Registration
No. 333-31333
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
______________
GTE CORPORATION
(Exact name of registrant as specified in charter)
13-1678633
New York (I.R.S.
Employer
(State of Incorporation) Identification
No.)
ONE STAMFORD FORUM, STAMFORD, CONNECTICUT 06904
(203-965-2000)
(Address and telephone number of principal executive offices)
J. MICHAEL KELLY
One Stamford Forum
Stamford, Connecticut 06904
(203-965-2000)
(Name, address and telephone number of agent for
service)
______________
Copies to: ROBERT W. MULLEN, JR., ESQ., Milbank, Tweed, Hadley &
McCloy,
1 Chase Manhattan Plaza, New York, New York 10005.
Approximate date of commencement of proposed sale to the
public: From time to time after the effective date of the
Registration Statement.
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant 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.
EXPLANATORY NOTE
This Registration Statement contains a form of Prospectus
Supplement to the Prospectus included herein to be used in
connection with an offering by GTE Corporation of Medium-Term
Notes, Series A.
SUBJECT TO COMPLETION DATED JULY 25, 1997
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED _________, 1997
$3,000,000,000
GTE Corporation [LOGO]
Medium-Term Notes, Series A
Due Nine Months or More From Date of Issue
________________
GTE Corporation ("GTE") may offer from time to time its Medium-
Term Notes, Series A (the "Notes") due from nine months or more
from the date of issue, as selected by the purchaser and agreed
to by GTE. The aggregate initial public offering price of the
Notes offered hereby will not exceed $3,000,000,000 or its
equivalent in one or more foreign currencies or composite
currencies, subject to reduction as a result of the sale by GTE
of other Securities described in the accompanying Prospectus.
The Notes may be denominated in U.S. dollars or in such foreign
currencies or composite currencies as may be designated by GTE at
the time of offering. The specific currency or composite
currency, interest rate (if any), issue price and maturity date
of any Note will be set forth in the related Pricing Supplement
to this Prospectus Supplement. Unless otherwise specified in the
applicable Pricing Supplement, Notes denominated in other than
U.S. dollars or ECUs will not be sold in, or to residents of, the
country issuing the specified currency. See "Description of the
Notes".
Unless otherwise specified in the applicable Pricing
Supplement, interest on the Fixed Rate Notes will be payable on
each February 1 and August 1 and at maturity. Interest on the
Floating Rate Notes will be payable on the dates specified
therein and in the applicable Pricing Supplement. The applicable
Pricing Supplement will specify whether a Floating Rate Note is a
Regular Floating Rate Note, a Floating Rate/Fixed Rate Note or an
Inverse Floating Rate Note and whether the rate of interest
thereon is determined by reference to one or more of the
Commercial Paper Rate, Prime Rate, LIBOR, Treasury Rate, CMT
Rate, CD Rate or Federal Funds Rate, or any other interest rate
basis or formula, as adjusted by any Spread and/or Spread
Multiplier, if any. Notes may also be issued that do not bear
any interest currently or that bear interest at a below market
rate. See "Description of the Notes".
Unless a Redemption Commencement Date is specified in the
applicable Pricing Supplement, the Notes will not be redeemable
prior to their Stated Maturity. If a Redemption Commencement
Date is so specified, the Notes will be redeemable at the option
of GTE at any time after such date as described herein. The
Notes will be repayable by GTE at the option of the Holders
thereof prior to their Stated Maturity only if one or more
Optional Repayment Dates are specified in the applicable Pricing
Supplement.
The Notes offered hereby will be issued only in registered form
in denominations of $1,000 and integral multiples thereof or the
approximate equivalent thereof in the Specified Currency for each
Note. See "Description of the Notes".
SEE "RISK FACTORS" COMMENCING ON PAGE S-2 FOR A DISCUSSION OF
CERTAIN STRUCTURAL AND FOREIGN CURRENCY RISKS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF INDEXED NOTES OR FOREIGN
CURRENCY NOTES.
________________
________________
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, THE PROSPECTUS OR ANY SUPPLEMENT HERETO.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
________________
<TABLE>
<CAPTION> Price to Agent's Discounts Proceeds to
Public (1) and Commissions(1)(2) Company (1)(3)
<C> <C> <C>
<S>
Per Note . . 100% 125%-.750% 99.250%-99.875%
Total (4) .$3,000,000,000 $3,750,000- $2,977,50,000-
$22,500,000 $2,996,250,000
</TABLE>
(1) Notes will be issued at 100% of their principal amount,
unless otherwise specified in the applicable Pricing
Supplement.
(2) GTE will pay the Agents a commission of from .125% to .750%,
depending on Stated Maturity, of the principal amount of any
Notes sold through them as agents (or sold to such Agents as
principal in circumstances in which no other discount is
agreed). For Notes with maturities greater than 30 years
from their dates of issue, commissions will be negotiated at
the time of sale and indicated in the applicable Pricing
Supplement. GTE has agreed to indemnify the Agents against
certain liabilities, including liabilities under the
Securities Act of 1933. See "Supplemental Plan of
Distribution".
(3) Before deducting estimated expenses of $950,000 payable by
GTE.
(4) Or the equivalent thereof in one or more foreign currencies
or composite currencies.
________________
Offers to purchase the Notes are being solicited, on a
reasonable, best efforts basis, from time to time by the Agents
on behalf of GTE. Notes may be sold to the Agents on their own
behalf at negotiated discounts. GTE reserves the right to sell
Notes directly on its own behalf. GTE also reserves the right to
withdraw, cancel or modify the offering contemplated hereby
without notice. GTE or the Agents may reject any order to
purchase Notes in whole or in part. See "Supplemental Plan of
Distribution".
Goldman, Sachs & Co.
Merrill Lynch & Co.
Salomon Brothers Inc
________________
The date of this Prospectus Supplement is _________, 1997.
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# 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 #
# AND THE ACCOMPANYING 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.
#
#################################################################
#######################
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MADE HEREBY MAY
ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE
AFFECT THE PRICE OF THE NOTES, INCLUDING OVER-ALLOTMENT,
STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH NOTES, AND
THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE OFFERING.
FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "SUPPLEMENTAL PLAN OF
DISTRIBUTION".
RISK FACTORS
This Prospectus Supplement does not describe all of the risks
of an investment in Notes, whether resulting from such Notes
being denominated or payable in or determined by reference to a
currency or composite currency other than United States dollars
or to one or more interest rate, currency or other indices or
formulas, or otherwise. GTE and the Agents disclaim any
responsibility to advise prospective investors of such risks as
they exist at the date of this Prospectus Supplement or as they
may change from time to time. Prospective investors should
consult their own financial and legal advisors as to the risks
entailed by an investment in such Notes and the suitability of
investing in such Notes in light of their particular
circumstances. Such Notes are not an appropriate investment for
investors who are unsophisticated with respect to foreign
currency transactions or transactions involving the applicable
interest rate or currency index or other indices or formulas.
Prospective investors should carefully consider, among other
factors, the matters described below. Terms used and not
otherwise defined in this "Risk Factors" section shall have the
meanings ascribed to them in the subsequent sections of this
Prospectus Supplement.
STRUCTURE RISKS
An investment in Notes indexed, as to principal, premium, if
any, and/or interest, if any, to one or more interest rate,
currency (including exchange rates and swap indices between
currencies or composite currencies) or other indices or formulas,
either directly or inversely, entails significant risks that are
not associated with similar investments in a conventional fixed
rate or floating rate debt security. Such risks include, without
limitation, the possibility that such indices or formulas may be
subject to significant changes, that no interest will be payable
in respect of such Notes or will be payable at a rate lower than
one applicable to a conventional fixed rate or floating rate debt
security issued by GTE at the same time, that repayment of the
principal and/or premium, if any, in respect of such Notes may
occur at times other than that expected by the holders of such
Notes (the "Holders"), and that the Holders could lose all or a
substantial portion of principal and/or premium, if any, payable
with respect to such Notes on the Maturity Date (as defined under
"Description of the Notes-General"). Such risks depend on a
number of interrelated factors, including economic, financial and
political events, over which GTE has no control. Additionally,
if the formula used to determine the amount of principal,
premium, if any, and/or interest, if any, payable with respect to
such Notes contains a multiplier or leverage factor, the effect
of any change in the applicable index or indices or formula or
formulas will be magnified. In recent years, values of certain
indices and formulas have been highly volatile and such
volatility may be expected to continue in the future.
Fluctuations in the value of any particular index or formula that
have occurred in the past are not necessarily indicative,
however, of fluctuations that may occur in the future.
Any optional redemption feature of Notes might affect the
market value of such Notes. Since GTE may be expected to redeem
such Notes when prevailing interest rates are relatively low,
Holders generally will not be able to reinvest the redemption
proceeds in a comparable security at an effective interest rate
as high as the current interest rate on such Notes.
S-2
The Notes will not have an established trading market when
issued, and there can be no assurance of a secondary market for
the Notes or the liquidity of the secondary market if one
develops. See "Supplemental Plan of Distribution".
The secondary market, if any, for Notes will be affected by a
number of factors independent of the creditworthiness of GTE and
the value of the applicable index or indices or formula or
formulas, including the complexity and volatility of each such
index or formula, the method of calculating the principal,
premium, if any, and/or interest, if any, in respect of such
Notes, the time remaining to the maturity of such Notes, the
outstanding amount of such Notes, any redemption features of such
Notes, the amount of other debt securities linked to such index
or formula and the level, direction and volatility of market
interest rates generally. Such factors also will affect the
market value of such Notes. In addition, certain Notes may be
designed for specific investment objectives or strategies and,
therefore, may have a more limited secondary market and
experience more price volatility than conventional debt
securities. Holders may not be able to sell such Notes readily
or at prices that will enable them to realize their anticipated
yield. No investor should purchase Notes unless such investor
understands and is able to bear the risk that such Notes may not
be readily saleable, that the value of such Notes will fluctuate
over time and that such fluctuation may be significant.
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in Foreign Currency Notes (as defined under
"Description of the Notes - General") entails significant risks
that are not associated with a similar investment in a debt
security denominated and payable in United States dollars. Such
risks include, without limitation, the possibility of significant
changes in the rate of exchange between the United States dollar
and the Specified Currency (as defined under "Description of the
Notes-General") and the possibility of the imposition or
modification of exchange controls by the applicable governments
or monetary authorities. Such risks generally depend on factors
over which GTE has no control, such as economic, financial and
political events and the supply and demand for the applicable
currencies or composite currencies. In addition, if the formula
used to determine the amount of principal, premium, if any,
and/or interest, if any, payable with respect to Foreign Currency
Notes contains a multiplier or leverage factor, the effect of any
change in the applicable currencies or composite currencies will
be magnified. In recent years, rates of exchange may between the
United States dollar and foreign or composite currencies have
been highly volatile and such volatility may be expected to
continue in the future. Fluctuations in any particular exchange
rate that have occurred in the past are not necessarily
indicative, however, of fluctuations that my occur in the future.
Depreciation of the Specified Currency applicable to a Foreign
Currency Note against the United States dollar would result in a
decrease in the United States dollar-equivalent yield of such
Foreign Currency Note, in the United States dollar-equivalent
value of the principal and premium, if any, payable on the
Maturity Date of such Foreign Currency Note, and, generally, in
the United States dollar-equivalent market value of such Foreign
Currency Note.
Governments or monetary authorities have imposed from time to
time, and may in the future impose or revise, exchange controls
at or prior to the date on which any payment of principal of, or
premium, if any, or interest, if any, on a Foreign Currency Note
is due, which could affect exchange rates as well as the
availability of the Specified Currency on such date. Even if
there are no exchange controls, it is possible that the Specified
Currency would not be
S-3
available on the applicable payment date due to other
circumstances beyond the control of GTE. In such cases, GTE will
be entitled to satisfy its obligations in respect of such Foreign
Currency Note in United States dollars. See "Special Provisions
Relating to Foreign Currency Notes - Availability of Specified
Currency".
GOVERNING LAW; JUDGMENTS
The Notes will be governed by and construed in accordance with
the laws of the State of New York. If an action based on Foreign
Currency Notes were commenced in a court of the United States, it
is likely that such court would grant judgment relating to such
Foreign Currency Notes only in United States dollars. It is not
clear, however, whether, in granting such judgment, the rate of
conversion into United States dollars would be determined with
reference to the date of default, the date of entry of the
judgment or some other date. If a court rendering such judgment
would be required to render such judgment in the applicable
foreign currency or composite currency, and such judgment would
be converted into United States dollars at the exchange rate
prevailing on the date of entry of the judgment, Holders of
Foreign Currency Notes would bear the risk of exchange rate
fluctuations between the time the amount of the judgment is
calculated and the time such amount is converted from United
States dollars into the applicable foreign currency or composite
currency.
CREDIT RATINGS
The credit ratings assigned to the Notes may not reflect the
potential impact of all risks related to structure and other
factors on the value of the Notes. Accordingly, prospective
investors should consult their own financial and legal advisers
as to the risks entailed by an investment in the Notes and the
suitability of investing in such Notes in light of their
particular circumstances.
DESCRIPTION OF THE NOTES
The Notes will be issued as a series of Securities under the
Indenture dated as of December 1, 1996, as amended or
supplemented from time to time (the "Indenture"), between GTE and
The Bank of New York, as trustee (the "Trustee"). The Indenture
is subject to, and governed by, the Trust Indenture Act of 1939,
as amended. The following summary of certain provisions of the
Notes and the Indenture does not purport to be complete and is
qualified in its entirety by reference to the actual provisions
of the Notes and the Indenture. Capitalized terms used but not
defined herein shall have the meanings given to them in the
accompanying Prospectus, the Notes or the Indenture, as the case
may be. The following description of the Notes will apply to
each Note offered hereby unless otherwise specified in the
applicable Pricing Supplement.
GENERAL
All Notes issued and to be issued under the Indenture will be
unsecured obligations of GTE and will rank pari passu with all
other unsecured and unsubordinated indebtedness of GTE from time
to time outstanding. The Indenture does not limit the aggregate
principal amount of Securities that may be issued thereunder and
Securities may be issued thereunder from time to time in one or
more series up to the aggregate principal amount from time to
time authorized by GTE for each series. GTE may, from time to
time, without the consent of the Holders of the Notes, provide
for the issuance of Notes or other Securities under the Indenture
in addition to the $3,000,000,000 aggregate initial offering
price of Notes offered hereby.
S-4
The Notes are currently limited to up to $3,000,000,000
aggregate initial offering price, or the equivalent thereof in
one or more foreign or composite currencies; however, such
aggregate initial offering price may be reduced after the date of
this Prospectus Supplement as a result of the sale by GTE of
other Securities described in the accompanying Prospectus.
The Notes will be offered on a continuous basis and will mature
on any day nine months or more from their dates of issue (each, a
"Stated Maturity"), as specified in the applicable Pricing
Supplement. Unless otherwise specified in the applicable Pricing
Supplement, interest-bearing Notes will either be Fixed Rate
Notes or Floating Rate Notes, as specified in the applicable
Pricing Supplement. Notes may also be issued that do not bear
any interest currently or that bear interest at a below market
rate.
Unless otherwise specified in the applicable Pricing
Supplement, the Notes will be denominated in, and payments of
principal, premium, if any, and/or interest, if any, will be made
in, United States dollars. The Notes also may be denominated in,
and payments of principal, premium, if any, and/or interest, if
any, may be made in, one or more foreign currencies or composite
currencies ("Foreign Currency Notes"). See "Risk Factors --
Exchange Rates and Exchange Controls". The currency or composite
currency in which a Note is denominated, whether United States
dollars or otherwise, is herein referred to as the "Specified
Currency". References herein to "United States dollars", "U.S.
dollars" or "$" are to the lawful currency of The United States
of America (the "United States").
Unless otherwise specified in the applicable Pricing
Supplement, purchasers are required to pay for the Notes in the
applicable Specified Currencies. At the present time, there are
limited facilities in the United States for the conversion of
United States dollars into foreign currencies or composite
currencies and vice versa, and commercial banks do not generally
offer non-United States dollar checking or savings account
facilities in the United States. Each Agent is prepared to
arrange for the conversion of United States dollars into the
Specified Currency in which the related Foreign Currency Note is
denominated in order to enable the purchaser to pay for such
Foreign Currency Note, provided that a request is made to the
applicable Agent on or prior to the third Business Day (as
defined below) preceding the date of delivery of such Foreign
Currency Note, or by such other day as determined by the
applicable Agent. Each such conversion will be made by the
applicable Agent on such terms and subject to such conditions,
limitations and charges as such Agent may from time to time
establish in accordance with its regular foreign exchange
practices. All costs of exchange will be borne by the purchaser
of each such Foreign Currency Note. See "Risk Factors - Exchange
Rates and Exchange Controls".
Interest rates offered by GTE with respect to the Notes may
differ depending upon, among other things, the aggregate
principal amount of Notes purchased in any single transaction.
Interest rates or formulas and other terms of the Notes are
subject to change by GTE from time to time, but no such change
will affect any Note already issued or as to which an offer to
purchase has been accepted by GTE.
Each Note will be issued in fully registered form as a Global
Security registered in the name of the Depository or a nominee of
the Depository (each such Note represented by a Global Security
being herein referred to as a "Book-Entry Note") or a certificate
in definitive registered form (a "Certificated Note"). The
authorized denominations of each Note other than a Foreign
Currency Note will be $1,000 and integral multiples thereof,
unless otherwise specified in the applicable Pricing Supplement,
while the authorized denominations of each Foreign Currency Note
will be specified in the applicable Pricing Supplement.
S-5
Payments of principal of, and premium, if any, and interest, if
any, on, Book-Entry Notes will be made by GTE through the Trustee
to the Depository. See "The Securities -- Book-Entry, Delivery
and Form" in the accompanying Prospectus. In the case of
Certificated Notes, payment of principal and premium, if any, due
on the Stated Maturity or any prior date on which the principal,
or an installment of principal, of each Certificated Note becomes
due and payable, whether by the declaration of acceleration,
notice of redemption at the option of GTE, notice of the Holder's
option to elect repayment or otherwise (the Stated Maturity or
such prior date, as the case may be, is herein referred to as the
"Maturity Date" with respect to the principal repayable on such
date) will be made in immediately available funds upon
presentation and surrender thereof at the corporate trust office
of the Trustee located at 101 Barclay Street, New York, N.Y.
10286. Payment of interest, if any, due on the Maturity Date of
each Certificated Note will be made to the person to whom payment
of the principal and premium, if any, shall be made. Payment of
interest, if any, due on each Certificated Note on any Interest
Payment Date (as defined below) other than the Maturity Date will
be made at the office or agency referred to above maintained by
GTE for such purpose by check mailed to the address of the Holder
entitled thereto as such address shall appear in the Security
Register of GTE or in such other manner as determined by GTE or
specified in such Note. Notwithstanding the foregoing, a Holder
of $10,000,000 (or, if the applicable Specified Currency is other
than United States dollars, the equivalent thereof in such
Specified Currency) or more in aggregate principal amount of
Notes (whether having identical or different terms and
provisions) will be entitled to receive interest payments, if
any, on any Interest Payment Date other than the Maturity Date by
wire transfer of immediately available funds if appropriate wire
transfer instructions have been received in writing by the
Trustee not less than 15 days prior to such Interest Payment
Date. Any such wire transfer instructions received by the
Trustee shall remain in effect until revoked by such Holder. For
special payment terms applicable to Foreign Currency Notes, see
"Risk Factors - Exchange Rates and Exchange Controls".
As used herein, "Business Day" means any day, other than a
Saturday or Sunday, that is neither a legal holiday nor a day on
which banking institutions are authorized or required by law,
regulation or executive order to close in The City of New York;
provided, however, that, with respect to Foreign Currency Notes,
such day is also not a day on which banking institutions are
authorized or required by law, regulation or execution order to
close in the Principal Financial Center (as hereinafter defined)
of the country issuing the Specified Currency (unless the
Specified Currency is European Currency Units ("ECU"), in which
case such day is also not a day that appears as an ECU non-
settlement day on the display designated as "ISDE" on the Reuter
Monitor Money Rates Service (or is not a day designated as an ECU
non-settlement day by the ECU Banking Association) or, if ECU non-
settlement days do not appear on that page (and are not so
designated), a day that is not a day on which payments in ECU
cannot be settled in the international interbank market);
provided, further, that, with respect to Notes as to which LIBOR
is an applicable Interest Rate Basis, such day is also a London
Business Day (as hereinafter defined). "London Business Day"
means a day on which dealings in the Index Currency (as
hereinafter defined) are transacted in the London interbank
market.
"Principal Financial Center" means (i) the capital city of the
country issuing the Specified Currency (except as described in
the immediately preceding paragraph with respect to ECU) or (ii)
the capital city of the country to which the Index Currency, if
applicable, relates (or, in the case of ECU, Luxembourg), except,
in each case, that with respect to United States dollars,
Australian dollars, Canadian dollars, Deutsche marks, Dutch
guilders,
S-6
Italian lire and Swiss francs, the "Principal Financial Center"
shall be The City of New York, Sydney, Toronto, Frankfurt,
Amsterdam, Milan (solely in the case of clause (i) above) and
Zurich, respectively.
Book-Entry Notes may be transferred or exchanged only through
the Depository. See "The Securities - Book-Entry, Delivery and
Form" in the accompanying Prospectus. Registration of transfer
or exchange of Certificated Notes will be made at the office or
agency maintained by GTE for such purpose in the Borough of
Manhattan, The City of New York. No service charge will be made
by GTE or the Trustee for any such registration of transfer or
exchange of Notes, but GTE may require payment of a sum
sufficient to cover any tax or other governmental charge that may
be imposed in connection therewith (other than exchanges pursuant
to the Indenture not involving any transfer).
Certain Notes ("Indexed Notes") may be issued with the
principal amount payable at maturity, and/or the amount of
interest payable on an interest payment date, to be determined by
reference to one or more currencies (including baskets of
currencies), one or more commodities (including baskets of
commodities), one or more securities (including baskets of
securities) and/or any other index as set forth in the applicable
Pricing Supplement. Holders of Indexed Notes may receive a
principal amount at maturity that is greater than or less than
the face amount (but not less than zero) of such Notes depending
upon the value at maturity of the applicable index. With respect
to any Indexed Note, information as to the methods for
determining the principal amount payable at maturity and/or the
amount of interest payable on an interest payment date, as the
case may be, as to any one or more currencies (including baskets
of currencies), commodities (including baskets of commodities),
securities (including baskets of securities) or other indices to
which principal or interest is indexed, as to any additional
foreign exchange or other risks or as to any additional tax
considerations may be set forth in the applicable Pricing
Supplement. See "Risks Factors - Structure Risks".
The applicable Pricing Supplement will specify any redemption
or repayment terms applicable to the Notes. Unless otherwise
specified in the applicable Pricing Supplement, the Notes will
not be subject to any sinking fund. See "Redemption and
Repayment" below. Any optional redemption feature of Notes might
affect the market value of such Notes. Since GTE may be expected
to redeem such Notes when prevailing interest rates are
relatively low, an investor might not be able to reinvest the
redemption proceeds at an effective interest rate as high as the
interest rate on such Notes.
The defeasance provisions of the Indenture described under the
caption "The Securities - Redemption Provisions, Sinking Fund and
Defeasance" in the accompanying Prospectus will apply to the
Notes.
The covenant provisions and Events of Default under the
Indenture described under the captions "The Securities -
Restrictions" and "- Events of Default and Notice Thereof" in the
accompanying Prospectus will apply to the Notes.
PAYMENT OF PRINCIPAL AND INTEREST
Unless otherwise specified in the applicable Pricing
Supplement, each interest-bearing Note will bear interest from
its date of issue at the rate per annum, in the case of a Fixed
Rate Note, or pursuant to the interest rate formula, in the case
of a Floating Rate Note, in each case as specified in the
applicable Pricing Supplement, until the principal thereof is
paid or duly made available for payment. Unless otherwise
specified in the applicable Pricing Supplement, interest payments
in respect of Fixed Rate Notes and Floating Rate Notes will equal
the amount of interest accrued from and
S-7
including the immediately preceding Interest Payment Date in
respect of which interest has been paid or duly made available
for payment (or from and including the date of issue, if no
interest has been paid or duly made available for payment) to but
excluding the applicable Interest Payment Date or the Maturity
Date, as the case may be (each, an "Interest Period"). Interest
on any overdue principal, premium and/or interest will be paid at
the Default Rate per annum specified in the applicable Pricing
Supplement (to the extent that the payment of such interest shall
be legally enforceable).
Interest on Fixed Rate Notes and Floating Rate Notes will be
payable in arrears on each Interest Payment Date and on the
Maturity Date. Unless otherwise specified in the applicable
Pricing Supplement, the first payment of interest on any such
Note originally issued between a Record Date (as defined below)
and the related Interest Payment Date will be made on the
Interest Payment Date immediately following the next succeeding
Record Date to the Holder on such next succeeding Record Date.
FIXED RATE NOTES
Unless otherwise specified in the applicable Pricing
Supplement, interest on Fixed Rate Notes will be payable on
February 1 and August 1 of each year (each, an "Interest Payment
Date") and on the Maturity Date. Unless otherwise specified in
the applicable Pricing Supplement, interest on Fixed Rate Notes
will be computed on the basis of a 360-day year of twelve 30-day
months. Unless otherwise specified in the applicable Pricing
Supplement, a "Record Date" for Fixed Rate Notes shall be the
January 15 and July 15 (whether or not a Business Day)
immediately preceding the February 1 and August 1 Interest
Payment Dates, respectively.
If any Interest Payment Date or the Maturity Date of a Fixed
Rate Note falls on a day that is not a Business Day, the required
payment of principal, premium, if any, and/or interest will be
made on the next succeeding Business Day as if made on the date
such payment was due, and no interest will accrue on such payment
for the period from and after such Interest Payment Date or the
Maturity Date, as the case may be, to the date of such payment on
the next succeeding Business Day.
FLOATING RATE NOTES
Unless otherwise specified in the applicable Pricing
Supplement, Floating Rate Notes will be issued as described
below. The applicable Pricing Supplement will specify certain
terms with respect to which each Floating Rate Note is being
delivered, including: whether such Floating Rate Note is a
"Regular Floating Rate Note", a "Floating Rate/Fixed Rate Note"
or an "Inverse Floating Rate Note", the Fixed Rate Commencement
Date, if applicable, Fixed Interest Rate, if applicable, Interest
Rate Basis or Bases, Initial Interest Rate, if any, Initial
Interest Reset Date, Interest Reset Period and Dates, Interest
Payment Period and Dates, Index Maturity, Maximum Interest Rate
and/or Minimum Interest Rate, if any, and Spread and/or Spread
Multiplier, if any, as such terms are defined below. If one or
more of the applicable Interest Rate Bases is LIBOR or the CMT
Rate, the applicable Pricing Supplement will also specify the
Index Currency and Designated LIBOR Page or the Designated CMT
Maturity Index and Designated CMT Telerate Page, respectively, as
such terms are defined below. Unless otherwise specified in the
applicable Pricing Supplement, a "Record Date" for Floating Rate
Notes shall be the fifteenth day (whether or not a Business Day)
immediately preceding the related Interest Payment Date.
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The interest rate borne by the Floating Rate Notes will be
determined as follows:
(i) Unless such Floating Rate Note is designated as a
"Floating Rate/Fixed Rate Note" or an "Inverse Floating Rate
Note" or as having an Addendum attached or having "Other
Provisions" apply, such Floating Rate Note will be designated
as a "Regular Floating Rate Note" and, except as described
below or in the applicable Pricing Supplement, will bear
interest at the rate determined by reference to the applicable
Interest Rate Basis or Bases (a) plus or minus the applicable
Spread, if any, and/or (b) multiplied by the applicable Spread
Multiplier, if any. Commencing on the Initial Interest Reset
Date, the rate at which interest on such Regular Floating Rate
Note shall be payable shall be reset as of each Interest Reset
Date; provided, however, that the interest rate in effect for
the period, if any, from the date of issue to the Initial
Interest Reset Date will be the Initial Interest Rate.
(ii) If such Floating Rate Note is designated as a "Floating
Rate/Fixed Rate Note", then, except as described below or in
the applicable Pricing Supplement, such Floating Rate Note
will bear interest at the rate determined by reference to the
applicable Interest Rate Basis or Bases (a) plus or minus the
applicable Spread, if any, and/or (b) multiplied by the
applicable Spread Multiplier, if any. Commencing on the
Initial Interest Reset Date, the rate at which interest on
such Floating Rate/Fixed Rate Note shall be payable shall be
reset as of each Interest Reset Date; provided, however, that
(y) the interest rate in effect for the period, if any, from
the date of issue to the Initial Interest Reset Date will be
the Initial Interest Rate and (z) the interest rate in effect
for the period commencing on the Fixed Rate Commencement Date
to the Maturity Date shall be the Fixed Interest Rate, if such
rate is specified in the applicable Pricing Supplement or, if
no such Fixed Interest Rate is specified, the interest rate in
effect thereon on the day immediately preceding the Fixed Rate
Commencement Date.
(iii) If such Floating Rate Note is designated as an
"Inverse Floating Rate Note", then, except as described below
or in the applicable Pricing Supplement, such Floating Rate
Note will bear interest at the Fixed Interest Rate specified
in the applicable Pricing Supplement minus the rate determined
by reference to the applicable Interest Rate Basis or Bases
(a) plus or minus the applicable Spread, if any, and/or (b)
multiplied by the applicable Spread Multiplier, if any;
provided, however, that, unless otherwise specified in the
applicable Pricing Supplement, the interest rate thereon will
not be less than zero. Commencing on the Initial Interest
Reset Date, the rate at which interest on such Inverse
Floating Rate Note shall be payable shall be reset as of each
Interest Reset Date; provided, however, that the interest rate
in effect for the period, if any, from the date of issue to
the Initial Interest Reset Date will be the Initial Interest
Rate.
The "Spread" is the number of basis points to be added to or
subtracted from the related Interest Rate Basis or Bases
applicable to such Floating Rate Note. The "Spread Multiplier"
is the percentage of the related Interest Rate Basis or Bases
applicable to such Floating Rate Note by which such Interest Rate
Basis or Bases will be multiplied to determine the applicable
interest rate on such Floating Rate Note. The "Index Maturity"
is the period to maturity of the instrument or obligation with
respect to which the related Interest Rate Basis or Bases will be
calculated.
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Notwithstanding the foregoing, if such Floating Rate Note is
designated as having an Addendum attached as specified on the
face thereof, such Floating Rate Note shall bear interest in
accordance with the terms described in such Addendum and the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing
Supplement, the interest rate with respect to each Interest Rate
Basis will be determined in accordance with the applicable
provisions below. Except as set forth above or in the applicable
Pricing Supplement, the interest rate in effect on each day shall
be (i) if such day is an Interest Reset Date, the interest rate
determined as of the Interest Determination Date (as defined
below) immediately preceding such Interest Reset Date or (ii) if
such day is not an Interest Reset Date, the interest rate
determined as of the Interest Determination Date immediately
preceding the most recent Interest Reset Date.
Interest on Floating Rate Notes will be determined by reference
to the applicable Interest Rate Basis or Interest Rate Bases,
which may, as described below, include (i) the CD Rate, (ii) the
CMT Rate, (iii) the Commercial Paper Rate, (iv) the Federal Funds
Rate, (v) LIBOR, (vi) the Prime Rate, (vii) the Treasury Rate, or
(viii) such other Interest Rate Basis or interest rate formula as
may be specified in the applicable Pricing Supplement; provided,
however, that the interest rate in effect on a Floating Rate Note
for the period, if any, from the date of issue to the Initial
Interest Reset Date will be the Initial Interest Rate; provided,
further, that with respect to a Floating Rate/Fixed Rate Note the
interest rate in effect for the period commencing on the Fixed
Rate Commencement Date to the Maturity Date shall be the Fixed
Interest Rate, if such rate is specified in the applicable
Pricing Supplement or, if no such Fixed Interest Rate is
specified, the interest rate in effect thereon on the day
immediately preceding the Fixed Rate Commencement Date.
The applicable Pricing Supplement will specify whether the rate
of interest on the related Floating Rate Note will be reset
daily, weekly, monthly, quarterly, semiannually or annually or on
such other specified basis (each, an "Interest Reset Period") and
the dates on which such rate of interest will be reset (each, an
"Interest Reset Date"). Unless otherwise specified in the
applicable Pricing Supplement, the Interest Reset Dates will be,
in the case of Floating Rate Notes which reset: (i) daily, each
Business Day; (ii) weekly, the Wednesday of each week (with the
exception of weekly reset Floating Rate Notes as to which the
Treasury Rate is an applicable Interest Rate Basis, which will
reset the Tuesday of each week, except as described below); (iii)
monthly, the third Wednesday of each month; (iv) quarterly, the
third Wednesday of March, June, September and December of each
year, (v) semiannually, the third Wednesday of the two months
specified in the applicable Pricing Supplement; and (vi)
annually, the third Wednesday of the month specified in the
applicable Pricing Supplement; provided however, that, with
respect to Floating Rate/Fixed Rate Notes, the rate of interest
thereon will not reset after the applicable Fixed Rate
Commencement Date. If any Interest Reset Date for any Floating
Rate Note would otherwise be a day that is not a Business Day,
such Interest Reset Date will be postponed to the next succeeding
Business Day, except that in the case of a Floating Rate Note as
to which LIBOR is an applicable Interest Rate Basis and such
Business Day falls in the next succeeding calendar month, such
Interest Reset Date will be the immediately preceding Business
Day. In addition, in the case of a Floating Rate Note as to
which the Treasury Rate is an applicable Interest Rate Basis and
the Interest Determination Date would otherwise fall on an
Interest Reset Date, then such Interest Reset Date will be
postponed to the next succeeding Business Day.
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The interest rate applicable to each Interest Reset Period
commencing on the related Interest Reset Date will be the rate
determined as of the applicable Interest Determination Date on or
prior to the Calculation Date (as defined below). The "Interest
Determination Date" with respect to the CD Rate, the CMT Rate,
the Commercial Paper Rate, the Federal Funds Rate and the Prime
Rate will be the second Business Day immediately preceding the
applicable Interest Reset Date; and the "Interest Determination
Date" with respect to LIBOR will be the second London Business
Day immediately preceding the applicable Interest Reset Date,
unless the Index Currency is British pounds sterling, in which
case the "Interest Determination Date" will be the applicable
Interest Reset Date. With respect to the Treasury Rate, the
"Interest Determination Date" will be the day in the week in
which the applicable Interest Reset Date falls on which day
Treasury Bills (as defined below) are normally auctioned
(Treasury Bills are normally sold at an auction held on Monday of
each week, unless that day is a legal holiday, in which case the
auction is normally held on the following Tuesday, except that
such auction may be held on the preceding Friday); provided,
however, that if an auction is held on the Friday of the week
preceding the applicable Interest Reset Date, the Interest
Determination Date will be such preceding Friday. The "Interest
Determination Date" pertaining to a Floating Rate Note the
interest rate of which is determined by reference to two or more
Interest Rate Bases will be the most recent Business Day which is
at least two Business Days prior to the applicable Interest Reset
Date for such Floating Rate Note on which each Interest Rate
Basis is determinable. Each Interest Rate Basis will be
determined as of such date, and the applicable interest rate will
take effect on the applicable Interest Reset Date.
A Floating Rate Note may also have either or both of the
following: (i) a Maximum Interest Rate, or ceiling on the rate of
interest, that may accrue during any Interest Period and (ii) a
Minimum Interest Rate, or floor on the rate of interest, that may
accrue during any Interest Period. In addition to any Maximum
Interest Rate that may apply to any Floating Rate Note, the
interest rate on Floating Rate Notes will in no event be higher
than the maximum rate permitted by New York law, as the same may
be modified by United States law of general application.
Except as provided below or in the applicable Pricing
Supplement, interest will be payable, in the case of Floating
Rate Notes which reset: (i) daily, weekly or monthly, on the
third Wednesday of each month or on the third Wednesday of March,
June, September and December of each year, as specified in the
applicable Pricing Supplement; (ii) quarterly, on the third
Wednesday of March, June, September and December of each year,
(iii) semiannually, on the third Wednesday of the two months of
each year specified in the applicable Pricing Supplement; and
(iv) annually, on the third Wednesday of the month of each year
specified in the applicable Pricing Supplement (each, an
"Interest Payment Date") and, in each case, on the Maturity Date.
If any Interest Payment Date other than the Maturity Date for any
Floating Rate Note would otherwise be a day that is not a
Business Day, such Interest Payment Date will be postponed to the
next succeeding Business Day, except that in the case of a
Floating Rate Note as to which LIBOR is an applicable Interest
Rate Basis and such Business Day falls in the next succeeding
calendar month, such Interest Payment Date will be the
immediately preceding Business Day. If the Maturity Date of a
Floating Rate Note falls on a day that is not a Business Day, the
required payment of principal, premium, if any, and interest will
be made on the next succeeding Business Day as if made on the
date such payment was due, and no interest will accrue on such
payment for the period from and after the Maturity Date to the
date of such payment on the next succeeding Business Day.
S-11
All percentages resulting from any calculation on Floating Rate
Notes will be rounded to the nearest one hundred-thousandth of a
percentage point, with five-one millionths of a percentage point
rounded upwards (e.g., 9.876545% (or .09876545) would be rounded
to 9.87655% (or .0987655)), and all amounts used in or resulting
from such calculation on Floating Rate Notes will be rounded, in
the case of United States dollars, to the nearest cent or, in the
case of a foreign currency or composite currency, to the nearest
unit (with one-half cent or unit being rounded upwards).
With respect to each Floating Rate Note, accrued interest is
calculated by multiplying its principal amount by an accrued
interest factor. Such accrued interest factor is computed by
adding the interest factor calculated for each day in the
applicable Interest Period. Unless otherwise specified in the
applicable Pricing Supplement, the interest factor for each such
day will be computed by dividing the interest rate applicable to
such day by 360, in the case of Floating Rate Notes for which an
applicable Interest Rate Basis is the CD Rate, the Commercial
Paper Rate, the Federal Funds Rate, LIBOR or the Prime Rate, or
by the actual number of days in the year in the case of Floating
Rate Notes for which an applicable Interest Rate Basis is the CMT
Rate or the Treasury Rate. Unless otherwise specified in the
applicable Pricing Supplement, the interest factor for Floating
Rate Notes for which the interest rate is calculated with
reference to two or more Interest Rate Bases will be calculated
in each period in the same manner as if only one of the
applicable Interest Rate Bases applied as specified in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing
Supplement, The Bank of New York will be the "Calculation Agent".
Upon request of the Holder of any Floating Rate Note, the
Calculation Agent will disclose the interest rate then in effect
and, if determined, the interest rate that will become effective
as a result of a determination made for the next succeeding
Interest Reset Date with respect to such Floating Rate Note.
Unless otherwise specified in the applicable Pricing Supplement,
the "Calculation Date", if applicable, pertaining to any Interest
Determination Date will be the earlier of (i) the tenth calendar
day after such Interest Determination Date, or, if such day is
not a Business Day, the next succeeding Business Day or (ii) the
Business Day immediately preceding the applicable Interest
Payment Date or the Maturity Date, as the case may be.
Unless otherwise specified in the applicable Pricing
Supplement, the Calculation Agent shall determine each Interest
Rate Basis in accordance with the following provisions.
CD RATE. Unless otherwise specified in the applicable Pricing
Supplement, "CD Rate" means, with respect to any Interest
Determination Date relating to a Floating Rate Note for which the
interest rate is determined with reference to the CD Rate (a "CD
Rate Interest Determination Date"), the rate on such date for
negotiable United States dollar certificates of deposit having
the Index Maturity specified in the applicable Pricing Supplement
as published by the Board of Governors of the Federal Reserve
System in "Statistical Release H.15(519), Selected Interest
Rates" or any successor publication ("H.15(519)") under the
heading "CDs (Secondary Market)", or, if not published by 3:00
P.M., New York City time, on the related Calculation Date, the
rate on such CD Rate Interest Determination Date for negotiable
United States dollar certificates of deposit of the Index
Maturity specified in the applicable Pricing Supplement as
published by the Federal Reserve Bank of New York in its daily
statistical release "Composite 3:30 P.M. Quotations for U.S.
Government Securities" or any successor publication ("Composite
Quotations") under the heading "Certificates of Deposit". If
such rate is not yet published in either H.15(519) or Composite
Quotations by 3:00 P.M., New York City time, on
S-12
the related Calculation Date, then the CD Rate on such CD Rate
Interest Determination Date will be calculated by the Calculation
Agent and will be the arithmetic mean of the secondary market
offered rates as of 10:00 A.M., New York City time, on such CD
Rate Interest Determination Date, of three leading nonbank
dealers in negotiable United States dollar certificates of
deposit in The City of New York (which may include the Agents or
their affiliates) selected by the Calculation Agent for
negotiable United States dollar certificates of deposit of major
United States money market banks with a remaining maturity
closest to the Index Maturity specified in the applicable Pricing
Supplement in an amount that is representative for a single
transaction in that market at that time; provided, however, that
if the dealers so selected by the Calculation Agent are not
quoting as mentioned in this sentence, the CD Rate determined as
of such CD Rate Interest Determination Date will be the CD Rate
in effect on such CD Rate Interest Determination Date.
CMT RATE. Unless otherwise specified in the applicable Pricing
Supplement, "CMT Rate" means, with respect to any Interest
Determination Date relating to a Floating Rate Note for which the
interest rate is determined with reference to the CMT Rate (a
"CMT Rate Interest Determination Date"), the rate displayed on
the Designated CMT Telerate Page under the caption "Treasury
Constant Maturities Federal Reserve Board Release H.15 Mondays
Approximately 3:45 P.M.", under the column for the Designated CMT
Maturity Index for (i) if the Designated CMT Telerate Page is
7055, the rate on such CMT Rate Interest Determination Date and
(ii) if the Designated CMT Telerate Page is 7052, the week, or
the month, as applicable, ended immediately preceding the week in
which the related CMT Rate Interest Determination Date occurs.
If such rate is no longer displayed on the relevant page or is
not displayed by 3:00 P.M., New York City time, on the related
Calculation Date, then the CMT Rate for such CMT Rate Interest
Determination Date will be such treasury constant maturity rate
for the Designated CMT Maturity Index (as defined below) as
published in the relevant H.15(519). If such rate is no longer
published or is not published by 3:00 P.M., New York City time,
on the related Calculation Date, then the CMT Rate on such CMT
Rate Interest Determination Date will be such treasury constant
maturity rate for the Designated CMT Maturity Index (or other
United States Treasury rate for the Designated CMT Maturity
Index) for the CMT Rate Interest Determination Date with respect
to such Interest Reset Date as may then be published by either
the Board of Governors of the Federal Reserve System or the
United States Department of the Treasury that the Calculation
Agent determines to be comparable to the rate formerly displayed
on the Designated CMT Telerate Page and published in the relevant
H.15(519). If such information is not provided by 3:00 P.M., New
York City time, on the related Calculation Date, then the CMT
Rate on the CMT Rate Interest Determination Date will be
calculated by the Calculation Agent and will be a yield to
maturity, based on the arithmetic mean of the secondary market
closing offer side prices as of approximately 3:30 P.M., New York
City time, on such CMT Rate Interest Determination Date reported,
according to their written records, by three leading primary
United States government securities dealers (each, a "Reference
Dealer") in The City of New York (which may include the Agents or
their affiliates) selected by the Calculation Agent (from five
such Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation (or, in the event of equality,
one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for the most recently issued
direct noncallable fixed rate obligations of the United States
("Treasury Notes") with an original maturity of approximately the
Designated CMT Maturity Index and a remaining term to maturity of
not less than such Designated CMT Maturity Index minus one year.
If the Calculation Agent is unable to obtain three such Treasury
Note quotations, the CMT Rate on such CMT Rate Interest
Determination Date will be
S-13
calculated by the Calculation Agent and will be a yield to
maturity based on the arithmetic mean of the secondary market
offer side prices as of approximately 3:30 P.M., New York City
time, on such CMT Rate Interest Determination Date of three
Reference Dealers in The City of New York (from five such
Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation (or, in the event of equality,
one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for Treasury Notes with an
original maturity of the number of years that is the next highest
to the Designated CMT Maturity Index and a remaining term to
maturity closest to the Designated CMT Maturity Index and in an
amount of at least $100 million. If three or four (and not five)
of such Reference Dealers are quoting as described above, then
the CMT Rate will be based on the arithmetic mean of the offer
prices obtained and neither the highest nor the lowest of such
quotes will be eliminated; provided, however, that if fewer than
three Reference Dealers so selected by the Calculation Agent are
quoting as mentioned herein, the CMT Rate determined as of such
CMT Rate Interest Determination Date will be the CMT Rate in
effect on such CMT Rate Interest Determination Date. If two
Treasury Notes with an original maturity as described in the
second preceding sentence have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the
Calculation Agent will obtain from five Reference Dealers
quotations for the Treasury Note with the shorter remaining term
to maturity.
"Designated CMT Telerate Page" means the display on the Dow
Jones Markets Service on the page specified in the applicable
Pricing Supplement (or any other page as may replace such page on
that service for the purpose of displaying Treasury Constant
Maturities as reported in H.15(519)). If no such page is
specified in the applicable Pricing Supplement, the Designated
CMT Telerate Page shall be 7052 for the most recent week.
"Designated CMT Maturity Index" means the original period to
maturity of the U.S. Treasury securities (either 1, 2, 3, 5, 7,
10, 20 or 30 years) specified in the applicable Pricing
Supplement with respect to which the CMT Rate will be calculated.
If no such maturity is specified in the applicable Pricing
Supplement, the Designated CMT Maturity Index shall be 2 years.
COMMERCIAL PAPER RATE. Unless otherwise specified in the
applicable Pricing Supplement, "Commercial Paper Rate" means,
with respect to any Interest Determination Date relating to a
Floating Rate Note for which the interest rate is determined with
reference to the Commercial Paper Rate (a "Commercial Paper Rate
Interest Determination Date"), the Money Market Yield (as defined
below) on such date of the rate for commercial paper having the
Index Maturity specified in the applicable Pricing Supplement as
published in H.15(519) under the heading "Commercial Paper" or
such other heading, in each case representing commercial paper
issued by non-financial entities whose bond rating is "Aa", or
the equivalent, from a nationally recognized statistical rating
organization. In the event that such rate is not published by
3:00 P.M., New York City time, on the related Calculation Date,
then the Commercial Paper Rate on such Commercial Paper Rate
Interest Determination Date will be the Money Market Yield of the
rate for commercial paper having the Index Maturity specified in
the applicable Pricing Supplement as published in Composite
Quotations under the heading "Commercial Paper" (with an Index
Maturity of one month or three months being deemed to be
equivalent to an Index Maturity of 30 days or 90 days,
respectively). If such rate is not yet published in either
H.15(519) or Composite Quotations by 3:00 P.M., New York City
time, on the related Calculation Date, then the Commercial Paper
Rate on such Commercial Paper Rate Interest Determination Date
will be calculated by the Calculation Agent and will be the Money
Market Yield of the arithmetic mean of the offered rates at
approximately 11:00 A.M., New York City time, on
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such Commercial Paper Rate Interest Determination Date of three
leading dealers of commercial paper in The City of New York
(which may include the Agents or their affiliates) selected by
the Calculation Agent for commercial paper having the Index
Maturity specified in the applicable Pricing Supplement placed
for an industrial issuer whose bond rating is "Aa", or the
equivalent, from a nationally recognized statistical rating
organization; provided, however, that if the dealers so selected
by the Calculation Agent are not quoting as mentioned in this
sentence, the Commercial Paper Rate determined as of such
Commercial Paper Rate Interest Determination Date will be the
Commercial Paper Rate in effect on such Commercial Paper Rate
Interest Determination Date.
"Money Market Yield" means a yield (expressed as a percentage)
calculated in accordance with the following formula:
360 x D
Money Market Yield = 100 x --------------------
360 - (D x M)
where "D" refers to the per annum rate for commercial paper
quoted on a bank discount basis and expressed as a decimal; and
"M" refers to the actual number of days in the period for which
interest is being calculated.
FEDERAL FUNDS RATE. Unless otherwise specified in the
applicable Pricing Supplement, "Federal Funds Rate" means, with
respect to any Interest Determination Date relating to a Floating
Rate Note for which the interest rate is determined with
reference to the Federal Funds Rate (a "Federal Funds Rate
Interest Determination Date"), the rate on such date for United
States dollar federal funds as published in H.15(519) under the
heading "Federal Funds (Effective)" or, if not published by 3:00
P.M., New York City time, on the related Calculation Date, the
rate on such Federal Funds Rate Interest Determination Date as
published in Composite Quotations under the heading "Federal
Funds/Effective Rate". If such rate is not published in either
H.15(519) or Composite Quotations by 3:00 P.M., New York City
time, on the related Calculation Date, then the Federal Funds
Rate on such Federal Funds Rate Interest Determination Date will
be calculated by the Calculation Agent and will be the arithmetic
mean of the rates for the last transaction in overnight United
States dollar federal funds arranged by three leading brokers of
federal funds transactions in The City of New York (which may
include the Agents or their affiliates) selected by the
Calculation Agent prior to 9:00 A.M., New York City time, on such
Federal Funds Rate Interest Determination Date; provided,
however, that if the brokers so selected by the Calculation Agent
are not quoting as mentioned in this sentence, the Federal Funds
Rate determined as of such Federal Funds Rate Interest
Determination Date will be the Federal Funds Rate in effect on
such Federal Funds Rate Interest Determination Date.
LIBOR. Unless otherwise specified in the applicable Pricing
Supplement, "LIBOR" means the rate determined in accordance with
the following provisions:
(i) With respect to any Interest Determination Date relating
to a Floating Rate Note for which the interest rate is
determined with reference to LIBOR (a "LIBOR Interest
Determination Date"), LIBOR will be either: (a) if "LIBOR
Reuters" is specified in the applicable Pricing Supplement,
the arithmetic mean of the offered rates (unless the
Designated LIBOR Page by its terms provides only for a single
rate, in which case such single rate shall be used) for
deposits in the Index Currency having the Index Maturity
specified in such Pricing Supplement,
S-15
commencing on the applicable Interest Reset Date, that appear
(or, if only a single rate is required as aforesaid, appears)
on the Designated LIBOR Page as of 11:00 A.M., London time, on
such LIBOR Interest Determination Date, or (b) if "LIBOR
Telerate" is specified in the applicable Pricing Supplement or
if neither "LIBOR Reuters" nor "LIBOR Telerate" is specified
in the applicable Pricing Supplement as the method for
calculating LIBOR, the rate for deposits in the Index Currency
having the Index Maturity specified in such Pricing
Supplement, commencing on such Interest Reset Date, that
appears on the Designated LIBOR Page as of 11:00 A.M., London
time, on such LIBOR Interest Determination Date. If in (a)
fewer than two such offered rates appear, or if in (b) no such
rate appears, as applicable, LIBOR on such LIBOR Interest
Determination Date will be determined in accordance with the
provisions described in clause (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on
which fewer than two offered rates appear, or no rate appears,
as the case may be, on the Designated LIBOR Page as specified
in clause (i) above, the Calculation Agent will request the
principal London offices of each of four major reference banks
in the London interbank market, as selected by the Calculation
Agent, to provide the Calculation Agent with its offered
quotation for deposits in the Index Currency for the period of
the Index Maturity specified in the applicable Pricing
Supplement, commencing on the applicable Interest Reset Date,
to prime banks in the London interbank market at approximately
11:00 A.M., London time, on such LIBOR Interest Determination
Date and in a principal amount that is representative for a
single transaction in such Index Currency in such market at
such time. If at least two such quotations are so provided,
then LIBOR on such LIBOR Interest Determination Date will be
the arithmetic mean of such quotations. If fewer than two
such quotations are so provided, then LIBOR on such LIBOR
Interest Determination Date will be the arithmetic mean of the
rates quoted at approximately 11:00 A.M., in the applicable
Principal Financial Center, on such LIBOR Interest
Determination Date by three major banks in such Principal
Financial Center selected by the Calculation Agent for loans
in the Index Currency to leading European banks, having the
Index Maturity specified in the applicable Pricing Supplement
and in a principal amount that is representative for a single
transaction in such Index Currency in such market at such
time; provided, however, that if the banks so selected by the
Calculation Agent are not quoting as mentioned in this
sentence, LIBOR determined as of such LIBOR Interest
Determination Date will be LIBOR in effect on such LIBOR
Interest Determination Date.
"Index Currency" means the currency or composite currency
specified in the applicable Pricing Supplement as to which LIBOR
shall be calculated. If no such currency or composite currency
is specified in the applicable Pricing Supplement, the Index
Currency shall be United States dollars.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is
specified in the applicable Pricing Supplement, the display on
the Reuter Monitor Money Rates Service (or any successor service)
for the purpose of displaying the London interbank rates of major
banks for the applicable Index Currency, or (b) if "LIBOR
Telerate" is specified in the applicable Pricing Supplement or
neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the
applicable Pricing Supplement as the method for calculating
LIBOR, the display on the Dow Jones Markets Service (or any
successor service) for the purpose of displaying the London
interbank rates of major banks for the applicable Index Currency.
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PRIME RATE. Unless otherwise specified in the applicable
Pricing Supplement, "Prime Rate" means, with respect to any
Interest Determination Date relating to a Floating Rate Note for
which the interest rate is determined with reference to the Prime
Rate (a "Prime Rate Interest Determination Date"), the rate on
such date as such rate is published in H.15(519) under the
heading "Bank Prime Loan". If such rate is not published prior
to 3:00 P.M., New York City time, on the related Calculation
Date, then the Prime Rate shall be the arithmetic mean of the
rates of interest publicly announced by each bank that appears on
the Reuters Screen USPRIME1 (as defined below) as such bank's
prime rate or base lending rate as in effect for such Prime Rate
Interest Determination Date. If fewer than four such rates
appear on the Reuters Screen USPRIME1 for such Prime Rate
Interest Determination Date, then the Prime Rate will be
determined by the Calculation Agent and shall be the arithmetic
mean of the prime rates quoted on the basis of the actual number
of days in the year divided by a 360-day year as of the close of
business on such Prime Rate Interest Determination Date by four
major money center banks in The City of New York selected by the
Calculation Agent. If fewer than four such quotations are so
provided, then the Prime Rate shall be the arithmetic mean of
four prime rates quoted on the basis of the actual number of days
in the year divided by a 360-day year as of the close of business
on such Prime Rate Interest Determination Date as furnished in
The City of New York by the major money center banks, if any,
that have provided such quotations and by as many substitute
banks or trust companies as necessary in order to obtain four
such prime rate quotations, provided such substitute banks or
trust companies are organized and doing business under the laws
of the United States, or any State thereof, each having total
equity capital of at least $500 million and being subject to
supervision or examination by Federal or State authority,
selected by the Calculation Agent to provide such rate or rates;
provided, however, that if the banks or trust companies so
selected by the Calculation Agent are not quoting as mentioned in
this sentence, the Prime Rate determined as of such Prime Rate
Interest Determination Date will be the Prime Rate in effect on
such Prime Rate Interest Determination Date.
"Reuters Screen USPRIME1" means the display designated as page
"USPRIME1" on the Reuter Monitor Money Rates Service (or such
other page as may replace the USPRIME1 page on that service for
the purpose of displaying prime rates or base lending rates of
major United States banks).
TREASURY RATE. Unless otherwise specified in the applicable
Pricing Supplement, "Treasury Rate" means, with respect to any
Interest Determination Date relating to a Floating Rate Note for
which the interest rate is determined by reference to the
Treasury Rate (a "Treasury Rate Interest Determination Date"),
the rate from the auction held on such Treasury Rate Interest
Determination Date (the "Auction") of direct obligations of the
United States ("Treasury Bills") having the Index Maturity
specified in the applicable Pricing Supplement, as such rate is
published in H.15(519) under the heading "Treasury Bills-auction
average (investment)" or, if not published by 3:00 P.M., New York
City time, on the related Calculation Date, the auction average
rate of such Treasury Bills (expressed as a bond equivalent on
the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) as otherwise announced by the United
States Department of the Treasury. In the event that the results
of the Auction of Treasury Bills having the Index Maturity
specified in the applicable Pricing Supplement are not reported
as provided by 3:00 P.M., New York City time, on the related
Calculation Date, or if no such Auction is held, then the
Treasury Rate will be calculated by the Calculation Agent and
will be a yield to maturity (expressed as a bond equivalent on
the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary
market bid
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rates, as of approximately 3:30 P.M., New York City time, on such
Treasury Rate Interest Determination Date, of three leading
primary United States government securities dealers (which may
include the Agent or its affiliates) selected by the Calculation
Agent, for the issue of Treasury Bills with a remaining maturity
closest to the Index Maturity specified in the applicable Pricing
Supplement; provided, however, that if the dealers so selected by
the Calculation Agent are not quoting as mentioned in this
sentence, the Treasury Rate determined as of such Treasury Rate
Interest Determination Date will be the Treasury Rate in effect
on such Treasury Rate Interest Determination Date.
REDEMPTION AND REPAYMENT
REDEMPTION AT THE OPTION OF GTE
The Notes will be redeemable at the option of GTE prior to the
Stated Maturity only if a Redemption Commencement Date is
specified in the applicable Pricing Supplement. If so specified,
the Notes will be subject to redemption at the option of GTE on
any date on and after the applicable Redemption Commencement Date
in whole or from time to time in part in increments of $1,000 or
such other increments specified in such Pricing Supplement
(provided that any remaining principal amount thereof shall be at
least $1,000 or such other specified minimum denomination), at
the applicable Redemption Price (as defined below), together with
unpaid interest accrued to the date of redemption, on notice
given not more than 60 nor less than 30 calendar days prior to
the date of redemption and in accordance with the provisions of
the Indenture. "Redemption Price", with respect to a Note, means
an amount equal to the Initial Redemption Percentage specified in
the applicable Pricing Supplement (as adjusted by the Annual
Redemption Percentage Reduction, if applicable) multiplied by the
unpaid principal amount to be redeemed. The Initial Redemption
Percentage, if any, applicable to a Note shall decline at each
anniversary of the Redemption Commencement Date by an amount
equal to the applicable Annual Redemption Percentage Reduction,
if any, until the Redemption Price is equal to 100% of the unpaid
principal amount to be redeemed. See also "- Original Issue
Discount Notes".
Unless otherwise specified in the applicable Pricing
Supplement, the Notes will not be subject to any sinking fund.
REPAYMENT AT THE OPTION OF THE HOLDER
The Notes will be repayable by GTE at the option of the Holders
thereof prior to the Stated Maturity only if one or more Optional
Repayment Dates are specified in the applicable Pricing
Supplement. If so specified, the Notes will be subject to
repayment at the option of the Holders thereof on any Optional
Repayment Date in whole or from time to time in part in
increments of $1,000 or such other increments specified in the
applicable Pricing Supplement (provided that any remaining
principal amount thereof shall be at least $1,000 or such other
specified minimum denomination), at a repayment price equal to
100% of the unpaid principal amount to be repaid, together with
unpaid interest accrued to the date of repayment. For any Note
to be repaid, such Note must be received, together with the form
thereon entitled "Option to Elect Repayment" duly completed, by
the Trustee at its Corporate Trust Office (or such other address
of which GTE shall from time to time notify the Holders) not more
than 60 nor less than 30 calendar days prior to the date of
repayment. Exercise of such repayment option by the Holder will
be irrevocable. See also "- Original Issue Discount Notes".
Only the Depository may exercise the repayment option in
respect of Global Securities representing Book-Entry Notes.
Accordingly, owners of beneficial
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interests ("Beneficial Owners") in Global Securities that desire
to have all or any portion of the Book-Entry Notes represented by
such Global Securities repaid must instruct the participant
through which they own their interest to direct the Depository to
exercise the repayment option on their behalf by delivering the
related Global Debt Security and duly completed election form to
the Trustee as aforesaid. In order to ensure that such Global
Debt Security and election form are received by the Trustee on a
particular day, the applicable Beneficial Owner must so instruct
the participant through which it owns its interest before such
participant's deadline for accepting instructions for that day.
Different firms may have different deadlines for accepting
instructions from their customers. Accordingly, Beneficial
Owners should consult the participants through which they own
their interest for the respective deadlines for such
participants. All instructions given to participants from
Beneficial Owners of Global Securities relating to the option to
elect repayment shall be irrevocable. In addition, at the time
such instructions are given, each such Beneficial Owner shall
cause the participant through which it owns its interest to
transfer such Beneficial Owner's interest in the Global Debt
Security or Securities representing the related Book-Entry Notes,
on the Depository's records, to the Trustee. See "- Book-Entry
Notes".
If applicable, GTE will comply with the requirements of Rule
14e-1 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and any other securities laws or regulations in
connection with any such repayment.
GTE may at any time purchase Notes at any price or prices in
the open market or otherwise. Notes so purchased by GTE may, at
the discretion of GTE, be held, resold or surrendered to the
Trustee for cancellation.
ADDENDUM AND/OR OTHER PROVISIONS
Any provisions with respect to the Notes, including the
specification and determination of one or more Interest Rate
Bases, the calculation of the interest rate applicable to a
Floating Rate Note, the Interest Payment Dates, the Maturity Date
or any other term relating thereto, may be modified and/or
supplemented as specified under "Other Provisions" on the face
thereof or in an Addendum relating thereto, if so specified on
the face thereof. Such provisions will be described in the
applicable Pricing Supplement.
AMORTIZING NOTES
GTE may from time to time offer Amortizing Notes. Unless
otherwise specified in the applicable Pricing Supplement,
interest on each Amortizing Note will be computed on the basis of
a 360-day year of twelve 30-day months. Payments with respect to
Amortizing Notes will be applied first to interest due and
payable thereon and then to the reduction of the unpaid principal
amount thereof. Further information concerning additional terms
and provisions of Amortizing Notes will be specified in the
applicable Pricing Supplement, including a table setting forth
repayment information for such Amortizing Notes.
ORIGINAL ISSUE DISCOUNT NOTES
GTE may offer Notes ("Original Issue Discount Notes") from time
to time that have an Issue Price (as specified in the applicable
Pricing Supplement) that is less than 100% of the principal
amount thereof (i.e. par). Original Issue Discount Notes may not
bear any interest currently or may bear interest at a rate that
is below market rates at the time of issuance. The difference
between the Issue Price of an Original Issue Discount Note and
par is referred
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to herein as the "Discount". In the event of redemption,
repayment or acceleration of maturity of an Original Issue
Discount Note, the amount payable to the Holder of such Original
Issue Discount Note will be equal to the sum of (i) the Issue
Price (increased by any accruals of Discount) and, in the event
of any redemption of such Original Issue Discount Note (if
applicable), multiplied by the Initial Redemption Percentage
specified in the applicable Pricing Supplement (as adjusted by
the Annual Redemption Percentage Reduction, if applicable) and
(ii) any unpaid interest on such Original Issue Discount Note
accrued from the date of issue to the date of such redemption,
repayment or acceleration of maturity, as the case may be.
Unless otherwise specified in the applicable Pricing
Supplement, for purposes of determining the amount of Discount
that has accrued as of any date on which a redemption, repayment
or acceleration of maturity occurs for an Original Issue Discount
Note, such Discount will be accrued using a constant yield
method. The constant yield will be calculated using a 30-day
month, 360-day year convention, a compounding period that, except
for the Initial Period (as defined below), corresponds to the
shortest period between Interest Payment Dates for the applicable
Original Issue Discount Note (with ratable accruals within a
compounding period), a coupon rate equal to the initial coupon
rate applicable to such Original Issue Discount Note and an
assumption that the maturity of such Original Issue Discount Note
will not be accelerated. If the period from the date of issue to
the initial Interest Payment Date for an Original Issue Discount
Note (the "Initial Period") is shorter than the compounding
period for such Original Issue Discount Note, a proportionate
amount of the yield for an entire compounding period will be
accrued. If the Initial Period is longer than the compounding
period, then such period will be divided into a regular
compounding period and a short period with the short period being
treated as provided in the preceding sentence. The accrual of
the applicable Discount may differ from the accrual of original
issue discount for purposes of the Internal Revenue Code of 1986,
as amended (the "Code"), certain Original Issue Discount Notes
may not be treated as having original issue discount within the
meaning of the Code, and Notes other than Original Issue Discount
Notes may be treated as issued with original issue discount for
federal income tax purposes. See "Certain United States Federal
Income Tax Considerations" herein.
GTE may from time to time offer Notes ("Indexed Notes") with
the amount of principal, premium or interest payable in respect
thereof to be determined by reference to the price or prices of
specified commodities or stocks or to other items, in each case
as specified in the applicable Pricing Supplement. In certain
cases, Holders of Indexed Notes may receive a principal payment
on the Maturity Date that is greater than or less than the
principal amount of such Indexed Notes depending upon the
relative value on the Maturity Date of the specified indexed
item. Information as to the method for determining the amount of
principal, premium, if any, or interest, if any, payable in
respect of Indexed Notes, certain historical information with
respect to the specified indexed item and any material tax
consideration associated with an investment in Indexed Notes will
be specified in the applicable Pricing Supplement.
BOOK-ENTRY NOTES
GTE has established a depository arrangement with The
Depository Trust Company with respect to the Book-Entry Notes,
the terms of which are summarized below. Any additional or
differing terms of the depository arrangement with respect to the
Book-Entry Notes will be described in the applicable Pricing
Supplement.
S-20
Upon issuance, all Book-Entry Notes up to $200,000,000
aggregate principal amount bearing interest (if any) at the same
rate or pursuant to the same formula and having the same date of
issue, currency of denomination and payment, Interest Payment
Dates (if any), Stated Maturity, redemption provisions (if any),
repayment provisions (if any) and other terms will be represented
by a single Global Security; all such Book-Entry Notes in excess
of $200,000,000 aggregate principal amount will be represented by
two or more Global Securities. Each Global Security representing
Book-Entry Notes will be deposited with, or on behalf of, the
Depository and will be registered in the name of the Depository
or a nominee of the Depository. No Global Security may be
transferred except as a whole by a nominee of the Depository to
the Depository or to another nominee of the Depository, or by the
Depository or such nominee to a successor of the Depository or a
nominee of such successor. See "The Securities - Book-Entry,
Delivery and Form" in the accompanying Prospectus.
SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES
GENERAL
Unless otherwise specified in the applicable Pricing
Supplement, Foreign Currency Notes will not be sold in, or to
residents of, the country issuing the Specified Currency. The
information set forth in this Prospectus Supplement is directed
to prospective purchasers who are United States residents and,
with respect to Foreign Currency Notes, is by necessity
incomplete. GTE and the Agents disclaim any responsibility to
advise prospective purchasers who are residents of countries
other then the United States with respect to any matters that may
affect the purchase, holding or receipt of payments of principal
of, and premium, if any, and interest, if any, on, Foreign
Currency Notes. Such persons should consult their own financial
and legal advisors with regard to such matters. See "Risk
Factors
- - Exchange Rates and Exchange Controls."
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST, IF ANY
Unless otherwise specified in the applicable Pricing
Supplement, GTE is obligated to make payments of principal of,
and premium, if any, and interest, if any, on, Foreign Currency
Notes in the applicable Specified Currency (or, if such Specified
Currency is not at the time of such payment legal tender for the
payment of public and private debts, in such other coin or
currency of the country which issued such Specified Currency as
at the time of such payment is legal tender for the payment of
such debts). Any such amounts payable by GTE in a foreign
currency or composite currency will, unless otherwise specified
in the applicable Pricing Supplement, be converted by the
Exchange Rate Agent named in the applicable Pricing Supplement
into United States dollars for payment to Holders. However, the
Holder of a Foreign Currency Note may elect to receive amounts
payable in a foreign currency or composite currency in such
foreign currency or composite currency as hereinafter described.
Any United States dollar amount to be received by a Holder of a
Foreign Currency Note will be based on the highest bid quotation
in The City of New York received by the Exchange Rate Agent at
approximately 11:00 A.M., New York City time, on the second
Business Day preceding the applicable payment date from three
recognized foreign exchange dealers (one of whom may be the
Exchange Rate Agent) selected by the Exchange Rate Agent and
approved by GTE for the purchase by the quoting dealer of the
applicable foreign currency or composite currency for United
States dollars for settlement on such payment date in the
aggregate amount of such currency or composite currency payable
to all Holders of Foreign Currency Notes scheduled to receive
United States
S-21
dollar payments and at which the applicable dealer commits to
execute a contract. All currency exchange costs will be borne by
the Holders of such Foreign Currency Notes by deductions from
such payments. If three such bid quotations are not available,
payments will be made in the applicable foreign currency or
composite currency.
If the principal of, and premium, if any, and interest, if any,
on, Foreign Currency Notes are payable in a foreign currency or
composite currency, Holders of such Foreign Currency Notes may
elect to receive all or a specified portion of such payments in
such foreign currency or composite currency by submitting a
written request for such payment to the Trustee at its corporate
trust office in the Borough of Manhattan, The City of New York on
or prior to the applicable Record Date or at least fifteen
calendar days prior to the Maturity Date, as the case may be.
Such written request may be mailed or hand delivered or sent by
cable, telex or other form of facsimile transmission. Holders of
such Foreign Currency Notes may elect to receive all or a
specified portion of all future payments in the applicable
foreign currency or composite currency in respect of such
principal, premium, if any, and/or interest, if any, and need not
file a separate election for each payment. Such election will
remain in effect until revoked by written notice to the Trustee,
but written notice of any such revocation must be received by the
Trustee on or prior to the applicable Record Date or at least
fifteen calendar days prior to the Maturity Date, as the case may
be. Holders of such Foreign Currency Notes to be held in the
name of a broker or nominee should contact such broker or nominee
to determine whether and how an election to receive payments in
the applicable foreign currency or composite currency may be
made.
Payments of the principal of, and premium, if any, and/or
interest, if any, on, Foreign Currency Notes which are to be made
in United States dollars will be made in the manner specified
herein with respect to Notes denominated in United States
dollars. See "Description of the Notes - General". Payments of
interest, if any, on Foreign Currency Notes which are to be made
in the applicable foreign currency or composite currency on an
Interest Payment Date other than the Maturity Date will be made
by check mailed to the address of the Holders of such Foreign
Currency Notes as they appear in the Security Register, subject
to the right to receive such interest payments by wire transfer
of immediately available funds under the circumstances described
under "Description of the Notes - General". Payments of
principal of, and premium, if any, and/or interest, if any, on,
Foreign Currency Notes which are to be made in the applicable
foreign currency or composite currency on the Maturity Date will
be made by wire transfer of immediately available funds to an
account with a bank designated at least fifteen calendar days
prior to the Maturity Date by each Holder thereof, provided that
such bank has appropriate facilities therefor and that the
applicable Foreign Currency Note is presented and surrendered at
the principal corporate trust office of the Trustee in time for
the Trustee to make such payments in such funds in accordance
with its normal procedures.
Unless otherwise specified in the applicable Pricing
Supplement, a Beneficial Owner of a Global Security or Securities
representing Book-Entry Notes payable in a currency or composite
currency other than United States dollars which elects to receive
payments of principal, premium, if any, and/or interest, if any,
in such currency or composite currency must notify the
participant through which it owns its interest on or prior to the
applicable Record Date or at least fifteen calendar days prior to
the Maturity Date, as the case may be, of such Beneficial Owner's
election. Such Participant must notify the Depository of such
election on or prior to the third Business Day after such Record
Date or at least twelve calendar days prior to the Maturity Date,
as the case may be, and the Depository will notify the Trustee of
such
S-22
election on or prior to the fifth Business Day after such Record
Date or at least ten calendar days prior to the Maturity Date, as
the case may be. If complete instructions are received by the
participant from the Beneficial Owner and forwarded by the
Participant to the Depository, and by the Depository to the
Trustee, on or prior to such dates, then such Beneficial Owner
will receive payments in the applicable foreign currency or
composite currency.
AVAILABILITY OF SPECIFIED CURRENCY
Except as set forth below, if the principal of, premium, if
any, and/or interest, if any, on, any Note is payable in a
Specified Currency other than U.S. dollars and such Specified
Currency is not available to GTE for making payments thereof due
to the imposition of exchange controls or other circumstances
beyond the control of GTE or is no longer used by the government
of the country issuing such currency or for the settlement of
transactions by public institutions within the international
banking community, then GTE will be entitled to satisfy its
obligations to holders of the Notes by making such payments in
U.S. dollars on the basis of the Market Exchange Rate (as defined
below) on the second Business Day prior to such payment date or,
if such Market Exchange Rate is not then available, on the basis
of the most recently available Market Exchange Rate; provided,
however, that if such Specified Currency is replaced by a single
European currency (expected to be named the Euro), the payment of
principal of, premium, if any, or interest on any Note
denominated in such currency shall be effected in the new single
European currency in conformity with legally applicable measures
taken pursuant to, or by virtue of, the treaty establishing the
European Community, as amended by the treaty on European Union.
Unless otherwise specified in the applicable Pricing
Supplement, if payment in respect of a Foreign Currency Note is
required to be made in any composite currency, and such composite
currency is unavailable due to the imposition of exchange
controls or other circumstances beyond the control of GTE, GTE
will be entitled to satisfy its obligations to the Holder of such
Foreign Currency Note by making such payment in United States
dollars. The amount of each payment in United States dollars
shall be computed by the Exchange Rate Agent on the basis of the
equivalent of the composite currency in United States dollars.
The component currencies of the composite currency for this
purpose (collectively, the "Component Currencies" and each, a
"Component Currency") shall be the currency amounts that were
components of the composite currency as of the last day on which
the composite currency was used. The equivalent of the composite
currency in United States dollars shall be calculated by
aggregating the United States dollar equivalents of the Component
Currencies. The United States dollar equivalent of each of the
Component Currencies shall be determined by the Exchange Rate
Agent on the basis of the most recently available Market Exchange
Rate for each such Component Currency, or as otherwise specified
in the applicable Pricing Supplement.
If the official unit of any Component Currency is altered by
way of combination or subdivision, the number of units of the
currency as a Component Currency shall be divided or multiplied
in the same proportion. If two or more Component Currencies are
consolidated into a single currency, the amounts of those
currencies as Component Currencies shall be replaced by an amount
in such single currency equal to the sum of the amounts of the
consolidated Component Currencies expressed in such single
currency. If any Component Currency is divided into two or more
currencies, the amount of the original Component Currency shall
be replaced by the amounts of such two or more
S-23
currencies, the sum of which shall be equal to the amount of the
original Component Currency.
The "Market Exchange Rate" for a currency or composite currency
other than United States dollars means the noon dollar buying
rate in The City of New York for cable transfers for such
currency or composite currency as certified for customs purposes
by (or if not so certified, as otherwise determined by) the
Federal Reserve Bank of New York. Any payment made in United
States dollars or a new single European currency under the
circumstances described above where the required payment is in a
currency or composite currency other than United States dollars
or such single European currency, respectively, will not
constitute an Event of Default under the Indenture with respect
to the Notes.
All determinations referred to above made by the Exchange Rate
Agent shall be at its sole discretion and shall, in the absence
of error, be conclusive for all purposes and binding on the
Holders of the Foreign Currency Notes.
CERTAIN UNITED STATES FEDERAL
INCOME TAX CONSIDERATIONS
The following summary of certain United States Federal income
tax consequences of the purchase, ownership and disposition of
the Notes is based upon laws, regulations, ruling and decisions
now in effect, all of which are subject to change (including
changes in effective dates). It deals only with Notes held as
capital assets within the meaning of Section 1221 of the Internal
Revenue Code of 1986, as amended (the "Code"), does not discuss
all of the tax consequences that may be relevant to a holder in
light of his particular circumstances and does not purport to
deal with persons in special tax situations, such as financial
institutions, insurance companies, tax-exempt organizations,
regulated investment companies, dealers in securities or
currencies, persons holding Notes as a hedge against currency
risks or as a position in a "straddle" for tax purposes, or
persons whose functional currency (as defined in Section 985 of
the Code) is not the United States dollar. Moreover, the summary
deals only with Notes that are due to mature 30 years or less
from the date on which they are issued. The United States
Federal income tax consequences of ownership of Notes that are
due to mature more than 30 years from their date of issue will be
discussed in an applicable Pricing Supplement. It also does not
deal with holders other than original purchasers (except where
otherwise specifically noted). BECAUSE THE EXACT PRICING AND
OTHER TERMS OF THE NOTES WILL VARY, NO ASSURANCE CAN BE GIVEN
THAT THE CONSIDERATIONS DESCRIBED BELOW WILL APPLY TO A
PARTICULAR ISSUANCE OF NOTES. CERTAIN MATERIAL UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE OWNERSHIP OF
PARTICULAR NOTES (WHERE APPLICABLE) WILL BE SUMMARIZED IN THE
PRICING SUPPLEMENT RELATING TO SUCH NOTES. PERSONS CONSIDERING
THE PURCHASE OF NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS
CONCERNING THE APPLICATION OF UNITED STATES FEDERAL INCOME TAX
LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES
OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES ARISING
UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING
JURISDICTION.
As used herein, the term "U.S. Holder" means a beneficial owner
of a Note that is for United States Federal income tax purposes
(i) a citizen or resident of the United States, (ii) a
corporation, partnership or other entity created or organized
under the laws of the United States or of any political
subdivision thereof, or (iii) an estate or trust the income of
which is subject to United States Federal income taxation
regardless of its source. The term also includes certain former
citizens of the United States. As used herein, the term "non-
U.S. Holder" means a beneficial owner of a Note that is not a
U.S. Holder.
S-24
U.S. HOLDER
PAYMENTS OF INTEREST. Payments of qualified stated interest
(defined below) on a Note generally will be taxable to a U.S.
Holder as ordinary interest income at the time such payments are
accrued or are received in accordance with the U.S. Holder's
regular method of accounting for federal income tax purposes.
ORIGINAL ISSUE DISCOUNT. The following summary is a general
discussion of the United States Federal income tax consequences
to U.S. Holders of the purchase, ownership and disposition of
Notes issued with original issue discount ("Discount Notes").
For United States Federal income tax purposes, a Note, other
than a Note with a term of one year or less (a "Short-Term
Note"), will be treated as issued at an original issue discount
if the excess of the stated redemption price at maturity of the
Note over its issue price, is more than a de minimis amount (as
defined below). In general, if the excess of a Note's stated
redemption price at maturity over its issue price is less than
1/4 of 1 percent of the Note's stated redemption price at
maturity multiplied by the number of complete years to maturity
or by, in the case of a Note providing for the payment of any
amount other than qualified stated interest (as hereinafter
defined) prior to maturity, the weighted average maturity of such
Note (the "de minimis amount"), then such excess, if any
constitutes "de minimis original issue discount" and the Note is
not a Discount Note. The issue price of each Note in an issue of
Notes equals the first price at which a substantial amount of
such Notes has been sold for money (ignoring sales to bond
houses, brokers, or similar persons or organizations acting in
the capacity of underwriters, placement agents, or wholesalers).
The stated redemption price at maturity of a Note is the sum of
all payments provided by the Note other than "qualified stated
interest" payments. The term "qualified stated interest"
generally means stated interest that is unconditionally payable
as a series of payments in cash or property (other than debt
instruments of the issuer) at least annually during the entire
term of the Note and equal to the outstanding principal balance
of the Note multiplied by a single fixed rate of interest. In
addition, under final Treasury Regulations (the "OID
Regulations") promulgated by the Internal Revenue Service (the
"IRS") under the original issue discount provisions of the Code,
if a Note bears interest for one or more accrual periods at a
rate below the rate applicable for the remaining term of such
Note (e.g., Notes with teaser
rates or interest holidays) the Note's stated redemption price at
maturity, for purposes of determining whether the Note has de
minimis OID, is treated as equal to the Note's issue price plus
the greater of the amount of foregone interest on such Note or
any "true" discount on such Note (i.e., the excess of the Note's
stated principal amount over its issue price).
Holders of Notes with de minimis original issue discount, as
described above, will generally include such de minimis original
issue discount in income as capital gain on a pro rata basis as
principal payments are made on the Note. A U.S. Holder of a
Discount Note that matures more than one year from the date of
issuance must include original issue discount in income as
ordinary income for United States Federal income tax purposes as
it accrues under a constant yield method based on a compounding
of interest in advance of receipt of the cash payments
attributable to such income, regardless of such U.S. Holder's
regular method of tax accounting. In general, the amount of
original issue discount included in income by the U.S. Holder of
a Discount Note is the sum of the daily portions of original
issue discount with respect to such Discount Note for each day
during the taxable year (or portion of the taxable year) on which
such U.S. Holder held such Discount Note. The "daily portion" of
original issue discount on any Discount Note is determined by
S-25
allocating to each day in any accrual period a ratable portion of
the original issue discount allocable to that accrual period. An
"accrual period" may be of any length and the accrual periods may
vary in length over the term of the Discount Note, provided that
each accrual period is no longer than one year and each scheduled
payment of principal or interest occurs either on the final day
of an accrual period or on the first day of an accrual period.
The amount of original issue discount allocable to each accrual
period is generally equal to the difference between (i) the
product of the Discount Note's adjusted issue price at the
beginning of such accrual period and its yield to maturity
(determined on the basis of compounding at the close of each
accrual period and appropriately adjusted to take into account
the length of the particular accrual period) and (ii) the amount
of any qualified stated interest payments allocable to such
accrual period. The "adjusted issue price" of a Discount Note at
the beginning of any accrual period is the sum of the issue price
of the Discount Note plus the amount of original issue discount
allocable to all prior accrual periods minus the amount of any
prior payments on the Discount Note that were not qualified
stated interest payments. Under these rules, U.S. Holders
generally will have to include in income increasing amounts of
original issue discount in successive accrual periods.
A U.S. Holder who purchases a Discount Note for an amount that
is greater than its adjusted issue price as of the purchase date
and less than or equal to the sum of all amounts payable on the
Discount Note after the purchase date other than payments of
qualified stated interest will be considered to have purchased
the Discount Notes at an "acquisition premium." Under the
acquisition premium rules, the amount of original issue discount
which such U.S. Holder must include in its gross income with
respect to such Discount Note for any taxable year (or portion
thereof in which the U.S. Holder holds the Discount Note) will be
reduced (but not below zero) by the portion of the acquisition
premium properly allocable to the period.
Under the OID Regulations, Floating Rate Notes and Indexed
Notes ("Variable Notes") are subject to special rules whereby a
Variable Note will qualify as a "variable rate debt instrument"
if (a) its issue price does not exceed the total noncontingent
principal payments due under the Variable Note by more than a
specified de minimis amount and (b) it provides for stated
interest, paid or compounded at least annually, at current values
of (i) one or more qualified floating rates, (ii) a single fixed
rate and one or more qualified floating rates, (iii) a single
objective rate, or (iv) a single fixed and a single objective
rate that is a qualified inverse floating rate.
A "qualified floating rate" is any variable rate where
variations in the value of such rate can reasonably be expected
to measure contemporaneous variations in the cost of newly
borrowed funds in the currency in which the Variable Note is
denominated. Although a multiple of a qualified floating rate
will generally not itself constitute a qualified floating rate, a
variable rate is a qualified floating rate if it is equal to
either (1) the product of a qualified floating rate and a fixed
multiple rate that is greater than 0.65 but not more than 1.35 or
(2) the product of a qualified floating rate and a fixed multiple
that is greater than 0.65 but not more than 1.35, increased or
decreased by a fixed rate. In addition, under the OID
Regulations, two or more qualified floating rates that can
reasonably be expected to have approximately the same values
throughout the term of the Variable Notes (e.g., two or more
qualified floating rates with values within 25 basis points of
each other as determined on the Variable Note's issue date) will
be treated as a single qualified floating rate. Notwithstanding
the foregoing, a variable rate that would otherwise constitute a
qualified floating rate but which is subject to one or more
restrictions such as a
S-26
maximum or minimum numerical limitation (i.e., a cap or floor)
may, under certain circumstances, fail to be treated as a
qualified floating rate under the OID Regulations unless such cap
or floor is fixed throughout the term of the Note. An "objective
rate" is a rate (other than a qualified floating
rate) that is obtained using a single fixed formula and that is
based on objective financial or economic information outside of
the issuer's control. The OID Regulations also provide that
other variable interest rates may be treated as objective rates
if so designated by the IRS in the future. Despite the
foregoing, a variable rate of interest on a Variable Note will
not constitute an objective rate if it is reasonably expected
that the average value of such rate during the first half of the
Variable Note's term will be either significantly less than or
significantly greater than the average value of the rate during
the final half of the Variable Note's term. A "qualified inverse
floating rate" is any objective rate where such rate is equal to
a fixed rate minus a qualified floating rate, as long as
variations in the rate can reasonably be expected to inversely
reflect contemporaneous variations in the qualified floating
rate. The OID Regulations also provide that if a Variable Note
provides for stated interest at a fixed rate for an initial
period of one year or less followed by a variable rate that is
either a qualified floating rate or an objective rate for a
subsequent period and if the variable rate on the Variable Note's
issue date is intended to approximate the fixed rate (e.g., the
value of the variable rate on the issue date does not differ from
the value of the fixed rate by more than 25 basis points), then
the fixed rate and the variable rate together will constitute
either a single qualified floating rate or objective rate, as the
case may be.
If a Variable Note that provides for stated interest at either
a single qualified floating rate or a single objective rate
throughout the term thereof qualifies as a "variable rate debt
instrument" under the OID Regulations, then any stated interest
on such Note which is unconditionally payable in cash or property
(other than debt instruments of the issuer) at least annually
during the term of the Note will constitute qualified stated
interest and the amount of original issue discount, if any, is
determined by using, in the case of a qualified floating rate or
qualified inverse floating rate, the value as of the issue date
of the qualified floating rate or qualified inverse floating
rate, or, in the case of any other objective rate, a fixed rate
that reflects the yield reasonably expected for the Note.
In general, any other Variable Note that qualifies as a
"variable rate debt instrument" will be converted into an
"equivalent" fixed rate debt instrument for purposes of
determining the amount and accrual of original issue discount and
qualified stated interest on the Variable Note. The OID
Regulations generally require that such a Variable Note be
converted into an "equivalent" fixed rate debt instrument by
substituting for any qualified floating rate or qualified inverse
floating rate provided for under the terms of the Variable Note a
fixed rate equal to the value of the qualified floating rate or
qualified inverse floating rate, as the case may be, as of the
Variable Note's issue date. Any objective rate (other than a
qualified inverse floating rate) provided for under the terms of
the Variable Note is converted into a fixed rate that reflects
the yield that is reasonably expected for the Variable Note. In
the case of a Variable Note that qualifies as a "variable rate
debt instrument" and provides for stated interest at a fixed rate
in addition to either one or more qualified floating rates or a
qualified inverse floating rate, the fixed rate is initially
converted into a qualified floating rate (or a qualified inverse
floating rate, if the Variable Note provides for a qualified
inverse floating rate). Under such circumstances, the qualified
floating rate or qualified inverse floating rate
S-27
that replaces the fixed rate must be such that the fair market
value of the Variable Note as of the Variable Note's issue date
is approximately the same as the fair market value of an
otherwise identical debt instrument that provides for either the
qualified floating rate or qualified inverse floating rate rather
than the fixed rate. Subsequent to converting the fixed rate
into either a qualified floating rate or a qualified inverse
floating rate, the Variable Note is then converted into an
"equivalent" fixed rate debt instrument in the manner described
above.
Once the Variable Note is converted into an "equivalent" fixed
rate debt instrument pursuant to the foregoing rules, the amount
of original issue discount and qualified stated interest if any,
are determined for the "equivalent" fixed rate debt instrument by
applying the general original issue discount rules to the
"equivalent" fixed rate debt instrument and a U.S. Holder of the
Variable Note will account for such original issue discount and
qualified stated interest as if the U.S. Holder held the
"equivalent" fixed rate debt instrument. In each accrual period,
appropriate adjustments will be made to the amount of qualified
stated interest or original issue discount assumed to have been
accrued or paid with respect to the "equivalent" fixed rate debt
instrument in the event that such amounts differ from the actual
amount of interest accrued or paid on the Variable Note during
the accrual period.
If a Variable Note does not qualify as a "variable rate debt
instrument" under the OID Regulations, then the Variable Note
would be treated as a contingent payment debt obligation.
Generally, if a Variable Note is treated as a contingent payment
obligation, interest payments thereon will be treated as
"contingent interest" payments. Under recently issued Treasury
Regulations, any contingent interest payments on a Variable Note
would be includible in income in a taxable year whether or not
the amount of any payment is fixed or determinable in that year.
The amount of interest included in income in any particular
accrual period would be determined by constructing a projected
payment schedule (as determined under the Regulations) for the
Variable Note and applying daily accrual rules similar to those
for accruing original issue discount on Notes issued with
original discount (as discussed above). If the actual amount of
contingent interest payments is not equal to the projected
amount, an adjustment to income at the time of the payment must
be made to reflect the difference. The United States Federal
income tax consequences of a sale, exchange, or, retirement of a
contingent payment Note will be discussed in the applicable
Pricing Supplement if such a Note is issued.
Certain of the Notes (i) may be redeemable at the option of the
Company prior to their stated maturity (a "call option") and/or
(ii) may be repayable at the option of the holder prior to their
stated maturity (a "put option"). Notes containing such features
may be subject to rules that differ from the general rules
discussed above. Investors intending to purchase Notes with such
features should consult their own tax advisors, since the
original issue discount consequences will depend, in part, on the
particular terms and features of the purchased Notes.
U.S. Holders may generally, upon election, include in income
all interest (including stated interest, acquisition discount,
original issue discount, de minimis original issue discount,
market discount, de minimis market discount, and unstated
interest, as adjusted by any amortizable bond premium or
acquisition premium) that accrues on a debt instrument by using
the constant yield method applicable to original issue discount,
subject to certain limitations and exceptions.
S-28
SHORT-TERM NOTES. Short-Term Notes will be treated as having
been issued with original issue discount. In general, an
individual or other cash method U.S. Holder is not required to
accrue such original issue discount unless the U.S. Holder elects
to do so. If such an election is not made, any gain recognized
by the U.S. Holder on the sale, exchange or maturity of the Short-
Term Note will be ordinary income to the extent of the original
issue discount accrued on a straight-line basis, or upon election
under the constant yield method (based on daily compounding),
through the date of sale, exchange or maturity, and a portion of
the deductions otherwise allowable to the U.S. Holder for
interest on borrowings allocable to the Short-Term Note will be
deferred until a corresponding amount of income is realized.
U.S. Holders who report income for United States Federal income
tax purposes under the accrual method, and certain other holders
including banks and dealers in securities, are required to accrue
original issue discount on a Short-Term Note on a straight-line
basis unless an election is made to accrue the original issue
discount under a constant yield method (based on daily
compounding).
MARKET DISCOUNT. In the case of a Note other than a Short-Term
Note, if a U.S. Holder purchases a Note that is not a Discount
Note, for an amount that is less than its stated redemption price
at maturity or, if the Note is a Discount Note, for an amount
that is less than its adjusted issue price as of the purchase
date, such U.S. Holder will be treated as having purchased such
Note at a "market discount," unless such market discount is less
than a specified de minimis amount.
Under the market discount rules, a U.S. Holder will be required
to treat any partial principal payment (or, in the case of a
Discount Note, any payment that does not constitute qualified
stated interest) on, or any gain realized on the sale, exchange,
retirement or other disposition of, a Note as ordinary income to
the extent of the lesser of (i) the amount of such payment or
realized gain or (ii) the market discount which has not
previously been included in income and is treated as having
accrued on such Note at the time of such payment or disposition.
Market discount will be considered to accrue ratably during the
period from the date of acquisition to the maturity date of the
Note, unless the U.S. Holder elects to accrue market discount on
an economic accrual basis. If such Note is disposed of in a
nontaxable transaction (other than as provided in Sections
1276(c) and (d) of the Code), accrued market discount will be
includible as ordinary income to the U.S. Holder as if such U.S.
Holder had sold the Note at its then fair market value.
A U.S. Holder may be required to defer the deduction of all or
a portion of the interest paid or accrued on any indebtedness
incurred or maintained to purchase or carry a Note with market
discount until the maturity of the Note or certain earlier
dispositions (including a nontaxable transaction other than as
provided by Sections 1276(c) and (d) of the Code), because a
current deduction is only allowed to the extent the interest
expense exceeds an allocable portion of market discount. A U.S.
Holder may elect to include market discount in income currently
as it accrues (on either a ratable or constant yield basis), in
which case the rules described above regarding the treatment as
ordinary income of gain upon the disposition of the Note and upon
the receipt of certain cash payments and regarding the deferral
of interest deductions will not apply. Generally, such included
market discount is treated as ordinary interest for United States
Federal income tax purposes. Such an election will apply to all
debt instruments acquired by the U.S. Holder on or after the
first day of the taxable year to which such election applies and
may be revoked only with the consent of the IRS.
S-29
PREMIUM. If a U.S. Holder purchases a Note for an amount that
is greater than its stated redemption price at maturity, such
U.S. Holder will be considered to have purchased the Note with
"amortizable bond premium" equal in amount to such excess. A
U.S. Holder may elect to amortize such premium using a constant
yield method over the remaining term of the Note and may offset
interest otherwise required to be included in respect of the Note
during any taxable year by the amortized amount of such excess
for the taxable year. However, if the Note may be optionally
redeemed after the U.S. Holder acquires it at a price in excess
of its stated redemption price at maturity, special rules would
apply which cold result in a deferral of the amortization of some
bond premium until later in the term of the Note. Any election
to amortize bond premium applies to all taxable debt obligations
then owned and thereafter acquired by the U.S. Holder and may be
revoked only with the consent of the IRS.
DISPOSITION OF A NOTE. Except for a Market Discount or
Contingent Payment Note (as discussed above) or a Foreign
Currency Note (as discussed below), upon the sale, exchange or
retirement of a Note, a U.S. Holder generally will recognize
taxable gain or loss equal to the difference between the amount
realized on the sale, exchange or retirement (other than amounts
representing accrued and unpaid interest which are treated as
ordinary income) and such U.S. Holder's adjusted tax basis in the
Note. A U.S. Holder's adjusted tax basis in a Note generally
will equal such U.S. Holder's initial investment in the Note
increased by any original issue discount included in income (and
accrued market discount, if any, if the U.S. Holder has included
such market discount in income) and decreased by the amount of
any payments, other than qualified stated interest payments,
received and amortizable bond premium taken with respect to such
Note. Such gain or loss generally will be long-term capital gain
or loss if the Note was held for more than one year. The excess
of the net long-term capital gains over the net short term
capital losses is taxed at a lower rate than ordinary income for
certain corporate taxpayers. Pending legislation would reduce
the tax rate on long-term capital gains for certain taxpayers.
There can be no assurance that the pending legislation will be
enacted in its current form or any other form. The distinction
between capital gain or loss and ordinary income or loss is also
relevant for purposes of, among other things, limitations on the
deductibility of capital losses.
PAYMENTS DENOMINATED IN, OR DETERMINED BY REFERENCE TO, A FOREIGN
CURRENCY
As used herein, "Foreign Currency" means a currency or currency
unit other than U.S. dollars.
CASH METHOD. A U.S. Holder who uses the cash method of
accounting for United States Federal income tax purposes and who
receives a payment of interest on a Foreign Currency Note (other
than original issue discount or market discount) will be required
to include in income the U.S. dollar value of the Foreign
Currency payment (determined on the date such payment is
received) regardless of whether the payment is in fact converted
to U.S. dollars at that time, and such U.S. dollar value will be
the U.S. Holder's tax basis in such Foreign Currency.
ACCRUAL METHOD. A U.S. Holder who uses the accrual method of
accounting for United States Federal income tax purposes, or who
otherwise is required to accrue interest prior to receipt, will
be required to include in income the U.S. dollar value of the
amount of interest income (including original issue discount or
market discount and reduced by amortizable bond premium to the
extent applicable) that has accrued and is otherwise required to
be taken into
S-30
account with respect to a Foreign Currency Note during an accrual
period. The U.S. dollar value of such accrued income will be
determined by translating such income at the average rate of
exchange for the accrual period or, with respect to an accrual
period that spans two taxable years, at the average rate for the
partial period within the taxable year. A U.S. Holder may elect,
however, to translate such accrued interest income using the rate
of exchange on the last day of the accrual period or, with
respect to an accrual period that spans two taxable years, using
the rate of exchange on the last day of the taxable year. A U.S.
Holder should consult a tax advisor before making the above
election. A U.S. Holder will recognize exchange rate gain or
loss (which will be treated as ordinary income or loss) with
respect to accrued interest income on the date such income is
received. The amount of ordinary income or loss recognized will
equal the difference, if any, between the U.S. dollar value of
the Foreign Currency payment received (determined on the date
such payment is received) in respect of such accrual period and
the U.S. dollar value of interest income that has accrued during
the accrual period (as determined above).
PURCHASE, SALE AND RETIREMENT OF NOTES. A U.S. Holder who
purchases a Foreign Currency Note with previously owned Foreign
Currency will recognize ordinary income or loss in an amount
equal to the difference, if any, between such U.S. Holder's tax
basis in the Foreign Currency and the U.S. dollar fair market
value of the Foreign Currency used to purchase the Foreign
Currency Note, determined on the date of purchase.
Upon the sale, exchange or retirement of a Foreign Currency
Note, a U.S. Holder will recognize taxable gain or loss equal to
the difference between the amount realized on the sale, exchange
or retirement and such U.S. Holder's adjusted tax basis in the
Note. Except as discussed above with respect to Short-Term
Notes, Market Discount Notes, and Contingent Payment Notes and as
discussed below with respect to exchange or fluctuations, such
gain or loss generally will be capital gain or loss (except to
the extent of any accrued market discount not previously included
in the U.S. Holder's income) and will be long-term capital gain
or loss if at the time of sale, exchange or retirement the Note
has been held by such U.S. Holder for more than one year. To the
extent the amount realized represents accrued but unpaid
interest, however, such amount must be taken into account as
interest income, with exchange gain or loss computed as described
in "Payments Denominated In, or Determined by Reference to, a
Foreign Currency-Accrual Method" above. If a U.S. Holder
receives Foreign Currency on such a sale, exchange or retirement
the amount realized will be based on the U.S. dollar value of the
Foreign Currency on the date the payment is received or the
Foreign Currency Note is disposed of (or deemed disposed of in
the case of a taxable exchange of the Foreign Currency Note for a
new Foreign Currency Note). In the case of a Foreign Currency
Note that is denominated in Foreign Currency and is traded on an
established securities market, a cash basis U.S. Holder (or, upon
election, an accrual basis U.S. Holder) will determine the U.S.
dollar value of the amount realized by translating the Foreign
Currency payment at the spot rate of exchange on the settlement
date of the sale. A U.S. Holder's adjusted tax basis in a
Foreign Currency Note will equal the cost of the Foreign Currency
Note to such holder, increased by the amounts of any market
discount or original issue discount previously included in income
by the holder with respect to such Foreign Currency Note and
reduced by any amortized acquisition or other premium and any
principal payments received by the holder. A U.S. Holder's tax
basis in a Note, and the amount of any subsequent adjustments to
such holder's tax basis, will be the U.S. dollar value of the
Foreign Currency amount paid for such Note, or of the Foreign
Currency amount of the adjustment, determined on the date of such
purchase or adjustment.
S-31
Gain or loss realized upon the sale, exchange or retirement of
a Foreign Currency Note that is attributable to fluctuations in
currency exchange rates will be ordinary income or loss which
will not be treated as interest income or expense. Gain or loss
attributable to fluctuations in exchange rates will equal the
difference between the U.S. dollar value of the Foreign Currency
principal amount of the Note, determined on the date such payment
is received or the Foreign Currency Note is disposed of, and the
U.S. dollar value of the Foreign Currency principal amount of the
Note, determined on the date the U.S. Holder acquired the Note.
Such Foreign Currency gain or loss will be recognized only to the
extent of the total gain or loss realized by the U.S. Holder on
the sale, exchange or retirement of the Note.
ORIGINAL ISSUE DISCOUNT. In the case of a Discount Note or
Short-Term Note, (i) original issue discount is determined in
units of the Foreign Currency, (ii) accrued original issue
discount is translated into U.S. dollars as described in "-
Payments of Interest Denominated in, or Determined by Reference
to, a Foreign Currency-Accrual Method" above and (iii) the amount
of Foreign Currency gain or loss on the accrued original issue
discount is determined by comparing the amount of income received
attributable to the discount (either upon payment, maturity or an
earlier disposition), as translated into U.S. dollars at the rate
of exchange on the date of such receipt, with the amount of
original issue discount accrued, as translated above.
PREMIUM AND MARKET DISCOUNT. In the case of a Foreign Currency
Note with market discount (i) market discount is determined in
units of the Foreign Currency, (ii) accrued market discount taken
into account upon the receipt of any partial principal payment or
upon the sale, exchange, retirement or other disposition of the
Foreign Currency Note (other than accrued market discount
required to be taken into account currently) is translated into
U.S. dollars at the exchange rate on such disposition date (and
no part of such accrued market discount is treated as exchange
gain or loss) and (iii) accrued market discount currently
includible in income by a U.S. Holder for any accrual period is
translated into U.S. dollars on the basis of the average exchange
rate in effect during such accrual period, and the exchange gain
or loss is determined upon the receipt of any partial principal
payment or upon the sale, exchange, retirement or other
disposition of the Foreign Currency Note in the manner described
in "Payments Denominated in, or Determined by Reference to, a
Foreign Currency-Accrual Method" above with respect to
computation of exchange gain or loss on accrued interest.
With respect to a Foreign Currency Note with amortizable bond
premium, such premium is determined in the relevant Foreign
Currency and reduces interest income in units of the Foreign
Currency. Although not entirely clear, a U.S. Holder should
recognize exchange gain or loss equal to the difference between
the U.S. dollar value of the bond premium amortized with respect
to a period, determined on the date the interest attributable to
such period is received, and the U.S. dollar value of the bond
premium determined on the date of the acquisition of the Note.
EXCHANGE OF FOREIGN CURRENCIES. A U.S. Holder will have a tax
basis in any Foreign Currency received as interest or on the
sale, exchange or retirement of a Foreign Currency Note equal to
the U.S. dollar value of such Foreign Currency, determined at the
time the interest is received or at the time of sale, exchange or
retirement. Any gain or loss realized by a U.S. Holder on a sale
or other disposition of Foreign Currency (including its exchange
for U.S. dollars or its use to purchase Notes) will be ordinary
income or loss.
S-32
NON-U.S. HOLDERS
A non-U.S. Holder will not be subject to United States Federal
income or withholding taxes on payments of principal, premium (if
any) or interest (including original issue discount, if any) on a
Note, unless such non-U.S. Holder owns actually or constructively
10% or more of the total combined voting power of all classes of
stock of the Company entitled to vote, is a controlled foreign
corporation related directly or indirectly to the Company through
stock ownership, or is a bank receiving interest described in
Section 881(c)(3)(A) of the Code. To qualify for the exemption
from taxation, the last United States payor in the chain of
payment prior to payment to a non-U.S. Holder (the "Withholding
Agent") must have received in the year in which a payment of
interest or principal occurs, or in either of the two preceding
calendar years, a statement that (i) is signed by the beneficial
owner of the Note under penalties of perjury, (ii) certifies that
such owner is not a U.S. Holder and (iii) provides the name and
address of the beneficial owner. The statement may be made on an
IRS Form W-8 or a substantially similar form, and the beneficial
owner must inform the Withholding Agent of any change in the
information on the statement within 30 days of such change. If a
Note is held through a securities clearing organization or
certain other financial institutions, the organizations or
institution may provide a signed statement to the Withholding
Agent. However, in such case, the signed statement must be
accompanied by a copy of the IRS Form W-8 or the substitute form
provided by the beneficial owner to the organization or
institution. In addition, the Treasury Department has recently
issued proposed regulations regarding the withholding and
information reporting rules discussed above. In general, the
proposed regulations do not alter the substantive withholding and
information reporting requirements but unify current
certification procedures and forms, clarify reliance standards
procedures and forms and clarify reliance standards. However,
the proposed regulations would require in the case of Notes held
by a foreign partnership, that (i) the certification requirement
described above be provided by the partners rather than by the
foreign partnership and (ii) the partnership provide certain
information, including a United States taxpayer identification
number. A look-through rule would apply in the case of tiered
partnerships. If finalized in their current form, the proposed
regulations would generally be effective for payments made after
December 31, 1997, subject to certain transition rules. There
can be no assurance that the proposed regulations will be adopted
or as to the provisions that they will include if and when
adopted in temporary or final form.
Generally, a non-U.S. Holder will not be subject to United
Sates Federal income or withholding taxes on any amount which
constitutes capital gain upon retirement or disposition of a
Note, unless (i) such Holder is an individual who is present in
the United States for 183 days or more in the taxable year of
disposition, and either (a) such individual has a "tax home" (as
defined in Section 911(d)(3) of the Code) in the United States
(unless such gain is attributable to a fixed place of business in
a foreign country maintained by such individual and has been
subject to foreign tax of at least 10%) or (b) the gain is
attributable to an office or other fixed place of business
maintained by such individual in the United States or (ii) the
gain is effectively connected with the conduct of a trade or
business in the United States by the non-U.S. Holder.
If a non-U.S. Holder of a Note is engaged in a trade or
business in the United States, and if interest (including
original issue discount) on the Note is effectively connected
with the conduct of such trade or business, the non-U.S. Holder,
although exempt from the withholding tax discussed in the
S-33
preceding two paragraphs, will generally be subject to regular
United States income tax on interest (including any original
issue discount) and on any gain realized on the sale, exchange or
other disposition of a Note in the same manner as if it were a
U.S. Holder. See the discussion above regarding U.S. Holders.
In lieu of the certificate described above, such a Holder will be
required to provide to the Company a properly executed Internal
Revenue Service Form 4224 in order to claim an exemption from
withholding tax. In addition, if such non-U.S. Holder is a
foreign corporation, it may be subject to a branch profits tax
and interest (including original issue discount) on and any gain
recognized on the sale, exchange or other disposition of a Note
will be included in the effectively connected earnings and
profits of such non-U.S. Holder if such interest or gain, as the
case may be, is effectively connected with the conduct by the non-
U.S. Holder of a trade or business in the United States.
The Notes will not be includible in the estate of a non-U.S.
Holder unless the individual owns, actually or constructively,
10% or more of the total combined voting power of all classes of
stock of the Company entitled to vote or, at the time of such
individual's death, payments in respect of the Notes would have
been effectively connected with the conduct by such individual of
a trade or business in the United States.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Backup withholding of United States Federal income tax at a
rate of 31% may apply to payments (including original issue
discount) made in respect of the Notes to registered owners who
are not "exempt recipients" and who fail to provide certain
identifying information (such as the registered owner's taxpayer
identification number) in the required manner. Generally,
individuals are not exempt recipients, whereas corporations and
certain other entities generally are exempt recipients. Payments
made in respect of the Notes to a U.S. Holder must be reported to
the IRS, unless the U.S. Holder is an exempt recipient or
establishes an exemption. Compliance with the identification
procedures described in the preceding section would establish an
exemption from backup withholding for those non-U.S. Holders who
are not exempt recipients.
Under current Treasury Regulations, payment on the sale,
exchange or other disposition of a Note made to or through a
foreign office of a broker generally will not be subject to
backup withholding. However, if such 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 will be
required unless the broker has in its records documentary
evidence that the beneficial owner is not a United States person
and certain other conditions are met or the beneficial owner
otherwise establishes an exemption. Under proposed Treasury
Regulations, backup withholding may apply to any payment which
such broker is required to report if such broker has actual
knowledge that the payee is a United States person. Payments to
or through the United States office of a broker will be subject
to backup withholding and information reporting unless the Holder
certifies, under penalties of perjury, that it is not a United
States person or otherwise establishes an exemption.
Holders should consult their tax advisors regarding their
qualification for an exemption from backup withholding and
information reporting and the procedures for obtaining such an
exemption, if applicable. Any amounts withheld under the backup
withholding rules from a payment to a beneficial
S-34
owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the
required information is furnished to the IRS.
SUPPLEMENTAL PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in the
Distribution Agreement, the Notes are being offered on a
continuing basis by GTE through Goldman, Sachs & Co., Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
and Salomon Brothers Inc (the "Agents"), who have agreed to use
reasonable best efforts to solicit purchases of the Notes. GTE
will have the sole right to accept offers to purchase Notes and
may reject any proposed purchase of Notes in whole or in part.
The Agents shall have the right, in their discretion reasonably
exercised, to reject any offer to purchase Notes, in whole or in
part. GTE will pay the Agents a commission of from 0.125% to
0.750% of the principal amount of Notes, depending upon maturity,
for sales made through them as Agents. For Notes with maturities
greater than 30 years from their dates of issue, commissions will
be negotiated at the time of sale and indicated in the applicable
Pricing Supplement.
GTE may also sell Notes to the Agents as principals for their
own accounts at a discount to be agreed upon at the time of sale,
or the purchasing Agents may receive from GTE a commission or
discount equivalent to that set forth on the cover page hereof in
the case of any such principal transaction in which no other
discount is agreed. Such Notes may be resold at prevailing
market prices, or at prices related thereto, at the time of such
resale, as determined by the Agents.
In addition, the Agents may offer the Notes they have purchased
as principal to other dealers. The Agents may sell Notes to any
dealer at a discount and, unless otherwise specified in the
applicable Pricing Supplement, such discount allowed to any
dealer may include all or part of the discount to be received
from GTE. Unless otherwise indicated in the applicable Pricing
Supplement, any Note sold to an Agent as principal will be
purchased by such Agent at a price equal to 100% of the principal
amount thereof less a percentage equal to the commission
applicable to any agency sale of a Note of identical maturity.
After the initial public offering of Notes to be resold to
investors and other purchasers on a fixed public offering price
basis, the public offering price, concession and discount may be
changed.
In connection with the offering, the Agents may purchase and
sell the Notes in the open market. These transactions may
include over-allotment and stabilizing transactions and purchases
to cover short positions created by the Agents in connection with
the offering. Stabilizing transactions consist of certain bids
or purchases for the purpose of preventing or retarding a decline
in the market price of the Notes, and short positions created by
the Agents involve the sale by the Agents of a greater aggregate
principal amount of Notes than they are required to purchase from
the Company in the offering. The Agents also may impose a
penalty bid, whereby selling concessions allowed to broker-
dealers in respect of the Notes sold in the offering may be
reclaimed by the Agents if such Notes are repurchased by the
Agents in stabilizing or covering transactions. These activities
may stabilize, maintain or otherwise affect the market price of
the Notes, which may be higher than the price that might
otherwise prevail in the open market; and these activities, if
commenced, may be discontinued at any time. These transactions
may be effected in the over-the-counter market or otherwise.
S-35
GTE reserves the right to sell Notes through one or more
additional agents or directly to certain investment banking firms
as underwriters for resale to the public. No commission will be
payable to the Agents on any Notes sold through other agents or
directly by GTE to underwriters. GTE has additionally reserved
the right to sell Notes directly to investors on its own behalf
in those jurisdictions where it is authorized to do so.
The Agents, as agents or principals, may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933
(the "Securities Act"). GTE has agreed to indemnify the Agents
against certain liabilities, including liabilities under the
Securities Act. GTE has agreed to reimburse the Agents for
certain expenses.
The Agents may sell to or through dealers who may resell to
investors, and the Agents may pay all or part of their discount
or commission to such dealers. Such dealers may be deemed to be
"underwriters" within the meaning of the Securities Act.
Unless otherwise indicated in the applicable Pricing
Supplement, payment of the purchase price of Notes will be
required to be made in immediately available funds in The City of
New York.
Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Salomon Brothers Inc may engage in transactions
with and perform services for GTE in the ordinary course of
business.
The Notes are a new issue of securities with no established
trading market and will not be listed on any securities exchange.
No assurance can be given as to the existence or liquidity of the
secondary market for the Notes.
S-36
No person has been authorized to
give any information or to make any
representations other than contained
or incorporated by reference in this
Prospectus Supplement, the applicable $3,000,000,000
Pricing Supplement or the Prospectus
in connection with the offer made by
this Prospectus Supplement, the appli-
cable Pricing Supplement and the Pro-
spectus and, if given or made, such
information or representations must not
be relied upon as having been authorized.
This Prospectus Supplement, the appli- GTE Corporation
[LOGO]
cable Pricing Supplement and the Pro-
spectus do not constitute an offer or
solicitation by anyone in any state in
which such offer or solicitation is not
authorized or in which the person making
such offer is not qualified to do so or
to anyone to whom it is unlawful to make
such offer or solicitation. Neither the
delivery of this Prospectus Supplement, Medium-Term Notes,
Series A
the applicable Pricing Supplement or the
Prospectus nor any sale made hereunder or
thereunder shall under any circumstance
create any implication that there has not
been any change in the affairs of GTE
since the date hereof or that the infor-
mation contained herein or therein is
correct as of any time subsequent to its
date.
TABLE OF CONTENTS
Prospectus Supplement
Page
Risk Factors . . . . . .. . . . . . S-2
Description of the Notes . . . . . S-4
Special Provisions Relating to
Foreign Currency Notes . . . . . S-21
Certain United States Federal
Income Tax Considerations . . . S-24
Supplemental Plan of
Distribution . . . . . . . . . . S-35 Goldman,
Sachs & Co.
Merrill Lynch & Co.
Salomon Brothers Inc
Prospectus
Statement of Available
Information . . . . . . . . . . . 2
Incorporation of Certain
Documents by Reference . . . . . . 2
GTE Corporation . . . . . . . . . . . 2
Use of Proceeds . . . . . . . . . . . 3
Consolidated Ratios of Earnings to
Fixed Charges . . . . . . . . . . 3
The Securities . . . . . . . . . . . 3
Experts . . . . . . . . . . . . . . 7
Certain Legal Matters . . . . . . . . 7
Plan of Distribution . . . . . . . . 8
SUBJECT TO COMPLETION DATED JULY 25, 1997
GTE CORPORATION [LOGO]
DEBT SECURITIES
______________
GTE Corporation ("GTE") intends to offer from time to time
up to $3,000,000,000 aggregate initial offering price, or the
equivalent thereof in one or more foreign or composite
currencies, of its debt securities (the "Securities") in one or
more series at prices and on terms to be determined at the time
or times of sale. The aggregate amount, authorized
denominations, rate and time of payment of interest, maturity,
initial public offering price, redemption provisions, if any, the
currency or composite currency (if other than United States
dollars) in which principal or premium, if any, and interest on
the Securities will be payable and other specific terms, of each
series of Securities will be set forth in an accompanying
prospectus supplement ("Prospectus Supplement").
______________
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.
GTE may sell the Securities through underwriters, dealers or
agents, or directly to one or more institutional purchasers. A
Prospectus Supplement will set forth the names of underwriters or
agents, if any, any applicable commissions or discounts, the
price of the Securities and the net proceeds to GTE from any such
sale or sales.
______________
The date of this Prospectus is , 1997.
##########################################################
#################
# 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.
#
##########################################################
#################
STATEMENT OF AVAILABLE INFORMATION
GTE is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and, in
accordance therewith, files, reports, proxy statements and other
information with the Securities and Exchange Commission ("SEC").
These reports, proxy statements and other information can be
inspected and copied at the public reference facilities
maintained by the SEC 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
SEC at its prescribed rates and can also be inspected at the New
York, Chicago and Pacific Stock Exchanges on which securities of
GTE are listed. In addition, the SEC maintains a Web site that
contains reports, proxy and information statements and other
information regarding registrants that file electronically with
the SEC. The address of this site is http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents are incorporated herein by
reference:
1. The Annual Report on Form 10-K of GTE for the year ended
December 31, 1996;
2. The Quarterly Report on Form 10-Q of GTE for the quarter
ended
March 31, 1997; and
3. The Current Reports on Form 8-K of GTE dated May 6, 1997
and
June 10, 1997.
All documents filed by GTE pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of the offering of the Securities
hereunder shall be deemed to be incorporated by reference in this
Prospectus and to be part hereof from the date of filing of such
documents.
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.
Unless otherwise indicated, currency amounts in this
Prospectus and the Prospectus Supplement are stated in United
States dollars ("$" or "U.S. $").
GTE CORPORATION
GTE was incorporated under the laws of the State of New York
on February 25, 1935 and has its principal executive offices at
One Stamford Forum, Stamford, Connecticut 06904, telephone (203)
965-2000.
-2-
GTE is one of the largest publicly-held telecommunications
companies in the world. It is the largest U.S.-based local
telephone company. GTE's domestic and international operations
serve 26.6 million access lines through subsidiaries in the
United States, Canada, and the Dominican Republic and an
affiliate in Venezuela. GTE is a leading mobile-cellular
operator in the United States, with the potential of serving 61.3
million cellular and personal communications service customers.
Outside the United States, GTE operates mobile-cellular networks
serving some 16.8 million POPs through
subsidiaries in Canada and the Dominican Republic and affiliates
in Venezuela and Argentina. Beginning in 1996, GTE became the
first among its peers to offer "one-stop shopping" for local,
long-distance and Internet access services. GTE is also a leader
in government and defense communications systems and equipment,
aircraft-passenger telecommunications, directories and
telecommunication-based information services and systems.
USE OF PROCEEDS
Except as specified in a Prospectus Supplement, the net
proceeds from the sale of the Securities, exclusive of accrued
interest, will be used toward (1) the repayment of short-term
debt, which at June 30, 1997 was $985,000,000 on an
unconsolidated basis at an average annual interest cost of 5.63%,
(2) further investment in, or advances to, subsidiaries in
connection with the financing of their operations and (3) general
corporate purposes.
<TABLE>
<CAPTION>
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
Three
Months
Ended
March 31, Years Ended December 31,
1997, 1996 1995 1994 1993(b) 1992
_________ _______________________________
<S> <C> <C> <C> <C> <C> <C>
Consolidated
Ratios of
Earnings to
Fixed Charges
(Unaudited)(a) 4.00 4.27 4.00 4.18 2.07 2.66
</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 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.
(b) Excluding from 1993 the effect of a $1.8 billion
pre-tax one-time restructuring charge, the cost of
voluntary separation programs and the gain on the sale
of non-strategic telephone properties, the consolidated
ratio of earnings to fixed charges would have been 3.31.
THE SECURITIES
The Securities are to be issued as one or more series under
an Indenture dated as of December 1, 1996, as amended and
supplemented (the "Indenture"), between GTE and The Bank of New
York, as trustee (the "Trustee"). By any one of (a) a
supplemental indenture to the Indenture duly executed by
authorized officers of GTE and the Trustee (a "Supplemental
Indenture"), (b) a resolution
-3-
of the Board of Directors of GTE (a "Board Resolution"), or (c) a
certificate of an authorized officer of GTE pursuant to
authorization from the Board of Directors of GTE (an "Officer's
Certificate"), GTE will establish, or specify the manner for
establishing, the title, aggregate principal amount, date or
dates of maturity, dates for payment and rate of interest (if
any), redemption dates, prices, obligations and restrictions and
other terms applicable to each new series of Securities. 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 express reference to, the cited Articles and Sections
of the Indenture and the forms of Securities, which are filed as
exhibits to the Registration Statement pertaining to the
Securities and the documents incorporated therein by reference.
FORM AND EXCHANGE
The Securities are issuable in one or more series pursuant
to a Supplemental Indenture, Board Resolution or Officer's
Certificate. Securities of each series will be issuable in
registered form, and, except as otherwise provided for in a
Prospectus Supplement, only in denominations of $1,000 and
multiples thereof and will be exchangeable for Securities of the
same series of other denominations of a like aggregate principal
amount, without service charge except for reimbursement of taxes,
if any. (ARTICLE TWO)
MATURITY, INTEREST AND PAYMENT
Information concerning the maturity, interest rate (if any)
and payment dates of each series of the Securities will be
contained in a Prospectus Supplement, or a Pricing Supplement
thereto, relating to that series of Securities.
The Indenture permits the issuance of Securities of any
series as "Original Issue Discount Securities". If any
Securities are issued as Original Issue Discount Securities, they
will state on their face that they are Original Issue Discount
Securities and will generally provide for an amount less than the
stated principal amount thereof to be due and payable upon
declaration of acceleration of the maturity thereof pursuant to
the terms of the Indenture. Federal income tax considerations
and other special considerations applicable to any such Original
Issue Discount Securities will be described in the applicable
Prospectus Supplement.
REDEMPTION PROVISIONS, SINKING FUND AND DEFEASANCE
Each series of the Securities will be redeemable upon not
less than 30 days' notice at the redemption prices and subject to
the conditions that will be set forth in a Supplemental
Indenture, Board Resolution, or Officer's Certificate and in a
Prospectus Supplement, or a Pricing Supplement thereto, relating
to that series of Securities. (ARTICLE THREE) If a sinking fund
is established with respect to any series of the Securities, a
description of the terms of such sinking fund will be set forth
in a Supplemental Indenture, Board Resolution, or Officer's
Certificate and in a Prospectus Supplement, or a Pricing
Supplement thereto, relating to that series of Securities. The
Indenture provides that each series of the Securities is subject
to defeasance. (ARTICLE ELEVEN)
-4-
RESTRICTIONS
The Securities will not be secured. The Indenture provides,
however, that if GTE shall at any time mortgage or pledge any of
its property, GTE will secure the Securities, equally and ratably
with the other indebtedness or obligations secured by each
mortgage or pledge, so long as such other indebtedness or
obligations shall be so secured. There are certain exceptions to
the foregoing, among them that the Securities need not be secured
in the case of purchase money mortgages or conditional sales
agreements, or mortgages existing at time of purchase, on
property acquired after the date of the Indenture, certain
deposits or pledges to secure the performance of bids, tenders,
contracts or leases or in connection with workers' compensation
and similar matters, mechanics' and similar liens in the ordinary
course of business, and subordination of GTE's rights with
respect to indebtedness owed to GTE by a subsidiary. (SECTION
4.05)
The Indenture does not limit the amount of debt securities
which may be issued or the amount of debt which may be incurred
by GTE. (SECTION 2.01)
Unless otherwise indicated in a Prospectus Supplement, the
covenants described above would not necessarily afford the
holders of Securities protection in the event of a highly
leveraged transaction involving GTE.
BOOK-ENTRY, DELIVERY AND FORM
If a Prospectus Supplement, or a Pricing Supplement thereto,
specifies that the Securities of a series are to be issued in the
form of one or more registered global certificates (for each
series, collectively, a "Global Security"), unless otherwise
specified in such Prospectus Supplement, or a Pricing Supplement
thereto, the Global Security will be deposited with, or on behalf
of, The Depository Trust Company (the "Depository") and
registered in the name of the Depository's nominee. Except as
set forth below, the Global Security may be transferred, in whole
and not in part, only to another nominee of the Depository or to
a successor of the Depository or its nominee.
The Depository has advised as follows: It is a limited-
purpose trust company which was created to hold securities for
its participants and to facilitate the clearance and settlement
of securities transactions between participants in such
securities through electronic book-entry changes in accounts of
its participants. Participants include securities brokers and
dealers (including the underwriters or dealers named in the
Prospectus Supplement relating to the Securities), banks and
trust companies, clearing corporations and certain other
organizations. Access to the Depository's system is also
available to others such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship
with a participant, either directly or indirectly ("indirect
participants"). Persons who are not participants may
beneficially own securities held by the Depository only through
participants or indirect participants.
The Depository has advised that pursuant to procedures
established by it (i) upon issuance of the Securities by GTE, the
Depository will credit the accounts of the participants
designated by the underwriters or dealers with the principal
amounts of the Securities purchased by the underwriters or
dealers, and (ii) ownership of beneficial interests in the Global
Security will be shown on, and the transfer of that ownership
will be effected only through, records maintained by the
Depository (with respect to participants' interests), the
participants and indirect participants (with respect to the
-5-
owners of beneficial interests in the Global Security). The laws
of some states require that certain persons take physical
delivery in definitive form of securities which they own.
Consequently, the ability to transfer beneficial interests in the
Global Security is limited to such extent.
So long as the Depository's nominee is the registered owner
of the Global Security, such nominee for all purposes will be
considered the sole owner or holder of the Securities. Except as
provided below, owners of beneficial interests in the Global
Security will not be entitled to have any of the Securities
registered in their names and will not receive or be entitled to
receive physical delivery of the Securities in definitive form.
Neither GTE, the Trustee, any paying agent of GTE nor the
Depository will have any responsibility or liability for any
aspect of the records relating to or payments made on account of
beneficial ownership interests in the Global Security, or for
maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
Principal and interest payments on the Securities registered
in the name of the Depository's nominee will be made to the
Depository's nominee as the registered owner of the Global
Security. GTE and the Trustee will treat the persons in whose
names the Securities are registered as the owners of such
Securities for the purpose of receiving payment of principal and
interest on the Securities and for all other purposes whatsoever.
Therefore, neither GTE, the Trustee nor any paying agent of GTE
will have any direct responsibility or liability for the payment
of principal and interest on the Securities to owners of
beneficial interests in the Global Security. The Depository has
advised GTE and the Trustee that its present practice is, upon
receipt of any payment of principal or interest, to immediately
credit the accounts of the participants with such payment in
amounts proportionate to their respective holdings in principal
amount of beneficial interests in the Global Security as shown in
the records of the Depository. Payments by participants and
indirect participants to owners of beneficial interests in the
Global Security will be governed by standing instructions and
customary practices, as is now the case with securities held for
the accounts of customers in bearer form or registered in "street
name," and will be the responsibility of the participants or
indirect participants.
If the Depository is at any time unwilling or unable to
continue as depository with respect to an outstanding series of
Securities or if at any time the Depository shall no longer be
registered or in good standing under the Exchange Act or other
applicable statute and a successor depository is not appointed by
GTE within 90 days, GTE will issue Securities in definitive form
in exchange for the Global Security. In addition, GTE may at any
time determine not to have an outstanding series of Securities
represented by a Global Security. In either instance, an owner
of a beneficial interest in the Global Security will be entitled
to have Securities equal in principal amount to such beneficial
interest registered in its name and will be entitled to physical
delivery of such Securities in definitive form. Securities so
issued in definitive form will be issued in denominations of U.S.
$1,000 and integral multiples thereof and will be issued in
registered form only, without coupons.
MODIFICATION OF INDENTURE
The Indenture contains provisions permitting GTE and the
Trustee, with the consent of the holders of not less than a
majority in aggregate principal amount of the Securities of any
series at the time outstanding and affected by
-6-
such modification, to modify the Indenture or any supplemental
indenture affecting that series of Securities or the rights of
the holders of that series of Securities; provided that no such
modification shall (i) extend the fixed maturity of any Security,
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 Security so affected, or (ii) reduce the
aforesaid percentage of Securities, the holders of which are
required to consent to any such supplemental indenture, without
the consent of each holder of Securities then outstanding and
affected thereby. (SECTION 9.02)
In addition, GTE and the Trustee may execute, without the
consent of any holder of Securities, any supplemental indenture
for certain other usual purposes including the creation of any
new series of the Securities. (SECTIONS 2.01, 9.01 and 10.01)
EVENTS OF DEFAULT AND NOTICE THEREOF
The Indenture provides that the following described events
constitute "Events of Default" with respect to each series of the
Securities issued thereunder: (a) failure for 30 business days
to pay interest on the Securities of that series when due; (b)
failure to pay principal or premium, if any, on the Securities 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; (c) failure to observe or perform
any other covenant (other than those specifically relating to
another series) in the Indenture for 90 days after notice with
respect thereto; or (d) certain events in bankruptcy, insolvency
or reorganization. (SECTION 6.01)
The holders of a majority in aggregate outstanding principal
amount of any series of Securities 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
Securities may declare the principal (or, for any Original Issue
Discount Securities of that series, such portion of the principal
amount thereof as may be specified in the terms of such Original
Issue Discount Securities) due and payable immediately upon an
Event of 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. (SECTION 6.01) Reference is made to
the Prospectus Supplement, or the Pricing Supplement thereto,
relating to the Securities of any series that are Original Issue
Discount Securities for the particular provisions relating to
acceleration of a portion of the principal amount of such
Original Issue Discount Securities upon the occurrence of an
Event of Default and the continuation thereof.
The holders of a majority in aggregate outstanding principal
amount of any series of the Securities may, on behalf of the
holders of all the Securities 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))
-7-
CONCERNING THE TRUSTEE
The Trustee, prior to an Event of Default, undertakes to
perform only such duties as are specifically set forth in the
Indenture and, after the occurrence of an Event of Default, shall
exercise the same degree of care as a prudent individual would
exercise in the conduct of his or her own affairs. (SECTION
7.01) Subject to such provisions, 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 Securities, unless
offered reasonable indemnity by such security holder against the
costs, expenses and liabilities which might be incurred thereby.
(SECTION 7.02) The Trustee is not required to expend or risk its
own funds or 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.
EXPERTS
The consolidated financial statements included in GTE's
Annual Report on Form 10-K for the year ended December 31, 1996,
which is incorporated by reference in this Prospectus, have been
audited by Arthur Andersen LLP, 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. Reference is made to said
report, which includes an explanatory paragraph with respect to
the discontinuance of the application of the provisions of
Statement of Financial Accounting Standards No. 71 "Accounting
for the Effects of Certain Types of Regulation" in 1995, as
discussed in Note 2 to the consolidated financial statements.
CERTAIN LEGAL MATTERS
The validity of the Securities will be passed upon for GTE
by William P. Barr, Esq., its Executive Vice President -
Government & Regulatory Advocacy, General Counsel. Certain legal
matters in connection with the Securities will be passed upon for
the purchasers, underwriters, or agents by Milbank, Tweed, Hadley
& McCloy, New York, New York. As of May 16, 1997, Mr. Barr was
the beneficial owner of approximately 3,032 shares of GTE Common
Stock and had options to purchase an aggregate of 58,666 shares
of GTE Common Stock.
PLAN OF DISTRIBUTION
GTE may sell any series of Securities in one or more of the
following ways: (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, or a Pricing
Supplement thereto, with respect to each series of Securities
will set forth the terms of the offering of such Securities,
including the name or names of any underwriters or agents, the
purchase price of such Securities and the proceeds to GTE from
such sale, any underwriting discounts or agency fees and other
items 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 Securities may be listed.
-8-
If underwriters are used in the sale, such 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, or
a Pricing Supplement thereto, the obligations of the underwriters
to purchase any series of Securities will be subject to certain
conditions precedent and the underwriters will be obligated to
purchase all of such series of Securities if any are purchased.
In the event of a default of one or more of the underwriters
involving not more than 10% of the aggregate principal amount of
the Securities offered for sale, the non-defaulting underwriters
would be required to purchase the Securities agreed to be
purchased by such defaulting underwriter or underwriters. In the
event of a default in excess of 10% of the aggregate principal
amount of the Securities, GTE may, at its option, sell less than
all the Securities offered.
If agents are used in the sale, unless otherwise indicated
in the Prospectus Supplement, or a Pricing Supplement thereto,
any such agent will be acting on a reasonable best efforts basis.
Underwriters and agents may be entitled under agreements
entered into with GTE to indemnification by GTE against certain
civil liabilities, including 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.
-9-
_________________________________________
______________________________
No dealer, salesman or any other
person has been authorized to give any
information or to make any representations
other than those contained in this
Prospectus in connection with the offer GTE
Corporation [LOGO]
contained in this Prospectus, and, if
given or made, such information or
representations must not be relied upon.
This Prospectus does not constitute an
offering by GTE or any dealer in any
jurisdiction in which such offering may
not be lawfully made.
_________
CONTENTS
Page
____
Statement of Available Information .. 2
Incorporation of Certain Documents
by Reference .................... 2
GTE Corporation ..................... 2
Use of Proceeds ..................... 3
Consolidated Ratios of Earnings
to Fixed Charges ................ 3
The Securities ...................... 3
Experts .......... .................. 7
Certain Legal Matters ............... 7
Plan of Distribution ................ 8
_________________________________________
______________________________
51
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 16. Exhibits:
See Exhibit Index on Page E-1.
II-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-3 and has duly caused this Amendment to the 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 25th day of July, 1997.
GTE CORPORATION
(Registrant)
J. MICHAEL KELLY
J. Michael Kelly
Executive Vice President -
Finance and Planning
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement has been signed
below by the following persons in the capacities and on the date
indicated.
(1) Principal executive officer:
CHARLES R. LEE
Chairman of the Board )
(Charles R. Lee) and Chief Executive )
Officer )
)
(2) Principal financial officer: )
)
)
J. MICHAEL KELLY )
Executive Vice President- )
(J. Michael Kelly) Finance and Planning )
)July 25,
1997
)
(3) Principal accounting officer: )
)
)
WILLIAM M. EDWARDS, III )
Vice President and )
(William M. Edwards, III) Controller )
)
)
(4) Directors: )
)
)
EDWIN L. ARTZ )
Director )
(Edwin L. Artz) )
)
)
JAMES R. BARKER )
Director )
(James R. Barker) )
II-2
(4) Directors, cont'd.
EDWARD H. BUDD )
Director )
(Edward H. Budd) )
)
)
ROBERT F. DANIELL )
Director )
(Robert F. Daniell) )
)
)
KENT B. FOSTER )
Director )
(Kent B. Foster) )
)
)
JAMES L. JOHNSON )
Director )
(James L. Johnson) )
)
)
RICHARD W. JONES )
Director )
(Richard W. Jones) )
)
)
JAMES L. KETELSEN )July 25, 1997
Director )
(James L. Ketelsen) )
)
)
CHARLES R. LEE )
Director )
(Charles R. Lee) )
)
)
MICHAEL T. MASIN )
Director )
(Michael T. Masin) )
)
)
SANDRA O. MOOSE )
Director )
(Sandra O. Moose) )
)
)
RUSSELL E. PALMER )
Director )
(Russell E. Palmer) )
)
)
ROBERT D. STOREY )
Director )
(Robert D. Storey) )
54
II-3
EXHIBIT INDEX
Exhibit
Number
_______
1.1 - Form of Purchase Agreement, including
Standard Purchase Agreement Provisions (July 1997
Edition).
1.2 - Form of Distribution Agreement.
* 4.l - Indenture dated as of December 1, 1996
between GTE and The Bank of New York as Trustee
(incorporated by reference from GTE Corporation's
Current Report on Form 8-K dated January 21,
1997).
* 4.2 - Form of Third Supplemental Indenture to be
dated as of July 1, 1997 between GTE and The Bank
of New York as Trustee.
4.3 - Form of Debt Security.
* 4.4 - Form of Fixed Rate Medium-Term Note.
* 4.5 - Form of Floating Rate Medium-Term Note.
* 5 - Opinion of William P. Barr, Esq.
* l2 - Consolidated Statement of Ratio of Earnings
to Fixed Charges (contained in Exhibit 12 to
GTE's Report on Form 10-Q for the quarter ended
March 31, 1997).
* 23.l - The consent of Arthur Andersen LLP is
included on page II-5 of this Registration
Statement.
* 23.2 - The consent of William P. Barr, Esq.
(contained in opinion filed as Exhibit 5).
* 25 - Form T-1 Statement of Eligibility under the
Trust Indenture Act of 1939, as amended, of The
Bank of New York.
* 26 - Form of Invitation For Bids.
_______________
* Previously filed.
E-1
EXHIBIT 1.1
GTE CORPORATION
PURCHASE AGREEMENT
GTE Corporation, a New York corporation ("GTE"), proposes to
issue and sell $ ,000,000 aggregate principal amount of
(the "New Securities"). Subject to the terms and conditions set
forth or incorporated by reference herein, GTE agrees to sell,
and the purchaser or purchasers named in Schedule A attached
hereto (the "Purchasers") agree to purchase, the New Securities
at
% of their principal amount plus accrued interest, if any,
from
, 199 to the date of payment for the New Securities and
delivery thereof. Interest on the New Securities will be payable
on and
, commencing . The New Securities will
be reoffered to the public at % of their principal
amount.
All the provisions contained in GTE's Standard Purchase
Agreement Provisions (July 1997 Edition) (the "Standard Purchase
Agreement Provisions") annexed hereto shall be deemed to be a
part of this Purchase Agreement to the same extent as if such
provisions had been set forth in full herein.
REDEMPTION PROVISIONS:
[The New Securities will not be redeemable prior to
maturity.]
OR
[The New Securities will not be redeemable prior to (
). Thereafter, the new Securities will be redeemable on not less
30 nor more than 60 days notice given as provided in the
Indenture, as a whole or in part, at the option of the Company,
at the redemption price set forth below. The "initial regular
redemption price" will be the initial public offering price as
defined below plus the rate of interest on the New Securities;
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 Securities, the initial public offering price of the New
Securities shall be the price, expressed in percentage of
principal amount (exclusive of accrued interest), at which the
New Securities are to be initially offered for sale to the
public; if there is not a public offering of the New Securities,
the initial public offering price of the New Securities shall be
deemed to be the price, expressed in percentage of principal
amount (exclusive of accrued interest), to be paid to GTE by the
Purchasers.]
SINKING FUND PROVISIONS:
(If Applicable)
-2-
CLOSING:
The Purchasers agree to pay for the New Securities, at the
option of GTE, by certified or official bank check or checks or
by wire transfer, in each case in same day funds upon delivery of
such New Securities 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
GTE and the Purchasers or the firm or firms designated as the
representative of the Purchasers (the "Representative"). GTE
shall advise the Representative not later than the business day
immediately preceding the Closing Date of its decision whether to
accept payment for the new Securities by certified bank check or
by wire transfer and, if GTE chooses to accept payment by wire
transfer, GTE shall provide the Representative on such date
immediately preceding the Closing Date with the appropriate wire
transfer instruction. The closing will be held at the offices of
on the Closing Date.
DENOMINATION OF NEW SECURITIES:
[The New Securities shall be in the form of temporary or
definitive fully-registered New Securities in denominations of
One Thousand Dollars ($1,000) or any integral multiple thereof,
registered in such names as the Purchasers or the Representative
shall request not less than two business days before the Closing
Date. GTE agrees to make the New Securities available to the
Purchasers or the Representative for inspection at the office of
The Bank of New York, New York, New York, at least twenty-four
hours prior to the time fixed for the delivery of the New
Securities on the Closing Date.]
OR
[The New Securities shall be in the form of temporary or
definitive fully-registered New Securities in denominations as
GTE may determine (if other than U.S. $1,000) and denominated in
such foreign currency or composite currency as GTE may determine,
registered in such names as the Purchasers or the Representative
shall request not less than two business days before the Closing
Date. GTE agrees to make the New Securities available to the
Purchasers or the Representative for inspection at the office of
The Bank of New York, New York, New York, at least twenty-four
hours prior to the time fixed for the delivery of the New
Securities on the Closing Date.]
OR
[The New Securities shall be in the form of one or more
Global Securities which shall represent, and shall be denominated
in an amount equal to the aggregate principal amount of, the New
Securities and shall be registered in the name of (name of
depository) or its nominee. GTE agrees to make the New
Securities available to the Purchasers or the Representative for
inspection at the office of (name and address of depository), at
least twenty-four hours prior to the time fixed for the delivery
of the New Securities on the Closing Date.]
RESALE:
[The Purchasers represent that they intend to resell the New
Securities, and therefore the provisions applicable to Reselling
Purchasers in the Standard Purchase Agreement Provisions will be
applicable.]
-3-
OR
[The Purchasers represent that they do not intend to resell
the New Securities, and therefore the provisions applicable to
Reselling Purchasers in the Standard Purchase Agreement
Provisions will not be applicable.]
In witness whereof, the parties have executed this Purchase
Agreement this day of , 199 .
(Name of Purchasers or
Representative)
By:
Title:
GTE CORPORATION
By:
Title:
59
SCHEDULE A
The names of the Purchasers and the principal amount of New
Securities which each respectively offers to purchase are as
follows:
Principal Amount
Name of New Securities
$
Total................... $ ,000,000
GTE CORPORATION
STANDARD PURCHASE AGREEMENT PROVISIONS
(July 1997 Edition)
GTE Corporation, a New York corporation ("GTE"), may enter
into one or more purchase agreements providing for the sale of
designated securities to the purchaser or purchasers named
therein (the "Purchasers"). The standard provisions set forth
herein will be incorporated by reference in any such purchase
agreement ("Purchase Agreement"). The Purchase Agreement,
including these Standard Purchase 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 Purchase Agreement have
the meanings set forth therein.
I. SALE OF THE SECURITIES
GTE proposes to issue one or more series of securities (the
"Securities") pursuant to the provisions of an Indenture dated as
of December 1, 1996 between GTE and The Bank of New York, as
Trustee (the "Indenture"). Pursuant to supplemental indentures
supplementing and/or amending the aforementioned Indenture, GTE
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.
GTE has filed with the Securities and Exchange Commission
(the "Commission") registration statement No. 333-31333 relating
to $2,500,000,000 aggregate initial offering price of GTE's
securities registered thereunder and $500,000,000 aggregate
initial offering price of GTE's securities registered under
Registration Statement No. 33-63145 (the amounts remaining unsold
thereunder from time to time, collectively, the "Securities"),
including a prospectus which, pursuant to Rule 429, of the
Securities Act of 1933, as amended (the "Act"), relates to the
Securities, 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 Securities (such particular series being
hereinafter referred to as the "New Securities") pursuant to Rule
424(b) under the Act ("Rule 424(b)"). The term "Registration
Statement" means the registration statements referred to herein
as amended to the date of the Purchase Agreement. The term
"Basic Prospectus" means the prospectus relating to the
Securities included in the Registration Statement. The term
"Prospectus" means the Basic Prospectus together with the
prospectus supplement specifically relating to the New
Securities, as filed with, or transmitted for filing to, the
Commission pursuant to Rule 424(b). As used herein, the terms
"Registration Statement", "Basic Prospectus", and "Prospectus"
shall include in each case the material, if any, incorporated by
reference therein.
II. PURCHASER'S REPRESENTATIONS AND RESALE
Each Purchaser represents and warrants that information
furnished in writing to GTE expressly for use with respect to the
New Securities 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 Purchasers advise GTE in the Purchase Agreement that
they intend to resell the New Securities, GTE will assist the
Purchasers as hereinafter provided. The terms of any such
resale will be furnished to GTE in writing and will be set forth
in the Prospectus. The provisions of Paragraphs D and E of
Article VI and Articles VIII, IX and X of this Agreement apply
only to Purchasers that have advised GTE of their intention to
resell the New Securities ("Reselling Purchasers"). All other
provisions apply to any Purchaser including a Reselling
Purchaser.
-2-
III. CLOSING
The closing will be held at the location specified by GTE at
least two business days prior to the Closing Date. Concurrent
with the delivery of the New Securities to the Purchasers or to
the Representative for the account of each Purchaser, payment of
the full purchase price of the New Securities shall be made by
the Purchasers or the Representative, at the option of GTE, by
certified or official bank check or checks in same day funds,
payable to GTE or its order, at The Bank of New York, Attention:
Corporate Trust Department, or by wire transfer in same day funds
to The Bank of New York for the account of GTE. Upon receipt of
such check or wire transfer by The Bank of New York, such check
or wire transfer shall be deemed to be delivered at the closing.
IV. CONDITIONS TO PURCHASERS' OBLIGATIONS
The respective obligations of the Purchasers 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; since the latest date as of which information is
given in the Registration Statement, there shall have been no
material adverse change in the business, business prospects,
properties, financial condition or results of operations of GTE;
and the Purchasers or the Representative shall have received on
the Closing Date the customary form of compliance certificate
dated the Closing Date and signed by the Chairman, a Vice
Chairman, the President or a Vice President of GTE, including the
foregoing. The officer making such certificate may rely upon the
best of his or her knowledge as to proceedings pending or
threatened.
(B) The Purchasers or the Representative shall have
received on the Closing Date an opinion of William P. Barr,
Executive Vice President - Government & Regulatory Advocacy,
General Counsel of GTE, dated the Closing Date, substantially in
the form set forth in Exhibit A hereto.
(C) The Purchasers or the Representative shall have
received on the Closing Date an opinion of Milbank, Tweed, Hadley
& McCloy, counsel for the Purchasers, dated the Closing Date,
substantially in the form set forth in Exhibit B hereto.
(D) The Purchasers or the Representative shall have
received on the Closing Date a letter from Arthur Andersen LLP,
independent public accountants for GTE, dated as of the Closing
Date, to the effect set forth in Exhibit C hereto.
V. CONDITIONS TO GTE'S OBLIGATIONS
The obligations of GTE 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.
-3-
(B) GTE shall have received on the Closing Date the full
purchase price of the New Securities purchased hereunder.
VI. COVENANTS OF GTE
In further consideration of the agreements contained herein
of the Purchasers, GTE covenants to the several Purchasers as
follows:
(A) To furnish to the Purchasers a copy of the Registration
Statement including materials, if any, incorporated by reference
therein and, during the period mentioned in (C) below, to supply
as many copies of the Prospectus, any documents incorporated by
reference therein and any supplements and amendments thereto as
the Purchasers or the Representative may reasonably request. The
terms "supplement" and "amendment" or "amend" as used in this
Agreement shall include all documents filed by GTE 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) Before amending or supplementing the Registration
Statement or the Prospectus with respect to the New Securities,
to furnish to any Purchaser or the Representative, and to counsel
for the Purchasers a copy of each such proposed amendment or
supplement.
The covenants in Paragraphs (C) and (D) apply only to Reselling
Purchasers:
(C) If in the period after the first date of resale of the
New Securities during which, in the opinion of counsel for the
Reselling Purchasers, 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 Purchasers or the
Representative by or on behalf of the Purchasers in writing
expressly for use in the Prospectus), to the Reselling
Purchasers, the number of copies requested by the Reselling
Purchasers 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.
(D) To use its best efforts to qualify the New Securities
for offer and sale under the securities or Blue Sky laws of such
jurisdictions as the Purchasers 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
Securities for investment under the laws of such jurisdictions as
the Purchasers or the Representative may designate; provided,
however, that GTE, 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 Securities;
provided, further, that GTE shall not be required to continue the
qualification of the New Securities beyond one year from the date
of the sale of the New Securities.
-4-
VII. REPRESENTATIONS AND WARRANTIES OF GTE
GTE represents and warrants to the several Purchasers that
(i) each document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in the Basic
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 Securities, 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 Prospectus is filed pursuant to Rule
424(b) and at all times subsequent to and including the Closing
Date, the Registration Statement 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, and on the date of the Prospectus, or any
amendment or supplement thereto, is filed pursuant to Rule 424(b)
and on the Closing Date, the Prospectus did not or 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, in 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 or the Prospectus based upon information
furnished to GTE by any Purchaser or the Representative by or on
behalf of any Purchaser 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 GTE is a
party, and (vi) the Indenture has been qualified under the Trust
Indenture Act of 1939, as amended.
VIII. INDEMNIFICATION
GTE agrees to indemnify and hold harmless each Reselling
Purchaser and each person, if any, who controls such Reselling
Purchaser 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 or
the Prospectus (if used within the period set forth in Paragraph
(C) of Article VI hereof, and as amended or supplemented if GTE
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 GTE by any Reselling
Purchaser or the Representative on behalf of any Reselling
Purchaser in writing expressly for use therein or by any
statement or omission in the Statement of Eligibility of the
Trustee under the Indenture. The foregoing agreement, insofar as
it relates to the Prospectus, shall not inure to the benefit of
any Reselling Purchaser (or to the benefit of any person
controlling such Reselling Purchaser) on account of any losses,
claims, damages or liabilities arising from the sale of any New
Securities by said Reselling Purchaser to any person if a copy of
the Prospectus (as supplemented
-5-
or amended, if prior to distribution of the Prospectus to the
Reselling Purchaser GTE shall have made any supplements or
amendments which have been furnished to said Reselling Purchaser)
shall not have been sent or given by or on behalf of such
Purchaser to such person at or prior to the written confirmation
of the sale of the New Securities to such person and such
statement or omission is cured in the Prospectus.
Each Reselling Purchaser agrees to indemnify and hold
harmless GTE, its directors, its officers who sign the
Registration Statement and any person controlling GTE to the same
extent as the foregoing indemnity from GTE to each Reselling
Purchaser, but only with reference to information relating to
said Reselling Purchaser furnished in writing by or on behalf of
said Reselling Purchaser expressly for use in the Registration
Statement 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
proceeding (provided, however, that if such indemnified party
shall object to the selection of counsel after having been
advised by such counsel that there may be one or more legal
defenses available to the indemnified party which are different
from or additional to those available to the indemnifying party,
the indemnifying party shall designate other counsel reasonably
satisfactory to the indemnified party) and the indemnifying party
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 GTE on the one hand and the
Reselling Purchasers on the other from the offering of the New
Securities 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 GTE on the one
hand and of the Reselling Purchasers 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 GTE
on the one hand and the Reselling Purchasers on the other in
connection with the offering of the New Securities shall be
deemed to be in the same
-6-
proportion as the total net proceeds from the offering of the New
Securities received by GTE bear to the total commissions, if any,
received by all of the Reselling Purchasers in respect thereof.
If there are no commissions allowed or paid by GTE to the
Reselling Purchasers in respect of the New Securities, the
relative benefits received by the Reselling Purchasers in the
preceding sentence shall be the difference between the price
received by such Reselling Purchasers upon resale of the New
Securities and the price paid for the New Securities pursuant to
the Purchase Agreement. The relative fault of GTE on the one
hand and of the Reselling Purchasers 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 GTE or by the Reselling Purchasers 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 GTE
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 Reselling
Purchaser or on behalf of any Reselling Purchaser or any person
controlling any Reselling Purchaser and (iii) acceptance of and
payment for any of the New Securities.
X. TERMINATION BY RESELLING PURCHASERS
At any time prior to the Closing Date, this Agreement shall
be subject to termination in the absolute discretion of any
Reselling Purchaser, by notice given to GTE, 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 material escalation of hostilities involving the
United States or the declaration by the United States of a
national emergency or war or other calamity or crisis shall have
occurred, the effect of which is such as to make it impracticable
or inadvisable to proceed with the delivery of the New Securities
on the terms and in the manner contemplated by the Prospectus.
XI. TERMINATION BY PURCHASERS
If this Agreement shall be terminated by the Purchasers
because of any failure or refusal on the part of GTE 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) GTE shall be unable to perform its obligations under
this Agreement, GTE will reimburse the Purchasers for all out-of-
pocket
-7-
expenses (including the fees and disbursements of counsel)
reasonably incurred by such Purchasers in connection with the New
Securities. Except as provided herein, the Purchasers shall bear
all of their expenses, including the fees and disbursements of
counsel.
XII. SUBSTITUTION OF PURCHASERS
If for any reason any Purchaser shall not purchase the New
Securities it has agreed to purchase hereunder, the remaining
Purchasers shall have the right within 24 hours to make
arrangements satisfactory to GTE for the purchase of such New
Securities hereunder. If they fail to do so, the amounts of New
Securities that the remaining Purchasers are obligated,
severally, to purchase under this Agreement shall be increased in
the proportions which the total amount of New Securities which
they have respectively agreed to purchase bears to the total
amount of New Securities which all non-defaulting Purchasers have
so agreed to purchase, or in such other proportions as the
Purchasers may specify to absorb such unpurchased New Securities,
provided that such aggregate increases shall not exceed 10% of
the total amount of the New Securities set forth in Schedule A to
the Purchase Agreement. If any unpurchased New Securities still
remain, GTE shall have the right either to elect to consummate
the sale except as to any such unpurchased New Securities so
remaining or, within the next succeeding 24 hours, to make
arrangements satisfactory to the remaining Purchasers for the
purchase of such New Securities. In any such cases, either the
Purchasers or the Representative or GTE shall have the right to
postpone the Closing Date for not more than seven business days
to a mutually acceptable date. If GTE shall not elect to so
consummate the sale and any unpurchased New Securities remain for
which no satisfactory substitute Purchaser is obtained in
accordance with the above provisions, then this Agreement shall
terminate without liability on the part of any non-defaulting
Purchaser or GTE for the purchase or sale of any New Securities
under this Agreement. No provision in this paragraph shall
relieve any defaulting Purchaser of liability to GTE for damages
occasioned by such default.
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.
68
EXHIBIT A
WILLIAM P. BARR
Executive Vice President - Government & Regulatory Advocacy,
General Counsel
GTE CORPORATION
One Stamford Forum, Stamford, Connecticut 06904
__________, 199_
and the other several Purchasers
listed in the Purchase Agreement
dated ________, 199_ among such
Purchasers and GTE Corporation
RE: GTE CORPORATION
$ _____________
Dear Sirs:
I have been requested by GTE Corporation, a New York
corporation (the "Corporation"), as its Executive Vice President
- - Government & Regulatory Advocacy, General Counsel to furnish
you with my opinion pursuant to a Purchase Agreement dated
______, 199_ (the "Agreement") between you and the Corporation,
relating to the purchase and sale of $___,000,000 aggregate
principal amount of its ___________ (the "New Securities").
In this connection I, or attorneys under my direction, have
examined among other things:
(a) The Certificate of Incorporation of the Corporation, as
amended, and the by-laws, each as presently in effect;
(b) A copy of the Indenture dated as of December 1, 1996,
as supplemented and amended (the "Indenture"), between the
Corporation and The Bank of New York, as Trustee (the "Trustee"),
and the resolutions of the Board of Directors of the Corporation
under which the New Securities are being issued;
(c) [The Supplemental Indenture, dated as of ____, 199_
(the "Supplemental Indenture") between the Corporation and the
Trustee] [The resolutions of the Board of Directors adopted
_____, 199_ (the "Board Resolution")] [The certificate, dated
_____, 199_, of an authorized officer of the Corporation pursuant
to authorization from the Board of Directors of the Corporation
(the "Officer's Certificate")] specifically authorizing the New
Securities, including the issuance and sale of the New
Securities;
(d) The form of the New Securities set forth in the
[Supplemental Indenture] [Board Resolution] [Officer's
Certificate];
(e) The records of the corporate proceedings of the
Corporation relating to the authorization, execution and delivery
of the Indenture and the [Supplemental Indenture] [Board
Resolution] [Officer's Certificate];
(f) The records of the corporate proceedings of the
Corporation relating to the authorization, execution and delivery
of the Agreement;
(g) The record of all proceedings taken by the Corporation
relating to the registration of the New Securities 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 Registration Statement No. 33-
63145 and Registration Statement No. 333-31333, including the
form of prospectus contained therein (unless the context shall
otherwise
-2-
require, such Registration Statements as amended are hereinafter
collectively called the "Registration Statement" and the
prospectus dated _________, together with the prospectus
supplement dated __________ relating to the New Securities in the
form filed under Rule 424(b) of the Act, is hereinafter called
the "Prospectus").
(g) Certain documents filed by the Corporation 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. The Corporation is a corporation duly incorporated,
validly existing and in good standing under the laws of the State
of New York, is a duly licensed and qualified foreign corporation
in good standing under the laws of the State of Connecticut, and
has adequate corporate power to carry on the business in which it
is now engaged.
2. All legal proceedings necessary to the authorization,
issue and sale of the New Securities to you have been taken by
the Corporation.
3. The Agreement has been duly and validly authorized,
executed and delivered by the Corporation.
4. The Indenture and the [Supplemental Indenture] [Board
Resolution] [Officer's Certificate] have been duly authorized by
the Corporation and have been duly executed and delivered by or
on behalf of the Corporation. The Indenture, as supplemented,
constitutes a legal, valid and binding agreement of the
Corporation enforceable in accordance with its terms, except as
limited by bankruptcy, insolvency and other laws affecting the
enforcement of creditors' rights and the availability of
equitable remedies. The Indenture [and Supplemental Indenture]
[has] [have] been duly qualified under the TIA.
5. The New Securities conform as to legal matters with the
statements concerning them in the Registration Statement and
Prospectus and have been duly authorized and executed by the
Corporation and (assuming due authentication and delivery thereof
by the Trustee) have been duly issued under the Indenture, as
supplemented, and (subject to the qualifications set forth in
paragraph 4 above) constitute legal, valid and binding
obligations of the Corporation enforceable in accordance with
their terms and are entitled to the benefits afforded by the
Indenture, as supplemented.
6. Except as may be required by the securities or Blue Sky
laws of certain jurisdictions, no authorization, approval or
consent of any governmental regulatory authority is required for
the issuance and sale of the New Securities.
7. Registration Statement No. 33-63145 became effective on
October 6, 1995 and Registration Statement No. 333-31333 became
effective on __________, 1997, and, to the best of my knowledge,
no proceedings under Section 8 of the Act looking toward the
possible issuance of a stop order with respect thereto are
pending or threatened and the Registration Statement remains in
effect on the date hereof. The Registration Statement and the
Prospectus comply as to form in all material respects with the
relevant provisions of the Act and of
-3-
the Exchange Act as to documents incorporated by reference into
said Registration Statement and the applicable rules and
regulations of the Securities and Exchange Commission thereunder,
except that I express no opinion as to the financial statements
contained therein. The Prospectus is lawful for use for the
purposes specified in the Act in connection with the offer for
sale and sale of the New Securities in the manner specified
therein. I have no reason to believe that the Registration
Statement, 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 any
material fact required to be stated therein or necessary to make
the statements therein not misleading.
Without my prior written consent, this opinion may not be
relied upon by any person or entity other than the addressee,
quoted in whole or in part, or otherwise referred to in any
report or document, or furnished to any other person or entity,
except that Milbank, Tweed, Hadley & McCloy may rely upon this
opinion as if this opinion were separately addressed to them.
Very truly yours,
WILLIAM P. BARR
cc: Milbank, Tweed, Hadley & McCloy
71
EXHIBIT B
MILBANK, TWEED, HADLEY & McCLOY
1 Chase Manhattan Plaza
New York, New York 10005
__________,
199_
GTE CORPORATION
$ __________
and the other several Purchasers
referred to in the Purchase Agreement
dated _________, ____ among such
Purchasers and GTE Corporation
Dear Sirs:
We have been designated by GTE Corporation (the
"Corporation") as counsel for the purchasers of $___,000,000
aggregate principal amount of its _________ (the "New
Securities"). Pursuant to such designation and the terms of a
Purchase Agreement dated ________, 199_, relating to the New
Securities (the "Purchase Agreement"), entered into by you with
the Corporation, we have acted as your counsel in connection with
your several purchases this day from the Corporation of the New
Securities, which are issued under an Indenture dated as of
December 1, 1996 between the Corporation and The Bank of New
York, as trustee (the "Trustee"), as supplemented (collectively,
the "Indenture").
We have reviewed originals, or copies certified to our
satisfaction, of such corporate records of the Corporation,
indentures, agreements and other instruments, certificates of
public officials and of officers and representatives of the
Corporation, 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 Corporation and other appropriate persons and statements
contained in the Registration Statement hereinafter mentioned.
In addition, we attended the closing held today at the
offices of _________________________________________, at which
the Corporation caused 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:
-2-
1. The Corporation is a validly existing corporation, in
good standing, under the laws of the State of New York.
2. The Purchase Agreement has been duly authorized,
executed and delivered by the Corporation.
3. The Indenture has been duly authorized, executed and
delivered by the Corporation and constitutes a legal, valid
and binding agreement of the Corporation, 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 Securities have been duly authorized and
conform as to legal matters in all substantial respects to
the description thereof contained in the Registration
Statement and Prospectus hereinafter mentioned. The New
Securities, assuming due execution thereof by the
Corporation and due authentication and delivery by the
Trustee, have been duly issued for value by the Corporation
and (subject to the qualifications stated in paragraph 3
above) constitute legal, valid and binding obligations of
the Corporation, enforceable in accordance with their terms
and are entitled to the benefits afforded by the Indenture
in accordance with the terms of the Indenture and of the New
Securities.
5. Except as may be required by Securities or blue sky
laws of certain jurisdictions, no authorization, approval or
consent of any governmental regulatory authority is required
for the issuance and sale of the New Securities.
6. On the basis of information received by the
Corporation from the Securities and Exchange Commission (the
"Commission"), the Registration Statement No. 33-63145 and
Registration Statement No. 333-31333 with respect to the
Securities (the "Registration Statement"), filed with the
Commission pursuant to the Securities Act of 1933, as
amended (the "Act"), became effective under the Act on
October 6, 1995 and ________, 1997, respectively, and the
Prospectus dated ________, 199_ as supplemented by the
Prospectus Supplement dated _________, 199_ (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 Securities in the manner therein
specified, subject to compliance with the provisions of
securities or blue sky laws of certain jurisdictions in
connection with the offer for sale or sale of the New
Securities in such jurisdictions. To the best of our
knowledge the Registration Statement(s) remains in effect at
this date.
7. The Registration Statements as of their effective
dates, and the Prospectus as of the date hereof, except any
financial statements or other financial data contained or
incorporated by reference therein, as to which no opinion is
expressed, complied or comply as to form in all material
respects with the relevant requirements of the Act and the
applicable published instructions, rules and regulations of
the Commission thereunder.
-3-
We are members of the New York bar only and, except as set
forth in the next paragraph, express no opinion as to matters
governed by any laws other than the laws of New York and the
Federal laws of the United States of America, and the extent that
the foregoing opinions involve the laws of the State of
Connecticut, in reliance upon the opinion of even date herewith
of William P. Barr, Esq., Executive Vice President - Government &
Regulatory Advocacy, General Counsel of the Corporation,
furnished pursuant to the Purchase Agreement, the laws of the
State of Connecticut.
The Registration Statements were filed on Form S-3 under the
Act and, accordingly, the Prospectus does not necessarily contain
a current description of the Corporation'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
Corporation in connection with the preparation of the
Registration Statement and Prospectus and we have reviewed
certain documents filed by the Corporation under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), which are
incorporated by reference in the Prospectus (such documents filed
prior to the effective date of the Registration Statements and
listed in the Prospectus as being incorporated by reference are
herein called the "Incorporated Documents"). In connection with
our participation in the preparation of the Registration
Statements 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
Statements, 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 Prospectus or the
Incorporated Documents, considered as a whole on the effective
date of the Registration Statement(s) contained 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 or that the
Prospectus and the Incorporated Documents, considered as a whole
on the date hereof, contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under
which they were made, not misleading. We express no opinion as
to any document filed by the Corporation under the Exchange Act,
whether prior or subsequent to such effective date, except to the
extent that such documents are Incorporated Documents read
together with the Registration Statement(s) 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(s), the Prospectus or the Incorporated Documents.
The opinions contained herein are rendered to you and are
solely for your benefit in connection with the transactions
contemplated by the Purchase Agreement. These opinions may not
be relied upon by you for any other purpose, or furnished to,
quoted or relied upon by any other person, firm or corporation
for any purpose, without our prior written consent.
Very truly yours,
MILBANK, TWEED, HADLEY & McCLOY
EXHIBIT C
LETTER OF INDEPENDENT PUBLIC ACCOUNTANTS
The letter of independent public accountants for GTE to be
delivered pursuant to Article IV, paragraph (D) of the document
entitled Standard Purchase Agreement Provisions (July 1997
Edition) shall be to the effect that:
At the closing, the Purchaser(s) shall have received such
number of copies as are necessary to provide one for each
Purchaser of a letter addressed to GTE and satisfactory to the
Purchaser(s), dated as of the Closing Date and encompassing the
performance of certain procedures described in the letter as of a
date not more than five business days prior to the Closing Date,
(the "Cutoff Date") from Arthur Andersen LLP confirming that they
are independent public accountants with respect to GTE within the
meaning of the Act and the applicable published rules and
regulations of the Commission thereunder, specifically Rule 2-01
of Regulation S-X, and stating in effect (1) that in their
opinion, the financial statements and schedules examined by them
and incorporated by reference in the Prospectus comply as to form
in all material respects with the applicable accounting
requirements of the Act, and the Exchange Act, and the published
rules and regulations thereunder, and (2) that although they have
not audited any financial statements of GTE as of any date or for
any period subsequent to the prior-year audit, and although they
have conducted an audit for that period, the purpose (and
therefore the scope) of the audit was to enable them to express
their opinion on the financial statements as of that date and for
the year then ended, but not on the financial statements for any
interim period within that year; therefore, they are unable to
and do not express any opinion on the unaudited condensed balance
sheet as of the latest available interim date, and the unaudited
condensed statements of income, reinvested earnings, and cash
flows for the latest available interim period subsequent to that
prior-year audit which are included in the Prospectus; to the
extent required, they have performed the procedures specified by
the American Institute of Certified Public Accountants for a
review of interim financial information as described in SAS No.
71, Interim Financial Information, on the latest available
unaudited interim financial statements prepared by GTE, inquired
of certain officials of GTE responsible for financial and
accounting matters, and read the minutes of the Board of
Directors and shareholders of GTE, all of which procedures have
been agreed to by the Purchasers, nothing has come to their
attention which caused them to believe that: (a) any unaudited
interim condensed consolidated financial statements incorporated
by reference in the Prospectus (i) 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 (ii) have not been
presented in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that
of the audited financial statements incorporated by reference in
the Prospectus; or (b) (i) as of the date of the latest available
unaudited interim financial data of GTE and the latest available
unaudited condensed summary of consolidated results of operations
prepared by GTE, there have been any changes in the capital
stock, or any material increase in the short-term indebtedness or
long-term debt of GTE or any material decreases in net assets, in
each case as compared with amounts shown on the latest balance
sheet included or incorporated by reference in the Prospectus, or
any material decreases, as compared with the corresponding period
of the prior year, in consolidated revenues and sales, net income
from continuing operations, or net income from continuing
operations applicable to common stock and per share of common
stock, or (ii) for the period from the date of the latest
financial statements included or incorporated by reference
-2-
in the Prospectus to the specified date referred to in the
preceding clause (i), there were any material decreases in
operating revenues, net operating income, net income or GTE's
ratio of earnings to fixed charges, in each case as compared with
the comparable period of the preceding year, (iii) as of the
Cutoff Date, there have been any changes in the capital stock or
any material increase in the debt of GTE, or any material
decreases in net assets, in each case as compared with amounts
shown in the latest balance sheet included or incorporated by
reference in the Prospectus, and (iv) for the period from the
date of the latest available unaudited interim financial
statements referred to in clause (b)(i) above to the Cutoff Date,
there were any material decreases in operating revenues, net
operating income or net income, in each case as compared with the
comparable period of the preceding year, except in all instances
for changes or decreases which the Prospectus discloses have
occurred or may occur or as disclosed in such letter and except
for changes occasioned by the declaration and payment of
dividends on the stock of GTE or occasioned by sinking fund
payments made on the debt securities of GTE, or by the issuance
of common stock of GTE in connection with any employee benefit
plan or dividend reinvestment plan of GTE or for the conversion
of convertible preferred stock.
EXHIBIT 1.2
GTE CORPORATION
$3,000,000,000
Medium-Term Notes, Series A
Distribution Agreement
_______, 1997
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Merrill Lynch, Pierce, Fenner & Smith Incorporated
World Financial Center
North Tower, 10th Floor
New York, New York 10281-1310
Salomon Brothers Inc
7 World Trade Center
New York, New York 10048
Ladies and Gentlemen:
GTE Corporation, a New York corporation ("GTE"), proposes to
issue and sell from time to time its Medium-Term Notes, Series A
(the "Securities") in an aggregate amount up to $3,000,000,000
and agrees with each of you (individually, an "Agent", and
collectively, the "Agents") as set forth in this Agreement.
Subject to the terms and conditions stated herein and to the
reservation by GTE of the right to sell Securities directly on
its own behalf, GTE hereby (i) appoints each Agent as an agent of
GTE for the purpose of soliciting and receiving offers to
purchase Securities from GTE pursuant to Section 2(a) hereof and
(ii) agrees that, except as otherwise contemplated herein,
whenever it determines to sell Securities directly to any Agent
as principal, it will enter into a separate agreement (each a
"Terms Agreement"), substantially in the form of Annex I hereto,
relating to such sale in accordance with Section 2(b) hereof.
GTE may appoint, upon three business days prior written notice to
the Agents, additional persons to serve as Agents hereunder, but
only if each of those additional persons agrees to be bound by
all of the terms of this Agreement as an Agent. This
Distribution Agreement shall not be construed to create either an
obligation on the part of GTE to sell any Securities or an
obligation of any of the Agents to purchase Securities as
principal.
GTE reserves the right to sell Securities through one or more
additional agents or directly to certain investment banking firms
as underwriters for resale to the public on terms substantially
identical to the terms contained herein. No commission will be
payable to the Agents on any Securities sold through other agents
or directly by GTE to underwriters. GTE has additionally
reserved the right to sell Securities to investors on its own
behalf in those jurisdictions where it is authorized to do so.
The Securities will be issued under an indenture, dated as of
December 1, 1996, as amended and supplemented (the "Indenture"),
between GTE and The Bank of New York, as Trustee (the "Trustee").
The Securities shall have the maturity ranges, interest rates, if
any, redemption provisions and other terms set forth in the
Prospectus referred to below as it may be amended or
-2-
supplemented from time to time. The Securities will be issued,
and the terms and rights thereof established, from time to time
by GTE in accordance with the Indenture.1. GTE represents and
warrants to, and agrees with, each Agent that:
(a) Two registration statements on Form S-3 (File Nos. 33-
63145 and 333-31333) in respect of the Securities have been
filed with the Securities and Exchange Commission (the
"Commission"); such registration statements and any post-
effective amendment thereto, each in the form heretofore
delivered or to be delivered to such Agent, excluding
exhibits to such registration statements, but including all
documents incorporated by reference in the prospectus
included in the latest registration statement, have been
declared effective by the Commission in such form; no other
document with respect to such registration statements or
document incorporated by reference therein has heretofore
been filed or transmitted for filing with the Commission
(other than the prospectuses filed pursuant to Rule 424(b)
of the rules and regulations of the Commission under the
Act, each in the form heretofore delivered to the Agents);
and no stop order suspending the effectiveness of any of
such registration statements has been issued and no
proceeding for that purpose has been initiated or threatened
by the Commission; the various parts of such registration
statements, including all exhibits thereto and the documents
incorporated by reference in the prospectus contained in the
registration statements at the time such part of the
registration statement became effective but excluding Form T-
1, each as amended at the time such part of the registration
statements became effective, are hereinafter collectively
called the "Registration Statement"; the prospectus
(including, if applicable, any prospectus supplement)
relating to the Securities, 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
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
Prospectus, as the case may be; any reference to any
amendment or supplement to the Prospectus, including any
supplement to the Prospectus that sets forth only the terms
of a particular issue of the Securities (a "Pricing
Supplement"), shall be deemed to refer to and include any
documents filed after the date of such Prospectus, as the
case may be, under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and incorporated therein by
reference; 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 Prospectus as amended or supplemented shall be deemed
to refer to and include the Prospectus as amended or
supplemented (including by the applicable Pricing Supplement
filed in accordance with Section 4(a) hereof) in relation to
Securities to be sold pursuant to this Agreement, in the
form filed or transmitted for filing with the Commission
pursuant to Rule 4.24(b) under the Act and in accordance
with Section 4(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, 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
-3-
Commission thereunder, and none of such documents when they
became effective or were filed with the Commission, as the
case may be, and when read together with other information
in the Prospectus, 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, 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, when read together with other information in the
Prospectus, 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;
(c) The Registration Statement and the Prospectus conform,
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
Trust Indenture Act of 1939, as amended (the "Trust
Indenture 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
date as to the Prospectus and any amendment or supplement
thereto, 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 by any Agent expressly for use in the
Prospectus as amended or supplemented to relate to a
particular issuance of Securities;
(d) Since the respective dates as of which information is
given in the Registration Statement and Prospectus, except
as stated therein or contemplated thereby, there has been no
material adverse change in the business, business prospects,
properties, financial condition or results of operations of
GTE; and
(e) 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 GTE is a party.
2. (a) On the basis of the representations and warranties
herein contained, and subject to the terms and conditions herein
set forth, each of the Agents hereby severally and not jointly
agrees, as agent of GTE, to use its reasonable best efforts to
solicit and receive offers to purchase the Securities from GTE
upon the terms and conditions set forth in the Prospectus as
amended or supplemented from time to time.
Procedural details relating to the issue and delivery of
Securities, the solicitation of offers to purchase Securities and
the payment in each case therefor shall be as set forth in the
Administrative Procedure attached hereto as Annex II as it may be
amended from time to time by written agreement between the Agents
and GTE (the "Administrative Procedure"). The provisions of the
Administrative Procedure shall apply to all transactions
contemplated hereunder other than those made pursuant to a Terms
Agreement. Each Agent and GTE agree to perform the respective
duties and obligations specifically provided to be performed by
each of them in the Administrative Procedure. GTE
-4-
will furnish to the Trustee a copy of the Administrative
Procedure as from time to time in effect.
GTE reserves the right, in its sole discretion, to instruct
the Agents to suspend at any time, for any period of time or
permanently, the solicitation of offers to purchase the
Securities. As soon as practicable, but in any event not later
than one business day in New York City, after receipt of notice
from GTE, the Agents will suspend solicitation of offers to
purchase Securities from GTE until such time as GTE has advised
the Agents that such solicitation may be resumed. During such
period, GTE shall not be required to comply with the provisions
of Sections 4(d), 4(e), 4(f) and 4(g). Upon advising the Agents
that such solicitation may be resumed, however, GTE shall
simultaneously provide the documents, dated as of such resumption
date required to be delivered by Sections 4(d), 4(e), 4(f) and
4(g), and the Agents shall have no obligation to solicit offers
to purchase the Securities until such documents have been
received by the Agents. In addition, any failure by GTE to
comply with its obligations hereunder, including without
limitation its obligations to deliver the documents required by
Sections 4(d), 4(e), 4(f) and 4(g), shall automatically suspend
the Agents' obligations hereunder, including without limitation
its obligations to solicit offers to purchase the Securities
hereunder as agent or to purchase Securities hereunder as
principal, until such time as GTE shall have cured such failure
to comply.
GTE agrees to pay each Agent a commission, at the time of
settlement of any sale of a Security by GTE as a result of a
solicitation made by such Agent, in an amount equal to the
following applicable percentage of the principal amount of such
Security sold:
<TABLE>
<CAPTION> Commission
(percentage of
aggregate
principal amount
Range of Maturities of Securities sold
<S> <C>
From 9 months to less than 1 year .125%
From 1 year to less than 18 months .150%
From 18 months to less than 2 years .200%
From 2 years to less than 3 years .250%
From 3 years to less than 4 years .350%
From 4 years to less than 5 years .450%
From 5 years to less than 7 years .500%
From 7 years to less than 8 years .550%
From 8 years to less than 10 years .600%
From 10 years to less than 15 years .625%
From 15 years to less than 20 years .675%
From 20 years to 30 years .750%
</TABLE>
For Securities with maturities greater than 30 years from
their dates of issue, commissions will be negotiated at the time
of sale and indicated in the applicable Pricing Supplement.
Notwithstanding the foregoing, with respect to any Security
which is designated on its face as an "Original Issue Discount
Security", the commission shall be a percentage of the initial
offering price thereof.
(b) Each sale of Securities to any Agent as principal shall
be made in accordance with the terms of this Agreement and
(unless GTE and such Agent
-5-
shall otherwise agree) a Terms Agreement which will provide for
the sale of such Securities to, and the purchase thereof by, such
Agent; a Terms Agreement may also specify certain provisions
relating to the reoffering of such Securities by such Agent; the
commitment of any Agent to purchase Securities as principal,
whether pursuant to any Terms Agreement or otherwise, shall be
deemed to have been made on the basis of the representations and
warranties of GTE herein contained and shall be subject to the
terms and conditions herein set forth; each Terms Agreement shall
specify the principal amount of Securities to be purchased by any
Agent pursuant thereto, whether such Agent is an Excluded
Purchaser (as defined below), the price to be paid to GTE for
such Securities, any provisions relating to rights of, and
default by, underwriters acting together with such Agent in the
reoffering of the Securities and the time and date and place of
delivery of and payment for such Securities; and such Terms
Agreement shall also specify any requirements for opinions of
counsel, accountants' letters and officers' certificates pursuant
to Section 4 hereof. Each Agent proposes to offer Securities
purchased by it as principal for sale at prevailing market prices
or prices related thereto at the time of sale, which may be equal
to, greater than or less than the price at which such Securities
are purchased by such Agent from GTE. The provisions of Section
4(b), Section 6(f), Section 7 and Section 9 hereof do not apply
to Agents purchasing Securities pursuant to a Terms Agreement
that have advised GTE of their intention not to resell such
Securities (the "Excluded Purchaser").
For each sale of Securities to an Agent as principal that is
not made pursuant to a Terms Agreement, the procedural details
relating to the issue and delivery of such Securities and payment
therefor shall be as set forth in the Administrative Procedure.
For each such sale of Securities to an Agent as principal that is
not made pursuant to a Terms Agreement, GTE agrees to pay such
Agent a commission (or grant an equivalent discount) as provided
in Section 2(a) hereof and in accordance with the schedule set
forth therein.
Each time and date of delivery of and payment for Securities
to be purchased by an Agent as principal, whether set forth in a
Terms Agreement or in accordance with the Administrative
Procedure, is referred to herein as a "Time of Delivery".
(c) Each Agent agrees, with respect to any Security
denominated in a currency other than U.S. dollars, as agent,
directly or indirectly, not to solicit offers to purchase, and as
principal under any Terms Agreement or otherwise, directly or
indirectly, not to offer, sell or deliver, such Security in, or
to residents of, the country issuing such currency, except as
permitted by applicable law.
3. The documents required to be delivered pursuant to
Section 6 hereof on the Commencement Date (as defined below)
shall be delivered to the Agents at the offices of GTE
Corporation, Stamford, Connecticut, at 11:00 a.m., New York City
time, on the date of this Agreement, which date and time of such
delivery may be postponed by agreement between the Agents and GTE
but in no event shall be later than the day prior to the date on
which solicitation of offers to purchase Securities is commenced
or on which any Terms Agreement is executed (such time and date
being referred to herein as the "Commencement Date").
4. GTE covenants and agrees with each Agent:
(a) (i) To make no amendment or supplement to the
Registration Statement or the Prospectus (A) prior to the
Commencement Date or (B) after the date of any Terms Agreement or
other agreement by the Agent to purchase
-6-
Securities as principal and prior to the related Time of
Delivery, without first furnishing to the Agents, and to counsel
for the Agents, a copy of each such proposed amendment or
supplement; (ii) to prepare, with respect to any Securities to be
sold through or to such Agent pursuant to this Agreement, a
Pricing Supplement with respect to such Securities in a form
previously approved by such Agent and to file such Pricing
Supplement pursuant to Rule 424(b)(3) under the Act not later
than the close of business of the Commission on the fifth
business day after the date on which such Pricing Supplement is
first used; (iii) to make no amendment or supplement to the
Registration Statement or Prospectus (other than an amendment or
supplement which relates to an offering of debt securities of GTE
other than the Securities or through the filing of reports under
the Exchange Act ) without first furnishing to the Agents, and
counsel to the Agents, a copy of each such proposed amendment or
supplement; (iv) 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 the
Securities, and during such same period to advise such Agent,
promptly after GTE receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or has
become effective or any supplement to the Prospectus or any
amended Prospectus (other than any Pricing Supplement that
relates to Securities not purchased through or by such Agent) 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 Securities, of the
suspension of the qualification of the Securities 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 amendment or supplement of the Registration
Statement or Prospectus or for additional information; and (v) in
the event of the issuance of any such stop order or of any such
order preventing or suspending the use of any such prospectus or
suspending any such qualification, to use promptly its reasonable
best efforts to obtain its withdrawal;
(b) To furnish such Agent with copies of the Registration
Statement and each amendment thereto, with copies of the
Prospectus as each time amended or supplemented, other than any
Pricing Supplement (except as provided in the Administrative
Procedure), in the form in which it is filed with the Commission
pursuant to Rule 424 under the Act, and with copies of the
documents incorporated by reference therein, all in such
quantities as such Agent may reasonably request from time to
time; and, if the delivery of a prospectus is required at any
time in connection with the offering or sale of the Securities
(including Securities purchased from GTE by such Agent as
principal) and if at such time any event shall have occurred 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, the Exchange Act or
the Trust Indenture Act, to notify such Agent and request such
Agent, in its capacity as agent of GTE, to suspend solicitation
of offers to purchase Securities from GTE (and, if so notified,
such Agent shall cease such solicitations as soon as practicable,
but in any event not later than one business day later); and if
GTE shall decide to amend or supplement the Registration
Statement or the Prospectus as then amended or supplemented, to
so advise such Agent promptly by telephone (with
-7-
confirmation in writing) and to prepare and cause to be filed
promptly with the Commission an amendment or supplement to the
Registration Statement or the Prospectus as then amended or
supplemented that will correct such statement or omission or
effect such compliance, and upon the filing of any such amendment
or supplement, the Agents shall resume solicitations; provided,
however, that if during such same period such Agent continues to
own Securities purchased from GTE by such Agent as principal or
such Agent is otherwise required to deliver a prospectus in
respect of transactions in the Securities, GTE shall promptly
prepare and file with the Commission such an amendment or
supplement;
(c) That each acceptance by GTE of an offer to purchase
Securities hereunder (including any purchase by such Agent as
principal not pursuant to a Terms Agreement), and each execution
and delivery by GTE of a Terms Agreement with such Agent, shall
be deemed to be an affirmation to such Agent that the
representations and warranties of GTE contained in or made
pursuant to this Agreement are true and correct as of the date of
such acceptance or of such Terms Agreement, as the case may be,
as though made at and as of such date, and an undertaking that
such representations and warranties will be true and correct as
of the settlement date for the Securities relating to such
acceptance or as of the Time of Delivery relating to such sale,
as the case may be, as though made at and as of such date (except
that such representations and warranties shall be deemed to
relate to the Registration Statement and the Prospectus as
amended and supplemented relating to such Securities);
(d) That in advance of each time an Annual Report on Form
10-K filed by GTE under the Act or the Exchange Act is
incorporated by reference into the Prospectus and each time GTE
sells Securities to an Agent as principal pursuant to a Terms
Agreement and such Terms Agreement specifies the delivery of an
opinion or opinions of Milbank, Tweed, Hadley & McCloy, counsel
to the Agents, as a condition to the purchase of Securities
pursuant to such Terms Agreement, GTE shall furnish to such
counsel such papers and information as they may reasonably
request to enable them to furnish to such Agent the opinion or
opinions referred to in Section 6(b) hereof;
(e) That each time the Registration Statement or the
Prospectus shall be amended or supplemented (other than (i) by a
Pricing Supplement, (ii) by an amendment or supplement which does
not affect the material terms of the Securities being offered
thereunder, (iii) except as otherwise described in this Section
4(e), by the filing of a document incorporated by reference
therein or (iv) by an amendment or supplement which relates to an
offering of debt securities of GTE other than the Securities),
each time an Annual Report on Form 10-K or a Quarterly Report on
Form 10-Q filed by GTE under the Act or the Exchange Act is
incorporated by reference into the Prospectus, each time a
document filed under the Act or the Exchange Act containing
material financial information is incorporated by reference into
the Prospectus (but only if the Agents request the opinion
referenced by this Section 4(e)) and each time GTE sells
Securities to such Agent as principal pursuant to a Terms
Agreement and such Terms Agreement specifies the delivery of an
opinion under this Section 4(e) as a condition to the purchase of
Securities pursuant to such Terms Agreement, GTE shall furnish or
cause to be furnished forthwith to such Agent a written opinion
of William P. Barr, counsel for GTE, or other counsel for GTE
satisfactory to such Agent, dated the date of such amendment or
supplement, the date such Annual Report on Form 10-K or Quarterly
Report on Form 10-Q is required to be filed, or the date of the
Time of Delivery relating to such sale, as the case may be, in
form satisfactory to such Agent, to the effect that such Agent
may rely on the opinion of such counsel referred to in Section
6(c) hereof which was last furnished to such Agent to
-8-
the same extent as though it were dated the date of such letter
authorizing reliance (except that the statements in such last
opinion shall be deemed to relate to the Registration Statement
and the Prospectus as amended and supplemented to such date) or,
in lieu of such opinion, an opinion of the same tenor as the
opinion of such counsel referred to in Section 6(c) hereof but
modified to relate to the Registration Statement and the
Prospectus as amended and supplemented to such date;
(f) That each time the Registration Statement or the
Prospectus shall be amended or supplemented (other than (i) by a
Pricing Supplement, (ii) by an amendment or supplement which does
not affect the material terms of the Securities being offered
thereunder, (iii) except as otherwise described in this Section
4(f), by the filing of a document incorporated by reference
therein or (iv) by an amendment or supplement which relates to an
offering of debt securities of GTE other than the Securities),
each time an Annual Report on Form 10-K or a Quarterly Report on
Form 10-Q filed by GTE under the Act or the Exchange Act is
incorporated by reference into the Prospectus and each time a
document filed under the Act or the Exchange Act containing
material financial information is incorporated by reference into
the Prospectus (but only if the Agents request the letter
referenced in this Section 4(f)), in each case to set forth new
or additional financial information included in or derived from
GTE's consolidated financial statements or accounting records,
and each time GTE sells Securities to such Agent as principal
pursuant to a Terms Agreement and such Terms Agreement specifies
the delivery of a letter under this Section 4(f) as a condition
to the purchase of Securities pursuant to such Terms Agreement,
GTE shall cause the independent certified public accountants who
have certified the financial statements of GTE and its
subsidiaries included or incorporated by reference in the
Registration Statement forthwith to furnish such Agent a letter,
dated the date of such amendment or supplement, the date such
Annual Report on Form 10-K or Quarterly Report on Form 10-Q is
required to be filed, or the date of the Time of Delivery
relating to such sale, as the case may be, in form satisfactory
to such Agent, of the same tenor as the letter referred to in
Section 6(d) hereof but modified to relate to the Registration
Statement and the Prospectus as amended or supplemented to the
date of such letter, with such changes as may be necessary to
reflect changes in the financial statements and other information
derived from the accounting records of GTE, to the extent such
financial statements and other information are available as of a
date not more than five business days prior to the date of such
letter; provided, however, that, with respect to any financial
information or other matter, such letter may reconfirm as true
and correct at such date as though made at and as of such date,
rather than repeat, statements with respect to such financial
information or other matter made in the letter referred to in
Section 6(d) hereof which was last furnished to such Agent; and
(g) That each time the Registration Statement or the
Prospectus shall be amended or supplemented (other than (i) by a
Pricing Supplement, (ii) by an amendment or supplement which does
not affect the material terms of the Securities being offered
thereunder, (iii) except as otherwise described in this Section
4(g), by the filing of a document incorporated by reference
therein or (iv) by an amendment or supplement which relates to an
offering of debt securities of GTE other than the Securities),
each time an Annual Report on Form 10-K or a Quarterly Report on
Form 10-Q filed by GTE under the Act or the Exchange Act is
incorporated by reference into the Prospectus, each time a
document filed under the Act or the Exchange Act containing
material financial information is incorporated by reference into
the Prospectus (but only if the Agents request the certificate
referenced in this Section 4(g)) and each time GTE sells
Securities to such Agent as principal and the
-9-
applicable Terms Agreement specifies the delivery of a
certificate under this Section 4(g) as a condition to the
purchase of Securities pursuant to such Terms Agreement, GTE
shall furnish or cause to be furnished forthwith to such Agent a
certificate, dated the date of such amendment or supplement, the
date such Annual Report on Form 10-K or Quarterly Report on Form
10-Q is required to be filed, or the date of the Time of Delivery
relating to such sale, as the case may be, in such form and
executed by such officers of GTE as shall be satisfactory to such
Agent, to the effect that the statements contained in the
certificates referred to in Section 6(g) hereof which was last
furnished to such Agent are true and correct at such date as
though made at and as of such date (except that such statements
shall be deemed to relate to the Registration Statement and the
Prospectus as amended and supplemented to such date) or, in lieu
of such certificate, certificates of the same tenor as the
certificates referred to in said Section 6(g) but modified to
relate to the Registration Statement and the Prospectus as
amended and supplemented to such date.
5. GTE covenants and agrees with each Agent that GTE will
pay or cause to be paid the following: (i) the fees,
disbursements and expenses of GTE's counsel and accountants in
connection with the registration of the Securities under the Act
and all other expenses in connection with the preparation,
printing and filing of the Registration Statement, the Prospectus
and any Pricing Supplements and all other amendments and
supplements thereto and the mailing and delivering of copies
thereof to such Agent; (ii) the fees, disbursements and expenses
of counsel for the Agents in connection with the establishment of
the program contemplated hereby, any opinions to be rendered by
such counsel hereunder and the transactions contemplated
hereunder; (iii) the cost of printing, producing or reproducing
this Agreement, any Terms Agreement, any Indenture, closing
documents (including any compilations thereof) and any other
documents in connection with the offering, purchase, sale and
delivery of the Securities; (iv) any fees charged by securities
rating services for rating the Securities; (v) any filing fees
incident to, and the fees and disbursements of counsel for the
Agents in connection with, any required review by the National
Association of Securities Dealers, Inc. of the terms of the sale
of the Securities; (vi) the cost of preparing the Securities;
(vii) the fees and expenses of any Trustee and any agent of any
Trustee and any transfer or paying agent of GTE and the fees and
disbursements of counsel for any Trustee or such agent in
connection with any Indenture and the Securities; (viii) any
advertising expenses connected with the solicitation of offers to
purchase and the sale of Securities so long as such advertising
expenses have been approved by GTE; and (ix) all other costs and
expenses incident to the performance of its obligations hereunder
which are not otherwise specifically provided for in this
Section. Except as provided in Sections 7 and 8 hereof, each
Agent shall pay all other expenses it incurs.
6. The obligation of any Agent, as agent of GTE, at any
time ("Solicitation Time") to solicit offers to purchase the
Securities and the obligation of any Agent to purchase Securities
as principal, pursuant to any Terms Agreement or otherwise, shall
in each case be subject, in such Agent's discretion, to the
condition that all representations and warranties and other
statements of GTE herein (and, in the case of an obligation of an
Agent under a Terms Agreement, in or incorporated by reference in
such Terms Agreement) are true and correct at and as of the
Commencement Date and any applicable date referred to in Section
4(g) hereof that is prior to such Solicitation Time or Time of
Delivery, as the case may be, and at and as of such Solicitation
Time or Time of Delivery, as the case may be, the condition that
prior to such Solicitation Time or Time of Delivery, as the case
may be, GTE shall have performed all of its obligations hereunder
theretofore to be
-10-
performed, and the following additional conditions:
(a) (i) With respect to any Securities sold at or prior to
such Solicitation Time or Time of Delivery, as the case may be,
the Prospectus as amended or supplemented (including the Pricing
Supplement) with respect to such Securities shall have been filed
with the Commission pursuant to Rule 424(b) under the Act within
the applicable time period prescribed for such filing by the
rules and regulations under the Act and in accordance with
Section 4(a) hereof; and (ii) no stop order suspending the
effectiveness of the Registration Statement shall have been
issued and no proceeding for that purpose shall be pending before
or threatened by the Commission;
(b) Milbank, Tweed, Hadley & McCloy, counsel to the Agents,
shall have furnished to such Agent (i) such opinion or opinions,
dated the Commencement Date, with respect to such matters as such
Agent may reasonably request, and (ii) if and to the extent
requested by such Agent, (A) with respect to each Terms Agreement
referred to in Section 4(d) hereof, an opinion or opinions, dated
as of such Time of Delivery, or (B) an opinion or opinions, dated
as of the April 15th following each filing of an Annual Report on
Form 10-K referred to in Section 4(d) hereof, in each case to the
effect that such Agent may rely on the opinion or opinions which
were last furnished to such Agent pursuant to this Section 6(b)
to the same extent as though it or they were dated the date of
such letter authorizing reliance (except that the statements in
such last opinion or opinions shall be deemed to relate to the
Registration Statement and the Prospectus as amended and
supplemented to such date) or, in any case, in lieu of such an
opinion or opinions, an opinion or opinions of the same tenor as
the opinion or opinions referred to in clause (i) but modified to
relate to the Registration Statement and the Prospectus as
amended and supplemented to such date; and in each case such
counsel shall have received such papers and information as they
may reasonably request to enable them to pass upon such matters;
(c) William P. Barr, counsel for GTE, or other counsel for
GTE satisfactory to such Agent, shall have furnished to such
Agent their written opinions, dated the Commencement Date and
each applicable date referred to in Section 4(e) hereof that is
on or prior to such Solicitation Time or Time of Delivery, as the
case may be, in form and substance satisfactory to such Agent, to
the effect that:
(i) GTE is a corporation duly incorporated, validly
existing and in good standing under the laws of New York, is a
duly licensed and qualified foreign corporation in good standing
under the laws of the State of Connecticut, and has adequate
corporate power to carry on the business in which it is now
engaged;
(ii) All legal proceedings necessary to the
authorization, issue and sale of the Securities have
been taken by GTE;
(iii) This Agreement and any applicable Terms
Agreement have been duly and validly authorized,
executed and delivered by GTE;
(iv) The Indenture has been duly authorized by GTE and
has been duly executed and delivered by GTE; the
Indenture constitutes a legal, valid and binding
agreement of GTE enforceable in accordance with its
terms, except as limited by bankruptcy, insolvency and
other laws affecting the enforcement of creditors'
rights and the availability of equitable remedies; the
Indenture has been duly qualified under the Trust
Indenture Act;
-11-
(v) The Securities conform as to legal matters with
the statements concerning them in the Prospectus as
amended or supplemented and have been duly authorized
and, when duly executed by GTE and duly authenticated
and delivered by the Trustee, will have been duly
issued under the Indenture, and (subject to
qualifications set forth in subsection (iv) of this
Section 6(c)) will constitute legal, valid and binding
obligations of GTE enforceable in accordance with their
terms and are entitled to the benefits afforded by the
Indenture;
(vi) No authorization, approval or consent of any
governmental regulatory authority is required for the
issuance and sale of the Securities;
(vii) Registration Statement No. 33-63145 became
effective on October 6, 1995 and Registration Statement
No. 333-31333 became effective on [insert date], and to
the best of such counsel's knowledge, no proceedings
under Section 8 of the Act looking toward the possible
issuance of a stop order with respect thereto are
pending or threatened and the Registration Statement
remains in effect on the date of such opinion; the
Registration Statement and the Prospectus as amended
and supplemented and any further amendments and
supplements thereto made by GTE prior to the date of
such opinion (other than the financial statements and
related schedules 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 Exchange Act
as to documents incorporated by reference into said
Registration Statement and the applicable rules and
regulations of the Securities and Exchange Commission
thereunder; the Prospectus as amended and supplemented
is lawful for use for the purposes specified in the Act
in connection with the offer for sale and sale of the
Securities in the manner specified therein; such
counsel has no reason to believe that the Registration
Statement or any further amendment or supplement
thereto made by GTE prior to the date of such opinion
(other than the financial statements and related
schedules therein, as to which such counsel need
express no opinion), the Prospectus as amended or
supplemented or any further amendment or supplement
thereto made by GTE prior to the date of such opinion
(other than the financial statements and related
schedules therein, as to which such counsel need
express no opinion) and the documents incorporated
therein by reference, considered as a whole on the
effective date of the Registration Statement (or, if an
amendment to the Registration Statement or an Annual
Report on Form 10-K has been filed by GTE with the
Commission subsequent to the effectiveness of the
Registration Statement, then at the time of the most
recent filing) and on the date of such opinion,
contained or contain any untrue statement of a material
fact or omitted or omit to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading;
(d) Not later than 10:00 a.m., New York City time, on the
Commencement Date and on each applicable date referred to in
Section 4(f) hereof that is on or prior to such Solicitation Time
or Time of Delivery, as the case may be, the independent
certified public accountants who have certified the
-12-
financial statements of GTE and its subsidiaries included or
incorporated by reference in the Registration Statement shall
have furnished to such Agent a letter, dated the Commencement
Date or such applicable date, as the case may be, in form and
substance satisfactory to such Agent, to the effect set forth in
Annex III hereto;
(e) There shall have been since the respective dates as of
which information is given in the Prospectus as amended or
supplemented prior to the date of the Pricing Supplement relating
to the Securities to be delivered at the relevant Time of
Delivery, except as stated therein or contemplated thereby, no
material adverse change in the business, business prospects,
properties, financial condition or results of operations of GTE;
(f) On or after the date hereof 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 general moratorium on commercial banking
activities in New York declared by either Federal or New York
State authorities; (iii) the establishment of minimum prices on
the New York Stock Exchange by Federal or New York State
authorities; or (iv) the outbreak or material escalation of
hostilities involving the United States or the declaration by the
United States of a national emergency or war or the occurrence of
any other calamity or crisis, if the effect of any such event
specified in this clause (iv) in the judgment of such Agent makes
it impracticable or inadvisable to proceed with the solicitation
of offers to purchase Securities or the purchase of the
Securities from GTE as principal pursuant to the applicable Terms
Agreement or otherwise, as the case may be, on the terms and in
the manner contemplated in the Prospectus;
(g) GTE shall have furnished or caused to be furnished to
such Agent a customary form of compliance certificate dated the
Commencement Date and each applicable date referred to in Section
4(g) hereof that is on or prior to such Solicitation Time or Time
of Delivery, as the case may be, signed by the Chairman, a Vice
Chairman, the President or a Vice President of GTE, as to the
matters set forth in subsections (a)(ii) and (e) of this Section
6. The officer making such certificate may rely upon the best of
his or her knowledge as to proceedings pending or threatened.
7. (a) GTE agrees to indemnify and hold harmless each
Agent and each person, if any, who controls such Agent 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 Prospectus, the Prospectus as amended
or supplemented or any other prospectus relating to the
Securities, or any amendment or supplement 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 GTE by such Agent in writing expressly
for use therein or by any statement or omission in the Statement
of Eligibility of the Trustee under the Indenture. The foregoing
agreement, insofar as it relates to the Prospectus or the
Prospectus as amended or supplemented, or any other prospectus
relating to the Securities, or any amendment or supplement
thereto, shall not inure to the benefit of any Agent (or to the
benefit of any person controlling such Agent) on account of any
losses, claims, damages or liabilities arising from the sale of
any Securities by said Agent to any person if a copy of the
-13-
Prospectus or the Prospectus as amended or supplemented or any
other prospectus relating to the Securities, or any amendment or
supplement thereto, shall not have been sent or given by or on
behalf of such Agent to such person at or prior to the written
confirmation of the sale of the Securities to such person and
such statement or omission is cured in the Prospectus or the
Prospectus as amended or supplemented or any other prospectus
relating to the Securities, or any amendment or supplement
thereto.
(b) Each Agent agrees to indemnify and hold harmless GTE,
its directors, its officers who sign the Registration Statement
and any person controlling GTE to the same extent as the
foregoing indemnity from GTE to each Agent, but only with
reference to information relating to said Agent furnished in
writing by or on behalf of said Agent expressly for use in the
Registration Statement, the Prospectus, the Prospectus as amended
or supplemented or any other prospectus relating to the
Securities.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in
respect of which indemnity may be sought pursuant to subsection
(a) or (b) of this Section 7, 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
proceeding (provided, however, that if such indemnified party
shall object to the selection of counsel after having been
advised by such counsel that there may be one or more legal
defenses available to the indemnified party which are different
from or additional to those available to the indemnifying party,
the indemnifying party shall designate other counsel reasonably
satisfactory to the indemnified party) 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.
(d) If the indemnification provided for in this Section 7
is unavailable to an indemnified party under subsection (a) or
(b) 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 GTE on the one hand and the Agents on the other from
the offering of the Securities 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 GTE on the one hand and of the Agents 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 GTE on the one hand and the Agents on the other in
connection with the offering of the Securities
-14-
shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Securities received by GTE bear
to the total commissions, if any, received by all of the Agents
in respect thereof. If there are no commissions allowed or paid
by GTE to any Agents in respect of the Securities, the relative
benefits received by the Agents in the preceding sentence shall
be the difference between the price received by such Agents upon
resale of the Securities and the price paid for the Securities
pursuant to the Terms Agreement. The relative fault of GTE on
the one hand and of the Agents 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 GTE or by the Agents and the parties' relative
intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
(e) The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities referred to
in subsection (d) of this Section 7 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.
8. Each Agent, in soliciting offers to purchase Securities
from GTE and in performing the other obligations of such Agent
hereunder (other than in respect of any purchase by an Agent as
principal, pursuant to a Terms Agreement or otherwise), is acting
solely as agent for GTE and not as principal. Each Agent will
make reasonable efforts to assist GTE in obtaining performance by
each purchaser whose offer to purchase Securities from GTE was
solicited by such Agent and has been accepted by GTE, but such
Agent shall not have any liability to GTE in the event such
purchase is not consummated for any reason. If GTE shall default
on its obligation to deliver Securities to a purchaser whose
offer it has accepted, GTE shall (i) hold each Agent harmless
against any loss, claim or damage arising from or as a result of
such default by GTE and (ii) notwithstanding such default, pay to
the Agent that solicited such offer any commission to which it
would be entitled in connection with such sale.
9. The respective indemnities, agreements, representations,
warranties and other statements by any Agent and GTE set forth in
or made 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 Agent or any
controlling person of any Agent, or GTE, or any officer or
director or any controlling person of GTE, and shall survive each
delivery of and payment for any of the Securities.
10. The provisions of this Agreement relating to the
solicitation of offers to purchase Securities from GTE may be
suspended or terminated at any time by GTE as to any Agent or by
any Agent as to such Agent upon the giving of written notice of
such suspension or termination to such Agent or GTE, as the case
may be. In the event of such suspension or termination with
respect to any Agent, (x) this Agreement shall remain in full
force and effect with respect to any Agent as to which such
suspension or termination has not occurred, (y) this Agreement
shall remain in full force and effect with respect to the rights
and obligations of any party which have previously accrued or
which relate to Securities which are already issued, agreed to be
-15-
issued or the subject of a pending offer at the time of such
suspension or termination and (z) in any event, this Agreement
shall remain in full force and effect insofar as the fourth
paragraph of Section 2(a), and Sections 5, 7, 8 and 9 hereof are
concerned.
11. Except as otherwise specifically provided herein or in
the Administrative Procedure, all statements, requests, notices
and advices hereunder shall be in writing, or by telephone if
promptly confirmed in writing, and if to Goldman, Sachs & Co.
shall be sufficient in all respects when delivered or sent by
facsimile transmission or registered mail to 85 Broad Street,
27th Floor, New York, New York 10004, Facsimile Transmission No.
(212) 902-0683, Attention: Money Market Origination, and if to
Merrill Lynch, Pierce, Fenner & Smith Incorporated shall be
sufficient in all respects when delivered or sent by telex,
facsimile transmission or registered mail to World Financial
Center, North Tower, 10th Floor, New York, New York 10281-1310,
Facsimile Transmission No. (212) 449-2234, Attention: MTN Product
Management, and if to Salomon Brothers Inc shall be sufficient in
all respects when delivered or sent by telex, facsimile
transmission or registered mail to 7 World Trade Center, New
York, New York 10048, Facsimile Transmission No. (212) 783-2274,
Attention: Medium-Term Note Department and if to GTE shall be
sufficient in all respects when delivered or sent by facsimile
transmission or registered mail to One Stamford Forum, Stamford,
Connecticut 06904, Facsimile Transmission No. (203) 965-4237,
Attention: Assistant Treasurer - Capital Markets or such other
address and facsimile number as GTE may provide in writing to the
Agents.
12. This Agreement and any Terms Agreement shall be binding
upon, and inure solely to the benefit of, each Agent and GTE, and
to the extent provided in Sections 7, 8 and 9 hereof, the
officers and directors of GTE and any person who controls any
Agent or GTE, and their respective personal representatives,
successors and assigns, and no other person shall acquire or have
any right under or by virtue of this Agreement or any Terms
Agreement. No purchaser of any of the Securities through or from
any Agent hereunder shall be deemed a successor or assign by
reason merely of such purchase.
13. Time shall be of the essence in this Agreement and any
Terms 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.
14. This Agreement and any Terms Agreement shall be
governed by, and construed in accordance with, the laws of the
State of New York.
15. This Agreement and any Terms 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 an original, but
all of such respective counterparts shall together constitute one
and the same instrument.
-16-
If the foregoing is in accordance with your understanding,
please sign and return to us four counterparts hereof, whereupon
this letter and the acceptance by each of you thereof shall
constitute a binding agreement between GTE and each of you in
accordance with its terms.
Very truly yours,
GTE CORPORATION
By:___________________________
_
Name:
Title:
Accepted in New York, New York,
as of the date hereof:
____________________________________
(Goldman, Sachs & Co.)
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
By:_________________________________
Name:
Title:
SALOMON BROTHERS INC
By:_________________________________
Name:
Title:
91
ANNEX I
GTE CORPORATION
[Title of Security]
Terms Agreement
_________, 19__
[Goldman, Sachs & Co.,
85 Broad Street
New York, New York 10004.]
[Merrill Lynch, Pierce, Fenner & Smith Incorporated
World Financial Center
North Tower, 10th Floor
New York, New York 10281-1310]
[Salomon Brothers Inc
7 World Trade Center
New York, New York 10048]
Ladies and Gentlemen:
GTE Corporation ("GTE") proposes, subject to the terms and
conditions stated herein and in the Distribution Agreement, dated
_______, 1997 (the "Distribution Agreement"), between GTE on the
one hand and Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner
& Smith Incorporated and Salomon Brothers Inc (the "Agents") on
the other, to issue and sell to [Goldman, Sachs & Co.] [Merrill
Lynch, Pierce, Fenner & Smith Incorporated][Salomon Brothers Inc]
(the "Purchaser(s)") the securities specified in the Schedule
hereto (the "Purchased Securities"). Each of the provisions of
the Distribution Agreement not specifically related to the
solicitation by the Agents, as agents of GTE, of offers to
purchase Securities is incorporated herein by reference in its
entirety, and shall be deemed to be part of this Terms Agreement
to the same extent as if such provisions had been set forth in
full herein. Nothing contained herein or in the Distribution
Agreement shall make any party hereto an agent of GTE or make
such party subject to the provisions therein relating to the
solicitation of offers to purchase Securities from GTE, solely by
virtue of its execution of this Terms Agreement. Each of the
representations and warranties set forth therein shall be deemed
to have been made at and as of the date of this Terms Agreement,
except that each representation and warranty in Section 1 of the
Distribution Agreement which makes reference to the Prospectus
shall be deemed to be a representation and warranty as of the
date of the Distribution Agreement in relation to the Prospectus
(as therein defined), and also a representation and warranty as
of the date of this Terms Agreement in relation to the Prospectus
as amended and supplemented to relate to the Purchased
Securities.
An amendment to the Registration Statement, or a supplement to
the Prospectus, as the case may be, relating to the Purchased
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
Distribution Agreement incorporated herein by reference, GTE
agrees to issue and sell to the Purchaser(s) and the Purchaser(s)
agree to purchase from GTE the Purchased Securities, at the time
and place, in the principal amount and at the purchase price set
forth in the Schedule hereto.
-2-
If the foregoing is in accordance with your understanding, please
sign and return to us [ ] counterparts hereof, and upon
acceptance hereof by you this letter and such acceptance hereof,
including those provisions of the Distribution Agreement
incorporated herein by reference, shall constitute a binding
agreement between you and GTE.
GTE CORPORATION
By:___________________________
____
Name:
Title:
Accepted:
By:[______________________________
(Goldman, Sachs & Co.)]
[MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
By:_______________________________
Name:
Title:]
[SALOMON BROTHERS INC
By:________________________________
Name:
Title:]
Schedule to Annex I
Title of Purchased Securities:
% Medium-Term Notes
Aggregate Principal Amount:
$ or units of other Specified
Currency
Price to Public:
Purchase Price by [Goldman, Sachs & Co.][Merrill Lynch, Pierce,
Fenner & Smith Incorporated][Salomon Brothers Inc] :
% of the principal amount of the Purchased Securities[, plus
accrued interest from to ] [and accrued
amortization, if any, from to
]
Method of and Specified Funds for Payment of Purchase Price:
[By wire transfer to a bank account specified by GTE in
immediately available funds]
[By certified or official bank check or checks, payable to
the order of GTE, in immediately available funds]
Indenture:
Indenture, dated as of December 1, 1996, as amended and
supplemented, between GTE and The Bank of New York as Trustee
Time of Delivery:
Closing Location for Delivery of Securities:
Maturity:
Interest Rate:
%
Interest Payment Dates:
[months and dates]
I-1
Documents to be Delivered:
The following documents referred to in the Distribution
Agreement shall be delivered as a condition to the Closing:
[(1) The opinion or opinions of counsel to the Agents
referred to in Section 4(d).]
[(2) The opinion of counsel to GTE referred to in Section
4(e).]
[(3) The accountants' letter referred to in Section 4(f).]
[(4) The officers' certificate referred to in Section
4(g).]
[Substitution of Purchasers (if applicable):
If for any reason any Purchaser shall not purchase the
Purchased Securities it has agreed to purchase hereunder, the
remaining Purchasers shall have the right within 24 hours to make
arrangements satisfactory to GTE for the purchase of such
Purchased Securities hereunder. If they fail to do so, the
amounts of Purchased Securities that the remaining Purchasers are
obligated, severally, to purchase under this Agreement shall be
increased in the proportions which the total amount of Purchased
Securities which they have respectively agreed to purchase bears
to the total amount of Purchased Securities which all non-
defaulting Purchasers have so agreed to purchase, or in such
other proportions as the Purchasers may specify to absorb such
unpurchased Purchased Securities, provided that such aggregate
increases shall not exceed 10% of the total amount of the
unpurchased Purchased Securities still remain, GTE shall have the
right either to elect to consummate the sale except as to any
such unpurchased Purchased Securities so remaining or, within the
next succeeding 24 hours, to make arrangements satisfactory to
the remaining Purchasers for the purchase of such Purchased
Securities. In any such cases, either the Purchasers or the
Representative or GTE shall have the right to postpone the
Closing Date for not more than seven business days to a mutually
acceptable date. If GTE shall not elect to so consummate the
sale and any unpurchased Purchased Securities remain for which no
satisfactory substitute Purchaser is obtained in accordance with
the above provisions, then this Agreement shall terminate without
liability on the part of any non-defaulting Purchaser or GTE for
the purchase or sale of any Purchased Securities under this
Agreement. No provision in this paragraph shall relieve any
defaulting Purchaser of liability to GTE for damages occasioned
by such default.]
Other Provisions (if applicable):
I-2
ANNEX II
GTE CORPORATION
Administrative Procedure
This Administrative Procedure relates to the Securities defined
in the Distribution Agreement, dated ______, 1997 (the
"Distribution Agreement"), between GTE Corporation ("GTE") and
Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Salomon Brothers Inc (together, the "Agents"),
to which this Administrative Procedure is attached as Annex II.
Defined terms used herein and not defined herein shall have the
meanings given such terms in the Distribution Agreement, the
Prospectus as amended or supplemented or the Indenture.
The procedures to be followed with respect to the settlement of
sales of Securities directly by GTE to purchasers solicited by an
Agent, as agent, are set forth below. The terms and settlement
details related to a purchase of Securities by an Agent, as
principal, from GTE will be set forth in a Terms Agreement
pursuant to the Distribution Agreement, unless GTE and such Agent
otherwise agree as provided in Section 2(b) of the Distribution
Agreement, in which case the procedures to be followed in respect
of the settlement of such sale will be as set forth below. An
Agent, in relation to a purchase of a Security by a purchaser
solicited by such Agent, is referred to herein as the "Selling
Agent" and, in relation to a purchase of a Security by such Agent
as principal other than pursuant to a Terms Agreement, as the
"Purchasing Agent".
GTE will advise each Agent in writing of those persons at GTE
with whom such Agent is to communicate regarding offers to
purchase Securities and the related settlement details.
Each Security will be issued only in fully registered form and
will be represented by either a global security (a "Global
Security") delivered to the Trustee, as agent for The Depository
Trust Company (the "Depositary") and recorded in the book-entry
system maintained by the Depositary (a "Book-Entry Security") or
a certificate issued in definitive form (a "Certificated
Security") delivered to a person designated by an Agent, as set
forth in the applicable Pricing Supplement. An owner of a Book-
Entry Security will not be entitled to receive a certificate
representing such a Security, except as provided in the
Indenture.
Book-Entry Securities will be issued in accordance with the
Administrative Procedure set forth in Part I hereof, and
Certificated Securities will be issued in accordance with the
Administrative Procedure set forth in Part II hereof.
PART I: ADMINISTRATIVE PROCEDURE FOR BOOK-ENTRY SECURITIES
In connection with the qualification of the Book-Entry Securities
for eligibility in the book-entry system maintained by the
Depositary, the Trustee will perform the custodial, document
control and administrative functions described below, in
accordance with its respective obligations under a Letter of
Representation from GTE and the Trustee to the Depositary, dated
the date hereof, and a Medium-Term Note Certificate Agreement
between the Trustee and the Depositary, dated as of August 17,
1989, (the "Certificate Agreement"), and its obligations as a
participant in the Depositary, including the Depositary's Same-
Day Funds Settlement System ("SDFS").
II-1
Posting Rates by GTE:
GTE and the Agents will discuss from time to time the rates of
interest per annum to be borne by and the maturity of Book-Entry
Securities that may be sold as a result of the solicitation of
offers by an Agent. GTE may establish a fixed set of interest
rates and maturities for an offering period ("posting"). If GTE
decides to change already posted rates, it will promptly advise
the Agents to suspend solicitation of offers until the new posted
rates have been established with the Agents.
Acceptance of Offers by GTE:
Each Agent will promptly advise GTE by telephone or other
appropriate means of all reasonable offers to purchase Book-Entry
Securities, other than those rejected by such Agent. Each Agent
may, in its discretion reasonably exercised, reject any offer
received by it in whole or in part. Each Agent also may make
offers to GTE to purchase Book-Entry Securities as a Purchasing
Agent. GTE will have the sole right to accept offers to purchase
Book-Entry Securities and may reject any such offer in whole or
in part.
GTE will promptly notify the Selling Agent or Purchasing Agent,
as the case may be, of its acceptance or rejection of an offer to
purchase Book-Entry Securities. If GTE accepts an offer to
purchase Book-Entry Securities, it will confirm such acceptance
in writing to the Selling Agent or Purchasing Agent, as the case
may be, and the Trustee.
Communication of Sale Information to GTE by Agent and Settlement
Procedures:
A. After the acceptance of an offer by GTE, the Selling
Agent or Purchasing Agent, as the case may be, will communicate
promptly, but in no event later than the time set forth under
"Settlement Procedure Timetable" below, the following details of
the terms of such offer (the "Sale Information") to GTE by
telephone (confirmed in writing) or by facsimile transmission or
other acceptable written means:
(1) Principal Amount of Book-Entry Securities to be
purchased;
(2) Original Issue Date;
(3) If a Fixed Rate Book-Entry Security, the interest rate;
(4) Stated Maturity;
(5) Interest Payment Date(s);
(6) Default Rate;
(7) Record Date(s);
(8) If a redeemable Book-Entry Security, such of the
following as are applicable:
(i) Redemption Commencement Date,
(ii) Initial Redemption Percentage, and
(iii) Annual Redemption Percentage Reduction;
(9) Optional Repayment Dates, if any;
(10) If such Securities are to be issued as Original Issue
Discount Securities, the Issue Price;
(11) Specified Currency and, if the Specified Currency is
other than U.S. dollars, the Exchange Rate Agent (it
being understood that currently the Depositary accepts
deposits of Global Securities denominated in U.S.
dollars only);
II-2
(12) Authorized Denominations;
(13) If a Floating Rate Book-Entry Security, such of the
following as are applicable:
(i) Minimum Interest Rate,
(ii) Maximum Interest Rate,
(iii) Initial Interest Reset Date,
(iv) Interest Reset Period,
(v) Interest Determination Date,
(vi) Interest Reset Date(s),
(vii) Initial Interest Rate,
(viii)Spread and/or Spread Multiplier,
(ix) Calculation Agent,
(x) Interest Category, indicating whether such
Securities are:
(a) Regular Floating Rate Securities,
(b) Floating Rate/Fixed Rate
Securities (in which case, the Fixed Rate
Commencement Date and the Fixed Interest Rate
shall be specified, or
(c) Inverse Floating Rate
Securities (in which case the Fixed Interest
Rate shall be specified);
(xi) Day Count Convention, indicating one of
the following (including the applicable period):
(a) Actual/360,
(b) Actual/Actual, or
(c) 30/360;
(xii) Interest Rate Basis or Bases, which may
include:
(a) CD Rate,
(b) Prime Rate,
(c) Federal Funds Rate,
(d) Commercial Paper Rate,
(e) LIBOR, in which case either
Reuters Page or Telerate Page shall be
indicated, as well as the Index Currency,
(f) Treasury Rate,
(g) CMT Rate, in which case the
Designated CMT Telerate Page or the
Designated CMT Maturity Index shall be
indicated, or
(h) Other;
(14)Name, address and taxpayer identification number of the
registered owner(s);
(15) Denomination of certificates to be delivered at
settlement;
(16) Selling Agent or Purchasing Agent;
(17) Selling Agent's commission or Purchasing Agent's
discount, as the case may be; and
(18) Net Proceeds to the Company.
II-3
B. After receiving the Sale Information from the Selling
Agent or Purchasing Agent, as the case may be, GTE will
communicate such Sale Information to the Trustee by facsimile
transmission or other acceptable written means. GTE will assign
a CUSIP number to the Global Security from a list of CUSIP
numbers previously delivered to the Trustee by GTE representing
such Book-Entry Security and then advise the Trustee and the
Selling Agent or Purchasing Agent, as the case may be, of such
CUSIP number.
C. The Trustee will enter a pending deposit message through
the Depositary's Participant Terminal System, providing the
following settlement information to the Depositary, and the
Depositary shall forward such information to such Agent and
Standard & Poor's Corporation's CUSIP Service Bureau:
(1) The applicable Sale Information;
(2) CUSIP number of the Global Security representing
such Book-Entry Security;
(3) Whether such Global Security will represent any
other Book-Entry Security (to the extent known at such
time);
(4) Number of the participant account maintained by
the Depositary on behalf of the Selling Agent or
Purchasing Agent, as the case may be;
(5) The interest payment period; and
(6) Initial Interest Payment Date for such Book-Entry
Security, number of days by which such date succeeds
the record date for the Depositary's purposes (which in
the case of Floating Rate Securities which reset weekly
shall be the date five calendar days immediately
preceding the applicable Interest Payment Date and in
the case of all other Book-Entry Securities shall be
the Regular Record Date, as defined in the Security)
and, if calculable at that time, the amount of interest
payable on such Interest Payment Date.
D. The Trustee will complete and authenticate the Global
Security previously delivered by GTE representing such Book-Entry
Security.
E. The Depositary will credit such Book-Entry Security to
the Trustee's participant account at the Depositary.
F. The Trustee will enter an SDFS deliver order through the
Depositary's Participant Terminal System instructing the
Depositary to (i) debit such Book-Entry Security to the Trustee's
participant account and credit such Book-Entry Security to such
Agent's participant account and (ii) debit such Agent's
settlement account and credit the Trustee's settlement account
for an amount equal to the price of such Book-Entry Security less
such Agent's commission. The entry of such a deliver order shall
constitute a representation and warranty by the Trustee to the
Depositary that (a) the Global Security representing such Book-
Entry Security has been issued and authenticated and (b) the
Trustee is holding such Global Security pursuant to the
Certificate Agreement.
G. Such Agent will enter an SDFS deliver order through the
Depositary's Participant Terminal System instructing the
Depositary (i) to debit such Book-Entry Security to such Agent's
participant account and credit such Book-Entry Security to the
participant accounts of the Participants with respect to such
Book-Entry Security and (ii) to debit the settlement accounts of
such Participants and credit the settlement account of such Agent
for an amount equal to the price of such Book-Entry Security.
II-4
H. Transfers of funds in accordance with SDFS deliver
orders described in Settlement Procedures "F" and "G" will be
settled in accordance with SDFS operating procedures in effect on
the settlement date.
I. Upon confirmation of receipt of funds, the Trustee will
transfer to the account of GTE maintained at [Name of Bank], New
York, New York, [Account No.; ABA No.; Reference] or such other
account as GTE may have previously specified to the Trustee, in
funds available for immediate use in the amount transferred to
the Trustee in accordance with Settlement Procedure "F".
J. Upon request, the Trustee will send to GTE a statement
setting forth the principal amount of Book-Entry Securities
outstanding as of that date under the Indenture.
K. Such Agent will confirm the purchase of such Book-Entry
Security to the purchaser either by transmitting to the
Participants with respect to such Book-Entry Security a
confirmation order or orders through the Depositary's
institutional delivery system or by mailing a written
confirmation to such purchaser.
L. The Depositary will, at any time, upon request of GTE or
the Trustee, promptly furnish to GTE or the Trustee a list of the
names and addresses of the participants for whom the Depositary
has credited Book-Entry Securities.
Preparation of Pricing Supplement by GTE:
If GTE accepts an offer to purchase a Book-Entry Security, it
will prepare a Pricing Supplement reflecting the terms of such
Book-Entry Security and arrange to have such Pricing Supplement
delivered to the Selling Agent or Purchasing Agent, as the case
may be, not later than 2:00 p.m., New York City time, on the
Business Day following the Trade Date (as defined below), or if
GTE and the purchaser agree to settlement on the Business Day
following the date of acceptance of such offer, not later than
noon, New York City time, on such date, at the following
applicable addresses in addition to the addresses specified in
the Distribution Agreement: if to Goldman Sachs & Co., to 85
Broad Street, 26th Floor, New York, New York 10004, Attention:
Medium-Term Note Trading, (212) 902-8401, facsimile transmission
no.: (212) 902-0658; if to Merrill Lynch, Pierce, Fenner & Smith,
Incorporated, to Tritech Services, 40 Colonial Drive, Piscataway,
New Jersey 08854, Attention: Prospectus Operations, Nachman
Kimerling, (908) 885-2768, facsimile transmission no: (908) 885-
2774; and if to Salomon Brothers Inc, to 8800 Hidden River
Parkway, Tampa, Florida 33637, Attention: Enrique Castro, (813)
558-7165, facsimile transmission no. (813) 558-4123. GTE will
arrange to have the Pricing Supplement filed with the Commission
not later than the close of business of the Commission on the
fifth Business Day following the date on which such Pricing
Supplement is first used.
Delivery of Confirmation and Prospectus to Purchaser by Selling
Agent:
The Selling Agent will deliver to the purchaser of a Book-Entry
Security a written confirmation of the sale and delivery and
payment instructions. In addition, the Selling Agent will
deliver to such purchaser or its agent the Prospectus as amended
or supplemented (including the Pricing Supplement) in relation to
such Book-Entry Security prior to or together with the earlier of
the delivery to such purchaser or its agent of (a) the
confirmation of sale or (b) the Book-Entry Security.
II-5
Date of Settlement:
The receipt by GTE of immediately available funds in payment for
a Book-Entry Security and the authentication and issuance of the
Global Security representing such Book-Entry Security shall
constitute "settlement" with respect to such Book-Entry Security.
All offers of Book-Entry Securities solicited by a Selling Agent
or made by a Purchasing Agent and accepted by GTE on a particular
date (the "Trade Date") will be settled on a date (the
"Settlement Date") which is the third Business Day after the
Trade Date pursuant to the "Settlement Procedure Timetable" set
forth below, unless GTE and the purchaser agree to settlement (a)
on another Business Day after the acceptance of such offer or (b)
with respect to an offer accepted by GTE prior to 10:00 a.m., New
York City time, on the date of such acceptance.
Settlement Procedure Timetable:
For orders of Book-Entry Securities solicited by a Selling Agent
and accepted by GTE for settlement on the third Business Day
after the Trade Date, Settlement Procedures "A" through "I" set
forth above shall be completed as soon as possible but not later
than the respective times (New York City time) set forth below:
<TABLE>
<CAPTION>
Settlement
Procedure Time
<S> <C>
A 10:00 a.m. on the Business Day following the Trade
Date
or 10:00a.m. on the Business Day prior to
the
Settlement Date, whichever is earlier
B 12:00 noon on the second Business Day immediately
preceding
the Settlement Date
C 2:00 p.m. on the second Business Day immediately
preceding
the Settlement Date
D 9:00 a.m. on the Settlement Date
E 10:00 a.m. on the Settlement Date
F-G 2:00 p.m. on the Settlement Date
H 4:45 p.m. on the Settlement Date
I 5:00 p.m. on the Settlement Date
</TABLE>
If the initial interest rate for a Floating Rate Book-Entry
Security has not been determined at the time that Settlement
Procedure "A" is completed, Settlement Procedures "B" and "C"
shall be completed as soon as such rate has been determined but
no later than 2:00 p.m. on the second Business Day immediately
preceding the Settlement Date. Settlement Procedure "H" is
subject to extension in accordance with any extension of Fedwire
closing deadlines and in the other events specified in the SDFS
operating procedures in effect on the Settlement Date.
If settlement of a Book-Entry Security is rescheduled or
canceled, the Trustee, upon obtaining knowledge thereof, will
deliver to the Depositary, through the Depositary's Participation
Terminal System, a cancellation message to such effect by no
later than 2:00 p.m. on the Business Day immediately preceding
the scheduled Settlement Date.
Failure to Settle:
If the Trustee fails to enter an SDFS deliver order with respect
to a Book-Entry Security pursuant to Settlement Procedure "F",
the Trustee may deliver to the Depositary, through the
Depositary's Participant Terminal System, as
II-6
soon as practicable a withdrawal message instructing the
Depositary to debit such Book-Entry Security to the Trustee's
participant account, provided that the Trustee's participant
account contains a principal amount of the Global Security
representing such Book-Entry Security that is at least equal to
the principal amount to be debited. If a withdrawal message is
processed with respect to all the Book-Entry Securities
represented by a Global Security, the Trustee will mark such
Global Security "canceled", make appropriate entries in the
Trustee's records and send such canceled Global Security to GTE.
The CUSIP number assigned to such Global Security shall, in
accordance with CUSIP Service Bureau procedures, be canceled and
not immediately reassigned. If a withdrawal message is processed
with respect to one or more, but not all, of the Book-Entry
Securities represented by a Global Security, the Trustee will
exchange such Global Security for two Global Securities, one of
which shall represent such Book-Entry Security or Securities and
shall be canceled immediately after issuance and the other of
which shall represent the remaining Book-Entry Securities
previously represented by the surrendered Global Security and
shall bear the CUSIP number of the surrendered Global Security.
If the purchase price for any Book-Entry Security is not timely
paid to the participants with respect to such Book-Entry Security
by the beneficial purchaser thereof (or a person, including an
indirect participant in the Depositary, acting on behalf of such
purchaser), such participants and, in turn, the Agent for such
Book-Entry Security may enter deliver orders through the
Depositary's Participant Terminal System debiting such Book-Entry
Security to such participant's account and crediting such Book-
Entry Security to such Agent's account and then debiting such
Book-Entry Security to such Agent's participant account and
crediting such Book-Entry Security to the Trustee's participant
account and shall notify GTE and the Trustee thereof.
Thereafter, the Trustee will (i) immediately notify GTE of such
order and GTE shall transfer to such Agent funds available for
immediate use in an amount equal to the price of such Book-Entry
Security which was credited to the account of GTE maintained at
the Trustee in accordance with Settlement Procedure I, and (ii)
deliver the withdrawal message and take the related actions
described in the preceding paragraph. If such failure shall have
occurred for any reason other than default by the applicable
Agent to perform its obligations hereunder or under the
Distribution Agreement, GTE will reimburse such Agent on an
equitable basis for the loss of its use of funds during the
period when the funds were credited to the account of GTE.
Notwithstanding the foregoing, upon any failure to settle with
respect to a Book-Entry Security, the Depositary may take any
actions in accordance with its SDFS operating procedures then in
effect. In the event of a failure to settle with respect to one
or more, but not all, of the Book-Entry Securities to have been
represented by a Global Security, the Trustee will provide, in
accordance with Settlement Procedure "D", for the authentication
and issuance of a Global Security representing the other Book-
Entry Securities to have been represented by such Global Security
and will make appropriate entries in its records. GTE will, from
time to time, furnish the Trustee with a sufficient quantity of
Securities.
Nothing herein shall be deemed to require the Trustee to risk or
expend its own funds in connection with any payments to GTE, the
Agents or the Depositary or any noteholder, it being understood
by all parties that payments made by the Trustee to GTE or the
Agents, or the Depositary, or any noteholder shall be made only
to the extend that funds are provided to the Trustee for such
purposes.
II-7
PART II: ADMINISTRATIVE PROCEDURE FOR CERTIFICATED SECURITIES
Posting Rates by GTE:
GTE and the Agents will discuss from time to time the rates of
interest per annum to be borne by and the maturity of
Certificated Securities that may be sold as a result of the
solicitation of offers by an Agent. GTE may establish a fixed
set of interest rates and maturities for an offering period
("posting"). If GTE decides to change already posted rates, it
will promptly advise the Agents to suspend solicitation of offers
until the new posted rates have been established with the Agents.
Acceptance of Offers by GTE:
Each Agent will promptly advise GTE by telephone or other
appropriate means of all reasonable offers to purchase
Certificated Securities, other than those rejected by such Agent.
Each Agent may, in its discretion reasonably exercised, reject
any offer received by it in whole or in part. Each Agent also
may make offers to GTE to purchase Certificated Securities as a
Purchasing Agent. GTE will have the sole right to accept offers
to purchase Certificated Securities and may reject any such offer
in whole or in part. GTE will promptly notify the Selling Agent
or Purchasing Agent, as the case may be, of its acceptance or
rejection of an offer to purchase Certificated Securities. If
GTE accepts an offer to purchase Certificated Securities, it will
confirm such acceptance in writing to the Selling Agent or
Purchasing Agent, as the case may be, and the Trustee.
Communication of Sale Information to GTE by Agent:
After the acceptance of an offer by GTE, the Selling Agent or
Purchasing Agent, as the case may be, will communicate the
following details of the terms of such offer (the "Sale
Information") to GTE by telephone (confirmed in writing) or by
facsimile transmission or other acceptable written means:
(1) Principal Amount of Certificated Securities to be
purchased;
(2) Original Issue Date;
(3) If a Fixed Rate Certificated Security, the interest
rate;
(4) Stated Maturity;
(5) Interest Payment Date(s);
(6) Default Rate;
(7) Record Date(s);
(8) If a redeemable Certificated Security, such of
the following as are applicable:
(i) Redemption Commencement Date,
(ii) Initial Redemption Percentage, and
(iii) Annual Redemption Percentage Reduction;
(9) Optional Repayment Dates, if any;
(10) If such Securities are to be issued as Original
Issue Discount Securities, the Issue Price;
(11) Specified Currency and, if the Specified
Currency is other than U.S. dollars, the Exchange
Rate Agent (it being understood that currently the
Depositary accepts deposits of Global Securities
denominated in U.S. dollars only);
(12) Authorized Denominations;
(13) If a Floating Rate Certificated Security, such
of the following as are applicable:
II-8
(i) Minimum Interest Rate,
(ii) Maximum Interest Rate,
(iii) Initial Interest Reset Date,
(iv) Interest Reset Period,
(v) Interest Determination Date,
(vi) Interest Reset Date(s),
(vii) Initial Interest Rate,
(viii) Spread and/or Spread Multiplier,
(ix) Calculation Agent,
(x) Interest Category, indicating whether such
Securities are:
(a) Regular Floating Rate Securities,
(b) Floating Rate/Fixed Rate
Securities (in which case, the Fixed Rate
Commencement Date and the Fixed Interest Rate
shall be specified, or
(c) Inverse Floating Rate
Securities (in which case the Fixed Interest
Rate shall be specified);
(xi) Day Count Convention, indicating one of
the following (including the applicable period):
(a) Actual/360,
(b) Actual/Actual, or
(c) 30/360;
(xii) Interest Rate Basis or Bases, which may
include:
(a) CD Rate,
(b) Prime Rate,
(c) Federal Funds Rate,
(d) Commercial Paper Rate,
(e) LIBOR, in which case either
Reuters Page or Telerate Page shall be
indicated, as well as the Index Currency,
(f) Treasury Rate,
(g) CMT Rate, in which case the
Designated CMT Telerate Page or the
Designated CMT Maturity Index shall be
indicated, or
(h) Other;
(14) Name, address and taxpayer identification
number of the registered owner(s);
(15) Denomination of certificates to be delivered at
settlement;
(16) Selling Agent or Purchasing Agent.
(17) Selling Agent's commission or Purchasing
Agent's discount, as the case may be;
(18) Net Proceeds to the Company.
Preparation of Pricing Supplement by GTE:
If GTE accepts an offer to purchase a Certificated Security, it
will prepare a Pricing Supplement reflecting the terms of such
Certificated Security and arrange to have such Pricing Supplement
delivered to the Selling Agent or Purchasing Agent, as the case
may be, not later than 2:00 p.m., New York City time, on the
Business Day following the Trade Date, or if GTE and the
purchaser agree to settlement on the date of acceptance of such
offer, not later than noon, New York City time, on such date, at
the following applicable addresses in addition to the addresses
specified in the Distribution
II-9
Agreement: if to Goldman Sachs & Co., to 85 Broad Street, 26th
Floor, New York, New York 10004, Attention: Medium-Term Note
Trading, (212) 902-8401, facsimile transmission no.: (212) 902-
0658; if to Merrill Lynch, Pierce, Fenner & Smith, Incorporated,
to Tritech Services, 40 Colonial Drive, Piscataway, New Jersey
08854, Attention: Prospectus Operations, Nachman Kimerling, (908)
885-2768, facsimile transmission no: (908) 885-2774; and if to
Salomon Brothers Inc, to 8800 Hidden River Parkway, Tampa,
Florida 33637, Attention: Enrique Castro, (813) 558-7165,
facsimile transmission no. (813) 558-4123. GTE will arrange to
have the Pricing Supplement filed with the Commission not later
than the close of business of the Commission on the fifth
Business Day following the date on which such Pricing Supplement
is first used.
Delivery of Confirmation and Prospectus to Purchaser by Selling
Agent:
The Selling Agent will deliver to the purchaser of a Certificated
Security a written confirmation of the sale and delivery and
payment instructions. In addition, the Selling Agent will
deliver to such purchaser or its agent the Prospectus as amended
or supplemented (including the Pricing Supplement) in relation to
such Certificated Security prior to or together with the earlier
of the delivery to such purchaser or its agent of (a) the
confirmation of sale or (b) the Certificated Security.
Date of Settlement:
All offers of Certificated Securities solicited by a Selling
Agent or made by a Purchasing Agent and accepted by GTE will be
settled on a date (the "Settlement Date") which is the third
Business Day after the date of acceptance of such offer, unless
GTE and the purchaser agree to settlement (a) on another Business
Day after the acceptance of such offer or (b) with respect to an
offer accepted by GTE prior to 10:00 a.m., New York City time, on
the date of such acceptance.
Instruction from GTE to Trustee for Preparation of Certificated
Securities:
After receiving the Sale Information from the Selling Agent or
Purchasing Agent, as the case may be, GTE will communicate such
Sale Information to the Trustee by telephone (confirmed in
writing) or by facsimile transmission or other acceptable written
means.
GTE will instruct the Trustee by facsimile transmission or other
acceptable written means to authenticate and deliver the
Certificated Securities no later than 2:15 p.m., New York City
time, on the Settlement Date. Such instruction will be given by
GTE prior to 3:00 p.m., New York City time, on the Business Day
immediately preceding the Settlement Date unless the Settlement
Date is the date of acceptance by GTE of the offer to purchase
Certificated Securities in which case such instruction will be
given by GTE by 11:00 a.m., New York City time.
Preparation and Delivery of Certificated Securities by Trustee
and Receipt of Payment Therefor:
The Trustee will prepare each Certificated Security and
appropriate receipts that will serve as the documentary control
of the transaction.
In the case of a sale of Certificated Securities to a purchaser
solicited by a Selling Agent, the Trustee will, by 2:15 p.m., New
York City time, on the Settlement Date, deliver the Certificated
Securities to the Selling Agent for
II-10
the benefit of the purchaser of such Certificated Securities
against delivery by the Selling Agent of a receipt therefor. On
the Settlement Date, the Selling Agent will deliver payment for
such Certificated Securities in immediately available funds to
GTE in an amount equal to the issue price of the Certificated
Securities less the Selling Agent's commission; provided that the
Selling Agent reserves the right to withhold payment for which it
has not received funds from the purchaser. GTE shall not use any
proceeds advanced by a Selling Agent to acquire securities.
In the case of a sale of Certificated Securities to a Purchasing
Agent, the Trustee will, by 2:15 p.m., New York City time, on the
Settlement Date, deliver the Certificated Securities to the
Purchasing Agent against delivery of payment for such
Certificated Securities in immediately available funds to GTE in
an amount equal to the issue price of the Certificated Securities
less the Purchasing Agent's discount.
Failure of Purchaser to Pay Selling Agent:
If a purchaser (other than a Purchasing Agent) fails to make
payment to the Selling Agent for a Certificated Security, the
Selling Agent will promptly notify the Trustee and GTE thereof by
telephone (confirmed in writing) or by facsimile transmission or
other acceptable written means. The Selling Agent will
immediately return the Certificated Security to the Trustee.
Immediately upon receipt of such Certificated Security by the
Trustee, GTE will return to the Selling Agent an amount equal to
the amount previously paid to GTE in respect of such Certificated
Security. GTE will reimburse the Selling Agent on an equitable
basis for its loss of the use of funds during the period when
they were credited to the account of GTE.
The Trustee will cancel the Certificated Security in respect of
which the failure occurred, make appropriate entries in its
records and the Certificated Security to GTE.
II-11
ANNEX III
Accountants' Letter
Pursuant to Sections 4(f) and 6(d), as the case may be, of the
Distribution Agreement, GTE's independent certified public
accountants shall furnish letters to the effect that:
They are independent public accountants with respect to GTE
within the meaning of the Act and the applicable published
rules and regulations of the Commission thereunder,
specifically Rule 2-01 of Regulation S-X, and stating in
effect (1) that in their opinion, the financial statements
and schedules examined by them and incorporated by reference
in the Prospectus comply as to form in all material respects
with the applicable accounting requirements of the Act, and
the Exchange Act, and the published rules and regulations
thereunder, and (2) that although they have not audited any
financial statements of GTE as of any date or for any period
subsequent to the prior-year audit, and although they have
conducted an audit for that period, the purpose (and
therefore the scope) of the audit was to enable them to
express their opinion on the financial statements as of that
date and for the year then ended, but not on the financial
statements for any interim period within that year;
therefore, they are unable to and do not express any opinion
on the unaudited condensed balance sheet as of the latest
available interim date, and the unaudited condensed
statements of income, reinvested earnings, and cash flows for
the latest available interim period subsequent to that prior-
year audit which are included in the Prospectus; to the
extent required, they have performed the procedures specified
by the American Institute of Certified Public Accountants for
a review of interim financial information as described in SAS
No. 71, Interim Financial Information, on the latest
available unaudited interim financial statements prepared by
GTE, inquired of certain officials of GTE responsible for
financial and accounting matters, and read the minutes of the
Board of Directors and shareholders of GTE, all of which
procedures have been agreed to by the Purchasers, nothing has
come to their attention which caused them to believe that:
(a) any unaudited interim condensed consolidated financial
statements incorporated by reference in the Prospectus (i) 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 (ii) have not been presented in
conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the
audited financial statements incorporated by reference in the
Prospectus; or (b) (i) as of the date of the latest available
unaudited interim financial data of GTE and the latest
available unaudited condensed summary of consolidated results
of operations prepared by GTE, there have been any changes in
the capital stock, or any material increase in the short-term
indebtedness or long-term debt of GTE or any material
decreases in net assets, in each case as compared with
amounts shown on the latest balance sheet included or
incorporated by reference in the Prospectus, or any material
decreases, as compared with the corresponding period of the
prior year, in consolidated revenues and sales, net income
from continuing operations, or net income from continuing
operations applicable to common stock and per share of common
stock, or (ii) 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 the
preceding clause (i), there were any material decreases in
operating revenues, net operating income, net income or
III-1
GTE's ratio of earnings to fixed charges, in each case as
compared with the comparable period of the preceding year,
(iii) as of a specified date no more than five days prior to
the date of such letter (the "Cutoff Date"), there have been
any changes in the capital stock or any material increase in
the debt of GTE, or any material decreases in net assets, in
each case as compared with amounts shown in the latest
balance sheet included or incorporated by reference in the
Prospectus, and (iv) for the period from the date of the
latest available unaudited interim financial statements
referred to in clause (b)(i) above to the Cutoff Date, there
were any material decreases in operating revenues, net
operating income or net income, in each case as compared with
the comparable period of the preceding year, except in all
instances for changes or decreases which the Prospectus
discloses have occurred or may occur or as disclosed in such
letter and except for changes occasioned by the declaration
and payment of dividends on the stock of GTE or occasioned by
sinking fund payments made on the debt securities of GTE, or
by the issuance of common stock of GTE in connection with any
employee benefit plan or dividend reinvestment plan of GTE or
for the conversion of convertible preferred stock.
All references in this Annex III to the Prospectus shall be
deemed to refer to the Prospectus (including the documents
incorporated by reference therein) as defined in the Distribution
Agreement as of the Commencement Date referred to in Section 6(d)
thereof and to the Prospectus as amended or supplemented
(including the documents incorporated by reference therein) as of
the date of the amendment, supplement, incorporation by reference
or the Time of Delivery relating to the Terms Agreement requiring
the delivery of such letter under Section 4(f) thereof.
III-2
EXHIBIT
4.4
FORM OF
FIXED RATE MEDIUM-TERM NOTE
[FACE OF NOTE]
THIS NOTE IS A GOLBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE
"DEPOSITARY") OR A NOMINEE THEREOF. THIS NOTE IS EXCHANGEABLE
FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE, AND MAY NOT BE TRANSFERRED EXCEPT AS
A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF
THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY, TO THE CORPORATION OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITARY), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
(1)
REGISTERED CUSIP No.: PRINCIPAL AMOUNT:
No. FXR-___ _________ _________
GTE CORPORATION
MEDIUM-TERM NOTE, SERIES A
(Fixed Rate)
ORIGINAL ISSUE DATE: INTEREST RATE: %
STATED MATURITY:
INTEREST PAYMENT DATE(S): RECORD DATE(S):
[ ] February 1 and August 1 [ ] January 15 and July 15
[ ] Other: [ ] Other:
DEFAULT RATE: %
REDEMPTION COMMENCEMENT INITIAL REDEMPTION ANNUAL
REDEMPTION
DATE: PERCENTAGE: % PERCENTAGE
REDUCTION:
%
OPTIONAL REPAYMENT [ ] CHECK IF AN ORIGINAL
DATE(S): ISSUE DISCOUNT NOTE
Issue Price: %
SPECIFIED CURRENCY: AUTHORIZED DENOMINATION: EXCHANGE
RATE
[ ] United States dollars [ ] $1,000 and integral AGENT (if
other than
multiples thereof The Bank of
New York:)
[ ] Other: [ ] Other:
ADDENDUM ATTACHED: OTHER/ADDITIONAL PROVISIONS:
[ ] Yes
[ ] No
_______________
(1) These paragraphs apply to global Notes only.
-2-
GTE Corporation, a New York corporation (the "Corporation",
which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to
pay to , or registered assigns, the principal sum of
, on the Stated Maturity specified above (or any Redemption Date
or Repayment Date, each as defined on the reverse hereof) (each
such Stated Maturity, Redemption Date or Repayment Date being
hereinafter referred to as the "Maturity Date" with respect to
the principal repayable on such date) and to pay interest
thereon, at the Interest Rate per annum specified above, until
the principal hereof is paid or duly made available for payment,
and (to the extent that the payment of such interest shall be
legally enforceable) at the Default Rate per annum specified
above on any overdue principal, premium and/or interest. The
Corporation will pay interest in arrears on each Interest Payment
Date, if any, specified above (each, an "Interest Payment Date"),
commencing with the first Interest Payment Date next succeeding
the Original Issue Date specified above, and on the Maturity
Date; provided, however, that unless otherwise specified on the
face hereof, if the Original Issue Date occurs between a Record
Date (as defined below) and the next succeeding Interest Payment
Date, interest payments will commence on the second Interest
Payment Date next succeeding the Original Issue Date to the
registered holder of this Note (the "Holder") on the Record Date
with respect to such second Interest Payment Date. Interest on
this Note will be computed on the basis of a 360-day year of
twelve 30-day months.
Notwithstanding the foregoing, if an Addendum is attached
hereto or "Other/Additional Provisions" apply to this Note as
specified above, this Note shall be subject to the terms set
forth in such Addendum or such "Other/ Additional Provisions".
Interest on this Note will accrue from and including the
immediately preceding Interest Payment Date to which interest has
been paid or duly provided for (or from and including the
Original Issue Date if no interest has been paid or duly provided
for) to but excluding the applicable Interest Payment Date or the
Maturity Date, as the case may be (each, an "Interest Period").
Unless otherwise specified on the face hereof, the interest so
payable and punctually paid or duly provided for on any Interest
Payment Date will, subject to certain exceptions described
herein, be paid to the person in whose name this Note (or one or
more predecessor Notes) is registered at the close of business on
the fifteenth day (whether or not a Business Day, as defined
below) of the month immediately preceding such Interest Payment
Date (the "Record Date"); provided, however, that interest
payable on the Maturity Date will be payable to the person to
whom the principal hereof and premium, if any, hereon shall be
payable. Any such interest not so punctually paid or duly
provided for ("Defaulted Interest") will forthwith cease to be
payable to the Holder on any Record Date, and shall be paid to
the person in whose name this Note is registered at the close of
business on a special record date (the "Special Record Date") for
the payment of such Defaulted Interest to be fixed by the Trustee
(as defined on the reverse hereof), notice whereof shall be given
to the Holder of this Note by the Trustee not less than 10
calendar 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 this Note may be
listed, and upon such notice as may be required by such exchange,
all as more fully provided for in the Indenture.
Payment of principal, premium, if any, and interest in
respect of this Note due on the Maturity Date will be made in
immediately available funds upon presentation and surrender of
this Note (and, with respect to any applicable repayment of this
Note, a duly completed election form as contemplated on the
-3-
reverse hereof) at the corporate trust office of the Trustee
("Corporate Trust Office") in the Borough of Manhattan, The City
of New York, currently located at 101 Barclay Street, 21st Floor,
New York, N.Y. 10286, or at such other paying agency in the
Borough of Manhattan, The City of New York, as the Corporation
may determine; provided, however, that if such payment is to be
made in a Specified Currency other than United States dollars as
set forth below, such payment will be made by wire transfer of
immediately available funds to an account with a bank designated
by the Holder hereof at least 15 calendar days prior to the
Maturity Date, provided that such bank has appropriate facilities
therefor and that this Note (and, if applicable, a duly completed
repayment election form) is presented and surrendered at the
aforementioned office of the Trustee in time for the Trustee to
make such payment in such funds in accordance with its normal
procedures. Unless otherwise specified on the face hereof,
payment of interest due on any Interest Payment Date other than
the Maturity Date will be made by check mailed to the address of
the person entitled thereto as such address shall appear in the
Security Register maintained at the aforementioned office of the
Trustee; provided, however, that a holder of U.S.$10,000,000 (or,
if the Specified Currency specified above is other than United
States dollars, the equivalent thereof in the Specified Currency)
or more in aggregate principal amount of Notes (whether having
identical or different terms and provisions) will be entitled to
receive interest payments on such Interest Payment Date by wire
transfer of immediately available funds if appropriate wire
transfer instructions have been received in writing by the
Trustee not less than 15 calendar days prior to such Interest
Payment Date. Any such wire transfer instructions received by
the Trustee shall remain in effect until revoked by such Holder.
If any Interest Payment Date or the Maturity Date falls on a
day that is not a Business Day, the required payment of
principal, premium, if any, and/or interest shall be made on the
next succeeding Business Day with the same force and effect as if
made on the date such payment was due, and no interest shall
accrue with respect to such payment for the period from and after
such Interest Payment Date or the Maturity Date, as the case may
be, to the date of such payment on the next succeeding Business
Day.
As used herein, "Business Day" means any day except a
Saturday, Sunday or a legal holiday in The City of New York on
which banking institutions are authorized or required by law,
regulation or executive order to close; provided, however, that
if the Specified Currency is other than United States dollars and
any payment is to be made in the Specified Currency in accordance
with the provisions hereof, such day is also not a day on which
banking institutions are authorized or required by law,
regulation or executive order to close in the Principal Financial
Center (as defined below) of the country issuing the Specified
Currency (or, in the case of European Currency Units ("ECU"), is
not a day that appears as an ECU non-settlement day on the
display designated as "ISDE" on the Reuter Monitor Money Rates
Service (or a day so designated by the ECU Banking Association)
or, if ECU non-settlement days do not appear on that page (and
are not so designated), is not a day on which payments in ECU
cannot be settled in the international interbank market).
"Principal Financial Center" means the capital city of the
country issuing the Specified Currency, except that with respect
to United States dollars, Australian dollars, Canadian dollars,
Deutsche marks, Dutch guilders, Italian lire, Swiss francs and
ECU, the "Principal Financial Center" shall be The City of New
York, Sydney, Toronto, Frankfurt, Amsterdam, Milan, Zurich and
Luxembourg, respectively.
-4-
The Corporation is obligated to make payments of principal,
premium, if any, and interest, if any, in respect of this Note in
the Specified Currency (or, if the Specified Currency is not at
the time of such payment legal tender for the payment of public
and private debts, in such other coin or currency of the country
which issued the Specified Currency as at the time of such
payment is legal tender for the payment of such debts). If the
Specified Currency is other than United States dollars, any such
amounts so payable by the Corporation will be converted by the
Exchange Rate Agent specified above into United States dollars
for payment to the Holder of this Note; provided, however, that
the Holder of this Note may elect to receive such amounts in such
Specified Currency pursuant to the provisions set forth below.
If the Specified Currency is other than United States
dollars and the Holder of this Note shall not have duly made an
election to receive all or a specified portion of any payment of
principal, premium, if any, and/or interest, if any, in respect
of this Note in the Specified Currency, any United States dollar
amount to be received by the Holder of this Note will be based on
the highest bid quotation in The City of New York received by the
Exchange Rate Agent at approximately 11:00 A.M., New York City
time, on the second Business Day preceding the applicable payment
date from three recognized foreign exchange dealers (one of whom
may be the Exchange Rate Agent) selected by the Exchange Rate
Agent and approved by the Corporation for the purchase by the
quoting dealer of the Specified Currency for United States
dollars for settlement on such payment date in the aggregate
amount of the Specified Currency payable to all holders of Notes
scheduled to receive United States dollar payments and at which
the applicable dealer commits to execute a contract. All
currency exchange costs will be borne by the Holder of this Note
by deductions from such payments. If three such bid quotations
are not available, payments on this Note will be made in the
Specified Currency.
If the Specified Currency is other than United States
dollars, the Holder of this Note may elect to receive all or a
specified portion of any payment of principal, premium, if any,
and/or interest, if any, in respect of this Note in the Specified
Currency by submitting a written request for such payment to the
Trustee at its Corporate Trust Office in the Borough of
Manhattan, The City of New York on or prior to the applicable
Record Date or at least 15 calendar days prior to the Maturity
Date, as the case may be. Such written request may be mailed or
hand delivered or sent by cable, telex or other form of facsimile
transmission. The Holder of this Note may elect to receive all
or a specified portion of all future payments in the Specified
Currency in respect of such principal, premium, if any, and/or
interest, if any, and need not file a separate election for each
payment. Such election will remain in effect until revoked by
written notice to the Trustee, but written notice of any such
revocation must be received by the Trustee on or prior to the
applicable Record Date or at least 15 calendar days prior to the
Maturity Date, as the case may be.
If the Specified Currency is other than United States
dollars or a composite currency and the Holder of this Note shall
have duly made an election to receive all or a specified portion
of any payment of principal, premium, if any, and/or interest, if
any, in respect of this Note in the Specified Currency and if the
Specified Currency is not available due to the imposition of
exchange controls or other circumstances beyond the control of
the Corporation, or is no longer used by the government of the
country issuing such currency or for the settlement of
transactions by public institutions within the international
banking community, then the Corporation will be
-5-
entitled to satisfy its obligations to the Holder of this Note by
making such payment in United States dollars on the basis of the
Market Exchange Rate (as defined below) on the second Business
Day prior to such payment date or, if such Market Exchange Rate
is not then available, on the basis of the most recently
available Market Exchange Rate; provided, however, that if such
Specified Currency is replaced by a single European currency, the
payment of principal of, premium, if any, or interest, if any, on
this Note denominated in such currency shall be effected in the
new single European currency in conformity with legally
applicable measures taken pursuant to, or by virtue of, the
treaty establishing the European Community, as amended by the
treaty on European Unity. The "Market Exchange Rate" for the
Specified Currency means the noon dollar buying rate in The City
of New York for cable transfers for the Specified Currency as
certified for customs purposes by (or if not so
certified, as otherwise determined by) the Federal Reserve Bank
of New York. Any payment made under such circumstances in United
States dollars or a new single European currency where the
required payment is in a Specified Currency other than United
States dollars or such single European currency, respectively,
will not constitute an Event of Default (as defined in the
Indenture).
If the Specified Currency is a composite currency and the
Holder of this Note shall have duly made an election to receive
all or a specified portion of any payment of principal, premium,
if any, and/or interest, if any, in respect of this Note in the
Specified Currency and if such composite currency is unavailable
due to the imposition of exchange controls or other circumstances
beyond the control of the Corporation, then the Corporation will
be entitled to satisfy its obligations to the Holder of this Note
by making such payment in United States dollars. The amount of
each payment in United States dollars shall be computed by the
Exchange Rate Agent on the basis of the equivalent of the
composite currency in United States dollars. The component
currencies of the composite currency for this purpose
(collectively, the "Component Currencies" and each, a "Component
Currency") shall be the currency amounts that were components of
the composite currency as of the last day on which the composite
currency was used. The equivalent of the composite currency in
United States dollars shall be calculated by aggregating the
United States dollar equivalents of the Component Currencies.
The United States dollar equivalent of each of the Component
Currencies shall be determined by the Exchange Rate Agent on the
basis of the most recently available Market Exchange Rate for
each such Component Currency, or as otherwise specified on the
face hereof. Any Payment made under such circumstances in United
States dollars where the required payment is in a Specified
Currency that is a composite currency will not constitute an
Event of Default (as defined in the Indenture).
If the official unit of any Component Currency is altered by
way of combination or subdivision, the number of units of the
currency as a Component Currency shall be divided or multiplied
in the same proportion. If two or more Component Currencies are
consolidated into a single currency, the amounts of those
currencies as Component Currencies shall be replaced by an amount
in such single currency equal to the sum of the amounts of the
consolidated Component Currencies expressed in such single
currency. If any Component Currency is divided into two or more
currencies, the amount of the original Component Currency shall
be replaced by the amounts of such two or more currencies, the
sum of which shall be equal to the amount of the original
Component Currency.
-6-
All determinations referred to above made by the Exchange
Rate Agent shall be at its sole discretion and shall, in the
absence of manifest error, be conclusive for all purposes and
binding on the Holder of this Note.
Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof and, if so specified above,
in the Addendum hereto, which further provisions shall have the
same force and effect as if set forth on the face hereof.
Unless the Certificate of Authentication hereon has been
executed by or on behalf of the Trustee by manual signature, this
Note shall not be entitled to any benefit under the Indenture or
be valid or obligatory for any purpose.
-7-
IN WITNESS WHEREOF, GTE Corporation has caused this Note to
be duly executed.
GTE CORPORATION
By:
________________________________
Title:
By:
________________________________
Title:
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Securities of the series designated as Medium-
Term Notes, Series A referred to in the within-mentioned
Indenture
THE BANK OF NEW YORK,
as Trustee
By: ____________________________
Authorized Signatory
118
-8-
[REVERSE OF NOTE]
GTE CORPORATION
MEDIUM-TERM NOTE
(Fixed Rate)
This Note is one of a duly authorized series of Securities
(the "Securities") of the Corporation issued and to be issued
under an Indenture, dated as of December 1, 1996, as amended,
modified or supplemented from time to time (the "Indenture"),
between the Corporation and The Bank of New York, as Trustee (the
"Trustee", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities
thereunder of the Corporation, the Trustee and the holders of the
Securities, and of the terms upon which the Securities are, and
are to be, authenticated and delivered. This Note is one of the
series of Securities designated as "Medium-Term Notes, Series A"
(the "Notes"). All terms used but not defined in this Note
specified on the face hereof or in an Addendum hereto shall have
the meanings assigned to such terms in the Indenture.
This Note is issuable only in registered form without
coupons in minimum denominations of U.S.$1,000 and integral
multiples thereof or the minimum Authorized Denomination
specified on the face hereof.
This Note will not be subject to any sinking fund and,
unless otherwise provided on the face hereof in accordance with
the provisions of the following two paragraphs, will not be
redeemable or repayable prior to the Stated Maturity.
This Note will be subject to redemption at the option of the
Corporation on any date on or after the Redemption Commencement
Date, if any, specified on the face hereof, in whole or from time
to time in part in increments of U.S.$1,000 or the minimum
Authorized Denomination (provided that any remaining principal
amount hereof shall be at least U.S.$1,000 or such minimum
Authorized Denomination), at the Redemption Price (as defined
below), together with unpaid interest accrued thereon to the date
fixed for redemption (each, a "Redemption Date"), on notice given
not more than 60 nor less than 30 calendar days prior to the
Redemption Date and in accordance with the provisions of the
Indenture. The "Redemption Price" shall initially be the Initial
Redemption Percentage specified on the face hereof multiplied by
the unpaid principal amount of this Note to be redeemed. The
Initial Redemption Percentage shall decline at each anniversary
of the Redemption Commencement Date by an amount equal to the
Annual Redemption Percentage Reduction, if any, specified on the
face hereof until the Redemption Price is equal to 100% of the
unpaid principal amount to be redeemed. In the event of
redemption of this Note in part only, a new Note of like tenor
for the unredeemed portion hereof and otherwise having the same
terms as this Note shall be issued in the name of the Holder
hereof upon the presentation and surrender hereof.
This Note will be subject to repayment by the Corporation at
the option of the Holder hereof on the Optional Repayment
Date(s), if any, specified on the face hereof, in whole or in
part in increments of U.S.$1,000 or the minimum Authorized
Denomination (provided that any remaining principal amount hereof
shall be at least U.S.$1,000 or such minimum Authorized
Denomination), at a repayment price equal to 100% of the unpaid
principal amount to be
-9-
repaid, together with unpaid interest accrued hereon to the date
fixed for repayment (each, a "Repayment Date"). For this Note to
be repaid, this Note must be received, together with the form
hereon entitled "Option to Elect Repayment" duly completed, by
the Trustee at its Corporate Trust Office in the Borough of
Manhattan, The City of New York (or at such other address of
which the Corporation shall from time to time designate and
notify holders of the Notes) not more than 60 nor less than 30
calendar days prior to the Repayment Date. Exercise of such
repayment option by the Holder hereof will be irrevocable. In
the event of repayment of this Note in part only, a new Note of
like tenor for the unrepaid portion hereof and otherwise having
the same terms as this Note shall be issued in the name of the
Holder hereof upon the presentation and surrender hereof.
If this is a Global Security representing Book-Entry Notes,
only the Depositary may exercise the repayment option in respect
of this Note. Accordingly, if this is a Global Security
representing Book-Entry Notes and the beneficial owner desires to
have all or any portion of the Book-Entry Note represented by
this Global Security repaid, the beneficial owner must instruct
the Participant through which he owns his interest to direct the
Depositary to exercise the repayment option on his behalf by
delivering this Note and duly completed election form to the
Trustee as aforesaid.
If this Note is an Original Issue Discount Note as specified
on the face hereof, the amount payable to the Holder of this Note
in the event of redemption, repayment or acceleration of maturity
will be equal to the sum of (i) the Issue Price specified on the
face hereof (increased by any accruals of the Discount, as
defined below) and, in the event of any redemption of this Note
(if applicable), multiplied by the Initial Redemption Percentage
(as adjusted by the Annual Redemption Percentage Reduction, if
applicable) and (ii) any unpaid interest on this Note accrued
from the Original Issue Date to the Redemption Date, Repayment
Date or date of acceleration of maturity, as the case may be.
The difference between the Issue Price and 100% of the principal
amount of this Note is referred to herein as the "Discount".
For purposes of determining the amount of Discount that has
accrued as of any Redemption Date, Repayment Date or date of
acceleration of maturity of this Note, such Discount will be
accrued so as to cause the yield on the Note to be constant. The
constant yield will be calculated using a 30-day month, 360-day
year convention, a compounding period that, except for the
Initial Period (as defined below), corresponds to the shortest
period between Interest Payment Dates (with ratable accruals
within a compounding period) and an assumption that the maturity
of this Note will not be accelerated. If the period from the
Original Issue Date to the initial Interest Payment Date (the
"Initial Period") is shorter than the compounding period for this
Note, a proportionate amount of the yield for an entire
compounding period will be accrued. If the Initial Period is
longer than the compounding period, then such period will be
divided into a regular compounding period and a short period,
with the short period being treated as provided in the preceding
sentence.
In case an Event of Default, as defined in the Indenture,
shall have occurred and be continuing, the principal of all of
the Notes 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 permitting the Corporation
and the Trustee, with the consent of the holders of not less than
a majority in
-10-
aggregate principal amount of the Securities 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 any supplemental indenture or of
modifying in any manner Securities; provided, however, that no
such supplemental indenture shall (i) extend the fixed maturity
of any Securities 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, or reduce the amount of the principal of a
Discount Security that would be due and payable upon a
declaration of acceleration of the maturity thereof, without the
consent of the holder of each Security so affected, or (ii)
reduce the aforesaid percentage of Securities the holders of
which are required to consent to any such supplemental indenture
without the consent of the holders of each Security then
outstanding and affected thereby. The Indenture also contains
provisions permitting the holders of a majority in aggregate
principal amount of the Securities of any series at the time
outstanding, on behalf of the holders of Securities 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 Securities of
such series. Any such consent or waiver by the registered holder
of this Note (unless revoked as provided in the Indenture) shall
be conclusive and binding upon such holder and upon all future
holders and owners of this Note and of any Note 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 Note.
No reference herein to the Indenture and no provision of
this Note or of the Indenture shall alter or impair the
obligation of the Corporation, which is absolute and
unconditional, to pay principal, premium, if any, and interest,
if any, in respect of this Note at the times, places and rate or
formula, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain
limitations therein and herein set forth, the transfer of this
Note is registrable in the Security Register of the Corporation
upon surrender of this Note for registration of transfer at the
office or agency of the Corporation in any place where the
principal hereof and any premium or interest hereon are payable,
duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Corporation and the Security
Registrar duly executed by, the Holder hereof or by his attorney
duly authorized in writing, and thereupon one or more new Notes,
of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or
transferees.
As provided in the Indenture and subject to certain
limitations therein and herein set forth, this Note is
exchangeable for a like aggregate principal amount of Notes of
different authorized denominations but otherwise having the same
terms and conditions, as requested by the Holder hereof
surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Corporation may require payment of
a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
Registrar shall be affected by any notice to the contrary.
-11-
Prior to due presentment for registration of transfer of
this Note, the Corporation, the Trustee, any paying agent and any
Security Registrar may deem and treat the registered holder
hereof as the absolute owner hereof (whether or not this Note
shall be overdue and notwithstanding any notice of ownership or
writing hereon made by anyone other than the Security Registrar)
for the purpose of receiving payment of or on account of the
principal hereof (and premium, if any) and interest due hereon
and for all other purposes, and neither the Corporation nor the
Trustee nor any paying agent nor any Security
No recourse shall be had for the payment of the principal of
(or premium, if any) or the interest on this Note, 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 Corporation 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 Indenture and the Notes are 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 the State of
New York, without regard to conflicts of laws.
-12-
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and
instruct(s) the Corporation to repay this Note (or portion hereof
specified below) pursuant to its terms at a price equal to _____%
of the principal amount to be repaid, together with unpaid
interest accrued hereon to the Repayment Date, to the
undersigned, at
(Please print or typewrite name and address of the undersigned)
For this Note to be repaid, the Trustee must receive at its
Corporate Trust Office in the Borough of Manhattan, The City of
New York, currently located at 101 Barclay Street, 21st Floor,
New York, N.Y. 10286, not more than 60 nor less than 30 calendar
days prior to the Repayment Date, this Note with this "Option to
Elect Repayment" form duly completed.
If less than the entire principal amount of this Note is to
be repaid, specify the portion thereof (which shall be in
increments of U.S.$1,000 (or, if the Specified Currency is other
than United States dollars, the minimum Authorized Denomination
specified on the face hereof)) which the Holder elects to have
repaid and specify the denomination or denominations (which shall
be an Authorized Denomination) of the Notes to be issued to the
Holder for the portion of this Note not being repaid (in the
absence of any such specification, one such Note will be issued
for the portion not being repaid).
Principal Amount
to be Repaid: $______
______________________________
Date: _______________ Notice: The signature(s)
on this Option to Elect
Repayment must correspond
with the name(s) as
written upon the face of
this Note in every
particular, without
alteration or enlargement
or any change whatsoever.
