be increased by the amount of any interest that is included in
income without a receipt of cash, and will be decreased again when and if such
cash is subsequently received from GTE Delaware.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
holder who or which is (i) a nonresident alien individual or (ii) a foreign
corporation, partnership or estate or trust, in either case not subject to
United States federal income tax on a net income basis in respect of a Series
A Preferred Security.
Under current United States federal income tax law, subject to the
discussion below with respect to backup withholding:
(i) Payments by GTE Delaware or any of its paying agents to any holder of
a Series A Preferred Security who or which is a United States Alien Holder
will not be subject to United States federal withholding tax provided that
(a) the beneficial owner of the Series A Preferred Security does not
actually or constructively own 10%, or more of the total combined voting
power of all classes of capital stock of GTE entitled to vote, (b) the
beneficial owner of the Series A Preferred Security is not a controlled
foreign corporation that is related to GTE through stock ownership and
(c) either (x) the beneficial owner of the Series A Preferred Security
certifies to GTE Delaware or its agent, under penalties of perjury, that it
is a United States Alien Holder and provides its name and address or (y)
the holder of the Series A Preferred Security is a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "financial
institution"), and such holder certifies to GTE Delaware or its agent under
penalties of perjury that such statement has been received from the
beneficial owner by it or by a financial institution between it and the
beneficial owner and furnishes GTE Delaware or its agent with a copy
thereof; and
(ii) a United States Alien Holder of a Series A Preferred Security will
generally not be subject to United States federal withholding tax on any
gain realized on the sale or exchange of a Series A Preferred Security
unless such holder is present in the United States for 183 days or more in
the taxable year of sale and either has a "tax home" in the United States
or certain other requirements are met.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to payments to
noncorporate United States holders of the proceeds of the sale of Series A
Preferred Securities within the United States and "backup withholding" at a
rate of 31% will apply to such payments if the United States holder fails to
provide an accurate taxpayer identification number.
Payments of the proceeds from the sale by a United States Alien Holder of
Series A Preferred Securities made to or through a foreign office of a broker
generally will not be subject to information reporting or backup withholding,
except that, if the broker is a United States person, a controlled foreign
corporation for United States tax purposes, or a foreign person 50% or more of
whose gross income is effectively connected with a United States trade or
business for a specified three-year period, information reporting may apply to
such payments. Payments of the proceeds from the sale of Series A Preferred
Securities to or through the United States office of a broker is subject to
information reporting and backup withholding unless the holder or beneficial
owner certifies as to its non-United States status or otherwise establishes an
exemption from information reporting and backup withholding.
S-27
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, GTE
Delaware has agreed to sell to each of the Underwriters named below, and each
of the Underwriters, for whom Goldman, Sachs & Co., and , are
acting as Representatives, has severally agreed to purchase from GTE Delaware
the respective number of Series A Preferred Securities set forth opposite its
name below:
<TABLE>
<CAPTION>
NUMBER OF
PREFERRED
UNDERWRITER SECURITIES
----------- ----------
<S> <C>
Goldman, Sachs & Co............................................
----
Total........................................................
====
</TABLE>
The Underwriters propose to offer the Series A Preferred Securities in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus Supplement, and in part to certain securities
dealers at such price less a concession of $ per Series A Preferred
Security. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of $ per Series A Preferred Security to certain
brokers and dealers. After the Series A Preferred Securities are released for
sale to the public, the offering price and other selling terms may from time
to time be varied by the Representatives.
In view of the fact that the proceeds of the sale of the Series A Preferred
Securities will ultimately be used to purchase the Series A Junior
Subordinated Debentures, the Underwriting Agreement provides that GTE will pay
as compensation ("Underwriters' Compensation"), for the Underwriters'
arranging the investment therein of such proceeds, an amount in New York
Clearing House (next day) funds of $ per Series A Preferred Security ($
per Series A Preferred Security sold to certain institutions) for the accounts
of the several Underwriters.
GTE and GTE Delaware have agreed, during the period beginning from the date
of the Underwriting Agreement and continuing to and including the earlier of
(i) the date, after the closing date, on which the distribution of the Series
A Preferred Securities and the Guarantee ceases, as determined by the
Underwriters, or (ii) 90 days after the closing date, not to offer, sell,
contract to sell, or otherwise dispose of any Series A Preferred Securities,
any limited partnership interests of GTE Delaware, or any preferred stock or
any other securities of GTE Delaware or GTE which are substantially similar to
the Series A Preferred Securities including the Guarantee, or any securities
convertible into or exchangeable for Series A Preferred Securities, limited
partnership interests, preferred stock or such substantially similar
securities of either GTE Delaware or GTE, without the prior written consent of
the Underwriters.
S-28
<PAGE>
Prior to this offering, there has been no public market for the Series A
Preferred Securities. In order to meet one of the requirements for listing the
Series A Preferred Securities on the New York Stock Exchange, the Underwriters
will undertake to sell lots of 100 or more Series A Preferred Securities to a
minimum of 400 beneficial holders.
GTE Delaware and GTE have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933,
as amended.
Certain of the Underwriters engage in transactions with, and from time to
time have performed services for, GTE and its subsidiaries in the ordinary
course of business.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Series A
Preferred Securities, the validity of the Limited Partnership Agreement and
the formation of GTE Delaware are being passed upon by Richards, Layton &
Finger, P.A., special Delaware counsel to GTE and GTE Delaware. The validity
of the Indenture, the Guarantee and the Series A Junior Subordinated
Debentures will be passed upon on behalf of GTE Delaware and GTE by Michael T.
Masin, Esq., Vice Chairman and Acting General Counsel of GTE, and on behalf of
the Underwriters by Milbank, Tweed, Hadley & McCloy, counsel to the
Underwriters. Mr. Masin will rely on Richards, Layton & Finger, P.A. as to
certain matters of Delaware law. Statements as to United States taxation in
the Prospectus Supplement in the second paragraph under the caption
"Investment Considerations--Special Event Redemption or Distribution", and
under the caption "United States Taxation", have been passed upon for GTE and
GTE Delaware by Sullivan & Cromwell, special tax counsel to GTE and GTE
Delaware, and are stated herein on their authority.
S-29
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS OR AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
---------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GTE Delaware.............................................................. S-3
GTE Corporation........................................................... S-3
Investment Considerations................................................. S-4
Summary Financial and Operating Information of GTE........................ S-6
Capitalization of GTE..................................................... S-8
Use of Proceeds........................................................... S-8
Description of the Series A Preferred Securities.......................... S-9
Description of the Series A Junior Subordinated Debentures................ S-21
United States Taxation.................................................... S-25
Underwriting.............................................................. S-28
Legal Matters............................................................. S-29
PROSPECTUS
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
GTE Delaware.............................................................. 3
GTE Corporation........................................................... 3
Consolidated Ratios of Earnings to Fixed Charges and Earnings to Combined
Fixed Charges and Preferred Stock Dividends of GTE Corporation........... 3
Use of Proceeds........................................................... 4
Description of the Preferred Securities................................... 4
Description of the Guarantee.............................................. 5
Description of the Junior Subordinated Debentures......................... 7
Plan of Distribution...................................................... 12
Experts................................................................... 13
Legal Opinions............................................................ 13
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PREFERRED SECURITIES
GTE DELAWARE
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
GTE CORPORATION LOGO
CUMULATIVE ADJUSTABLE RATE
MONTHLY INCOME PREFERRED SECURITIES,
SERIES A
---------------
PROSPECTUS SUPPLEMENT
---------------
GOLDMAN, SACHS & CO.
REPRESENTATIVES OF THE UNDERWRITERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 23, 1994
$1,000,000,000
GTE CORPORATION LOGO
JUNIOR SUBORDINATED DEBENTURES
GTE DELAWARE
PREFERRED SECURITIES
----------
GTE Corporation, a New York corporation ("GTE"), may from time to time offer
its junior subordinated debentures (the "Junior Subordinated Debentures") in
one or more series and in amounts, at prices and on terms to be determined at
the time of the offering. The Junior Subordinated Debentures when issued will
be unsecured and subordinate and junior in right of payment to Senior
Indebtedness (as defined herein) of GTE.
GTE Delaware, L.P. ("GTE Delaware"), a Delaware special purpose limited
partnership in which GTE is the general partner, may offer, from time to time,
its preferred securities, representing limited partner interests (the
"Preferred Securities"), in one or more series. The payment of periodic cash
distributions ("dividends") with respect to Preferred Securities of any series,
out of moneys held by GTE Delaware, and payments on liquidation or redemption
with respect to the Preferred Securities are guaranteed by GTE to the extent
described herein (the "Guarantee"). GTE's obligations under the Guarantee are
subordinate and junior in right of payment to all other liabilities of GTE and
pari passu with the most senior preferred stock issued by GTE. Junior
Subordinated Debentures also may be issued and sold from time to time in one or
more series by GTE to GTE Delaware in connection with the investment of the
proceeds from the offering of Preferred Securities. The Junior Subordinated
Debentures subsequently may be distributed pro rata to holders of Preferred
Securities in connection with the dissolution of GTE Delaware upon the
occurrence of certain events as may be described in an accompanying Prospectus
Supplement (the "Prospectus Supplement").
Specific terms of the particular Junior Subordinated Debentures and Preferred
Securities of any series in respect of which this Prospectus is being delivered
(the "Offered Securities") will be set forth in the accompanying Prospectus
Supplement with respect to such series, which will describe, without limitation
and where applicable, the following: (i) in the case of Junior Subordinated
Debentures, the specific designation, aggregate principal amount, denomination,
maturity, premium, if any, interest rate (or the method of determining such
rate), if any, dates on which premium, if any, and interest, if any, will be
payable, any redemption provisions, any sinking fund provisions, the initial
public offering price, any listing on a securities exchange and any other terms
and (ii) in the case of Preferred Securities, the specific designation, number
of Preferred Securities, dividend rate (or the method of determining such
rate), dates on which dividends will be payable, liquidation preference, voting
rights, any redemption provisions, terms for any conversion or exchange into
other securities, the initial public offering price, any listing on a
securities exchange, and any other rights, preferences, privileges, limitations
and restrictions.
The Offered Securities may be offered in amounts, at prices and on terms to
be determined at the time of offering; provided, however, that the aggregate
initial public offering price of all Offered Securities shall not exceed
$1,000,000,000.
The Prospectus Supplement relating to any series of Offered Securities will
contain information concerning certain United States federal income tax
considerations, if applicable to the Offered Securities.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------
The Offered Securities will be sold directly, through agents, underwriters or
dealers as designated from time to time, or through a combination of such
methods. If agents or any dealers or underwriters are involved in the sale of
the Offered Securities in respect of which this Prospectus is being delivered,
the names of such agents, dealers or underwriters and any applicable
commissions or discounts will be set forth in or may be calculated from the
Prospectus Supplement with respect to such Offered Securities.
The date of this Prospectus is , 1994.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
AVAILABLE INFORMATION
GTE is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith,
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). These reports, proxy statements and
other information can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, as well as at the following Regional Offices: 7 World
Trade Center, New York, New York 10048; and 500 West Madison Street, Chicago,
Illinois 60661. Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street at prescribed rates
and can be inspected at the New York, Chicago and Pacific Stock Exchanges.
This Prospectus does not contain all the information set forth in the
Registration Statement on Form S-3 (together with all amendments and exhibits
thereto, the "Registration Statement") filed by GTE Delaware and GTE with the
Commission under the Securities Act of 1933, as amended (the "Securities
Act"). Reference is made to the Registration Statement for further information
with respect to GTE, GTE Delaware and the Securities offered hereby.
Statements contained or incorporated by reference herein concerning the
provisions of documents are necessarily summaries of such documents, and each
statement is qualified in its entirety by reference to the Registration
Statement.
No separate financial statements of GTE Delaware have been included herein.
GTE and GTE Delaware do not consider that such financial statements would be
material to holders of Preferred Securities because GTE Delaware is a newly
formed special purpose entity, has no operating history, has no independent
operations and is not engaged in, and does not propose to engage in, any
activity other than as set forth below. GTE Delaware is a limited partnership
formed under the laws of the State of Delaware. GTE is the sole general
partner in GTE Delaware and, as of the date hereof, directly or indirectly
beneficially owns all of GTE Delaware's partnership interests. See "GTE
Delaware".
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
GTE's Annual Report on Form 10-K for the fiscal year ended December 31, 1993
and its Quarterly Report on Form 10-Q for the period ended March 31, 1994, as
filed with the Commission pursuant to the Exchange Act, are incorporated
herein by reference. All documents filed by GTE pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the securities
offered hereby shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the date of filing such documents. Any
statement contained herein or in a document all or a portion of which is
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
GTE hereby undertakes to provide without charge to each person to whom a
copy of this Prospectus has been delivered, on the written or oral request of
any such person, including any beneficial owner, a copy of any or all of the
documents referred to above which have been or may be incorporated in this
Prospectus by reference, other than exhibits to such documents unless such
exhibits are specifically incorporated by reference into the information that
the Prospectus incorporates. Requests for such copies should be directed to
Mr. R.J. Tuccillo, Assistant Secretary of GTE, at One Stamford Forum,
Stamford, CT 06904. Mr. Tuccillo's telephone number is (203) 965-2942.
2
<PAGE>
GTE DELAWARE
GTE Delaware is a limited partnership formed under the laws of the State of
Delaware. GTE Delaware exists for the sole purpose of issuing its limited
partnership interests and investing the net proceeds thereof in Junior
Subordinated Debentures. All of its partnership interests, as of the date
hereof, are beneficially owned, directly or indirectly, by GTE. GTE is the
sole general partner in GTE Delaware (the "General Partner"). GTE Finance
Corporation, a Delaware corporation and wholly-owned subsidiary of GTE ("GTE
Finance"), is, as of the date hereof, the sole limited partner in GTE
Delaware. Upon the issuance of Preferred Securities, which securities
represent limited partner interests in GTE Delaware, GTE Finance will remain
as a limited partner, but will have no interest in the profits and dividends
or in the assets of GTE Delaware. GTE Delaware has a term of approximately 99
years, unless earlier dissolved. GTE Delaware's registered office in the State
of Delaware is c/o The Corporation Trust Company, Corporation Trust Center,
1209 Orange Street, Wilmington, New Castle County, Delaware 19801, telephone:
(302) 658-7581. All of GTE Delaware's business and affairs will be conducted
by GTE, as the sole general partner. The principal place of business of GTE
Delaware is c/o GTE Corporation, One Stamford Forum, Stamford, Connecticut
06904, telephone number (203) 965-2000.
GTE CORPORATION
GTE is the fourth-largest publicly-held telecommunications company in the
world, the largest U.S.-based local telephone company and the second-largest
provider of cellular-mobile telephone services in the United States in terms
of population in the areas served. As of March 31, 1994, through Telephone
Operations, GTE provided local telephone services to approximately 17.2
million customer access lines in 33 states within the United States and
approximately 5.1 million customer access lines in British Columbia and
Quebec, Canada, the Dominican Republic and Venezuela. Through
Telecommunications Products and Services, GTE provides cellular-mobile
communications, command, control and communication systems, information
marketing and networking services, satellite services and air-to-ground
communications, and publishes yellow pages telephone directories. As of March
31, 1994, GTE's cellular operations served a potential subscriber population
of approximately 53.1 million "POPs" in the United States. The location of the
principal executive offices of GTE is One Stamford Forum, Stamford,
Connecticut 06904, telephone number (203) 965-2000.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
AND EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS OF GTE CORPORATION
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------ THREE MONTHS ENDED
1989 1990 1991 1992 1993 MARCH 31, 1994
---- ---- ---- ---- ---- ------------------
<S> <C> <C> <C> <C> <C> <C>
Consolidated ratio of earnings to
fixed charges (unaudited)(a)...... 2.52 2.35 2.22 2.66 2.07 3.69
Consolidated ratio of earnings to
combined fixed charges and
preferred stock dividends
(unaudited)(a).................... 2.42 2.28 2.17 2.61 2.04 3.61
</TABLE>
- --------
(a) For purposes of computing the consolidated ratios, earnings consist of
income from continuing operations before income taxes and fixed charges.
Fixed charges consist of interest expense, preferred stock dividends of
subsidiaries, the additional income requirement to cover preferred stock
dividends of subsidiaries and the portion of rent expense representing
interest. Amounts applicable to entities that are at least 50%-owned have
been added to both earnings and fixed charges, and amounts applicable to
minority interests have been deducted from both earnings and fixed
charges. Excluding from 1993 the effect of the one-time restructuring
charge, the cost of voluntary separation programs at Telephone Operations
and the gain on the sale of non-strategic telephone properties, the
consolidated ratio of earnings to fixed charges would have been 3.31 and
the consolidated ratio of earnings to combined fixed charges and preferred
stock dividends would have been 3.26.
3
<PAGE>
USE OF PROCEEDS
GTE Delaware will invest all proceeds received from the sale of Preferred
Securities in Junior Subordinated Debentures. Unless otherwise specified in
the Prospectus Supplement, the net proceeds to be received by GTE from the
sale of Junior Subordinated Debentures will be used to reduce short-term
obligations, including current maturities (at May 31, 1994, totaling
approximately $2.0 billion, at an average interest cost of approximately
4.45%), and for general corporate purposes.
DESCRIPTION OF THE PREFERRED SECURITIES
GTE Delaware may issue, from time to time, Preferred Securities, in one or
more series, having terms described in the Prospectus Supplement relating
thereto. The limited partnership agreement of GTE Delaware will be amended and
restated (as so amended and restated, "Limited Partnership Agreement") to
authorize the establishment of one or more series of Preferred Securities,
having such terms, including dividends, redemption, voting, liquidation rights
and such other preferred, deferred or other special rights or such
restrictions as shall be set forth therein or otherwise established by the
General Partner pursuant thereto. Reference is made to the Prospectus
Supplement relating to the Preferred Securities of a particular series for
specific terms, including (i) the distinctive designation of such series which
shall distinguish it from other series; (ii) the number of Preferred
Securities included in such series, which number may be increased or decreased
from time to time unless otherwise provided by the General Partner in creating
the series; (iii) the annual dividend rate (or method of determining such
rate) for Preferred Securities of such series and the date or dates upon which
such dividends shall be payable, provided, however, dividends on any series of
Preferred Securities shall be payable on a monthly basis to holders of such
series of Preferred Securities as of a record date in each month during which
such series of Preferred Securities are outstanding; (iv) whether dividends on
Preferred Securities of such series shall be cumulative, and, in the case of
Preferred Securities of any series having cumulative dividend rights, the date
or dates or method of determining the date or dates from which dividends on
Preferred Securities of such series shall be cumulative; (v) the amount or
amounts which shall be paid out of the assets of GTE Delaware to the holders
of Preferred Securities of such series upon voluntary or involuntary
dissolution, winding-up or termination of GTE Delaware; (vi) the price or
prices at which, the period or periods within which and the terms and
conditions upon which Preferred Securities of such series may be redeemed or
purchased, in whole or in part, at the option of GTE Delaware or the General
Partner; (vii) the obligation, if any, of GTE Delaware to purchase or redeem
Preferred Securities of such series and the price or prices at which, the
period or periods within which and the terms and conditions upon which
Preferred Securities of such series shall be purchased or redeemed, in whole
or in part, pursuant to such obligation; (viii) the voting rights, if any, of
Preferred Securities of such series in addition to those required by law,
including the number of votes per Preferred Security and any requirement for
the approval by the holders of Preferred Securities, or of Preferred
Securities of one of more series, or of both, as a condition to specified
action or amendments to the Limited Partnership Agreement; and (ix) any other
relative rights, preferences, privileges, limitations or restrictions of
Preferred Securities of the series not inconsistent with the Limited
Partnership Agreement or with applicable law. All Preferred Securities offered
hereby will be guaranteed by GTE to the extent set forth below under
"Description of the Guarantee". Any applicable federal income tax
considerations applicable to any offering of Preferred Securities will be
described in the Prospectus Supplement relating thereto.
4
<PAGE>
DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information concerning the Guarantee which
will be executed and delivered by GTE for the benefit of the holders from time
to time of Preferred Securities. The summary does not purport to be complete
and is subject in all respects to the provisions of, and is qualified in its
entirety by reference to, the Guarantee, which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part.
GENERAL
GTE will irrevocably and unconditionally agree, to the extent set forth
herein, to pay in full, to the holders of the Preferred Securities of each
series, the Guarantee Payments (as defined below) (except to the extent paid
by GTE Delaware), as and when due, regardless of any defense, right of set-off
or counterclaim which GTE Delaware may have or assert. The following payments
with respect to any series of Preferred Securities to the extent not paid by
GTE Delaware (the "Guarantee Payments") will be subject to the Guarantee
(without duplication): (i) any accrued and unpaid dividends which are required
to be paid on the Preferred Securities of such series, to the extent GTE
Delaware shall have funds legally available therefor, (ii) the redemption
price, including all accrued and unpaid dividends (the "Redemption Price"),
payable out of funds legally available therefor with respect to any Preferred
Securities called for redemption by GTE Delaware and (iii) upon a liquidation
of GTE Delaware, the lesser of (a) the aggregate of the liquidation preference
and all accrued and unpaid dividends on the Preferred Securities of such
series to the date of payment and (b) the amount of assets of GTE Delaware
remaining available for distribution to holders of Preferred Securities of
such series in liquidation of GTE Delaware. GTE's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts
by GTE to the holders of Preferred Securities or by causing GTE Delaware to
pay such amounts to such holders.
CERTAIN COVENANTS OF GTE
In the Guarantee, GTE will covenant that, so long as any Preferred
Securities remain outstanding, GTE will not declare or pay any dividend on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any
of its capital stock or make any guarantee payment with respect to the
foregoing if at such time GTE shall be in default with respect to its payment
or other obligations under the Guarantee or there shall have occurred any
event that would constitute an Event of Default under the Indenture.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of Preferred Securities (in which case no vote will be required),
the Guarantee may be changed only with the prior approval of the holders of
not less than 66 2/3% in liquidation preference of the outstanding Preferred
Securities. The manner of obtaining any such approval of holders of the
Preferred Securities of each series will be as set forth in an accompanying
Prospectus Supplement. All guarantees and agreements contained in the
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of GTE and shall inure to the benefit of the holders of the
Preferred Securities then outstanding.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect as to the
Preferred Securities of any series upon full payment of the Redemption Price
of all Preferred Securities of such series, and will terminate completely upon
full payment of the amounts payable upon liquidation of GTE Delaware. The
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of Preferred Securities of any series must
restore payment of any sums paid under such series of Preferred Securities or
the Guarantee.
5
<PAGE>
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of GTE and will rank
(i) subordinate and junior in right of payment to all liabilities of GTE, (ii)
pari passu with the most senior preferred or preference stock now or hereafter
issued by GTE and with any guarantee now or hereafter entered into by GTE in
respect of any preferred or preference stock of any affiliate of GTE and (iii)
senior to GTE's common stock. The Limited Partnership Agreement provides that
each holder of Preferred Securities by acceptance thereof agrees to the
subordination provisions and other terms of the Guarantee.
The Guarantee will constitute a guarantee of payment and not of collection.
The Guarantee will be deposited with the General Partner to be held for the
benefit of the holders of each series of the Preferred Securities. In the event
of the appointment of a Special Representative to, among other things, enforce
the Guarantee, the Special Representative may take possession of the Guarantee
for such purpose. If no Special Representative has been appointed to enforce
the Guarantee, the General Partner has the right to enforce the Guarantee on
behalf of the holders of each series of the Preferred Securities. The holders
of not less than 10% in aggregate liquidation preference of the Preferred
Securities have the right to direct the time, method and place of conducting
any proceeding for any remedy available in respect of the Guarantee, including
the giving of directions to the General Partner or the Special Representative,
as the case may be. If the General Partner or the Special Representative fails
to enforce the Guarantee as above provided, any holder of Preferred Securities
may institute a legal proceeding directly against GTE to enforce its rights
under the Guarantee, without first instituting a legal proceeding against GTE
Delaware or any other person or entity. The Guarantee will not be discharged
except by payment of the Guarantee Payments in full to the extent not paid by
GTE Delaware and by complete performance of all obligations under the
Guarantee.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
6
<PAGE>
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Junior Subordinated Debentures may be issued from time to time in one or
more series under an Indenture, dated as of June 1, 1994 (the "Indenture"),
between GTE and The Bank of New York, as Trustee (the "Trustee"). The
following summary does not purport to be complete and is subject in all
respects to the provisions of, and is qualified in its entirety by reference
to, the Indenture, which is filed as an exhibit to the Registration Statement
of which this Prospectus forms a part. Whenever particular provisions or
defined terms in the Indenture are referred to herein, such provisions or
defined terms are incorporated by reference herein. Section and Article
references used herein are references to provisions of the Indenture unless
otherwise noted.
GENERAL
The Junior Subordinated Debentures will be unsecured, subordinated
obligations of GTE. The Indenture does not limit the aggregate principal
amount of Junior Subordinated Debentures which may be issued thereunder and
provides that the Junior Subordinated Debentures may be issued thereunder from
time to time in one or more series.
The Junior Subordinated Debentures are issuable in one or more series
pursuant to an indenture supplemental to the Indenture or a resolution of
GTE's Board of Directors or a special committee thereof (each, a "Supplemental
Indenture") (Section 2.01). The aggregate principal amount of Junior
Subordinated Debentures relating to Preferred Securities of any series will be
set forth in the Prospectus Supplement for such series and will be equal to
the sum of the aggregate liquidation preference of the Preferred Securities
for such series and the General Partner's capital contribution with respect to
the Preferred Securities for such series. Junior Subordinated Debentures
relating to Preferred Securities of any series subsequently may be distributed
pro rata to holders of Preferred Securities of such series in connection with
the dissolution of GTE Delaware upon the occurrence of certain events
described in the Prospectus Supplement relating to the Preferred Securities of
such series.
Reference is made to the Prospectus Supplement which will accompany this
Prospectus for the following terms of the series of Junior Subordinated
Debentures being offered thereby: (i) the specific title of such Junior
Subordinated Debentures; (ii) any limit on the aggregate principal amount of
such Junior Subordinated Debentures; (iii) the date or dates on which the
principal of such Junior Subordinated Debentures is payable; (iv) the rate or
rates at which such Junior Subordinated Debentures will bear interest or the
method of determination of such rate or rates; (v) the date or dates from
which such interest shall accrue, the interest payment dates on which such
interest will be payable or the manner of determination of such interest
payment dates and the record dates for the determination of holders to whom
interest is payable on any such interest payment dates; (vi) the right, if
any, to extend the interest payment periods and the duration of such
extension; (vii) the period or periods within which, the price or prices at
which and the terms and conditions upon which such Junior Subordinated
Debentures may be redeemed, in whole or in part, at the option of GTE; (viii)
the obligation, if any, of GTE to redeem or purchase such Junior Subordinated
Debentures pursuant to any sinking fund or analogous provisions or at the
option of the holder thereof and the period or periods, the price or prices at
which, and the terms and conditions upon which, such Junior Subordinated
Debentures shall be redeemed or purchased, in whole or part, pursuant to such
obligation; (ix) the form of such Junior Subordinated Debentures; (x) if other
than denominations of $25 or any integral multiple thereof, the denominations
in which such Junior Subordinated Debentures shall be issuable; (xi) any and
all other terms with respect to such series; and (xii) whether such Junior
Subordinated Debentures are issuable as a global security, and in such case,
the identity of the depository. (Section 2.01).
The Indenture does not contain any provisions that afford holders of Junior
Subordinated Debentures protection in the event of a highly leveraged
transaction involving GTE.
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SUBORDINATION
The Indenture provides that the Junior Subordinated Debentures are
subordinate and junior in right of payment to all Senior Indebtedness (as
defined below) of GTE as provided in the Indenture. No payment of principal of
(including redemption and sinking fund payments), premium, if any, or interest
on, the Junior Subordinated Debentures may be made if any Senior Indebtedness
is not paid when due, any applicable grace period with respect to such default
has ended and such default has not been cured or waived, or if the maturity of
any Senior Indebtedness has been accelerated because of a default. Upon any
distribution of assets of GTE to creditors upon any dissolution, winding-up,
liquidation or reorganization, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all principal of,
and premium, if any, and interest due or to become due on, all Senior
Indebtedness must be paid in full before the holders of the Junior
Subordinated Debentures are entitled to receive or retain any payment. The
rights of the holders of the Junior Subordinated Debentures will be subrogated
to the rights of the holders of Senior Indebtedness to receive payments or
distributions applicable to Senior Indebtedness until all amounts owing on the
Junior Subordinated Debentures are paid in full. (Sections 14.01 to 14.03).
However, since Senior Indebtedness currently is not secured and ranks pari
passu with other unsecured indebtedness of GTE, rights of subrogation
currently do not improve the position of the holders of the Junior
Subordinated Debentures in relation to the holders of any other unsecured
indebtedness of GTE.
The term "Senior Indebtedness" shall mean the principal of, premium, if any,
interest on and any other payment due pursuant to any of the following,
whether outstanding at the date of execution of the Indenture or thereafter
incurred, created or assumed:
(a) all indebtedness of GTE evidenced by notes, debentures, bonds or
other securities sold by GTE for money;
(b) all indebtedness of others of the kinds described in the preceding
clause (a) assumed by or guaranteed in any manner by GTE or in effect
guaranteed by GTE; and
(c) all renewals, extensions or refundings of indebtedness of the kinds
described in any of the preceding clauses (a) and (b);
unless, in the case of any particular indebtedness, renewal, extension or
refunding, the instrument creating or evidencing the same or the assumption or
guarantee of the same expressly provides that such indebtedness, renewal,
extension or refunding is not superior in right of payment to or is pari passu
with the Junior Subordinated Debentures. Such Senior Indebtedness shall
continue to be Senior Indebtedness and entitled to the benefits of the
subordination provisions irrespective of any amendment, modification or waiver
of any term of such Senior Indebtedness. (Section 1.01).
The Indenture does not limit the aggregate amount of Senior Indebtedness
which may be issued. As of May 31, 1994, Senior Indebtedness of GTE aggregated
approximately $6.4 billion.
CERTAIN COVENANTS OF GTE
GTE will covenant that it will not declare or pay any dividend on, or
redeem, purchase, acquire or make a distribution or liquidation payment with
respect to, any of its capital stock, if at such time (i) there shall have
occurred any event that would constitute an Event of Default under the
Indenture, (ii) GTE shall be in default with respect to its payment of any
obligations under the Guarantee or (iii) GTE shall have given notice of its
selection of an extended interest payment period as provided in the Indenture
and such period, or any extension thereof, shall be continuing. (Section
4.06). GTE will also covenant (i) to remain the sole general partner of GTE
Delaware and maintain 100% ownership of the general partnership interests
thereof; provided that any permitted successor of GTE under the
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Indenture may succeed to GTE's duties as General Partner, (ii) to contribute
capital to the extent required to maintain its capital at an amount equal to
at least 3% of the total capital contributions to GTE Delaware, (iii) not to
voluntarily dissolve, wind-up or terminate GTE Delaware, except in connection
with the distribution of Junior Subordinated Debentures to the holders of
Preferred Securities in liquidation of GTE Delaware and in connection with
certain mergers, consolidations or amalgamations permitted by the Limited
Partnership Agreement, (iv) to timely perform all of its duties as the general
partner in GTE Delaware (including the duty to pay dividends on the Preferred
Securities) and (v) to use its reasonable efforts to cause GTE Delaware to
remain a limited partnership and otherwise continue to be treated as a
partnership for United States federal income tax purposes. (Section 4.07).
FORM, EXCHANGE, REGISTRATION AND TRANSFER
Junior Subordinated Debentures of each series will be issued in registered
form and in either certificated form or will be represented by one or more
global securities. If not represented by one or more global securities, Junior
Subordinated Debentures may be presented for registration of transfer (with
the form of transfer endorsed thereon duly executed) or exchange, at the
office of the Debenture Registrar or at the office of any transfer agent
designated by GTE for such purpose with respect to any series of Junior
Subordinated Debentures and referred to in an applicable Prospectus
Supplement, without service charge and upon payment of any taxes and other
governmental charges as described in the relevant Indenture. Such transfer or
exchange will be effected upon the Debenture Registrar or such transfer agent,
as the case may be, being satisfied with the documents of title and identity
of the person making the request. GTE has appointed the Trustee as Debenture
Registrar with respect to the Junior Subordinated Debentures. (Section 2.05).
If a Prospectus Supplement refers to any transfer agents (in addition to the
Debenture Registrar) initially designated by GTE with respect to any series of
Junior Subordinated Debentures, GTE may at any time rescind the designation of
any such transfer agent or approve a change in the location through which any
such transfer agent acts, except that GTE will be required to maintain a
transfer agent in each Place of Payment for such series. (Section 4.02). GTE
may at any time designate additional transfer agents with respect to any
series of Junior Subordinated Debentures.
In the event of any redemption in part, GTE shall not be required to (i)
issue, register the transfer of or exchange any Junior Subordinated Debenture
during a period beginning at the opening of business 15 days before any
selection for redemption of Junior Subordinated Debentures of like tenor and
of the series of which such Junior Subordinated Debenture is a part, and
ending at the close of business on the earliest date in which the relevant
notice of redemption is deemed to have been given to all holders of Junior
Subordinated Debentures of like tenor and of such series to be redeemed and
(ii) register the transfer of or exchange any Junior Subordinated Debentures
so selected for redemption, in whole or in part, except the unredeemed portion
of any Junior Subordinated Debenture being redeemed in part. (Section 2.05).
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and premium (if any) on any Junior Subordinated Debenture will
be made only against surrender to the Paying Agent of such Junior Subordinated
Debenture. Unless otherwise indicated in an applicable Prospectus Supplement,
principal of and any premium and interest, if any, on Junior Subordinated
Debentures will be payable, subject to any applicable laws and regulations, at
the office of such Paying Agent or Paying Agents as GTE may designate from
time to time, except that at the option of GTE payment of any interest may be
made by check mailed to the address of the person entitled thereto as such
address shall appear in the Debenture Register with respect to such Junior
Subordinated Debentures. (Section 4.03). Unless otherwise indicated in an
applicable Prospectus Supplement, payment of interest on a Junior Subordinated
Debenture on any Interest Payment Date will be made to
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<PAGE>
the person in whose name such Junior Subordinated Debenture (or Predecessor
Security) is registered at the close of business on the Regular Record Date
for such interest payment. (Section 2.03).
GTE will act as Paying Agent with respect to the Junior Subordinated
Debentures. GTE may at any time designate additional Paying Agents or rescind
the designation of any Paying Agents or approve a change in the office through
which any Paying Agent acts, except that GTE will be required to maintain a
Paying Agent in each Place of Payment for each series of the respective Junior
Subordinated Debentures. (Sections 4.02 and 4.03).
All moneys paid by GTE to a Paying Agent for the payment of the principal of
or premium or interest, if any, on any Junior Subordinated Debenture of any
series which remain unclaimed at the end of two years after such principal,
premium, if any, or interest shall have become due and payable will be repaid
to GTE and the holder of such Junior Subordinated Debenture will thereafter
look only to GTE for payment thereof. (Section 11.05).
GLOBAL DEBENTURES
If any Junior Subordinated Debentures of a series are represented by one or
more global securities, the applicable Prospectus Supplement will describe the
circumstances, if any, under which beneficial owners of interests in any such
Global Debenture may exchange such interests for Junior Subordinated
Debentures of such series and of like tenor and principal amount in any
authorized form and denomination. Principal of and any premium and interest on
a Global Debenture will be payable in the manner described in the applicable
Prospectus Supplement. (Section 2.11).
The specific terms of the depository arrangement with respect to any portion
of a series of Junior Subordinated Debentures to be represented by a Global
Debenture will be described in the applicable Prospectus Supplement.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting GTE and the Trustee, with the
consent of the holders of not less than a majority in principal amount of the
Junior Subordinated Debentures of each series which are affected by the
modification, to modify the Indenture or any supplemental indenture affecting
that series or the rights of the holders of that series of Junior Subordinated
Debentures; provided, that no such modification may, without the consent of
the holder of each outstanding Junior Subordinated Debenture affected thereby,
(i) extend the fixed maturity of any Junior 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 Junior
Subordinated Debenture so affected or (ii) reduce the percentage of Junior
Subordinated Debentures, the holders of which are required to consent to any
such supplemental indenture, without the consent of the holders of each Junior
Subordinated Debenture then outstanding and affected thereby. (Section 9.02).
In addition, GTE and the Trustee may execute, without the consent of any
holder of Junior Subordinated Debentures, any supplemental indenture for
certain other usual purposes including the creation of any new series of
Junior Subordinated Debentures. (Sections 2.01, 9.01 and 10.01).
EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events, which has occurred and is continuing, constitutes an "Event of
Default" with respect to each series of Junior Subordinated Debentures:
(a) failure for 10 days to pay interest on the Junior Subordinated
Debentures of that series, including any Additional Interest in respect
thereof, when due; or
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<PAGE>
(b) failure to pay principal or premium, if any, on the Junior
Subordinated Debentures of that series when due whether at maturity, upon
redemption by declaration or otherwise, or to make any sinking fund payment
with respect to that series; or
(c) failure to observe or perform any other covenant (other than those
specifically relating to another series) contained in the Indenture for 90
days after notice; or
(d) the dissolution, winding-up or termination of GTE Delaware, except in
connection with the distribution of Junior Subordinated Debentures to the
holders of Preferred Securities in liquidation of GTE Delaware and in
connection with certain mergers, consolidations or amalgamations permitted
by the Limited Partnership Agreement; or
(e) certain events in bankruptcy, insolvency or reorganization of GTE.
(Section 6.01).
The holders of a majority in aggregate outstanding principal amount of any
series of the Junior Subordinated Debentures have the right to direct the
time, method and place of conducting any proceeding for any remedy available
to the Trustee for that series. (Section 6.06). The Trustee or the holders of
not less than 25% in aggregate outstanding principal amount of any particular
series of the Junior Subordinated Debentures may declare the principal due and
payable immediately on default with respect to such series, but the holders of
a majority in aggregate outstanding principal amount of such series may annul
such declaration and waive the default if the default has been cured and a sum
sufficient to pay all matured installments of interest and principal and any
premium has been deposited with the Trustee. (Sections 6.01 and 6.06).
The holders of a majority in aggregate outstanding principal amount of all
series of the Junior Subordinated Debentures affected thereby may, on behalf
of the holders of all the Junior Subordinated Debentures of such series, waive
any past default, except a default in the payment of principal, premium, if
any, or interest. (Section 6.06). GTE is required to file annually with the
Trustee a certificate as to whether or not GTE is in compliance with all the
conditions and covenants under the Indenture. (Section 5.03(d)).
CONSOLIDATION, MERGER AND SALE
The Indenture does not contain any covenant which restricts GTE's ability to
merge or consolidate with or into any other corporation, sell or convey all or
substantially all of its assets to any person, firm or corporation or
otherwise engage in restructuring transactions. (Section 10.01).
DEFEASANCE AND DISCHARGE
Under the terms of the Indenture, GTE will be discharged from any and all
obligations in respect of the Junior Subordinated Debentures of any series
(except in each case for certain obligations to register the transfer or
exchange of Junior Subordinated Debentures, replace stolen, lost or mutilated
Junior Subordinated Debentures, maintain paying agencies and hold moneys for
payment in trust) if GTE deposits with the Trustee, in trust, moneys or
Government Obligations, in an amount sufficient to pay all the principal of,
and interest on, the Junior Subordinated Debentures of such series on the
dates such payments are due in accordance with the terms of such Junior
Subordinated Debentures. (Sections 11.01 and 11.02).
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by,
and construed in accordance with, the laws of the State of New York. (Section
13.05).
INFORMATION CONCERNING THE TRUSTEE
The Trustee, prior to default, undertakes to perform only such duties as are
specifically set forth in the Indenture and, after default, shall exercise the
same degree of care as a prudent individual would
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exercise in the conduct of his or her own affairs. (Section 7.01). Subject to
such provision, the Trustee is under no obligation to exercise any of the
powers vested in it by the Indenture at the request of any holder of Junior
Subordinated Debentures, unless offered reasonable indemnity by such holder
against the costs, expenses and liabilities which might be incurred thereby.
(Section 7.02). The Trustee is not required to expand or risk its own funds or
otherwise incur personal financial liability in the performance of its duties
if the Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it. (Section 7.01).
GTE maintains a deposit account and banking relationship with the Trustee.
The Trustee serves as trustee under other indentures pursuant to which
unsecured debt securities of GTE are outstanding.
MISCELLANEOUS
GTE will have the right at all times to assign any of its rights or
obligations under the Indenture to a direct or indirect wholly-owned
subsidiary of GTE; provided, that, in the event of any such assignment, GTE
will remain liable for all such obligations. GTE Delaware may not assign any
of its rights under the Indenture without the prior written consent of GTE.
Subject to the foregoing, the Indenture will be binding upon and inure to the
benefit of the parties thereto and their respective successors and assigns.
The Indenture provides that it may not otherwise be assigned by the parties
thereto. (Section 13.11).
PLAN OF DISTRIBUTION
GTE may sell any series of Junior Subordinated Debentures, and GTE Delaware
may sell any series of Preferred Securities, being offered hereby in one or
more of the following ways from time to time: (i) to underwriters for resale
to the public or to institutional investors; (ii) directly to institutional
investors; or (iii) through agents to the public or to institutional
investors. The Prospectus Supplement with respect to each series of Offered
Securities will set forth the terms of the offering of such Offered
Securities, including the name or names of any underwriters or agents, the
purchase price of such Offered Securities and the proceeds to GTE or GTE
Delaware, as the case may be, from such sale, any underwriting discounts or
agency fees and other item's constituting underwriters' or agents'
compensation, any initial public offering price, any discounts or concessions
allowed or reallowed or paid to dealers and any securities exchanges on which
such Offered Securities may be listed.
If underwriters are used in the sale, such Offered Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of
sale.
Unless otherwise set forth in the Prospectus Supplement, the obligations of
the underwriters to purchase any series of Offered Securities will be subject
to certain conditions precedent and the underwriters will be obligated to
purchase all of such series of Offered Securities, if any are purchased. In
the event of a default of one or more of the underwriters involving not more
than one-eleventh of the aggregate number or aggregate principal amount of
Offered Securities offered for sale, the non-defaulting underwriters would be
required to purchase the Offered Securities agreed to be purchased by such
defaulting underwriter or underwriters. In the event of a default in excess of
one-eleventh of the aggregate number or aggregate principal amount of Offered
Securities, then GTE and/or GTE Delaware may, at their or its option, sell to
the non-defaulting underwriters all of the Offered Securities which such
underwriters have committed to purchase.
Underwriters and agents may be entitled under agreements entered into with
GTE and/or GTE Delaware to indemnification by GTE and/or GTE Delaware against
certain civil liabilities, including
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liabilities under the Securities Act of 1933, or to contribution with respect
to payments which the underwriters or agents may be required to make in
respect thereof. Underwriters and agents may be customers of, engage in
transactions with, or perform services for GTE in the ordinary course of
business.
Each series of Offered Securities will be a new issue of securities and will
have no established trading market. Any underwriters to whom Offered
Securities are sold by GTE or GTE Delaware for public offering and sale may
make a market in such Offered Securities, but such underwriters will not be
obligated to do so and may discontinue any market making at any time without
notice. The Offered Securities may or may not be listed on a national
securities exchange.
EXPERTS
The consolidated financial statements included in GTE's Annual Report on
Form 10-K for the year ended December 31, 1993, which is incorporated by
reference in this Prospectus, have been audited by Arthur Andersen & Co.,
independent public accountants, as indicated in their report with respect
thereto, and are incorporated herein in reliance upon the authority of said
firm as experts in giving said report.
LEGAL OPINIONS
Certain legal matters in connection with the Offered Securities will be
passed upon for GTE by Michael T. Masin, Esq., Vice Chairman and Acting
General Counsel, and for the purchasers or underwriters by Milbank, Tweed,
Hadley & McCloy, New York, New York. Certain matters of Delaware law relating
to the validity of the Preferred Securities will be passed upon by Richards,
Layton & Finger, P.A., as special Delaware counsel for GTE and GTE Delaware.
Mr. Masin will rely on the opinion of Richards, Layton & Finger, P.A. as to
certain matters of Delaware law. As of June 15, 1994, Mr. Masin was the
beneficial owner of approximately 2,600 shares of GTE Common Stock.
13
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DOCUMENT
----------- --------
<C> <S>
1.1 Form of Underwriting Agreement to be used in connection with the
issuance of Preferred Securities.
1.2 Form of Underwriting Agreement to be used in connection with the
issuance of Junior Subordinated Debentures.
4.1 Form of Indenture between GTE and The Bank of New York, as
Trustee.
4.2 Form of Supplemental Indenture to Indenture to be used in
connection with the issuance of Junior Subordinated Debentures
and fixed rate Preferred Securities.
4.3 Form of Supplemental Indenture to Indenture to be used in
connection with the issuance of Junior Subordinated Debentures
and adjustable rate Preferred Securities.
4.4 Form of Supplemental Indenture to Indenture to be used in
connection with the issuance of Junior Subordinated Debentures
only.
*4.5 Certificate of Limited Partnership of GTE Delaware.
4.6 Form of Amended and Restated Agreement of Limited Partnership of
GTE Delaware.
4.7 Form of Preferred Security (included in Exhibit 4.6 above).
4.8 Form of Junior Subordinated Debenture (included in Exhibit 4.4).
4.9 Form of Guarantee Agreement with respect to Preferred Securities.
5.1 Opinion of Michael T. Masin.
5.2 Opinion of Richards, Layton & Finger.
8.1 Opinion of Sullivan & Cromwell.
12.1 Computations of consolidated ratio of earnings to fixed charges
and consolidated ratio of earnings to combined fixed charges and
preferred stock dividends.
23.1 Consent of Arthur Andersen & Co.
23.2 Consent of Michael T. Masin (included in Exhibit 5.1 above).
23.3 Consent of Sullivan & Cromwell (included in Exhibit 8.1 above).
23.4 Consent of Richards, Layton & Finger (included in Exhibit 5.2
above).
*25.1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as Trustee under the Indenture.
</TABLE>
- -------
* Previously filed.
II-1
<PAGE>
SIGNATURES
PURSUANT TO REQUIREMENTS OF THE SECURITIES ACT OF 1933, GTE CORPORATION
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF STAMFORD AND STATE OF CONNECTICUT ON THE 23RD DAY
OF JUNE 1994.
GTE Corporation
Charles R. Lee
By ______________________________________
(Charles R. Lee)
Chairman of the Board and
Chief Executive Officer
II-2
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, GTE DELAWARE,
L.P. CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF
THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF STAMFORD AND STATE OF CONNECTICUT, ON THE 23RD DAY
OF JUNE 1994.
GTE Delaware, L.P.
By:GTE Corporation,
General Partner
Charles R. Lee
By ______________________________________
(Charles R. Lee)
Chairman of the Board and
Chief Executive Officer
II-3
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING DIRECTORS AND
OFFICERS OF GTE CORPORATION IN THE CAPACITIES AND ON THE DATE INDICATED.
Principal executive officer:
Charles R. Lee
Date: June 23, 1994 By_________________________________
(Charles R. Lee) Chairman of the
Board and Chief Executive
Officer
Principal financial officer:
Date: June 23, 1994 By J. Michael Kelly
-----------------------------------
(J. Michael Kelly) Senior Vice
President--Finance
Principal accounting officer:
Date: June 23, 1994
By William D. Wilson
-----------------------------------
(William D. Wilson) Vice
President and Controller
Directors:
By
-----------------------------------
(Edwin L. Artzt--Director)
Date: June 23, 1994 By James R. Barker
-----------------------------------
(James R. Barker--Director)
Date: June 23, 1994 By Edward H. Budd
-----------------------------------
(Edward H. Budd--Director)
Date: June 23, 1994 By Kent B. Foster
-----------------------------------
(Kent B. Foster--Director)
Date: June 23, 1994 By James L. Johnson
-----------------------------------
(James L. Johnson--Director)
Date: June 23, 1994 By Richard W. Jones
-----------------------------------
(Richard W. Jones--Director)
Date: June 23, 1994 By James L. Ketelsen
-----------------------------------
(James L. Ketelsen--Director)
II-4
<PAGE>
Date: June 23, 1994 By Charles R. Lee
-----------------------------------
(Charles R. Lee--Director)
Date: June 23, 1994 By Michael T. Masin
-----------------------------------
(Michael T. Masin--Director)
Date: June 23, 1994 By Sandra O. Moose
-----------------------------------
(Sandra O. Moose--Director)
Date: June 23, 1994 By Russell E. Palmer
-----------------------------------
(Russell E. Palmer--Director)
Date: June 23, 1994 By Howard Sloan
-----------------------------------
(Howard Sloan--Director)
Date: June 23, 1994 By Robert D. Storey
-----------------------------------
(Robert D. Storey--Director)
Date: June 23, 1994 By James W. Walter
-----------------------------------
(James W. Walter--Director)
Date: June 23, 1994 By Charles Wohlstetter
-----------------------------------
(Charles Wohlstetter--Director)
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE NO.
------- ----------- --------
<C> <S>
1.1 Form of Underwriting Agreement to be used in connection
with the issuance of Preferred Securities.
1.2 Form of Underwriting Agreement to be used in connection
with the issuance of Junior Subordinated Debentures.
4.1 Form of Indenture between GTE and The Bank of New York, as
Trustee.
4.2 Form of Supplemental Indenture to Indenture to be used in
connection with the issuance of Junior Subordinated
Debentures and fixed rate Preferred Securities.
4.3 Form of Supplemental Indenture to Indenture to be used in
connection with the issuance of Junior Subordinated and
adjustable rate Preferred Securities.
4.4 Form of Supplemental Indenture to Indenture to be used in
connection with the issuance of Junior Subordinated
Debentures only.
*4.5 Certificate of Limited Partnership of GTE Delaware.
4.6 Form of Amended and Restated Agreement of Limited
Partnership of GTE Delaware.
4.7 Form of Preferred Security (included in Exhibit 4.6 above).
4.8 Form of Junior Subordinated Debenture (included in Exhibit
4.4 above).
4.9 Form of Guarantee Agreement with respect to Preferred
Securities.
5.1 Opinion of Michael T. Masin.
5.2 Opinion of Richards, Layton & Finger.
8.1 Opinion of Sullivan & Cromwell.
12.1 Computations of consolidated ratio of earnings to fixed
charges and consolidated ratio of earnings to combined
fixed charges and preferred stock dividends.
23.1 Consent of Arthur Andersen & Co.
23.2 Consent of Michael T. Masin (included in Exhibit 5.1
above).
23.3 Consent of Sullivan & Cromwell (included in Exhibit 8.1
above).
23.4 Consent of Richards, Layton & Finger (included in Exhibit
5.2 above).
*25.1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The Bank of New York, as Trustee
under the Indenture.
</TABLE>
- --------
* Previously filed.
E-1
<PAGE>
EXHIBIT 1.1
GTE DELAWARE, L.P.
PREFERRED SECURITIES
GUARANTEED BY
GTE CORPORATION
UNDERWRITING AGREEMENT
----------------------
Goldman, Sachs & Co.
c/o Goldman, Sachs & Co., , 1994
85 Broad Street,
New York, New York 10004
Dear Sirs:
From time to time, GTE Delaware, L.P., a Delaware limited partnership ("GTE
Delaware"), as issuer, and GTE Corporation, a New York corporation ("GTE"), as
guarantor, propose to enter into one or more Pricing Agreements (each, a
"Pricing Agreement") in the form of Annex I hereto, with such additions and
deletions as the parties thereto may determine, and, subject to the terms and
conditions stated herein and therein, whereby GTE Delaware will issue and sell
to the firms named in Schedule I to the applicable Pricing Agreement (such firms
constituting the "Underwriters" with respect to such Pricing Agreement and the
securities specified therein) certain preferred securities representing limited
partner interests in GTE Delaware (the "Preferred Securities") specified in
Schedule II to such Pricing Agreement (with respect to such Pricing Agreement,
the "Firm Securities") and, if specified in such Pricing Agreement, at the
election of the Underwriters, an additional number of Preferred Securities
specified in such Pricing Agreement as provided in Section 3 hereof (the
"Optional Securities"), guaranteed by GTE as to the payment of cash
distributions, out of moneys held by GTE Delaware, and as to payments on
liquidation or redemption and described in any Final Supplemented Prospectus (as
defined in Section 2(a) hereof) (the "Guarantee") (the Firm Securities and the
Optional Securities, if any, which the Underwriters elect to purchase pursuant
to Section 3 hereof being referred to collectively as the "Securities", and the
Securities and the Guarantee being referred to collectively as the "Designated
Securities").
1
<PAGE>
The terms and rights of any particular issuance of Designated Securities shall
be as specified in the Pricing Agreement relating thereto.
1. Particular sales of Designated Securities may be made from time to time
to the Underwriters of such Designated Securities, for whom the firms designated
as representatives of the Underwriters of such Designated Securities in the
Pricing Agreement relating thereto will act as representatives (the
"Representatives"). The term "Representatives" also refers to a single firm
acting as sole representative of the Underwriters and to Underwriters who act
without any firm being designated as their representative. This Underwriting
Agreement shall not be construed as an obligation of GTE Delaware to sell any of
the Preferred Securities (including the Guarantee) or as an obligation of any of
the Underwriters to purchase any of the Preferred Securities (including the
Guarantee). The obligation of GTE Delaware to issue and sell any of the
Preferred Securities (including the Guarantee) and the obligation of any of the
Underwriters to purchase any of the Preferred Securities (including the
Guarantee) shall be evidenced by the Pricing Agreement with respect to the
Designated Securities specified therein. Each Pricing Agreement shall specify
the aggregate number of Firm Securities, the maximum number of Optional
Securities, if any, the initial public offering price of such Firm and Optional
Securities or the manner of determining such price, the purchase price to the
Underwriters of the Designated Securities, the names of the Underwriters of such
Designated Securities, the names of the Representatives of such Underwriters,
the number of such Designated Securities to be purchased by each Underwriter and
the commission, if any, payable to the Underwriters with respect thereto and
shall set forth the date, time and manner of delivery of such Firm and Optional
Securities, if any, and payment therefor. A Pricing Agreement shall be in the
form of an executed writing (which may be in counterparts), and may be evidenced
by an exchange of telegraphic communications or any other rapid transmission
device designed to produce a written record of communications transmitted. The
obligations of the Underwriters under this Agreement and each Pricing Agreement
shall be several and not joint.
2. Each of GTE Delaware and GTE jointly and severally represents and
warrants to, and agrees with, each of the Underwriters that:
(a) A registration statement (including any pre-effective amendments
thereto) on Form S-3 (File No. 33- ) in respect of the Preferred
Securities and the Guarantee has been filed with the Securities and
Exchange Commission (the "Commission"); such registration statement and any
post-effective amendment thereto, each in the form heretofore delivered or
to be delivered to the Representatives and, excluding exhibits to such
registration statement, but including all documents incorporated by
reference in the prospectus included therein, to the Representatives for
each of the other Underwriters have been declared effective by the
Commission in such form; no other document (other than one or more requests
for acceleration of effectiveness of the registration statement) with
respect to such registration statement or document incorporated by
reference therein has heretofore been filed, or transmitted for filing,
with the Commission; and no stop order suspending the effectiveness of such
registration statement has been issued and no proceeding for that purpose
has been initiated or threatened by the Commission (any preliminary
prospectus or preliminary prospectus as supplemented by a preliminary
prospectus supplement included in such registration statement or filed with
the Commission pursuant to Rule 424(a) of the rules and regulations of the
Commission under the Securities Act of 1933, as amended (the "Act"), is
hereinafter called a "Preliminary Prospectus" or "Preliminary Supplemented
Prospectus," as the case may be; the various parts of such registration
statement, including all exhibits thereto and the documents incorporated by
reference in the prospectus contained in the registration statement at the
time such part of the registration statement became effective, each as
amended at the time such part of the registration statement became
effective, are hereinafter collectively called the "Registration
Statement"; the prospectus relating to the Preferred Securities and the
Guarantee in the form in which it has most recently been filed, or
transmitted for filing, with the Commission on or prior to the date of this
Agreement, is hereinafter called the "Prospectus"; any reference herein to
any Preliminary Prospectus, Preliminary Supplemented Prospectus or the
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the
Act, as of the date of such Preliminary Prospectus, Preliminary
Supplemented Prospectus or Prospectus, as the case may be; any reference to
any amendment or supplement to any Preliminary Prospectus, Preliminary
Supplemented Prospectus, or Prospectus shall be deemed to refer to and
include any documents filed after the date of such Preliminary Prospectus,
Preliminary Supplemented Prospectus or Prospectus, as the case may be,
under the Securities Act of 1934, as
2
<PAGE>
amended (the "Exchange Act"), and incorporated by reference in such
Preliminary Prospectus, Preliminary Supplemented Prospectus or Prospectus,
as the case may be; any reference to any amendment to the Registration
Statement shall be deemed to refer to and include any annual report of GTE
filed pursuant to Section 13(a) or 15(d) of the Exchange Act after the
effective date of the Registration Statement that is incorporated by
reference in the Registration Statement; and any reference to the "Final
Supplemented Prospectus" shall be deemed to refer to the Prospectus as
amended or supplemented in relation to the applicable Designated Securities
in the form in which it is filed with the Commission pursuant to Rule
424(b) under the Act in accordance with Section 5(a) hereof, including any
documents incorporated by reference therein as of the date of such filing);
(b) The documents incorporated by reference in the Prospectus and the
Final Supplemented Prospectus, when they became effective or were filed
with the Commission, as the case may be, conformed in all material respects
to the requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder, and none of such
documents contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading; and any further documents so filed
and incorporated by reference in the Prospectus and the Final Supplemented
Prospectus or any further amendment or supplement thereto, when such
documents become effective or are filed with the Commission, as the case
may be, will conform in all material respects to the requirements of the
Act or the Exchange Act, as applicable, and the rules and regulations of
the Commission thereunder and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall not apply to
any statements or omissions made in reliance upon and in conformity with
information furnished in writing to GTE Delaware or GTE by an Underwriter
of Designated Securities through the Representatives expressly for use in
the Final Supplemented Prospectus;
(c) The Registration Statement, the Prospectus and the Preliminary
Supplemented Prospectus conform, and the Final Supplemented Prospectus and
any further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects, to the requirements of
the Act and the rules and regulations of the Commission thereunder and do
not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the applicable
filing dates as to the Prospectus and the Final Supplemented Prospectus,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to GTE
Delaware or GTE by an Underwriter of Designated Securities through the
Representatives expressly for use in the Prospectus or the Final
Supplemented Prospectus, as the case may be;
(d) GTE Delaware has no subsidiaries. Neither GTE Delaware nor GTE
(including all of its subsidiaries taken as a whole) has sustained since
the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth
or contemplated in the Prospectus; and, since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, there has not been any material change in the capital stock or
long-term debt of GTE (including all of its subsidiaries taken as a whole)
or any material adverse change in or affecting the business, properties,
business prospects, position (financial or otherwise) or results of
operations of GTE and its subsidiaries taken as a whole, otherwise than as
set forth in or contemplated by the Prospectus. For purposes of this
Agreement, "Designated Subsidiaries" of GTE shall mean GTE Mobilnet
Incorporated, Contel Cellular Inc. and subsidiaries of GTE which provide
local exchange telephone and communication service in the United States and
whose service and rates are regulated by a public body;
3
<PAGE>
(e) GTE Delaware has been duly formed and is validly existing as a
limited partnership in good standing under the Delaware Revised Uniform
Limited Partnership Act, as amended (the "Partnership Act");
(f) GTE has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of New York, with
all corporate power and authority to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified as a
foreign corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such qualification,
or is subject to no material liability or disability by reason of the
failure to be so qualified in any such jurisdiction; and each Designated
Subsidiary of GTE has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, with all corporate power and authority to own its properties
and conduct its business as described in the Prospectus, and has been duly
qualified as a foreign corporation for the transaction of business and is
in good standing under the laws of each other jurisdiction in which it owns
or leases properties, or conducts any business, so as to require
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction; and,
except as set forth in or contemplated by the Prospectus, all of the issued
shares of common stock of each Designated Subsidiary have been duly and
validly authorized and issued, are fully paid and non-assessable, and
(other than Contel Cellular Inc.) are owned directly or indirectly by GTE,
free and clear of all liens, encumbrances, equities or claims;
(g) GTE had, as of the date indicated in the Final Supplemented
Prospectus, an authorized capitalization as set forth in the Final
Supplemented Prospectus; and all of the issued shares of capital stock of
GTE have been duly and validly authorized and issued, and are fully paid
and non-assessable;
(h) The Preferred Securities have been duly and validly authorized by
GTE Delaware, and, when the Firm Securities and the Guarantee are issued
and delivered pursuant to this Agreement and the Pricing Agreement with
respect to such Designated Securities and, in the case of any Optional
Securities, pursuant to Over-allotment Options (as defined in Section 3
hereof) with respect to such Preferred Securities, such Designated
Securities will be duly authorized, validly issued, fully paid and not
subject to assessment by GTE Delaware for additional capital contributions
and will conform to the descriptions thereof contained in the Registration
Statement and the Final Supplemented Prospectus;
(i) The Indenture dated as of June 1, 1994 between GTE and The Bank of
New York, as trustee (the "Subordinated Indenture") and the junior
subordinated debentures of GTE (the "Junior Subordinated Debentures") to be
issued thereunder, have been duly authorized; the Subordinated Indenture
has been duly qualified under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"), and, at the Time of Delivery (as defined
herein), will have been duly executed and delivered and will constitute,
and the Junior Subordinated Debentures, when duly executed and
authenticated in accordance with the Subordinated Indenture and issued and
delivered under the circumstances provided in the Final Supplemented
Prospectus, will constitute, valid and legally binding obligations of GTE
enforceable in accordance with their terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the enforcement
of creditors' rights and remedies generally, as from time to time in
effect, and by applicable principles of equity and considerations of public
policy (regardless of whether enforceability is considered in a proceeding
in equity or at law);
(j) The limited partnership agreement of GTE Delaware, as amended and
restated (the "Limited Partnership Agreement"), constitutes a legal, valid
and binding agreement of GTE, in its capacity as the general partner of GTE
Delaware, and is enforceable against GTE in its capacity as the general
partner of GTE Delaware, in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws relating to or
affecting the enforcement of creditors' rights and remedies generally, as
from time to time in effect, by applicable principles of equity and
considerations of public policy (regardless of whether enforceability is
considered in a proceeding in equity or at law) and by applicable law
relating to fiduciary duties;
4
<PAGE>
(k) The Guarantee has been duly authorized and when validly executed and
delivered by GTE will constitute a legal, valid and binding obligation of
GTE, enforceable in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws relating to or affecting
the enforcement of creditors' rights and remedies generally, as from time
to time in effect, and by applicable principles of equity and
considerations of public policy (regardless of whether enforceability is
considered in a proceeding in equity or at law); and the Guarantee will
conform to the description thereof in the Prospectus;
(l) All of the limited partnership interests of GTE Delaware (other than
the Preferred Securities) are owned directly or indirectly by GTE, free and
clear of all liens, encumbrances, equities or claims; each of the limited
partners of GTE Delaware has been duly admitted as a limited partner of
GTE Delaware; and GTE Delaware is not a party to or otherwise bound by any
agreement other than those described in the Final Supplemented Prospectus;
(m) The issue and sale of the Preferred Securities and the Guarantee by
GTE Delaware and the compliance by GTE Delaware with all of the provisions
of this Agreement, and the consummation of the transactions herein and
therein contemplated, will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which GTE Delaware is a party or by which GTE
Delaware is bound or to which any of the property or assets of GTE Delaware
is subject, nor will such action result in any violation of the provisions
of GTE Delaware's Certificate of Limited Partnership or the Limited
Partnership Agreement or any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over GTE
Delaware or any of its properties; and no consent, approval, authorization,
order, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the
Designated Securities or the consummation by GTE Delaware of the
transactions contemplated by this Agreement, except the registration under
the Act of the Preferred Securities, the Guarantee and the Junior
Subordinated Debentures, the qualification of the Subordinated Indenture
under the Trust Indenture Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities
or Blue Sky laws in connection with the purchase of the Designated
Securities and the distribution of the Designated Securities by the
Underwriters;
(n) The issue and sale of the Preferred Securities and the Guarantee by
GTE Delaware, the compliance by GTE with all of the provisions of this
Agreement, the execution, delivery and performance by GTE of the
Subordinated Indenture, the execution, delivery and performance by GTE of
the Guarantee and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which GTE is a party or by which it is bound or to which any
of its property or assets is subject or any indenture, mortgage, deed of
trust, loan agreement or other material agreement or instrument to which
any of the Designated Subsidiaries is a party or by which any of the
Designated Subsidiaries is bound or to which any of the property or assets
of the Designated Subsidiaries is subject, nor will such action result in
any violation of the provisions of the Articles of Incorporation or by-laws
of GTE or the charter or by-laws of any of the Designated Subsidiaries or
any statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over GTE or any of the Designated
Subsidiaries or any of their properties; and no consent, approval,
authorization, order, registration or qualification of or with any such
court or governmental agency or body is required for the issue of the
Guarantee or the Junior Subordinated Debentures or the consummation by GTE
of the transactions contemplated by this Agreement, except the registration
under the Act of the Preferred Securities, the Guarantee and the Junior
Subordinated Debentures and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities
or Blue Sky laws in connection with the purchase of the Designated
Securities and distribution of the Designated Securities by the
Underwriters;
(o) Neither GTE Delaware nor GTE is an "investment company" required to
register under, or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company" as such
5
<PAGE>
terms are defined in, the Investment Company Act of 1940, as amended, nor
will be required to so register, nor will be such after giving effect to
the transactions contemplated hereby;
(p) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which GTE Delaware, GTE or any of the
Designated Subsidiaries is a party or of which any property of GTE
Delaware, GTE or any of the Designated Subsidiaries is subject which, if
determined adversely to GTE Delaware, GTE or any of the Designated
Subsidiaries, would individually or in the aggregate result in any material
adverse change in or affecting the business, properties, business
prospects, position (financial or otherwise) or results of operations of
each of GTE Delaware or GTE and its subsidiaries taken as a whole and, to
the best of GTE Delaware's or GTE's knowledge, as the case may be, no such
proceedings are threatened by governmental authorities or threatened by
others;
(q) Arthur Andersen & Co., who have certified certain financial
statements of GTE and its subsidiaries, are independent public accountants
as required by the Act and the rules and regulations of the Commission
thereunder and were independent public accountants as required by the Act
and the rules and regulations of the Commission thereunder during the
periods covered by the financial statements on which they reported
contained in the Prospectus;
(r) No labor disturbance by the employees of GTE or any of the Designated
Subsidiaries exists or, to the knowledge of GTE, is imminent which is
likely to result in any material adverse change in or affecting the
business, properties, business prospects, position (financial or
otherwise), or results of operations of GTE and its subsidiaries taken as a
whole; and
(s) There are no contracts, agreements or understandings between GTE
Delaware or GTE and any person granting such person the right to require
GTE Delaware or GTE to file a registration statement under the Act with
respect to any preferred securities of GTE Delaware or capital stock of GTE
owned or to be owned by such person or to require GTE Delaware or GTE to
include such securities in the securities registered pursuant to the
Registration Statement or in any securities being registered pursuant to
any other registration statement filed by GTE Delaware or GTE under the
Act.
3. Upon the execution of the Pricing Agreement applicable to any Designated
Securities and authorization by the Representatives of the release of the Firm
Securities, the several Underwriters propose to offer the Firm Securities for
sale upon the terms and conditions set forth in the Final Supplemented
Prospectus.
GTE Delaware may specify in the Pricing Agreement applicable to any
Designated Securities that GTE Delaware thereby grants to the Underwriters the
right (an "Over-allotment Option") to purchase at their election up to the
number of Optional Securities set forth in such Pricing Agreement, on the terms
set forth in the paragraph above, for the sole purpose of covering over-
allotments in the sale of the Firm Securities. Any such election to purchase
Optional Securities may be exercised by written notice from the Representatives
to GTE Delaware, given within a period specified in the Pricing Agreement,
setting forth the aggregate number of Optional Securities to be purchased and
the date on which such Optional Securities are to be delivered, as determined by
the Representatives but in no event earlier than the First Time of Delivery (as
defined in Section 4 hereof) or, unless the Representatives and GTE Delaware
otherwise agree in writing, earlier than or later than the respective number of
business days after the date of such notice set forth in such Pricing Agreement.
The number of Optional Securities to be added to the number of Firm
Securities to be purchased by each Underwriter as set forth in Schedule I to the
Pricing Agreement applicable to such Designated Securities shall be, in each
case, the number of Optional Securities which GTE Delaware has been advised by
the Representatives have been attributed to such Underwriter, provided that, if
GTE Delaware has not been so advised, the number of Optional Securities to be so
added shall be, in each case, that proportion of Optional Securities which the
number of Firm Securities to be purchased by such Underwriter under such Pricing
Agreement bears to the aggregate number of Firm Securities (rounded as the
Representatives may determine to the nearest 100 interests). The total number of
Designated Securities to be purchased by all the Underwriters pursuant to such
Pricing Agreement shall be the aggregate number of Firm Securities set forth in
Schedule I to such Pricing Agreement plus the aggregate number of the Optional
Securities which the Underwriters elect to purchase.
6
<PAGE>
4. Except as set forth in the Pricing Agreement, one or more fully-registered
global certificates for the Firm Securities and Optional Securities to be
purchased by each Underwriter pursuant to the Pricing Agreement relating
thereto, in definitive form registered in the name of the nominee of The
Depository Trust Company, shall be delivered by or on behalf of GTE Delaware to
the Representatives for the account of such Underwriter, against payment by such
Underwriter or on its behalf of the purchase price therefor by certified or
official bank check or checks, payable to the order of GTE Delaware in the funds
specified in such Pricing Agreement, (i) with respect to the Firm Securities,
all at the place and time and date specified in such Pricing Agreement or at
such other place and time and date as the Representatives and GTE Delaware may
agree upon in writing, such time and date being herein called the "First Time of
Delivery" and (ii) with respect to the Optional Securities, if any, at the place
and time and date specified by the Representatives in the written notice given
by the Representatives of the Underwriters' election to purchase such Optional
Securities, or at such other place and time and date as the Representatives and
GTE may agree upon in writing, such time and date, if not the First Time of
Delivery, herein called the "Second Time of Delivery." Each such time and date
for delivery is herein called a "Time of Delivery."
As compensation to the Underwriters for their commitments to purchase the
Designated Securities, GTE at each Time of Delivery will pay to the
Representatives, for the accounts of the several Underwriters, an amount per
Preferred Security as set forth in the Pricing Agreement relating to the
Designated Securities to be sold by GTE Delaware thereunder.
5. Each of GTE Delaware and GTE jointly and severally agrees with each of
the Underwriters of any Designated Securities:
(a) To prepare the Final Supplemented Prospectus in a form approved by
the Representatives and to file such Final Supplemented Prospectus pursuant
to Rule 424(b) under the Act not later than the Commission's close of
business on the second business day following the execution and delivery of
the Pricing Agreement relating to the applicable Designated Securities or,
if applicable, such earlier time as may be required by Rule 424(b); to
advise the Representatives promptly of any such amendment or supplement
after any Time of Delivery for such Designated Securities and furnish the
Representatives with copies thereof; to file promptly all reports and any
definitive proxy or information statements required to be filed by GTE with
the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act for so long as the delivery of a prospectus is required in
connection with the offering or sale of such Designated Securities, and
during such same period to advise the Representatives, promptly after
either GTE or GTE Delaware receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or becomes effective
or any supplement to the Prospectus or any amended Prospectus has been
filed with the Commission, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of any prospectus
relating to the Preferred Securities and the Guarantee, of the suspension
of the qualification of such Preferred Securities or the Guarantee for
offering or sale in any jurisdiction, of the initiation or threatening of
any proceeding for any such purpose, or of any request by the Commission
for the amending or supplementing of the Registration Statement or
Prospectus or for additional information; and, in the event of the issuance
of any such stop order or of any such order preventing or suspending the
use of any Prospectus relating to the Preferred Securities and the
Guarantee, or suspending any such qualification, to use promptly its best
efforts to obtain its withdrawal;
(b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Preferred Securities
and the Guarantee for offering and sale under the securities laws of such
jurisdictions as the Representatives may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution
of such Preferred Securities and the Guarantee, provided that in connection
therewith neither GTE Delaware nor GTE shall be required to qualify as a
foreign corporation or to file a general consent to service of process in
any jurisdiction;
(c) To furnish the Underwriters with copies of the Final Supplemented
Prospectus in such quantities as the Representatives may from time to time
reasonably request, and, if the delivery of a prospectus is required at any
time in connection with the offering or sale of the Preferred Securities
and the Guarantee and if at such time any event shall have occurred in the
judgment of counsel to the
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Underwriters as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when
such Prospectus is delivered, not misleading, or, if for any other reason
it shall be necessary during such same period to amend or supplement the
Prospectus or to file under the Exchange Act any document incorporated by
reference in the Prospectus in order to comply with the Act or the Exchange
Act, to notify the Representatives and file such document and to prepare
and furnish without charge to each Underwriter and to any dealer in
securities as many copies as the Representatives may from time to time
reasonably request of an amended Prospectus or a supplement to the
Prospectus which will correct such statement or omission or effect such
compliance;
(d) In the case of GTE, to make generally available to its security
holders as soon as practicable, but in any event not later than eighteen
months after the effective date of the Registration Statement (as defined
in Rule 158(c) under the Act), an earnings statement of GTE and its
subsidiaries (which need not be audited) complying with Section 11(a) of
the Act and the rules and regulations of the Commission thereunder
(including, at the option of GTE, Rule 158 under the Act);
(e) During the period beginning from the date of the Pricing Agreement
for such Designated Securities and continuing to and including the earlier
of (i) the date, after the last Time of Delivery, on which the distribution
of the Designated Securities ceases, as determined by Goldman, Sachs & Co.,
or (ii) the date which is 90 days after the last Time of Delivery, not to
offer, sell, contract to sell or otherwise dispose of any Preferred
Securities, any preferred stock or any other securities of GTE Delaware or
GTE which are substantially similar to such Designated Securities or any
securities convertible into or exchangeable for Preferred Securities,
preferred stock or substantially similar securities of either GTE Delaware
or GTE, without the prior written consent of the Representatives;
(f) To the extent necessary to comply with New York Stock Exchange rules
and regulations or the rules and regulations of any other exchange on which
the Preferred Securities are listed, to furnish to the holders of Preferred
Securities as soon as practicable after the end of each fiscal year an
annual report (including a balance sheet and statements of income,
stockholders' equity and cash flows of GTE and its consolidated
subsidiaries audited by independent public accountants) and, as soon as
practicable after the end of each of the first three quarters of each
fiscal year (beginning with the first such fiscal quarter ending after the
effective date of the Registration Statement), consolidated summary
financial information of GTE and its subsidiaries for such quarter in
reasonable detail;
(g) During a period of three years from the date of this Agreement to
furnish to you copies of all reports or other communications (financial or
other) furnished to holders of common stock of GTE, and deliver to you as
soon as they are available, copies of any reports and financial statements
furnished to or filed with the Commission or any national securities
exchange on which any class of securities of GTE Delaware or GTE are
listed;
(h) To use its best efforts to list, subject to notice of issuance, the
Preferred Securities on the New York Stock Exchange; and
(i) To use its best efforts to list the Junior Subordinated Debentures
on the New York Stock Exchange in connection with the distribution of such
Debentures to holders of Preferred Securities.
6. GTE Delaware and GTE jointly and severally covenant and agree with the
several Underwriters that GTE Delaware and GTE will pay or cause to be paid the
following: (i) the fees, disbursements and expenses of GTE Delaware's and GTE's
counsel and accountants in connection with the registration of the Preferred
Securities and the Guarantee under the Act and all other expenses in connection
with the preparation, printing and filing of the Registration Statement, any
Preliminary Supplemented Prospectus and the Prospectus and amendments and
supplements thereto, including the Final Supplemented Prospectus, and the
mailing and delivering of copies thereof to the Underwriters and dealers; (ii)
the cost of printing or producing any Agreement among Underwriters, this
Agreement, any Pricing Agreement, any Blue Sky Memoranda and
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any other documents in connection with the offering, purchase, sale and delivery
of the Designated Securities; (iii) all expenses in connection with the
qualification of the Preferred Securities and the Guarantee for offering and
sale under state securities laws as provided in Section 5(b) hereof, including
the fees and disbursements of counsel for the Underwriters in connection with
such qualification and in connection with the Blue Sky surveys; (iv) any fees
charged by securities rating services for rating the Preferred Securities; (v)
the cost of preparing certificates for the Preferred Securities; (vi) the cost
and charges of any transfer agent or registrar or paying agent; (vii) all costs
and expenses incident to listing the Preferred Securities on the New York Stock
Exchange and the cost of registering the Preferred Securities under Section 12
of the Exchange Act; (viii) the cost of qualifying the Preferred Securities with
The Depository Trust Company; and (ix) all other costs and expenses incident to
the performance of its obligations hereunder and under any Over-allotment
Options which are not otherwise specifically provided for in this Section. It is
understood, however, that, except as provided in this Section, Section 8 and
Section 11 hereof, the Underwriters will pay all of their own costs and
expenses, including the fees of their counsel, transfer taxes on resale of any
of the Securities by them, and any advertising expenses connected with any
offers they may make.
7. The obligations of the Underwriters of any Designated Securities and
under the Pricing Agreement relating to such Designated Securities shall be
subject, in the discretion of the Representatives, to the condition that all
representations and warranties and other statements of GTE Delaware and GTE in
or incorporated by reference in the Pricing Agreement relating to such
Designated Securities are, at and as of such Time of Delivery, true and correct,
the condition that GTE Delaware and GTE shall have performed all of their
obligations hereunder theretofore to be performed, and the following additional
conditions:
(a) The Final Supplemented Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) within the applicable time period
prescribed for such filing by the rules and regulations under the Act and
in accordance with Section 5(a) hereof; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information
on the part of the Commission shall have been complied with to the
Representatives' reasonable satisfaction;
(b) Milbank, Tweed, Hadley & McCloy, counsel for the Underwriters, shall
have furnished to the Representatives such opinion or opinions, being
delivered at such Time of Delivery, with respect to the matters covered in
paragraphs (i), (iv), (vii), (x), (xi) and (xii) of subsection (c) below as
well as such other related matters as the Representatives may reasonably
request, and such counsel shall have received such papers and information
as they may reasonably request to enable them to pass upon such matters;
(c) Counsel for GTE Delaware and GTE shall have furnished to the
Representatives his written opinion, dated such Time of Delivery, in form
and substance satisfactory to the Representatives, to the effect that:
(i) GTE has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of New York, with
all corporate power and authority to own its properties and conduct its
business as described in the Final Supplemented Prospectus;
(ii) All of the limited partnership interests of GTE Delaware (other
than the Preferred Securities) are owned directly or indirectly by GTE,
free and clear of all liens, encumbrances, equities or claims;
(iii) The Guarantee has been duly authorized and when validly executed
and delivered by GTE will constitute a legal, valid and binding obligation
of GTE, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws relating to or
affecting the enforcement of creditors' rights and remedies generally, as
from time to time in effect, and by applicable principles of equity and
considerations of public policy (regardless of whether enforceability is
considered in a proceeding in equity or at law); and the Guarantee will
conform to the description thereof in the Prospectus;
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(iv) The Subordinated Indenture and the Junior Subordinated Debentures to
be issued thereunder, have been duly authorized; the Subordinated Indenture
has been duly qualified under the Trust Indenture Act, and, at the Time of
Delivery will have been duly executed and delivered and will constitute,
and the Junior Subordinated Debentures, when duly executed and
authenticated in accordance with the Subordinated Indenture and issued and
delivered under the circumstances provided in the Final Supplemented
Prospectus, will constitute, valid and legally binding obligations of GTE
enforceable in accordance with their terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the enforcement
of creditors' rights and remedies generally, as from time to time in
effect, and by applicable principles of equity and considerations of public
policy (regardless of whether enforceability is considered in a proceeding
in equity or at law); and the Subordinated Indenture conforms and the
Junior Subordinated Debentures, when duly executed, authenticated, issued
and delivered, will conform to the descriptions thereof in the Final
Supplemented Prospectus;
(v) GTE has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
other United States jurisdiction in which it owns or leases property, or
conducts any business, so as to require such qualification, except where
the failure to so qualify would not result in any material adverse change
in or affecting the business, properties, business prospects, position
(financial or otherwise) or results of operations of GTE and its
subsidiaries taken as a whole;
(vi) To the best of such counsel's knowledge and other than as set forth
in the Prospectus, there are no legal or governmental proceedings pending
to which GTE Delaware or GTE is a party or of which any property of GTE
Delaware or GTE is the subject which, if determined adversely to GTE
Delaware or GTE would individually or in the aggregate result in any
material adverse change in or affecting the business, properties, business
prospects, position (financial or otherwise) or results of operations of
each of GTE Delaware or GTE and its subsidiaries taken as a whole; and to
the best of such counsel's knowledge, no such proceedings are threatened by
governmental authorities or threatened by others;
(vii) This Agreement and the Pricing Agreement with respect to the
Preferred Securities have been duly authorized, executed and delivered by
each of GTE Delaware and GTE;
(viii) The issue and sale of the Preferred Securities being delivered at
such Time of Delivery, the compliance by GTE Delaware and GTE with all of
the provisions of this Agreement and the Pricing Agreement with respect to
the Designated Securities, the execution, delivery and performance by GTE
of the Guarantee, the Subordinated Indenture and the Junior Subordinated
Debentures and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which GTE or GTE Delaware is a party or
by which GTE or GTE Delaware is bound or to which any of the property or
assets of GTE or GTE Delaware is subject, nor will such action result in
any violation of the provisions of the Certificate of Incorporation or By-
laws of GTE or any statute or any order, rule or regulation known to such
counsel of any court or governmental agency or body having jurisdiction
over GTE or any of their properties;
(ix) No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the issuance and sale of the Designated Securities being
delivered at such Time of Delivery, the execution, delivery or performance
of the Guarantee or the consummation by GTE Delaware and GTE of the
transactions contemplated herein or therein or by such Pricing Agreement,
except registration under the Act of the Preferred Securities, the
Guarantee and the Junior Subordinated Debentures and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Preferred Securities and the Guarantee by
the Underwriters;
(x) The documents incorporated by reference in the Prospectus and the
Final Supplemented Prospectus (other than the financial statements, related
schedules and other financial and statistical data therein, as to which
such counsel need express no opinion), when they became effective or were
filed with the Commission, as the case may be, conformed in all material
respects to the requirements of the Act or the Exchange Act, as applicable,
and the rules and regulations of the Commission thereunder; and such
counsel has no reason to believe that any of such
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documents, when they become effective or were so filed, as the case may be,
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading;
(xi) The Registration Statement, the Prospectus and the Final
Supplemented Prospectus and any further amendments and supplements thereto
made by either GTE Delaware or GTE prior to such Time of Delivery (other
than the financial statements and related schedules and financial and
statistical data therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the requirements of the Act
and the rules and regulations thereunder; such counsel has no reason to
believe that, as of its effective date, the Registration Statement or any
further amendment thereto made by either GTE Delaware or GTE prior to such
Time of Delivery (other than the financial statements, related schedules
and other financial and statistical data therein, as to which such counsel
need express no opinion) contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that, as of
their respective dates, the Preliminary Supplemented Prospectus, the
Prospectus, the Final Supplemented Prospectus or any further amendment or
supplement thereto made by either GTE Delaware or GTE prior to such Time of
Delivery (other than the financial statements and related schedules and
financial and statistical data therein, as to which such counsel need
express no opinion) contained an untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading or
that, as of such Time of Delivery, either the Registration Statement or the
Final Supplemented Prospectus or any further amendment or supplement
thereto made by either GTE Delaware or GTE prior to such Time of Delivery
(other than the financial statements and related schedules and financial
and statistical data therein, as to which such counsel need express no
opinion) contains an untrue statement of a material fact or omits to state
a material fact necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; and they do not know
of any amendment to the Registration Statement required to be filed; and
(xii) Under current law and interpretations of current law issued by
the Commission, neither GTE Delaware nor GTE is an "investment company"
required to register under, or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company" as such terms are
defined in, the Investment Company Act of 1940, as amended, nor will be
required to so register, nor will be such after giving effect to the
transactions contemplated hereby.
In rendering the above opinion, such counsel may also rely, as to all
matters of Delaware law, upon the opinion of Richards, Layton & Finger,
dated such Time of Delivery and delivered pursuant to section (d) hereof.
(d) Richards, Layton & Finger, P.A., special Delaware counsel for GTE
Delaware and GTE, shall have furnished to you their written opinion,
limited to the laws of the State of Delaware and dated such Time of
Delivery, in form and substance satisfactory to you, to the effect that:
(i) GTE Delaware has been duly formed and is validly existing in good
standing as a limited partnership in good standing under the Partnership
Act, and all filings required as of the date hereof under the Partnership
Act with respect to the formation and valid existence of GTE Delaware as a
limited partnership have been made;
(ii) Under the Limited Partnership Agreement and the Partnership Act,
GTE Delaware has all necessary partnership power and authority to own its
properties and conduct its business, all as described in the Final
Supplemented Prospectus;
(iii) Assuming that the limited partners of GTE Delaware that hold the
Preferred Securities (the "Preferred Security Holders"), as limited
partners of GTE Delaware, do not participate in the control of the business
of GTE Delaware, the Preferred Securities issued to the Preferred Security
Holders have been duly and validly authorized and are validly issued and,
subject to the qualifications set forth herein, are fully paid and
nonassessable limited partner interests in GTE Delaware, as to which the
Preferred Security Holders, as limited partners of GTE Delaware, will have
no liability in excess of their obligations to make payments provided for
in the Limited Partnership Agreement and their share of GTE Delaware's
assets and undistributed profits (subject to the obligation of a Preferred
Security Holder to repay any funds wrongfully distributed to it);
(iv) There are no provisions in the Limited Partnership Agreement the
inclusion of which, subject to the terms and conditions therein, or,
assuming that the Preferred Security Holders, as limited partners of GTE
Delaware, take no action other than actions permitted by the Limited
Partnership Agreement, the exercise of which, in accordance with the terms
and conditions therein, would cause the Preferred Security Holders, as
limited partners of GTE Delaware, to be deemed to be participating in the
control of the business of GTE Delaware;
(v) The Preferred Securities as described in the Final Supplemented
Prospectus are authorized by the Limited Partnership Agreement;
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(vi) Under the Partnership Act and the Limited Partnership Agreement, the
execution and delivery by GTE Delaware of this Agreement and the Pricing
Agreement, and the performance by GTE Delaware of its obligations under
this Agreement and the Pricing Agreement, have been duly authorized by all
necessary partnership action on the part of GTE Delaware;
(vii) Under the Partnership Act and the Limited Partnership Agreement,
GTE, as general partner of GTE Delaware, has all necessary power and
authority to execute and deliver this Agreement and the Pricing Agreement
on behalf of GTE Delaware and such Agreements have each been so executed
and delivered;
(viii) The issue and sale by GTE Delaware of the Preferred Securities,
the compliance by GTE Delaware with all of the provisions of this Agreement
and the Pricing Agreement, and the consummation of the transactions herein
and therein contemplated, will not violate (a) the Certificate of Limited
Partnership of GTE Delaware or the Limited Partnership Agreement or (b) any
Delaware statute, rule or regulation;
(ix) No consent, approval, authorization, order, registration or
qualification of or with any Delaware court or Delaware governmental agency
or body is required solely in connection with the issuance and sale by GTE
Delaware of the Preferred Securities pursuant to this Agreement and the
Pricing Agreement;
(x) The Limited Partnership Agreement constitutes a legal, valid and
binding agreement of GTE, and is enforceable against GTE, in its capacity
as general partner of GTE Delaware, in accordance with its terms, subject
to the effect upon the Limited Partnership Agreement of (i) bankruptcy,
insolvency, reorganization, moratorium, receivership, liquidation,
fraudulent conveyance and other similar laws relating to or affecting the
rights of creditors generally, and (ii) principles of equity (regardless of
whether considered and applied in a proceeding in equity or at law),
provided, however, that such counsel shall not be required to express any
opinion on the effect upon the Limited Partnership Agreement of applicable
law relating to fiduciary duties;
(xi) The execution and delivery by GTE Delaware of this Agreement and the
Pricing Agreement, and the performance by GTE Delaware of its obligations
under this Agreement and the Pricing Agreement, do not violate the Limited
Partnership Agreement or the Partnership Act; and
(xii) Such counsel has reviewed the statements in the Final Supplemented
Prospectus under the caption "GTE Delaware" and, insofar as it contains
statements of Delaware law, such statements are fairly presented.
(e) Sullivan & Cromwell, special tax counsel for GTE Delaware and GTE,
shall have furnished at each Time of Delivery their opinion confirming
their opinion as to tax matters set forth in the Final Supplemented
Prospectus.
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(f) On the date of the Pricing Agreement for such Designated Securities
and at each Time of Delivery for such Designated Securities, the
independent accountants of GTE who have certified the annual financial
statements of GTE and its subsidiaries included or incorporated by
reference in the Registration Statement, shall have furnished to the
Representatives a letter, dated the effective date of the Registration
Statement or the date of the most recent report filed with the Commission
containing financial statements and incorporated by reference in the
Registration Statement, if the date of such report is later than such
effective date, and a letter dated such Time of Delivery, respectively, to
the effect set forth in Annex II hereto, and with respect to such letter
dated such Time of Delivery, as to such other matters as the
Representatives may reasonably request and in form and substance
satisfactory to the Representatives;
(g) Neither GTE Delaware nor GTE (including all of its subsidiaries
taken as a whole) has sustained since the date of the latest audited
financial statements included or incorporated by reference in the
Prospectus any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus; and, since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any material change in the
capital stock or long-term debt of GTE (including all of its subsidiaries
taken as a whole) or any material adverse change in or affecting the
business, properties, business prospects, position (financial or
otherwise), stockholders' equity or results of operations of GTE and its
subsidiaries taken as a whole, otherwise than as set forth in or
contemplated by the Prospectus;
(h) On or after the date of the Pricing Agreement relating to the
Designated Securities there shall not have occurred any of the following:
(i) a suspension or material limitation in trading in securities generally
on the New York Stock Exchange; (ii) a suspension in trading in GTE
Delaware's securities or GTE's common stock on the New York Stock Exchange;
(iii) a general moratorium on commercial banking activities in New York
declared by either Federal or New York State authorities; or (iv) the
outbreak or escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war if the
effect of any such event specified in this clause (iv) in the judgment of
the Representatives makes it impracticable or inadvisable to proceed with
the public offering or the delivery of the Firm Securities or Optional
Securities or both on the terms and in the manner contemplated in the Final
Supplemented Prospectus;
(i) The Preferred Securities at Time of Delivery shall have been duly
listed subject to notice of issuance on the New York Stock Exchange;
(j) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against GTE Delaware, GTE or any
of its Designated Subsidiaries or any of their respective officers or
directors in their capacities as such, before or by any Federal, state or
local court, commission, regulatory body, administrative agency or other
governmental body, domestic or foreign, in which litigation or proceeding
an unfavorable ruling, decision or finding is likely to result in any
material adverse change in or affecting the business, properties, business
prospects, position (financial or otherwise) or results of operations of
each of GTE Delaware or GTE and its subsidiaries taken as a whole;
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(k) At the Time of Delivery, there shall be furnished to the
Representatives an accurate certificate of GTE Delaware and GTE, dated the
date of its delivery, signed by the general partner of GTE Delaware and the
President or any Vice President of GTE and the Chief Financial Officer or
Treasurer of GTE, in form and substance satisfactory to the
Representatives, to the effect that:
(i) Each signer of such certificate has carefully examined the
Registration Statement and the Prospectus (including any documents filed
under the Exchange Act and deemed to be incorporated by reference into
the Prospectus) and (A) as of the date of such certificate, such
documents are true and correct in all material respects and do not omit
to state a material fact required to be stated therein or necessary in
order to make the statements therein not untrue or misleading and (B) in
the case of the certificate delivered at the Time of Delivery, no event
has occurred as a result of which it is necessary to amend or supplement
the Prospectus in order to make the statements therein not untrue or
misleading in any material respect and there has been no document
required to be filed under the Exchange Act and the Exchange Act rules
and regulations that upon such filing would be deemed to be incorporated
by reference into the Prospectus that has not been so filed;
(ii) Each of the representations and warranties of GTE Delaware and GTE
contained in this Agreement were, when originally made, and are, at the
time such certificate is dated, true and correct; and
(iii) Each of the covenants required to be performed by GTE Delaware and
GTE herein on or prior to the date of such certificate has been duly,
timely and fully performed and each condition herein required to be
satisfied or fulfilled on or prior to the date of such certificate has
been duly, timely and fully satisfied or fulfilled;
(l) Neither GTE Delaware nor GTE shall have made any further amendment
or supplement to the Registration Statement, Prospectus or Final
Supplemented Prospectus after the date of the Pricing Agreement relating to
such Designated Securities and prior to any Time of Delivery for such
Designated Securities which shall have been objected to in good faith by
the Representatives for such Designated Securities; and
(m) A Special Event (as defined in the Final Supplemental Prospectus)
shall not have occurred and be continuing; provided that it shall also be a
condition of the obligations of GTE and GTE Delaware hereunder to issue and
sell the Designated Securities that a Special Event shall not have
occurred and be continuing.
8. (a) GTE Delaware and GTE will jointly and severally indemnify and hold
harmless each Underwriter against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement, the Prospectus, the Preliminary Supplemented Prospectus,
the Final Supplemented Prospectus or any other prospectus relating to the
Preferred Securities and the Guarantee, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each Underwriter for any
legal or other expenses reasonably incurred by such Underwriter in connection
with investigating or defending any such action or claim as such expenses are
incurred; provided, however, that neither GTE Delaware nor GTE shall be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in any Preliminary Prospectus, the
Registration Statement, the Prospectus, the Preliminary Supplemented Prospectus,
the Final Supplemented Prospectus or any other prospectus relating to the
Preferred Securities and the Guarantee, or any such amendment or supplement in
reliance upon and in conformity with written information furnished to GTE
Delaware and GTE by any Underwriter of Designated Securities through the
Representatives expressly for use in the Final Supplemented Prospectus.
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(b) Each Underwriter will indemnify and hold harmless GTE Delaware and GTE
against any losses, claims, damages or liabilities to which GTE Delaware and GTE
may become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement, the
Prospectus, the Preliminary Supplemented Prospectus, the Final Supplemented
Prospectus or any other prospectus relating to the Preferred Securities and the
Guarantee, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement, the Prospectus, the
Preliminary Prospectus, the Preliminary Supplemented Prospectus, the Final
Supplemented Prospectus or any other prospectus relating to the Preferred
Securities and the Guarantee, or any such amendment or supplement in reliance
upon and in conformity with written information furnished to GTE Delaware and
GTE by such Underwriter through the Representatives expressly for use in the
Final Supplemented Prospectus; and will reimburse GTE Delaware and GTE for any
legal or other expenses reasonably incurred by GTE Delaware and GTE in
connection with investigating or defending any such action or claim as such
expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation.
(d) If the indemnification provided for in this Section 8 is unavailable to
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by GTE Delaware and GTE on the one hand and the Underwriters of the Designated
Securities on the other from the offering of the Designated Securities to which
such loss, claim, damage or liability (or action in respect thereof) relates.
If, however, the allocation provided by the immediately preceding sentence is
not permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (c) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of GTE Delaware and GTE on the one hand and the Underwriters
of the Designated Securities on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by GTE Delaware and GTE on the
one hand and such Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from such offering (before deducting
expenses) received by GTE Delaware bear to the total underwriting discounts and
commissions received by such Underwriters. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by GTE Delaware and GTE on the
one hand or such Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. GTE Delaware and GTE and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this subsection (d)
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
subsection (d). The amount paid
15
<PAGE>
or payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this subsection
(d) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the applicable Designated Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
obligations of the Underwriters of Designated Securities in this subsection (d)
to contribute are several in proportion to their respective underwriting
obligations with respect to such Designated Securities and not joint.
(e) The obligations of GTE Delaware and GTE under this Section 8 shall be in
addition to any liability which they may otherwise have and shall extend, upon
the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of GTE Delaware and GTE and
to each person, if any, who controls GTE Delaware and GTE within the meaning of
the Act.
9. (a) If any Underwriter shall default in its obligation to purchase the
Firm Securities or Optional Securities which it has agreed to purchase under the
Pricing Agreement relating to such Securities, the Representatives may in their
discretion arrange for themselves or another party or other parties to purchase
such Securities on the terms contained herein. If within thirty-six hours after
such default by any Underwriter, the Representatives do not arrange for the
purchase of such Firm Securities or Optional Securities, as the case may be (the
"Representatives' Arrangement Period"), then GTE Delaware and GTE shall be
entitled, if they so elect, to a further period of thirty-six hours within which
to procure another party or other parties satisfactory to the Representatives to
purchase such Securities on such terms (the "GTE Arrangement Period"). In the
event that, within the Representatives' Arrangement Period, the Representatives
notify GTE Delaware and GTE that they have so arranged for the purchase of such
Securities, or, within the GTE Arrangement Period (if GTE so elects to utilize
such GTE Arrangement Period) GTE Delaware or GTE notifies the Representatives
that it has so arranged for the purchase of such Securities, the Representatives
or GTE Delaware or GTE shall have the right to postpone a Time of Delivery for
such Securities for a period of not more than seven days, in order to effect
whatever changes may thereby be made necessary in the Registration Statement or
the Prospectus as amended or supplemented, or in any other documents or
arrangements, and GTE Delaware and GTE agree to file promptly any amendments or
supplements to the Registration Statement or the Prospectus which in the opinion
of the Representatives may thereby be made necessary. The term "Underwriter" as
used in this Agreement shall include any person substituted under this Section
with like effect as if such person had originally been a party to the Pricing
Agreement with respect to such Designated Securities.
(b) If, after giving effect to any arrangements for the purchase of the Firm
Securities or Optional Securities, as the case may be, of a defaulting
Underwriter or Underwriters by the Representatives and GTE Delaware and GTE as
provided in subsection (a) above during the Representatives' Arrangement Period
and the GTE Arrangement Period (if GTE so elects to utilize the GTE Arrangement
Period), the aggregate number of such Securities which remains unpurchased does
not exceed one-eleventh of the aggregate number of the Firm Securities or
Optional Securities, as the case may be, to be purchased at the respective Time
of Delivery, then GTE Delaware and GTE shall have the right to require each non-
defaulting Underwriter to purchase the number of Firm Securities or Optional
Securities, as the case may be, which such Underwriter agreed to purchase under
the Pricing Agreement relating to such Designated Securities and, in addition,
to require each non-defaulting Underwriter to purchase its pro rata share (based
on the number of Firm Securities or Optional Securities, as the case may be,
which such Underwriter agreed to purchase under such Pricing Agreement) of the
Firm Securities or Optional Securities, as the case may be, of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase of the Firm
Securities or Optional Securities, as the case may be, of a defaulting
Underwriter or Underwriters by the Representatives and GTE Delaware and GTE as
provided in subsection (a) above during the Representatives' Arrangement Period
and the GTE Arrangement Period (if GTE so elects to utilize the GTE Arrangement
Period), the aggregate number of Firm Securities or Optional Securities, as the
case may be, which remains unpurchased exceeds one-eleventh of the aggregate
number of the Firm Securities
16
<PAGE>
or Optional Securities, as the case may be, to be purchased at the respective
Time of Delivery, as referred to in subsection (b) above, GTE Delaware and GTE
shall have the right to elect to consummate the sale of the Firm Securities or
the Optional Securities, as the case may be, except as to any such unpurchased
Firm Securities or Optional Securities so remaining. If GTE Delaware and GTE
elect not to so consummate the sale of the Firm Securities or the Optional
Securities, as the case may be, and any unpurchased Firm Securities or Optional
Securities remain for which no satisfactory party or parties is procured to
purchase such Securities in accordance with subsection (a) above, then the
Pricing Agreement relating to such Firm Securities or the Over-allotment Option
relating to such Optional Securities, as the case may be, shall thereupon
terminate, without liability on the part of any non-defaulting Underwriter, GTE
Delaware or GTE, except for the expenses to be borne by GTE Delaware, GTE and
the Underwriters as provided in Section 6 hereof and the indemnity and
contribution agreements in Section 8 hereof; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties and
other statements of GTE Delaware and GTE and the several Underwriters, as set
forth in this Agreement or made by or on behalf of them, respectively, pursuant
to this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or GTE
Delaware, GTE, or any officer or director or general partner or controlling
person of GTE Delaware or GTE, as the case may be, and shall survive delivery of
and payment for the Designated Securities.
11. If any Pricing Agreement or Over-allotment Option shall be terminated
pursuant to Section 9 hereof, GTE Delaware and GTE shall not then be under any
liability to any Underwriter with respect to the Firm Securities or Optional
Securities with respect to which such Pricing Agreement shall have been
terminated except as provided in Section 6 and Section 8 hereof; but, if for any
other reason, Designated Securities are not delivered by or on behalf of GTE
Delaware (or the Guarantee is not concurrently issued by GTE) as provided
herein, GTE Delaware and GTE will reimburse the Underwriters through the
Representatives for all out-of-pocket expenses approved in writing by the
Representatives, including fees and disbursements of counsel, reasonably
incurred by the Underwriters in making preparations for the purchase, sale and
delivery of such Designated Securities but GTE Delaware and GTE shall then be
under no further liability to any Underwriter with respect to such Designated
Securities except as provided in Section 6 and Section 8 hereof.
12. In all dealings hereunder, the Representatives of the Underwriters of
Designated Securities shall act on behalf of each of such Underwriters, and the
parties hereto shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of any Underwriter made or given by such
Representatives jointly or by such of the Representatives, if any, as may be
designated for such purpose in the Pricing Agreement.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail or
facsimile transmission to the address of the Representatives as set forth in the
Pricing Agreement; and if to GTE Delaware or GTE shall be delivered or sent by
mail or facsimile transmission to the address of GTE Delaware or GTE set forth
in the Registration Statement; provided, however, that any notice to an
Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by mail
or facsimile transmission to such Underwriter at its address set forth in
its Underwriters' Questionnaire, or which address will be supplied to GTE
Delaware or GTE by the Representatives upon request. Any such statements,
requests, notices or agreements shall take effect upon receipt thereof.
13. This Agreement and each Pricing Agreement shall be binding upon, and
inure solely to the benefit of, the Underwriters, GTE Delaware and GTE and, to
the extent provided in Section 8 and Section 10 hereof, the officers and
directors of GTE, as the case may be, and each person who controls GTE Delaware
or GTE or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement or any such Pricing
Agreement. No purchaser of any of the Designated Securities from any
Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
14. Time shall be of the essence of each Pricing Agreement. As used herein,
the term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. THIS AGREEMENT AND EACH PRICING AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
17
<PAGE>
16. This Agreement and each Pricing Agreement may be executed by any one or
more of the parties hereto and thereto in any number of counterparts, each of
which shall be deemed to be an original, but all such respective counterparts
shall together constitute one and the same instrument.
18
<PAGE>
If the foregoing is in accordance with your understanding, please sign and
return to us.
Very truly yours,
GTE DELAWARE, L.P.
By: GTE CORPORATION,
General Partner
By:
__________________________________
Name:
Title:
GTE CORPORATION
By:
__________________________________
Name:
Title:
Accepted as of the date hereof:
Goldman, Sachs & Co.
By: ___________________________
(Goldman, Sachs & Co.)
19
<PAGE>
ANNEX I
PRICING AGREEMENT
-----------------
Goldman, Sachs & Co.,
As Representatives of the several
Underwriters named in Schedule I hereto,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
________ __, 1994
Dear Sirs:
GTE Delaware, L.P., a Delaware limited partnership ("GTE Delaware"), proposes,
subject to the terms and conditions stated herein and in the Underwriting
Agreement, dated _______, __ 1994 (the "Underwriting Agreement"), between GTE
Delaware and GTE Corporation, a New York corporation ("GTE"), on the one hand,
and Goldman, Sachs & Co. and ________________, on the other hand, to issue and
sell to the Underwriters named in Schedule I hereto (the "Underwriters") the
Preferred Securities (including the related Guarantee) specified in Schedule II
hereto (the "Designated Securities" consisting of Firm Securities and any
Optional Securities the Underwriters may elect to purchase). Each of the
provisions of the Underwriting Agreement is incorporated herein by reference in
its entirety, and shall be deemed to be a part of this Agreement to the same
extent as if such provisions had been set forth in full herein; and each of the
representations and warranties set forth therein shall be deemed to have been
made at and as of the date of this Pricing Agreement, except that each
representation and warranty which refers to the Prospectus in Section 2 of the
Underwriting Agreement shall be deemed to be a representation or warranty as of
the date of the Underwriting Agreement in relation to the Prospectus (as therein
defined), and also a representation and warranty as of the date of this Pricing
Agreement in relation to the Final Supplemented Prospectus relating to the
Designated Securities which are the subject of this Pricing Agreement. Each
reference to the Representatives herein and in the provisions of the
Underwriting Agreement so incorporated by reference shall be deemed to refer to
you. Unless otherwise defined herein, terms defined in the Underwriting
Agreement are used herein as therein defined. The Representatives designated to
act on behalf of the Representatives and on behalf of each of the Underwriters
of the Designated Securities pursuant to Section 12 of the Underwriting
Agreement and the address of the Representatives referred to in such Section 12
are set forth at the end of Schedule II hereto.
An amendment to the Registration Statement, or a Final Supplemented
Prospectus, as the case may be, relating to the Designated Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the Underwriting
Agreement incorporated herein by reference, (a) GTE Delaware agrees to issue and
sell to each of the Underwriters, and each of the Underwriters agrees, severally
and not jointly, to purchase from GTE Delaware, at the time and place and at the
purchase price to the Underwriters set forth in Schedule II hereto, the number
of Firm Securities set forth opposite
1
<PAGE>
the name of such Underwriter in Schedule I hereto, and (b) in the event and to
the extent that the Underwriters shall exercise the election to purchase
Optional Securities, as provided below, GTE Delaware agrees to issue and sell to
each of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from GTE Delaware at the purchase price to the Underwriters
set out in Schedule II hereto that portion of the number of Optional Securities
as to which such election shall have been exercised. GTE agrees to issue the
Guarantee concurrently with the issue and sale of Preferred Securities as
contemplated herein.
GTE Delaware hereby grants to each of the Underwriters the right to purchase
at their election up to the number of Optional Securities set forth opposite the
name of such Underwriter in Schedule I hereto on the terms referred to in the
paragraph above for the sole purpose of covering overallotments in the sale of
the Firm Securities. Any such election to purchase Optional Securities may be
exercised by written notice from the Representatives to GTE Delaware given
within a period of 30 calendar days after the date of this Pricing Agreement,
setting forth the aggregate number of Optional Securities to be purchased and
the date on which such Optional Securities are to be delivered, as determined by
the Representatives, but in no event earlier than the First Time of Delivery or,
unless the Representatives and GTE Delaware and GTE otherwise agree in writing,
no earlier than 2 or later than 10 business days after the date of such notice.
GTE hereby guarantees the timely performance by GTE Delaware of its
obligations under this Pricing Agreement and the Underwriting Agreement. As
compensation to the Underwriters for their commitments hereunder, and in view of
the fact that the proceeds of the sale of the Preferred Securities will be
invested in Junior Subordinated Debentures, GTE hereby agrees to pay at the Time
of Delivery to the Representatives for the accounts of the several Underwriters
an amount or amounts set forth in Schedule II hereto.
2
<PAGE>
If the foregoing is in accordance with your understanding, please sign and
return to us counterparts hereof, and upon acceptance hereof by you, on behalf
of each of the Underwriters, this letter and such acceptance hereof, including
the provisions of the Underwriting Agreement incorporated herein by reference,
shall constitute a binding agreement between each of the Underwriters, on one
hand, and GTE Delaware and GTE, on the other hand. It is understood that your
acceptance of this letter on behalf of each of the Underwriters is or will be
pursuant to the authority set forth in a form of Agreement among Underwriters,
the form of which shall be submitted to GTE Delaware and GTE for examination,
upon request, but without warranty on the part of the Representatives as to the
authority of the signers thereof.
Very truly yours,
GTE DELAWARE, L.P.
By: GTE CORPORATION,
General Partner
By: __________________________
Name:
Title:
GTE CORPORATION
By: __________________________
Name:
Title:
Accepted as of the date hereof:
Goldman, Sachs & Co.
By: ___________________________
(Goldman, Sachs & Co.)
3
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Maximum Number
of Optional
Securities to be
Total Number of Purchased if
Firm Securities Maximum Option
Underwriter to be Purchased Exercised
- ---------------------- --------------- ----------------
<S> <C> <C>
Goldman, Sachs & Co.
Total
</TABLE>
4
<PAGE>
SCHEDULE II
TITLE OF DESIGNATED SECURITIES:
NUMBER OF DESIGNATED SECURITIES:
Number of Firm Securities:
Maximum Number of Optional Securities:
INITIAL OFFERING PRICE TO PUBLIC:
[$........ per Security]
Purchase Price by Underwriters:
[$........ per Security]
COMMISSION PAYABLE TO UNDERWRITERS: $........ PER SECURITY ($____ PER SECURITY
SOLD TO INSTITUTIONS)
SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE:
DIVIDEND RATE:
....% per annum
DIVIDEND PAYMENT DATES:
[months and dates]
DIVIDEND RIGHTS:
[Non-] cumulative, [deferred]
VOTING RIGHTS:
LIQUIDATION RIGHTS:
REDEMPTION PROVISIONS:
[The Designated Securities may be redeemed, in whole or in part at the option
of GTE Delaware, on or after........... at the following redemption prices:
REDEMPTION
YEAR PRICE
------ ----------
and thereafter at $........ per share, together in each case with accrued
dividends to the redemption date.]
[on any dividend payment date falling on or after ..........., ...., at the
election of GTE, at a redemption price equal to the stated amount thereof,
plus accrued dividends to the date of redemption.]
[Other possible redemption provisions, such as mandatory redemption upon
occurrence of certain events or redemption for changes in tax law]
TIME OF DELIVERY:
..... , 19..
CLOSING LOCATION FOR DELIVERY OF SECURITIES:
NAMES AND ADDRESSES OF REPRESENTATIVES:
Designated Representatives:
Address for Notices, etc.:
5
<PAGE>
ANNEX II
Pursuant to Section 7(f) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect to
GTE and its subsidiaries within the meaning of the Act and the applicable
published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, prospective
financial statements and/or pro forma financial information) included or
incorporated by reference in the Registration Statement or the Prospectus
comply as to form in all material respects with the applicable accounting
requirements of the Act or the Exchange Act, as applicable, and the related
published rules and regulations thereunder; to the extent required, they
have made a review in accordance with standards established by the American
Institute of Certified Public Accountants of the consolidated interim
financial statements, selected financial data, pro forma financial
information, prospective financial statements and/or condensed financial
statements derived from audited financial statements of GTE for the periods
specified in such letter, as indicated in their reports thereon, copies of
which have been furnished to the representatives of the Underwriters (the
"Representatives");
(iii) The unaudited selected income statement data and balance sheet
data for the five most recent fiscal years included in the Prospectus
agrees with the corresponding amounts (after restatement where applicable)
in the audited consolidated financial statements for such five fiscal years
which were included or incorporated by reference in GTE's Annual Reports on
Form 10-K for such fiscal years;
(iv) On the basis of limited procedures, not constituting an audit in
accordance with generally accepted auditing standards, consisting of a
reading of the unaudited financial statements and other information
referred to below, a reading of the latest available interim financial
statements of GTE and its subsidiaries, inspection of the minute books of
GTE and its subsidiaries since the date of the latest audited financial
statements included or incorporated by reference in the Prospectus,
inquiries of officials of GTE and its subsidiaries responsible for
financial and accounting matters and such other inquiries and procedures as
may be specified in such letter, nothing came to their attention that
caused them to believe that:
(A) the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included or incorporated by reference in GTE's Quarterly Reports on
Form 10-Q incorporated by reference in the Prospectus do not comply as
to form in all material respects with the applicable accounting
requirements of the Exchange Act as it applies to Form 10-Q and the
related published rules and regulations thereunder or are not in
conformity with generally accepted accounting principles applied on a
basis substantially consistent with the basis for the audited
consolidated statements of income, consolidated balance sheets and
consolidated statements of cash flows included or incorporated by
reference in GTE's Annual Report on Form 10-K for the most recent
fiscal year;
(B) any other unaudited income statement data and balance sheet
data included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited consolidated
financial statements included or incorporated by reference in GTE's
Annual Report on Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not included in
the Prospectus but from which were derived the unaudited condensed
financial statements referred to in clause (A) and any unaudited
income statement data and balance sheet data included in the
Prospectus and referred to in Clause (B) were not determined on a
basis substantially consistent with the basis for the audited
financial statements included or incorporated by reference in GTE's
Annual Report on Form 10-K for the most recent fiscal year;
1
<PAGE>
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of those
statements;
(E) as of the date of the latest available interim financial
statements, there have been any changes in the consolidated equity
(other than issuances of capital stock upon exercise of options and
stock appreciation rights, upon earn-outs of performance shares and
upon conversions of convertible securities, in each case which were
outstanding on the date of the latest balance sheet included or
incorporated by reference in the Prospectus) or any increase in the
consolidated short-term debt or long-term debt of GTE and its
subsidiaries, or any decreases in consolidated net assets or other
items specified by the Representatives, or any increases in any items
specified by the Representatives, in each case as compared with
amounts shown in the latest balance sheet included or incorporated by
reference in the Prospectus, except in each case for changes,
increases or decreases which the Prospectus discloses have occurred or
may occur or which are described in such letter;
(F) for the period from the date of the latest financial statements
included or incorporated by reference in the Prospectus to the
specified date referred to in Clause (E) whether there were any
decreases in consolidated net revenues or operating profit or the
total or per share amounts of consolidated net income or other items
specified by the Representatives, or any increases in any items
specified by the Representatives, in each case as compared with the
comparable period of the preceding year and with any other period of
corresponding length specified by the Representatives, except in each
case for increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter;
(G) as of a specified date not more than five days prior to the
date of such letter there have been any changes in the consolidated
equity (other than issuances of capital stock upon exercise of options
and stock appreciation rights, upon earn-outs of performance shares
and upon conversions of convertible securities, in each case which
were outstanding on the date of the latest balance sheet included or
incorporated by reference in the Prospectus) or any increase in the
consolidated short-term debt or, long-term debt of GTE and its
subsidiaries, or any decreases in consolidated net assets or or other
items specified by the Representatives, or any increases in any items
specified by the Representatives, in each case as compared with
amounts shown in the latest balance sheet included or incorporated by
reference in the Prospectus, except in each case for changes,
increases or decreases which the Prospectus discloses have occurred or
may occur or which are described in such letter; and
(H) for the period from the date of the latest available interim
financial statements referred to in Clause (E) to the specified date
referred to in Clause (G) whether there were any material decreases in
consolidated net revenues or operating profit or the total or per
share amounts of consolidated net income or other items specified by
the Representatives, or any material increases in any items specified
by the Representatives, in each case as compared with the comparable
period of the preceding year and with any other period of
corresponding length specified by the Representatives, except in each
case for increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter;
(v) In addition to the audit referred to in their report(s) included or
incorporated by reference in the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures referred to in
paragraphs (iii) and (iv) above, they have carried out certain specified
procedures, not constituting an audit in accordance with generally accepted
auditing standards, with respect to certain amounts, percentages and
financial information specified by the Representatives which are derived
from the general accounting records of GTE and its subsidiaries, which
appear in the Prospectus (excluding documents incorporated by reference),
or in Part II of, or in exhibits and schedules to, the Registration
Statement specified by the Representatives or in documents incorporated by
reference in the Prospectus specified by the Representatives, and have
compared certain of such amounts, percentages and financial information
with the accounting records of GTE and its subsidiaries and have found them
to be in agreement.
All references in this Annex II to the Prospectus shall be deemed to refer to
the Prospectus (including the documents incorporated by reference therein) as
defined in the Underwriting Agreement as of the date of the letter delivered on
the date of the Pricing Agreement for purposes of such letter and to the Final
Supplemented Prospectus (including the documents incorporated by reference
therein) in relation to the applicable Designated Securities for purposes of the
letter delivered at the Time of Delivery for such Designated Securities.
2
<PAGE>
EXHIBIT 1.2
GTE CORPORATION
UNDERWRITING AGREEMENT
GTE Corporation, a New York corporation (the "Company"), proposes to
issue and sell $___,000,000 aggregate principal amount of its ___% Junior
Subordinated Debentures, Series ___, Due _____ (the "New Debentures"). Subject
to the terms and conditions set forth or incorporated by reference herein, the
Company agrees to sell and the underwriters named in Schedule A attached hereto
(the "Underwriters") agree to purchase the New Debentures at ___% of their
principal amount, plus accrued interest from ___________ to the date of payment
for the New Debentures and delivery thereof. Interest on the New Debentures will
be payable semi-annually on June 30 and December 31, commencing __________. [The
New Debentures will be reoffered to the public at ____% of their principal
amount.
All the provisions contained in the Company's Standard Underwriting
Agreement Provisions (June, 1994 Edition) (the "Standard Underwriting Agreement
Provisions") annexed hereto shall be deemed to be a part of this Underwriting
Agreement to the same extent as if such provisions had been set forth in full
herein.
REDEMPTION PROVISIONS:
[The New Debentures will not be redeemable prior to maturity.]
OR
[The redemption price applicable to redemptions to and including _______
(the "initial regular redemption price") will be the initial public offering
price as defined below plus the rate of interest on the New Debentures; the
redemption price during the twelve month period beginning _______ and during the
twelve month periods beginning on each __________ thereafter through the twelve
month period ended _______ will be determined by reducing the initial regular
redemption price by an amount determined by multiplying (a) 1/__ of the amount
by which such initial regular redemption price exceeds 100% by (b) the number of
such full twelve month periods which shall have elapsed between _________ and
the date fixed for redemption; and thereafter the redemption prices during the
twelve month periods beginning _________ shall be 100%; provided, however, that
all such prices will be specified to the nearest 0.01% or if there is no nearest
0.01%, then to the next higher 0.01%.
For the purpose of determining the redemption prices of the New
Debentures, the initial public offering price of the New Debentures shall be the
price, expressed in percentage of principal amount (exclusive of accrued
interest), at which the New Debentures are to be initially offered for sale to
the public; if there is not a public offering of the New Debentures, the initial
public offering price of the New Debentures shall be deemed to be the price,
expressed in percentage of principal amount (exclusive of accrued interest), to
be paid to the Company by the Underwriters.
<PAGE>
-2-
None of the New Debentures may be called for redemption at the option of
the Company prior to ____________ if such redemption is for the purpose or in
anticipation of refunding any New Debentures by the application, directly or
indirectly, of funds borrowed by the Company at an annual cost of money
(calculated in accordance with generally accepted financial practice) less than
the annual cost of money to the Company resulting from the sale of the New
Debentures to the Underwriters. (If Applicable)]
CLOSING:
The Underwriters agree to pay for the New Debentures in New York
Clearing House (next day) funds upon delivery of such New Debentures at 10:00
A.M. (New York City time) on _________ (the "Closing Date") or at such other
time, not later than the seventh full business day thereafter, as shall be
agreed upon by the Company and the Underwriters or the firm or firms designated
as the representative or representatives, as the case may be, of the
Underwriters (the "Representative").
RESALE:
[The Underwriters represent that they intend to resell the New
Debentures, and therefore the provisions applicable to Reselling Underwriters in
the Standard Underwriting Agreement Provisions will be applicable.]
OR
[The Underwriters represent that they do not intend to resell the New
Debentures, and therefore the provisions applicable to Reselling Underwriters in
the Standard Underwriting Agreement Provisions will not be applicable.]
In witness whereof, the parties have executed this Underwriting
Agreement this ___ day of _________.
[Names of Underwriters or
Representative]
By______________________________
Title:
GTE CORPORATION
By______________________________
Title:
<PAGE>
-3-
SCHEDULE A
The names of the Underwriters and the principal amount of New
Debentures which each respectively offers to purchase are as follows:
<TABLE>
<CAPTION>
Principal
Amount
of New
Name Debentures
- ---- --------------
<S> <C>
$
--------------
Total....................... $___,000,000
</TABLE>
<PAGE>
GTE CORPORATION
STANDARD UNDERWRITING AGREEMENT PROVISIONS
(June, 1994 Edition)
<PAGE>
GTE Corporation, a New York corporation (the "Company"), may enter into
one or more underwriting agreements providing for the sale of junior
subordinated debentures to the underwriter or underwriters named therein (the
"Underwriters"). The standard provisions set forth herein will be incorporated
by reference in any such underwriting agreement ("Underwriting Agreement"). The
Underwriting Agreement, including these Standard Underwriting Agreement
Provisions incorporated therein by reference, is hereinafter referred to as
"this Agreement". Unless otherwise defined herein, terms used in this Agreement
that are defined in the Underwriting Agreement have the meanings set forth
therein.
I. SALE OF THE JUNIOR SUBORDINATED DEBENTURES
The Company proposes to issue one or more series of junior subordinated
debentures pursuant to the provisions of an Indenture dated as of June 1, 1994,
between the Company and The Bank of New York, as Trustee (the "Trustee"), as
amended by the ________ Supplmental Indenture dated as of ________ __, 1994 (the
Indenture as so supplemented, is hereinafter referred to as the "Indenture").
Pursuant to such Supplemental Indenture, the Company will designate the title of
each series, aggregate principal amount, date or dates of maturity, dates for
payment and rate of interest, redemption dates, prices, obligations and
restrictions, if any, and any other terms with respect to each such series.
The Company has filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"),
registration statement No. 33-53495 relating to $1,000,000,000 of the Company's
junior subordinated debentures (the amount remaining unsold thereunder, from
time to time, is hereinafter referred to as the "Debentures"), including a
prospectus relating to the Debentures, and has filed with, or transmitted for
filing to, the Commission (or will promptly after the sale so file or transmit
for filing) a prospectus supplement specifically relating to a particular series
of Debentures (such particular series being hereinafter referred to as the "New
Debentures") pursuant to Rule 424(b) under the Act ("Rule 424(b)"). The term
"Registration Statement" means the registration statement referred to herein, as
amended to the date of the Purchase Agreement. The term "Basic Prospectus" means
the prospectus relating to the Debentures included in the Registration
Statement. The term "Preliminary Prospectus" means the Basic Prospectus as
supplemented by a preliminary prospectus supplement included in the Registration
Statement or filed with the Commission pursuant to Rule 424(a) of the rules and
regulations of the Act. The term "Prospectus" means the Basic Prospectus
together with the prospectus supplement specifically relating to the New
Debentures, as filed with, or transmitted for filing to, the Commission pursuant
to Rule 424(b). As used herein, the terms "Registration Statement", "Basic
Prospectus", "Preliminary Prospectus" and "Prospectus" shall include in each
case the material, if any, incorporated by reference therein.
II. UNDERWRITERS' REPRESENTATIONS AND RESALE
Each Underwriter represents and warrants that information furnished in
writing to the Company expressly for use with respect to the New Debentures will
not contain any untrue statement of a material fact and will not omit any
material fact in connection with such information necessary to make such
information not misleading.
If the Underwriters advise the Company in the Underwriting Agreement
that they intend to resell the New Debentures, the Company will assist the
Underwriters as hereinafter provided. The terms of any such resale will be set
forth in the Prospectus. The provision of Paragraphs D and E of Article VI and
Articles VIII, IX and X of this Agreement apply only to Underwriters that have
advised the Company of their intention to resell the New Debentures ("Reselling
Underwriters"). All other provisions apply to any Underwriter including a
Reselling Underwriter.
<PAGE>
-2-
III. CLOSING
The closing will be held at the office of GTE Service Corporation, 5th
Floor, One Stamford Forum, Stamford, Connecticut 06904 on the Closing Date.
Concurrent with the delivery of the New Debentures to the Underwriters or to the
Representative for the account of each Underwriter, payment of the full purchase
price of the New Debentures shall be made by certified or official bank check or
checks in New York Clearing House (next day) funds, payable to the Company or
its order, at The Bank of New York, Attention: Corporate Trust Department. Upon
notification to the Company of receipt of such check by The Bank of New York,
such check shall be deemed to be delivered at the closing. The New Debentures
shall be in the form of temporary or definitive fully-registered New Debentures
in denominations of One Thousand Dollars ($1,000) or any integral multiple
thereof, registered in such names as the Underwriters or the Representative
shall request not less than three business days before the Closing Date. The
Company agrees to make the New Debentures available to the Underwriters or the
Representative for inspection at the office of The Depository Trust Company, New
York, New York, at least twenty-four hours prior to the time fixed for the
delivery of the New Debentures on the Closing Date.
IV. CONDITIONS TO UNDERWRITERS' OBLIGATIONS
The respective obligations of the Underwriters hereunder are subject to
the following conditions:
(A) The Registration Statement shall have become effective and no stop
order suspending the effectiveness of the Registration Statement shall be in
effect, and no proceedings for such purpose shall be pending before or
threatened by the Commission; the Company (including all of its subsidiaries
taken as a whole) has not sustained since the date of the latest audited
financial statements included or incorporated by reference in the Prospectus any
material loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since the respective dates as of which
information is given in the Registration Statement and the Prospectus, there has
not been any material change in the capital stock or long-term debt of the
Company (including all of its subsidiaries taken as a whole) or any material
adverse change in or affecting the business, properties, business prospects,
position (financial or otherwise) or results of operations of the Company and
its subsidiaries taken as a whole, otherwise than as set forth in or
contemplated by the Prospectus; and the Underwriters or the Representative shall
have received on the Closing Date the customary form of compliance certificate,
dated the Closing Date and signed by the President or a Vice President of the
Company, including the foregoing. The officer executing such certificate may
rely upon the best of his or her knowledge as to proceedings pending or
threatened.
(B) The Underwriters or the Representative shall have received on the
Closing Date an opinion of Michael T. Masin, Vice Chairman and Acting General
Counsel of the Company, dated the Closing Date, substantially in the form set
forth in Exhibit A hereto.
(C) The Underwriters or the Representative shall have received on the
Closing Date an opinion of Milbank, Tweed, Hadley & McCloy, counsel for the
Underwriters, dated the Closing Date, substantially in the form set forth in
Exhibit B hereto.
<PAGE>
-3-
(D) The Underwriters or the Representative shall have received on the
Closing Date an opinion of Sullivan & Cromwell, special tax counsel for the
Company, confirming their opinion as to tax matters set forth in the Prospectus.
(E) The Underwriters or the Representative shall have received on the
date of this Agreement and on the Closing Date a letter from Arthur Andersen &
Co., independent public accountants for the Company, dated as of a date not more
than five business days prior to the Closing Date, to the effect set forth in
Exhibit C hereto.
V. CONDITIONS TO COMPANY'S OBLIGATIONS
The obligations of the Company hereunder are subject to the following
conditions:
(A) The Registration Statement shall have become effective and no stop
order suspending the effectiveness of the Registration Statement shall be in
effect, and no proceedings for such purpose shall be pending before or
threatened by the Commission.
(B) The Company shall have received on the Closing Date the full
purchase price of the New Debentures purchased hereunder.
VI. COVENANTS OF THE COMPANY
In further consideration of the agreements contained herein of the
Underwriters, the Company covenants to the several Underwriters as follows:
(A) To furnish to the Underwriters or the Representative a copy of the
Registration Statement including materials, if any, incorporated by reference
therein and, during the period mentioned in (D) below, to supply as many copies
of the Prospectus, any documents incorporated by reference therein and any
supplements and amendments thereto as the Underwriters or the Representative may
reasonably request. The terms "supplement" and "amendment" or "amend" as used in
this Agreement shall include all documents filed by the Company with the
Commission subsequent to the effective date of the Registration Statement, or
the date of the Basic Prospectus, as the case may be, pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), which are deemed to be
incorporated by reference therein.
(B) For a period of five years, unless all of the New Debentures shall
be sooner retired, to deliver to any Underwriter who may so request, as soon as
practicable after the end of each fiscal year, a consolidated balance sheet of
the Company as of the end of such year and related consolidated statements of
income, reinvested earnings and changes in financial position for such year, all
as examined by independent public accountants, and to deliver to any Underwriter
upon request, as soon as practicable after the end of each of the first three
quarterly periods of each year a Form 10-Q of the Company as filed with the
Commission.
(C) Before amending or supplementing the Registration Statement or the
Prospectus with respect to the New Debentures, to furnish to any Underwriter or
the Representative, and to counsel for the Underwriters, a copy of each such
proposed amendment or supplement.
<PAGE>
-4-
The covenants in Paragraphs (D) and (E) apply only to Reselling
Underwriters:
(D) If in the period after the first date of resale of the New
Debentures during which, in the opinion of counsel for the Reselling
Underwriters, the Prospectus is required by law to be delivered, any event shall
occur as a result of which it is necessary to amend or supplement the Prospectus
in order to make a statement therein, in light of the circumstances when the
Prospectus is delivered to a subsequent purchaser, not materially misleading, or
if it is otherwise necessary to amend or supplement the Prospectus to comply
with law, forthwith to prepare and furnish, at its own expense (unless such
amendment shall relate to information furnished by the Underwriters or the
Representative by or on behalf of the Underwriters in writing expressly for use
in the Prospectus), to the Reselling Underwriters, the number of copies
requested by the Reselling Underwriters or the Representative of either
amendments or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in light of the circumstances
when the Prospectus is delivered to a subsequent purchaser, be misleading or so
that the Prospectus will comply with law.
(E) To use its best efforts to qualify the New Debentures for offer and
sale under the securities or Blue Sky laws of such jurisdictions as the
Underwriters or the Representative shall reasonably request and to pay all
expenses (including fees and disbursements of counsel) in connection therewith
and in connection with the determination of the eligibility of the New
Debentures for investment under the laws of such jurisdictions as the
Underwriters or the Representative may designate; provided, however, that the
Company, in complying with the foregoing provisions of this paragraph, shall not
be required to qualify as a foreign company or to register or qualify as a
broker or dealer in securities in any jurisdiction or to consent to service of
process in any jurisdiction other than with respect to claims arising out of the
offering or sale of the New Debentures, and provided further that the Company
shall not be required to continue the qualification of the New Debentures beyond
one year from the date of the sale of the New Debentures.
VII. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the several Underwriters that (i)
each document, if any, filed or to be filed pursuant to the Exchange Act and
incorporated by reference in the Basic Prospectus, the Preliminary Prospectus or
the Prospectus complied or will comply when so filed in all material respects
with the Exchange Act and the rules and regulations thereunder, (ii) each part
of the Registration Statement filed with the Commission pursuant to the Act
relating to the New Debentures, when such part became effective, did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (iii) on the effective date of the Registration Statement, the date
the Preliminary Prospectus is filed pursuant to Rule 424(a), the date the
Prospectus is filed pursuant to Rule 424(b) and at all times subsequent to and
including the Closing Date, the Registration Statement, the Preliminary
Prospectus and the Prospectus, as amended or supplemented, if applicable,
complied or will comply in all material respects with the Act and the applicable
rules and regulations thereunder, (iv) on the effective date of the Registration
Statement, the Registration Statement did not contain, and as amended or
supplemented, if applicable, will not contain, any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein not misleading, on the date the Preliminary Prospectus, or
any amendment or supplement thereto, is filed pursuant to Rule 424(a), the
Preliminary Prospectus will not contain any untrue statement of a material fact
necessary in order to make the statements therein not misleading, and on the
date the Prospectus, or any amendment or supplement thereto, is filed pursuant
to Rule 424(b) and on the Closing Date, the Prospectus will not contain any
untrue statement of a material fact or omit to state a material fact necessary
<PAGE>
- 5 -
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; except that these representations and
warranties do not apply to statements or omissions in the Registration
Statement, the Preliminary Prospectus or the Prospectus based upon information
furnished to the Company by any Underwriter or the Representative by or on
behalf of any Underwriter in writing expressly for use therein or to statements
or omissions in the Statement of Eligibility of the Trustee under the Indenture,
(v) the consummation of any transaction herein contemplated will not result in a
breach of any of the terms of any agreement or instrument to which the Company
is a party, and (vi) the Indenture has been qualified under the Trust Indenture
Act of 1939, as amended.
VIII. INDEMNIFICATION
The Company agrees to indemnify and hold harmless each Reselling
Underwriter and each person, if any, who controls such Reselling Underwriter
within the meaning of either Section 15 of the Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, damages and liabilities based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, the Basic Prospectus, the Preliminary
Prospectus or the Prospectus (if used within the period set forth in Paragraph
(D) of Article VI hereof, and as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are based upon any
such untrue statement or omission or alleged untrue statement or omission based
upon information furnished to the Company by any Reselling Underwriter or the
Representative by or on behalf of any Reselling Underwriter in writing expressly
for use therein or by any statement or omission in the Statement of Eligibility
of the Trustee under the Indenture.
Each Reselling Underwriter agrees to indemnify and hold harmless the
Company, its directors, its officers who sign the Registration Statement and any
person controlling the Company to the same extent as the foregoing indemnity
from the Company to each Reselling Underwriter, but only with reference to
information relating to said Reselling Underwriter furnished to the Company in
writing by the Reselling Underwriter or the Representative by or on behalf of
said Reselling Underwriter expressly for use in the Registration Statement, the
Preliminary Prospectus or the Prospectus.
In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be sought
pursuant to either of the two preceding paragraphs, such person (the
"indemnified party") shall promptly notify the person or persons against whom
such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such
<PAGE>
- 6 -
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless the indemnifying party and
the indemnified party shall have mutually agreed to the retention of such
counsel. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but if settled with such consent
or if there be a final judgment for the plaintiff, the indemnifying party agrees
to indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment.
If the indemnification provided for in this Article VIII is unavailable
to an indemnified party under the first or second paragraph hereof or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party, in lieu of indemnifying such
indemnified party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Reselling Underwriters on the other from
the offering of the New Debentures or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
Reselling Underwriters on the other in connection with the statement or omission
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Reselling Underwriters on the other in
connection with the offering of the New Debentures shall be deemed to be in the
same proportion as the total net proceeds from the offering of the New
Debentures received by the Company bear to the total commissions, if any,
received by all of the Reselling Underwriters in respect thereof. If there are
no commissions allowed or paid by the Company to the Reselling Underwriters in
respect of the New Debentures, the relative benefits received by the Reselling
Underwriters in the preceding sentence shall be the difference between the price
received by such Reselling Underwriters upon resale of the New Debentures and
the price paid for the New Debentures pursuant to the Underwriting Agreement.
The relative fault of the Company on the one hand and of the Reselling
Underwriters on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Reselling Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The amount paid or payable by an indemnified party as a result of the
losses, claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
IX. SURVIVAL
The indemnity and contribution agreements contained in Article VIII and
the representations and warranties of the Company contained in Article VII of
this Agreement shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by any
<PAGE>
-7-
Reselling Underwriter or on behalf of any Reselling Underwriter or any person
controlling any Reselling Underwriter and (iii) acceptance of and payment for
any of the New Debentures.
X. TERMINATION BY RESELLING UNDERWRITERS
At any time prior to the Closing Date this Agreement shall be subject to
termination in the absolute discretion of any Reselling Underwriter, by notice
given to the Company, if (i) trading in securities generally on the New York
Stock Exchange shall have been suspended or materially limited, (ii) a general
moratorium on commercial banking activities in New York shall have been declared
by either Federal or New York State authorities, (iii) minimum prices shall have
been established on the New York Stock Exchange by Federal or New York State
authorities or (iv) any outbreak or escalation of hostilities involving the
United States or declaration by the United States of a national emergency or war
or other calamity or crisis shall have occurred, the effect of any of which is
such as to make it impracticable or inadvisable to proceed with the delivery of
the New Debentures on the terms and in the manner contemplated by the
Prospectus.
XI. TERMINATION BY UNDERWRITERS
If this Agreement shall be terminated by the Underwriters because of any
failure or refusal on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, or if for any reason, (other
than those set forth in Article V) the Company shall be unable to perform its
obligations under this Agreement, the Company will reimburse the Underwriters
for all out-of-pocket expenses (including the fees and disbursements of counsel)
reasonably incurred by such Underwriters in connection with the New Debentures.
Except as provided herein, the Underwriters shall bear all of their expenses,
including the fees and disbursements of counsel.
XII. SUBSTITUTION OF UNDERWRITERS
If for any reason any Underwriter shall not purchase the New Debentures
it has agreed to purchase hereunder, the remaining Underwriters shall have the
right within 36 hours to make arrangements for the purchase of such New
Debentures hereunder. If they fail to do so, the Company shall have the right
within a further period of 36 hours to make arrangements satisfactory to the
Underwriters or the Representative for the puchase of such New Debentures
hereunder. If, after giving effect to any arrangements for the purchase of the
New Debentures as set forth in the preceding sentences, the aggregate number of
New Debentures which remains unpurchased does not exceed one-eleventh of the
aggregate number of New Debentures set forth in Schedule A hereto, then the
amounts of New Debentures that the remaining Underwriters are obligated,
severally, to purchase under this Agreement shall be increased in the
proportions which the total amount of New Debentures which they have
respectively agreed to purchase bears to the total amount of New Debentures
which all non-defaulting Underwriters have so agreed to purchase, or in such
other proportions as the Underwriters may specify to absorb such unpurchased New
Debentures. If after giving effect to any arrangements for the purchase of the
New Debentures as set forth in the first two sentences of this Article XII, the
aggregate number of New Debentures which remains unpurchased exceeds one-
eleventh of the aggregate number of New Debentures set forth in Schedule A
hereto, then the Company shall have the right either to elect to consummate the
sale except as to any such unpurchased New Debentures so remaining. In any such
cases, either the Underwriters or the Representative or the Company shall have
the right to postpone the Closing Date for not more than seven business days to
a mutually acceptable date. If the Company shall not elect to so consummate the
sale and any unpurchased New Debentures remain for which no satisfactory
substitute Underwriter is obtained in accordance with the above provisions, then
this Agreement shall terminate without liability on the part of any non-
defaulting Underwriter or the Company for the purchase or sale of any New
Debenture under this Agreement. No provision in this paragraph shall relieve any
defaulting Underwriter of liability to the Company for damages occasioned by
such default.
<PAGE>
-8-
XIII. MISCELLANEOUS
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
This Agreement shall be governed by and construed in accordance with
the substantive laws of the State of New York.
<PAGE>
EXHIBIT A
LETTERHEAD OF
Michael T. Masin
Vice Chairman and Acting General Counsel
________________
_____________, 199_
and the other Underwriters named in
the Underwriting Agreement dated _________ ,
199_, between GTE Corporation
and such Underwriters
Re: GTE Corporation
___% Junior Subordinated Debentures, Series _, Due____
Dear Sirs:
I have been requested by GTE Corporation, a New York corporation ("GTE"
or the "Company"), as its Vice Chairman and Acting General Counsel to furnish
you with my opinion pursuant to an Underwriting Agreement dated ______, 199_
(the "Agreement") between you and the Company, relating to the purchase and sale
of $ ___,000,000 aggregate principal amount of its __% Junior Subordinated
Debentures, Series _, Due ___ (the "New Debentures").
In this connection I have examined among other things:
(a) The Restated Certificate of Incorporation of the Company, as
amended, and the by-laws, each as presently in effect;
(b) A copy of the Indenture dated as of June 1, 1994, between the
Company and The Bank of New York, as Trustee (the "Trustee") as supplmented by a
________ Supplemental Indenture dated as of ________, 1994 (the Indenture as so
supplemented is hereinafter referred to as the "Indenture"), under which the New
Debentures are being issued;
(c) the forms of the New Debentures set forth in the ________
Supplemental Indenture;
(d) The records of the corporate proceedings of the Company relating to
the authorization, execution and delivery of the Indenture;
(e) The records of the corporate proceedings of the Company relating to
the authorization, execution and delivery of the Agreement;
(f) The record of all proceedings taken by the Company relating to the
registration of the New Debentures under the Securities Act of 1933, as amended
(the "Act"), and qualification of the Indenture under the Trust Indenture Act of
1939, as amended (the "TIA"), particularly the Registration Statement (File No.
33-53495), including the form of prospectus contained therein (unless the
context shall otherwise require, the Registration Statement as amended is
hereinafter called the "Registration Statement", the preliminary prospectus
dated _____, together with the preliminary prospectus supplement dated ____
relating to the New Debentures in the form filed under Rule 424(a) of the Act,
is hereinafter called the "Preliminary Prospectus" and the prospectus dated
_____, together with the prospectus supplement dated _____ relating to the New
Debentures in the form filed under Rule 424(b) of the Act, is hereinafter called
the "Prospectus"); and
<PAGE>
- 2 -
(g) Certain documents filed by the Company under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), which are incorporated by
reference in the Prospectus (the "Incorporated Documents").
On the basis of my examination of the foregoing and of such other
documents and matters as I have deemed necessary as the basis for the opinions
hereinafter expressed, I am of the opinion that:
(1) GTE has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of New York, with
all corporate power and authority to own its properties and conduct its
business as described in the Prospectus;
(2) The Indenture and the New Debentures to be issued thereunder, have
been duly authorized; the Indenture has been duly qualified under the Trust
Indenture Act, and has been duly executed and delivered and constitutes,
and the New Debentures, when duly executed and authenticated in accordance
with the Indenture and issued and delivered under the circumstances
provided in the Prospectus, will constitute, valid and legally binding
obligations of GTE enforceable in accordance with their terms, except as
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
the enforcement of creditors' rights and remedies generally, as from time
to time in effect, and by applicable principles of equity and
considerations of public policy (regardless of whether enforceability is
considered in a proceeding in equity or at law); and the Indenture conforms
and the New Debentures, when duly executed, authenticated, issued and
delivered, will conform to the descriptions thereof in the Prospectus;
(3) GTE has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
other United States jurisdiction in which it owns or leases property, or
conducts any business, so as to require such qualification, except where
the failure to so qualify would not result in any material adverse change
in or affecting the business, properties, business prospects, position
(financial or otherwise) or results of operations of GTE and its
subsidiaries taken as a whole;
(4) This Agreement has been duly authorized, executed and delivered by
GTE;
<PAGE>
-3-
(5) No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the issuance and sale of the New Debentures or the
consummation by GTE of the transactions contemplated herein, except
registration under the Act of the New Debentures and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the
purchase and distribution of the New Debentures by the Underwriters;
(6) The documents incorporated by reference in the Preliminary
Prospectus and the Prospectus (other than the financial statements, related
schedules and other financial and statistical data therein, as to which
such counsel need express no opinion), when they became effective or were
filed with the Commission, as the case may be, conformed in all material
respects to the requirements of the Act or the Exchange Act, as applicable,
and the rules and regulations of the Commission thereunder; and such
counsel has no reason to believe that any of such documents, when they
become effective or were so filed, as the case may be, contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and
(7) The Registration Statement, the Preliminary Prospectus and the
Prospectus and any further amendments and supplements thereto (other than
the financial statements and related schedules and financial and
statistical data therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the requirements of the Act
and the rules and regulations thereunder; such counsel has no reason to
believe that, as of its effective date, the Registration Statement or any
further amendment thereto (other than the financial statements, related
schedules and other financial and statistical data therein, as to which
such counsel need express no opinion) contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that,
as of their respective dates, the Preliminary Prospectus, the Prospectus or
any further amendment or supplement thereto (other than the financial
statements and related schedules and financial and statistical data
therein, as to which such counsel need express no opinion) contained an
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading or that, as of the Closing Date,
either the Registration Statement or the Prospectus or any further
amendment or supplement thereto (other than the financial statements and
related schedules and financial and statistical data therein, as to which
such counsel need express no opinion) contains an untrue statement of a
material fact or omits to state a material fact necessary to make the
statements therein, in light of the circumstances in which they were made,
not misleading; and they do not know of any amendment to the Registration
Statement required to be filed.
<PAGE>
EXHIBIT B
MILBANK, TWEED, HADLEY & McCLOY
1 Chase Manhattan Plaza
New York, New York 10005
____________, 1994
GTE CORPORATION
$___,000,000 __% Junior Subordinated Debentures, Series _, Due ____
and the other several Underwriters
referred to in the Underwriting Agreement
dated _______________________, among such
Underwriters and GTE Corporation
Dear Sirs:
We have been designated by GTE Corporation (the "Company") as counsel
for the underwriters of $___,000,000 aggregate principal amount of its __%
Junior Subordinated Debentures, Series _, Due ____ (the "New Debentures").
Pursuant to such designation and the terms of an Underwriting Agreement dated
___________, relating to the New Debentures (the "Underwriting Agreement"),
entered into by you with the Company, we have acted as your counsel in
connection with your several purchases this day from the Company of the New
Debentures, which are issued under an Indenture dated as of June 1, 1994,
between the Company and The Bank of New York, as trustee (the "Trustee") as
supplmented by a ________ Supplemental Indenture, dated as of ________, 1994,
(the Indenture, as so supplmented, is hereinafter referred to as the
"Indenture").
We have reviewed originals, or copies certified to our satisfaction, of
such corporate records of the Company, indentures, agreements and other
instruments, certificates of public officials and of officers and
representatives of the Company, and other documents, as we have deemed necessary
as a basis for the opinions hereinafter expressed. In such examination we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity with the original documents of all
documents submitted to us as copies, and the authenticity of the originals of
such latter documents. As to various questions of fact material to such
opinions, we have, when relevant facts were not independently established,
relied upon certifications by officers of the Company and statements contained
in the Registration Statement hereinafter mentioned.
In addition, we attended the closing held today at the offices of GTE
Service Corporation, One Stamford Forum, Stamford, Connecticut, at which the
Company caused the New Debentures to be delivered to your representatives at The
Depository Trust Company, 55 Water Street, New York, New York, for your several
accounts, against payment therefor.
On the basis of the foregoing, and having regard to legal considerations
which we deem relevant, we are of the opinion that:
1. The Company is a validly existing corporation, in good standing,
under the laws of the State of New York.
<PAGE>
-2-
2. The Underwriting Agreement has been duly authorized, executed and
delivered by and on behalf of the Company.
3. The Indenture has been duly authorized, executed, and delivered by
the Company and constitutes a legal, valid and binding agreement of the Company
enforceable in accordance with its terms, except as limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws of general applicability
affecting the enforceability of creditors' rights. The enforceability of the
Indenture is subject to the effect of general principles of equity (regardless
of whether considered in a proceeding in equity or at law), including without
limitation (i) the possible unavailability of specific performance, injunctive
relief or any other equitable remedy and (ii) concepts of materiality,
reasonableness, good faith and fair dealing. The Indenture has been duly
qualified under the Trust Indenture Act of 1939, as amended.
4. The New Debentures have been duly authorized and conform as to legal
matters in all substantial respects to the description thereof contained in the
Registration Statement, the Preliminary Prospectus and Prospectus hereinafter
mentioned. The New Debentures (assuming due execution thereof by the Company and
due authentication and delivery by the Trustee) have been duly issued for value
by the Company and (subject to the qualifications stated in paragraph 3 above)
constitute legal, valid and binding obligations of the Company, and are entitled
to the benefits afforded by the Indenture in accordance with the terms of the
Indenture and of the New Debentures.
5. On the basis of information received by the Company from the
Securities and Exchange Commission (the "Commission"), Registration Statement
No. 33-____ with respect to the New Debentures filed with the Commission
pursuant to the Securities Act of 1933, as amended (the "Act"), became effective
under the Act on _______, and the Prospectus dated ______, as supplemented by
the Prospectus Supplement dated ______ (collectively, the "Prospectus"), became
lawful for use for the purposes specified in the Act, in connection with the
offer for sale and sale of the New Debentures in the manner therein specified,
subject to compliance with the provisions of securities of Blue Sky laws of
certain States in connection with the offer for sale or sale of the New
Debentures in such States. The term "Preliminary Prospectus" means any
preliminary prospectus or preliminary prospectus as supplemented by a
preliminary prospectus supplement included in the Registration Statement or
filed with the Commission pursuant to Rule 424(a) of the rules and regulations
of the Act. To the best of our knowledge, the Registration Statement remains in
effect at this date.
6. The Registration Statement, the Preliminary Prospectus and the
Prospectus (except any financial statements or other financial data contained or
incorporated by reference therein, as to which no opinion is expressed) comply
as to form in all material respects with the relevant requirements of the Act
and the applicable rules and regulations of the Commission thereunder.
<PAGE>
- 3 -
We are members of the bar of New York and express no opinion as to
matters governed by any laws other than the laws of the State of New York and
the Federal laws of the United States of America.
The Registration Statement was filed on Form S-3 under the Act and,
accordingly, the Preliminary Prospectus and the Prospectus do not necessarily
contain a current description of the Company's business and affairs, since Form
S-3 provides for the incorporation by reference of certain documents filed with
the Commission which contain descriptions as of various dates. We participated
in conferences with counsel for, and representatives of, the Company in
connection with the preparation of the Registration Statement, the Preliminary
Prospectus and Prospectus and we have reviewed certain documents filed by the
Company under the Exchange Act, which are incorporated by reference in the
Preliminary Prospectus and the Prospectus (such documents as have been filed
prior to the effective date of the Registration Statement and listed in the
Preliminary Prospectus and the Prospectus as being incorporated by reference are
herein called the "Incorporated Documents"). In connection with our
participation in the preparation of the Registration Statement, the Preliminary
Prospectus and the Prospectus, we have not independently verified the accuracy,
completeness or fairness of the statements contained therein or in the
Incorporated Documents, and the limitations inherent in the review made by us
and the knowledge available to us are such that we are unable to assume, and we
do not assume, any responsibility for the accuracy, completeness or fairness of
the statements contained in the Registration Statement, the Preliminary
Prospectus, the Prospectus or the Incorporated Documents, except as otherwise
specifically stated herein. None of the foregoing disclosed to us any
information which gave us reason to believe that the Registration Statement, the
Preliminary Prospectus, the Prospectus or the Incorporated Documents, considered
as a whole on the effective date of the Registration Statement and on the date
hereof, contained or contain any untrue statement of a material fact or omitted
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading. We express no opinion as to
any document filed by the Company under the Securities and Exchange Act of 1934,
whether prior or subsequent to such effective date, except to the extent that
such documents are Incorporated Documents read together with the Registration
Statement, the Preliminary Prospectus or the Prospectus and considered as a
whole, nor do we express any opinion as to the financial statements or other
financial data included in or omitted from, or incorporated by reference in the
Registration Statement, the Preliminary Prospectus, the Prospectus or the
Incorporated Documents.
Very truly yours,
MILBANK, TWEED, HADLEY & McCLOY
<PAGE>
EXHIBIT C
LETTER OF INDEPENDENT PUBLIC ACCOUNTANTS
The letter of independent public accountants for the Company to be
delivered pursuant to Article IV, paragraph (E) of the document entitled
Standard Purchase Agreement Provisions, June, 1994 Edition, shall be to the
effect that:
(i) They are independent certified public accountants with respect to
GTE and its subsidiaries within the meaning of the Act and the applicable
published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, prospective
financial statements and/or pro forma financial information) included or
incorporated by reference in the Registration Statement or the Prospectus
comply as to form in all material respects with the applicable accounting
requirements of the Act or the Exchange Act, as applicable, and the related
published rules and regulations thereunder; to the extent required, they
have made a review in accordance with standards established by the American
Institute of Certified Public Accountants of the consolidated interim
financial statements, selected financial data, pro forma financial
information, prospective financial statements and/or condensed financial
statements derived from audited financial statements of GTE for the periods
specified in such letter, as indicated in their reports thereon, copies of
which have been furnished to the representatives of the Underwriters (the
"Representatives");
(iii) The unaudited selected income statement data and balance sheet
data for the five most recent fiscal years included in the Prospectus
agrees with the corresponding amounts (after restatement where applicable)
in the audited consolidated financial statements for such five fiscal years
which were included or incorporated by reference in GTE's Annual Reports on
Form 10-K for such fiscal years;
(iv) On the basis of limited procedures, not constituting an audit in
accordance with generally accepted auditing standards, consisting of a
reading of the unaudited financial statements and other information
referred to below, a reading of the latest available interim financial
statements of GTE and its subsidiaries, inspection of the minute books of
GTE and its subsidiaries since the date of the latest audited financial
statements included or incorporated by reference in the Prospectus,
inquiries of officials of GTE and its subsidiaries responsible for
financial and accounting matters and such other inquiries and procedures as
may be specified in such letter, nothing came to their attention that
caused them to believe that:
(A) the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included or incorporated by reference in GTE's Quarterly Reports on
Form 10-Q incorporated by reference in the Prospectus do not comply as
to form in all material respects with the applicable accounting
requirements of the Exchange Act as it applies to Form 10-Q and the
related published rules and regulations thereunder or are not in
conformity with generally accepted accounting principles applied on a
basis substantially consistent with the basis for the audited
consolidated statements of income, consolidated balance sheets and
consolidated statements of cash flows included or incorporated by
reference in GTE's Annual Report on Form 10-K for the most recent
fiscal year;
(B) any other unaudited income statement data and balance sheet
data included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited consolidated
financial statements included or incorporated by reference in GTE's
Annual Report on Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not included in
the Prospectus but from which were derived the unaudited condensed
financial statements referred to in clause (A) and any unaudited
income statement data and balance sheet data included in the
Prospectus and referred to in Clause (B) were not determined on a
basis substantially consistent with the basis for the audited
financial statements included or incorporated by reference in GTE's
Annual Report on Form 10-K for the most recent fiscal year;
1
<PAGE>
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of those
statements;
(E) as of the date of the latest available interim financial
statements, there have been any changes in the consolidated equity
(other than issuances of capital stock upon exercise of options and
stock appreciation rights, upon earn-outs of performance shares and
upon conversions of convertible securities, in each case which were
outstanding on the date of the latest balance sheet included or
incorporated by reference in the Prospectus) or any increase in the
consolidated short-term debt or long-term debt of GTE and its
subsidiaries, or any decreases in consolidated net assets or other
items specified by the Representatives, or any increases in any items
specified by the Representatives, in each case as compared with
amounts shown in the latest balance sheet included or incorporated by
reference in the Prospectus, except in each case for changes,
increases or decreases which the Prospectus discloses have occurred or
may occur or which are described in such letter;
(F) for the period from the date of the latest financial statements
included or incorporated by reference in the Prospectus to the
specified date referred to in Clause (E) whether there were any
decreases in consolidated net revenues or operating profit or the
total or per share amounts of consolidated net income or other items
specified by the Representatives, or any increases in any items
specified by the Representatives, in each case as compared with the
comparable period of the preceding year and with any other period of
corresponding length specified by the Representatives, except in each
case for increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter;
(G) as of a specified date not more than five days prior to the
date of such letter there have been any changes in the consolidated
equity (other than issuances of capital stock upon exercise of options
and stock appreciation rights, upon earn-outs of performance shares
and upon conversions of convertible securities, in each case which
were outstanding on the date of the latest balance sheet included or
incorporated by reference in the Prospectus) or any increase in the
consolidated short-term debt or, long-term debt of GTE and its
subsidiaries, or any decreases in consolidated net assets or or other
items specified by the Representatives, or any increases in any items
specified by the Representatives, in each case as compared with
amounts shown in the latest balance sheet included or incorporated by
reference in the Prospectus, except in each case for changes,
increases or decreases which the Prospectus discloses have occurred or
may occur or which are described in such letter; and
(H) for the period from the date of the latest available interim
financial statements referred to in Clause (E) to the specified date
referred to in Clause (G) whether there were any material decreases in
consolidated net revenues or operating profit or the total or per
share amounts of consolidated net income or other items specified by
the Representatives, or any material increases in any items specified
by the Representatives, in each case as compared with the comparable
period of the preceding year and with any other period of
corresponding length specified by the Representatives, except in each
case for increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter;
(v) In addition to the audit referred to in their report(s) included or
incorporated by reference in the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures referred to in
paragraphs (iii) and (iv) above, they have carried out certain specified
procedures, not constituting an audit in accordance with generally accepted
auditing standards, with respect to certain amounts, percentages and
financial information specified by the Representatives which are derived
from the general accounting records of GTE and its subsidiaries, which
appear in the Prospectus (excluding documents incorporated by reference),
or in Part II of, or in exhibits and schedules to, the Registration
Statement specified by the Representatives or in documents incorporated by
reference in the Prospectus specified by the Representatives, and have
compared certain of such amounts, percentages and financial information
with the accounting records of GTE and its subsidiaries and have found them
to be in agreement.
All references in this Exhibit C to the Prospectus shall be deemed to refer to
the Basic Prospectus (including the documents incorporated by reference therein)
as defined in the Underwriting Agreement as of the date of the letter delivered
on the date of the Underwriting Agreement for purposes of such letter and to the
Prospectus (including the documents incorporated by reference therein) in
relation to the New Debentures for purposes of the letter delivered on the
Closing Date.
2
<PAGE>
EXHIBIT 4.1
- --------------------------------------------------------------------------------
GTE CORPORATION
AND
THE BANK OF NEW YORK
AS TRUSTEE
____________
INDENTURE
Dated as of June 1, 1994
____________
Junior Subordinated Debentures
- --------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
<S> <C>
Section of
Trust Indenture Act Section of
of 1939, as amended Indenture
310(a)..................... 7.09
310(b)..................... 7.08
7.10
310(c)..................... Inapplicable
311(a)..................... 7.13(a)
311(b)..................... 7.13(b)
311(c)..................... Inapplicable
312(a)..................... 5.01
5.02(a)
312(b)..................... 5.02(b)
312(c)..................... 5.02(c)
313(a)..................... 5.04(a)
313(b)..................... 5.04(b)
313(c)..................... 5.04(a)
5.04(b)
313(d)..................... 5.04(c)
314(a)..................... 5.03
314(b)..................... Inapplicable
314(c)..................... 13.06
314(d)..................... Inapplicable
314(e)..................... 13.06
314(f)..................... Inapplicable
315(a)..................... 7.01(a)
7.02
315(b)..................... 6.07
315(c)..................... 7.01
315(d)..................... 7.01(b)
7.01(c)
315(e)..................... 6.08
316(a)..................... 6.06
8.04
316(b)..................... 6.04
316(c)..................... 8.01
317(a)..................... 6.02
317(b)..................... 4.04
318(a)..................... 13.08
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS*
__________________
Page
----
<S> <C>
PARTIES............................................. 1
<CAPTION>
RECITALS:
<S> <C>
Purpose of Indenture................................ 1
Compliance with legal requirements.................. 1
Purpose of and consideration for Indenture.......... 1
<CAPTION>
ARTICLE ONE
DEFINITIONS
<S> <C>
SECTION 1.01. Certain terms defined; other terms
defined in the Trust Indenture Act of 1939, as
amended, or by reference therein in the Securities
Act of 1933, as amended, to have the meanings
assigned therein.................................... 2
Affiliate........................................... 2
Authenticating Agent................................ 2
Board of Directors.................................. 2
Board Resolution.................................... 3
Business day........................................ 3
Certificate......................................... 3
Corporate Trust Office.............................. 3
Company............................................. 3
Debenture or Debentures............................. 3
Debentureholder..................................... 3
Default............................................. 3
Depository.......................................... 4
Event of Default.................................... 4
Global Debenture.................................... 4
Governmental Obligations............................ 4
GTE Delaware........................................ 4
Guarantee........................................... 5
Indenture........................................... 5
Interest Payment Date............................... 5
Officers' Certificate............................... 5
Opinion of Counsel.................................. 5
Outstanding......................................... 5
Predecessor Debenture............................... 6
Responsible Officer................................. 6
Senior Indebtedness................................. 6
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Subsidiary.......................................... 7
Trustee............................................. 7
Trust Indenture Act................................. 7
</TABLE>
- ------------
* This Table of Contents does not constitute part of the Indenture and should
not have any bearing upon the interpretation of any of its terms or provisions.
ii
<PAGE>
ARTICLE TWO
ISSUE, DESCRIPTION, TERMS, EXECUTION, REGISTRATION
AND EXCHANGE OF DEBENTURES
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 2.01. Designation, terms, amount, authentication
and delivery of Debentures................. 7
SECTION 2.02. Form of Debentures and Trustee's
certificate................................ 9
SECTION 2.03. Date and denominations of Debentures,
and provisions for payment of principal,
premium and interest....................... 9
SECTION 2.04. Execution of Debentures.................... 11
SECTION 2.05. Exchange of Debentures..................... 12
(a) Registration and transfer
of Debentures.............................. 12
(b) Debentures to be accompanied
by proper instruments of
transfer................................... 13
(c) Charges upon exchange, transfer or
registration of Debentures................. 13
(d) Restrictions on transfer or exchange at
time of redemption......................... 13
SECTION 2.06. Temporary Debentures....................... 14
SECTION 2.07. Mutilated, destroyed, lost or stolen
Debentures................................. 14
SECTION 2.08. Cancellation of surrendered
Debentures................................. 15
SECTION 2.09. Provisions of Indenture and Debentures
for sole benefit of parties and
Debentureholders........................... 15
SECTION 2.10. Appointment of Authenticating
Agent...................................... 16
SECTION 2.11. Global Debenture........................... 16
</TABLE>
iii
<PAGE>
ARTICLE THREE
REDEMPTION OF DEBENTURES AND SINKING FUND PROVISIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 3.01. Redemption of Debentures................. 18
SECTION 3.02. (a) Notice of redemption................. 18
(b) Selection of Debentures in case
less than all Debentures to be
redeemed................................. 19
SECTION 3.03. (a) When Debentures called for redemption
become due and payable................... 19
(b) Receipt of new Debenture upon
partial payment.......................... 19
SECTION 3.04. Sinking Fund for Debentures.............. 20
SECTION 3.05. Satisfaction of Sinking Fund Payments
with Debentures.......................... 20
SECTION 3.06. Redemption of Debentures for Sinking
Fund..................................... 20
<CAPTION>
ARTICLE FOUR
PARTICULAR COVENANTS OF THE COMPANY
<S> <C> <C>
SECTION 4.01. Payment of principal of (and premium,
if any) and interest on
Debentures............................... 21
SECTION 4.02. Maintenance of office or agency for
payment of Debentures, designation
of office or agency for payment,
registration, transfer and
exchange of Debentures................... 21
SECTION 4.03. (a) Duties of paying agent............... 21
(b) Company as paying agent.............. 22
(c) Holding sums in trust................ 22
SECTION 4.04. Appointment to fill vacancy in
office of Trustee........................ 22
SECTION 4.05. Restriction on consolidation,
merger or sale........................... 23
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 4.06 Covenants as to GTE Delaware............. 23
SECTION 4.07 Restriction on dividends and
payments................................. 23
<CAPTION>
ARTICLE FIVE
DEBENTUREHOLDERS' LISTS, AND REPORTS BY THE COMPANY
AND THE TRUSTEE
<S> <C> <C>
SECTION 5.01. Company to furnish Trustee information
as to names and addresses of
Debentureholders......................... 24
SECTION 5.02. (a) Trustee to preserve information
as to names and addresses of
Debentureholders received by it
in capacity of paying agent.............. 24
(b) Trustee may destroy list of
Debentureholders on certain
conditions............................... 24
(c) Trustee to make information as to
names and addresses of Debentureholders
available to "applicants" or mail
communications to Debentureholders
in certain circumstances................. 24
(d) Procedure if Trustee elects not
to make information available to
applicants............................... 25
(e) Company and Trustee not accountable
for disclosure of information............ 25
SECTION 5.03. (a) Annual and other reports to be filed
by Company with Trustee.................. 25
(b) Additional information and reports to
be filed with Trustee and Securities and
Exchange Commission...................... 26
(c) Summaries of information and reports
to be transmitted by Company to
Debentureholders......................... 26
(d) Annual Certificate to be furnished
to Trustee............................... 26
SECTION 5.04. (a) Trustee to transmit annual report to
Debentureholders......................... 26
</TABLE>
v
<PAGE>
<TABLE>
<S> <C> <C>
(b) Trustee to transmit certain further
reports to Debentureholders.............. 27
(c) Copies of reports to be filed with
stock exchanges and Securities and
Exchange Commission...................... 28
<CAPTION>
ARTICLE SIX
REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS
UPON EVENT OF DEFAULT
<S> <C> <C>
SECTION 6.01. (a) Events of Default defined............ 28
(b) Acceleration of maturity upon Event
of Default............................... 29
(c) Waiver of default and rescission of
declaration of maturity.................. 30
(d) Restoration of former position and
rights upon curing default............... 31
SECTION 6.02. (a) Covenant of Company to pay to Trustee
whole amount due on Debentures on default
in payment of interest or principal (and
premium, if any)......................... 31
(b) Trustee may recover judgment for whole
amount due on Debentures on failure of
Company to pay........................... 31
(c) Filing of proof of claim by Trustee
in bankruptcy, reorganization or
receivership proceeding.................. 32
(d) Rights of action and of asserting
claims may be enforced by Trustee without
possession of Debentures................. 32
SECTION 6.03. Application of moneys collected
by Trustee............................... 33
SECTION 6.04. Limitation on suits by holders
of Debentures............................ 33
SECTION 6.05. (a) Remedies cumulative.................. 34
(b) Delay or omission in exercise of
rights not waiver of default............. 34
</TABLE>
vi
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 6.06. Rights of holders of majority in
principal amount of Debentures to direct
Trustee and to waive defaults........... 34
SECTION 6.07. Trustee to give notice of defaults known
to it, but may withhold in certain
circumstances........................... 35
SECTION 6.08. Requirements of an undertaking to pay
costs in certain suits under Indenture
or against Trustee...................... 36
<CAPTION>
ARTICLE SEVEN
CONCERNING THE TRUSTEE
<S> <C> <C>
SECTION 7.01. (a) Upon Event of Default occurring and
continuing, Trustee shall exercise powers
vested in it, and use same degree of care
and skill in their exercise, as prudent
individual would use..................... 36
(b) Trustee not relieved from liability
for negligence or willful misconduct
except as provided in this section....... 36
(1) Prior to Event of Default and after
the curing of all Events of Default which
may have occurred........................ 36
(i) Trustee not liable except for per-
formance of duties specifically set
forth.................................... 36
(ii) In absence of bad faith, Trustee
may conclusively rely on certificates
or opinions furnished it hereunder,
subject to duty to examine the same if
specifically required to be furnished
to it.................................... 37
(2) Trustee not liable for error of
judgment made in good faith by
Responsible Officer unless Trustee
negligent................................ 37
(3) Trustee not liable for action or
non-action in accordance with direction
of holders of majority in principal
amount of Debentures..................... 37
(4) Trustee need not expend own funds
without adequate indemnity............... 37
</TABLE>
vii
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 7.02. Subject to provisions of Section 7.01:
(a) Trustee may rely on documents
believed genuine and properly signed or
presented................................ 37
(b) Sufficient evidence by certain
instruments provided for................. 38
(c) Trustee may consult with counsel
and act on advice or Opinion of
Counsel.................................. 38
(d) Trustee may require indemnity from
Debentureholders......................... 38
(e) Trustee not liable for actions in
good faith believed to be authorized..... 38
(f) Prior to Event of Default Trustee
not bound to investigate facts or
matters stated in certificates, etc.,
unless requested in writing by
Debentureholders......................... 38
(g) Trustee may perform duties directly
or through agents or attorneys........... 39
SECTION 7.03. (a) Trustee not liable for recitals in
Indenture or in Debentures............... 39
(b) No representations by Trustee as
to validity or Indenture or of
Debentures............................... 39
(c) Trustee not accountable for use of
Debentures or proceeds................... 39
SECTION 7.04. Trustee, paying agent or Debenture
Registrar may own Debentures............ 39
SECTION 7.05. Moneys received by Trustee to be held
in trust without interest............... 39
SECTION 7.06. (a) Trustee entitled to compensation,
reimbursement and indemnity............. 39
(b) Obligations to Trustee to be secured
by lien prior to Debentures.............. 40
</TABLE>
viii
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 7.07. Right of Trustee to rely on certificate
of officers of Company where no other
evidence specifically prescribed........ 40
SECTION 7.08. (a) Trustee acquiring conflicting
interest to eliminate conflict or resign. 40
(b) Notice to Debentureholders in case
of failure to comply with subsection (a). 40
(c) Definition of conflicting interest... 41
(d) Definition of certain terms.......... 45
(e) Calculation of percentages of
Debentures............................... 46
(f) Trustee resignation not required
under certain circumstances.............. 47
SECTION 7.09. Requirements for eligibility of
Trustee.................................. 47
SECTION 7.10. (a) Resignation of Trustee and appoint-
ment of successor........................ 48
(b) Removal of Trustee by Company or
by court on Debentureholders' applica-
tion..................................... 48
(c) Removal of Trustee by holders of
majority in principal amount of
Debentures............................... 49
(d) Time when resignation or removal
of Trustee effective..................... 49
(e) One Trustee for each series.......... 49
SECTION 7.11. (a) Acceptance by successor to
Trustee.................................. 49
(b) Trustee with respect to less than
all series............................... 49
(c) Company to confirm Trustee's
rights................................... 50
(d) Successor Trustee to be
qualified................................ 50
</TABLE>
ix
<PAGE>
<TABLE>
<S> <C> <C>
(e) Notice of succession................. 51
SECTION 7.12. Successor to Trustee by merger,
consolidation or succession to
business................................ 51
SECTION 7.13. (a) Limitations on rights of Trustee
as a creditor to obtain payment of
certain claims within four months
prior to default or during default,
or to realize on property as such
creditor thereafter...................... 51
(b) Certain creditor relationships
excluded................................. 54
(c) Definition of certain terms.......... 55
<CAPTION>
ARTICLE EIGHT
CONCERNING THE DEBENTUREHOLDERS
<S> <C> <C>
SECTION 8.01. Evidence of action by Debenture-
holders................................. 55
SECTION 8.02. Proof of execution of instruments and
of holding of Debentures................ 56
SECTION 8.03. Who may be deemed owners of
Debentures.............................. 56
SECTION 8.04. Debentures owned by Company or
controlled or controlling companies
disregarded for certain purposes........ 57
SECTION 8.05. Instruments executed by Debenture-
holders bind future holders............. 57
<CAPTION>
ARTICLE NINE
SUPPLEMENTAL INDENTURES
<S> <C> <C>
SECTION 9.01. Purposes for which supplemental
indenture may be entered into without
consent of Debentureholders............. 58
SECTION 9.02. Modification of Indenture with consent
of Debentureholders..................... 59
SECTION 9.03. Effect of supplemental indentures........ 60
SECTION 9.04. Debentures may bear notation of
changes by supplemental indentures...... 60
</TABLE>
x
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 9.05. Opinion of Counsel....................... 60
<CAPTION>
ARTICLE TEN
CONSOLIDATION, MERGER AND SALE
<S> <C> <C>
SECTION 10.01. Consolidations or mergers of Company
and sales or conveyances of property of
Company permitted....................... 61
SECTION 10.02. (a) Rights and duties of successor
company................................. 61
(b) Appropriate changes may be made
in phraseology and form of
Debentures............................... 62
(c) Company may consolidate or merge
into itself or acquire properties of
other corporations....................... 62
SECTION 10.03. Opinion of Counsel....................... 62
<CAPTION>
ARTICLE ELEVEN
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
<S> <C> <C>
SECTION 11.01. Satisfaction and discharge of
Indenture............................... 62
SECTION 11.02. Discharge of Company's Obligations....... 63
SECTION 11.03. Application by Trustee of funds
deposited for payment of Debentures..... 63
SECTION 11.04. Repayment of moneys held by paying
agent................................... 64
SECTION 11.05. Repayment of moneys held by
Trustee................................. 64
<CAPTION>
ARTICLE TWELVE
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
<S> <C> <C>
SECTION 12.01. Incorporators, stockholders, officers
and directors of Company exempt from
individual liability.................... 64
</TABLE>
xi
<PAGE>
<TABLE>
ARTICLE THIRTEEN
SUNDRY PROVISIONS
<S> <C> <C>
SECTION 13.01. Successors and assigns of Company
bound by Indenture........................ 65
SECTION 13.02. Acts of board, committee or officer
of successor company valid................ 65
SECTION 13.03. Surrender of powers by Company............. 65
SECTION 13.04. Required notices or demands may be
served by mail............................ 65
SECTION 13.05. Indenture and Debentures to be con-
strued in accordance with laws of
the State of York......................... 65
SECTION 13.06. (a) Officers' Certificate and Opinion
of Counsel to be furnished upon
applications or demands by Company........ 65
(b) Statements to be included in
each certificate or opinion with
respect to compliance with condi-
tion or covenant........................... 66
SECTION 13.07. Payments due on Sundays or
holidays................................... 66
SECTION 13.08. Provisions required by Trust
Indenture Act of 1939 to control........... 66
SECTION 13.09. Indenture may be executed in
counterparts............................... 66
SECTION 13.10. Separability of Indenture provi-
sions...................................... 66
SECTION 13.11. Assignment by Company to subsidiary......... 67
<CAPTION>
ARTICLE FOURTEEN
SUBORDINATION OF DEBENTURES
<S> <C> <C>
SECTION 14.01 Agreement of Subordination.................. 67
SECTION 14.02. Limitations on payments to Debentureholders.. 67
SECTION 14.03. Payments in bankruptcy....................... 68
SECTION 14.04. Subrogation of Debentures.................... 69
</TABLE>
xii
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 14.05. Authorization by Debentureholders........ 70
SECTION 14.06. Notice to Trustee........................ 70
SECTION 14.07. Trustee's relation to Senior
Indebtedness............................ 71
SECTION 14.08. Acts of holders of Senior
Indebtedness............................ 72
ACCEPTANCE OF TRUST BY TRUSTEE............................. 73
TESTIMONIUM................................................ 73
SIGNATURES AND SEALS....................................... 73
ACKNOWLEDGMENTS............................................ 74
</TABLE>
xiii
<PAGE>
THIS INDENTURE, dated as of the 1st day of June, 1994, between GTE
CORPORATION, a corporation duly organized and existing under the laws of the
State of New York (hereinafter sometimes referred to as the "Company"), and The
Bank of New York, a New York banking association organized and existing under
the laws of the State of New York, as trustee (hereinafter sometimes referred to
as the "Trustee"):
WHEREAS, for its lawful corporate purposes, the Company has duly authorized
the execution and delivery of this Indenture to provide for the issuance of
unsecured debentures (hereinafter referred to as the "Debentures"), in an
unlimited aggregate principal amount to be issued from time to time in one or
more series as in this Indenture provided as registered Debentures without
coupons, to be authenticated by the certificate of the Trustee;
WHEREAS, to provide the terms and conditions upon which the Debentures are
to be authenticated, issued and delivered, the Company has duly authorized the
execution of this Indenture;
WHEREAS, the Debentures and the certificate of authentication to be borne
by the Debentures (the "Certificate of Authentication") are to be substantially
in such forms as may be approved by the Board of Directors (as defined below) or
set forth in any indenture supplemental to this Indenture;
AND WHEREAS, all acts and things necessary to make the Debentures issued
pursuant hereto, when executed by the Company and authenticated and delivered by
the Trustee as in this Indenture provided, the valid, binding and legal
obligations of the Company, and to constitute these presents a valid indenture
and agreement according to its terms, have been done and performed or will be
done and performed prior to the issuance of such Debentures, and the execution
of this Indenture and the issuance hereunder of the Debentures have been or will
be prior to issuance in all respects duly authorized, and the Company, in the
exercise of the legal right and power in it vested, executes this Indenture and
proposes to make, execute, issue and deliver the Debentures;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the Debentures
are and are to be authenticated, issued and delivered, and in consideration of
the premises, of the purchase and acceptance of the Debentures by the holders
thereof and of the sum of one dollar ($1.00) to it duly paid by the Trustee at
the execution of these presents, the receipt whereof is hereby acknowledged, the
Company covenants and agrees with the Trustee,
<PAGE>
for the equal and proportionate benefit (subject to the provisions of this
Indenture) of the respective holders from time to time of the Debentures,
without any discrimination, preference or priority of any one Debenture over any
other by reason of priority in the time of issue, sale or negotiation thereof,
or otherwise, except as provided herein, as follows:
ARTICLE ONE
Definitions
SECTION 1.01. The terms defined in this Section (except as in this
Indenture otherwise expressly provided or unless the context otherwise requires)
for all purposes of this Indenture, any resolution of the Board of Directors of
the Company and of any indenture supplemental hereto shall have the respective
meanings specified in this Section. All other terms used in this Indenture
which are defined in the Trust Indenture Act of 1939, as amended, or which are
by reference in such Act defined in the Securities Act of 1933, as amended
(except as herein otherwise expressly provided or unless the context otherwise
requires), shall have the meanings assigned to such terms in said Trust
Indenture Act and in said Securities Act as in force at the date of the
execution of this instrument.
Affiliate:
The term "Affiliate" of the Company shall mean any company at least a majority
of whose outstanding voting stock shall at the time be owned by the Company, or
by one or more direct or indirect subsidiaries of or by the Company and one or
more direct or indirect subsidiaries of the Company. For the purposes only of
this definition of the term "Affiliate", the term "voting stock", as applied to
the stock of any company, shall mean stock of any class or classes having
ordinary voting power for the election of a majority of the directors of such
company, other than stock having such power only by reason of the occurrence of
a contingency.
Authenticating Agent:
The term "Authenticating Agent" means an authenticating agent with respect to
all or any of the series of Debentures, as the case may be, appointed with
respect to all or any series of the Debentures, as the case may be, by the
Trustee pursuant to Section 2.10.
Board of Directors:
The term "Board of Directors" shall mean the Board of Directors of the Company,
or an Executive or Special Committee of such Board.
2
<PAGE>
Board Resolution:
The term "Board Resolution" shall mean a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification.
Business day:
The term "business day", with respect to any series of Debentures, shall mean
any day other than a day on which banking institutions in the Borough of
Manhattan, the City and State of New York, as the case may be (depending on
whether an office or agency of the Company is being maintained in either such
city with respect to any such series), are authorized or obligated by law or
executive order to close.
Certificate:
The term "Certificate" shall mean a certificate signed by the principal
executive officer, the principal financial officer or the principal accounting
officer of the Company. The Certificate need not comply with the provisions of
Section 13.06.
Corporate Trust Office:
The term "Corporate Trust Office" shall mean the office of the Trustee at which
at any particular time its corporate trust business shall be principally
administered, which office at the date of the execution of this Indenture is
located at 101 Barclay St., New York, NY 10286, Attention: Corporate Trust
Department.
Company:
The term "Company" shall mean GTE Corporation, a corporation duly organized and
existing under the laws of the State of New York, and, subject to the provisions
of Article Ten, shall also include its successors and assigns.
Debenture or Debentures:
The term "Debenture" or "Debentures" shall mean any Debenture or Debentures, as
the case may be, authenticated and delivered under this Indenture.
Debentureholder:
The term "Debentureholder", "holder of Debentures", "registered holder", or
other similar term, shall mean the person or persons in whose name or names a
particular Debenture shall be registered on the books of the Company kept for
that purpose in accordance with the terms of this Indenture.
Default:
The term "Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
3
<PAGE>
Depository:
The term "Depository" shall mean, with respect to Debentures of any series, for
which the Company shall determine that such Debentures will be issued as a
Global Debenture, The Depository Trust Company, New York, New York, another
clearing agency, or any successor registered as a clearing agency under the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), or other
applicable statute or regulation, which, in each case, shall be designated by
the Company pursuant to either Section 2.01 or 2.11.
Event of Default:
The term "Event of Default" with respect to Debentures of a particular series
shall mean any event specified in Section 6.01, continued for the period of
time, if any, therein designated.
Global Debenture:
The term "Global Debenture" shall mean, with respect to any series of
Debentures, a Debenture executed by the Company and delivered by the Trustee to
the Depository or pursuant to the Depository's instruction, all in accordance
with the Indenture, which shall be registered in the name of the Depository or
its nominee.
Governmental Obligations:
The term, "Governmental Obligations" shall mean securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act of 1933, as amended) as custodian with respect to any such
Governmental Obligation or a specific payment of principal of or interest on any
such Governmental Obligation held by such custodian for the account of the
holder of such depository receipt; provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the Governmental Obligation or the specific payment of
principal of or interest on the Governmental Obligation evidenced by such
depository receipt.
GTE Delaware:
The term "GTE Delaware" shall mean GTE Delaware, L.P., a Delaware limited
partnership.
4
<PAGE>
Guarantee:
The term "Guarantee" shall mean any guarantee that the Company may enter into
with GTE Delaware or other persons that operate directly or indirectly for the
benefit of holders of limited partnership interests issued by GTE Delaware.
Indenture:
The term "Indenture" shall mean this instrument as originally executed, or, if
amended or supplemented as herein provided, as so amended or supplemented.
Interest Payment Date:
The term "Interest Payment Date" when used with respect to any installment of
interest on a Debenture of a particular series shall mean the date specified in
such Debenture or in a Board Resolution or in an indenture supplemental hereto
with respect to such series as the fixed date on which an installment of
interest with respect to Debentures of that series is due and payable.
Limited Partnership Agreement:
"Limited Partnership Agreement" shall mean the Limited Partnership Agreement,
dated ______________, pursuant to which GTE Delaware was formed.
Officers' Certificate:
The term "Officers' Certificate" shall mean a certificate signed by the
President or a Vice President and by the Treasurer or an Assistant Treasurer or
the Controller or an Assistant Controller or the Secretary or an Assistant
Secretary of the Company. Each such certificate shall include the statements
provided for in Section 13.06, if and to the extent required by the provisions
thereof.
Opinion of Counsel:
The term "Opinion of Counsel" shall mean an opinion in writing signed by legal
counsel, who may be an employee of or counsel for the Company. Each such opinion
shall include the statements provided for in Section 13.06, if and to the extent
required by the provisions thereof.
Outstanding:
The term "outstanding", when used with reference to Debentures of any series,
shall, subject to the provisions of Section 8.04, mean, as of any particular
time, all Debentures of that series theretofore authenticated and delivered by
the Trustee under this Indenture, except (a) Debentures theretofore canceled by
the Trustee or any paying agent, or delivered to the Trustee or any paying agent
for cancellation or which have previously been canceled; (b) Debentures or
portions thereof for the payment or redemption of which moneys or Governmental
Obligations in the necessary amount shall have been deposited in trust with the
Trustee or with any paying agent (other than the Company) or
5
<PAGE>
shall have been set aside and segregated in trust by the Company (if the Company
shall act as its own paying agent); provided, however, that if such Debentures
or portions of such Debentures are to be redeemed prior to the maturity thereof,
notice of such redemption shall have been given as in Article Three provided, or
provision satisfactory to the Trustee shall have been made for giving such
notice; and (c) Debentures in lieu of or in substitution for which other
Debentures shall have been authenticated and delivered pursuant to the terms of
Section 2.07.
Predecessor Debenture:
The term "Predecessor Debenture" of any particular Debenture shall mean every
previous Debenture evidencing all or a portion of the same debt as that
evidenced by such particular Debenture; and, for the purposes of this
definition, any Debenture authenticated and delivered under Section 2.07 in lieu
of a lost, destroyed or stolen Debenture shall be deemed to evidence the same
debt as the lost, destroyed or stolen Debenture.
Responsible Officer:
The term "Responsible Officer" when used with respect to the Trustee shall mean
the chairman of the board of directors, the president, any vice president, the
secretary, the treasurer, any trust officer, any corporate trust officer or any
other officer or assistant officer of the Trustee customarily performing
functions similar to those performed by the persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of his or her knowledge of and familiarity with the particular subject.
Senior Indebtedness:
The term "Senior Indebtedness" of the Company shall mean the principal of,
premium, if any, interest on and any other payment due pursuant to any of the
following, whether outstanding at the date of execution of this Indenture or
thereafter incurred, created or assumed: (a) all indebtedness of the Company
evidenced by notes, debentures, bonds or other securities sold by the Company
for money, (b) all indebtedness of others of the kinds described in the
preceding clause (a) assumed by or guaranteed in any manner by the Company or in
effect guaranteed by the Company through an agreement to purchase, contingent or
otherwise, and (c) all renewals, extensions or refundings of indebtedness of the
kinds described in any of the preceding clauses (a) and (b) unless, in the case
of any particular indebtedness, renewal, extension or refunding, the instrument
creating or evidencing the same or the assumption or guarantee of the same
expressly provides that such indebtedness, renewal, extension or refunding is
not superior in right of payment to or is pari passu with the Debentures.
---- -----
6
<PAGE>
Subsidiary:
The term "Subsidiary" shall mean any corporation at least a majority of whose
outstanding voting stock shall at the time be owned by the Company or by one or
more Subsidiaries or by the Company and one or more Subsidiaries. For the
purposes only of this definition of the term "Subsidiary", the term "voting
stock", as applied to the stock of any corporation, shall mean stock of any
class or classes having ordinary voting power for the election of a majority of
the directors of such corporation, other than stock having such power only by
reason of the occurrence of a contingency.
Trustee:
The term "Trustee" shall mean The Bank of New York and, subject to the
provisions of Article Seven, shall also include its successors and assigns, and,
if at any time there is more than one person acting in such capacity hereunder,
"Trustee" shall mean each such person. The term "Trustee" as used with respect
to a particular series of the Debentures shall mean the trustee with respect to
that series.
Trust Indenture Act:
The term "Trust Indenture Act" subject to the provisions of Sections 9.01, 9.02,
and 10.01, shall mean the Trust Indenture Act of 1939, as amended and in effect
at the date of execution of this Indenture.
ARTICLE TWO
Issue, Description, Terms, Execution,
Registration and Exchange of Debentures
SECTION 2.01. The aggregate principal amount of Debentures which may be
authenticated and delivered under this Indenture is unlimited.
The Debentures may be issued in one or more series up to the aggregate
principal amount of Debentures of that series from time to time authorized by or
pursuant to a Board Resolution or pursuant to one or more indentures
supplemental hereto, prior to the initial issuance of Debentures of a particular
series. Prior to the initial issuance of Debentures of any series, there shall
be established in or pursuant to a Board Resolution, and set forth in an
Officers' Certificate, or established in one or more indentures supplemental
hereto:
(1) the title of the Debentures of the series (which shall distinguish
the Debentures of the series from all other Debentures);
7
<PAGE>
(2) any limit upon the aggregate principal amount of the Debentures of
that series which may be authenticated and delivered under this Indenture
(except for Debentures authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Debentures of that
series);
(3) the date or dates on which the principal of the Debentures of the
series is payable;
(4) the rate or rates at which the Debentures of the series shall bear
interest or the manner of calculation of such rate or rates, if any;
(5) the date or dates from which such interest shall accrue, the
Interest Payment Dates on which such interest will be payable or the manner
of determination of such Interest Payment Dates and the record date for the
determination of holders to whom interest is payable on any such Interest
Payment Dates;
(6) the right, if any, to extend the interest payment periods and the
duration of such extension;
(7) the period or periods within which, the price or prices at which
and the terms and conditions upon which, Debentures of the series may be
redeemed, in whole or in part, at the option of the Company;
(8) the obligation, if any, of the Company to redeem or purchase
Debentures of the series pursuant to any sinking fund or analogous
provisions (including payments made in cash in anticipation of future
sinking fund obligations) or at the option of a holder thereof and the
period or periods within which, the price or prices at which, and the terms
and conditions upon which, Debentures of the series shall be redeemed or
purchased, in whole or in part, pursuant to such obligation;
(9) the form of the Debentures of the series including the form of the
Certificate of Authentication for such series.
(10) if other than denominations of $25 or any integral multiple
thereof, the denominations in which the Debentures of the series shall be
issuable;
(11) any and all other terms with respect to such series (which terms
shall not be inconsistent with the terms of this Indenture); and
8
<PAGE>
(12) whether the Debentures are issuable as a Global Debenture and, in
such case, the identity for the Depository for such series.
All Debentures of any one series shall be substantially identical except as
to denomination and except as may otherwise be provided in or pursuant to any
such Board Resolution or in any indentures supplemental hereto.
If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
SECTION 2.02. The Debentures of any series and the Trustee's certificate of
authentication to be borne by such Debentures shall be substantially of the
tenor and purport as set forth in one or more indentures supplemental hereto or
as provided in a Board Resolution and as set forth in an Officers' Certificate,
and may have such letters, numbers or other marks of identification or
designation and such legends or endorsements printed, lithographed or engraved
thereon as the Company may deem appropriate and as are not inconsistent with the
provisions of this Indenture, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which Debentures of that series may be listed, or to
conform to usage.
SECTION 2.03. The Debentures shall be issuable as registered Debentures and
in the denominations of $25 or any integral multiple thereof, subject to Section
2.01(10). The Debentures of a particular series shall bear interest payable on
the dates and at the rate specified with respect to that series. The principal
of and the interest on the Debentures of any series, as well as any premium
thereon in case of redemption thereof prior to maturity, shall be payable in the
coin or currency of the United States of America which at the time is legal
tender for public and private debt, at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan, the City and State of
New York. Each Debenture shall be dated the date of its authentication. Interest
on the Debentures shall be computed on the basis of a 360-day year composed of
twelve 30-day months.
The interest installment on any Debenture which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date for
Debentures of that series shall be paid to the person in whose name said
Debenture (or one or more Predecessor
9
<PAGE>
Debentures) is registered at the close of business on the regular record date
for such interest installment. In the event that any Debenture of a particular
series or portion thereof is called for redemption and the redemption date is
subsequent to a regular record date with respect to any Interest Payment Date
and prior to such Interest Payment Date, interest on such Debenture will be paid
upon presentation and surrender of such Debenture as provided in Section 3.03.
Any interest on any Debenture which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date for Debentures of the same
series (herein called "Defaulted Interest") shall forthwith cease to be payable
to the registered holder on the relevant regular record date by virtue of having
been such holder; and such Defaulted Interest shall be paid by the Company, at
its election, as provided in clause (1) or clause (2) below:
(1) The Company may make payment of any Defaulted Interest on
Debentures to the persons in whose names such Debentures (or their
respective Predecessor Debentures) are registered at the close of business
on a special record date for the payment of such Defaulted Interest, which
shall be fixed in the following manner: the Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each such Debenture and the date of the proposed payment, and at the
same time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the persons entitled to
such Defaulted Interest as in this clause provided. Thereupon the Trustee
shall fix a special record date for the payment of such Defaulted Interest
which shall not be more than 15 nor less than 10 days prior to the date of
the proposed payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall promptly
notify the Company of such special record date and, in the name and at the
expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the special record date therefor to be mailed, first
class postage prepaid, to each Debentureholder at his or her address as it
appears in the Debenture Register (as hereinafter defined), not less than
10 days prior to such special record date. Notice of the proposed payment
of such Defaulted Interest and the special record date therefor having been
mailed as aforesaid, such Defaulted Interest shall be paid to the persons
in whose names such Debentures (or their respective Predecessor Debentures)
are registered
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on such special record date and shall be no longer payable pursuant to the
following clause (2).
(2) The Company may make payment of any Defaulted Interest on any
Debentures in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Debentures may be
listed, and upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant
to this clause, such manner of payment shall be deemed practicable by the
Trustee.
Unless otherwise set forth in a Board Resolution or one or more indentures
supplemental hereto establishing the terms of any series of Debentures pursuant
to Section 2.01 hereof, the term "regular record date" as used in this Section
with respect to a series of Debentures with respect to any Interest Payment Date
for such series shall mean either the fifteenth day of the month immediately
preceding the month in which an Interest Payment Date established for such
series pursuant to Section 2.01 hereof shall occur, if such Interest Payment
Date is the first day of a month, or the last day of the month immediately
preceding the month in which an Interest Payment Date established for such
series pursuant to Section 2.01 hereof shall occur, if such Interest Payment
Date is the fifteenth day of a month, whether or not such date is a business
day.
Subject to the foregoing provisions of this Section, each Debenture of a
series delivered under this Indenture upon transfer of or in exchange for or in
lieu of any other Debenture of such series shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Debenture.
SECTION 2.04. The Debentures shall, subject to the provisions of Section
2.06, be printed on steel engraved borders or fully or partially engraved, or
legibly typed, as the proper officers of the Company may determine, and shall be
signed on behalf of the Company by its President or one of its Vice Presidents,
under its corporate seal attested by its Secretary or one of its Assistant
Secretaries. The signature of the President or a Vice President and/or the
signature of the Secretary or an Assistant Secretary in attestation of the
corporate seal, upon the Debentures, may be in the form of a facsimile signature
of a present or any future President or Vice President and of a present or any
future Secretary or Assistant Secretary and may be imprinted or otherwise
reproduced on the Debentures and for that purpose the Company may use the
facsimile signature of any person who shall have been a President or Vice
President, or of any person who shall have been a Secretary or Assistant
Secretary, notwithstanding the fact that at the time the Debentures shall be
authenticated and delivered or disposed of such person shall have
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ceased to be the President or a Vice President, or the Secretary or an Assistant
Secretary, of the Company, as the case may be. The seal of the Company may be
in the form of a facsimile of the seal of the Company and may be impressed,
affixed, imprinted or otherwise reproduced on the Debentures.
Only such Debentures as shall bear thereon a Certificate of Authentication
substantially in the form established for such Debentures, executed manually by
an authorized signatory of the Trustee, or by any Authenticating Agent with
respect to such Debentures, shall be entitled to the benefits of this Indenture
or be valid or obligatory for any purpose. Such certificate executed by the
Trustee, or by any Authenticating Agent appointed by the Trustee with respect to
such Debentures, upon any Debenture executed by the Company shall be conclusive
evidence that the Debenture so authenticated has been duly authenticated and
delivered hereunder and that the holder is entitled to the benefits of this
Indenture.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Debentures of any series executed by the
Company to the Trustee for authentication, together with a written order of the
Company for the authentication and delivery of such Debentures, signed by its
President or any Vice President and its Treasurer or any Assistant Treasurer,
and the Trustee in accordance with such written order shall authenticate and
deliver such Debentures.
In authenticating such Debentures and accepting the additional
responsibilities under this Indenture in relation to such Debentures, the
Trustee shall be entitled to receive, and (subject to Section 7.01) shall be
fully protected in relying upon, an Opinion of Counsel stating that the form and
terms thereof have been established in conformity with the provisions of this
Indenture.
The Trustee shall not be required to authenticate such Debentures if the
issue of such Debentures pursuant to this Indenture will affect the Trustee's
own rights, duties or immunities under the Debentures and this Indenture or
otherwise in a manner which is not reasonably acceptable to the Trustee.
SECTION 2.05. (a) Debentures of any series may be exchanged upon
presentation thereof at the office or agency of the Company designated for such
purpose in the Borough of Manhattan, the City and State of New York, for other
Debentures of such series of authorized denominations, and for a like aggregate
principal amount, upon payment of a sum sufficient to cover any tax or
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other governmental charge in relation thereto, all as provided in this Section.
In respect of any Debentures so surrendered for exchange, the Company shall
execute, the Trustee shall authenticate and such office or agency shall deliver
in exchange therefor the Debenture or Debentures of the same series which the
Debentureholder making the exchange shall be entitled to receive, bearing
numbers not contemporaneously outstanding.
(b) The Company shall keep, or cause to be kept, at its office or agency
designated for such purpose in the Borough of Manhattan, the City and State of
New York, or such other location designated by the Company a register or
registers (herein referred to as the "Debenture Register") in which, subject to
such reasonable regulations as it may prescribe, the Company shall register the
Debentures and the transfers of Debentures as in this Article provided and which
at all reasonable times shall be open for inspection by the Trustee. The
registrar for the purpose of registering Debentures and transfer of Debentures
as herein provided shall be appointed as authorized by Board Resolution (the
"Debenture Registrar").
Upon surrender for transfer of any Debenture at the office or agency of the
Company designated for such purpose in the Borough of Manhattan, the City and
State of New York, the Company shall execute, the Trustee shall authenticate and
such office or agency shall deliver in the name of the transferee or transferees
a new Debenture or Debentures of the same series as the Debenture presented for
a like aggregate principal amount.
All Debentures presented or surrendered for exchange or registration of
transfer, as provided in this Section, shall be accompanied (if so required by
the Company or the Debenture Registrar) by a written instrument or instruments
of transfer, in form satisfactory to the Company or the Debenture Registrar,
duly executed by the registered holder or by his duly authorized attorney in
writing.
(c) No service charge shall be made for any exchange or registration of
transfer of Debentures, or issue of new Debentures in case of partial redemption
of any series, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge in relation thereto, other than exchanges
pursuant to Section 2.06, the second paragraph of Section 3.03 and Section 9.04
not involving any transfer.
(d) The Company shall not be required (i) to issue, exchange or register
the transfer of any Debentures during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of less
than all the outstanding Debentures of the same series and ending at the close
of business on the day of such mailing, nor (ii) to register the transfer of or
exchange any Debentures of any series or portions
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thereof called for redemption. The provisions of this Section 2.05 are, with
respect to any Global Debenture, subject to Section 2.11 hereof.
SECTION 2.06. Pending the preparation of definitive Debentures of any
series, the Company may execute, and the Trustee shall authenticate and deliver,
temporary Debentures (printed, lithographed or typewritten) of any authorized
denomination, and substantially in the form of the definitive Debentures in lieu
of which they are issued, but with such omissions, insertions and variations as
may be appropriate for temporary Debentures, all as may be determined by the
Company. Every temporary Debenture of any series shall be executed by the
Company and be authenticated by the Trustee upon the same conditions and in
substantially the same manner, and with like effect, as the definitive
Debentures of such series. Without unnecessary delay the Company will execute
and will furnish definitive Debentures of such series and thereupon any or all
temporary Debentures of such series may be surrendered in exchange therefor
(without charge to the holders), at the office or agency of the Company
designated for the purpose in the Borough of Manhattan, the City and State of
New York, and the Trustee shall authenticate and such office or agency shall
deliver in exchange for such temporary Debentures an equal aggregate principal
amount of definitive Debentures of such series, unless the Company advises the
Trustee to the effect that definitive Debentures need not be executed and
furnished until further notice from the Company. Until so exchanged, the
temporary Debentures of such series shall be entitled to the same benefits under
this Indenture as definitive Debentures of such series authenticated and
delivered hereunder.
SECTION 2.07. In case any temporary or definitive Debenture shall become
mutilated or be destroyed, lost or stolen, the Company (subject to the next
succeeding sentence) shall execute, and upon its request the Trustee (subject as
aforesaid) shall authenticate and deliver, a new Debenture of the same series
bearing a number not contemporaneously outstanding, in exchange and substitution
for the mutilated Debenture, or in lieu of and in substitution for the Debenture
so destroyed, lost or stolen. In every case the applicant for a substituted
Debenture shall furnish to the Company and to the Trustee such security or
indemnity as may be required by them to save each of them harmless, and, in
every case of destruction, loss or theft, the applicant shall also furnish to
the Company and to the Trustee evidence to their satisfaction of the
destruction, loss or theft of the applicant's Debenture and of the ownership
thereof. The Trustee may authenticate any such substituted Debenture and deliver
the same upon the written request or authorization of any officer of the
Company. Upon the issuance of any substituted Debenture, the Company may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may
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be imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith. In case any Debenture which has
matured or is about to mature shall become mutilated or be destroyed, lost or
stolen, the Company may, instead of issuing a substitute Debenture, pay or
authorize the payment of the same (without surrender thereof except in the case
of a mutilated Debenture) if the applicant for such payment shall furnish to the
Company and to the Trustee such security or indemnity as they may require to
save them harmless, and, in case of destruction, loss or theft, evidence to the
satisfaction of the Company and the Trustee of the destruction, loss or theft of
such Debenture and of the ownership thereof.
Every Debenture issued pursuant to the provisions of this Section in
substitution for any Debenture which is mutilated, destroyed, lost or stolen
shall constitute an additional contractual obligation of the Company, whether or
not the mutilated, destroyed, lost or stolen Debenture shall be found at any
time, or be enforceable by anyone, and shall be entitled to all the benefits of
this Indenture equally and proportionately with any and all other Debentures of
the same series duly issued hereunder. All Debentures shall be held and owned
upon the express condition that the foregoing provisions are exclusive with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Debentures, and shall preclude (to the extent lawful) any and all other rights
or remedies, notwithstanding any law or statute existing or hereafter enacted to
the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.
SECTION 2.08. All Debentures surrendered for the purpose of payment,
redemption, exchange or registration of transfer shall, if surrendered to the
Company or any paying agent, be delivered to the Trustee for cancellation, or,
if surrendered to the Trustee, shall be canceled by it, and no Debentures shall
be issued in lieu thereof except as expressly required or permitted by any of
the provisions of this Indenture. On request of the Company, the Trustee shall
deliver to the Company canceled Debentures held by the Trustee. In the absence
of such request the Trustee may dispose of canceled Debentures in accordance
with its standard procedures and deliver a certificate of disposition to the
Company. If the Company shall otherwise acquire any of the Debentures, however,
such acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Debentures unless and until the same are
delivered to the Trustee for cancellation.
SECTION 2.09. Nothing in this Indenture or in the Debentures, express or
implied, shall give or be construed to give to any person, firm or corporation,
other than the parties hereto and the holders of the Debentures, any legal or
equitable
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right, remedy or claim under or in respect of this Indenture, or under any
covenant, condition or provision herein contained; all such covenants,
conditions and provisions being for the sole benefit of the parties hereto and
of the holders of the Debentures.
SECTION 2.10. So long as any of the Debentures of any series remain
outstanding there may be an Authenticating Agent for any or all such series of
Debentures which the Trustee shall have the right to appoint. Said
Authenticating Agent shall be authorized to act on behalf of the Trustee to
authenticate Debentures of such series issued upon exchange, transfer or partial
redemption thereof, and Debentures so authenticated shall be entitled to the
benefits of this Indenture and shall be valid and obligatory for all purposes as
if authenticated by the Trustee hereunder. All references in this Indenture to
the authentication of Debentures by the Trustee shall be deemed to include
authentication by an Authenticating Agent for such series except for
authentication upon original issuance or pursuant to Section 2.07 hereof. Each
Authenticating Agent shall be acceptable to the Company and shall be a
corporation which has a combined capital and surplus, as most recently reported
or determined by it, sufficient under the laws of any jurisdiction under which
it is organized or in which it is doing business to conduct a trust business,
and which is otherwise authorized under such laws to conduct such business and
is subject to supervision or examination by Federal or State authorities. If at
any time any Authenticating Agent shall cease to be eligible in accordance with
these provisions, it shall resign immediately.
Any Authenticating Agent may at any time resign by giving written notice of
resignation to the Trustee and to the Company. The Trustee may at any time (and
upon request by the Company shall) terminate the agency of any Authenticating
Agent by giving written notice of termination to such Authenticating Agent and
to the Company. Upon resignation, termination or cessation of eligibility of
any Authenticating Agent, the Trustee may appoint an eligible successor
Authenticating Agent acceptable to the Company. Any successor Authenticating
Agent, upon acceptance of its appointment hereunder, shall become vested with
all the rights, powers and duties of its predecessor hereunder as if originally
named as an Authenticating Agent pursuant hereto.
SECTION 2.11. (a) If the Company shall establish pursuant to Section
2.01 that the Debentures of a particular series are to be issued as a Global
Debenture, then the Company shall execute and the Trustee shall, in accordance
with Section 2.04, authenticate and deliver, a Global Debenture which (i) shall
represent, and shall be denominated in an amount equal to the aggregate
principal amount of, all of the Outstanding Debentures of such series, (ii)
shall be registered in the name of the Depository or its nominee, (iii) shall be
delivered by the
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Trustee to the Depository or pursuant to the Depository's instruction and (iv)
shall bear a legend substantially to the following effect: "Except as otherwise
provided in Section 2.11 of the Indenture, this Debenture may be transferred, in
whole but not in part, only to another nominee of the Depository or to a
successor Depository or to a nominee of such successor Depository."
(b) Notwithstanding the provisions of Section 2.05, the Global Debenture
of a series may be transferred, in whole but not in part and in the manner
provided in Section 2.05, only to another nominee of the Depository for such
series, or to a successor Depository for such series selected or approved by the
Company or to a nominee of such successor Depository.
(c) If at any time the Depository for a series of Debentures notifies the
Company that it is unwilling or unable to continue as Depository for such series
or if at any time the Depository for such series shall no longer be registered
or in good standing under the Exchange Act, or other applicable statute or
regulation and 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, this Section 2.11 shall no longer be
applicable to the Debentures of such series and the Company will execute, and
subject to Section 2.05, the Trustee will authenticate and deliver Debentures of
such series in definitive registered form without coupons, in authorized
denominations, and in an aggregate principal amount equal to the principal
amount of the Global Debenture of such series in exchange for such Global
Debenture. In addition, the Company may at any time determine that the
Debentures of any series shall no longer be represented by a Global Debenture
and that the provisions of this Section 2.11 shall no longer apply to the
Debentures of such series. In such event the Company will execute and subject
to Section 2.05, the Trustee, upon receipt of an Officers' Certificate
evidencing such determination by the Company, will authenticate and deliver
Debentures of such series in definitive registered form without coupons, in
authorized denominations, and in an aggregate principal amount equal to the
principal amount of the Global Debenture of such series in exchange for such
Global Debenture. Upon the exchange of the Global Debenture for such Debentures
in definitive registered form without coupons, in authorized denominations, the
Global Debenture shall be canceled by the Trustee. Such Debentures in
definitive registered form issued in exchange for the Global Debenture pursuant
to this Section 2.11(c) 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 Debentures to the Depository for delivery to the persons in
whose names such Debentures are so registered.
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ARTICLE THREE
Redemption of Debentures and Sinking Fund Provisions
SECTION 3.01. The Company may redeem the Debentures of any series issued
hereunder on and after the dates and in accordance with the terms established
for such series pursuant to Section 2.01 hereof.
SECTION 3.02. (a) In case the Company shall desire to exercise such right
to redeem all or, as the case may be, a portion of the Debentures of any series
in accordance with the right reserved so to do, it shall give notice of such
redemption to holders of the Debentures of such series to be redeemed by
mailing, first class postage prepaid, a notice of such redemption not less than
30 days and not more than 60 days before the date fixed for redemption of that
series to such holders at their last addresses as they shall appear upon the
Debenture Register. Any notice which is mailed in the manner herein provided
shall be conclusively presumed to have been duly given, whether or not the
registered holder receives the notice. In any case, failure duly to give such
notice to the holder of any Debenture of any series designated for redemption in
whole or in part, or any defect in the notice, shall not affect the validity of
the proceedings for the redemption of any other Debentures of such series or any
other series. In the case of any redemption of Debentures prior to the
expiration of any restriction on such redemption provided in the terms of such
Debentures or elsewhere in this Indenture, the Company shall furnish the Trustee
with an Officers' Certificate evidencing compliance with any such restriction.
Each such notice of redemption shall specify the date fixed for redemption
and the redemption price at which Debentures of that series are to be redeemed,
and shall state that payment of the redemption price of such Debentures to be
redeemed will be made at the office or agency of the Company in the Borough of
Manhattan, the City and State of New York, upon presentation and surrender of
such Debentures, that interest accrued to the date fixed for redemption will be
paid as specified in said notice, that from and after said date interest will
cease to accrue and that the redemption is for a sinking fund, if such is the
case. If less than all the Debentures of a series are to be redeemed, the notice
to the holders of Debentures of that series to be redeemed in whole or in part
shall specify the particular Debentures to be so redeemed. In case any Debenture
is to be redeemed in part only, the notice which relates to such Debenture shall
state the portion of the principal amount thereof to be redeemed, and shall
state that on and after the redemption date, upon surrender of such Debenture, a
new Debenture or Debentures of such series in principal amount equal to the
unredeemed portion thereof will be issued.
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(b) If less than all the Debentures of a series are to be redeemed, the
Company shall give the Trustee at least 45 days' notice in advance of the date
fixed for redemption as to the aggregate principal amount of Debentures of the
series to be redeemed, and thereupon the Trustee shall select, by lot or in such
other manner as it shall deem appropriate and fair in its discretion and which
may provide for the selection of a portion or portions (equal to $25 or any
integral multiple thereof) of the principal amount of such Debentures of a
denomination larger than $25, the Debentures to be redeemed and shall thereafter
promptly notify the Company in writing of the numbers of the Debentures to be
redeemed, in whole or in part.
The Company may, if and whenever it shall so elect, by delivery of
instructions signed on its behalf by its President or any Vice President,
instruct the Trustee or any paying agent to call all or any part of the
Debentures of a particular series for redemption and to give notice of
redemption in the manner set forth in this Section, such notice to be in the
name of the Company or its own name as the Trustee or such paying agent may deem
advisable. In any case in which notice of redemption is to be given by the
Trustee or any such paying agent, the Company shall deliver or cause to be
delivered to, or permit to remain with, the Trustee or such paying agent, as the
case may be, such Debenture Register, transfer books or other records, or
suitable copies or extracts therefrom, sufficient to enable the Trustee or such
paying agent to give any notice by mail that may be required under the
provisions of this Section.
SECTION 3.03. (a) If the giving of notice of redemption shall have been
completed as above provided, the Debentures or portions of Debentures of the
series to be redeemed specified in such notice shall become due and payable on
the date and at the place stated in such notice at the applicable redemption
price, together with interest accrued to the date fixed for redemption and
interest on such Debentures or portions of Debentures shall cease to accrue on
and after the date fixed for redemption, unless the Company shall default in the
payment of such redemption price and accrued interest with respect to any such
Debenture or portion thereof. On presentation and surrender of such Debentures
on or after the date fixed for redemption at the place of payment specified in
the notice, said Debentures shall be paid and redeemed at the applicable
redemption price for such series, together with interest accrued thereon to the
date fixed for redemption (but if the date fixed for redemption is an interest
payment date, the interest installment payable on such date shall be payable to
the registered holder at the close of business on the applicable record date
pursuant to Section 2.03).
(b) Upon presentation of any Debenture of such series which is to be
redeemed in part only, the Company shall execute and the Trustee shall
authenticate and the office or agency where the
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Debenture is presented shall deliver to the holder thereof, at the expense of
the Company, a new Debenture or Debentures of the same series, of authorized
denominations in principal amount equal to the unredeemed portion of the
Debenture so presented.
SECTION 3.04. The provisions of Sections 3.04, 3.05 and 3.06 shall be
applicable to any sinking fund for the retirement of Debentures of a series,
except as otherwise specified as contemplated by Section 2.01 for Debentures of
such series.
The minimum amount of any sinking fund payment provided for by the terms of
Debentures of any series is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
terms of Debentures of any series is herein referred to as an "optional sinking
fund payment". If provided for by the terms of Debentures of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 3.05. Each sinking fund payment shall be applied to the redemption of
Debentures of any series as provided for by the terms of Debentures of such
series.
SECTION 3.05. The Company (i) may deliver Outstanding Debentures of a
series (other than any previously called for redemption) and (ii) may apply as a
credit Debentures of a series which have been redeemed either at the election of
the Company pursuant to the terms of such Debentures or through the application
of permitted optional sinking fund payments pursuant to the terms of such
Debentures, in each case in satisfaction of all or any part of any sinking fund
payment with respect to the Debentures of such series required to be made
pursuant to the terms of such Debentures as provided for by the terms of such
series; provided that such Debentures have not been previously so credited. Such
Debentures shall be received and credited for such purpose by the Trustee at the
redemption price specified in such Debentures for redemption through operation
of the sinking fund and the amount of such sinking fund payment shall be reduced
accordingly.
SECTION 3.06. Not less than 45 days prior to each sinking fund payment date
for any series of Debentures, the Company will deliver to the Trustee an
Officers' Certificate specifying the amount of the next ensuing sinking fund
payment for that series pursuant to the terms of that series, the portion
thereof, if any, which is to be satisfied by delivering and crediting Debentures
of that series pursuant to Section 3.05 and the basis for such credit and will,
together with such Officers' Certificate, deliver to the Trustee any Debentures
to be so delivered. Not less than 30 days before each such sinking fund payment
date the Trustee shall select the Debentures to be redeemed upon such sinking
fund payment date in the manner specified in Section 3.02 and cause notice of
the redemption thereof to be given in the name of and at the expense
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of the Company in the manner provided in Section 3.02. Such notice having been
duly given, the redemption of such Debentures shall be made upon the terms and
in the manner stated in Section 3.03.
ARTICLE FOUR
Particular Covenants of the Company
The Company covenants and agrees for each series of the Debentures as
follows:
SECTION 4.01. The Company will duly and punctually pay or cause to be paid
the principal of (and premium, if any) and interest on the Debentures of that
series at the time and place and in the manner provided herein and established
with respect to such Debentures.
SECTION 4.02. So long as any series of the Debentures remain outstanding,
the Company agrees to maintain an office or agency in the Borough of Manhattan,
the City and State of New York, with respect to each such series and at such
other location or locations as may be designated as provided in this Section
4.02, where (i) Debentures of that series may be presented for payment, (ii)
Debentures of that series may be presented as hereinabove authorized for
registration of transfer and exchange, and (iii) notices and demands to or upon
the Company in respect of the Debentures of that series and this Indenture may
be given or served, such designation to continue with respect to such office or
agency until the Company shall, by written notice signed by its President or a
Vice President and delivered to the Trustee, designate some other office or
agency for such purposes or any of them. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, notices and demands may be
made or served at the Corporate Trust Office of the Trustee, and the Company
hereby appoints the Trustee as its agent to receive all such presentations,
notices and demands.
SECTION 4.03. (a) If the Company shall appoint one or more paying agents
for all or any series of the Debentures, other than the Trustee, the Company
will cause each such paying agent to execute and deliver to the Trustee an
instrument in which such agent shall agree with the Trustee, subject to the
provisions of this Section:
(1) that it will hold all sums held by it as such agent for the
payment of the principal of (and premium, if any) or interest on the
Debentures of that series (whether such sums have been paid to it by the
Company or by any other obligor of such Debentures) in trust for the
benefit of the persons entitled thereto;
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(2) that it will give the Trustee notice of any failure by the Company
(or by any other obligor of such Debentures) to make any payment of the
principal of (and premium, if any) or interest on the Debentures of that
series when the same shall be due and payable;
(3) that it will, at any time during the continuance of any failure
referred to in the preceding paragraph (a)(2) above, upon the written
request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such paying agent; and
(4) that it will perform all other duties of paying agent as set forth
in this Indenture.
(b) If the Company shall act as its own paying agent with respect to any
series of the Debentures, it will on or before each due date of the principal of
(and premium, if any) or interest on Debentures of that series, set aside,
segregate and hold in trust for the benefit of the persons entitled thereto a
sum sufficient to pay such principal (and premium, if any) or interest so
becoming due on Debentures of that series until such sums shall be paid to such
persons or otherwise disposed of as herein provided and will promptly notify the
Trustee of such action, or any failure (by it or any other obligor on such
Debentures) to take such action. Whenever the Company shall have one or more
paying agents for any series of Debentures, it will, prior to each due date of
the principal of (and premium, if any) or interest on any Debentures of that
series, deposit with the paying agent a sum sufficient to pay the principal
(and premium, if any) or interest so becoming due, such sum to be held in trust
for the benefit of the persons entitled to such principal, premium or interest,
and (unless such paying agent is the Trustee) the Company will promptly notify
the Trustee of its action or failure so to act.
(c) Anything in this Section to the contrary notwithstanding, (i) the
agreement to hold sums in trust as provided in this Section is subject to the
provisions of Section 11.05, and (ii) the Company may at any time, for the
purpose of obtaining the satisfaction and discharge of this Indenture or for any
other purpose, pay, or direct any paying agent to pay, to the Trustee all sums
held in trust by the Company or such paying agent, such sums to be held by the
Trustee upon the same terms and conditions as those upon which such sums were
held by the Company or such paying agent; and, upon such payment by any paying
agent to the Trustee, such paying agent shall be released from all further
liability with respect to such money.
SECTION 4.04. The Company, whenever necessary to avoid or fill a vacancy in
the office of Trustee, will appoint, in the
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manner provided in Section 7.10, a Trustee, so that there shall at all times be
a Trustee hereunder.
SECTION 4.05. The Company will not, while any of the Debentures remain
outstanding, consolidate with, or merge into, or merge into itself, or sell or
convey all or substantially all of its property to any other company unless the
provisions of Article Ten hereof are complied with.
SECTION 4.06. The Company will not declare or pay any dividend on, or
redeem, purchase, acquire or make a distribution or liquidation payment with
respect to, any of its capital stock if at such time (i) there shall have
occurred any event that would constitute an Event of Default under the
Indenture, (ii) the Company shall be in default with respect to its payment of
any obligations under the Guarantee, if issued, or (iii) the Company shall have
given notice of its selection of an extended interest payment period as provided
in the Indenture and such period, or any extension thereof, shall be continuing.
SECTION 4.07. So long as any series of Debentures issued in connection with
the application of the proceeds from the issuance and sale of a series of
Preferred Securities of GTE Delaware remain outstanding, the Company will (i)
remain the sole general partner of GTE Delaware, L.P. and maintain 100%
ownership of the general partner interests thereof; provided that any permitted
successor of the Company under the Indenture may succeed to its duties as
general partner, (ii) contribute capital to the extent required to maintain its
capital at an amount equal to at least 3% of the total capital contributions to
GTE Delaware, (iii) not voluntarily dissolve, wind-up or terminate GTE Delaware,
except in connection with a distribution of Debentures and in connection with
certain mergers, consolidations or amalgamations permitted by the Limited
Partnership Agreement, (iv) timely perform all of its duties as General Partner
(including the duty to pay dividends on the Preferred Securities of GTE
Delaware), and (v) use its reasonable efforts to cause GTE Delaware to remain a
limited partnership except in connection with a distribution of Debentures and
in connection with certain mergers, consolidations or amalgamations permitted by
the Limited Partnership Agreement, and otherwise continue to be treated as a
partnership for United States federal income tax purposes except in connection
with a distribution of Debentures.
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ARTICLE FIVE
Debentureholders' Lists and Reports by the Company
and the Trustee
SECTION 5.01. The Company will furnish or cause to be furnished to the
Trustee (a) on a monthly basis on each regular record date (as defined in
Section 2.03) a list, in such form as the Trustee may reasonably require, of the
names and addresses of the holders of each series of Debentures as of such
regular record date, provided, that the Company shall not be obligated to
furnish or cause to furnish such list at any time that the list shall not differ
in any respect from the most recent list furnished to the Trustee by the
Company and (b) at such other times as the Trustee may request in writing within
30 days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished; provided, however, no such list need be furnished
for any series for which the Trustee shall be the Debenture Registrar.
SECTION 5.02. (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
holders of Debentures contained in the most recent list furnished to it as
provided in this Section 5.01 and as to the names and addresses of holders of
Debentures received by the Trustee in its capacity as Debenture Registrar (if
acting in such capacity).
(b) The Trustee may destroy any list furnished to it as provided in this
Section 5.01 upon receipt of a new list so furnished.
(c) In case three or more holders of Debentures of a series (hereinafter
referred to as "applicants") apply in writing to the Trustee, and furnish to the
Trustee reasonable proof that each such applicant has owned a Debenture for a
period of at least six months preceding the date of such application, and such
application states that the applicants desire to communicate with other holders
of Debentures of such series or holders of all Debentures with respect to their
rights under this Indenture or under such Debentures, and is accompanied by a
copy of the form of proxy or other communication which such applicants propose
to transmit, then the Trustee shall, within five business days after the receipt
of such application, at its election, either:
(1) afford to such applicants access to the information preserved at
the time by the Trustee in accordance with the provisions of subsection (a)
of this Section 5.01; or
(2) inform such applicants as to the approximate number of holders of
Debentures of such series or of all Debentures, as the case may be, whose
names and addresses appear in the information preserved at the time by the
Trustee, in accordance with the provisions of subsection (a) of this
Section 5.01, and as to the approximate cost of
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mailing to such Debentureholders the form of proxy or other communication,
if any, specified in such application.
(d) If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each holder of such series or of all Debentures, as the case may be,
whose name and address appears in the information preserved at the time by the
Trustee in accordance with the provisions of subsection (a) of this Section
5.01, a copy of the form of proxy or other communication which is specified in
such request, with reasonable promptness after a tender to the Trustee of the
material to be mailed and of payment, or provision for the payment, of the
reasonable expenses of mailing, unless within five days after such tender, the
Trustee shall mail to such applicants and file with the Securities and Exchange
Commission (the "Commission"), together with a copy of the material to be
mailed, a written statement to the effect that, in the opinion of the Trustee,
such mailing would be contrary to the best interests of the holders of
Debentures of such series or of all Debentures, as the case may be, or would be
in violation of applicable law. Such written statement shall specify the basis
of such opinion. If said Commission, after opportunity for a hearing upon the
objections specified in the written statement so filed, shall enter an order
refusing to sustain any of such objections or if, after the entry of an order
sustaining one or more of such objections, said Commission shall find, after
notice and opportunity for hearing, that all the objections so sustained have
been met and shall enter an order so declaring, the Trustee shall mail copies of
such material to all such Debentureholders with reasonable promptness after the
entry of such order and the renewal of such tender; otherwise, the Trustee shall
be relieved of any obligation or duty to such applicants respecting their
application.
(e) Each and every holder of the Debentures, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any paying agent nor any Debenture Registrar shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the holders of Debentures in accordance with the provisions of
subsection (b) of this Section, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under said subsection
(b).
SECTION 5.03. (a) The Company covenants and agrees to file with the
Trustee, within 15 days after the Company is required to file the same with the
Commission, copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as said
Commission may from time to time by rules and regulations prescribe) which the
Company may be required to file with said
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Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if
the Company is not required to file information, documents or reports pursuant
to either of such sections, then to file with the Trustee and said Commission,
in accordance with the rules and regulations prescribed from time to time by
said Commission, such of the supplementary and periodic information, documents
and reports which may be required pursuant to Section 13 of the Exchange Act, in
respect of a security listed and registered on a national securities exchange as
may be prescribed from time to time in such rules and regulations.
(b) The Company covenants and agrees to file with the Trustee and the
Commission, in accordance with the rules and regulations prescribed from time to
time by said Commission, such additional information, documents and reports with
respect to compliance by the Company with the conditions and covenants provided
for in this Indenture as may be required from time to time by such rules and
regulations.
(c) The Company covenants and agrees to transmit by mail, first class
postage prepaid, or reputable over-night delivery service which provides for
evidence of receipt, to the Debentureholders, as their names and addresses
appear upon the Debenture Register, within 30 days after the filing thereof with
the Trustee, such summaries of any information, documents and reports required
to be filed by the Company pursuant to subsections (a) and (b) of this Section
as may be required by rules and regulations prescribed from time to time by the
Commission.
(d) The Company covenants and agrees to furnish to the Trustee, on or
before May 15 in each calendar year in which any of the Debentures are
outstanding, or on or before such other day in each calendar year as the Company
and the Trustee may from time to time agree upon, a Certificate as to his or her
knowledge of the Company's compliance with all conditions and covenants under
this Indenture. For purposes of this subsection (d), such compliance shall be
determined without regard to any period of grace or requirement of notice
provided under this Indenture.
SECTION 5.04. (a) On or before July 15 in each year in which any of the
Debentures are outstanding, the Trustee shall transmit by mail, first class
postage prepaid, to the Debentureholders, as their names and addresses appear
upon the Debenture Register, a brief report dated as of the preceding May 15,
with respect to any of the following events which may have occurred within the
previous twelve months (but if no such event has occurred within such period no
report need be transmitted):
(1) any change to its eligibility under Section 7.09, and its
qualifications under Section 7.08;
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(2) the creation of or any material change to a relationship specified
in paragraphs (1) through (10) of subsection (c) of Section 7.08;
(3) the character and amount of any advances (and if the Trustee
elects so to state, the circumstances surrounding the making thereof) made
by the Trustee (as such) which remain unpaid on the date of such report,
and for the reimbursement of which it claims or may claim a lien or charge,
prior to that of the Debentures, on any property or funds held or collected
by it as Trustee if such advances so remaining unpaid aggregate more than
1/2 of 1% of the principal amount of the Debentures outstanding on the date
of such report;
(4) any change to the amount, interest rate, and maturity date of all
other indebtedness owing by the Company, or by any other obligor on the
Debentures, to the Trustee in its individual capacity, on the date of such
report, with a brief description of any property held as collateral
security therefor, except any indebtedness based upon a creditor
relationship arising in any manner described in paragraphs (2), (3), (4),
or (6) of subsection (b) of Section 7.13;
(5) any change to the property and funds, if any, physically in the
possession of the Trustee as such on the date of such report;
(6) any release, or release and substitution, of property subject to
the lien of this Indenture (and the consideration thereof, if any) which it
has not previously reported;
(7) any additional issue of Debentures which the Trustee has not
previously reported; and
(8) any action taken by the Trustee in the performance of its duties
under this Indenture which it has not previously reported and which in its
opinion materially affects the Debentures or the Debentures of any series,
except any action in respect of a default, notice of which has been or is
to be withheld by it in accordance with the provisions of Section 6.07.
(b) The Trustee shall transmit by mail, first class postage prepaid, to the
Debentureholders, as their names and addresses appear upon the Debenture
Register, a brief report with respect to the character and amount of any
advances (and if the Trustee elects so to state, the circumstances surrounding
the making thereof) made by the Trustee as such since the date of the last
report transmitted pursuant to the provisions of subsection (a)
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of this Section (or if no such report has yet been so transmitted, since the
date of execution of this Indenture), for the reimbursement of which it claims
or may claim a lien or charge prior to that of the Debentures of any series on
property or funds held or collected by it as Trustee, and which it has not
previously reported pursuant to this subsection if such advances remaining
unpaid at any time aggregate more than 10% of the principal amount of Debentures
of such series outstanding at such time, such report to be transmitted within 90
days after such time.
(c) A copy of each such report shall, at the time of such transmission to
Debentureholders, be filed by the Trustee with the Company, with each stock
exchange upon which any Debentures are listed (if so listed) and also with the
Commission. The Company agrees to notify the Trustee when any Debentures become
listed on any stock exchange.
ARTICLE SIX
Remedies of the Trustee and Debentureholders
on Event of Default
SECTION 6.01. (a) Whenever used herein with respect to Debentures of a
particular series, "Event of Default" means any one or more of the following
events which has occurred and is continuing:
(1) default in the payment of any installment of interest upon any of
the Debentures of that series, as and when the same shall become due and
payable, and continuance of such default for a period of 10 days;
(2) default in the payment of the principal of (or premium, if any,
on) any of the Debentures of that series as and when the same shall become
due and payable whether at maturity, upon redemption, by declaration or
otherwise, or in any payment required by any sinking or analogous fund
established with respect to that series;
(3) failure on the part of the Company duly to observe or perform any
other of the covenants or agreements on the part of the Company with
respect to that series contained in such Debentures or otherwise
established with respect to that series of Debentures pursuant to Section
2.01 hereof or contained in this Indenture (other than a covenant or
agreement which has been expressly included in this Indenture solely for
the benefit of one or more series of Debentures other than such series) for
a period of 90 days after the date on which written notice of such failure,
requiring the same to be remedied and stating that such notice is a "Notice
of Default" hereunder, shall have been
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given to the Company by the Trustee, by registered or certified mail, or to
the Company and the Trustee by the holders of at least 25% in principal
amount of the Debentures of that series at the time outstanding;
(4) a decree or order by a court having jurisdiction in the premises
shall have been entered adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking liquidation or
reorganization of the Company under the Federal Bankruptcy Code or any
other similar applicable Federal or State law, and such decree or order
shall have continued unvacated and unstayed for a period of 90 days; or
an involuntary case shall be commenced under such Code in respect of the
Company and shall continue undismissed for a period of 90 days or an
order for relief in such case shall have been entered; or a decree or order
of a court having jurisdiction in the premises shall have been entered for
the appointment on the ground of insolvency or bankruptcy of a receiver or
custodian or liquidator or trustee or assignee in bankruptcy or insolvency
of the Company or of its property, or for the winding up or liquidation of
its affairs, and such decree or order shall have remained in force
unvacated and unstayed for a period of 90 days;
(5) the Company shall institute proceedings to be adjudicated a
voluntary bankrupt, or shall consent to the filing of a bankruptcy
proceeding against it, or shall file a petition or answer or consent
seeking liquidation or reorganization under the Federal Bankruptcy Code or
any other similar applicable Federal or State law, or shall consent to the
filing of any such petition, or shall consent to the appointment on the
ground of insolvency or bankruptcy of a receiver or custodian or liquidator
or trustee or assignee in bankruptcy or insolvency of it or of its
property, or shall make an assignment for the benefit of creditors; or
(6) So long as any series of Debentures issued in connection with the
application of the proceeds from the issuance and sale of a series of
Preferred Securities of GTE Delaware remain outstanding, GTE Delaware shall
have dissolved, wound up its business or otherwise terminated its existence
except in connection with the distribution of Debentures to limited
partners of GTE Delaware in liquidation of their interests in GTE Delaware
and in connection with certain mergers, consolidations or amalgamations
permitted by the Limited Partnership Agreement.
(b) In each and every such case, unless the principal of all the Debentures
of that series shall have already become due and payable, either the Trustee or
the holders of not less than 25% in aggregate principal amount of the Debentures
of that series then outstanding hereunder, by notice in writing to the Company
(and to the Trustee if given by such Debentureholders), may declare the
principal of all the Debentures of that series to be due and payable
immediately, and upon any such declaration the
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same shall become and shall be immediately due and payable, anything contained
in this Indenture or in the Debentures of that series or established with
respect to that series pursuant to Section 2.01 hereof to the contrary
notwithstanding.
(c) This provision, however, is subject to the condition that if, at any
time after the principal of the Debentures of that series shall have been so
declared due and payable, and before any judgment or decree for the payment of
the moneys due shall have been obtained or entered as hereinafter provided, the
Company shall pay or shall deposit with the Trustee a sum sufficient to pay all
matured installments of interest upon all the Debentures of that series and the
principal of (and premium, if any, on) any and all Debentures of that series
which shall have become due otherwise than by acceleration (with interest upon
such principal and premium, if any, and, to the extent that such payment is
enforceable under applicable law, upon overdue installments of interest, at the
rate per annum expressed in the Debentures of that series to the date of such
payment or deposit) and the amount payable to the Trustee under Section 7.06,
and any and all defaults under the Indenture, other than the nonpayment of
principal on Debentures of that series which shall not have become due by their
terms, shall have been remedied or waived as provided in Section 6.06 then and
in every such case the holders of a majority in aggregate principal amount of
the Debentures of that series then outstanding, by written notice to the Company
and to the Trustee, may rescind and annul such declaration and
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its consequences; but no such rescission and annulment shall extend to or shall
affect any subsequent default, or shall impair any right consequent thereon.
(d) In case the Trustee shall have proceeded to enforce any right with
respect to Debentures of that series under this Indenture and such proceedings
shall have been discontinued or abandoned because of such rescission or
annulment or for any other reason or shall have been determined adversely to the
Trustee, then and in every such case the Company and the Trustee shall be
restored respectively to their former positions and rights hereunder, and all
rights, remedies and powers of the Company and the Trustee shall continue as
though no such proceedings had been taken.
SECTION 6.02. (a) The Company covenants that (1) in case default shall be
made in the payment of any installment of interest on any of the Debentures of a
series, or any payment required by any sinking or analogous fund established
with respect to that series as and when the same shall have become due and
payable, and such default shall have continued for a period of 10 business days,
or (2) in case default shall be made in the payment of the principal of (or
premium, if any, on) any of the Debentures of a series when the same shall have
become due and payable, whether upon maturity of the Debentures of a series or
upon redemption or upon declaration or otherwise, then, upon demand of the
Trustee, the Company will pay to the Trustee, for the benefit of the holders of
the Debentures of that series, the whole amount that then shall have become due
and payable on all such Debentures for principal (and premium, if any) or
interest, or both, as the case may be, with interest upon the overdue principal
(and premium, if any) and (to the extent that payment of such interest is
enforceable under applicable law) upon overdue installments of interest at the
rate per annum expressed in the Debentures of that series; and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, and the amount payable to the Trustee under Section
7.06.
(b) In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any action or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or other obligor upon the
Debentures of that series and collect in the manner provided by law out of the
property of the Company or other obligor upon the Debentures of that series
wherever situated the moneys adjudged or decreed to be payable.
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(c) In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, readjustment, arrangement, composition or other judicial
proceedings affecting the Company, any other obligor on such Debentures, or the
creditors or property of either, the Trustee shall have power to intervene in
such proceedings and take any action therein that may be permitted by the court
and shall (except as may be otherwise provided by law) be entitled to file such
proofs of claim and other papers and documents as may be necessary or advisable
in order to have the claims of the Trustee and of the holders of Debentures of
such series allowed for the entire amount due and payable by the Company or such
other obligor under the Indenture at the date of institution of such
proceedings and for any additional amount which may become due and payable by
the Company or such other obligor after such date, and to collect and receive
any moneys or other property payable or deliverable on any such claim, and to
distribute the same after the deduction of the amount payable to the Trustee
under Section 7.06; and any receiver, assignee or trustee in bankruptcy or
reorganization is hereby authorized by each of the holders of Debentures of such
series to make such payments to the Trustee, and, in the event that the Trustee
shall consent to the making of such payments directly to such Debentureholders,
to pay to the Trustee any amount due it under Section 7.06.
(d) All rights of action and of asserting claims under this Indenture, or
under any of the terms established with respect to Debentures of that series,
may be enforced by the Trustee without the possession of any of such Debentures,
or the production thereof at any trial or other proceeding relative thereto, and
any such suit or proceeding instituted by the Trustee shall be brought in its
own name as trustee of an express trust, and any recovery of judgment shall,
after provision for payment to the Trustee of any amounts due under Section
7.06, be for the ratable benefit of the holders of the Debentures of such
series.
In case of an Event of Default hereunder, the Trustee may in its discretion
proceed to protect and enforce the rights vested in it by this Indenture by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any of such rights, either at law or in equity or in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement contained in the Indenture or in aid of the exercise of any power
granted in this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Debentureholder any
plan of reorganization, arrangement, adjustment or composition affecting the
Debentures of that series or the rights of any holder thereof or to authorize
the Trustee
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to vote in respect of the claim of any Debentureholder in any such proceeding.
SECTION 6.03. Any moneys collected by the Trustee pursuant to Section 6.02
with respect to a particular series of Debentures shall be applied in the order
following, at the date or dates fixed by the Trustee and, in case of the
distribution of such moneys on account of principal (or premium, if any) or
interest, upon presentation of the several Debentures of that series, and
stamping thereon the payment, if only partially paid, and upon surrender thereof
if fully paid:
FIRST: To the payment of costs and expenses of collection and of all
amounts payable to the Trustee under Section 7.06; and
SECOND: To the payment of the amounts then due and unpaid upon
Debentures of such series for principal (and premium, if any) and interest,
in respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Debentures for principal (and
premium, if any) and interest, respectively.
SECTION 6.04. No holder of any Debenture of any series shall have any right
by virtue or by availing of any provision of this Indenture to institute any
suit, action or proceeding in equity or at law upon or under or with respect to
this Indenture or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless such holder previously shall have given to the Trustee
written notice of an Event of Default and of the continuance thereof with
respect to Debentures of such series specifying such Event of Default, as
hereinbefore provided, and unless also the holders of not less than 25% in
aggregate principal amount of the Debentures of such series then outstanding
shall have made written request upon the Trustee to institute such action, suit
or proceeding in its own name as trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee for 60 days
after its receipt of such notice, request and offer of indemnity, shall have
failed to institute any such action, suit or proceeding; it being understood and
intended, and being expressly covenanted by the taker and holder of every
Debenture of such series with every other such taker and holder and the Trustee,
that no one or more holders of Debentures of such series shall have any right in
any manner whatsoever by virtue or by availing of any provision of this
Indenture to affect, disturb or prejudice the rights of the holders of any other
of such Debentures, or to obtain or seek to obtain priority over or preference
to any other such holder, or to enforce any right under this Indenture, except
in the manner herein provided
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and for the equal, ratable and common benefit of all holders of Debentures of
such series. For the protection and enforcement of the provisions of this
Section, each and every Debentureholder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.
Notwithstanding any other provisions of this Indenture, however, the right
of any holder of any Debenture to receive payment of the principal of (and
premium, if any) and interest on such Debenture, as therein provided, on or
after the respective due dates expressed in such Debenture (or in the case of
redemption, on the redemption date), or to institute suit for the enforcement of
any such payment on or after such respective dates or redemption date, shall not
be impaired or affected without the consent of such holder.
SECTION 6.05. (a) All powers and remedies given by this Article to the
Trustee or to the Debentureholders shall, to the extent permitted by law, be
deemed cumulative and not exclusive of any others thereof or of any other powers
and remedies available to the Trustee or the holders of the Debentures, by
judicial proceedings or otherwise, to enforce the performance or observance of
the covenants and agreements contained in this Indenture or otherwise
established with respect to such Debentures.
(b) No delay or omission of the Trustee or of any holder of any of the
Debentures to exercise any right or power accruing upon any Event of Default
occurring and continuing as aforesaid shall impair any such right or power, or
shall be construed to be a waiver of any such default or an acquiescence
therein; and, subject to the provisions of Section 6.04, every power and remedy
given by this Article or by law to the Trustee or to the Debentureholders may be
exercised from time to time, and as often as shall be deemed expedient, by the
Trustee or by the Debentureholders.
SECTION 6.06. The holders of a majority in aggregate principal amount of
the Debentures of any series at the time outstanding, determined in accordance
with Section 8.04, shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee with respect to such series;
provided, however, that such direction shall not be in conflict with any rule of
law or with this Indenture or unduly prejudicial to the rights of holders of
Debentures of any other series at the time outstanding determined in accordance
with Section 8.04 not parties thereto. Subject to the provisions of Section
7.01, the Trustee shall have the right to decline to follow any such direction
if the Trustee in good faith shall, by a Responsible Officer or Officers of the
Trustee, determine that the proceeding so directed would involve the
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Trustee in personal liability. The holders of a majority in aggregate principal
amount of the Debentures of all series at the time outstanding affected thereby,
determined in accordance with Section 8.04, may on behalf of the holders of all
of the Debentures of such series waive any past default in the performance of
any of the covenants contained herein or established pursuant to Section 2.01
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
Debentures of that series as and when the same shall become due by the terms of
such Debentures or a call for redemption of Debentures of that series. Upon any
such waiver, the default covered thereby shall be deemed to be cured for all
purposes of this Indenture and the Company, the Trustee and the holders of the
Debentures of such series shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 6.07. The Trustee shall, within 90 days after the occurrence of a
default with respect to a particular series, transmit by mail, first class
postage prepaid, to the holders of Debentures of that series, as their names and
addresses appear upon the Debenture Register, notice of all defaults with
respect to that series known to the Trustee, unless such defaults shall have
been cured before the giving of such notice (the term "defaults" for the
purposes of this Section being hereby defined to be the events specified in
subsections (1), (2), (3), (4), (5) and (6) of Section 6.01(a), not including
any periods of grace provided for therein and irrespective of the giving of
notice provided for by subsection (3) of Section 6.01(a)); provided, that,
except in the case of default in the payment of the principal of (or premium, if
any) or interest on any of the Debentures of that series or in the payment of
any sinking fund installment established with respect to that series, the
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee, or a trust committee of directors
and/or Responsible Officers, of the Trustee in good faith determine that the
withholding of such notice is in the interests of the holders of Debentures of
that series; provided further, that in the case of any default of the character
specified in Section 6.01(a)(3) with respect to Debentures of such series no
such notice to the holders of the Debentures of that series shall be given until
at least 30 days after the occurrence thereof.
The Trustee shall not be deemed to have knowledge of any default, except
(i) a default under subsections (a)(1) or (a)(2) of Section 6.01 as long as the
Trustee is acting as paying agent for such series of Debentures or (ii) any
default as to which the Trustee shall have received written notice or a
Responsible Officer charged with the administration of this Indenture shall have
obtained written notice.
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SECTION 6.08. All parties to this Indenture agree, and each holder of any
Debentures by his or her acceptance thereof shall be deemed to have agreed, that
any court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for any
action taken or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Debentureholder, or group of
Debentureholders, holding more than 10% in aggregate principal amount of the
outstanding Debentures of any series, or to any suit instituted by any
Debentureholder for the enforcement of the payment of the principal of (or
premium, if any) or interest on any Debenture of such series, on or after the
respective due dates expressed in such Debenture or established pursuant to this
Indenture.
ARTICLE SEVEN
Concerning the Trustee
SECTION 7.01. (a) The Trustee, prior to the occurrence of an Event of
Default with respect to Debentures of a series and after the curing of all
Events of Default with respect to Debentures of that series which may have
occurred, shall undertake to perform with respect to Debentures of such series
such duties and only such duties as are specifically set forth in this
Indenture, and no implied covenants shall be read into this Indenture against
the Trustee. In case an Event of Default with respect to Debentures of a series
has occurred (which has not been cured or waived), the Trustee shall exercise
with respect to Debentures of that series such of the rights and powers vested
in it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(b) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:
(1) prior to the occurrence of an Event of Default with respect to
Debentures of a series and after the curing or waiving of all such Events
of Default with respect to that series which may have occurred:
(i) the duties and obligations of the Trustee shall with respect
to Debentures of such series be
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determined solely by the express provisions of this Indenture, and the
Trustee shall not be liable with respect to Debentures of such series
except for the performance of such duties and obligations as are
specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on the part of the Trustee, the
Trustee may with respect to Debentures of such series conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Indenture; but in the case of any such certificates or opinions which
by any provision hereof are specifically required to be furnished to
the Trustee, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Indenture;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer or Responsible Officers of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining
the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the holders of not less than a majority in principal amount of the
Debentures of any series at the time outstanding relating to the time,
method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred upon the Trustee
under this Indenture with respect to the Debentures of that series; and
(4) None of the provisions contained in this Indenture shall require
the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if there is reasonable ground for
believing that the repayment of such funds or liability is not reasonably
assured to it under the terms of this Indenture or adequate indemnity
against such risk is not reasonably assured to it.
SECTION 7.02. Except as otherwise provided in Section 7.01:
(a) The Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent,
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order, approval, bond, security or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties;
(b) Any request, direction, order or demand of the Company mentioned herein
shall be sufficiently evidenced by a Board Resolution or an instrument signed in
the name of the Company by the President or any Vice President and by the
Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer
(unless other evidence in respect thereof is specifically prescribed herein);
(c) The Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted hereunder in
good faith and in reliance thereon;
(d) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request, order or direction of
any of the Debentureholders, pursuant to the provisions of this Indenture,
unless such Debentureholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby; nothing herein contained shall, however, relieve
the Trustee of the obligation, upon the occurrence of an Event of Default with
respect to a series of the Debentures (which has not been cured or waived) to
exercise with respect to Debentures of that series such of the rights and powers
vested in it by this Indenture, and to use the same degree of care and skill in
their exercise, as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs;
(e) The Trustee shall not be liable for any action taken or omitted to be
taken by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture;
(f) The Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond, security, or
other papers or documents, unless requested in writing so to do by the holders
of not less than a majority in principal amount of the outstanding Debentures
of the particular series affected thereby (determined as provided in Section
8.04); provided, however, that if the payment within a reasonable time to the
Trustee of the costs, expenses or liabilities likely to be incurred by it in the
making of such investigation is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of this
Indenture, the Trustee may require reasonable
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indemnity against such costs, expenses or liabilities as a condition to so
proceeding. The reasonable expense of every such examination shall be paid by
the Company or, if paid by the Trustee, shall be repaid by the Company upon
demand; and
(g) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
SECTION 7.03. (a) The recitals contained herein and in the Debentures
(other than the Certificate of Authentication on the Debentures) shall be taken
as the statements of the Company, and the Trustee assumes no responsibility for
the correctness of the same.
(b) The Trustee makes no representations as to the validity or sufficiency
of this Indenture or of the Debentures.
(c) The Trustee shall not be accountable for the use or application by the
Company of any of the Debentures or of the proceeds of such Debentures, or for
the use or application of any moneys paid over by the Trustee in accordance with
any provision of this Indenture or established pursuant to Section 2.01, or for
the use or application of any moneys received by any paying agent other than the
Trustee.
SECTION 7.04. The Trustee or any paying agent or Debenture Registrar, in
its individual or any other capacity, may become the owner or pledgee of
Debentures with the same rights it would have if it were not Trustee, paying
agent or Debenture Registrar.
SECTION 7.05. Subject to the provisions of Section 11.05, all moneys
received by the Trustee shall, until used or applied as herein provided, be held
in trust for the purposes for which they were received, but need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any moneys received by it hereunder
except such as it may agree with the Company to pay thereon.
SECTION 7.06. (a) The Company covenants and agrees to pay to the Trustee
from time to time, and the Trustee shall be entitled to, reasonable compensation
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) for all services rendered by it
in the execution of the trusts hereby created and in the exercise and
performance of any of the powers and duties hereunder of the Trustee, and the
Company will pay or reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any of the provisions of this Indenture (including the
reasonable compensation and the
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expenses and disbursements of its counsel and of all persons not regularly in
its employ) except any such expense, disbursement or advance as may arise from
its negligence or bad faith. The Company also covenants to indemnify the Trustee
(and its officers, agents, directors and employees) for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or bad faith
on the part of the Trustee and arising out of or in connection with the
acceptance or administration of this trust, including the costs and expenses of
defending itself against any claim of liability in the premises.
(b) The obligations of the Company under this Section to compensate and
indemnify the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder.
Such additional indebtedness shall be secured by a lien prior to that of the
Debentures upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the holders of particular
Debentures.
SECTION 7.07. Except as otherwise provided in Section 7.01, whenever in the
administration of the provisions of this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking or
suffering or omitting to take any action hereunder, such matter (unless other
evidence in respect thereof be herein specifically prescribed) may, in the
absence of negligence or bad faith on the part of the Trustee, be deemed to be
conclusively proved and established by an Officers' Certificate delivered to the
Trustee and such certificate, in the absence of negligence or bad faith on the
part of the Trustee, shall be full warrant to the Trustee for any action taken,
suffered or omitted to be taken by it under the provisions of this Indenture
upon the faith thereof.
SECTION 7.08. (a) If the Trustee has or shall acquire any conflicting
interest, as defined in this Section, with respect to the Debentures of any
series and if the Default to which such conflicting interest relates has not
been cured, duly waived or otherwise eliminated, within 90 days after
ascertaining that it has such conflicting interest, it shall either eliminate
such conflicting interest, except as otherwise provided herein, or resign with
respect to the Debentures of that series in the manner and with the effect
specified in Section 7.10 and the Company shall promptly appoint a successor
Trustee in the manner provided herein.
(b) In the event that the Trustee shall fail to comply with the provisions
of subsection (a) of this Section, with respect to the Debentures of any series
the Trustee shall, within ten days after the expiration of such 90-day period,
transmit notice of such failure by mail, first class postage prepaid, to the
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Debentureholders of that series as their names and addresses appear upon the
registration books.
(c) For the purposes of this Section the Trustee shall be deemed to have a
conflicting interest with respect to the Debentures of any series if a Default
has occurred and is continuing and:
(1) the Trustee is trustee under this Indenture with respect to the
outstanding Debentures of any series other than that series, or is trustee
under another indenture under which any other securities, or certificates
of interest or participation in any other securities, of the Company are
outstanding, unless such other indenture is a collateral trust indenture
under which the only collateral consists of Debentures issued under this
Indenture; provided that there shall be excluded from the operation of this
paragraph the Debentures of any series other than that series and any other
indenture or indentures under which other securities, or certificates of
interest or participation in other securities, of the Company are
outstanding if (i) this Indenture and such other indenture or indentures
and all series of securities issuable thereunder are wholly unsecured and
rank equally and such other indenture or indentures (and such series) are
hereafter qualified under the Trust Indenture Act, unless the Securities
and Exchange Commission shall have found and declared by order pursuant to
subsection (b) of Section 305 or subsection (c) of Section 307 of the Trust
Indenture Act, that differences exist between (A) the provisions of this
Indenture with respect to Debentures of that series and with respect to one
or more other series or (B) the provisions of this Indenture and the
provisions of such other indenture or indentures (or such series), which
are so likely to involve a material conflict of interest as to make it
necessary in the public interest or for the protection of investors to
disqualify the Trustee from acting as such under this Indenture with
respect to the Debentures of that series and such other series or such
other indenture or indentures, or (ii) the Company shall have sustained the
burden of proving, on application to the Securities and Exchange Commission
and after opportunity for hearing thereon, that the trusteeship under this
Indenture with respect to Debentures of that series and such other series
or such other indenture or indentures is not so likely to involve a
material conflict of interest as to make it necessary in the public
interest or for the protection of investors to disqualify the Trustee from
acting as such under this Indenture with respect to Debentures of that
series and such other series or under such other indentures;
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(2) the Trustee or any of its directors or executive officers is an
underwriter for the Company;
(3) the Trustee directly or indirectly controls or is directly or
indirectly controlled by or is under direct or indirect common control with
or an underwriter for the Company;
(4) the Trustee or any of its directors or executive officers is a
director, officer, partner, employee, appointee or representative of the
Company, or of an underwriter (other than the Trustee itself) for the
Company who is currently engaged in the business of underwriting, except
that (A) one individual may be a director and/or an executive officer of
the Trustee and a director and/or an executive officer of the Company, but
may not be at the same time an executive officer of both the Trustee and
the Company; (B) if and so long as the number of directors of the Trustee
in office is more than nine, one additional individual may be a director
and/or an executive officer of the Trustee and a director of the Company;
and (C) the Trustee may be designated by the Company or by an underwriter
for the Company to act in the capacity of transfer agent, registrar,
custodian, paying agent, fiscal agent, escrow agent, or depository, or in
any other similar capacity, or, subject to the provisions of paragraph (1)
of this subsection (c), to act as trustee whether under an indenture or
otherwise;
(5) 10% or more of the voting securities of the Trustee is
beneficially owned either by the Company or by any director, partner, or
executive officer thereof, or 20% or more of such voting securities is
beneficially owned, collectively, by any two or more of such persons; or
10% or more of the voting securities of the Trustee is beneficially owned
either by an underwriter for the Company or by any director, partner, or
executive officer thereof, or is beneficially owned, collectively, by any
two or more such persons;
(6) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
subsection (c) defined), (A) 5% or more of the voting securities, or 10% or
more of any other class of security, of the Company, not including the
Debentures issued under this Indenture and securities issued under any
other indenture under which the Trustee is also trustee, or (B) 10% or more
of any class of security of an underwriter for the Company;
(7) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default
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(as hereinafter in this subsection (c) defined), 5% or more of the voting
securities of any person who, to the knowledge of the Trustee, owns 10% or
more of the voting securities of, or controls directly or indirectly or is
under direct or indirect common control with, the Company;
(8) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
subsection (c) defined), 10% or more of any class of security of any person
who, to the knowledge of the Trustee, owns 50% or more of the voting
securities of the Company;
(9) the Trustee owns, on the date of Default upon the Debentures of
any series or any anniversary of such Default while such Default upon the
Debentures issued under this Indenture remains outstanding, in the capacity
of executor, administrator, testamentary or inter vivos trustee, guardian,
committee or conservator, or in any other similar capacity, an aggregate of
25% or more of the voting securities, or of any class of security, of any
person, the beneficial ownership of a specified percentage of which would
have constituted a conflicting interest under paragraph (6), (7), or (8) of
this subsection (c). As to any such securities of which the Trustee
acquired ownership through becoming executor, administrator or testamentary
trustee of an estate which include them, the provisions of the preceding
sentence shall not apply, for a period of two years from the date of such
acquisition, to the extent that such securities included in such estate do
not exceed 25% of such voting securities or 25% of any such class of
security. Promptly after the dates of any such Default upon the Debentures
issued under this Indenture and annually in each succeeding year that the
Debentures issued under this Indenture remain in Default, the Trustee shall
make a check of its holding of such securities in any of the above-
mentioned capacities as of such dates. If the Company fails to make payment
in full of principal of or interest on any of the Debentures when and as
the same becomes due and payable, and such failure continues for 30 days
thereafter, the Trustee shall make a prompt check of its holding of such
securities in any of the above-mentioned capacities as of the date of the
expiration of such 30-day period, and after such date, notwithstanding the
foregoing provisions of this paragraph (9), all such securities so held by
the Trustee, with sole or joint control over such securities vested in it,
shall, but only so long as such failure shall continue, be considered as
though beneficially owned by the Trustee for the purposes of paragraphs
(6), (7) and (8) of this subsection (c); or
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(10) except under the circumstances described in paragraphs (1), (3),
(4), (5) or (6) of subsection (b) of Section 7.13 the Trustee shall be or
shall become a creditor of the Company.
For purposes of paragraph (1) of this subsection (c), and of Section 6.06,
the term "series of securities or "series" means a series, class or group of
securities issuable under an indenture pursuant to whose terms holders of one
such series may vote to direct the indenture trustee, or otherwise take action
pursuant to a vote of such holders, separately from holders of another such
series; provided, that "series of securities" or "series" shall not include any
series of securities issuable under an indenture if all such series rank equally
and are wholly unsecured.
The specification of percentages in paragraphs (5) to (9), inclusive, of
this subsection (c) shall not be construed as indicating that the ownership of
such percentages of the securities of a person is or is not necessary or
sufficient to constitute direct or indirect control for the purposes of
paragraph (3) or (7) of this subsection (c).
For the purposes of paragraphs (6), (7), (8) and (9) of this subsection (c)
only, (A) the terms "security" and "securities" shall include only such
securities as are generally known as corporate securities, but shall not include
any note or other evidence of indebtedness issued to evidence an obligation to
repay moneys lent to a person by one or more banks, trust companies or banking
firms, or any certificate of interest or participation in any such note or
evidence of indebtedness; (B) an obligation shall be deemed to be in "default"
when a default in payment of principal shall have continued for 30 days or more
and shall not have been cured; and (C) the Trustee shall not be deemed to be the
owner or holder of (i) any security which it holds as collateral security (as
trustee or otherwise) for any obligation which is not in default as defined in
clause (B) above, or (ii) any security which it holds as collateral security
under this Indenture, irrespective of any Default hereunder, or (iii) any
security which it holds as agent for collection, or as custodian, escrow agent
or depositary, or in any similar representative capacity.
Except as above provided, the word "security" or "securities" as used in
this Indenture shall mean any note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or participation in any
profit-sharing agreement, collateral-trust certificate, pre-organization
certificate or subscription, transferable share, investment contract, voting-
trust certificate, certificate of deposit for a security, fractional undivided
interest in oil, gas, or other mineral rights, or, in general, any interest or
instrument
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commonly known as a "security", or any certificate of interest or participation
in, temporary or interim certificate for, receipt for, guarantee of, or warrant
or right to subscribe to or purchase, any of the foregoing.
(d) For the purposes of this Section:
(1) The term "underwriter" when used with reference to the Company
shall mean every person, who, within one year prior to the time as of which
the determination is made, has purchased from the Company with a view to,
or has offered or sold for the Company in connection with, the distribution
of any security of the Company outstanding at such time, or has
participated or has had a direct or indirect participation in any such
undertaking, or has participated or has had a participation in the direct
or indirect underwriting of any such undertaking, but such term shall not
include a person whose interest was limited to a commission from an
underwriter or dealer not in excess of the usual and customary
distributors' or sellers' commission.
(2) The term "director" shall mean any member of the board of
directors of a corporation or any individual performing similar functions
with respect to any organization whether incorporated or unincorporated.
(3) The term "person" shall mean an individual, a corporation, a
partnership, an association, a joint-stock company, a trust, an
unincorporated organization or a government or political subdivision
thereof. As used in this paragraph, the term "trust" shall include only a
trust where the interest or interests of the beneficiary or beneficiaries
are evidenced by a security.
(4) The term "voting security" shall mean any security presently
entitling the owner or holder thereof to vote in the direction or
management of the affairs of a person, or any security issued under or
pursuant to any trust, agreement or arrangement whereby a trustee or
trustees or agent or agents for the owner or holder of such security are
presently entitled to vote in the direction or management of the affairs of
a person.
(5) The term "Company" shall mean any obligor upon the Debentures.
(6) The term "executive officer" shall mean the president, every vice
president, every assistant vice president, every trust officer, the
cashier, the secretary, and the treasurer of a corporation, and any
individual customarily performing similar functions with respect to any
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organization whether incorporated or unincorporated, but shall not include
the chairman of the board of directors.
(e) The percentages of voting securities and other securities specified in
this Section shall be calculated in accordance with the following provisions:
(1) A specified percentage of the voting securities of the Trustee,
the Company or any other person referred to in this Section (each of whom
is referred to as a "person" in this paragraph) means such amount of the
outstanding voting securities of such person as entitles the holder or
holders thereof to cast such specified percentage of the aggregate votes
which the holders of all the outstanding voting securities of such person
are entitled to cast in the direction or management of the affairs of such
person.
(2) A specified percentage of a class of securities of a person means
such percentage of the aggregate amount of securities of the class
outstanding.
(3) The term "amount", when used in regard to securities, means the
principal amount if relating to evidences of indebtedness, the number of
shares if relating to capital shares, and the number of units if relating
to any other kind of security.
(4) The term "outstanding" means issued and not held by or for the
account of the issuer. The following securities shall not be deemed
outstanding within the meaning of this definition:
(i) securities of an issuer held in a sinking fund relating
to securities of the issuer of the same class;
(ii) securities of an issuer held in a sinking fund relating
to another class of securities of the issuer, if the obligation
evidenced by such other class of securities is not in default as
to principal or interest or otherwise;
(iii) securities pledged by the issuer thereof as security
for an obligation of the issuer not in default as to principal or
interest or otherwise; and
(iv) securities held in escrow if placed in escrow by the
issuer thereof,
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provided, however, that any voting securities of an issuer shall be deemed
outstanding if any person other than the issuer is entitled to exercise the
voting rights thereof.
(5) A security shall be deemed to be of the same class as another
security if both securities confer upon the holder or holders thereof
substantially the same rights and privileges; provided, however, that, in
the case of secured evidences of indebtedness, all of which are issued
under a single indenture, differences in the interest rates or maturity
dates of various series thereof shall not be deemed sufficient to
constitute such series different classes; and provided, further, that, in
the case of unsecured evidences of indebtedness, differences in the
interest rates or maturity dates thereof shall not be deemed sufficient to
constitute them securities of different classes, whether or not they are
issued under a single indenture.
(f) Except in the case of a default in the payment of the principal of (or
premium, if any) or interest on any Debentures issued under this Indenture, or
in the payment of any sinking or analogous fund installment, the Trustee shall
not be required to resign as provided by this Section 7.08 if such Trustee shall
have sustained the burden of proving, on application to the Securities and
Exchange Commission and after opportunity for hearing thereon, that (i) the
default under the Indenture may be cured or waived during a reasonable period
and under the procedures described in such application and (ii) a stay of the
Trustee's duty to resign will not be inconsistent with the interests of
Debentureholders. The filing of such an application shall automatically stay the
performance of the duty to resign until the Securities and Exchange Commission
orders otherwise.
Any resignation of the Trustee shall become effective only upon the
appointment of a successor trustee and such successor's acceptance of such an
appointment.
SECTION 7.09. There shall at all times be a Trustee with respect to the
Debentures issued hereunder which shall at all times be a corporation organized
and doing business under the laws of the United States of America or any State
or Territory thereof or of the District of Columbia, or a corporation or other
person permitted to act as trustee by the Securities and Exchange Commission,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least 50 million dollars, and subject to supervision
or examination by Federal, State, Territorial, or District of Columbia
authority. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set
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forth in its most recent report of condition so published. The Company may not,
nor may any person directly or indirectly controlling, controlled by, or under
common control with the Company, serve as Trustee. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, the Trustee shall resign immediately in the manner and with the effect
specified in Section 7.10.
SECTION 7.10. (a) The Trustee or any successor hereafter appointed, may at
any time resign with respect to the Debentures of one or more series by giving
written notice thereof to the Company and by transmitting notice of resignation
by mail, first class postage prepaid, to the Debentureholders of such series, as
their names and addresses appear upon the Debenture Register. Upon receiving
such notice of resignation, the Company shall promptly appoint a successor
trustee with respect to Debentures of such series by written instrument, in
duplicate, executed by order of the Board of Directors, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and have
accepted appointment within 30 days after the mailing of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee with respect to
Debentures of such series, or any Debentureholder of that series who has been a
bona fide holder of a Debenture or Debentures for at least six months may,
subject to the provisions of Section 6.08, on behalf of himself and all others
similarly situated, petition any such court for the appointment of a successor
trustee. Such court may thereupon after such notice, if any, as it may deem
proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with the provisions of subsection
(a) of Section 7.08 after written request therefor by the Company or by any
Debentureholder who has been a bona fide holder of a Debenture or
Debentures for at least six months; or
(2) the Trustee shall cease to be eligible in accordance with the
provisions of Section 7.09 and shall fail to resign after written request
therefor by the Company or by any such Debentureholder of Debentures; or
(3) the Trustee shall become incapable of acting, or shall be adjudged
a bankrupt or insolvent, or a receiver of the Trustee or of its property
shall be appointed, or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then, in any such case, the
Company may remove the Trustee with respect
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to all Debentures and appoint a successor trustee by written instrument, in
duplicate, executed by order of the Board of Directors, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor trustee, or, subject to the provisions of Section 6.08, unless
the Trustee's duty to resign is stayed as provided herein, any
Debentureholder who has been a bona fide holder of a Debenture or
Debentures for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor trustee. Such
court may thereupon after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint a successor trustee.
(c) The holders of a majority in aggregate principal amount of the
Debentures of any series at the time outstanding may at any time remove the
Trustee with respect to such series and appoint a successor trustee.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee with respect to the Debentures of a series pursuant to any of
the provisions of this Section shall become effective upon acceptance of
appointment by the successor trustee as provided in Section 7.11.
(e) Any successor trustee appointed pursuant to this Section may be
appointed with respect to the Debentures of one or more series or all of such
series, and at any time there shall be only one Trustee with respect to the
Debentures of any particular series.
SECTION 7.11. (a) In case of the appointment hereunder of a successor
trustee with respect to all Debentures, every such successor trustee so
appointed shall execute, acknowledge and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee;
but, on the request of the Company or the successor trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor trustee all the rights, powers, and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such successor
trustee all property and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor trustee with
respect to the Debentures of one or more (but not all) series, the Company, the
retiring Trustee and each successor trustee with respect to the Debentures of
one or more series
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shall execute and deliver an indenture supplemental hereto wherein each
successor trustee shall accept such appointment and which (1) shall contain such
provisions as shall be necessary or desirable to transfer and confirm to, and to
vest in, each successor trustee all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Debentures of that or those series to which
the appointment of such successor trustee relates, (2) shall contain such
provisions as shall be deemed necessary or desirable to confirm that all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Debentures of that or those series as to which the retiring Trustee is not
retiring shall continue to be vested in the retiring Trustee, and (3) shall add
to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of the same
trust, that each such Trustee shall be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any other
such Trustee and that no Trustee shall be responsible for any act or failure to
act on the part of any other Trustee hereunder; and upon the execution and
delivery of such supplemental indenture the resignation or removal of the
retiring Trustee shall become effective to the extent provided therein, such
retiring Trustee shall with respect to the Debentures of that or those series to
which the appointment of such successor trustee relates have no further
responsibility for the exercise of rights and powers or for the performance of
the duties and obligations vested in the Trustee under this Indenture, and each
such successor trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Debentures of that or those series to which the
appointment of such successor trustee relates; but, on request of the Company or
any successor trustee, such retiring Trustee shall duly assign, transfer and
deliver to such successor trustee, to the extent contemplated by such
supplemental indenture, the property and money held by such retiring Trustee
hereunder with respect to the Debentures of that or those series to which the
appointment of such successor trustee relates.
(c) Upon request of any such successor trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor trustee all such rights, powers and trusts referred to in
paragraph (a) or (b) of this Section, as the case may be.
(d) No successor trustee shall accept its appointment unless at the time of
such acceptance such successor trustee shall be qualified and eligible under
this Article.
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(e) Upon acceptance of appointment by a successor trustee as provided in
this Section, the Company shall transmit notice of the succession of such
trustee hereunder by mail, first class postage prepaid, to the Debentureholders,
as their names and addresses appear upon the Debenture Register. If the Company
fails to transmit such notice within ten days after acceptance of appointment by
the successor trustee, the successor trustee shall cause such notice to be
transmitted at the expense of the Company.
SECTION 7.12. Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be qualified under the provisions of Section 7.08 and eligible
under the provisions of Section 7.09, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding. In case any Debentures shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Debentures so authenticated with the same
effect as if such successor Trustee had itself authenticated such Debentures.
SECTION 7.13. (a) Subject to the provisions of subsection (b) of this
Section, if the Trustee shall be or shall become a creditor, directly or
indirectly, secured or unsecured, of the Company within three months prior to a
default, as defined in subsection (c) of this Section, or subsequent to such a
default, then, unless and until such default shall be cured, the Trustee shall
set apart and hold in a special account for the benefit of the Trustee
individually, the holders of the Debentures and the holders of other indenture
securities (as defined in subsection (c) of this Section):
(1) an amount equal to any and all reductions in the amount due and
owing upon any claim as such creditor in respect of principal or interest,
effected after the beginning of such three months' period and valid as
against the Company and its other creditors, except any such reduction
resulting from the receipt or disposition of any property described in
paragraph (2) of this subsection, or from the exercise of any right of set-
off which the Trustee could have exercised if a petition in bankruptcy had
been filed by or against the Company upon the date of such default; and
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(2) all property received by the Trustee in respect of any claim as
such creditor, either as security therefor, or in satisfaction or
composition thereof, or otherwise, after the beginning of such three
months' period, or an amount equal to the proceeds of any such property, if
disposed of, subject, however, to the rights, if any, of the Company and
its other creditors in such property or such proceeds.
Nothing herein contained, however, shall affect the right of the Trustee:
(A) to retain for its own account (i) payments made on account of any
such claim by any person (other than the Company) who is liable thereon,
and (ii) the proceeds of the bona fide sale of any such claim by the
Trustee to a third person, and (iii) distributions made in cash,
securities, or other property in respect of claims filed against the
Company in bankruptcy or receivership or in a case for reorganization
pursuant to the Federal Bankruptcy Code or applicable State law;
(B) to realize, for its own account, upon any property held by it as
security for any such claim, if such property was so held prior to the
beginning of such three months' period;
(C) to realize, for its own account, but only to the extent of the
claim hereinafter mentioned, upon any property held by it as security for
any such claim, if such claim was created after the beginning of such three
months' period and such property was received as security therefor
simultaneously with the creation thereof, and if the Trustee shall sustain
the burden of proving that at the time such property was so received the
Trustee had no reasonable cause to believe that a default, as defined in
subsection (c) of this Section, would occur within three months; or
(D) to receive payment on any claim referred to in paragraph (B) or
(C), against the release of any property held as security for such claim as
provided in such paragraph (B) or (C), as the case may be, to the extent of
the fair value of such property.
For the purposes of paragraphs (B), (C) and (D), property substituted after
the beginning of such three months' period for property held as security at the
time of such substitution shall, to the extent of the fair value of the property
released, have the same status as the property released, and, to the extent that
any claim referred to in any of such paragraphs is created in renewal of or in
substitution for or for the purpose of repaying or refunding any pre-existing
claim of the Trustee as such
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creditor, such claim shall have the same status as such pre-existing claim.
If the Trustee shall be required to account, the funds and property held in
such special account and the proceeds thereof shall be apportioned between the
Trustee, the Debentureholders and the holders of other indenture securities in
such manner that the Trustee, the Debentureholders and the holders of other
indenture securities realize, as a result of payments from such special account
and payments of dividends on claims filed against the Company in bankruptcy or
receivership or in a case for reorganization pursuant to the Federal Bankruptcy
Code or applicable State law, the same percentage of their respective claims,
figured before crediting to the claim of the Trustee anything on account of the
receipt by it from the Company of the funds and property in such special account
and before crediting to the respective claims of the Trustee, the
Debentureholders and the holders of other indenture securities dividends on
claims filed against the Company in bankruptcy or receivership or in a case for
reorganization pursuant to the Federal Bankruptcy Code or applicable State law,
but after crediting thereon receipts on account of the indebtedness represented
by their respective claims from all sources other than from such dividends and
from the funds and property so held in such special account. As used in this
paragraph, with respect to any claim, the term "dividends" shall include any
distribution with respect to such claim, in bankruptcy or receivership or in a
case for reorganization pursuant to the Federal Bankruptcy Code or applicable
State law, whether such distribution is made in cash, securities, or other
property, but shall not include any such distribution with respect to the
secured portion, if any, of such claim. The court in which such bankruptcy,
receivership or a case for reorganization is pending shall have jurisdiction (i)
to apportion between the Trustee, the Debentureholders and the holders of other
indenture securities, in accordance with the provisions of this paragraph, the
funds and property held in such special account and the proceeds thereof, or
(ii) in lieu of such apportionment, in whole or in part, to give to the
provisions of this paragraph due consideration in determining the fairness of
the distributions to be made to the Trustee, the Debentureholders and the
holders of other indenture securities with respect to their respective claims,
in which event it shall not be necessary to liquidate or to appraise the value
of any securities or other property held in such special account or as security
for any such claim, or to make a specific allocation of such distributions as
between the secured and unsecured portions of such claims, or otherwise to apply
the provisions of this paragraph as a mathematical formula.
Any Trustee who has resigned or been removed after the beginning of such
three months' period shall be subject to the provisions of this subsection (a)
as though such resignation or
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removal had not occurred. If any Trustee has resigned or been removed prior to
the beginning of such three months' period, it shall be subject to the
provisions of this subsection (a) if and only if the following conditions exist:
(i) the receipt of property or reduction of claim which would have
given rise to the obligation to account, if such Trustee had continued as
trustee, occurred after the beginning of such three months' period; and
(ii) such receipt of property or reduction of claim occurred within
three months after such resignation or removal.
(b) There shall be excluded from the operation of subsection (a) of this
Section a creditor relationship arising from:
(1) the ownership or acquisition of securities issued under any
indenture, or any security or securities having a maturity of one year or
more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court of
competent jurisdiction, or by this Indenture, for the purpose of preserving
any property other than cash which shall at any time be subject to the
lien, if any, of this Indenture or of discharging tax liens or other prior
liens or encumbrances thereon, if notice of such advance and of the
circumstances surrounding the making thereof is given to the
Debentureholders at the time and in the manner provided in this Indenture;
(3) disbursements made in the ordinary course of business in the
capacity of trustee under an indenture, transfer agent, registrar,
custodian, paying agent, subscription agent, fiscal agent or depositary, or
other similar capacity;
(4) an indebtedness created as a result of services rendered or
premises rented; or an indebtedness created as a result of goods or
securities sold in a cash transaction as defined in subsection (c) of this
Section;
(5) the ownership of stock or of other securities of a Company
organized under the provisions of Section 25(a) of the Federal Reserve Act,
as amended, which is directly or indirectly a creditor of the Company; or
(6) the acquisition, ownership, acceptance or negotiation of any
drafts, bills of exchange, acceptances or obligations which fall within the
classification of
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self-liquidating paper as defined in subsection (c) of this Section.
(c) As used in this Section:
(1) The term "default" shall mean any failure to make payment in full
of the principal of (or premium, if any) or interest upon any of the
Debenture or upon the other indenture securities when and as such principal
(or premium, if any) or interest becomes due and payable.
(2) The term "other indenture securities" shall mean securities upon
which the Company is an obligor (as defined in the Trust Indenture Act)
outstanding under any other indenture (A) under which the Trustee is also
trustee, (B) which contains provisions substantially similar to the
provisions of subsection (a) of this Section, and (C) under which a default
exists at the time of the apportionment of the funds and property held in
said special account.
(3) The term "cash transaction" shall mean any transaction in which
full payment for goods or securities sold is made within seven days after
delivery of the goods or securities in currency or in checks or other
orders drawn upon banks or bankers and payable upon demand.
(4) The term "self-liquidating paper" shall mean any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by the Company for the purpose of financing the purchase,
processing, manufacture, shipment, storage or sale of goods, wares or
merchandise and which is secured by documents evidencing title to,
possession of, or a lien upon, the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods, wares or
merchandise previously constituting the security, provided the security is
received by the Trustee simultaneously with the creation of the creditor
relationship with the Company arising from the making, drawing, negotiating
or incurring of the draft, bill of exchange, acceptance or obligation.
(5) The term "Company" shall mean any obligor upon any of the
Debentures.
ARTICLE EIGHT
Concerning the Debentureholders
SECTION 8.01. Whenever in this Indenture it is provided that the holders of
a majority or specified percentage in aggregate principal amount of the
Debentures of a particular series may take any action (including the making of
any demand or request, the giving of any notice, consent or waiver or the taking
of any
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other action), the fact that at the time of taking any such action the holders
of such majority or specified percentage of that series have joined therein may
be evidenced by any instrument or any number of instruments of similar tenor
executed by such holders of Debentures of that series in person or by agent or
proxy appointed in writing.
If the Company shall solicit from the Debentureholders of any series any
request, demand, authorization, direction, notice, consent, waiver or other
action, the Company may, at its option, as evidenced by an Officers'
Certificate, fix in advance a record date for such series for the determination
of Debentureholders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other action, but the Company shall have
no obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other action may be given
before or after the record date, but only the Debentureholders of record at the
close of business on the record date shall be deemed to be Debentureholders for
the purposes of determining whether Debentureholders of the requisite proportion
of outstanding Debentures of that series have authorized or agreed or consented
to such request, demand, authorization, direction, notice, consent, waiver or
other action, and for that purpose the outstanding Debentures of that series
shall be computed as of the record date; provided that no such authorization,
agreement or consent by such Debentureholders on the record date shall be deemed
effective unless it shall become effective pursuant to the provisions of this
Indenture not later than six months after the record date.
SECTION 8.02. Subject to the provisions of Section 7.01, proof of the
execution of any instrument by a Debentureholder (such proof will not require
notarization) or his agent or proxy and proof of the holding by any person of
any of the Debentures shall be sufficient if made in the following manner:
(a) The fact and date of the execution by any such person of any
instrument may be proved in any reasonable manner acceptable to the
Trustee.
(b) The ownership of Debentures shall be proved by the Debenture
Register of such Debentures or by a certificate of the Debenture Registrar
thereof.
(c) The Trustee may require such additional proof of any matter
referred to in this Section as it shall deem necessary.
SECTION 8.03. Prior to the due presentment for registration of transfer of
any Debenture, the Company, the Trustee, any paying agent and any Debenture
Registrar may deem and treat the
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person in whose name such Debenture shall be registered upon the books of the
Company as the absolute owner of such Debenture (whether or not such Debenture
shall be overdue and notwithstanding any notice of ownership or writing thereon
made by anyone other than the Debenture Registrar) for the purpose of receiving
payment of or on account of the principal of, premium, if any, and (subject to
Section 2.03) interest on such Debenture and for all other purposes; and neither
the Company nor the Trustee nor any paying agent nor any Debenture Registrar
shall be affected by any notice to the contrary.
SECTION 8.04. In determining whether the holders of the requisite aggregate
principal amount of Debentures of a particular series have concurred in any
direction, consent or waiver under this Indenture, Debentures of that series
which are owned by the Company or any other obligor on the Debentures of that
series or by any person directly or indirectly controlling or controlled by or
under common control with the Company or any other obligor on the Debentures of
that series shall be disregarded and deemed not to be outstanding for the
purpose of any such determination, except that for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, consent
or waiver, only Debentures of such series which the Trustee actually knows are
so owned shall be so disregarded. Debentures so owned which have been pledged in
good faith may be regarded as outstanding for the purposes of this Section, if
the pledgee shall establish to the satisfaction of the Trustee the pledgee's
right so to act with respect to such Debentures and that the pledgee is not a
person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company or any such other obligor. In case of a
dispute as to such right, any decision by the Trustee taken upon the advice of
counsel shall be full protection to the Trustee.
SECTION 8.05. At any time prior to (but not after) the evidencing to the
Trustee, as provided in Section 8.01, of the taking of any action by the holders
of the majority or percentage in aggregate principal amount of the Debentures of
a particular series specified in this Indenture in connection with such action,
any holder of a Debenture of that series which is shown by the evidence to be
included in the Debentures the holders of which have consented to such action
may, by filing written notice with the Trustee, and upon proof of holding as
provided in Section 8.02, revoke such action so far as concerns such Debenture.
Except as aforesaid any such action taken by the holder of any Debenture shall
be conclusive and binding upon such holder and upon all future holders and
owners of such Debenture, and of any Debenture issued in exchange therefor, on
registration of transfer thereof or in place thereof, irrespective of whether or
not any notation in regard thereto is made upon such Debenture. Any action taken
by the holders of the majority or
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percentage in aggregate principal amount of the Debentures of a particular
series specified in this Indenture in connection with such action shall be
conclusively binding upon the Company, the Trustee and the holders of all the
Debentures of that series.
ARTICLE NINE
Supplemental Indentures
SECTION 9.01. In addition to any supplemental indenture otherwise
authorized by this Indenture, the Company, when authorized by a Board
Resolution, and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act as then in effect), without the consent of
the Debentureholders, for one or more of the following purposes:
(a) to evidence the succession of another corporation to the Company,
and the assumption by any such successor of the covenants of the Company
contained herein or otherwise established with respect to the Debentures;
or
(b) to add to the covenants of the Company such further covenants,
restrictions, conditions or provisions for the protection of the holders of
the Debentures of all or any series as the Board of Directors and the
Trustee shall consider to be for the protection of the holders of
Debentures of all or any series, and to make the occurrence, or the
occurrence and continuance, of a default in any of such additional
covenants, restrictions, conditions or provisions a default or an Event of
Default with respect to such series permitting the enforcement of all or
any of the several remedies provided in this Indenture as herein set forth;
provided, however, that in respect of any such additional covenant,
restriction, condition or provision such supplemental indenture may provide
for a particular period of grace after default (which period may be shorter
or longer than that allowed in the case of other defaults) or may provide
for an immediate enforcement upon such default or may limit the remedies
available to the Trustee upon such default or may limit the right of the
holders of a majority in aggregate principal amount of the Debentures of
such series to waive such default; or
(c) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any
supplemental indenture, or to make such other provisions in regard to
matters or questions arising under this Indenture as shall not be
inconsistent with the provisions of this Indenture
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and shall not adversely affect the interests of the holders of the
Debentures of any series; or
(d) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall become effective only
when there is no Debenture outstanding of any series created prior to the
execution of such supplemental indenture which is entitled to the benefit
of such provision.
The Trustee is hereby authorized to join with the Company in the execution
of any such supplemental indenture, and to make any further appropriate
agreements and stipulations which may be therein contained, but the Trustee
shall not be obligated to enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
Any supplemental indenture authorized by the provisions of this Section may
be executed by the Company and the Trustee without the consent of the holders of
any of the Debentures at the time outstanding, notwithstanding any of the
provisions of Section 9.02.
SECTION 9.02. With the consent (evidenced as provided in Section 8.01) of
the holders of not less than a majority in aggregate principal amount of the
Debentures of each series affected by such supplemental indenture or indentures
at the time outstanding, the Company, when authorized by a Board Resolution, and
the Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as then in effect) for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of this
Indenture or of any supplemental indenture or of modifying in any manner the
rights of the holders of the Debentures of such series under this Indenture;
provided, however, that no such supplemental indenture shall (i) extend the
fixed maturity of any 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 Debenture so affected or (ii) reduce the aforesaid
percentage of Debentures, the holders of which are required to consent to any
such supplemental indenture, without the consent of the holders of each
Debenture then outstanding and affected thereby.
Upon the request of the Company, accompanied by a Board Resolution
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of Debentureholders required
to consent thereto as aforesaid, the Trustee shall join with the Company in the
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execution of such supplemental indenture unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion but shall not be
obligated to enter into such supplemental indenture.
It shall not be necessary for the consent of the Debentureholders of any
series affected thereby under this Section to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient if such consent
shall approve the substance thereof.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Trustee
shall transmit by mail, first class postage prepaid, a notice, setting forth in
general terms the substance of such supplemental indenture, to the
Debentureholders of all series affected thereby as their names and addresses
appear upon the Debenture Register. Any failure of the Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
SECTION 9.03. Upon the execution of any supplemental indenture pursuant to
the provisions of this Article or of Section 10.01, this Indenture shall, with
respect to such series, be and be deemed to be modified and amended in
accordance therewith and the respective rights, limitations of rights,
obligations, duties and immunities under this Indenture of the Trustee, the
Company and the holders of Debentures of the series affected thereby shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
SECTION 9.04. Debentures of any series, affected by a supplemental
indenture, authenticated and delivered after the execution of such supplemental
indenture pursuant to the provisions of this Article or of Section 10.01, may
bear a notation in form approved by the Company, provided such form meets the
requirements of any exchange upon which such series may be listed, as to any
matter provided for in such supplemental indenture. If the Company shall so
determine, new Debentures of that series so modified as to conform, in the
opinion of the Board of Directors, to any modification of this Indenture
contained in any such supplemental indenture may be prepared by the Company,
authenticated by the Trustee and delivered in exchange for the Debentures of
that series then outstanding.
SECTION 9.05. The Trustee, subject to the provisions of Section 7.01, may
receive an Opinion of Counsel as conclusive evidence that any supplemental
indenture executed pursuant to
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this Article is authorized or permitted by, and conforms to, the terms of this
Article and that it is proper for the Trustee under the provisions of this
Article to join in the execution thereof.
ARTICLE TEN
Consolidation, Merger and Sale
SECTION 10.01. Nothing contained in this Indenture or in any of the
Debentures shall prevent any consolidation or merger of the Company with or into
any other corporation or corporations (whether or not affiliated with the
Company), or successive consolidations or mergers in which the Company or its
successor or successors shall be a party or parties, or shall prevent any sale,
conveyance, transfer or other disposition of the property of the Company or its
successor or successors as an entirety, or substantially as an entirety, to any
other corporation (whether or not affiliated with the Company or its successor
or successors) authorized to acquire and operate the same; provided, however,
the Company hereby covenants and agrees that, upon any such consolidation,
merger, sale, conveyance, transfer or other disposition, the due and punctual
payment of the principal of (premium, if any) and interest on all of the
Debentures of all series in accordance with the terms of each series, according
to their tenor, and the due and punctual performance and observance of all the
covenants and conditions of this Indenture with respect to each series or
established with respect to such series pursuant to Section 2.01 to be kept or
performed by the Company, shall be expressly assumed, by supplemental indenture
(which shall conform to the provisions of the Trust Indenture Act, as then in
effect) satisfactory in form to the Trustee executed and delivered to the
Trustee by the entity formed by such consolidation, or into which the Company
shall have been merged, or by the entity which shall have acquired such
property.
SECTION 10.02. (a) In case of any such consolidation, merger, sale,
conveyance, transfer or other disposition and upon the assumption by the
successor corporation, by supplemental indenture, executed and delivered to the
Trustee and satisfactory in form to the Trustee, of the due and punctual payment
of the principal of, premium, if any, and interest on all of the Debentures of
all series outstanding and the due and punctual performance of all of the
covenants and conditions of this Indenture or established with respect to each
series of the Debentures pursuant to Section 2.01 to be performed by the Company
with respect to each series, such successor corporation shall succeed to and be
substituted for the Company, with the same effect as if it had been named herein
as the party of the first part, and thereupon the predecessor corporation shall
be relieved of all obligations and covenants under this Indenture and the
Debentures. Such successor corporation thereupon may cause to be signed, and may
issue either in its own name or in
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the name of the Company or any other predecessor obligor on the Debentures, any
or all of the Debentures issuable hereunder which theretofore shall not have
been signed by the Company and delivered to the Trustee; and, upon the order of
such successor company, instead of the Company, and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee shall
authenticate and shall deliver any Debentures which previously shall have been
signed and delivered by the officers of the predecessor Company to the Trustee
for authentication, and any Debentures which such successor corporation
thereafter shall cause to be signed and delivered to the Trustee for that
purpose. All the Debentures so issued shall in all respects have the same legal
rank and benefit under this Indenture as the Debentures theretofore or
thereafter issued in accordance with the terms of this Indenture as though all
of such Debentures had been issued at the date of the execution hereof.
(b) In case of any such consolidation, merger, sale, conveyance, transfer
or other disposition such changes in phraseology and form (but not in substance)
may be made in the Debentures thereafter to be issued as may be appropriate.
(c) Nothing contained in this Indenture or in any of the Debentures shall
prevent the Company from merging into itself or acquiring by purchase or
otherwise all or any part of the property of any other corporation (whether or
not affiliated with the Company).
SECTION 10.03. The Trustee, subject to the provisions of Section 7.01, may
receive an Opinion of Counsel as conclusive evidence that any such
consolidation, merger, sale, conveyance, transfer or other disposition, and any
such assumption, comply with the provisions of this Article.
ARTICLE ELEVEN
Satisfaction and Discharge of Indenture;
Unclaimed Moneys
SECTION 11.01. If at any time: (a) the Company shall have delivered to the
Trustee for cancellation all Debentures of a series theretofore authenticated
(other than any Debentures which shall have been destroyed, lost or stolen and
which shall have been replaced or paid as provided in Section 2.07) and
Debentures for whose payment money or Governmental Obligations has theretofore
been deposited in trust or segregated and held in trust by the Company (and
thereupon repaid to the Company or discharged from such trust, as provided in
Section 11.05); (b) all such Debentures of a particular series not theretofore
delivered to the Trustee for cancellation shall have become due and payable, or
are by their terms to become due and payable within one year or are to be called
for redemption within one
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year under arrangements satisfactory to the Trustee for the giving of notice of
redemption, and the Company shall deposit or cause to be deposited with the
Trustee as trust funds the entire amount in moneys or Governmental Obligations
sufficient; or (c) a combination thereof, sufficient in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay at maturity or
upon redemption all Debentures of that series not theretofore delivered to the
Trustee for cancellation, including principal (and premium, if any) and interest
due or to become due to such date of maturity or date fixed for redemption, as
the case may be, and if the Company shall also pay or cause to be paid all other
sums payable hereunder with respect to such series by the Company, then this
Indenture shall thereupon cease to be of further effect with respect to such
series except for the provisions of Sections 2.05, 2.07, 4.02 and 7.10, which
shall survive until the date of maturity or redemption date, as the case may be,
and Sections 7.06 and 11.05 which shall survive to such date and thereafter, and
the Trustee, on demand of the Company and at the cost and expense of the
Company, shall execute proper instruments acknowledging satisfaction of and
discharging this Indenture with respect to such series.
SECTION 11.02. If at any time all such Debentures of a particular series
not heretofore delivered to the Trustee for cancellation or which have not
become due and payable as described in Section 11.01 shall have been paid by the
Company by depositing irrevocably with the Trustee as trust funds moneys or an
amount of Governmental Obligations sufficient to pay at maturity or upon
redemption all such Debentures of that series not theretofore delivered to the
Trustee for cancellation, including principal (and premium, if any) and interest
due or to become due to such date of maturity or date fixed for redemption, as
the case may be, and if the Company shall also pay or cause to be paid all other
sums payable hereunder by the Company with respect to such series, then after
the date such moneys or Governmental Obligations, as the case may be, are
deposited with the Trustee the obligations of the Company under this Indenture
with respect to such series shall cease to be of further effect except for the
provisions of Sections 2.05, 2.07, 4.02, 7.06, 7.10 and 11.05 hereof which shall
survive until such Debentures shall mature and be paid. Thereafter, Sections
7.06 and 11.05 shall survive.
SECTION 11.03. All moneys or Governmental Obligations deposited with the
Trustee pursuant to Sections 11.01 or 11.02 shall be held in trust and shall be
available for payment as due, either directly or through any paying agent
(including the Company acting as its own paying agent), to the holders of the
particular series of Debentures for the payment or redemption of
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which such moneys or Governmental Obligations have been deposited with the
Trustee.
SECTION 11.04. In connection with the satisfaction and discharge of this
Indenture all moneys or Governmental Obligations then held by any paying agent
under the provisions of this Indenture shall, upon demand of the Company, be
paid to the Trustee and thereupon such paying agent shall be released from all
further liability with respect to such moneys or Governmental Obligations.
SECTION 11.05. Any moneys or Governmental Obligations deposited with any
paying agent or the Trustee, or then held by the Company, in trust for payment
of principal of or premium or interest on the Debentures of a particular series
that are not applied but remain unclaimed by the holders of such Debentures for
at least two years after the date upon which the principal of (and premium, if
any) or interest on such Debentures shall have respectively become due and
payable, shall be repaid to the Company on May 31 of each year or (if then held
by the Company) shall be discharged from such trust; and thereupon the paying
agent and the Trustee shall be released from all further liability with respect
to such moneys or Governmental Obligations, and the holder of any of the
Debentures entitled to receive such payment shall thereafter, as an unsecured
general creditor, look only to the Company for the payment thereof.
ARTICLE TWELVE
Immunity of Incorporators, Stockholders, Officers
and Directors
SECTION 12.01. No recourse under or upon any obligation, covenant or
agreement of this Indenture, or of any Debenture, or for any claim based thereon
or otherwise in respect thereof, shall be had against any incorporator,
stockholder, officer or director, past, present or future as such, of the
Company or of any predecessor or successor corporation, either directly or
through the Company or any such 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; it being expressly understood that this
Indenture and the obligations issued hereunder are solely corporate obligations,
and that no such personal liability whatever shall attach to, or is or shall be
incurred by, the incorporators, stockholders, officers or directors as such, of
the Company or of any predecessor or successor corporation, or any of them,
because of the creation of the indebtedness hereby authorized, or under or by
reason of the obligations, covenants or agreements contained in this Indenture
or in any of the Debentures or implied therefrom; and that any and all such
personal liability of every name and nature, either at common law or in equity
or by
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constitution or statute, of, and any and all such rights and claims against,
every such incorporator, stockholder, officer or director as such, because of
the creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or in any of
the Debentures or implied therefrom, are hereby expressly waived and released as
a condition of, and as a consideration for, the execution of this Indenture and
the issuance of such Debentures.
ARTICLE THIRTEEN
Miscellaneous Provisions
SECTION 13.01. All the covenants, stipulations, promises and agreements in
this Indenture contained by or on behalf of the Company shall bind its
successors and assigns, whether so expressed or not.
SECTION 13.02. Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board, committee or
officer of the Company shall and may be done and performed with like force and
effect by the corresponding board, committee or officer of any corporation that
shall at the time be the lawful sole successor of the Company.
SECTION 13.03. The Company by instrument in writing executed by authority
of two-thirds of its Board of Directors and delivered to the Trustee may
surrender any of the powers reserved to the Company and thereupon such power so
surrendered shall terminate both as to the Company and as to any successor
corporation.
SECTION 13.04. Except as otherwise expressly provided herein any notice or
demand which by any provision of this Indenture is required or permitted to be
given or served by the Trustee or by the holders of Debentures to or on the
Company may be given or served by being deposited first class postage prepaid in
a post-office letterbox addressed (until another address is filed in writing by
the Company with the Trustee), as follows: GTE Corporation, One Stamford Forum,
Stamford, Connecticut 06904, Attention: Secretary. Any notice, election, request
or demand by the Company or any Debentureholder to or upon the Trustee shall be
deemed to have been sufficiently given or made, for all purposes, if given or
made in writing at the Corporate Trust Office of the Trustee.
SECTION 13.05. This Indenture and each Debenture shall be deemed to be a
contract made under the laws of the State of New York, and for all purposes
shall be construed in accordance with the laws of said State.
SECTION 13.06. (a) Upon any application or demand by the Company to the
Trustee to take any action under any of the
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provisions of this Indenture, the Company shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent provided for in this
Indenture relating to the proposed action have been complied with and an Opinion
of Counsel stating that in the opinion of such counsel all such conditions
precedent have been complied with, except that in the case of any such
application or demand as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or demand, no additional certificate or opinion need be
furnished.
(b) Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
in this Indenture (other than the certificate provided pursuant to Section
5.03(d) of this Indenture) shall include (1) a statement that the person making
such certificate or opinion has read such covenant or condition; (2) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based; (3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
SECTION 13.07. Except as provided pursuant to Section 2.01 pursuant to a
Board Resolution, and as set forth in an Officers' Certificate, or established
in one or more indentures supplemental to the Indenture, in any case where the
date of maturity of interest or principal of any Debenture or the date of
redemption of any Debenture shall not be a business day then payment of interest
or principal (and premium, if any) may be made on the next succeeding business
day with the same force and effect as if made on the nominal date of maturity or
redemption, and no interest shall accrue for the period after such nominal date.
SECTION 13.08. If and to the extent that any provision of this Indenture
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act of 1939, as amended, such imposed duties
shall control.
SECTION 13.09. This 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.
SECTION 13.10. In case any one or more of the provisions contained in this
Indenture or in the Debentures of any series 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 Indenture or of
such Debentures, but this Indenture and such Debentures shall be construed as if
such invalid or illegal or
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unenforceable provision had never been contained herein or therein.
SECTION 13.11. The Company will have the right at all times to assign any
of its rights or obligations under the Indenture to a direct or indirect wholly
owned subsidiary of the Company; provided that, in the event of any such
assignment, the Company will remain liable for all such obligations. Subject to
the foregoing, the Indenture is binding upon and inures to the benefit of the
parties thereto and their respective successors and assigns. The Indenture may
not otherwise be assigned by the parties thereto.
ARTICLE FOURTEEN
Subordination of Debentures
SECTION 14.01. The Company covenants and agrees, and each Holder of
Debentures issued hereunder by his acceptance thereof likewise covenants and
agrees, that all Debentures shall be issued subject to the provisions of this
Article Fourteen; and each Holder of a Debenture, whether upon original issue or
upon transfer or assignment thereof, accepts and agrees to be bound by such
provisions.
The payment of the principal of, premium, if any, and interest on all
Debentures issued hereunder shall, to the extent and in the manner hereinafter
set forth, be subordinated and subject in right of payment to the prior payment
in full of all Senior Indebtedness, whether outstanding at the date of this
Indenture or thereafter incurred.
No provision of this Article Fourteen shall prevent the occurrence of any
default or Event of Default hereunder.
SECTION 14.02 In the event and during the continuation of any default in
the payment of principal, premium, interest or any other payment due on any
Senior Indebtedness continuing beyond the period of grace, if any, specified in
the instrument evidencing such Senior Indebtedness, unless and until such
default shall have been cured or waived or shall have ceased to exist, and in
the event that the maturity of any Senior Indebtedness has been accelerated
because of a default, then no payment shall be made by the Company with respect
to the principal (including redemption and sinking fund payments) of, or
premium, if any, or interest on the Debentures.
In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee or any holder when such payment is prohibited by the
preceding paragraphs of this Section 14.02, such payment shall be held in trust
for the benefit of, and shall be paid over or delivered to, the holders of
Senior Indebtedness or their respective representatives, or to the
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trustee or trustees under any indenture pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests may appear, but
only to the extent that the holders of the Senior Indebtedness (or their
representative or representatives or a trustee) notify the Trustee within 90
days of such payment of the amounts then due and owing on the Senior
Indebtedness and only the amounts specified in such notice to the Trustee shall
be paid to the holders of Senior Indebtedness.
SECTION 14.03. 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 or to
become due upon all Senior Indebtedness shall first be paid in full, or payment
thereof provided for in money in accordance with its terms, before any payment
is made on account of the principal (and premium, if any) or interest on the
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 Debenture or the Trustee would be entitled, except for
the provisions of this Article Fourteen, shall by 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 Debentures or by
the Trustee under this Indenture if received by them or it, directly to the
holders of Senior Indebtedness (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 any
Senior Indebtedness may have been issued, as their respective interests may
appear, to the extent necessary to pay all 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 Senior Indebtedness, before any payment or distribution
is made to the holders of Debentures or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee or the holders of the Debentures before all Senior Indebtedness 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 Senior Indebtedness or
their representative or
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representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any 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 remaining unpaid to the
extent necessary to pay all 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.
For purposes of this Article Fourteen, 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 Fourteen with
respect to the Debentures to the payment of all Senior Indebtedness which may at
the time be outstanding; provided that (i) the 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 the 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 Ten hereof shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section 14.03
if such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Article Ten hereof.
Nothing in Section 14.02 or in this Section 14.03 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 7.06.
SECTION 14.04. Subject to the payment in full of all Senior Indebtedness,
the rights of the holders of the Debentures shall be subrogated to the rights of
the holders of Senior Indebtedness to receive payments or distributions of cash,
property or securities of the Company applicable to the Senior Indebtedness
until the principal of (and premium, if any) and interest on the Debentures
shall be paid in full; and, for the purposes of such subrogation, no payments or
distributions to the holders of the Senior Indebtedness of any cash, property or
securities to which the holders of the Debentures or the Trustee would be
entitled except for the provisions of this Article Fourteen, and no payment over
pursuant to the provisions of this Article Fourteen, to or for the benefit of
the holders of Senior Indebtedness by holders of the Debentures or the Trustee,
shall, as between the Company, its creditors other than holders of Senior
Indebtedness,
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and the Holders of the Debentures, be deemed to be a payment by the Company to
or on account of the Senior Indebtedness. It is understood that the provisions
of this Article Fourteen are and are intended solely for the purposes of
defining the relative rights of the holders of the Debentures, on the one hand,
and the holders of the Senior Indebtedness on the other hand.
Nothing contained in this Article Fourteen or elsewhere in this Indenture
or in the Debentures is intended to or shall impair, as between the Company, its
creditors other than the holders of Senior Indebtedness, and the holders of the
Debentures, the obligation of the Company, which is absolute and unconditional,
to pay to the holders of the Debentures the principal of (and premium, if any)
and interest on the 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 Debentures and creditors of the Company other than
the holders of the Senior Indebtedness, nor shall anything herein or therein
prevent the Trustee or the holder of any Debenture from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture, subject
to the rights, if any, under this Article Fourteen of the holders of Senior
Indebtedness in respect of cash, property or securities of the Company received
upon the exercise of any such remedy.
Upon any payment of distribution of assets of the Company referred to in
this Article Fourteen, the Trustee, subject to the provision of Section 7.01,
and the holders of the 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 Debentures, for the purposes of ascertaining the persons
entitled to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount hereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article Fourteen.
SECTION 14.05. Each Holder of a Debenture by his acceptance thereof
authorizes and directs the Trustee in his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article Fourteen and appoints the Trustee his attorney-in-fact for any and all
such purposes.
SECTION 14.06. The Company shall give prompt written notice to a
Responsible Officer of the Trustee of any fact known to the Company which would
prohibit the making of any payment of monies to or by the Trustee in respect of
the Debentures pursuant to the
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provisions of this Article Fourteen. Notwithstanding the provisions of this
Article Fourteen or any other provision of this Indenture, the Trustee shall not
be charged with knowledge of the existence of any facts which would prohibit the
making of any payment of monies to or by the Trustee in respect of the
Debentures pursuant to the provisions of this Article Fourteen, unless and until
a Responsible Officer of the Trustee shall have received written notice thereof
at the Principal Office of the Trustee 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 7.01,
shall be entitled in all respects to assume that no such facts exist; provided
--------
that if the Trustee shall not have received the notice provided for in this
Section 14.06 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 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 which may be received by it within two
business days prior to such date.
The Trustee, subject to the provisions of Section 7.01, 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 (or a trustee on behalf of such
holder) to establish that such notice has been given by a holder of 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 Senior Indebtedness to
participate in any payment or distribution pursuant to this Article Fourteen,
the Trustee may request such person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of 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 Fourteen, 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 14.07. The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article Fourteen 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.
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With respect to the holders of Senior Indebtedness, the Trustee undertakes
to perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article Fourteen, and no implied covenants or
obligations with respect to the holders of 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 Senior Indebtedness and, subject to the
provisions of Section 7.01, the Trustee shall not be liable to any holder of
Senior Indebtedness if it shall pay over or deliver to holders of Debentures,
the Company or any other person money or assets to which any holder of Senior
Indebtedness shall be entitled by virtue of this Article Fourteen or otherwise.
SECTION 14.08. No right of any present or future holder of any Senior
Indebtedness 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 which 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 may, at any time and from time to time, without
the consent of or notice to the Trustee or the holders of the Debentures,
without incurring responsibility to the holders of the Debentures and without
impairing or releasing the subordination provided in this Article or the
obligations hereunder of the holders of the Debentures to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness
or any instrument evidencing the same or any agreement under which Senior
Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii)
release any person liable in any manner for the collection of Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Company and any other person.
The Bank of New York, as Trustee hereby accepts the trusts in this
Indenture declared and provided, upon the terms and conditions hereinabove set
forth.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
GTE CORPORATION
By ___________________________
Vice President
Attest:
By ________________________
Secretary
THE BANK OF NEW YORK
as Trustee
Attest:
By ___________________________
By _________________________
Assistant Treasurer
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STATE OF CONNECTICUT)
ss.:
COUNTY OF FAIRFIELD )
On _____________ __, 1994 before me, ____________, Notary Public,
personally appeared ___________________ and ___________________
/ / personally known to me - OR -
/ / proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
Witness my hand and official seal.
_____________________________
Signature of Notary
CAPACITY CLAIMED BY SIGNER
/ / INDIVIDUAL(S) _____________________
/ / CORPORATE OFFICER(S)____________________
/ / PARTNER(S)
/ / ATTORNEY-IN-FACT
/ / TRUSTEE(S)
/ / GUARDIAN/CONSERVATOR
/ / OTHER:
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
GTE CORPORATION
74
<PAGE>
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
On _________________ __, 1994 before me, ____________, Notary Public,
personally appeared ___________________ and ____________.
/ / personally known to me - OR -
/ / proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
Witness my hand and official seal.
_____________________________
Signature of Notary
CAPACITY CLAIMED BY SIGNER
/ / INDIVIDUAL(S) _____________________
/ / CORPORATE OFFICER(S) TRUST OFFICER
/ / PARTNER(S)
/ / ATTORNEY-IN-FACT
/ / TRUSTEE(S)
/ / GUARDIAN/CONSERVATOR
/ / OTHER:
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
THE BANK OF NEW YORK
75
<PAGE>
EXHIBIT 4.2
- --------------------------------------------------------------------------------
GTE CORPORATION
AND
THE BANK OF NEW YORK,
as Trustee
________________
FIRST SUPPLEMENTAL INDENTURE
Dated as of ________ __, 1994
TO
INDENTURE
Dated as of June 1, 1994
________________
______% Junior Subordinated Debentures, Series A, Due 2024
- --------------------------------------------------------------------------------
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of the _____ day of _________,
1994 (the "First Supplemental Indenture"), between GTE CORPORATION, a
corporation duly organized and existing under the laws of the State of New York
(hereinafter sometimes referred to as the "Company"), and THE BANK OF NEW YORK,
a New York banking association organized and existing under the laws of the
State of New York, as trustee (hereinafter sometimes referred to as the
"Trustee") under the Indenture dated as of June 1, 1994 between the Company and
the Trustee (the "Indenture"; all terms used and not defined herein are used as
defined in the Indenture).
WHEREAS, the Company executed and delivered the Indenture to the
Trustee to provide for the future issuance of its junior subordinated debentures
(the "Debentures"), said Debentures to be issued from time to time in series as
might be determined by the Company under the Indenture, in an unlimited
aggregate principal amount which may be authenticated and delivered thereunder
as in the Indenture provided; and
WHEREAS, pursuant to the terms of the Indenture, the Company desires
to provide for the establishment of a new series of its Debentures to be known
as its _____% Junior Subordinated Debentures, Series A, due 2024 (said series
being hereinafter referred to as the "Series A Debentures"), the form and
substance of such Series A Debentures and the terms, provisions and conditions
thereof to be set forth as provided in the Indenture and this First Supplemental
Indenture; and
WHEREAS, GTE Delaware, L.P., a Delaware limited partnership ("GTE
Delaware"), has offered to the public its ___% Cumulative Monthly Income
Preferred Securities, Series A (the "Series A Preferred Securities"),
representing limited partnership interests in GTE Delaware and proposes to
invest the proceeds from such offering in the Series A Debentures; and
WHEREAS, upon the occurrence of a Special Event (as defined in the
Amended and Restated Agreement of Limited Partnership of GTE Delaware, dated
__________ ___, 1994 (the "Limited Partnership Agreement"), the Company may
dissolve GTE Delaware and cause to be distributed to the holders of the Series A
Preferred Securities, on a pro rata basis, Series A Debentures (a "Dissolution
Event"); and
WHEREAS, the Company desires and has requested the Trustee to join
with it in the execution and delivery of 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 Series A Debentures,
when executed by the Company and authenticated and delivered by the Trustee, the
valid obligations of the Company, have been
<PAGE>
performed and fulfilled, and the execution and delivery hereof have been in all
respects duly authorized:
NOW THEREFORE, in consideration of the purchase and acceptance of the
Series A Debentures by the holders thereof, and for the purpose of setting
forth, as provided in the Indenture, the form and substance of the Series A
Debentures and the terms, provisions and conditions thereof, the Company
covenants and agrees with the Trustee as follows:
ARTICLE ONE
General Terms and Conditions of
the Series A Debentures
SECTION 1.01. There shall be and is hereby authorized a series of
Debentures designated the "_____% Junior Subordinated Debentures, Series A, Due
2024", limited in aggregate principal amount to (i) $________, plus (ii) the
amount of capital contributions made by the Company from time to time as general
partner of GTE Delaware, which amount shall be as set forth in any written order
of the Company for the authentication and delivery of Series A Debentures. The
Series A Debentures shall mature and the principal shall be due and payable
together with all accrued and unpaid interest thereon, including Additional
Interest (as hereinafter defined) on _______ __, 2024, and shall be issued in
the form of registered Series A Debentures without coupons.
SECTION 1.02. Except as provided in Section 1.03 herein, the Series A
Debentures shall be issued in certificated form. Principal and interest on the
Series A Debentures issued in certificated form will be payable, the transfer of
such Series A Debentures will be registrable and such Series A Debentures will
be exchangeable for the Series A Debentures bearing identical terms and
provisions at the office or agency of the Company in the Borough of Manhattan,
The City of New York; 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 Debenture register. Notwithstanding the
foregoing, so long as the holder of the Series A Debentures is GTE Delaware, the
payment of the principal of and interest on (including Additional Interest, if
any) on the Series A Debentures will be made at such place and to such account
as may be designated by GTE Delaware.
SECTION 1.03. In connection with a Dissolution Event, the Series A
Debentures in certificated form may be presented to the Trustee by GTE Delaware
in exchange for a Global Debenture in an aggregate principal amount equal to all
Outstanding Series A Debentures, to be registered in the name of the Depository,
or its nominee, and delivered by the Trustee to the Depository for
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<PAGE>
crediting to the accounts of its participants pursuant to the instructions of
GTE Delaware. The Company upon any such presentation shall execute a Global
Debenture in such aggregate principal amount and deliver the same to the Trustee
for authentication and delivery as hereinabove and in the Indenture provided.
Payments on the Series A Debentures issued as a Global Debenture will be made to
the Depository. The Depository for the Series A Debentures shall be The
Depository Trust Company, New York, New York.
SECTION 1.04. Each Series A Debenture will bear interest at the rate
of _____% per annum from the original date of issuance 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 same rate per annum, payable monthly in
arrears on the last day of each calendar month of each year (each, an "Interest
Payment Date", commencing on _______, 1994), to the person in whose name such
Series A Debenture or any predecessor Series A Debenture 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 that
Interest Payment Date. If pursuant to the provisions of Section 2.11(c) of the
Indenture the Series A Junior Subordinated Debentures are no longer represented
by a Global Debenture, the Company may select a regular record date for such
interest installment which shall be any date not later than fifteen days
preceding an 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
the Series A Debenture (or one or more Predecessor 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 the Series A 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
Series A Debentures may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in the Indenture hereinafter referred
to.
The amount of interest payable for any period will 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 the Series A 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.
If at any time when GTE Delaware is the holder of the Series A
Debentures, GTE Delaware shall be required to pay any interest on dividends in
arrears in respect of the Series A
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<PAGE>
Preferred Securities pursuant to the terms thereof, then the Company will pay as
interest (the "Additional Interest") an amount equal to such interest on
dividends in arrears. In addition, if GTE Delaware would be required to pay any
taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed by the United States, or any other taxing
authority, then, in any such case, the Company shall also pay as Additional
Interest such amounts as shall be required so that the net amount received and
retained by GTE Delaware after paying any such taxes, duties, assessments or
governmental charges will not be less than the amounts GTE Delaware would have
received had no such taxes, duties, assessments or governmental charges been
imposed.
ARTICLE TWO
Mandatory Prepayment and Optional Redemption
of the Series A Debentures
SECTION 2.01. If GTE Delaware redeems the Series A Preferred
Securities in accordance with the terms thereof, the Series A Debentures will
become due and payable in a principal amount equal to the aggregate stated
liquidation preference of the Series A Preferred Securities so redeemed,
together with all accrued and unpaid interest thereon, including Additional
Interest, if any (the "Mandatory Prepayment Price"). Any payment pursuant to
this provision shall be made prior to 12:00 noon, New York time, on the date of
such redemption or at such earlier time as the Company and GTE Delaware shall
agree.
SECTION 2.02. At such time as there are no Series A Preferred
Securities remaining outstanding and subject to the terms of Article Three of
the Indenture, the Company shall have the right to redeem the Series A
Debentures, in whole or in part, from time to time, on or after ___________,
1999, at a redemption price equal to 100% of the principal amount to be redeemed
plus any accrued and unpaid interest thereon, including any Additional 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 the Series A
Debentures are only partially redeemed pursuant to this Section, the Debentures
will be redeemed pro rata or by lot or by any other method utilized by the
Trustee; provided, that if at the time of redemption, the Series A Debentures
are registered as a Global Debenture, the Depository shall determine by lot the
principal amount of such Series A Debentures held by each Series A
Debentureholder to be redeemed.
-4-
<PAGE>
ARTICLE THREE
Extension of Interest Payment Period
SECTION 3.01. The Company shall have the right, at any time during
the term of the Series A Debentures, from time to time to extend the interest
payment period, of such Series A Debentures for up to 60 consecutive months (the
"Extended Interest Payment Period"), at the end of which period the Company
shall pay all interest accrued and unpaid thereon (together with interest
thereon at the rate specified for the Series A Debentures to the extent
permitted by applicable law); provided that, during such Extended Interest
Payment Period the Company shall not declare or pay any dividend on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of its
capital stock or make any guarantee payments with respect to the foregoing.
Prior to the termination of any such 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 60 consecutive months. Upon
the termination of any Extended Interest Payment Period and upon the payment of
all accrued and unpaid interest and any Additional Interest then due, the
Company may select a new Extended Interest Payment Period, subject to the
foregoing requirements. No interest during an Extended Interest Payment Period,
except at the end thereof, shall be due and payable.
SECTION 3.02. (a) If GTE Delaware is the sole holder of the
Series A Debentures at the time the Company selects an Extended Interest Payment
Period, the Company shall give both GTE Delaware and the Trustee written notice
of its selection of such Extended Interest Payment Period one business day prior
to the earlier of (i) the next succeeding date on which dividends on the Series
A Preferred Securities are payable or (ii) the date GTE Delaware is required to
give notice of the record date or the date such dividends are payable to the New
York Stock Exchange or other applicable self-regulatory organization or to
holders of the Series A Preferred Securities, but in any event not less than one
business day prior to such record date. The Company shall cause GTE Delaware to
give notice of the Company's selection of such Extended Interest Payment Period
to the holders of the Series A Preferred Securities.
(b) If GTE Delaware is not the sole holder of the Series A Debentures
at the time the Company selects an Extended Interest Payment Period, the Company
shall give the holders of the Series A Debentures and the Trustee written notice
of its selection of such Extended Interest Payment Period 10 business days prior
to 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 Series A Debentures, but in any
event not less than two business days prior to such record date.
(c) The month in which any notice is given pursuant to paragraphs (a)
or (b) of this Section shall constitute one of the
-5-
<PAGE>
60 months which comprise the maximum Extended Interest Payment Period.
ARTICLE FOUR
Right of Set-Off
SECTION 4.01. Notwithstanding anything to the contrary in the
Indenture or herein, the Company shall have the right to set-off any payment it
is otherwise required to make thereunder or hereunder with and to the extent the
Company has heretofore made, or is concurrently on the date of such payment
making, a payment under the Guarantee, dated as of ________, executed by the
Company and furnished to GTE Delaware for the benefit of the holders of the
Series A Preferred Securities.
ARTICLE FIVE
Covenant to List on Exchange
SECTION 5.01. If the Series A Debentures are to be issued as a Global
Debenture in connection with the distribution of the Series A Debentures to the
holders of the Series A Preferred Securities upon a Dissolution Event, the
Company will use its best efforts to list such Debentures on the New York Stock
Exchange or on such other exchange as the Series A Preferred Securities are then
listed and traded on the same part of any such exchange.
ARTICLE SIX
Form of Series A Debenture
SECTION 6.01. The Series A Debentures and the Trustee's Certificate
of Authentication to be endorsed thereon are to be substantially in the
following forms:
(FORM OF FACE OF DEBENTURE)
[If the Debenture is to be a Global Debenture, insert - This Debenture
is a Global 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 Debenture is exchangeable for 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 Debenture (other than a
transfer of this 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.
-6-
<PAGE>
Unless this Debenture is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York) to the issuer or its
agent for registration of transfer, exchange or payment, and any Debenture
issued is registered in the name of Cede & Co. or such other name as requested
by an authorized representative of The Depository Trust Company and any payment
hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof, Cede &
Co., has an interest herein.]
No.__________________ $__________________
CUSIP No. __________
GTE CORPORATION
___% JUNIOR SUBORDINATED DEBENTURE, SERIES A, DUE 2024
GTE CORPORATION, a corporation duly organized and existing under the
laws of the State of New York (herein referred to as the "Company", which term
includes any successor corporation under the Indenture), for value received,
hereby promises to pay to or registered assigns, the principal sum
of Dollars on , 2024, and to pay interest on
said principal sum from , 1994 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, monthly in arrears on the last day of each calendar
month of each year commencing , 1994 at the rate of % per annum plus
----
Additional Interest, if any, until the principal hereof shall have become due
and payable, and on any overdue principal and premium, if any, 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. 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 Debenture 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. The interest
installment so payable, and punctually paid or duly provided for, on any
-7-
<PAGE>
Interest Payment Date will, as provided in the Indenture, be paid to the person
in whose name this Debenture (or one or more Predecessor 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 Section 2.11(c) of the Indenture the Series A Junior Subordinated
Debentures are no longer represented by a Global 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 Debenture (or one
or more Predecessor 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 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 Debentures may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in the Indenture hereinafter referred to. The principal of (and
premium, if any) and the interest on this Debenture shall be payable at the
office or agency of the Company maintained for that purpose in the Borough of
Manhattan, The City of New York, in any coin or currency of the United States of
America which 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 Debenture register. Notwithstanding the
foregoing, so long as the holder of this Debenture is GTE Delaware, L.P. ("GTE
Delaware"), the payment of the principal of (and premium, if any) and interest
(including Additional Interest, if any) in this Debenture will be made at such
place and to such account as may be designated by GTE Delaware.
The indebtedness evidenced by this Debenture is, to the extent
provided in the Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Indebtedness, and this Debenture is issued
subject to the provisions of the Indenture with respect thereto. Each Holder of
this Debenture, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his 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 attorney-in-fact for
any and all such purposes. Each Holder hereof, by his 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.
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<PAGE>
This 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.
Unless the Certificate of Authentication hereon has been executed by
the Trustee referred to on the reverse side hereof, this Debenture shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
The provisions of this Debenture are contained 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____________________
GTE CORPORATION
By_________________
Chairman
Attest:
__________________________________
Secretary
-9-
<PAGE>
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures of the series of Debentures described in
the within-mentioned Indenture.
The Bank of New York
- ----------------------- -----------------------
as Trustee or as Authentication Agent
By__________________________ By__________________________
Authorized Signatory Authorized Signatory
(FORM OF REVERSE OF DEBENTURE)
This Debenture is one of a duly authorized series of Debentures of the
Company (herein sometimes referred to as the "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 June 1, 1994 duly executed and delivered between
the Company and The Bank of New York, a New York banking association duly
organized and existing under the laws of the State of New York, as Trustee
(herein referred to as the "Trustee"), as supplemented by the First Supplemental
Indenture dated as of ________, 1994 between the Company and the Trustee (said
Indenture as so supplemented being hereinafter referred to as 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
Debentures. By the terms of the Indenture, the Debentures are issuable in series
which may vary as to amount, date of maturity, rate of interest and in other
respects as in the Indenture provided. This series of Debentures is limited in
aggregate principal amount as specified in said First Supplemental Indenture.
-10-
<PAGE>
If GTE Delaware redeems its __% Cumulative Monthly Income Preferred
Securities, Series A (the "Series A Preferred Securities") in accordance with
the terms thereof, this Debenture will become due and payable in a principal
amount equal to the aggregate stated liquidation preference of the Series A
Preferred Securities so redeemed, together with any interest accrued thereon,
including Additional Interest (the "Mandatory Prepayment Price"). Any Mandatory
Prepayment shall be made prior to 12:00 noon, New York time, on the date of such
redemption or at such earlier time as the Company and GTE Delaware shall agree.
At such time as there are no Series A Preferred Securities remaining outstanding
and subject to the terms of Article Three of the Indenture, the Company shall
have the right to redeem this Debenture at the option of the Company, without
premium or penalty, in whole or in part at any time on or after __________, 1999
(an "Optional Redemption"), at a redemption price equal to 100% of the principal
amount plus any accrued but unpaid interest, including any Additional 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 the Debentures
are only partially redeemed by the Company pursuant to an Optional Redemption,
the Debentures will be redeemed pro rata or by lot or by any other method
utilized by the Trustee; provided that if at the time of redemption, the
Debentures are registered as a Global Debenture, the Depository shall determine
by lot the principal amount of such Debentures held by each Debentureholder to
be redeemed.
In the event of redemption of this Debenture in part only, a new
Debenture or 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 Debentures may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions for defeasance at any time of the
entire indebtedness of this Debenture upon compliance by the Company with
certain conditions set forth therein.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not
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<PAGE>
less than a majority in aggregate principal amount of the 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 Debentures; provided, however, that no such supplemental indenture shall
(i) extend the fixed maturity of any 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 Debenture so affected or (ii) reduce
the aforesaid percentage of Debentures, the holders of which are required to
consent to any such supplemental indenture, without the consent of the holders
of each Debenture then outstanding and affected thereby. The Indenture also
contains provisions permitting the Holders of a majority in aggregate principal
amount of the Debentures of all series at the time outstanding affected thereby,
on behalf of the Holders of the 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 Debentures of such series. Any such consent or
waiver by the registered Holder of this 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 Debenture and of any 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 Debenture.
No reference herein to the Indenture and no provision of this
Debenture or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest on this 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
Debentures, from time to time to extend the interest payment period of such
Debentures to up to 60 consecutive months (the "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
Debentures to the extent that payment of such interest is enforceable under
applicable law); provided that, during such
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<PAGE>
Extended Interest Payment Period the Company shall not declare or pay any
dividend on, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock or make any guarantee payments with respect
to the foregoing. Prior to the termination of any such Extended Interest Payment
Period, the Company may further extend such Extended Interest Payment Period,
provided that such Period together with all such further extensions thereof
shall not exceed 60 consecutive months. 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 select a new Extended
Interest Payment Period.
As provided in the Indenture and subject to certain limitations
therein set forth, this Debenture is transferable by the registered holder
hereof on the Debenture Register of the Company, upon surrender of this
Debenture for registration of transfer at the office or agency of the Company in
the Borough of Manhattan, The City of New York 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 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
Debenture, the Company, the Trustee, any paying agent and any Debenture
Registrar may deem and treat the registered holder hereof as the absolute owner
hereof (whether or not this Debenture shall be overdue and notwithstanding any
notice of ownership or writing hereon made by anyone other than the Debenture
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
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 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 Debentures of this series are issuable only in registered form
without coupons in denominations of $25 and any integral multiple thereof.]
[This Global Debenture is
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<PAGE>
exchangeable for Debentures in definitive form only under certain limited
circumstances set forth in the Indenture. 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, Debentures of this series
[so issued] are exchangeable for a like aggregate principal amount of Debentures
of this series of a different authorized denomination, as requested by the
Holder surrendering the same.
All terms used in this Debenture which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
ARTICLE SEVEN
Original Issue of Series A Debentures
SECTION 7.01. Series A Debentures in the aggregate principal amount of
$________ plus the amount of capital contributions made by the Company from time
to time as general partner of GTE Delaware, may, upon execution of this First
Supplemental Indenture, or from time to time thereafter, be executed by the
Company and delivered to the Trustee for authentication, and the Trustee shall
thereupon authenticate and deliver said Debentures to or upon the written order
of the Company, signed by its Chairman, its President, or any Vice President and
its Treasurer or an Assistant Treasurer, without any further action by the
Company.
ARTICLE EIGHT
Sundry Provisions.
SECTION 8.01. Except as otherwise expressly provided in this First
Supplemental Indenture or in the form of Series A Debenture or otherwise clearly
required by the context hereof or thereof, all terms used herein or in said form
of Series A Debenture that are defined in the Indenture shall have the several
meanings respectively assigned to them thereby.
SECTION 8.02. 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 8.03. 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.
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<PAGE>
SECTION 8.04. 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.
-15-
<PAGE>
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.
GTE CORPORATION
By______________________
Vice President
Attest:
___________________
Secretary
THE BANK OF NEW YORK
as Trustee
By_____________________
Attest:
_____________________________
Assistant Treasurer
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<PAGE>
STATE OF CONNECTICUT )
COUNTY OF FAIRFIELD ) ss.: Stamford, _________ __, 1994
On the ___day _________, in the year one thousand nine hundred ninety-
four, before me personally came ____________ to me known, who, being by me duly
sworn, did depose and say that he resides at
______________________________________________; that he is ______________ of GTE
CORPORATION, one of the corporations described in and which executed the above
instrument; that he knows the corporate seal of said corporation; that the seal
affixed to the said instrument is such corporation seal; that it was so affixed
by authority of the Board of Directors of said corporation, and that he signed
his name thereto by like authority.
___________________________
STATE OF NEW YORK)
COUNTY OF ) ss.: _______ __, 1994
On the __ day of ______, in the year one thousand nine hundred ninety-
four, before me personally came to me known, who, being by me
duly sworn, did depose and say that (s)he resides at ___________________, of
____________________, one of the corporations described in and which executed
the above instrument; that he knows the corporate seal of said corporation; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation and that he
signed his name thereto by like authority.
________________________________
NOTARY PUBLIC
My Commission Expires
-17-
<PAGE>
EXHIBIT 4.3
- --------------------------------------------------------------------------------
GTE CORPORATION
AND
THE BANK OF NEW YORK,
as Trustee
________________
FIRST SUPPLEMENTAL INDENTURE
Dated as of ________ __, 1994
TO
INDENTURE
Dated as of June 1, 1994
________________
Cumulative Adjustable Rate Junior Subordinated Debentures, Series A, Due 2024
- --------------------------------------------------------------------------------
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of the _____ day of _________,
1994 (the "First Supplemental Indenture"), between GTE CORPORATION, a
corporation duly organized and existing under the laws of the State of New York
(hereinafter sometimes referred to as the "Company"), and THE BANK OF NEW YORK,
a New York banking association organized and existing under the laws of the
State of New York, as trustee (hereinafter sometimes referred to as the
"Trustee") under the Indenture dated as of June 1, 1994 between the Company
and the Trustee (the "Indenture"; all terms used and not defined herein are used
as defined in the Indenture).
WHEREAS, the Company executed and delivered the Indenture to the
Trustee to provide for the future issuance of its junior subordinated debentures
(the "Debentures"), said Debentures to be issued from time to time in series as
might be determined by the Company under the Indenture, in an unlimited
aggregate principal amount which may be authenticated and delivered thereunder
as in the Indenture provided; and
WHEREAS, pursuant to the terms of the Indenture, the Company desires
to provide for the establishment of a new series of its Debentures to be known
as its Adjustable Rate Junior Subordinated Debentures, Series A, due 2024 (said
series being hereinafter referred to as the "Series A Debentures"), the form and
substance of such Series A Debentures and the terms, provisions and conditions
thereof to be set forth as provided in the Indenture and this First Supplemental
Indenture; and
WHEREAS, GTE Delaware, L.P., a Delaware limited partnership ("GTE
Delaware"), has offered to the public its Cumulative Adjustable Rate Monthly
Income Preferred Securities, Series A (the "Series A Preferred Securities"),
representing limited partnership interests in GTE Delaware and proposes to
invest the proceeds from such offering in the Series A Debentures; and
WHEREAS, upon the occurrence of a Special Event (as defined in the
Amended and Restated Agreement of Limited Partnership of GTE Delaware, dated
__________ ___, 1994 (the "Limited Partnership Agreement"), the Company may
dissolve GTE Delaware and cause to be distributed to the holders of the Series A
Preferred Securities, on a pro rata basis, Series A Debentures (a "Dissolution
Event"); and
WHEREAS, the Company desires and has requested the Trustee to join
with it in the execution and delivery of 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 Series A Debentures,
when executed by the Company and authenticated and delivered by the Trustee, the
valid obligations of the Company, have been
<PAGE>
performed and fulfilled, and the execution and delivery hereof have been in all
respects duly authorized:
NOW THEREFORE, in consideration of the purchase and acceptance of the
Series A Debentures by the holders thereof, and for the purpose of setting
forth, as provided in the Indenture, the form and substance of the Series A
Debentures and the terms, provisions and conditions thereof, the Company
covenants and agrees with the Trustee as follows:
ARTICLE ONE
General Terms and Conditions of
the Series A Debentures
SECTION 1.01. There shall be and is hereby authorized a series of
Debentures designated the "Adjustable Rate Junior Subordinated Debentures,
Series A, Due 2024", limited in aggregate principal amount to (i) $________,
plus (ii) the amount of capital contributions made by the Company from time to
time as general partner of GTE Delaware, which amount shall be as set forth in
any written order of the Company for the authentication and delivery of Series A
Debentures. The Series A Debentures shall mature and the principal shall be due
and payable together with all accrued and unpaid interest thereon, including
Additional Interest (as hereinafter defined) on _______ __, 2024, and shall be
issued in the form of registered Series A Debentures without coupons.
SECTION 1.02. Except as provided in Section 1.03 herein, the Series A
Debentures shall be issued in certificated form. Principal and interest on the
Series A Debentures issued in certificated form will be payable, the transfer of
such Series A Debentures will be registrable and such Series A Debentures will
be exchangeable for the Series A Debentures bearing identical terms and
provisions at the office or agency of the Company in the Borough of Manhattan,
The City of New York; 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 Debenture register. Notwithstanding the
foregoing, so long as the holder of the Series A Debentures is GTE Delaware, the
payment of the principal of and interest on (including Additional Interest, if
any) on the Series A Debentures will be made at such place and to such account
as may be designated by GTE Delaware.
SECTION 1.03. In connection with a Dissolution Event, the Series A
Debentures in certificated form may be presented to the Trustee by GTE Delaware
in exchange for a Global Debenture in an aggregate principal amount equal to all
Outstanding Series A Debentures, to be registered in the name of the Depository,
or its nominee, and delivered by the Trustee to the Depository for
-2-
<PAGE>
crediting to the accounts of its participants pursuant to the instructions of
GTE Delaware. The Company upon any such presentation shall execute a Global
Debenture in such aggregate principal amount and deliver the same to the Trustee
for authentication and delivery as hereinabove and in the Indenture provided.
Payments on the Series A Debentures issued as a Global Debenture will be made to
the Depository. The Depository for the Series A Debentures shall be The
Depository Trust Company, New York, New York.
SECTION 1.04. Each Series A Debenture shall bear interest at a
variable rate from the date it is made until maturity. The interest rate will
be adjusted quarterly. The rate for the initial period from the original date of
issuance to ____ __, 1994 will be ___% per annum. Thereafter, interest on the
Series A Debentures will be payable at the "Applicable Rate" (as defined below)
from time to time in effect. The interest rate on any overdue principal and (to
the extent that payment of such interest is enforceable under applicable law) on
any overdue installment of interest will be at the same rate per annum, during
such overdue period. Interest is payable monthly in arrears on the last day of
each calendar month of each year (each, an "Interest Payment Date", commencing
on _______, 1994), to the person in whose name such Series A Debenture or any
predecessor Series A Debenture 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 that Interest Payment Date. If
pursuant to the provisions of Section 2.11(c) of the Indenture the Series A
Debentures are no longer represented by a Global Debenture, the Company may
select a regular record date for such interest installment which shall be any
date not later than fifteen days preceding an 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 the Series A Debenture (or one or more
Predecessor 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 the Series
A 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 Series A Debentures may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in the Indenture hereinafter referred to.
The amount of interest payable for any period will 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 the Series A 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.
If at any time when GTE Delaware is the holder of the Series A
Debentures, GTE Delaware shall be required to pay any interest on dividends in
arrears in respect of the Series A
-3-
<PAGE>
Preferred Securities pursuant to the terms thereof, then the Company will pay as
interest (the "Additional Interest") an amount equal to such interest on
dividends in arrears. In addition, if GTE Delaware would be required to pay any
taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed by the United States, or any other taxing
authority, then, in any such case, the Company shall also pay as Additional
Interest such amounts as shall be required so that the net amount received and
retained by GTE Delaware after paying any such taxes, duties, assessments or
governmental charges will not be less than the amounts GTE Delaware would have
received had no such taxes, duties, assessments or governmental charges been
imposed.
Except as provided below in this paragraph, the "Applicable Rate" for
any quarter (other than the initial period) will be equal to ____% of the
Effective Rate (as defined below), but not less than ____% per annum nor more
than ____% per annum. The "Effective Rate" for any quarter will be equal to the
highest of the Treasury Bill Rate, the Ten Year Constant Maturity Rate and the
Thirty Year Constant Maturity Rate (each as defined below) for such quarter. The
Treasury Bill Rate, the Ten Year Constant Maturity Rate and the Thirty Year
Constant Maturity Rate with respect to any quarter shall be determined by GTE
Delaware in the same manner as, and consistent with its determinations with
respect to quarters for the purpose of dividends payable on the Series A
Preferred Securities, as described below. The Applicable Rate will be rounded to
the nearest five hundredth of a percent. In the event that GTE Delaware
determines in good faith that for any reason:
(i) any one of the Treasury Bill Rate, the Ten Year Constant
Maturity Rate or the Thirty Year Constant Maturity Rate cannot be determined
for any quarter, then the Effective Rate for such quarter will be equal to the
higher of whichever two of such rates can be so determined;
(ii) only one of the Treasury Bill Rate, the Ten Year Constant
Maturity Rate or the Thirty Year Constant Maturity Rate can be determined for
any quarter, then the Effective Rate for such quarter will be equal to whichever
such rate can be so determined; or
(iii) none of the Treasury Bill Rate, the Ten Year Constant
Maturity Rate or the Thirty Year Constant Maturity Rate can be determined for
any quarter, then the Effective Rate for the preceding quarter will be
continued for such quarter.
-4-
<PAGE>
Except as described below in this paragraph, the "Treasury Bill
Rate" for each quarter will be the arithmetic average of the two most recent
weekly per annum secondary market discount rates (or the one weekly per annum
secondary market discount rate, if only one such rate is published during the
relevant Calendar Period (as defined below)) for three-month U.S. Treasury
bills, as published weekly by the Federal Reserve Board (as defined below)
during the Calendar Period immediately preceding the last ten calendar days
preceding the quarter for which the interest rate on the Series A Debentures
is being determined. In the event that the Federal Reserve Board does not
publish such a weekly per annum secondary market discount rate during any such
Calendar Period, then the Treasury Bill Rate for such quarter will be the
arithmetic average of the two most recent weekly per annum secondary market
discount rates (or the one weekly per annum secondary market discount rate, if
only one such rate is published during the relevant Calendar Period) for
three-month U.S. Treasury bills, as published weekly during such Calendar
Period by any Federal Reserve Bank or by any U.S. Government department or
agency selected by GTE Delaware. In the event that a per annum secondary
market discount rate for three-month U.S. Treasury bills is not published by
the Federal Reserve Board or by any Federal Reserve Bank or by any U.S.
Government department or agency during such Calendar Period, then the Treasury
Bill Rate for such quarter will be the arithmetic average of the two most
recent weekly per annum secondary market discount rates (or the one weekly
per annum secondary market discount rate, if only one such rate is published
during the relevant Calendar Period) for all of the U.S. Treasury bills then
having remaining maturities of not less than 80 nor more than 100 days, as
published during such Calendar Period by the Federal Reserve Board, or if the
Federal Reserve Board does not publish such rates, by any Federal Reserve Bank
or by any U.S. Government department or agency selected by GTE Delaware. In
the event that GTE Delaware determines in good faith that for any reason no
such U.S. Treasury bill rates are published as provided above during such
Calendar Period, then the Treasury Bill Rate for such quarter will be the
arithmetic average of the per annum secondary market discount rates based upon
the closing bids during such Calendar Period for each of the issues of
marketable non-interest-bearing U.S. Treasury securities with a remaining
maturity of not less than 80 nor more than 100 days from the date of each such
quotation, as chosen and quoted daily for each business day in New York City
(or less frequently if daily quotations are not generally available) to GTE
Delaware by at least three recognized dealers in U.S. Government securities
selected by GTE Delaware. In the event that GTE Delaware determines in good
faith that for any reason GTE Delaware cannot determine the Treasury Bill Rate
for any quarter as provided above in this paragraph, the Treasury Bill Rate
for such quarter will be the arithmetic average of the per annum secondary
market discount rates based upon the closing bids during such Calendar Period
for each of the issues of marketable interest-bearing U.S. Treasury securities
with a remaining maturity of not less than 80 nor more than 100 days, as
chosen and quoted daily for each business day in New York City (or less
frequently if daily quotations are not generally available) to GTE Delaware by
at least three recognized dealers in U.S. Government securities selected by
GTE Delaware.
-5-
<PAGE>
Except as described below in this paragraph, the "Ten Year Constant
Maturity Rate" for each quarter will be the arithmetic average of the two most
recent weekly per annum Ten Year Average Yields (as defined below) (or the
one weekly per annum Ten Year Average Yield, if only one such yield is
published during the relevant Calendar Period), as published weekly by the
Federal Reserve Board during the Calendar Period immediately preceding the
last ten calendar days preceding the quarter for which the interest rate on the
Series A Debentures is being determined. In the event that the Federal Reserve
Board does not publish such a weekly per annum Ten Year Average Yield during
such Calendar Period, then the Ten Year Constant Maturity Rate for such
quarter will be the arithmetic average of the two most recent weekly per annum
Ten Year Average Yields (or the one weekly per annum Ten Year Average Yield,
if only one such yield is published during the relevant Calendar Period), as
published weekly during such Calendar Period by any Federal Reserve Bank or by
any U.S. Government department or agency selected by GTE Delaware. In the
event that a per annum Ten Year Average Yield is not published by any Federal
Reserve Bank or by any U.S. Government department or agency during such
Calendar Period, then the Ten Year Constant Maturity Rate for such quarter
will be the arithmetic average of the two most recent weekly per annum average
yields to maturity (or the one weekly per annum average yield to maturity, if
only one such yield is published during the relevant Calendar Period) for all
of the actively traded marketable U.S. Treasury fixed interest rate securities
(other than Special Securities (as defined below)) then having remaining
maturities of not less than eight nor more than twelve years, as published
during such Calendar Period by the Federal Reserve Board or, if the Federal
Reserve Board does not publish such yields, by any Federal Reserve Bank or by
any U.S. Government department or agency selected by GTE Delaware. In the
event that GTE Delaware determines in good faith that for any reason GTE
Delaware cannot determine the Ten Year Constant Maturity Rate for any quarter
as provided above in this paragraph, then the Ten Year Constant Maturity Rate
for such quarter will be the arithmetic average of the per annum average
yields to maturity based upon the closing bids during such Calendar Period for
each of the issues of actively traded marketable U.S. Treasury fixed interest
rate securities (other than Special Securities) with a final maturity date not
less than eight or more than twelve years from the date of each such
quotation, as chosen and quoted daily for each business day in New York City
(or less frequently if daily quotations are not generally available) to GTE
Delaware by at least three recognized dealers in U.S. Government securities
selected by GTE Delaware.
-6-
<PAGE>
Except as described below in this paragraph, the "Thirty Year
Constant Maturity Rate" for each quarter will be the arithmetic average of the
two most recent weekly per annum Thirty Year Average Yields (as defined below)
(or the one weekly per annum Thirty Year Average Yield, if only one such yield
is published during the relevant Calendar Period), as published weekly by the
Federal Reserve Board during the Calendar Period immediately preceding the
last ten calendar days preceding the quarter for which the interest rate on
the Series A Debentures is being determined. In the event that the Federal
Reserve Board does not publish such a weekly per annum Thirty Year Average
Yield during such Calendar Period, then the Thirty Year Constant Maturity Rate
for such quarter will be the arithmetic average of the two most recent weekly
per annum Thirty Year Average Yields (or the one weekly per annum Thirty Year
Average Yield, if only one such yield is published during the relevant
Calendar Period), as published weekly during such Calendar Period by any
Federal Reserve Bank or by any U.S. Government department or agency selected
by GTE Delaware. In the event that a per annum Thirty Year Average Yield is
not published by the Federal Reserve Board or by any Federal Reserve Bank or
by any U.S. Government department or agency during such Calendar Period, then
the Thirty Year Constant Maturity Rate for such quarter will be the arithmetic
average of the two most recent weekly per annum average yields to maturity (or
the one weekly per annum average yield to maturity, if only one such yield is
published during the relevant Calendar Period) for all of the actively traded
marketable U.S. Treasury fixed interest rate securities (other than Special
Securities) then having remaining maturities of not less than twenty-eight nor
more than thirty-two years, as published during such Calendar Period by the
Federal Reserve Board or, if the Federal Reserve Board does not publish such
yields, by any Federal Reserve Bank or by any U.S. Government department or
agency selected by GTE Delaware. In the event that GTE Delaware determines in
good faith that for any reason GTE Delaware cannot determine the Thirty Year
Constant Maturity Rate for any quarter as provided above in this paragraph,
then the Thirty Year Constant Maturity Rate for such quarter will be the
arithmetic average of the per annum average yields to maturity based upon the
closing bids during such Calendar Period for each of the issues of actively
traded marketable U.S. Treasury fixed interest rate securities (other than
Special Securities) with a final maturity date not less than twenty-eight nor
more than thirty-two years from the date of each such quotation, as chosen and
quoted daily for each business day in New York City (or less frequently if
daily quotations are not generally available) to GTE Delaware by at least
three recognized dealers in U.S. Government securities selected by GTE
Delaware.
The Treasury Bill Rate, the Ten Year Constant Maturity Rate and the
Thirty Year Constant Maturity Rate will each be rounded to the nearest one
hundredth of a percent.
The Applicable Rate with respect to each quarter (other than the
initial period) will be calculated as promptly as practicable by GTE Delaware
according to the appropriate method described above. GTE Delaware will cause
each Applicable Rate to be published in a newspaper of general circulation in
New York City before the commencement of the quarter to which it applies and
will cause notice of such Applicable Rate to be given to the Depository Trust
Company ("DTC"), New York, NY, the securities depository for the Series A
Debentures.
-7-
<PAGE>
As used above, the term "Calendar Period" means a period of fourteen
calendar days; the term "Federal Reserve Board" means the Board of Governors
of the Federal Reserve System; the term "Special Securities" means securities
which can, at the option of the holder, be surrendered at face value in
payment of any Federal estate tax or which provide tax benefits to the holder
and are priced to reflect such tax benefits or which were originally issued at
a deep or substantial discount; the term "Ten Year Average Yield" means the
average yield to maturity for actively traded marketable U.S. Treasury fixed
interest rate securities (adjusted to constant maturities of ten years); and the
term "Thirty Year Average Yield" means the average yield to maturity for
actively traded marketable U.S. Treasury fixed interest rate securities
(adjusted to constant maturities of thirty years).
ARTICLE TWO
Mandatory Prepayment and Optional Redemption
of the Series A Debentures
SECTION 2.01. If GTE Delaware redeems the Series A Preferred
Securities in accordance with the terms thereof, the Series A Debentures will
become due and payable in a principal amount equal to the aggregate stated
liquidation preference of the Series A Preferred Securities so redeemed,
together with all accrued and unpaid interest thereon, including Additional
Interest, if any (the "Mandatory Prepayment Price"). Any payment pursuant to
this provision shall be made prior to 12:00 noon, New York time, on the date of
such redemption or at such earlier time as the Company and GTE Delaware shall
agree.
SECTION 2.02. At such time as there are no Series A Preferred
Securities remaining outstanding and subject to the terms of Article Three of
the Indenture, the Company shall have the right to redeem the Series A
Debentures, in whole or in part, from time to time, on or after ___________,
1999, at a redemption price equal to 100% of the principal amount to be redeemed
plus any accrued and unpaid interest thereon, including any Additional 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 the Series A
Debentures are only partially redeemed pursuant to this Section, the Debentures
will be redeemed pro rata or by lot or by any other method utilized by the
Trustee; provided, that if at the time of redemption, the Series A Debentures
are registered as a Global Debenture, the Depository shall determine by lot the
principal amount of such Series A Debentures held by each Series A
Debentureholder to be redeemed.
-8-
<PAGE>
ARTICLE THREE
Extension of Interest Payment Period
SECTION 3.01. The Company shall have the right, at any time during
the term of the Series A Debentures, from time to time to extend the interest
payment period, of such Series A Debentures for up to 60 consecutive months (the
"Extended Interest Payment Period"), at the end of which period the Company
shall pay all interest accrued and unpaid thereon (together with interest
thereon at the rate specified for the Series A Debentures to the extent
permitted by applicable law); provided that, during such Extended Interest
Payment Period the Company shall not declare or pay any dividend on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of its
capital stock or make any guarantee payments with respect to the foregoing.
Prior to the termination of any such 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 60 consecutive months. Upon
the termination of any Extended Interest Payment Period and upon the payment of
all accrued and unpaid interest and any Additional Interest then due, the
Company may select a new Extended Interest Payment Period, subject to the
foregoing requirements. No interest during an Extended Interest Payment Period,
except at the end thereof, shall be due and payable.
SECTION 3.02. (a) If GTE Delaware is the sole holder of the
Series A Debentures at the time the Company selects an Extended Interest Payment
Period, the Company shall give both GTE Delaware and the Trustee written notice
of its selection of such Extended Interest Payment Period one business day prior
to the earlier of (i) the next succeeding date on which dividends on the Series
A Preferred Securities are payable or (ii) the date GTE Delaware is required to
give notice of the record date or the date such dividends are payable to the New
York Stock Exchange or other applicable self-regulatory organization or to
holders of the Series A Preferred Securities, but in any event not less than one
business day prior to such record date. The Company shall cause GTE Delaware to
give notice of the Company's selection of such Extended Interest Payment Period
to the holders of the Series A Preferred Securities.
(b) If GTE Delaware is not the sole holder of the Series A Debentures
at the time the Company selects an Extended Interest Payment Period, the Company
shall give the holders of the Series A Debentures and the Trustee written notice
of its selection of such Extended Interest Payment Period 10 business days prior
to 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 Series A Debentures, but in any
event not less than two business days prior to such record date.
(c) The month in which any notice is given pursuant to paragraphs (a)
or (b) of this Section shall constitute one of the
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<PAGE>
60 months which comprise the maximum Extended Interest Payment Period.
ARTICLE FOUR
Right of Set-Off
SECTION 4.01. Notwithstanding anything to the contrary in the
Indenture or herein, the Company shall have the right to set-off any payment it
is otherwise required to make thereunder or hereunder with and to the extent the
Company has heretofore made, or is concurrently on the date of such payment
making, a payment under the Guarantee, dated as of ________, executed by the
Company and furnished to GTE Delaware for the benefit of the holders of the
Series A Preferred Securities.
ARTICLE FIVE
Covenant to List on Exchange
SECTION 5.01. If the Series A Debentures are to be issued as a Global
Debenture in connection with the distribution of the Series A Debentures to the
holders of the Series A Preferred Securities upon a Dissolution Event, the
Company will use its best efforts to list such Debentures on the New York Stock
Exchange or on such other exchange as the Series A Preferred Securities are then
listed and traded on the same part of any such exchange.
ARTICLE SIX
Form of Series A Debenture
SECTION 6.01. The Series A Debentures and the Trustee's Certificate
of Authentication to be endorsed thereon are to be substantially in the
following forms:
(FORM OF FACE OF DEBENTURE)
[If the Debenture is to be a Global Debenture, insert - This Debenture
is a Global 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 Debenture is exchangeable for 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 Debenture (other than a
transfer of this 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.
-10-
<PAGE>
Unless this Debenture is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York) to the issuer or its
agent for registration of transfer, exchange or payment, and any Debenture
issued is registered in the name of Cede & Co. or such other name as requested
by an authorized representative of The Depository Trust Company and any payment
hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof, Cede &
Co., has an interest herein.]
No.__________________ $__________________
CUSIP No. __________
GTE CORPORATION
ADJUSTABLE RATE JUNIOR SUBORDINATED DEBENTURE, SERIES A, DUE 2024
GTE CORPORATION, a corporation duly organized and existing under the
laws of the State of New York (herein referred to as the "Company", which term
includes any successor corporation under the Indenture), for value received,
hereby promises to pay to or registered assigns, the principal sum
of Dollars on , 2024, and to pay interest on
said principal sum from , 1994 to , 1994 at the initial rate of
% per annum and thereafter from the most recent interest payment date (each
such date, an "Interest Payment Date") to which interest has been paid or duly
provided for, monthly in arrears on the last day of each calendar month of each
year commencing , 1994 at the Applicable Rate (as defined in the First
Supplemental Indenture) adjusted quarterly, determined by GTE Delaware in the
manner described in the First Supplemental Indenture, plus Additional Interest,
----
if any, until the principal hereof shall have become due and payable, and on any
overdue principal and premium, if any, 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 during such overdue period. 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 Debenture 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. The interest
installment so payable, and punctually paid or duly provided for, on any
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<PAGE>
Interest Payment Date will, as provided in the Indenture, be paid to the
person in whose name this Debenture (or one or more Predecessor 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 Section 2.11(c) of the Indenture the Series
A Debentures are no longer represented by a Global 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
Debenture (or one or more Predecessor 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 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 Debentures may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in the Indenture hereinafter
referred to. The principal of (and premium, if any) and the interest on this
Debenture shall be payable at the office or agency of the Company maintained
for that purpose in the Borough of Manhattan, The City of New York, in any
coin or currency of the United States of America which 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
Debenture register. Notwithstanding the foregoing, so long as the holder of
this Debenture is GTE Delaware, L.P. ("GTE Delaware"), the payment of the
principal of (and premium, if any) and interest (including Additional Interest,
if any) in this Debenture will be made at such place and to such account as may
be designated by GTE Delaware.
The indebtedness evidenced by this Debenture is, to the extent
provided in the Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Indebtedness, and this Debenture is issued
subject to the provisions of the Indenture with respect thereto. Each Holder of
this Debenture, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his 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 attorney-in-fact for
any and all such purposes. Each Holder hereof, by his 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.
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<PAGE>
This 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.
Unless the Certificate of Authentication hereon has been executed by
the Trustee referred to on the reverse side hereof, this Debenture shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
The provisions of this Debenture are contained 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____________________
GTE CORPORATION
By_________________
Chairman
Attest:
__________________________________
Secretary
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<PAGE>
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures of the series of Debentures described in
the within-mentioned Indenture.
The Bank of New York
- ----------------------- -----------------------
as Trustee or as Authentication Agent
By__________________________ By__________________________
Authorized Signatory Authorized Signatory
(FORM OF REVERSE OF DEBENTURE)
This Debenture is one of a duly authorized series of Debentures of the
Company (herein sometimes referred to as the "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 June 1, 1994 duly executed and delivered between
the Company and The Bank of New York, a New York banking association duly
organized and existing under the laws of the State of New York, as Trustee
(herein referred to as the "Trustee"), as supplemented by the First Supplemental
Indenture dated as of ________, 1994 between the Company and the Trustee (said
Indenture as so supplemented being hereinafter referred to as 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
Debentures. By the terms of the Indenture, the Debentures are issuable in series
which may vary as to amount, date of maturity, rate of interest and in other
respects as in the Indenture provided. This series of Debentures is limited in
aggregate principal amount as specified in said First Supplemental Indenture.
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<PAGE>
If GTE Delaware redeems its Cumulative Adjustable Rate Monthly Income
Preferred Securities, Series A (the "Series A Preferred Securities") in
accordance with the terms thereof, this Debenture will become due and payable in
a principal amount equal to the aggregate stated liquidation preference of the
Series A Preferred Securities so redeemed, together with any interest accrued
thereon, including Additional Interest (the "Mandatory Prepayment Price"). Any
Mandatory Prepayment shall be made prior to 12:00 noon, New York time, on the
date of such redemption or at such earlier time as the Company and GTE Delaware
shall agree. At such time as there are no Series A Preferred Securities
remaining outstanding and subject to the terms of Article Three of the
Indenture, the Company shall have the right to redeem this Debenture at the
option of the Company, without premium or penalty, in whole or in part at any
time on or after __________, 1999 (an "Optional Redemption"), at a redemption
price equal to 100% of the principal amount plus any accrued but unpaid
interest, including any Additional 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 the Debentures are only partially redeemed by
the Company pursuant to an Optional Redemption, the Debentures will be redeemed
pro rata or by lot or by any other method utilized by the Trustee; provided that
if at the time of redemption, the Debentures are registered as a Global
Debenture, the Depository shall determine by lot the principal amount of such
Debentures held by each Debentureholder to be redeemed.
In the event of redemption of this Debenture in part only, a new
Debenture or 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 Debentures may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions for defeasance at any time of the
entire indebtedness of this Debenture upon compliance by the Company with
certain conditions set forth therein.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not
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<PAGE>
less than a majority in aggregate principal amount of the 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 Debentures; provided, however, that no such supplemental indenture shall
(i) extend the fixed maturity of any 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 Debenture so affected or (ii) reduce
the aforesaid percentage of Debentures, the holders of which are required to
consent to any such supplemental indenture, without the consent of the holders
of each Debenture then outstanding and affected thereby. The Indenture also
contains provisions permitting the Holders of a majority in aggregate principal
amount of the Debentures of all series at the time outstanding affected thereby,
on behalf of the Holders of the 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 Debentures of such series. Any such consent or
waiver by the registered Holder of this 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 Debenture and of any 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 Debenture.
No reference herein to the Indenture and no provision of this
Debenture or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest on this 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
Debentures, from time to time to extend the interest payment period of such
Debentures to up to 60 consecutive months (the "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
Debentures to the extent that payment of such interest is enforceable under
applicable law); provided that, during such
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<PAGE>
Extended Interest Payment Period the Company shall not declare or pay any
dividend on, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock or make any guarantee payments with respect
to the foregoing. Prior to the termination of any such Extended Interest Payment
Period, the Company may further extend such Extended Interest Payment Period,
provided that such Period together with all such further extensions thereof
shall not exceed 60 consecutive months. 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 select a new Extended
Interest Payment Period.
As provided in the Indenture and subject to certain limitations
therein set forth, this Debenture is transferable by the registered holder
hereof on the Debenture Register of the Company, upon surrender of this
Debenture for registration of transfer at the office or agency of the Company in
the Borough of Manhattan, The City of New York 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 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
Debenture, the Company, the Trustee, any paying agent and any Debenture
Registrar may deem and treat the registered holder hereof as the absolute owner
hereof (whether or not this Debenture shall be overdue and notwithstanding any
notice of ownership or writing hereon made by anyone other than the Debenture
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
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 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 Debentures of this series are issuable only in registered form
without coupons in denominations of $25 and any integral multiple thereof.]
[This Global Debenture is
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<PAGE>
exchangeable for Debentures in definitive form only under certain limited
circumstances set forth in the Indenture. 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, Debentures of this series
[so issued] are exchangeable for a like aggregate principal amount of Debentures
of this series of a different authorized denomination, as requested by the
Holder surrendering the same.
All terms used in this Debenture which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
ARTICLE SEVEN
Original Issue of Series A Debentures
SECTION 7.01. Series A Debentures in the aggregate principal amount of
$________ plus the amount of capital contributions made by the Company from time
to time as general partner of GTE Delaware, may, upon execution of this First
Supplemental Indenture, or from time to time thereafter, be executed by the
Company and delivered to the Trustee for authentication, and the Trustee shall
thereupon authenticate and deliver said Debentures to or upon the written order
of the Company, signed by its Chairman, its President, or any Vice President and
its Treasurer or an Assistant Treasurer, without any further action by the
Company.
ARTICLE EIGHT
Sundry Provisions.
SECTION 8.01. Except as otherwise expressly provided in this First
Supplemental Indenture or in the form of Series A Debenture or otherwise clearly
required by the context hereof or thereof, all terms used herein or in said form
of Series A Debenture that are defined in the Indenture shall have the several
meanings respectively assigned to them thereby.
SECTION 8.02. 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 8.03. 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.
-18-
<PAGE>
SECTION 8.04. 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.
-19-
<PAGE>
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.
GTE CORPORATION
By______________________
Vice President
Attest:
___________________
Secretary
THE BANK OF NEW YORK
as Trustee
By_____________________
Attest:
_____________________________
Assistant Treasurer
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<PAGE>
STATE OF CONNECTICUT )
COUNTY OF FAIRFIELD ) ss.: Stamford, _________ __, 1994
On the ___day _________, in the year one thousand nine hundred ninety-
four, before me personally came ____________ to me known, who, being by me duly
sworn, did depose and say that he resides at
______________________________________________; that he is ______________ of GTE
CORPORATION, one of the corporations described in and which executed the above
instrument; that he knows the corporate seal of said corporation; that the seal
affixed to the said instrument is such corporation seal; that it was so affixed
by authority of the Board of Directors of said corporation, and that he signed
his name thereto by like authority.
___________________________
STATE OF NEW YORK)
COUNTY OF ) ss.: _______ __, 1994
On the __ day of ______, in the year one thousand nine hundred ninety-
four, before me personally came to me known, who, being by me
duly sworn, did depose and say that (s)he resides at ___________________, of
____________________, one of the corporations described in and which executed
the above instrument; that he knows the corporate seal of said corporation; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation and that he
signed his name thereto by like authority.
________________________________
NOTARY PUBLIC
My Commission Expires
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<PAGE>
EXHIBIT 4.4
- --------------------------------------------------------------------------------
GTE CORPORATION
AND
THE BANK OF NEW YORK,
as Trustee
________________
FIRST SUPPLEMENTAL INDENTURE
Dated as of ________ __, 1994
TO
INDENTURE
Dated as of June 1, 1994
________________
______% Junior Subordinated Debentures, Series A, Due 2024
- --------------------------------------------------------------------------------
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of the _____ day of _________,
1994 (the "First Supplemental Indenture"), between GTE CORPORATION, a
corporation duly organized and existing under the laws of the State of New York
(hereinafter sometimes referred to as the "Company"), and THE BANK OF NEW YORK,
a New York banking association organized and existing under the laws of the
State of New York, as trustee (hereinafter sometimes referred to as the
"Trustee") under the Indenture dated as of June 1, 1994 between the Company
and the Trustee (the "Indenture"; all terms used and not defined herein are used
as defined in the Indenture).
WHEREAS, the Company executed and delivered the Indenture to the
Trustee to provide for the future issuance of its junior subordinated debentures
(the "Debentures"), said Debentures to be issued from time to time in series as
might be determined by the Company under the Indenture, in an unlimited
aggregate principal amount which may be authenticated and delivered thereunder
as in the Indenture provided; and
WHEREAS, pursuant to the terms of the Indenture, the Company desires
to provide for the establishment of a new series of its Debentures to be known
as its _____% Junior Subordinated Debentures, Series A, due 2024 (said series
being hereinafter referred to as the "Series A Debentures"), the form and
substance of such Series A Debentures and the terms, provisions and conditions
thereof to be set forth as provided in the Indenture and this First Supplemental
Indenture; and
WHEREAS, the Company desires and has requested the Trustee to join
with it in the execution and delivery of 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 Series A Debentures,
when executed by the Company and authenticated and delivered by the Trustee, the
valid obligations of the Company, have been
<PAGE>
performed and fulfilled, and the execution and delivery hereof have been in all
respects duly authorized:
NOW THEREFORE, in consideration of the purchase and acceptance of the
Series A Debentures by the holders thereof, and for the purpose of setting
forth, as provided in the Indenture, the form and substance of the Series A
Debentures and the terms, provisions and conditions thereof, the Company
covenants and agrees with the Trustee as follows:
ARTICLE ONE
General Terms and Conditions of
the Series A Debentures
SECTION 1.01. There shall be and is hereby authorized a series of
Debentures designated the "_____% Junior Subordinated Debentures, Series A,
Due 2024", limited in aggregate principal amount to $______, which amount shall
be as set forth in any written order of the Company for the authentication and
delivery of Series A Debentures. The Series A Debentures shall mature and the
principal shall be due and payable together with all accrued and unpaid interest
thereon on _______ __, 2024, and shall be issued in the form of registered
Series A Debentures without coupons.
SECTION 1.02. Except as provided in Section 1.03 herein, the Series A
Debentures shall be issued in certificated form. Principal and interest on the
Series A Debentures issued in certificated form will be payable, the transfer of
such Series A Debentures will be registrable and such Series A Debentures will
be exchangeable for the Series A Debentures bearing identical terms and
provisions at the office or agency of the Company in the Borough of Manhattan,
The City of New York; 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 Debenture register.
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<PAGE>
SECTION 1.03. Each Series A Debenture will bear interest at the rate
of _____% per annum from the original date of issuance 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 same rate per annum, payable
semi-annually on June 30 and December 31 (each, an "Interest Payment Date",
commencing on December 31, 1994), to the person in whose name such Series A
Debenture or any predecessor Series A Debenture is registered, at the close of
business on the preceding June 15 or December 15, respectively. 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 the Series A Debenture (or one or more
Predecessor 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 the Series
A 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 Series A Debentures may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in the Indenture hereinafter referred to.
The amount of interest payable for any period will 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 the Series A 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 it made on such date.
-3-
<PAGE>
ARTICLE TWO
Redemption of the Series A Debentures
SECTION 2.01. The Series A Debentures will be redeemable at the
option of GTE, as a whole or in part, at anytime on or after , 2004 and
prior to maturity, upon not less than 30 nor more than 60 days' notice, at the
applicable percentage of the principal amount thereof specified in the form of
Debenture set forth herein under the heading "Redemption Price" during the
respective twelve-month periods beginning _______ of the years shown therein,
together with accrued interest to the date fixed for redemption.
-4-
<PAGE>
ARTICLE THREE
Extension of Interest Payment Period
SECTION 3.01. The Company shall have the right, at any time during
the term of the Series A Debentures, from time to time to extend the interest
payment period, of such Series A Debentures for up to 60 consecutive months (the
"Extended Interest Payment Period"), at the end of which period the Company
shall pay all interest accrued and unpaid thereon (together with interest
thereon at the rate specified for the Series A Debentures to the extent
permitted by applicable law); provided that, during such Extended Interest
Payment Period the Company shall not declare or pay any dividend on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of its
capital stock or make any guarantee payments with respect to the foregoing.
Prior to the termination of any such 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 60 consecutive months. Upon
the termination of any Extended Interest Payment Period and upon the payment
of all accrued and unpaid interest then due, the Company may select a new
Extended Interest Payment Period, subject to the foregoing requirements. No
interest during an Extended Interest Payment Period, except at the end
thereof, shall be due and payable.
SECTION 3.02. (a) The Company shall give the holders of the Series A
Debentures and the Trustee written notice of its selection of such Extended
Interest Payment Period 10 business days prior to the earlier of (i) the next
succeeding Interest Payment Date or (ii) the date the Company is required to
give notice to holders of the Series A Debentures (or, if applicable, to the New
York Stock Exchange or other applicable self-regulatory organization) of the
record or payment date of such interest payment, but in any event not less than
two business days prior to such record date.
(b) The month in which any notice is given pursuant to paragraph (a)
of this Section shall constitute one of the
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<PAGE>
60 months which comprise the maximum Extended Interest Payment Period.
ARTICLE FOUR
Form of Series A Debenture
SECTION 4.01. The Series A Debentures and the Trustee's Certificate
of Authentication to be endorsed thereon are to be substantially in the
following forms:
(FORM OF FACE OF DEBENTURE)
-6-
<PAGE>
No.__________________ $__________________
CUSIP No. __________
GTE CORPORATION
___% JUNIOR SUBORDINATED DEBENTURE, SERIES A, DUE 2024
GTE CORPORATION, a corporation duly organized and existing under the
laws of the State of New York (herein referred to as the "Company", which term
includes any successor corporation under the Indenture), for value received,
hereby promises to pay to or registered assigns, the principal sum
of Dollars on , 2024, and to pay interest on
said principal sum from , 1994 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, semi-annually on June 30 and December 31 commencing
December 31, 1994 at the rate of % per annum until the principal hereof shall
have become due and payable, and on any overdue principal and premium, if any,
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. 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 Debenture 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 calendar year, such payment shall be made on the immediately
preceding business day, in each case with the same force and effect if made on
such date. The interest installment so payable, and punctually paid or duly
provided for, on any
-7-
<PAGE>
Interest Payment Date will, as provided in the Indenture, be paid to the
person in whose name this Debenture (or one or more Predecessor Debentures, as
defined in said Indenture) is registered at the close of business on the
preceding June 15 or December 15, respectively. 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 Debenture (or one or more Predecessor
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 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 Debentures may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in the
Indenture hereinafter referred to. The principal of (and premium, if any) and
the interest on this Debenture shall be payable at the office or agency of the
Company maintained for that purpose in the Borough of Manhattan, The City of
New York, in any coin or currency of the United States of America which 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 Debenture register.
The indebtedness evidenced by this Debenture is, to the extent
provided in the Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Indebtedness, and this Debenture is issued
subject to the provisions of the Indenture with respect thereto. Each Holder of
this Debenture, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his 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 attorney-in-fact for
any and all such purposes. Each Holder hereof, by his 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.
-8-
<PAGE>
This 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.
Unless the Certificate of Authentication hereon has been executed by
the Trustee referred to on the reverse side hereof, this Debenture shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
The provisions of this Debenture are contained 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____________________
GTE CORPORATION
By_________________
Chairman
Attest:
__________________________________
Secretary
-9-
<PAGE>
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures of the series of Debentures described in
the within-mentioned Indenture.
The Bank of New York
- ----------------------- -----------------------
as Trustee or as Authentication Agent
By__________________________ By__________________________
Authorized Signatory Authorized Signatory
(FORM OF REVERSE OF DEBENTURE)
This Debenture is one of a duly authorized series of Debentures of the
Company (herein sometimes referred to as the "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 June 1, 1994 duly executed and delivered between
the Company and The Bank of New York, a New York banking association duly
organized and existing under the laws of the State of New York, as Trustee
(herein referred to as the "Trustee"), as supplemented by the First Supplemental
Indenture dated as of ________, 1994 between the Company and the Trustee (said
Indenture as so supplemented being hereinafter referred to as 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
Debentures. By the terms of the Indenture, the Debentures are issuable in series
which may vary as to amount, date of maturity, rate of interest and in other
respects as in the Indenture provided. This series of Debentures is limited in
aggregate principal amount as specified in said First Supplemental Indenture.
-10-
<PAGE>
The Debentures will be redeemable at the option of GTE, as a whole or
in part, at any time on or after , 2004 and prior to maturity, upon not less
than 30 nor more than 60 days' notice, at the respective redemption prices
(expressed in percentage of the principal amount to be redeemed) during the
twelve month periods commencing on of the years indicated:
Redemption Redemption
Year Price Year Price
---- ---------- ---- ----------
2004 % 2014 %
2005 % 2015 %
2006 % 2016 %
2007 % 2017 %
2008 % 2018 %
2009 % 2019 %
2010 % 2020 %
2011 % 2021 %
2012 % 2022 %
2013 % 2023 %
in each case, together with accrued interest to the redemption date. If the
Debentures are only partially redeemed by the Company, the Debentures will be
redeemed pro rata or by lot or by any other method utilized by the Trustee.
In the event of redemption of this Debenture in part only, a new
Debenture or 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 Debentures may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions for defeasance at any time of the
entire indebtedness of this Debenture upon compliance by the Company with
certain conditions set forth therein.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not
-11-
<PAGE>
less than a majority in aggregate principal amount of the 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 Debentures; provided, however, that no such supplemental indenture shall
(i) extend the fixed maturity of any 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 Debenture so affected or (ii) reduce
the aforesaid percentage of Debentures, the holders of which are required to
consent to any such supplemental indenture, without the consent of the holders
of each Debenture then outstanding and affected thereby. The Indenture also
contains provisions permitting the Holders of a majority in aggregate principal
amount of the Debentures of all series at the time outstanding affected thereby,
on behalf of the Holders of the 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 Debentures of such series. Any such consent or
waiver by the registered Holder of this 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 Debenture and of any 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 Debenture.
No reference herein to the Indenture and no provision of this
Debenture or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest on this 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
Debentures, from time to time to extend the interest payment period of such
Debentures to up to 60 consecutive months (the "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
Debentures to the extent that payment of such interest is enforceable under
applicable law); provided that, during such
-12-
<PAGE>
Extended Interest Payment Period the Company shall not declare or pay any
dividend on, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock or make any guarantee payments with respect
to the foregoing. Prior to the termination of any such Extended Interest Payment
Period, the Company may further extend such Extended Interest Payment Period,
provided that such Period together with all such further extensions thereof
shall not exceed 60 consecutive months. 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 select a new Extended
Interest Payment Period.
As provided in the Indenture and subject to certain limitations
therein set forth, this Debenture is transferable by the registered holder
hereof on the Debenture Register of the Company, upon surrender of this
Debenture for registration of transfer at the office or agency of the Company in
the Borough of Manhattan, The City of New York 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 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
Debenture, the Company, the Trustee, any paying agent and any Debenture
Registrar may deem and treat the registered holder hereof as the absolute owner
hereof (whether or not this Debenture shall be overdue and notwithstanding any
notice of ownership or writing hereon made by anyone other than the Debenture
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
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 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 Debentures of this series are issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof.
-13-
<PAGE>
As provided in the Indenture and subject to certain limitations herein and
therein set forth, Debentures of this series so issued are exchangeable for a
like aggregate principal amount of Debentures of this series of a different
authorized denomination, as requested by the Holder surrendering the same.
All terms used in this Debenture which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
ARTICLE FIVE
Original Issue of Series A Debentures
SECTION 5.01. Series A Debentures in the aggregate principal amount of
$________, may, upon execution of this First Supplemental Indenture, or from
time to time thereafter, be executed by the Company and delivered to the
Trustee for authentication, and the Trustee shall thereupon authenticate and
deliver said Debentures to or upon the written order of the Company, signed by
its Chairman, its President, or any Vice President and its Treasurer or an
Assistant Treasurer, without any further action by the Company.
ARTICLE SIX
Paying Agent and Registrar
SECTION 6.01. The Bank of New York will be the paying agent and
Registrar for the Series A Debentures.
ARTICLE SEVEN
Sundry Provisions.
SECTION 7.01. Except as otherwise expressly provided in this First
Supplemental Indenture or in the form of Series A Debenture or otherwise clearly
required by the context hereof or thereof, all terms used herein or in said form
of Series A Debenture that are defined in the Indenture shall have the several
meanings respectively assigned to them thereby.
SECTION 7.02. 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 7.03. 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.
-14-
<PAGE>
SECTION 7.04. 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.
-15-
<PAGE>
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.
GTE CORPORATION
By______________________
Vice President
Attest:
___________________
Secretary
THE BANK OF NEW YORK
as Trustee
By_____________________
Attest:
_____________________________
Assistant Treasurer
-16-
<PAGE>
STATE OF CONNECTICUT )
COUNTY OF FAIRFIELD ) ss.: Stamford, _________ __, 1994
On the ___day _________, in the year one thousand nine hundred ninety-
four, before me personally came ____________ to me known, who, being by me duly
sworn, did depose and say that he resides at
______________________________________________; that he is ______________ of GTE
CORPORATION, one of the corporations described in and which executed the above
instrument; that he knows the corporate seal of said corporation; that the seal
affixed to the said instrument is such corporation seal; that it was so affixed
by authority of the Board of Directors of said corporation, and that he signed
his name thereto by like authority.
___________________________
STATE OF NEW YORK)
COUNTY OF ) ss.: _______ __, 1994
On the __ day of ______, in the year one thousand nine hundred ninety-
four, before me personally came to me known, who, being by me
duly sworn, did depose and say that (s)he resides at ___________________, of
____________________, one of the corporations described in and which executed
the above instrument; that he knows the corporate seal of said corporation; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation and that he
signed his name thereto by like authority.
________________________________
NOTARY PUBLIC
My Commission Expires
-17-
<PAGE>
EXHIBIT 4.6
AMENDED AND RESTATED AGREEMENT
OF
LIMITED PARTNERSHIP
OF
GTE Delaware, L.P.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
ARTICLE I
FORMATION AND CONTINUATION OF THE PARTNERSHIP;
ADMISSION OF SERIES A PREFERRED SECURITY HOLDERS;
WITHDRAWAL OF INITIAL LIMITED PARTNER
<S> <C> <C>
Section 1.1 Formation and Continuation of the
Partnership............................. 1
Section 1.2 Name.................................... 2
Section 1.3 Business of the Partnership............. 2
Section 1.4 Term.................................... 2
Section 1.5 Registered Agent and Office............. 2
Section 1.6 Principal Place of Business............. 2
Section 1.7 Name and Business Address of General
Partner................................. 2
Section 1.8. Admission of Holders of Preferred
Securities; Withdrawal of Initial
Limited Partner......................... 3
<CAPTION>
ARTICLE II
DEFINED TERMS
<S> <C> <C>
Section 2.1 Definitions............................. 3
Section 2.2 Headings................................ 8
<CAPTION>
ARTICLE III
CAPITAL CONTRIBUTIONS, REPRESENTATION OF
PREFERRED SECURITY HOLDER'S INTEREST; CAPITAL ACCOUNTS
<S> <C> <C>
Section 3.1 Capital Contributions................... 9
Section 3.2 Preferred Security Holder's Interest
Represented by Preferred Securities..... 9
Section 3.3 Capital Accounts........................ 10
Section 3.4 Interest on Capital Contributions....... 10
Section 3.5 Withdrawal and Return of Capital
Contributions........................... 10
<CAPTION>
ARTICLE IV
ALLOCATIONS
<S> <C> <C>
Section 4.1 Profits and Losses...................... 10
Section 4.2 Other Allocation Provisions............. 11
Section 4.3. Allocations for Income Tax Purposes..... 13
Section 4.4. Withholding............................. 13
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
ARTICLE V
DIVIDENDS
Page
----
<S> <C> <C>
Section 5.1 Dividends................................ 14
Section 5.2 Limitations on Distributions............. 14
<CAPTION>
ARTICLE VI
ISSUANCE OF PREFERRED SECURITIES
<S> <C> <C>
Section 6.1 General Provisions Regarding Preferred
Securities............................... 14
<CAPTION>
ARTICLE VII
BOOKS OF ACCOUNT, RECORDS AND REPORTS
<S> <C> <C>
Section 7.1 Books and Records........................ 18
Section 7.2 Accounting Method........................ 18
<CAPTION>
ARTICLE VIII
POWERS, RIGHTS AND DUTIES
OF THE LIMITED PARTNERS
<S> <C> <C>
Section 8.1 Limitations.............................. 19
Section 8.2 Liability................................ 19
Section 8.3 Priority................................. 19
<CAPTION>
ARTICLE IX
POWERS, RIGHTS AND DUTIES
OF THE GENERAL PARTNER
<S> <C> <C>
Section 9.1 Authority................................ 19
Section 9.2 Powers and Duties of General Partner..... 19
Section 9.3 Liability................................ 21
Section 9.4 Exculpation.............................. 21
Section 9.5 Fiduciary Duty........................... 21
Section 9.6 Indemnification.......................... 22
Section 9.7 Outside Businesses....................... 23
Section 9.8 Limits on General Partner's Powers....... 23
Section 9.9 Tax Matters Partner...................... 24
Section 9.10 Expenses................................. 24
<CAPTION>
ARTICLE X
TRANSFERS OF INTERESTS BY PARTNERS
<S> <C> <C>
Section 10.1 Transfer of Interests.................... 24
Section 10.2 Transfer of LP Certificates.............. 25
Section 10.3 Persons Deemed Preferred Security
Holders.................................. 25
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 10.4 Book Entry Interests..................... 25
Section 10.5 Notices to Clearing Agency............... 26
Section 10.6 Appointment of Additional Successor
Agency................................... 26
Section 10.7 Definitive LP Certificates............... 26
<CAPTION>
ARTICLE XI
DISSOLUTION; LIQUIDATION AND DISTRIBUTION OF ASSETS
<S> <C> <C>
Section 11.1 Withdrawal of Partners................... 27
Section 11.2 Dissolution of the Partnership........... 27
Section 11.3 Liquidation.............................. 28
Section 11.4 Distribution in Liquidation.............. 28
Section 11.5 Rights of Limited Partner................ 29
Section 11.6 Termination.............................. 29
<CAPTION>
ARTICLE XII
AMENDMENTS AND MEETINGS
<S> <C> <C>
Section 12.1 Amendments............................... 29
Section 12.2 Amendment of Certificate................. 29
Section 12.3 Meetings of the Partners................. 29
<CAPTION>
ARTICLE XIII
MISCELLANEOUS
<S> <C> <C>
Section 13.1 Notices.................................. 30
Section 13.2 Entire Agreement......................... 31
Section 13.3 Governing Law............................ 31
Section 13.4 Effect................................... 31
Section 13.5 Pronouns and Number...................... 31
Section 13.6 Captions................................. 31
Section 13.7 Partial Enforceability................... 31
Section 13.8 Counterparts............................. 31
Section 13.9 Waiver of Partition...................... 32
Section 13.10 Remedies................................. 32
</TABLE>
iii
<PAGE>
AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF
GTE DELAWARE, L.P.
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of GTE Delaware,
L.P. (the "Partnership"), dated as of _______ __, 1994, among GTE Corporation, a
-----------
New York Corporation ("GTE"), as the general partner, GTE Finance Corporation, a
---
Delaware corporation, as the initial limited partner (the "Initial Limited
---------------
Partner") and such other Persons (as defined herein) who become Limited Partners
- -------
(as defined herein) as provided herein.
WHEREAS, GTE and the Initial Limited Partner entered into an Agreement
of Limited Partnership, dated as of May 3, 1994, (the "Original Limited
Partnership Agreement"); ----------------
- ---------------------
WHEREAS, the Certificate of Limited Partnership of the Partnership was
filed with the Office of the Secretary of State of the State of Delaware on
May 3, 1994;
WHEREAS, the Partners desire to continue the Partnership as a limited
partnership under the Act (as defined herein) and to amend and restate the
Original Limited Partnership Agreement in its entirety;
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree to amend
and restate the Original Limited Partnership Agreement in its entirety and
hereby agree as follows:
ARTICLE I
FORMATION AND CONTINUATION OF THE PARTNERSHIP;
ADMISSION OF SERIES A PREFERRED SECURITY HOLDERS;
WITHDRAWAL OF INITIAL LIMITED PARTNER
Section 1.1 Formation and Continuation of the Partnership. The
---------------------------------------------
Partnership was formed as a limited partnership under the Act by the filing by
the General Partner of the Certificate (as defined herein) with the Office of
the Secretary of State of the State of Delaware on May 3, 1994 and the
entering into by the General Partner and the Initial Limited Partner of the
Original Limited Partnership Agreement. The parties hereto agree to continue
the Partnership as a limited partnership under the Act. The General Partner,
for itself and as agent for the Limited Partners, shall make every reasonable
effort to assure that
<PAGE>
all certificates and documents, are properly executed and shall accomplish all
filing, recording, publishing and other acts necessary or appropriate for
compliance with all the requirements for the continuation of the Partnership as
a limited partnership under the Act and under all other laws of the State of
Delaware or such other jurisdictions in which the General Partner determines
that the Partnership may conduct business. The rights, liabilities and duties of
the Partners shall be as provided in the Act except as modified by this
Agreement. Where not otherwise specified in this Agreement, the Act governs the
rights and obligations of the parties to this Agreement.
Section 1.2 Name. The name of the Partnership is "GTE Delaware,
----
L.P.", as such name may be modified from time to time by the General Partner
following written notice to the Limited Partners. The Partnership business may
be conducted under the name of the Partnership or any other name deemed
advisable by the General Partner.
Section 1.3 Business of the Partnership. The sole purpose of the
---------------------------
Partnership is (a) to issue limited partnership interests in the Partnership,
including, without limitation, Preferred Securities (as defined below), and to
use the proceeds thereof to purchase Junior Subordinated Debentures (as herein-
after defined) or other similar debt instruments of GTE and (b) except as
otherwise limited herein, to enter into, make and perform all contracts and
other undertakings, and engage in all activities and transactions as the General
Partner may reasonably deem necessary or advisable to the carrying out of the
foregoing purpose of the Partnership.
Section 1.4 Term. The term of the Partnership commenced on the
----
date the Certificate was filed with the Secretary of State of the State of
Delaware and shall continue until December 31, 2093, unless dissolved before
such date in accordance with the provisions of this Agreement.
Section 1.5 Registered Agent and Office. The Partnership's
---------------------------
registered agent and office in the State of Delaware shall be The Corporation
Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New
Castle County, Delaware 19801. At any time, the General Partner may designate
another registered agent and/or registered office.
Section 1.6 Principal Place of Business. The principal place of
---------------------------
business of the Partnership shall be at c/o GTE Corporation, One Stamford Forum,
Stamford, Connecticut 06904. Upon ten days written notice to the Limited
Partners, the General Partner may change the location of the Partnership's
principal place of business.
Section 1.7 Name and Business Address of General Partner. The name
--------------------------------------------
and address of the General Partner are as follows:
2
<PAGE>
GTE Corporation
One Stamford Forum
Stamford, Connecticut 06904
Attention: Corporate Secretary
The General Partner may change its name or business address from time to time,
in which event the General Partner shall promptly notify the Limited Partners of
any such change.
Section 1.8. Admission of Holders of Preferred Securities.
--------------------------------------------
(a) Without necessity for execution of this Agreement, upon receipt by
a Person of an LP Certificate and payment of the Purchase Price for the
Preferred Securities represented by such LP Certificate in connection with the
initial issuance by the Partnership of such Preferred Securities, which shall be
deemed to constitute a request by such Person that the books and records of the
Partnership reflect such Person's admission as a Limited Partner, such Person
shall be admitted to the Partnership as a Limited Partner and shall become bound
by this Agreement.
(b) Following the first admission of Preferred Security Holders to
the Partnership as Limited Partners pursuant to paragraph (a) above, the Initial
Limited Partner shall receive the return of its capital contribution without
interest or deduction, but will continue to be a limited partner of the
Partnership. While the Initial Limited Partner shall continue to be a limited
partner of the Partnership, the Initial Limited Partner shall only have such
rights, if any, as are expressly provided to the Initial Limited Partner
pursuant to this Agreement.
(c) The name and mailing address of each Partner and the amount
contributed by such Partner to the capital of the Partnership shall be listed on
the books and records of the Partnership. The General Partner shall be required
to update the books and records from time to time as necessary to accurately
reflect the information therein.
ARTICLE II
DEFINED TERMS
Section 2.1 Definitions. Unless the context otherwise requires, the
-----------
terms defined in this Article II shall, for the purposes of this Agreement, have
the meanings herein specified.
"Act" means the Delaware Revised Uniform Limited Partnership Act,
---
6 Del.C. Section 17-101, et seq., as amended from time to time.
------ -- ---
"Action" has the meaning set forth in Section 6.1.
------ -----------
"Affiliate" means, with respect to a specified Person, (a) any Person
---------
directly or indirectly owning, controlling or holding with power to vote 10% or
more of the outstanding voting securities or other ownership interests of the
specified Person,
3
<PAGE>
(b) any Person 10% or more of whose outstanding voting securities or other
ownership interests are directly or indirectly owned, controlled or held with
power to vote by the specified Person, (c) any Person directly or indirectly
controlling, controlled by, or under common control with the specified Person,
(d) a partnership in which the specified Person is a general partner, (e) any
officer or director of the specified Person, and (f) if the specified Person is
an officer, director, general partner or employee, any other entity for which
the specified Person acts in any such capacity.
"Agreement" means this Amended and Restated Agreement of Limited
---------
Partnership of the Partnership, as amended, modified, supplemented or restated
from time to time.
"Book Entry Interests" means a beneficial interest in the LP
--------------------
Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 10.4.
------------
"Business Day" means any day other than a day on which banking
------------
institutions in The City of New York are authorized or required by law to close.
"Capital Account" has the meaning set forth in Section 3.3.
--------------- -----------
"Certificate" means the Certificate of Limited Partnership of the
-----------
Partnership filed with the Secretary of State of the State of Delaware on
May 3, 1994, and any and all amendments thereto and restatements thereof.
"Clearing Agency" means an organization registered as a "Clearing
---------------
Agency" pursuant to Section 17A of the Exchange Act that is acting as depository
for the Preferred Securities and in whose name shall be registered a global LP
Certificate and which shall undertake to effect book entry transfers and pledges
of the Preferred Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
---------------------------
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Code" means the Internal Revenue Code of 1986, as amended from time
----
to time, or any corresponding federal tax statute enacted after the date of this
Agreement. A reference to a specific section ((S)) of the Code refers not only
to such specific section but also to any corresponding provision of any federal
tax statute enacted after the date of this Agreement, as such specific section
or corresponding provision is in effect on the date of application of the
provisions of this Agreement containing such reference.
4
<PAGE>
"Covered Person" means any Partner, any Affiliate of a Partner or any
--------------
officers, directors, shareholders, partners, employees, representatives or
agents of a Partner or its respective Affiliates, or any employee or agent of
the Partnership or its Affiliates or any Special Representative.
"Dividends" means the distributions of income paid or payable to any
---------
Limited Partner who is a Preferred Security Holder pursuant to the terms of the
Preferred Securities held by such Limited Partner, including any interest
payable in respect of arrears.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
---
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Fiscal Year" means (i) the period commencing upon the formation of
-----------
the Partnership and ending on December 31, 1994, and (ii) any subsequent twelve
(12) month period commencing on January 1 and ending on December 31.
"General Partner" means GTE, its successors and assigns, and any
---------------
additional or successor general partner in the Partnership admitted as a general
partner of the Partnership to this Agreement.
"GTE" has the meaning set forth in the forepart of this Agreement.
---
"Guarantee" means the Guarantee Agreement dated as of _____ __, 1994
---------
of GTE in respect of the Series A Preferred Securities.
"Holders" means, with respect to a series of Preferred Securities,
-------
Preferred Security Holders in whose name an LP Certificate representing
Preferred Securities of such series is registered.
"Indemnified Person" means the General Partner, any Special
------------------
Representative, any Affiliate of the General Partner or any Special
Representative or any officers, directors, shareholders, partners, employees,
representatives or agents of the General Partner or any Special Representative,
or any employee or agent of the Partnership or its Affiliates.
"Indenture" means the Indenture dated as of June 1, 1994 between GTE
---------
and The Bank of New York, as Trustee, pursuant to which the Series A Junior
Subordinated Debentures are issued and other series of junior subordinated
debentures of GTE may be issued.
5
<PAGE>
"Initial Limited Partners" means GTE Finance Corporation, a Delaware
------------------------
Corporation.
"Initial Series A Limited Partner" means the Persons admitted as
--------------------------------
Limited Partners pursuant to Section 1.8(a) in connection with the initial
--------------
issuance by the Partnership of Series A Preferred Securities.
"Interest" means the entire ownership interest of a Partner in the
--------
Partnership at any particular time, including, without limitation, its interest
in the capital, profits, losses and distributions of the Partnership.
"Investment Company Event" means the occurrence of a change in law or
------------------------
regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 40 Act Law") to the effect that the Partnership is or
--------------------
will be considered an "investment company" which is required to be registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), which
--------
Change in 40 Act Law becomes effective on or after ______ , 1994; provided,
--------
however, that no Investment Company Event shall be deemed to have occurred
- -------
if the General Partner obtains a written opinion of nationally recognized
independent counsel to the Partnership experienced in practice under the 1940
Act to the effect that the General Partner has successfully issued an additional
or supplemental irrevocable and unconditional guarantee (i) of accrued and
unpaid dividends (whether or not determined to be paid out of monies legally
available therefor) on the Preferred Securities and (ii) of the full amount of
the Liquidation Distribution on the Series A Preferred Securities upon a
liquidation of the Partnership (regardless of the amount of assets of the
Partnership otherwise available for distribution in such liquidation) to avoid
such Change in 40 Act Law so that in the opinion of such counsel,
notwithstanding such Change in 40 Act Law, the Partnership is not required to be
registered as an "investment company" within the meaning of the 1940 Act.
"Junior Subordinated Debentures" means the Series A Junior
------------------------------
Subordinated Debentures and any other series of debentures issued by GTE under
the Indenture.
"Limited Partner" means any Person who is admitted to the Partnership
---------------
as a limited partner of the Partnership pursuant to the terms of this Agreement.
"Liquidation Distribution" has the meaning set forth in Section 6.2.
------------------------ -----------
"Loss Carried Forward Amount" means as of the first day of any month
---------------------------
for any Series, an amount equal to the excess of (x) all Net Loss allocated to
the Holders of such series of Preferred Securities from the date of issuance of
such series of Preferred Securities through and including the day prior to the
first day of such month pursuant to Section 4.1(b)(ii) over (y) the amount of
------------------
Net Income allocated to the Holders of such series of Preferred Securities
pursuant to Section 4.1(a)(ii) in all prior calendar months.
6
<PAGE>
"LP Certificate" means a certificate substantially in the form
--------------
attached hereto as Annex A, evidencing the Preferred Securities held by a
-------
Limited Partner.
"Majority in liquidation preference of the Preferred Securities"
--------------------------------------------------------------
means Holder(s) of a series of Preferred Securities or, as the context may
require, Holder(s) of more than one series of Preferred Securities voting as a
class, who are the record owners of Preferred Securities whose liquidation
preference (including the stated preference amount that would be paid on
redemption or maturity, plus accrued and unpaid dividends, whether or not
declared, to the date upon which the voting percentages are determined)
represents more than 50% of the above stated liquidation preference of all
Preferred Securities of such series or, as applicable, multiple series.
"Net Income" and "Net Loss", respectively, for any period means the
---------- --------
income and loss, respectively, of the Partnership for such period as determined
in accordance with the method of accounting followed by the Partnership for
federal income tax purposes, including, for all purposes, any income exempt from
tax and any expenditures of the Partnership which are described in Code Section
705(a)(2)(B); provided, however, that any item allocated under Section 4.2
-------- ------- -----------
shall be excluded from the computation of Net Income and Net Loss.
"Partners" means the General Partner and the Limited Partners,
--------
collectively, where no distinction is required by the context in which the term
is used.
"Partnership" means the limited partnership formed pursuant to this
-----------
Agreement under the name "GTE Delaware, L.P."
"Paying Agent" has the meaning set forth in Section 10.7.
------------ ------------
"Person" means any individual, corporation, limited liability company,
------
association, partnership, trust or other entity.
"Preferred Securities" means the limited partner interests in the
--------------------
Partnership described in Article VI.
----------
"Preferred Security Holder" has the meaning set forth in Section 10.3.
------------------------- ------------
"Preferred Security Owner" means, with respect to a Book Entry
------------------------
Interest, a Person who is the beneficial owner of such Book Entry Interest, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).
"Pricing Agreement" means a Pricing Agreement between the Partnership
-----------------
and GTE relating to the issuance of the Preferred Securities.
"Purchase Price" for any Preferred Security means the amount paid for
--------------
such Preferred Security in the initial sale by the Partnership of such Preferred
Security.
"Regulations" means a Treasury Regulation promulgated under the Code.
-----------
"Securities Act" means the Securities Act of 1933, as amended.
--------------
7
<PAGE>
"Series A Junior Subordinated Debentures" means the ___% Junior
---------------------------------------
Subordinated Debentures, Series A, Due 2024 issued by GTE.
"Series A Preferred Securities" has the meaning specified in Section
----------------------------- -------
6.2 of this Agreement.
- ---
"66-2/3% in liquidation preference of the Preferred Securities" means
-------------------------------------------------------------
Holder(s) of a series of Preferred Securities or, as the context may require,
Holder(s) of more than one series of Preferred Securities voting as a class, who
are the record owners of Preferred Securities whose liquidation preference
(including the stated preference amount that would be paid on redemption or
maturity, plus accrued and unpaid dividends, whether or not declared, to the
date upon which the voting percentages are determined) represents more than
66-2/3% of the above stated liquidation preference of all Preferred Securities
of such series or, as applicable, multiple series.
"Special Event" means a Tax Event or an Investment Company Act Event.
-------------
"Special Representative" has the meaning specified in Section 6.2(g)
----------------------
hereof.
"Tax Event" means that the General Partner shall have obtained an
---------
opinion of nationally recognized independent tax counsel experienced in such
matters 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 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 on or after such date), or (c) any interpretation or
pronouncement that provides for a position with respect to such laws or
regulations that differs from the generally accepted position on __________,
1994, which amendment or change is effective or such interpretation or
pronouncement is announced on or after __________, 1994, there is more than an
insubstantial risk that (i) the Partnership is subject to federal income tax
with respect to interest received on the Series A Junior Subordinated
Debentures, (ii) interest payable to the Partnership on the Series A Junior
Subordinated Debentures will not be deductible for federal income tax purposes
or (iii) the Partnership is subject to more than a de minimus amount of other
-- -------
taxes, duties or other governmental charges.
"Tax Matters Partner" means the General Partner designated as such in
-------------------
Section 9.9 hereof.
- -----------
"10% in liquidation preference of the Preferred Securities" means
--------------------------------------------------------
Holders(s) of a series of Preferred Securities or, as the context may require,
Holder(s) of more than one series of Preferred Securities voting as a class, who
are the record owners of Preferred Securities whose liquidation preference
(including the stated preference amount that would be paid on redemption or
maturity, plus accrued and unpaid dividends, whether or not declared, to the
date upon which the voting percentages are determined) represents more than 10%
of the above stated liquidation preference of all Preferred Securities of such
series or, as applicable, multiple series.
"Treasury Regulations" means the income tax regulations, including
--------------------
temporary regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
"Underwriting Agreement" means an Underwriting Agreement, among the
----------------------
Partnership and the underwriters named therein relating to the issuance of the
Preferred Securities.
Section 2.2 Headings. The headings and subheadings in this Agreement
--------
are included for convenience and identification only and are in no way intended
to describe, interpret, define or limit the scope, extent or intent of this
Agreement or any provision hereof.
8
<PAGE>
ARTICLE III
CAPITAL CONTRIBUTIONS, REPRESENTATION OF
PREFERRED SECURITY HOLDER'S INTEREST; CAPITAL ACCOUNTS
Section 3.1 Capital Contributions.
---------------------
(a) The General Partner has, on or prior to the date hereof,
contributed an aggregate of $_______ to the capital of the Partnership, which
amount is equal to at least 3% of the total capital contributions to the
Partnership on the date hereof, after taking into account the contribution of
the Initial Series A Limited Partner referred to in paragraph (c) of this
-------------
Section 3.1 Subject to Section 4.1(c), the General Partner shall from
--------------
time to time make such additional capital contributions as are necessary to
maintain its Capital Account balance at least equal to 3% of the aggregate
positive Capital Account balances of all Partners.
(b) The Initial Limited Partner has, prior to the date hereof,
contributed the amount of $50 to the capital of the Partnership which amount is
being returned to the Initial Limited Partner.
(c) The Initial Series A Limited Partner has, on the date hereof,
contributed to the capital of the Partnership the amount of the Purchase Price
for the Series A Preferred Securities acquired by it.
(d) Each Person who acquires a Preferred Security after the date
hereof in connection with the initial issuance by the Partnership of such
Preferred Security shall, in connection with the acquisition of such Preferred
Security, contribute to the capital of the Partnership an amount equal to the
Purchase Price for such Preferred Security.
(e) No Limited Partner shall at any time be required to make any
additional capital contributions to the Partnership.
Section 3.2 Preferred Security Holder's Interest Represented by
---------------------------------------------------
Preferred Securities. A Preferred Security Holder's interest in the Partnership
- --------------------
shall be represented by the Preferred Securities held by such Preferred Security
Holder. Each Preferred Security Holder's respective Preferred Securities shall
be set forth on the books and records of the Partnership. Each Limited
Partner, including a Preferred Security Holder, hereby agrees that its interest
in the Partnership and in its Preferred Securities shall for all purposes be
personal property. No Limited Partner, including a Preferred Security Holder,
shall have an interest in specific Partnership property.
9
<PAGE>
Section 3.3 Capital Accounts. An individual capital account (a
----------------
"Capital Account") shall be established and maintained on the books of the
- ----------------
Partnership for each Partner in compliance with Regulation (S)(S)1.704-
1(b)(2)(iv) and 1.704-2, as amended. Subject to the preceding sentence, each
Capital Account will be credited with the capital contributions made and the
profits allocated to such Partner (or predecessor in interest) and debited by
the distributions made and losses allocated to the Partner (or predecessor
thereof).
Section 3.4 Interest on Capital Contributions. No Partner shall be
---------------------------------
entitled to interest on or with respect to any capital contribution to the
Partnership.
Section 3.5 Withdrawal and Return of Capital Contributions.
----------------------------------------------
No Partner shall be entitled to withdraw any part of such Partner's capital
contribution to the Partnership or to receive any distributions from the
Partnership, except as provided in this Agreement.
ARTICLE IV
ALLOCATIONS
Section 4.1 Profits and Losses. Except as provided in Section 4.2,
------------------ -----------
(a) the Partnership's Net Income for each calendar month shall be
allocated as follows:
(i) First, to the Holders of each series of Preferred Securities as of
the record date in such calendar month for the payment of Dividends on such
series of Preferred Securities in an amount equal to the excess of (x) all
Dividends accrued on such series of Preferred Securities (in accordance
with the Action creating such series) from their date of issuance through
and including the close of such calendar month over (y) the amount of Net
Income allocated to the Holders of such series of Preferred Securities
pursuant to this Section 4.1(a)(i) in all prior calendar months; provided,
----------------- --------
however, that (A) as to any series of Preferred Securities as to which
-------
Dividends are not cumulative, no Dividend shall be deemed to accrue until
the Partnership has actually paid (or set aside money to pay) such Dividend
and (B) Dividends as to Preferred Securities that are cumulative and are
not payable at the end of each calendar month shall be deemed to accrue in
a manner consistent with the Action creating such Preferred Securities.
Amounts allocated to all Holders of any series of Preferred Securities
shall be allocated among such Holders in proportion to the number of
Preferred Securities of such series held by such Holders.
(ii) Second, 100% to the Holders of any series of Preferred
Securities up to an amount equal to the Loss Carried Forward Amount for
such series as of the first day of such month. Amounts allocated to all
Holders of any series of Preferred Securities shall be allocated among such
Holders in proportion to the number of Preferred Securities of such series
held by such Holders.
10
<PAGE>
(iii) Any remaining Net Income shall be allocated to the General
Partner.
(b) The Partnership's Net Loss for any Fiscal Period shall be
allocated as follows:
(i) First, to the General Partner until the General Partner's Capital
Account is reduced to zero; provided, however, that the aggregate amount of
-------- -------
Net Losses allocated to the General Partner pursuant to this Section
-------
4.1(b)(i) shall not exceed the sum of 3% of the total capital contributions
---------
of all Partners plus the aggregate Net Income allocated to the General
Partner pursuant to Section 4.1.
-----------
(ii) Second, to the Holders of each series of Preferred Securities in
proportion to the aggregate Capital Account balances of the Holders of such
series of Preferred Securities (calculated taking into account only
contributions, distributions and allocations related to such series), until
the Capital Account balances of such Holders are reduced to zero; provided,
--------
however, that the General Partner shall make appropriate adjustments in
-------
these allocations, in accordance with Section 4.1(c) with respect to any
--------------
Preferred Securities as to which Net Income has been allocated with respect
to Dividends that accrued but were not paid. Amounts allocated to the
Holders of any series of Preferred Securities shall be allocated among such
Holders in proportion to the number of Preferred Securities of such series
held by such Holders.
(iii) Any remaining Net Loss shall be allocated to the General
Partner.
(c) The General Partner shall make such changes to the allocations in
Sections 4.1(a) and 4.1(b) in the year of the Partnership's liquidation as it
- --------------- ------
deems reasonably necessary so that amounts distributed to the Preferred Security
Holders in such year in accordance with Section 11.4(a)(ii) shall equal their
-------------------
Liquidation Distributions; provided, however, that no allocation pursuant to
-------- -------
this Section 4.1(c) may result in the General Partner being required to make any
--------------
Capital Contributions pursuant to Section 3.1.
-----------
Section 4.2 Other Allocation Provisions.
---------------------------
11
<PAGE>
(a) For purposes of determining the profits, losses or any other
items allocable to any period, profits, losses and any such other items shall be
determined on a daily, monthly or other basis, as determined by the General
Partner using any method that is permissible under (S)706 of the Code and the
Regulations.
(b) The Partners are aware of the income tax consequences of the
allocations made by this Article IV and hereby agree to be bound by the
----------
provisions of this Article IV in reporting their shares of Partnership income
----------
and loss for income tax purposes.
(c) Notwithstanding anything to the contrary that may be expressed or
implied in this Article IV, the interest of the General Partner in each item of
----------
income, gain, loss, deduction and credit will be equal to at least (i) at any
time that aggregate capital contributions to the Partnership are equal to or
less than $50,000,000, 1% of each such item and (ii) at any time that aggregate
capital contributions to the Partnership are greater than $50,000,000, at least
1%, multiplied by a fraction (not exceeding one and not less than 0.2), the
numerator of which is $50,000,000 and the denominator of which is the lesser of
the aggregate Capital Account balances of the Capital Accounts of all Partners
at such time and the aggregate capital contributions to the Partnership of all
Partners at such time, of such item.
(d) (i) If during any taxable year, a Partner unexpectedly receives
an adjustment, allocation or distribution described in Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6), which causes or increases a deficit balance
in the Partner's Adjusted Capital Account (as defined below), there shall be
allocated to the Partner items of Partnership income and gain (consisting of a
pro rata portion of each item of Partnership income, including gross income and
gain for such year) in an amount and manner sufficient to eliminate such
deficit. The foregoing is intended to be a "qualified income offset" provision
as described in Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted and applied in all respects in accordance with that Regulation.
A Partner's "Adjusted Capital Account" at any time shall equal the
------------------------
Partner's Capital Account at such time (x) increased by the sum of (A) the
amount of the Partner's share of Partnership minimum gain (as defined in
Regulations Section 1.704-2(g)(1) and (3)) and (ii) the amount of the Partner's
share of the minimum gain attributable to a "partner non-recourse debt" (as
defined in Regulations Section 1.704-2(i)(5)) and (y) decreased by reasonably
excepted adjustments, allocations and distributions described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
12
<PAGE>
(ii) While the Partnership Agreement does not provide certain
provisions required by Regulations Sections 1.704-1(b) and 1.704-2 because those
provisions apply to transactions that are not expected to occur, the Partners
intend that the allocations under Section 4.1 conform to Regulations (S)1.704-
-----------
1(b) and 1.704-2 (including, without limitation, the minimum gain chargeback,
chargeback of partner nonrecourse debt minimum gain and partner nonrecourse debt
provisions of such Regulation), and the General Partner shall make such changes
in the allocations under Section 4.1 as it believes are reasonably necessary to
-----------
meet the requirements of such Regulations.
(e) Solely for the purpose of adjusting the Capital Accounts of the
Partners, and not for tax purposes, if any property is distributed in kind to
any Partner, the difference between its fair market value and its book value at
the time of distribution shall be treated as gain or loss recognized by the
Partnership and allocated pursuant to the provisions of Section 4.1; provided,
----------- --------
however, that Net Income and Net Loss allocated as a result of the distribution
- -------
of any series of Junior Subordinated Debentures to the Holders of any series of
Preferred Securities or to the General Partner (or both) shall be allocated to
the Partner receiving the Junior Subordinated Debentures in proportion to the
amount of Subordinated Debentures distributed to them. For this purpose, the
fair market value of any property shall be determined by the General Partner in
its sole discretion, provided, however, that the value of any Junior
-------- -------
Subordinated Debenture shall at all times be treated as equal to the value of
any Preferred Security if the interest rate on and principle amount of the
Junior Subordinated Debenture is the same as the Dividend payable on and the
liquidation preference with respect to the Preferred Security.
Section 4.3. Allocations for Income Tax Purposes. The income, gains,
-----------------------------------
losses, deductions and credits of the Partnership shall be allocated in the same
manner as the items entering into the computation of Net Income and Net Loss
were allocated under Sections 4.1 and 4.2; provided, however, that solely for
------------ --- -------- -------
federal, state and local income and franchise tax purposes and not for book or
Capital Account purposes, income, gain, loss and deduction with respect to any
property properly carried on the Partnership's books at a value other than the
tax basis of such property shall be allocated in a manner determined in the
General Partner's discretion, so as to take into account (consistently with Code
Section 704(c) principles) the difference between such property's book value and
its tax basis.
Section 4.4. Withholding. The Partnership shall comply with
-----------
withholding requirements under federal, state and local law and shall remit
amounts withheld to and file required forms with applicable jurisdictions. To
the extent that Partnership is required to withhold and pay over any amounts to
any authority with respect to distributions or allocations to any
13
<PAGE>
Partner, the amount withheld shall be deemed to be a distribution in the amount
of the withholding to the Partner. In the event of any claimed over-
withholding, Partners shall be limited to an action against the applicable
jurisdiction. If the amount withheld was not withheld from actual
distributions, the Partnership may reduce subsequent distributions by the amount
of such withholding. Each Partner agrees to furnish the Partnership with any
representations and forms as shall reasonably be requested by the Partnership to
assist it in determining the extent of, and in fulfilling, its withholding
obligations.
ARTICLE V
DIVIDENDS
Section 5.1 Dividends. Limited Partners shall receive periodic
---------
Dividends, if any, redemption payments and liquidation distributions in
accordance with the applicable terms of the Preferred Securities. Subject to
the rights of the Preferred Securities, all remaining cash shall be distributed
to the General Partner at such time as the General Partner shall determine.
Section 5.2 Limitations on Distributions. Notwithstanding any
----------------------------
provision to the contrary contained in this Agreement, the Partnership shall not
make a distribution to any Partner on account of its interest in the Partnership
if such distribution would violate Section 17-607 of the Act or other applicable
law.
ARTICLE VI
ISSUANCE OF PREFERRED SECURITIES
Section 6.1 General Provisions Regarding Preferred Securities.
-------------------------------------------------
(a) The aggregate number of Preferred Securities which the
Partnership shall have authority to issue is unlimited.
(b) The powers, preferences, special rights and limitations of the
Preferred Securities shall be as follows:
(i) The payment of Dividends and payments on dissolution of the
Partnership or on redemption in respect of Preferred Securities shall be
guaranteed by GTE pursuant to the Guarantee. The Preferred Security Holders
hereby authorize the General Partner to hold the Guarantee on behalf of the
Preferred Security Holders. In the event of the appointment of a Special
Representative to, among other things, enforce the Guarantee, the Special
Representative may take possession of the Guarantee for such purpose. If no
Special Representative has been appointed to enforce the Guarantee, the
General Partner has the right to enforce the Guarantee on behalf of the
Preferred Security Holders. The Holders of not less than 10% in liquidation
14
<PAGE>
preference of the Preferred Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available in
respect of the Guarantee including the giving of directions to the General
Partner or the Special Representative, as the case may be. If the General
Partner or the Special Representative fails to enforce the Guarantee as
above provided, a Preferred Security Holder may institute a legal
proceeding directly against the Guarantor to enforce its rights under the
Guarantee, without first instituting a legal proceeding against the
Partnership or any other Person or entity. The Preferred Security Holders,
by acceptance of such Preferred Securities, hereby agree to the
subordination provisions and other terms of the Guarantee;
(ii) The Preferred Securities may be issued from time to time by the
Partnership as Preferred Securities of one or more series and the General
Partner is expressly authorized, prior to issuance, in a written action or
actions (each, an "Action") providing for the issue of Preferred Securities
------
of each particular series, to fix the following:
(A) the distinctive designation of such series which shall
distinguish it from other series;
(B) the number of Preferred Securities included in such series,
which number may be increased or decreased from time to time unless
otherwise provided by the General Partner in creating the series;
(C) the annual Dividend rate (or method of determining such rate)
for Preferred Securities of such series and the date or dates upon
which such Dividends shall be payable, provided, however, Dividends on
-------- -------
any series of Preferred Securities shall be payable on a monthly basis
to Holders of such series of Preferred Securities as of a record date
in each month during which such series of Preferred Securities are
outstanding;
(D) whether Dividends on the Preferred Securities of such series
shall be cumulative, and, in the case of Preferred Securities of any
series having cumulative Dividend rights, the date or dates or method
of determining the date or dates from which Dividends on the Preferred
Securities of such series shall be cumulative;
(E) the amount or amounts which shall be paid out of the assets
of the Partnership to the Holders of the Preferred Securities of such
series upon voluntary or involuntary dissolution, winding up or
termination of the Partnership;
(F) the price or prices at which, the period or periods within
which and the terms and conditions upon which the Preferred Securities
of such series may be redeemed or purchased, in whole or in part, at
the option of the Partnership or the General Partner;
(G) the obligation, if any, of the Partnership to purchase or
redeem Preferred Securities of such series and the price or prices at
which, the period or periods within which and the terms and conditions
upon which the Preferred
15
<PAGE>
Securities of such series shall be purchased or redeemed, in whole or
in part, pursuant to such obligation;
(H) the voting rights, if any, of the Preferred Securities of
such series in addition to those required by law, including the number
of votes per Preferred Security and any requirement for the approval
by the Holders of Preferred Securities, or of the Preferred Securities
of one or more series, or of both, as a condition to specified action
or amendments to this Agreement; and
(I) any other relative rights, powers, preferences or
limitations of the Preferred Securities of the series not inconsistent
with this Agreement or with applicable law.
In connection with the foregoing and without limiting the
generality thereof, the General Partner is hereby expressly authorized,
without the vote or approval of any Preferred Security Holder, (i) to take
any Action to create under the provisions of this Agreement a series of
Preferred Securities that was not previously outstanding and (ii) to admit
Preferred Security Holders as Limited Partners in the Partnership. Without
the vote or approval of any Preferred Security Holder, the General Partner
may execute, swear to, acknowledge, deliver, file and record whatever
documents may be required in connection with the issue from time to time of
Preferred Securities in one or more series as shall be necessary,
convenient or desirable to reflect the issue of such series. The General
Partner shall do all things it deems to be appropriate or necessary to
comply with the Act and is authorized and directed to do all things it
deems to be necessary or permissible in connection with any future
issuance, including compliance with any statute, rule, regulation or
guideline of any federal, state or other governmental agency or any
securities exchange.
Any Action or Actions taken by the General Partner pursuant to
the provisions of this paragraph (ii) shall be deemed an amendment and
--------------
supplement to and part of this Agreement.
16
<PAGE>
(iii) The proceeds received by the Partnership from the issuance of
any series of Preferred Securities, together with the proceeds of any
capital contribution of the General Partner made at the time of such
issuance, shall be invested by the Partnership in Junior Subordinated
Debentures with (A) an aggregate principal amount equal to such aggregate
proceeds and (B) an interest rate equal to the Dividend rate of such series
of Preferred Securities.
(iv) So long as any series of Junior Subordinated Debentures are held
by the Partnership, the General Partner shall not (i) direct the time,
method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee with
respect to such series, (ii) waive any past default which is waivable under
Section 6.06 of the Indenture, (iii) exercise any right to rescind or annul
a declaration that the principal of all the Junior Subordinated Debentures
of such series shall be due and payable or (iv) consent to any amendment,
modification or termination of the Indenture without, in each case,
obtaining the prior approval of the Holders of at least 66 2/3% in
liquidation preference of all series of Preferred Securities affected
thereby, acting as a single class; provided, however, that where a consent
-------- --------
under the Indenture would require the consent of each holder of Junior
Subordinated Debentures affected thereby, no such consent shall be given by
the General Partner without the prior consent of each Holder of all series
of Preferred Securities affected thereby. The General Partner shall not
revoke any action previously authorized or approved by a vote of any series
of Preferred Securities affected thereby. The General Partner shall notify
all Holders of any series of Preferred Securities of any notice of default
received from the Trustee with respect to the related series of Junior
Subordinated Debentures.
(iv) The Partnership may not issue any limited partner interests in
the Partnership (including, without limitation, any series of Preferred
Securities), unless such series of Preferred Securities ranks pari passu
---- -----
with each other series of Preferred Securities then outstanding as regards
(A) participation in profits and Dividends of the Partnership and (B)
participation in the assets of the Partnership. All Preferred Securities
shall rank senior to the General Partner's Interest in respect of the right
to receive Dividends and the right to receive payments out of the assets of
the Partnership upon voluntary or involuntary dissolution, winding up or
termination of the Partnership. All Preferred Securities redeemed,
purchased or otherwise acquired by the Partnership (including Preferred
Securities surrendered for conversion or exchange) shall be canceled.
(v) No Holder of a Preferred Security shall be entitled as a matter
of right to subscribe for or purchase,
17
<PAGE>
or have any preemptive right with respect to, any part of any new or
additional issue of Preferred Securities of any class whatsoever, or of
securities convertible into any Preferred Securities of any class
whatsoever, whether now or hereafter authorized and whether issued for cash
or other consideration or by way of a Dividend.
ARTICLE VII
BOOKS OF ACCOUNT, RECORDS AND REPORTS
Section 7.1 Books and Records.
-----------------
(a) Proper and complete records and books of account of the
Partnership shall be kept by the General Partner in which shall be entered fully
and accurately all transactions and other matters relative to the Partnership's
business as are usually entered into records and books of account maintained by
Persons engaged in businesses of a like character, including a Capital Account
for each Partner. The books and records of the Partnership, together with a
certified copy of this Agreement and of the Certificate, shall at all times be
maintained at the principal office of the Partnership and shall be open to the
inspection and examination of the Limited Partners or their duly authorized
representatives for a proper purpose reasonably related to its Interest during
reasonable business hours.
(b) Notwithstanding any other provision of this Agreement, the
General Partner may, to the maximum extent permitted by applicable law, keep
confidential from the Partners any information the disclosure of which the
General Partner reasonably believes is not in the best interests of the
Partnership or is adverse to the interests of the Partnership or which the
Partnership or the General Partner is required by law or by an agreement with
any Person to keep confidential.
(c) Within three months after the close of each Fiscal Year, the
General Partner shall transmit to each Partner, a statement indicating such
Partner's share of each item of Partnership income, gain, loss, deduction or
credit for such Fiscal Year for federal income tax purposes.
Section 7.2 Accounting Method. For both financial and tax reporting
-----------------
purposes and for purposes of determining profits and losses, the books and
records of the Partnership shall be kept on the accrual method of accounting
applied in a consistent manner and shall reflect all Partnership transactions
and be appropriate and adequate for the Partnership's business.
18
<PAGE>
ARTICLE VIII
POWERS, RIGHTS AND DUTIES
OF THE LIMITED PARTNERS
Section 8.1 Limitations. The Limited Partners shall not
-----------
participate in the management or control of the Partnership's business,
property or other assets nor shall the Limited Partners
transact any business for the Partnership, nor shall the Limited Partners have
the power to act for or bind the Partnership, said powers being vested solely
and exclusively in the General Partner, provided, however, that the Limited
-------- -------
Partners shall have such rights as are set forth herein, including any Action.
The Limited Partners shall have no interest in the properties or assets of the
General Partner, or any equity therein, or in any proceeds of any sales thereof
(which sales shall not be restricted in any respect, by virtue of acquiring or
owning an Interest.
Section 8.2 Liability. Subject to the provisions of the Act, no
---------
Limited Partner shall be liable for the repayment, satisfaction or discharge of
any debts or other obligations of the Partnership in excess of the Capital
Account balance of such Limited Partner.
Section 8.3 Priority. Except as may be provided in any Action, no
--------
Limited Partner shall have priority over any other Limited Partner as to
Partnership allocations or distributions.
ARTICLE IX
POWERS, RIGHTS AND DUTIES
OF THE GENERAL PARTNER
Section 9.1 Authority. Subject to the limitations provided in this
---------
Agreement, the General Partner shall have exclusive and complete authority and
discretion to manage the operations and affairs of the Partnership and to make
all decisions regarding the business of the Partnership. Any action taken by
the General Partner shall constitute the act of and serve to bind the
Partnership. In dealing with the General Partner acting on behalf of the
Partnership, no Person shall be required to inquire into the authority of the
General Partner to bind the Partnership. Persons dealing with the Partnership
are entitled to rely conclusively on the power and authority of the General
Partner as set forth in this Agreement.
Section 9.2 Powers and Duties of General Partner. Except as
------------------------------------
otherwise specifically provided herein, the General Partner shall have all
rights and powers of a general partner under the Act, and shall have all
authority, rights and powers in the management of the Partnership business to do
any and all other acts and things necessary, proper, convenient or advisable
19
<PAGE>
to effectuate the purposes of this Agreement, including by way of illustration
but not by way of limitation, the following:
(a) to secure the necessary goods and services required in performing
the General Partner's duties for the Partnership;
(b) to exercise all powers of the Partnership, on behalf of the
Partnership, in connection with enforcing the Partnership's rights and
interest under the Junior Subordinated Debentures and the Guarantee;
(c) to issue Preferred Securities, and series thereof, in accordance
with this Agreement;
(d) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including with
respect to Dividends and voting rights and to make determinations as to the
payment of Dividends, and make all other required payments to Preferred
Security Holders and to the General Partner as the Partnership's paying
agent;
(e) to open, maintain and close bank accounts and to draw checks and
other orders for the payment of money;
(f) to bring or defend, pay, collect, compromise, arbitrate, resort
to legal action, or otherwise adjust claims or demands of or against the
Partnership;
(g) to deposit, withdraw, invest, pay, retain and distribute the
Partnership's funds in a manner consistent with the provisions of this
Agreement;
(h) to take all action which may be necessary or appropriate for the
preservation and the continuation of the Partnership's valid existence,
rights, franchises and privileges as a limited partnership under the laws
of the State of Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the Limited
Partner or to enable the Partnership to conduct the business in which it
is engaged;
(i) to take all action not inconsistent with applicable law, the
Certificate or this Agreement as long as such action does not adversely
affect the interests of the Preferred Security Holders, necessary to
conduct its affairs and to operate the Partnership in such a way that the
Partnership would not be deemed an "investment company" required to be
registered under the 1940 Act or taxed as a corporation for federal income
tax purposes and so that the Junior Subordinated Debentures will be treated
as indebtedness of GTE for federal income tax purposes;
(j) to cause the Partnership to enter into and perform, on behalf of
the Partnership an Underwriting Agreement and a Pricing Agreement and to
cause the Partnership to purchase the Junior Subordinated Debentures
without any further act, vote or approval of any Partner; and
(k) to execute and deliver any and all documents or instruments,
perform all duties and powers and do all things
20
<PAGE>
for and on behalf of the Partnership in all matters necessary or desirable
or incidental to the foregoing.
Section 9.3 Liability. Except as expressly set forth in this
---------
Agreement, (a) the General Partner shall not be personally liable for the
return of any portion of the capital contributions (or any return thereon) of
the Limited Partners; (b) the return of such capital contributions (or any
return thereon) shall be made solely from assets of the Partnership; and (c) the
General Partner shall not be required to pay to the Partnership or to any
Limited Partner any deficit in any Limited Partner's Capital Account upon
dissolution or otherwise. No Limited Partner shall have the right to demand or
receive property other than cash for its respective Interest in the Partnership.
Section 9.4 Exculpation. (a) No Indemnified Person shall be liable,
-----------
responsible or accountable in damages or otherwise to the Partnership or any
Covered Person for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good faith on behalf
of the Partnership and in a manner reasonably believed to be within the scope of
the authority conferred on such Indemnified Person by this Agreement or by law
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's gross negligence or
willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Partnership and upon such information, opinions,
reports or statements presented to the Partnership by any Person as to matters
the Indemnified Person reasonably believes are within such other Persons's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Partnership, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which distributions to Partners might properly be paid.
Section 9.5 Fiduciary Duty.
--------------
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Partnership or to any other Covered Person, an Indemnified Person acting under
this Agreement shall not be liable to the Partnership or to any other Covered
Person for its good faith reliance on the provisions of this Agreement. The
provisions of this Agreement, to the extent that they restrict the duties and
liabilities of an Indemnified Person otherwise existing at law or in equity, are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
21
<PAGE>
(b) Unless otherwise expressly provided herein, (i) whenever a
conflict of interest exists or arises between Covered Persons, or (ii) whenever
this Agreement or any other agreement contemplated herein or therein provides
that an Indemnified Person shall act in a manner that is, or provides terms that
are, fair and reasonable to the Partnership or any Partner, the Indemnified
Person shall resolve such conflict of interest, taking such action or providing
such terms, considering in each case the relative interest of each party
(including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Agreement or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Agreement an Indemnified Person is permitted or
required to make a decision (i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to consider only such
interests and factors a it desires, including its own interests, and shall have
no duty or obligation to give any consideration to any interest of or factors
affecting the Partnership or any other Person, or (ii) in its "good faith" or
under another express standard, the Indemnified Person shall act under such
express standard and shall not be subject to any other or different standard
imposed by this Agreement or other applicable law.
Section 9.6 Indemnification.
---------------
(a) To the fullest extent permitted by applicable law, the
Partnership shall indemnify and hold harmless each Indemnified Person from and
against any loss, damage or claim incurred by such Indemnified Person by reason
of any act or omission performed or omitted by such Indemnified Person in good
faith on behalf of the Partnership and in a manner reasonably believed to be
within the scope of authority conferred on such Indemnified Person by this
Agreement, except that no Indemnified Person shall be entitled to be indemnified
in respect of any loss, damage or claim incurred by such Indemnified Person by
reason of gross negligence or willful misconduct with respect to such acts or
omissions; provided, however, that any indemnity under this Section 9.6 shall be
-------- ------- -----------
provided out of and to the extent of Partnership assets only, and no Covered
Person shall have any personal liability on account thereof.
(b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the
Partnership prior to the final disposition of such claim, demand, action, suit
or
22
<PAGE>
proceeding upon receipt by the Partnership of an undertaking by or on behalf of
the Indemnified Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified as authorized in Section
-------
9.6(a).
- ------
Section 9.7 Outside Businesses. Any Partner or Affiliate thereof
------------------
may engage in or possess an interest in other business ventures of any nature of
description, independently or with others, similar or dissimilar to the business
of the Partnership, and the Partnership and the Partners shall have no rights by
virtue of this Agreement in and to such independent ventures or the income or
profits derived therefrom and the pursuit of any such venture, even if
competitive with the business of the Partnership, shall not be deemed wrongful
or improper. No Partner or Affiliate thereof shall be obligated to present any
particular investment opportunity to the Partnership even if such opportunity is
of a character that, if presented to the Partnership, could be taken by the
Partnership, and any Partner or Affiliate thereof shall have the right to take
for its own account (individually or as a partner or fiduciary) or to recommend
to others any such particular investment opportunity.
Section 9.8 Limits on General Partner's Powers. Anything in this
----------------------------------
Agreement to the contrary notwithstanding, the General Partner shall not cause
or permit the Partnership to
(a) acquire any assets other than as expressly provided herein;
(b) possess Partnership property for other than a Partnership
purpose;
(c) admit a Person as a Partner, except as expressly provided in this
Agreement;
(d) make any loans to the General Partner or its affiliates, other
than loans represented by the Junior Subordinated Debentures or other
similar debt instruments of GTE;
(e) perform any act that would subject any Limited Partner to
liability as a general partner in any jurisdiction;
(f) engage in any activity that is not consistent with the purposes
of the Partnership, as set forth in Section 1.3;
-----------
(g) confess a judgment against the Partnership;
23
<PAGE>
(h) without the written consent of 66-2/3% in liquidation preference
of the outstanding Preferred Securities have an order for relief entered
with respect to the Partnership or commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or consent to the entry of an order for relief in an involuntary
case under any such law, or consent to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a
substantial part of the Partnership's property, or make any assignment for
the benefit of creditors of the Partnership; it being understood that
nothing in this paragraph (h) is to effect the ability of the Partnership
-------------
to dissolve pursuant to this Agreement; or
(i) subject to Section 1.3, borrow money or become liable for the
-----------
borrowings of any third party or to engage in any financial or other trade
or business.
Section 9.9 Tax Matters Partner. (a) For purposes of Code Section
-------------------
6231(a)(7), the "Tax Matters Partner" shall be the General Partner as long as it
-------------------
remains the general partner of the Partnership. The Tax Matters Partner shall
keep the Limited Partners fully informed of any inquiry, examination or
proceeding.
(b) The General Partner shall not make an election in accordance with
(S)754 of the Code.
(c) The General Partner and the Preferred Security Holders
acknowledge that they intend, for U.S. federal income tax purposes, that the
Partnership shall be treated as a partnership and that the General Partner and
the Preferred Security Holders shall be treated as Partners of such Partnership
for such purposes.
Section 9.10 Expenses. The General Partner shall pay for all, and the
--------
Partnership shall not be obligated to pay, directly or indirectly, for any,
costs and expenses of the Partnership (including, but not limited to, costs and
expenses relating to the organization of, and offering of limited partner
interests in, the Partnership and costs and expenses relating to the operation
of the Partnership, including without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services and computing or
accounting equipment, paying agent(s), registrar(s), transfer agent(s),
duplicating, travel and telephone and costs and expenses incurred in connection
with the acquisition, financing, and disposition of Partnership assets).
ARTICLE X
TRANSFERS OF INTERESTS BY PARTNERS
Section 10.1 Transfer of Interests. (a) Preferred Securities shall
---------------------
be freely transferable by a Preferred Security Holder.
(b) The General Partner may not assign its interest in the Partnership
in whole or in part under any circumstances except to a successor of GTE as
permitted under the Indenture. The admission of such successor as a general
partner of the Partnership shall be effective upon the filing of an amendment to
the Certificate with the Secretary of State of the State of Delaware which
indicates that such successor has been admitted as a general partner in the
Partnership. If the General Partner assigns its entire Interest to a successor
of GTE as permitted under the Indenture, the General Partner shall be deemed to
have ceased to be a general partner in the Partnership simultaneously with the
admission of the successor as a general partner in the Partnership. Any such
successor general partner in the Partnership is hereby authorized to and shall
continue the business of the Partnership without dissolution.
(c) No Interest shall be transferred, in whole or in part, except in
accordance with the terms and conditions set forth in this Agreement. Any
transfer or purported transfer of any Interest not made in accordance with this
Agreement shall be null and void.
24
<PAGE>
Section 10.2 Transfer of LP Certificates. The General Partner shall
---------------------------
provide for the registration of LP Certificates and of transfers of LP
Certificates. Upon surrender for registration of transfer of any LP Certificate,
the General Partner shall cause one or more new LP Certificates to be issued in
the name of the designated transferee or transferees. Every LP Certificate
surrendered for registration of transfer shall be accompanied by a written
instrument of transfer in form satisfactory to the General Partner duly executed
by the Preferred Security Holder or his or her attorney duly authorized in
writing. Each LP Certificate surrendered for registration of transfer shall be
canceled by the General Partner. A transferee of an LP Certificate shall be
admitted to the Partnership as a Limited Partner and shall be entitled to the
rights and subject to the obligations of a Preferred Security Holder hereunder
upon the receipt by a transferee of an LP Certificate. By acceptance of an LP
Certificate, each transferee shall be deemed to have requested admission as a
Limited Partner and to have agreed to be bound by this Agreement. The transferor
of an LP Certificate, in whole, shall cease to be a Limited Partner at the time
that the transferee of such LP Certificate is admitted to the Partnership as a
Limited Partner in accordance with this Section 10.2.
------------
Section 10.3 Persons Deemed Preferred Security Holders. The
-----------------------------------------
Partnership may treat the Person in whose name any LP Certificate shall be
registered on the books and records of the Partnership as the sole holder of
such LP Certificate and of the Preferred Securities represented by such LP
Certificate (the "Preferred Security Holder") for purposes of receiving
-------------------------
Dividends and for all other purposes whatsoever and, accordingly, shall not be
bound to recognize any equitable or other claim to or interest in such LP
Certificate or in the Preferred Securities represented by such LP Certificate on
the part of any other Person, whether or not the Partnership shall have actual
or other notice thereof.
Section 10.4 Book Entry Interests. The LP Certificates, on original
--------------------
issuance, will be issued in the form of a global LP Certificate or LP
Certificates representing the Book Entry Interests, to be delivered to DTC, the
initial Clearing Agency, by, or on behalf of, the Partnership. Such LP
Certificate or LP Certificates shall initially be registered on the books and
records of the Partnership in the name of Cede & Co., the nominee of DTC, and no
Preferred Security Owner will receive a definitive LP Certificate representing
such Preferred Security Owner's interests in such LP Certificate, except as
provided in Section 10.7. Unless and until definitive, fully registered LP
------------
Certificates (the "Definitive LP Certificates") have been issued to the
--------------------------
Preferred Security Owners pursuant to Section 10.7:
------------
(i) The provisions of this Section shall be in full force and effect;
(ii) The Partnership and the General Partner shall be entitled to deal
with the Clearing Agency for all purposes of this Agreement (including the
payment of Dividends on the LP Certificates and receiving approvals, votes
or consents hereunder) as the Preferred Security Holder and the sole holder
of the LP Certificates and shall have no obligation to the Preferred
Security Owner;
25
<PAGE>
(iii) To the extent that the provisions of this Section conflict with
any other provisions of this Agreement, the provisions of this Section
shall control; and
(iv) The rights of the Preferred Security Owners shall be exercised
only through the Clearing Agency and shall be limited to those established
by law and agreements between such Preferred Security Owners and the
Clearing Agency and/or the Clearing Agency Participants. DTC will make
book entry transfers among the Clearing Agency Participants and receive and
transmit payments of Dividends on the LP Certificates to such Clearing
Agency Participants.
Section 10.5 Notices to Clearing Agency. Whenever a notice or other
--------------------------
communication to the Preferred Security Holders is required under this
Agreement, unless and until Definitive LP Certificates shall have been issued to
the Preferred Security Owners pursuant to Section 10.7, the General Partner
------------
shall give all such notices and communications specified herein to be given to
the Preferred Security Holders to the Clearing Agency, and shall have no
obligations to the Preferred Security Owners.
Section 10.6 Appointment of Successor Clearing Agency. If any
----------------------------------------
Clearing Agency elects to discontinue its services as securities depository with
respect to the Preferred Securities, the General Partner may, in its sole
discretion, appoint a successor Clearing Agency with respect to the Preferred
Securities.
Section 10.7 Definitive LP Certificates; Appointment of Paying
-------------------------------------------------
Agent(s). If (i) a Clearing Agency elects to discontinue its services as
- --------
securities depository with respect to the Preferred Securities and a successor
Clearing Agency is not appointed within 90 days after such discontinuance
pursuant to Section 10.6 or (ii) the Partnership elects to terminate the book
------------
entry system through the Clearing Agency, then (a) Definitive LP Certificates
shall be prepared by the Partnership and (b) the General Partner shall
authorize one or more Persons (each, a "Paying Agent") to pay Dividends,
--------------
redemption payments or liquidation payments on behalf of the Partnership with
respect to the Preferred Securities. Upon surrender of the global LP Certificate
or LP Certificates representing the Book Entry Interests by the Clearing Agency,
accompanied by registration instructions, the General Partner shall cause
Definitive LP Certificates to be delivered to Preferred Security Owners in
accordance with the instructions of the Clearing Agency. Neither the General
Partner nor the Partnership shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Any Person receiving a Definitive LP Certificate in
accordance with this Article X shall be admitted to the Partnership as a Limited
---------
Partner upon receipt of such Definitive LP Certificate and shall be registered
on the books and records of the Partnership as a Preferred Security Holder. The
Clearing Agency or the nominee of the Clearing Agency, as the case may be, shall
cease to be a Limited Partner under this Section 10.7 at the time that at
------------
least one additional person is admitted to the Partnership as a Limited Partner
in accordance with this Section 10.7. The Definitive LP Certificates shall be
------------
printed, lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the General Partner, as evidenced by its execution
thereof.
26
<PAGE>
ARTICLE XI
WITHDRAWAL; DISSOLUTION;
LIQUIDATION AND DISTRIBUTION OF ASSETS
Section 11.1 Withdrawal of Partners. Subject to the further
----------------------
provisions of this Section 11.1 and except as provided in Article X, no Partner
------------
shall at any time retire or withdraw from the Partnership. Any Partner retiring
or withdrawing in contravention of this Section 11.1 shall indemnify, defend and
------------
hold harmless the Partnership and the other Partners from and against any
losses, expenses, judgments, fines, settlements or damages suffered or incurred
by the Partnership or such other Partners arising out of or resulting from such
retirement or withdrawal. No permitted transfer of all or any portion of a
Partner's Interest in the Partnership in accordance with Article X shall
---------
constitute a withdrawal in violation of this Section 11.1. Further, the
------------
withdrawal of a Holder in connection with the redemption of its entire Interest
in the Partnership in accordance with the terms hereof or of an Action, shall
not constitute a violation of this Section 11.1.
------------
Section 11.2 Dissolution of the Partnership.
------------------------------
(a) The Partnership shall not be dissolved by the admission of
additional or successor Partners in accordance with the terms of this Agreement.
The death, withdrawal, bankruptcy or dissolution of a Limited Partner, or the
occurrence of any other event which terminates the Interest of a Limited Partner
in the Partnership, shall not, in and of itself, cause the Partnership to be
dissolved and its affairs wound up. To the fullest extent permitted by
applicable law, upon the occurrence of such event, the General Partner may,
without any further act, vote or approval of any Partner, admit any Person to
the Partnership as an additional or substitute limited partner in the
Partnership, which admission shall be effective as of the date of the occurrence
of such event, and the business of the Partnership shall be continued without
dissolution.
(b) The Partnership shall be dissolved and its affairs shall be wound
up upon the occurrence of any of the following events:
(i) The expiration of the term of the Partnership, as provided in
Section 1.4 hereof;
- -----------
(ii) Upon the bankruptcy of the General Partner;
(iii) Upon the assignment by the General Partner of its entire
interest in the Partnership when the assignee is not admitted to the Partnership
as a general partner of the Partnership in accordance with Section 10.1, or the
------------
filing of a certificate of dissolution or its equivalent, with respect to the
General Partner, or the revocation of the General Partner's charter and the
expiration of 90 days after the date of notice to the General Partner of
revocation without a reinstatement of its charter, or any other event occurs
which causes the General Partner to cease to be a general partner of the
Partnership under the Act, unless the business of the Partnership is continued
in accordance with the Act (any remaining general partner of the Partnership is
hereby authorized to and shall continue the business of the Partnership without
dissolution);
(iv) In accordance with any Action;
(v) the entry of a decree of judicial dissolution under Section
17-802 of the Act; or
(vi) the written consent of all Partners.
27
<PAGE>
(c) Upon dissolution of the Partnership, the Liquidator shall
promptly notify the Partners of such dissolution.
Section 11.3 Liquidation. (a) In the event of the dissolution of the
-----------
Partnership for any reason, the General Partner (or, if the Partnership is
dissolved pursuant to Section 11.2(b)(ii), then a liquidating trustee appointed
by 66 2/3% in liquidation preference of the Preferred Securities
(the General Partner or such person so appointed is hereinafter referred to as
the "Liquidator")), shall commence to wind up the affairs of the Partnership and
----------
to liquidate the Partnership's assets; provided, however, that a reasonable time
-------- -------
shall be allowed for the orderly liquidation of the assets of the Partnership
and the satisfaction of liabilities to creditors so as to enable the Partners to
minimize the normal losses attendant upon liquidation. The Partners shall
continue to share all income, losses and distributions during the period of
liquidation in accordance with Articles IV and V. Subject to the provisions of
----------- -
this Article XI, the Liquidator shall have full right and unlimited discretion
----------
to determine the time, manner and terms of any sale or sales of Partnership
property pursuant to such liquidation, giving due regard to the activity and
condition of the relevant market and general financial and economic conditions.
(b) The Liquidator shall have all of the rights and powers with
respect to the assets and liabilities of the Partnership in connection with the
liquidation and termination of the Partnership that the General Partner would
have with respect to the assets and liabilities of the Partnership during the
term of the Partnership, and the Liquidator is hereby expressly authorized and
empowered to execute any and all documents necessary or desirable to effectuate
the liquidation and termination of the Partnership and the transfer of any
assets.
(c) Notwithstanding the foregoing, a Liquidator which is not the
General Partner shall not be deemed a Partner in this Partnership and shall not
have any of the economic interests in the Partnership of a Partner; and such
Liquidator may be compensated for its services to the Partnership at normal,
customary and competitive rates for its services to the Partnership as
reasonably determined by a majority-in-interest of the Limited Partners.
Section 11.4 Distribution in Liquidation.
---------------------------
(a) Upon the winding up of the Partnership, the assets of the
Partnership shall be distributed in the following order of priority:
(i) to creditors of the Partnership, including Preferred Security
Holders who are creditors, to the extent otherwise permitted by law, in
satisfaction of the liabilities of the Partnership (whether by payment or
the making of reasonable provision for payment thereof), other
28
<PAGE>
than liabilities for distributions (including Dividends) to Partners; and
(ii) to the Partners in proportion to the Partners' positive Capital
Account balances.
Section 11.5 Rights of Limited Partners. Each Limited Partner shall
--------------------------
look solely to the assets of the Partnership for all distributions with respect
to the Partnership and such Partner's capital contribution (including return
thereof), and such Partner's share of profits or losses thereof, and shall have
no recourse therefor (upon dissolution or otherwise) against the General
Partner. No Partner shall have any right to demand or receive property other
than cash upon dissolution and termination of the Partnership.
Section 11.6 Termination. The Partnership shall terminate when all
-----------
of the assets of the Partnership shall have been disposed of and the assets
shall have been distributed as provided in Section 11.4. The Liquidator shall
------------
then execute and cause to be filed a certificate of cancellation of the
Certificate.
ARTICLE XII
AMENDMENTS AND MEETINGS
Section 12.1 Amendments. Except as otherwise provided in this
----------
Agreement or by any applicable terms of any Action establishing a series of
Preferred Securities, this Agreement may be amended by, and only by, a written
instrument executed by the General Partner; provided, however, that (i) no
-------- -------
amendment shall be made, and any such purported amendment shall be void and
ineffective, to the extent the result thereof would be to cause the Partnership
to be treated as anything other than a partnership for purposes of United States
income taxation and (ii) any amendment which would adversely affect the powers,
preferences or special rights of any series of Preferred Securities may be
effected only as permitted by the terms of such series of Preferred Securities.
Section 12.2 Amendment of Certificate. In the event this Agreement
------------------------
shall be amended pursuant to Section 12.1, the General Partner shall amend the
------------
Certificate to reflect such change if it deems such amendment of the Certificate
to be necessary or appropriate.
Section 12.3 Meetings of the Partners.
------------------------
(a) Meetings of the Limited Partners who are Holders of any series
or, in the case of a class vote, of multiple series of Preferred Securities may
be called at any time by the General Partner (or as provided in any Action
establishing a series of Preferred Securities) to consider and act on any matter
on which Limited Partners are entitled to act under the terms of this Agreement
or the Act. The General Partner shall call a meeting of Holders of any series
or, in the case of a class vote, multiple series, if directed to do so by
Holders of not less than 10% in liquidation preference of the Preferred
Securities. Such direction shall be given by delivering to the General Partner
one or more calls in writing stating that the signing Limited Partners wish to
call a meeting and indicating the general or specific purpose for which the
meeting is to be called. Any Limited Partner calling a meeting shall specify the
LP Certificates as to which the Limited Partners exercising the right to call a
meeting and only those specified Interests shall be counted for purposes of
determining whether the required percentage set forth in the proceeding sentence
has been met. Except to the extent otherwise provided in any such Action, the
following provisions shall apply to meetings of Partners.
29
<PAGE>
(b) Notice of any such meeting shall be given to all Limited Partners
having a right to vote thereat not less than 7 Business Days nor more than 60
days prior to the date of such meeting. Whenever a vote, consent or approval of
Limited Partners is permitted or required under this Agreement, such vote,
consent or approval may be given at a meeting of Limited Partners. Further, any
action that may be taken at a meeting of the Limited Partners may be taken
without a meeting if a consent in writing setting forth the action so taken is
signed by Limited Partners owning not less than the minimum Interests that would
be necessary to authorize or take such action at a meeting at which all Limited
Partners having a right to vote thereon were present and voting. Prompt notice
of the taking of action without a meeting shall be given to the Limited Partners
entitled to vote who have not consented in writing. The General Partner may
specify that any written ballot submitted to the Limited Partners for the
purpose of taking any action without a meeting shall be returned to the
partnership within the time specified by the General Partner.
(c) Each Limited Partner may authorize any Person to act for it by
proxy on all matters in which a Limited Partner is entitled to participate,
including waiving notice of any meeting, or voting or participating at a
meeting. No proxy shall be valid after the expiration of 11 months from the date
thereof unless otherwise provided in the proxy. Every proxy shall be revocable
at the pleasure of the Limited Partner executing it. Except as otherwise
provided herein, in any Action or pursuant to Section 12.3(e), all matters
---------------
relating to the giving, voting or validity of proxy shall be governed by the
General Corporation Law of the State of Delaware relating to proxies, and
judicial interpretations thereunder, as if the Partnership were a Delaware
corporation and the Limited Partners were stockholders of a Delaware
corporation.
(d) Each meeting of Partners shall be conducted by the General
Partner or by such other Person that the General Partner may designate.
(e) The General Partner, in its sole discretion, shall establish all
other provisions relating to meetings of Limited Partners, including notice of
the time, place or purpose of any meeting at which any matter is to be voted on
by any Limited Partners, waiver of any such notice, action by consent without a
meeting, the establishment of a record date, quorum requirements, voting in
person or by proxy or any other matter with respect to the exercise of any such
right to vote.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Notices. All notices provided for in this Agreement
-------
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by registered or certified mail, as follows:
(a) if given to the Partnership, in care of the General Partner at
the Partnership's mailing address set forth below:
GTE Delaware, L.P.
c/o GTE Corporation
One Stamford Forum
30
<PAGE>
Stamford, Connecticut 06904
Attention: Corporate Secretary
(b) if given to the General Partner, at its mailing address set forth
below:
GTE Corporation
One Stamford Forum
Stamford, Connecticut 06904
Attention: Corporate Secretary
(c) if given to any other Partner at the address set forth on the
books and records of the Partnership.
All such notices shall be deemed to have been given when received.
Section 13.2 Entire Agreement. This Agreement constitutes the
----------------
entire agreement among the parties. It supersedes any prior agreement or
understandings among them, and it may not be modified or amended in any manner
other than as set forth herein.
Section 13.3 Governing Law. This Agreement and the rights of the
-------------
parties hereunder shall be governed by and interpreted in accordance with the
law of the State of Delaware and all rights and remedies shall be governed by
such laws without regard to principles of conflict of laws.
Section 13.4 Effect. Except as herein otherwise specifically
------
provided, this Agreement shall be binding upon and inure to the benefit of the
parties and their legal representatives, successors and assigns.
Section 13.5 Pronouns and Number. Wherever from the context it
-------------------
appears appropriate, each term stated in either the singular or the plural shall
include the singular and the plural, and pronouns stated in either the
masculine, feminine or neuter shall include the masculine, feminine and neuter.
Section 13.6 Captions. Captions contained in this Agreement are
--------
inserted only as a matter of convenience and in no way define, limit or extend
the scope or intent of this Agreement or any provision hereof.
Section 13.7 Partial Enforceability. If any provision of this
----------------------
Agreement, or the application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Agreement, or the application of
such provision to persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.
Section 13.8 Counterparts. This Agreement may contain more than one
------------
counterpart of the signature page and this
31
<PAGE>
Agreement may be executed by the affixing of the signature of each of the
Partners to one of such counterpart signature pages. All of such counterpart
signatures pages shall be read as though one, and they shall have the same force
and effect as though all of the signers had signed a single signature page.
Section 13.9 Waiver of Partition. Each Partner hereby irrevocably
-------------------
waives any and all rights (if any) that such Partner may have to maintain any
action for partition of any of the Partnership's property.
Section 13.10 Remedies. The failure of any party to seek redress for
--------
violation of, or to insist upon the strict performance of, any provision of this
Agreement shall not prevent a subsequent act, which would have originally
constituted a violation, from having the effect of an original violation. The
rights and remedies provided by this Agreement are cumulative and the use of any
one right or remedy by any party shall not preclude or waive its right to use
any or all other remedies. Said rights and remedies are given in addition to
any other rights the parties may have by law, statute, ordinance or otherwise.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above stated.
General Partner:
GTE CORPORATION,
a New York Corporation
By:_____________________
Name:
Title:
Initial Limited Partner:
GTE FINANCE CORPORATION,
a Delaware Corporation
By:________________________
Name:
Title:
32
<PAGE>
Annex A
Certificate Number Number of Preferred Securities
- ---------------------------------------------------
R-1
CUSIP NO.
Certificate Evidencing Preferred Securities
of
GTE Delaware, L.P.
_________________ Monthly Income Preferred Securities, Series A
(liquidation preference $25 per Preferred Security)
GTE Delaware, L.P., a limited partnership formed under the laws of the
State of Delaware (the "Partnership"), hereby certifies that __________ (the
-----------
"Holder") is the registered owner of _______ (__________) preferred securities
- -------
of the Partnership representing limited partner interests in the Partnership
of a series designated the ________________ Monthly Income Preferred Securities,
Series A (liquidation preference $25 per Preferred Security)(the "Series A
--------
Preferred Securities"). The Series A Preferred Securities are fully paid and
- --------------------
nonassessable limited partner interests in the Partnership, as to which the
limited partners in the Partnership who hold the Series A Preferred Securities
(the "Preferred Security Holders"), in their capacities as limited partners in
--------------------------
the Partnership, will, assuming such Preferred Security Holders do not
participate in the control of the business of the Partnership, have no liability
solely by reason of being Preferred Security Holders in excess of their share of
the Partnership's assets and undistributed profits (subject to the obligation of
a Preferred Security Holder to repay any funds wrongfully distributed to it) and
are transferable on the books and records of the Partnership, in person or by a
duly authorized attorney, upon surrender of this certificate duly endorsed and
in proper form for transfer. The powers, preferences and special rights and
limitations of the Series A Preferred Securities are set forth in, and this
certificate and the Series A Preferred Securities represented hereby are issued
and shall in all respects be subject to the terms and provisions of, the Amended
and Restated Agreement of Limited Partnership of the Partnership dated as of ___
__, 1994, as the same may be amended from time to time (the "Limited Partnership
-------------------
Agreement") authorizing the issuance of the Series A Preferred Securities and
- ---------
determining the powers, preferences, and other special rights and limitations,
regarding Dividends, voting, return of capital and otherwise, and other matters
relating to the Series A Preferred Securities. Capitalized terms used herein but
not defined shall have the meaning given them in the Limited Partnership
Agreement. The Holder is entitled to the benefits of the Guarantee Agreement of
GTE Corporation, a New York corporation ("GTE"), dated as of
---
<PAGE>
_______, 1994 (the "Guarantee") to the extent provided therein. The Partnership
---------
will furnish a copy of the Limited Partnership Agreement and the Guarantee to
the Holder without charge upon written request to the Partnership at its
principal place of business or registered office.
The Holder, by accepting this certificate, is deemed to have agreed
that (i) the Series A Junior Subordinated Debentures acquired by the
Partnership with the proceeds from the issuance of the Series A Preferred
Security are subordinated and junior in right of payment to all Senior
Indebtedness of GTE as and to the extent provided in the Indenture, and (ii)
the Guarantee ranks subordinate and junior in right of payment to all
liabilities of GTE, pari passu with the most senior preferred or preference
---- -----
stock now or hereafter issued by GTE and with any guarantee now or hereafter
issued by GTE in respect of any preferred or preference stock of any Affiliate
of GTE, and senior to GTE's common stock, as and to the extent provided in the
Guarantee. Upon receipt of this certificate, the Holder is admitted to the
Partnership as a Limited Partner, is bound by the Limited Partnership Agreement
and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, the Partnership has executed this certificate this
day of ____________, 199_
GTE DELAWARE, L.P.
By: GTE CORPORATION,
its General Partner
By:________________________
2
<PAGE>
EXHIBIT 4.9
GUARANTEE AGREEMENT
GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of ___, 1994,
-------------------
executed and delivered by GTE Corporation, a New York corporation (the
"Guarantor"), for the benefit of the holders from time to time of the Preferred
- ----------
Securities (as defined in the Partnership Agreement (as defined below)) of GTE
Delaware, L.P, a Delaware limited partnership (the "Issuer").
------
WHEREAS, pursuant to the Amended and Restated Agreement of Limited
Partnership, dated as of the date hereof, of the Issuer (the "Partnership
-----------
Agreement"), the Issuer may issue one or more series of Preferred Securities;
- ---------
WHEREAS, pursuant to the Partnership Agreement, the proceeds received
by the Issuer from the issuance and sale of any such Preferred Securities will
be invested by the Issuer in Junior Subordinated Debentures (as defined in the
Partnership Agreement); and
WHEREAS, the Guarantor, as incentive for the Holders (as defined
herein) to purchase Preferred Securities, desires hereby irrevocably and
unconditionally to agree to the extent set forth herein to pay to the Holders
the Guarantee Payments (as defined herein) and to make certain other payments on
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for
the benefit of the Holders.
ARTICLE I.
---------
As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings. Capitalized
terms used but not otherwise defined herein shall have the meanings assigned to
such terms in the Partnership Agreement.
"Guarantee Payments" shall mean the following payments, without
------------------
duplication, with respect to any series of Preferred Securities, to the extent
not paid by the Issuer: (i) any accrued and unpaid Dividends which are required
to be paid on such series of Preferred Securities, to the extent the Issuer
shall have funds legally available therefor, (ii) the redemption price,
including all accrued and unpaid Dividends (the "Redemption Price"),
----------------
payable out of funds legally available therefor with
<PAGE>
- 2 -
respect to any Preferred Securities called for redemption by the Issuer and
(iii) upon a liquidation of the Issuer, the lesser of (a) the aggregate of the
liquidation preference and all accrued and unpaid Dividends on the Preferred
Securities of such series to the date of payment (the "Liquidation
-----------
Distribution") and (b) the amount of assets of the Issuer remaining available
- ------------
for distribution to Holders in liquidation of the Issuer.
"Holder" shall mean any holder, as registered on the books and records
------
of the Issuer, of any series of Preferred Securities; provided, however, that in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any entity owned more than 50% by the
Guarantor, either directly or indirectly.
ARTICLE II.
-----------
SECTION 2.01. The Guarantor irrevocably and unconditionally agrees to
pay in full to the Holders the Guarantee Payments, as and when due (except to
the extent paid by the Issuer), regardless of any defense, right of set-off or
counterclaim which the Issuer may have or assert. The Guarantor's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Guarantor to the Holders or by causing the Issuer to pay such
amounts to the Holders.
SECTION 2.02. The Guarantor hereby waives notice of acceptance of this
Guarantee Agreement and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
SECTION 2.03. The obligations, covenants, agreements and duties of the
Guarantor under this Guarantee Agreement shall in no way be affected or impaired
by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to any series of Preferred
Securities to be performed or observed by the Issuer;
<PAGE>
- 3 -
(b) the extension of time for the payment by the Issuer of all or any
portion of the Dividends, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of any series of Preferred Securities or
the extension of time for the performance of any other obligation under,
arising out of, or in connection with, any series of Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of any series of
Preferred Securities, or any action on the part of the Issuer granting
indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Issuer
or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, any series of
Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor, it being the
intent of this Section 2.03 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain consent
of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 2.04. The Guarantor expressly acknowledges that (i) this
Guarantee Agreement will be deposited with the General Partner to be held for
the benefit of the Holders; (ii) in the event of the appointment of a Special
Representative to, among other things, enforce this Guarantee Agreement, the
Special Representative may take possession of this Guarantee Agreement for such
purpose; (iii) if no Special Representative has been appointed, the
General Partner has the right to enforce this Guarantee Agreement on behalf of
the Holders; (iv) the Holders of not less than 10% in liquidation preference of
the Preferred Securities have the right to direct the time, method and place of
<PAGE>
- 4 -
conducting any proceeding for any remedy available in respect of this Guarantee
Agreement including the giving of directions to the General Partner or the
Special Representative as the case may be; and (v) if the General Partner or
Special Representative fails to enforce this Guarantee Agreement as above
provided, any Holder may institute a legal proceeding directly against the
Guarantor to enforce its rights under this Guarantee Agreement, without first
instituting a legal proceeding against the Issuer or any other person or entity.
SECTION 2.05. This Guarantee Agreement will not be discharged except
by payment of the Guarantee Payments in full to the extent not paid by the
Issuer and by complete performance of all obligations under this Guarantee
Agreement.
SECTION 2.06. The Guarantor shall be subrogated to all (if any) rights
of the Holders against the Issuer in respect of any amounts paid to the Holders
by the Guarantor under this Guarantee Agreement and shall have the right to
waive payment by the Guarantor pursuant to Section 2.01; provided, however, that
------------
the Guarantor shall not (except to the extent required by mandatory provisions
of law) be entitled to enforce or exercise any rights which it may acquire by
way of subrogation or any indemnity, reimbursement or other agreement, in all
cases as a result of a payment under this Guarantee Agreement, if, at the time
of any such payment, any amounts are due and unpaid under this Guarantee
Agreement. If any amount shall be paid to the Guarantor in violation of the
preceding sentence, the Guarantor agrees to hold such amount in trust for the
Holders and to pay over such amount to the Holders.
SECTION 2.07. The Guarantor acknowledges that its obligations
hereunder are independent of the obligations of the Issuer with respect to the
Preferred Securities and that the Guarantor shall be liable as principal and
sole debtor hereunder to make Guarantee Payments pursuant to the terms of this
Guarantee Agreement notwithstanding the occurrence of any event referred to in
subsections (a) through (f), inclusive, of Section 2.03 hereof.
------------
ARTICLE III.
-----------
SECTION 3.01. So long as any Preferred Securities remain outstanding,
the Guarantor will not declare or pay any dividend on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock
or make any guarantee payments with respect to the foregoing if at such time the
Guarantor shall be in default with respect to its payment or other obligations
hereunder or there shall have occurred any event that
<PAGE>
- 5 -
would constitute an Event of Default under the Indenture.
SECTION 3.02. This Guarantee Agreement will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all liabilities of the Guarantor, (ii) pari passu with the most
---- -----
senior preferred or preference stock now or hereafter issued by the Guarantor
and with any guarantee now or hereafter entered into by the Guarantor in respect
of any preferred or preference stock of any affiliate of the Guarantor and (iii)
senior to the Guarantor's common stock.
ARTICLE IV.
-----------
This Guarantee Agreement shall terminate and be of no further force
and effect, as to the Preferred Securities of any series, upon full payment
of the Redemption Price of all of Preferred Securities of such series, and will
terminate completely upon full payment of the amounts payable upon liquidation
of the Issuer. This Guarantee Agreement will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder must restore payment
of any sums paid under any series of Preferred Securities or this Guarantee
Agreement.
ARTICLE V.
----------
SECTION 5.01. All guarantees and agreements contained in this
Guarantee Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Preferred Securities then outstanding.
SECTION 5.02. Except with respect to any changes which do not
adversely affect the rights of Holders (in which case no consent of Holders will
be required), this Guarantee Agreement may only be amended with the prior
approval of the Holders of not less than 66-2/3% in liquidation preference of
all the outstanding Preferred Securities.
<PAGE>
- 6 -
SECTION 5.03. Any notice, request or other communication required or
permitted to be given hereunder to the Guarantor shall be given in writing by
delivering the same against receipt therefor by facsimile transmission
(confirmed by mail), addressed to the Guarantor, as follows (and if so
given, shall be deemed given when mailed):
GTE Corporation
One Stamford Forum
Stamford, Connecticut 06904
Facsimile No.: (203) 965-2936
Attention: Treasurer
Any notice, request or other communication required or permitted to be
given hereunder to the Holders shall be given by the Guarantor in the same
manner as notices sent by the Issuer to the Holders.
SECTION 5.04. The masculine, feminine and neuter genders used herein
shall include the masculine, feminine and neuter genders.
SECTION 5.05. This Guarantee Agreement is solely for the benefit of
the Holders and is not separately transferable from the Preferred Securities.
SECTION 5.06. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
THIS GUARANTEE AGREEMENT is executed as of the day and year first
above written.
GTE Corporation
By ________________________
Name:
Title:
<PAGE>
EXHIBIT 5.1
June 23, 1994
GTE Corporation
One Stamford Forum
Stamford, CT 06904
Gentlemen:
I am Vice Chairman and Acting General Counsel of GTE Corporation. I have
examined the Registration Statement, as filed on May 5, 1994 and amended on
June 23, 1994 (the "Registration Statement"), of GTE Corporation (the
"Corporation") on Form S-3 for the registration under the Securities Act of
1933, as amended (the "Act"), of $1,000,000,000 aggregate amount of (i)
preferred securities (the "Preferred Securities") of GTE Delaware, L.P. ("GTE
Delaware"), (ii) junior subordinated debentures of the Corporation (the "Debt
Securities") and (iii) a guarantee of the Corporation with respect to the
Preferred Securities (the "Guarantee"). I have also examined the Corporation's
Certificate of Incorporation, as amended, and such corporate records and other
documents as I have deemed necessary to enable me to express the opinions with
respect to the Debt Securities and the Guarantee set forth below.
In my opinion,
1. When (i) the Registration Statement shall have become effective
under the Act and (ii) the Indenture (the "Indenture"), between the
Corporation and the Bank of New York, as Trustee (the "Trustee),
substantially in the form of Exhibit 4.1 to the Registration Statement
and any supplements and amendments thereto, shall have been qualified
under the Trust Indenture Act of 1939, as amended, and duly executed and
delivered by the Corporation and the Trustee, the Debt Securities, upon
their issuance and sale in the manner contemplated in the Registration
Statement and the Indenture, will be legally and validly issued, and
will be binding obligations of the Corporation, except to the extent
that enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, or similar laws or equitable principles
relating to or limiting creditors' rights generally.
2. When (i) the Registration Statement shall have become effective
under the Act, (ii) the Guarantee, substantially in the form of Exhibit
4.9 to the Registration Statement, has been duly executed and delivered
by the Corporation and (iii) Preferred Securities have been duly issued
and sold and the purchase price therefor has been received by GTE
Delaware, the Guarantee will constitute a legal and valid binding
obligation of the Corporation, except to the extent that enforcement may
be limited by bankruptcy, insolvency, reorganization, moratorium, or
similar laws or equitable principles relating to or limiting creditors'
rights generally.
I hereby consent to the reference made to me (i) under the caption "Legal
Opinions" in the preliminary Prospectus and (ii) under the caption "Legal
Matters" in the forms of preliminary Prospectus Supplement pertaining to the
Preferred Securities, each forming a part of the Registration Statement, and
to the filing of this consent as an exhibit to the Registration Statement.
Very truly yours,
Michael T. Masin
Vice Chairman and Acting General Counsel
<PAGE>
EXHIBIT 5.2
Richards, Layton & Finger
One Rodney Square
P.O. Box 551
Wilmington, Delaware 19899
June 23, 1994
GTE Delaware, L.P.
c/o GTE Corporation
One Stamford Forum
Stamford, Connecticut 06904
Re: GTE Delaware, L.P.
Ladies and Gentlemen:
We have acted as special Delaware counsel for GTE Corporation, a
New York corporation ("GTE"), and GTE Delaware, L.P., a Delaware limited
partnership (the "Partnership"), in connection with the matters set forth
herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of executed or
conformed counterparts, or copies otherwise proved to our satisfaction, of the
following:
(a) The Certificate of Limited Partnership of the Partnership,
dated as of May 3, 1994 (the "Certificate"), as filed in the office of the
Secretary of State of the State of Delaware (the "Secretary of State") on May
3, 1994;
<PAGE>
GTE Delaware, L.P.
June 23, 1994
Page 2
(b) The Agreement of Limited Partnership of the Partnership,
dated as of May 3, 1994;
(c) Amendment No. 1 to the registration statement (the
"Registration Statement") on Form S-3, including a preliminary prospectus (the
"Prospectus"), and two preliminary prospectus supplements relating to the
Preferred Securities (the "Prospectus Supplements"), as filed by GTE and the
Partnership with the Securities and Exchange Commission on June 23, 1994;
(d) A form of Amended and Restated Agreement of Limited
Partnership of the Partnership, attached as an exhibit to the Registration
Statement (the "Agreement"); and
(e) A Certificate of Good Standing for the Partnership, dated
June 23, 1994, obtained from the Secretary of State.
The Agreement as amended and supplemented by a duly established
Action is hereinafter referred to as the "LP Agreement." Initially capitalized
terms used herein and not otherwise defined are used as defined in the LP
Agreement.
For purposes of this opinion, we have not reviewed any documents
other than the documents listed in paragraphs (a) through (e) above. In
particular, we have not reviewed any document (other than the documents listed
in paragraphs (a) through (e) above) that is referred to in or incorporated by
reference into the LP Agreement or the Registration Statement. We have assumed
that there exists no provision in any document that we have not reviewed that
is inconsistent with the opinions stated herein. We have conducted no
independent factual investigation of our own but rather have relied solely upon
the foregoing documents, the statements and information set forth therein and
the additional matters recited or assumed herein, all of which we have assumed
to be true, complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed (i)
the authenticity of all documents submitted to us as authentic originals, (ii)
the conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that at the time
of the issuance of the Preferred Securities, the LP Agreement constitutes the
entire agreement
<PAGE>
GTE Delaware, L.P.
June 23, 1994
Page 3
among the parties thereto with respect to the subject matter thereof,
including with respect to the admission of partners to, and the creation,
operation and termination of, the Partnership, and that the LP Agreement and
the Certificate are in full force and effect and have not been amended, (ii)
except to the extent provided in paragraph 1 below, the due organization or
due formation, as the case may be, and valid existence in good standing of
each party to the documents examined by us under the laws of the jurisdiction
governing its organization or formation, (iii) the legal capacity of natural
persons who are parties to the documents examined by us, (iv) that each of the
parties to the documents examined by us has the power and authority to execute
and deliver, and to perform its obligations under, such documents, (v) the due
authorization, execution and delivery by all parties thereto of all documents
examined by us, including the LP Agreement, (vi) the receipt by each Preferred
Security Holder of an LP Certificate and the payment for the Preferred
Securities acquired by it, in accordance with the LP Agreement, (vii) that the
books and records of the Partnership set forth all information required by the
LP Agreement and the Delaware Revised Uniform Limited Partnership Act (6
Del. C. (S) 17-010, et seq.) (the "Act"), including all information with
- ------- -- ---
respect to all Persons to be admitted as Partners and their contributions to
the Partnership, and (viii) that the Preferred Securities are issued and sold
to the Preferred Security Holders in accordance with the Registration
Statement and the LP Agreement. We have not participated in the preparation of
the Registration Statement and assume no responsibility for its contents,
except that we have reviewed the contents of the Prospectus and the Prospectus
Supplements pertaining specifically to the Preferred Securities and compared
such contents to the terms of the LP Agreement.
This opinion is limited to the laws of the State of Delaware (excluding
the securities laws of the State of Delaware), and we have not considered and
express no opinion on the laws of any other jurisdiction, including federal
laws and rules and regulations relating thereto. Our opinions are rendered
only with respect to Delaware laws and rules, regulations and orders
thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of such questions of
law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Partnership has been duly formed and is validly existing in
good standing as a limited partnership under the Act.
2. Assuming that the Preferred Security Holders, as limited partners
of the Partnership, do not participate in the control of the business of the
Partnership, upon issuance and payment as contemplated by the LP Agreement,
the Preferred
<PAGE>
GTE Delaware, L.P.
June 23, 1994
Page 4
Securities will represent valid and, subject to the qualifications set forth
herein, will be fully paid and nonassessable limited partner interests in the
Partnership, as to which the Preferred Security Holders, as limited partners of
the Partnership, will have no liability in excess of their obligations to make
payments provided for in the LP Agreement and their share of the Partnership's
assets and undistributed profits (subject to the obligation of a Preferred
Security Holder to repay any funds wrongfully distributed to it).
3. There are no provisions in the LP Agreement the inclusion of
which, subject to the terms and conditions therein, or, assuming that the
Preferred Security Holders, as limited partners of the Partnership, take no
action other than actions permitted by the LP Agreement, the exercise of
which, in accordance with the terms and conditions therein, would cause the
Preferred Security Holders, as limited partners of the Partnership, to be
deemed to be participating in the control of the business of the Partnership.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. We hereby
consent to the use of our name under the heading "Legal Matters" in the
Prospectus Supplements and "Legal Opinions" in the Prospectus. We hereby
consent to the reliance by Michael T. Masin, Esquire, Vice Chairman and Acting
General Counsel of GTE, upon this opinion as to matters of Delaware law for
purposes of his opinion being rendered in connection with the Registration
Statement. In giving the foregoing consents, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7
of the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. Except as stated above, without
our prior written consent, this opinion may not be furnished or quoted to, or
relied upon by, any other person or entity for any purpose.
Very truly yours,
Richards, Layton & Finger
<PAGE>
EXHIBIT 8.1
SULLIVAN & CROMWELL
125 Broad Street
New York, New York 10004-2498
June 23, 1994
GTE Corporation,
One Stamford Forum,
Stamford, Connecticut 06904
Dear Sirs:
We have acted as your counsel in connection with the registration by GTE
Delaware, L.P. of Adjustable Rate Monthly Income Preferred Securities
("Adjustable MIPS") and Fixed Rate Monthly Income Preferred Securities ("Fixed
MIPS") and the registration by GTE Corporation of Junior Subordinated
Debentures ("Junior Subordinated Debentures") and hereby confirm to you our
opinions as set forth in the second paragraph under the heading "Investment
Considerations--Special Event Redemption or Distribution", and under the
heading "United States Taxation", in the preliminary Prospectus Supplement for
the Fixed MIPS and for the Adjustable MIPS, both dated June 23, 1994 and under
the heading "United States Taxation", in the preliminary Prospectus Supplement
for the Junior Subordinated Debentures dated June 23, 1994.
We hereby consent to the filing of these opinions with the Securities and
Exchange Commission (the "Commission") as an exhibit to the Registration
Statement on Form S-3, as filed by GTE Corporation and GTE Delaware, L.P. with
the Commission on the date hereof, and to the use of our name under the
headings "Legal Matters" and "United States Taxation" in the preliminary
Prospectus Supplement for the Adjustable MIPS, the Fixed MIPS and the Junior
Subordinated Debentures and under the heading "Legal Opinions" in the
preliminary Prospectus.
Very truly yours,
Sullivan & Cromwell
<PAGE>
EXHIBIT 12.1
GTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF THE RATIO OF EARNINGS TO FIXED CHARGES
(THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
----------------------------------------------------------------------
1993(a) 1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net earnings available
for fixed charges:
Income from continuing
operations............ $2,095,170 $ 989,803 $1,787,035 $1,528,102 $1,622,261 $1,550,450
Add (deduct)--
Income taxes.......... 1,210,401 567,747 966,589 662,860 697,963 719,854
Interest expense...... 1,298,234 1,298,234 1,475,670 1,574,746 1,510,909 1,282,691
Capitalized interest
(net of
amortization)........ (3,421) (3,421) (4,931) (14,791) (18,316) (18,121)
Preferred stock
dividends of
subsidiaries......... 22,162 22,162 23,429 25,317 28,697 33,775
Additional income
requirement on
preferred stock
dividends of
subsidiaries......... 12,739 12,739 12,671 11,006 12,357 15,676
Minority interests.... 112,335 112,335 112,425 103,626 83,471 79,554
Portion of rent
expense representing
interest............. 153,058 153,058 196,533 210,698 206,959 199,408
---------- ---------- ---------- ---------- ---------- ----------
4,900,678 3,152,657 4,569,421 4,101,564 4,144,301 3,863,287
Deduct -- Minority
interests............. (236,944) (236,944) (248,979) (247,284) (224,240) (211,816)
---------- ---------- ---------- ---------- ---------- ----------
Adjusted earnings
available for
fixed charges from
continuing
operations........ $4,663,734 $2,915,713 $4,320,442 $3,854,280 $3,920,061 $3,651,471
========== ========== ========== ========== ========== ==========
Fixed charges:
Interest expense....... $1,298,234 $1,298,234 $1,475,670 $1,574,746 $1,510,909 $1,282,691
Preferred dividends of
subsidiaries.......... 22,162 22,162 23,429 25,317 28,697 33,775
Additional income
requirement on
preferred dividends of
subsidiaries.......... 12,739 12,739 12,671 11,006 12,357 15,676
Portion of rent
expense representing
interest.............. 153,058 153,058 196,533 210,698 206,959 199,408
---------- ---------- ---------- ---------- ---------- ----------
1,486,193 1,486,193 1,708,303 1,821,767 1,758,922 1,531,550
Deduct -- Minority
interests............. (78,421) (78,421) (86,504) (89,479) (91,730) (80,287)
---------- ---------- ---------- ---------- ---------- ----------
Adjusted fixed
charges.......... $1,407,772 $1,407,772 $1,621,799 $1,732,288 $1,667,192 $1,451,263
========== ========== ========== ========== ========== ==========
Ratio of earnings to
fixed charges--
continuing operations. 3.31 2.07 2.66 2.22 2.35 2.52
========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
QUARTERS ENDED MARCH 31
------------------------------
1994 1993
-------------- -------------
<S> <C> <C>
Net earnings available
for fixed charges:
Income from continuing
operations............ $ 503,899 $ 460,497
Add (deduct)--
Income taxes.......... 312,000 273,948
Interest expense...... 278,329 338,372
Capitalized interest
(net of
amortization)........ (1,116) (235)
Preferred stock
dividends of
subsidiaries......... 5,315 5,639
Additional income
requirement on
preferred stock
dividends of
subsidiaries......... 3,285 3,355
Minority interests.... 31,142 21,394
Portion of rent
expense representing
interest............. 34,898 46,227
---------- ----------
1,167,752 1,149,197
Deduct -- Minority
interests............. (48,326) (47,468)
---------- ----------
Adjusted earnings
available for
fixed charges from
continuing
operations........ $1,119,426 $1,101,729
========== ==========
Fixed charges:
Interest expense....... $ 278,329 $ 338,372
Preferred dividends of
subsidiaries.......... 5,315 5,639
Additional income
requirement on
preferred dividends of
subsidiaries.......... 3,285 3,355
Portion of rent
expense representing
interest.............. 34,898 46,227
---------- ----------
321,827 393,593
Deduct -- Minority
interests............. (18,149) (19,295)
---------- ----------
Adjusted fixed
charges.......... $ 303,678 $ 374,298
========== ==========
Ratio of earnings to
fixed charges--
continuing operations. 3.69 2.94
========== ==========
</TABLE>
(a) Excludes the effect of the one-time restructuring charge, the cost of
voluntary separation programs at Telephone operations and the gain on the
sale of non-strategic telephone properties.
<PAGE>
GTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF THE RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED
STOCK DIVIDENDS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
----------------------------------------------------------------------
1993(a) 1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net earnings available
for fixed charges and
preferred stock
dividends:..............
Income from continuing
operations............. $2,095,170 $ 989,803 $1,787,035 $1,528,102 $1,622,261 $1,550,450
Add (deduct) -..........
Income taxes........... 1,210,401 567,747 966,589 662,860 697,963 719,854
Interest expense....... 1,298,234 1,298,234 1,475,670 1,574,746 1,510,909 1,282,691
Capitalized interest
(net of amortization). (3,421) (3,421) (4,931) (14,791) (18,316) (18,121)
Preferred stock
dividends of
subsidiaries.......... 22,162 22,162 23,429 25,317 28,697 33,775
Additional income
requirement on
preferred stock
dividends of
subsidiaries.......... 12,739 12,739 12,671 11,006 12,357 15,676
Minority interests..... 112,335 112,335 112,425 103,626 83,471 79,554
Additional income
requirement on
preferred stock
dividends of Parent... 10,246 10,246 14,241 15,991 18,802 22,085
Portion of rent expense
representing
interest.............. 153,058 153,058 196,533 210,698 206,959 199,408
---------- ---------- ---------- ---------- ---------- ----------
4,910,924 3,162,903 4,583,662 4,117,555 4,163,103 3,885,372
Deduct - Minority
interests.............. (236,944) (236,944) (248,979) (247,284) (224,240) (211,816)
---------- ---------- ---------- ---------- ---------- ----------
Adjusted earnings
available for fixed
charges and preferred
stock dividends from
continuing
operations........... $4,673,980 $2,925,959 $4,334,683 $3,870,271 $3,938,863 $3,673,556
========== ========== ========== ========== ========== ==========
Fixed charges:
Interest expense........ $1,298,234 $1,298,234 $1,475,670 $1,574,746 $1,510,909 $1,282,691
Preferred dividends of
subsidiaries........... 22,162 22,162 23,429 25,317 28,697 33,775
Additional income
requirement on
preferred dividends of
subsidiaries........... 12,739 12,739 12,671 11,006 12,357 15,676
Preferred stock
dividends of Parent.... 17,825 17,825 26,331 36,785 43,662 47,583
Additional income
requirement on
preferred stock
dividends of Parent.... 10,246 10,246 14,241 15,991 18,802 22,085
Portion of rent expense
representing
interest............... 153,058 153,058 196,533 210,698 206,959 199,408
---------- ---------- ---------- ---------- ---------- ----------
1,514,264 1,514,264 1,748,875 1,874,543 1,821,386 1,601,218
Deduct - Minority
interests.............. (78,421) (78,421) (86,504) (89,479) (91,730) (80,287)
---------- ---------- ---------- ---------- ---------- ----------
Adjusted fixed charges
and preferred stock
dividends............ $1,435,843 $1,435,843 $1,662,371 $1,785,064 $1,729,656 $1,520,931
========== ========== ========== ========== ========== ==========
Ratio of earnings to
fixed charges and
preferred stock
dividends - continuing
operations.............. 3.26 2.04 2.61 2.17 2.28 2.42
========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
QUARTERS ENDED MARCH 31
-------------------------
1994 1993
---------- ----------
<S> <C> <C>
Net earnings available
for fixed charges and
preferred stock
dividends:..............
Income from continuing
operations............. $ 503,899 $ 460,497
Add (deduct) -..........
Income taxes........... 312,000 273,948
Interest expense....... 278,329 338,372
Capitalized interest
(net of amortization). (1,116) (235)
Preferred stock
dividends of
subsidiaries.......... 5,315 5,639
Additional income
requirement on
preferred stock
dividends of
subsidiaries.......... 3,285 3,355
Minority interests..... 31,142 21,394
Additional income
requirement on
preferred stock
dividends of Parent... 2,651 2,562
Portion of rent expense
representing
interest.............. 34,898 46,227
---------- ----------
1,170,403 1,151,759
Deduct - Minority
interests.............. (48,326) (47,468)
---------- ----------
Adjusted earnings
available for fixed
charges and preferred
stock dividends from
continuing
operations........... $1,122,077 $1,104,291
========== ==========
Fixed charges:
Interest expense........ $ 278,329 $ 338,372
Preferred dividends of
subsidiaries........... 5,315 5,639
Additional income
requirement on
preferred dividends of
subsidiaries........... 3,285 3,355
Preferred stock
dividends of Parent.... 4,289 4,528
Additional income
requirement on
preferred stock
dividends of Parent.... 2,651 2,562
Portion of rent expense
representing
interest............... 34,898 46,227
---------- ----------
328,767 400,683
Deduct - Minority
interests.............. (18,149) (19,295)
---------- ----------
Adjusted fixed charges
and preferred stock
dividends............ $ 310,618 $ 381,388
========== ==========
Ratio of earnings to
fixed charges and
preferred stock
dividends - continuing
operations.............. 3.61 2.90
========== ==========
</TABLE>
(a) Excludes the effect of the one-time restructuring charge, the cost of
voluntary sparation porgrams at Telphone Operations and the gain on the sale
of non-strategic telephone properties.
2
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Amendment No.1 to the Registration Statement on Form S-3 of
our report dated February 1, 1994, included in GTE Corporation's Annual Report
on Form 10-K for the year ended December 31, 1993, and to the reference to our
Firm under the caption "Experts" in this Registration Statement.
ARTHUR ANDERSEN & CO.
ARTHUR ANDERSEN & CO.
Stamford, Connecticut
June 23, 1994
