As filed with the Securities and Exchange Commission on October 24, 1995
Registration No. 33-_____
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
___________________
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
PACIFIC TELESIS GROUP Nevada 94-2919931
PACIFIC TELESIS FINANCING I Delaware 94-6688509
PACIFIC TELESIS FINANCING II Delaware 94-6688510
PACIFIC TELESIS FINANCING III Delaware 94-6688511
(Exact name of Registrant as (State or other (I.R.S. Employer
specified in its Charter) Jurisdiction of Identification
Incorporation Number)
or Organization)
130 Kearny Street
San Francisco, California 94108
(415) 394-3000
(Address, including zip code, and telephone number,
including area code, of each registrant's principal
executive offices)
__________________
William E. Downing
Executive Vice President, Chief Financial Officer
& Treasurer
Pacific Telesis Group
130 Kearny Street
San Francisco, California 94108
(415) 394-3000
(Name, address, including zip code, and telephone number,
including area code, of agent for service for each registrant)
__________________
Please send copies of all communications to:
Duane G. Henry, Senior Counsel Blair W. White, Esq.
Jamie E. Chung, Esq. Pillsbury Madison & Sutro
Pacific Telesis Group P. O. Box 7880
130 Kearny Street San Francisco, California 94120
San Francisco, California 94108 (415) 983-1000
(415) 394-3535
________________________
Approximate Date of Commencement of Proposed Sale to Public:
From time to time after the effective date of the Registration
Statement, as determined by market conditions.
________________________
<PAGE>
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, other than securities offered only in connection with
dividend or interest reinvestment plans, please check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
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<PAGE>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum
Offering Aggregate Amount of
Title of Each Class Amount to Price Per Offering Registra-
of Securities to be be Regis- Unit Price tion Fee
Registered tered (1) (1)(2)(3) (1)(2)(3) (2)
___________________ _________ _________ _________ _________
Preferred Securities
of Pacific Telesis
Financing I. . . .
Preferred Securities
of Pacific Telesis
Financing II . . .
Preferred Securities
of Pacific Telesis
Financing III. . .
Subordinated Debt
Securities of Pacific
Telesis Group. . . .
Guarantees of Pre-
ferred Securities
of Pacific Telesis
Financing I,
Pacific Telesis
Financing II and
Pacific Telesis
Financing III by
Pacific Telesis
Group (4). . . .
___________________________________________________________________________
Total $1,000,000,000 100% $1,000,000,000 $344,827.59
(1) Such indeterminate number of Preferred Securities of Pacific Telesis
Financing I, Pacific Telesis Financing II and Pacific Telesis Financing
III and such indeterminate principal amount of Subordinated Debt
Securities of Pacific Telesis Group as may from time to time be issued at
indeterminate prices. Subordinated Debt Securities may be issued and
sold to Pacific Telesis Financing I, Pacific Telesis Financing II and
Pacific Telesis Financing III, in which event such Subordinated Debt
Securities may later be distributed to the holders of Preferred
Securities upon a dissolution of Pacific Telesis Financing I, Pacific
Telesis Financing II or Pacific Telesis Financing III and the
distribution of the assets thereof.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457. The aggregate public offering price of the
Preferred Securities of Pacific Telesis Financing I, Pacific Telesis
Financing II and Pacific Telesis Financing III and the Subordinated Debt
Securities of Pacific Telesis Group registered hereby will not exceed
$1,000,000,000.
(3) Exclusive of accrued interest and distributions, if any.
(4) Includes the rights of holders of the Preferred Securities under the
Guarantees and certain back-up undertakings as described in the
Registration Statement. No separate consideration will be received for
the Guarantees and the back-up undertakings.
The Registrants hereby amend this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrants shall
file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
=============================================================================
3
<PAGE>
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.
SUBJECT TO COMPLETION, DATED OCTOBER 24, 1995
PROSPECTUS SUPPLEMENT
(To Prospectus Dated _____, 1995)
_,000,000 Preferred Securities
Pacific Telesis Financing I
____% Trust Originated Preferred Securities(sm) ("TOPrS(sm)")
(Liquidation amount $25 per Preferred Security)
guaranteed to the extent set forth herein by
PACIFIC TELESIS GROUP
_______________
The ____% Trust Originated Preferred Securities (the "Preferred Securities")
offered hereby represent preferred undivided beneficial interests in the
assets of Pacific Telesis Financing I, a statutory business trust formed under
the laws of the State of Delaware ("Pacific Telesis Financing" or the
"Trust"). Pacific Telesis Group, a Nevada corporation ("Pacific Telesis" and,
together with its subsidiaries, the "Company"), will directly or indirectly
own all the common securities (the "Common Securities" and, together with the
Preferred Securities, the "Trust Securities") representing undivided
beneficial interests in the assets of Pacific Telesis Financing. Pacific
Telesis Financing exists for the sole purpose of issuing the Preferred
Securities and Common Securities and investing the proceeds thereof in an
equivalent amount of_____% Subordinated Deferrable Interest Debentures due
__________, 2025 ("Subordinated Debentures") of Pacific Telesis. Upon a
Declaration Event of Default (as defined herein), the holders of Preferred
Securities will have a preference over the holders of the Common Securities
with respect to payments in respect of distributions and payments upon
redemption, liquidation and otherwise.
______________________(continued on next page)
SEE "RISK FACTORS" ON PAGE __ FOR CERTAIN INFORMATION RELEVANT TO AN
INVESTMENT IN THE PREFERRED SECURITIES, INCLUDING THE PERIOD AND CIRCUMSTANCES
DURING AND UNDER WHICH PAYMENTS OF DISTRIBUTIONS ON THE PREFERRED SECURITIES
MAY BE DEFERRED AND THE RELATED UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
OF SUCH DEFERRAL.
The Preferred Securities have been approved for listing on the New York Stock
Exchange, Inc. (the "New York Stock Exchange"). Trading of the Preferred
Securities on the New York Stock Exchange is expected to commence within a 30-
day period after the initial delivery of the Preferred Securities. See
"Underwriting."
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH
IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Initial Proceeds to
Public Pacific
Offering Underwriting Telesis Financing
Price (1) Commission (2) (3)(4)
Per Preferred Security. . $25.00 (3) $25.00
Total . . . . . . . . . . $___,000,000 (3) $___,000,000
4
<PAGE>
(1) Plus accrued distributions, if any, from ____________.
(2) Pacific Telesis Financing and Pacific Telesis have agreed to indemnify
the several Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended. See
"Underwriting."
(3) In view of the fact that the proceeds of the sale of the Preferred
Securities will be invested in Subordinated Debentures, Pacific Telesis
has agreed to pay to the Underwriters as compensation ("Underwriters'
Compensation") for their arranging the investment therein of such
proceeds $_____ per Preferred Security (or $_________ in the aggregate);
provided that, such compensation for sales of 10,000 or more Preferred
Securities to a single purchaser will be $___ per Preferred Security.
Therefore, to the extent of such sales, the actual amount of
Underwriters' Compensation will be less than the aggregate amount
specified in the preceding sentence. See "Underwriting."
(4) Expenses of the offering which are payable by Pacific Telesis are
estimated to be $955,000.
The Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them
and subject to their right to reject any order in whole or in part. It is
expected that delivery of the Preferred Securities will be made only in book-
entry form through the facilities of The Depository Trust Company, on or about
______, 1995.
_______________________
Merrill Lynch & Co.
_______________________
The date of this Prospectus Supplement is ______, 1995.
(sm) "Trust Originated Preferred Securities" and "TOPrS" are
service marks of Merrill Lynch & Co., Inc.
5
<PAGE>
(continued from previous page)
Holders of the Preferred Securities are entitled to receive cumulative cash
distributions at an annual rate of ____% of the liquidation amount of $25 per
Preferred Security, accruing from the date of original issuance and payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of
each year, commencing ______, 1995 ("distributions"). The distribution rate
and the distribution and other payment dates for the Preferred Securities will
correspond to the interest rate and interest and other payment dates on the
Subordinated Debentures, which will be the sole assets of Pacific Telesis
Financing. As a result, if principal or interest is not paid on the
Subordinated Debentures, no amounts will be paid on the Preferred Securities.
The payment of distributions out of moneys held by Pacific Telesis Financing
and payments on liquidation of Pacific Telesis Financing or the redemption of
Preferred Securities, as set forth below, are fully and unconditionally
guaranteed by Pacific Telesis (the "Guarantee") if and to the extent the Trust
has funds available therefor. See "Description of the Guarantees" in the
accompanying Prospectus. If Pacific Telesis does not make principal or
interest payments on the Subordinated Debentures, including as a result of
Pacific Telesis' election to extend the interest payment period on the
Subordinated Debentures as described below, Pacific Telesis Financing will not
have sufficient funds to make distributions on the Preferred Securities, in
which event, the Guarantee will not apply to such distributions until Pacific
Telesis has made such principal or interest payments. The obligations of
Pacific Telesis under the Subordinated Debentures are unsecured and will be
subordinate and junior in right of payment, to the extent set forth herein, to
all existing and future Senior Indebtedness (as defined herein) of Pacific
Telesis and will be effectively subordinated to all existing and future
liabilities and obligations of Pacific Telesis' subsidiaries and partnerships.
At June 30, 1995, the aggregate amount of Senior Indebtedness and liabilities
and obligations of Pacific Telesis' subsidiaries and partnerships that would
have effectively ranked senior to the Subordinated Debentures was
approximately $14,578 million.
So long as the Company is not in default in the payment of interest on the
Subordinated Debentures, Pacific Telesis has the right to defer payments of
interest on the Subordinated Debentures by extending the interest payment
period on the Subordinated Debentures at any time for up to 20 consecutive
quarters (each an "Extension Period") provided that no Extension Period may
extend beyond the Scheduled Maturity Date (as defined herein). If interest
payments are so deferred, distributions on the Preferred Securities will also
be deferred. During such Extension Period, distributions will continue to
accrue with interest thereon (to the extent permitted by applicable law) at an
annual rate of ____% per annum compounded quarterly, and during any Extension
Period, holders of Preferred Securities will be required to include deferred
interest income in their gross income for United States federal income tax
purposes in advance of receipt of the cash distributions with respect to such
deferred interest payments. There could be multiple Extension Periods of
varying lengths throughout the term of the Subordinated Debentures. See Risk
Factors -- Option to Extend Interest Payment Period and Defer Payment of
Interest," "Description of the Subordinated Debentures -- Option to Extend
Interest Payment Period," and "United States Federal Income Taxation --
Original Issue Discount."
The Subordinated Debentures are redeemable by Pacific Telesis, in whole or in
part, from time to time, on or after ______, 2000, or at any time in certain
circumstances upon the occurrence of a Tax Event (as defined herein). If
Pacific Telesis redeems Subordinated Debentures, Pacific Telesis Financing
must redeem Trust Securities having an aggregate liquidation amount equal to
the aggregate principal amount of the Subordinated Debentures so redeemed at
$25 per Trust Security plus accrued and unpaid distributions thereon to the
date fixed for redemption (the "Redemption Price"). See "Description of the
Preferred Securities -- Mandatory Redemption." The outstanding Preferred
Securities will be redeemed upon maturity of the Subordinated Debentures. The
Subordinated Debentures mature on ______, 2025, but Pacific Telesis may extend
the maturity date once for up to an additional 19 years, provided certain
financial conditions are met. See "Description of the Subordinated Debentures
- -- Option to Extend Maturity Date." In addition, upon the occurrence of a
Special Event (as defined herein) arising from a change in law or a change in
legal interpretation, unless the Subordinated Debentures are redeemed in the
limited circumstances described herein, Pacific Telesis Financing shall be
dissolved, with the result that the Subordinated Debentures will be
distributed to the holders of the Preferred Securities, on a pro rata basis,
in lieu of any cash redemption. In the case of a Special Event that is a Tax
6
<PAGE>
Event, Pacific Telesis will have the right in certain circumstances to redeem
the Subordinated Debentures, which would result in the redemption by Pacific
Telesis Financing of the Trust Securities in the same amount on a pro rata
basis. See "Description of the Preferred Securities -- Special Event
Redemption or Distribution." If the Subordinated Debentures are distributed
to the holders of the Preferred Securities, Pacific Telesis will use its best
efforts to have the Subordinated Debentures listed on the New York Stock
Exchange or on such other exchange as the Preferred Securities are then
listed. In the event of the involuntary or voluntary dissolution, winding up
or termination of Pacific Telesis Financing, the holders of the Preferred
Securities will be entitled to receive for each Preferred Security a
liquidation amount of $25 plus accrued and unpaid distributions thereon
(including interest thereon) to the date of payment, unless, in connection
with such dissolution, the Subordinated Debentures are distributed to the
holders of the Preferred Securities. See "Description of the Preferred
Securities --Liquidation Distribution Upon Dissolution."
_____________________
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE THAT MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING TRANSACTIONS, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
7
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP
SUMMARY FINANCIAL DATA
The summary financial data below should be read in conjunction with the Company's Financial Statements and notes thereto
included in the 1994 Form 10-K and the 1995 Second Quarter Form 10-Q, which are incorporated by reference into this Prospectus.
See "Incorporation of Certain Documents by Reference" in the accompanying Prospectus. The summary financial data for the five
years ended December 31, 1994, are derived from financial statements that have been audited by Coopers & Lybrand L.L.P.,
independent certified public accountants. See "Independent Public Accountants" in the accompanying Prospectus. The summary
financial data for the six months ended June 30, 1995 and 1994 are derived from financial statements that are unaudited, but
which, in the opinion of management, include all adjustments necessary for a fair presentation of the financial position and
results of operations for these periods.
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
---------------- -------------------------------------------------
FINANCIAL DATA 1995 1994 1994 1993 1992 1991 1990
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Results of Operations:
(Dollars in millions, except per share amounts)
Operating revenues....................................... $ 4,485 $ 4,550 $ 9,235 $ 9,244 $ 9,108 $ 9,168 $ 9,052
Operating expenses....................................... 3,477 3,455 7,041 8,582 7,025 7,217 6,989
Operating income......................................... 1,008 1,095 2,194 662 2,083 1,951 2,063
Income from continuing operations........................ 542 560 1,136 191 1,173 931 981
Income (loss) from spun-off operations................... - 23 23 29 (31) 84 49
Cumulative effect of accounting changes.................. - - - (1,724) - - -
Net income (loss)........................................ $ 542 $ 583 $ 1,159 $(1,504) $ 1,142 $ 1,015 $ 1,030
- ---------------------------------------------------------------------------------------------------------------------------------
Earnings (Loss) Per Share:
Income from continuing operations........................ $ 1.28 $ 1.32 $ 2.68 $ 0.46 $ 2.91 $ 2.37 $ 2.47
Income (loss) from spun-off operations................... - 0.06 0.05 0.07 (0.08) 0.21 0.12
Cumulative effect of accounting changes.................. - - - (4.16) - - -
Net income (loss)........................................ $ 1.28 $ 1.38 $ 2.73 $ (3.63) $ 2.83 $ 2.58 $ 2.59
- ---------------------------------------------------------------------------------------------------------------------------------
Total assets*............................................ $20,299 $20,297 $20,139 $23,437 $21,849 $21,226 $21,051
Net assets of spun-off operations........................ - - - $ 2,874 $ 745 $ 663 $ 634
Shareowners' equity...................................... $ 5,357 $ 5,087 $ 5,233 $ 7,786 $ 8,251 $ 7,729 $ 7,401
(CONTINUED ON NEXT PAGE)
8
<PAGE>
PACIFIC TELESIS GROUP
SUMMARY FINANCIAL DATA
(Continued)
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
---------------- ----------------------------------------------
FINANCIAL DATA (CONTINUED) 1995 1994 1994 1993 1992 1991 1990
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Continuing Operations**:
Return on equity (%)..................................... 20.2 22.0 22.0 -26.3 16.1 13.4 14.2
Return on capital (%).................................... 13.7 14.0 14.3 -8.6 12.0 10.6 11.2
Debt maturing within one year............................ $ 728 $ 79 $ 246 $ 595 $ 1,158 $ 951 $ 810
Long-term obligations....................................
$ 4,887
$ 5,143 $ 4,897 $ 5,129 $ 5,207 $ 5,395 $ 5,496
Debt ratio (%)........................................... 51.2 50.7 49.6 53.8 45.9 47.3 48.2
Capital expenditures.....................................
$ 1,545 $ 703 $ 1,684 $ 1,886 $ 1,852 $ 1,737 $ 1,760
Cash from operating activities...........................
$ 1,357 $ 1,492 $ 2,947 $ 2,727 $ 2,807 $ 2,439 $ 2,542
OPERATING DATA
Employees................................................ 50,871 53,532 51,590 55,355 57,023 59,037 62,979
Toll messages (millions)***.............................. 2,396 2,218 4,485 4,272 4,158 4,092 4,174
Carrier access minutes-of-use (millions)................. 29,046 26,414 53,486 49,674 46,800 43,872 41,383
Customer switched access lines in service (thousands).... 15,488 15,056 15,298 14,873 14,551 14,262 13,868
Average shares outstanding(thousands).................... 424,065 423,873 423,969 414,171 402,977 400,023 403,569
Number of common shareowners............................. 744,502 781,568 764,749 804,024 881,607 919,796 1,005,548
- ----------------------------------------------------------------------------------------------------------------------------------
<FN>
1) Effective April 1, 1994, the Company spun off to its shareowners its domestic and international cellular, paging, and
other wireless operations in a one-for-one stock distribution of its 86 percent interest in these operations. As a
result, the Company's total assets and shareowners' equity were each reduced by $2.9 billion during 1994. The
Company's previous interests in the operating results and net assets of "spun-off operations" are classified
separately and excluded from the Company's revenues, expenses, and other amounts presented for "continuing
operations."
(CONTINUED ON NEXT PAGE)
</FN>
9
<PAGE>
<CAPTION>
PACIFIC TELESIS GROUP
SUMMARY FINANCIAL DATA
(Continued)
<FN>
Results for 1993, 1991, and 1990 reflect restructuring charges which reduced income from continuing operations by $861,
$122, and $65 million for each respective year, and related per share amounts by $2.08, $.30, and $.16 for each
respective year. Results for 1993 also reflect the cumulative after-tax effects of applying new accounting rules for
postretirement and postemployment benefits to prior years.
2) Effective third quarter 1995, management determined that it is no longer appropriate for Pacific Bell to continue to
use the special accounting rules of Statement of Financial Accounting Standards No. 71 (SFAS 71), Accounting for the
Effects of Certain Types of Regulation" for entities subject to traditional regulation. Management's decision for
Pacific Bell to change to the more general accounting rules used by competitive enterprises was based upon assessing
the emerging competitive environment in California. As a result, the Company recorded during the third quarter a non-
cash, extraordinary charge of $3.4 billion, or $7.86 per share, which is net of a deferred income tax benefit of $2.4
billion. The telephone plant write-down portion of the charge reflects a pre-tax increase in Pacific Bell's
accumulated depreciation reserve of approximately $4.8 billion. The extraordinary charge also includes a pre-tax
write-off of approximately $1 billion to eliminate Pacific Bell's regulatory assets and liabilities. The
discontinuance of SFAS 71 is not expected to have a material effect on future earnings.
* Includes net assets of spun-off operations for years prior to 1994.
** Excludes spun-off operations.
*** Toll messages include Message Telecommunications Services, Optional Calling Plans, WATS, and Terminating 800 messages.
Pacific Bell expanded its local calling areas effective June 1991, which reduced subsequent toll message volumes. As a
result, comparisons of 1992 and subsequent years' volumes with prior year volumes are not meaningful.
</FN>
</TABLE>
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<PAGE>
The following information concerning the Company, Pacific Telesis Financing,
the Preferred Securities, the Guarantee and the Subordinated Debentures
supplements, and should be read in conjunction with, the information contained
in the accompanying Prospectus. Capitalized terms used in this Prospectus
Supplement have the same meanings as in the accompanying Prospectus.
PACIFIC TELESIS GROUP
The Company was incorporated in 1983 under the laws of the State of Nevada and
has its principal executive offices at 130 Kearny Street, San Francisco,
California 94108 (telephone number (415) 394-3000). The Company is one of
seven regional holding companies formed in connection with the 1984
divestiture by AT&T Corp. of its 22 wholly-owned operating telephone companies
("BOCs") pursuant to a consent decree settling antitrust litigation (the
"Consent Decree") approved by the United States District Court for the
District of Columbia, which has retained jurisdiction over the interpretation
and enforcement of the Consent Decree.
The Company includes a holding company, Pacific Telesis; two BOCs, Pacific
Bell and Nevada Bell; and certain diversified subsidiaries. The holding
company provides financial, strategic planning, legal and general
administrative functions on its own behalf and on behalf of its subsidiaries.
Pacific Bell and its wholly-owned subsidiaries, Pacific Bell Directory,
Pacific Bell Information Services and Pacific Bell Mobile Services, and Nevada
Bell provide a variety of communications and information services in
California and Nevada. These services include: (1) dialtone and usage
services including local service (both exchange and private line), message
toll services within a service area, Wide Area Toll Service (WATS) / 800
services within a service area, Centrex service (a central office-based
switching service) and various special and custom calling services; (2)
exchange access to interexchange carriers and information service providers
for the origination and termination of switched and non-switched (private
line) voice and data traffic; (3) billing services for interexchange carriers
and information service providers; (4) various operator services; (5)
installation and maintenance of customer premises wiring; (6) public
communications services; (7) directory publishing; and (8) selected
information services, such as voice mail and electronic mail. Pacific Bell
Mobile Services was formed in 1994 to offer personal communications services
and other mobile telecommunications services and has not yet commenced
service.
RECENT DEVELOPMENT
The Company incurred losses for the three and nine months ended September 30,
1995 of $3,085 and $2,543 million, respectively, or losses per share of $7.22
and $5.98, respectively. The reported losses reflect a non-cash,
extraordinary charge to net income during third quarter of $3.4 billion, after
taxes, or $7.86 per share. As a result of this extraordinary charge, the
Company expects to record a net loss for the year. The charge stems from the
discontinued application of SFAS 71 by the Company's Pacific Bell subsidiary
and its change to the more general accounting rules used by competitive
enterprises. SFAS 71 is the accounting standard which provides special
accounting rules for entities subject to traditional regulation.
In future years, the discontinuance of SFAS 71 by Pacific Bell is not expected
to materially affect the Company's depreciation expense, net income or cash
flow. This action will not affect Pacific Bell's planned network investments.
The discontinuance of SFAS 71 by Pacific Bell is a change for financial
reporting only and has no effect on its customers.
PACIFIC TELESIS FINANCING I
Pacific Telesis Financing is a statutory business trust formed under Delaware
law pursuant to (i) a declaration of trust executed by Pacific Telesis, as
sponsor (the "Sponsor"), and the trustees of Pacific Telesis Financing (the
"Pacific Telesis Trustees") and (ii) the filing of a certificate of trust with
the Secretary of State of the State of Delaware on October 17, 1995. The
declaration of trust will be amended and restated in its entirety (as so
amended and restated, the Declaration") substantially in the form filed as an
exhibit to the Registration Statement of which this Prospectus Supplement
forms a part. The Declaration will be qualified as an indenture under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). Upon
11
<PAGE>
issuance of the Preferred Securities, the purchasers thereof will own all of
the Preferred Securities. See "Description of the Preferred Securities --
Book-Entry Only Issuance -- The Depository Trust Company." Pacific Telesis
will directly or indirectly acquire Common Securities in an aggregate
liquidation amount equal to 3% of the total capital of Pacific Telesis
Financing. Pacific Telesis Financing exists for the exclusive purposes of (i)
issuing the Trust Securities representing undivided beneficial interests in
the assets of the Trust, (ii) investing the gross proceeds of the Trust
Securities in the Subordinated Debentures and (iii) engaging in only those
other activities necessary or incidental thereto. The Trust has a term of 55
years, but may be terminated earlier as provided in the Declaration.
Pursuant to the Declaration, the number of Pacific Telesis Trustees will
initially be five. Three of the Pacific Telesis Trustees (the "Regular
Trustees") will be persons who are employees or officers of or who are
affiliated with Pacific Telesis. The fourth trustee will be a financial
institution unaffiliated with Pacific Telesis that will serve as property
trustee under the Declaration and as indenture trustee for the purposes of the
Trust Indenture Act (the "Property Trustee"). The fifth trustee will be a
natural person who is a resident of the State of Delaware or a legal entity
which maintains a principal place of business in the State of Delaware (the
Delaware Trustee"). The First National Bank of Chicago will act as the
Property Trustee and Michael J. Majchrzak, an employee of the Property Trustee
and a Delaware resident, will act as the Delaware Trustee, in each case until
removed or replaced by the holder of the Common Securities. The First
National Bank of Chicago will also act as indenture trustee under the
Guarantee (the "Guarantee Trustee"). See "Description of the Guarantees" in
the accompanying Prospectus.
The Property Trustee will hold title to the Subordinated Debentures for the
benefit of the Trust and the holders of the Trust Securities and, so long as
the Subordinated Debentures are held by Pacific Telesis Financing, the
Property Trustee will have the power to exercise all rights, powers, and
privileges of a holder of Subordinated Debentures under the Indenture (as
defined in Description of Subordinated Debentures" herein). In addition, the
Property Trustee will maintain exclusive control of a segregated non-interest
bearing bank account (the "Property Account") to hold all payments made in
respect of the Subordinated Debentures for the benefit of the holders of the
Trust Securities. The Property Trustee will make payments of distributions
and payments on liquidation, redemption and otherwise to the holders of the
Trust Securities out of funds from the Property Account. The Guarantee
Trustee will hold the Guarantee for the benefit of the holders of the
Preferred Securities. Pacific Telesis, as the direct holder of all the Common
Securities, will have the right to appoint, remove or replace any Pacific
Telesis Trustee and to increase or decrease the number of Pacific Telesis
Trustees. Pacific Telesis will pay all fees and expenses related to Pacific
Telesis Financing and the offering of the Trust Securities. See "Description
of the Subordinated Debentures -- Miscellaneous."
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are set forth in the
Declaration, the Delaware Business Trust Act, as amended (the "Trust Act") and
the Trust Indenture Act. See "Description of the Preferred Securities."
RISK FACTORS
Prospective purchasers of Preferred Securities should carefully review the
information contained in other sections of this Prospectus Supplement and in
the accompanying Prospectus and should in particular consider the following
matters.
Ranking of Subordinate Obligations Under the Guarantee and Subordinated
Debentures
Pacific Telesis' obligations under the Guarantee are unsecured and subordinate
and junior in right of payment to all liabilities of Pacific Telesis and pari
passu with the most senior preferred stock now or hereafter issued, from time
to time, if any, by Pacific Telesis and with any guarantee now or hereafter
issued by Pacific Telesis in respect of any preferred stock or preference
stock of any affiliate of Pacific Telesis. The obligations of Pacific Telesis
under the Subordinated Debentures are subordinate and junior in right of
payment, to the extent set forth herein, to all present and future Senior
Indebtedness of Pacific Telesis and will be effectively subordinated to all
existing and future liabilities and obligations of Pacific Telesis'
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subsidiaries and partnerships. At June 30, 1995, the aggregate amount of
Senior Indebtedness and liabilities and obligations of Pacific Telesis'
subsidiaries and partnerships that would have effectively ranked senior to the
Subordinated Debentures was approximately $14,578 million. There are no terms
in the Preferred Securities, the Subordinated Debentures or the Guarantee that
limit Pacific Telesis' ability to incur additional indebtedness, including
indebtedness that ranks senior to the Subordinated Debentures and the
Guarantee. See "Description of the Guarantees -- Status of the Guarantees" in
the accompanying Prospectus, and "Description of the Subordinated Debentures -
- - Subordination" herein.
Trust Distributions Dependent On Pacific Telesis' Payments On Subordinated
Debentures
The Trust's ability to make distributions and other payments on the Preferred
Securities is solely dependent upon Pacific Telesis making interest and other
payments on the Subordinated Debentures. If Pacific Telesis were not to make
payments on the Subordinated Debentures for any reason, including as a result
of Pacific Telesis' election to defer the payment of interest on the
Subordinated Debentures by extending the interest period on the Subordinated
Debentures, the Trust will not make payments on the Trust Securities. In such
an event, holders of the Preferred Securities would not be able to rely on the
Guarantee since distributions and other payments on the Preferred Securities
are subject to such Guarantee only if and to the extent that Pacific Telesis
Financing has funds available therefor. Instead, holders of Preferred
Securities would rely on the enforcement by the Property Trustee of its rights
against Pacific Telesis pursuant to the terms of the Indenture. However, if
the Trust's failure to make distributions on the Preferred Securities is a
consequence of Pacific Telesis' exercise of its right to extend the interest
payment period for the Subordinated Debentures, the Property Trustee will have
no right to enforce the payment of distributions on the Preferred Securities
until an Event of Default under the Indenture shall have occurred. See
Description of the Guarantees -- Status of the Guarantees" in the
accompanying Prospectus.
Option to Extend Interest Payment Period
Pacific Telesis has the right under the Indenture to defer payments of
interest on the Subordinated Debentures by extending the interest payment
period at any time, and from time to time, on the Subordinated Debentures. As
a consequence of such an extension, quarterly distributions on the Preferred
Securities would be deferred (but despite such deferral, to the extent
permitted by law, would continue to accrue with interest thereon compounded
quarterly) by Pacific Telesis Financing during any such extended interest
payment period. Such right to extend the interest payment period for the
Subordinated Debentures is limited at any time to a period not exceeding 20
consecutive quarters (each, an Extension Period"), provided that no Extension
Period may extend beyond the Scheduled Maturity Date of the Subordinated
Debentures. In the event that Pacific Telesis exercises this right to defer
interest payments, then, prior to the payment of all accrued interest on
outstanding Subordinated Debentures, (a) Pacific Telesis shall not declare or
pay dividends on, or make a distribution with respect to, or redeem, purchase
or acquire, or make a liquidation payment with respect to, any of its capital
stock and (b) Pacific Telesis shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by Pacific Telesis that rank pari passu with or junior to
the Subordinated Debentures; provided, however, that restriction (a) above
does not apply to any stock dividends paid by Pacific Telesis where the
dividend stock is the same stock as that on which the dividend is being paid.
Prior to the termination of any such Extension Period, Pacific Telesis may
further extend the interest payment period; provided that, such Extension
Period, together with all such previous and further extensions thereof, may
not exceed 20 consecutive quarters or extend beyond the Scheduled Maturity
Date of the Subordinated Debentures. Upon the termination of any Extension
Period and the payment of all amounts then due, Pacific Telesis may commence a
new Extension Period, subject to the above requirements. Consequently, there
could be multiple Extension Periods of varying lengths throughout the term of
the Subordinated Debentures. See "Description of the Preferred Securities --
Distributions" and "Description of the Subordinated Debentures -- Option to
Extend Interest Payment Period.
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Tax Consequences of Extension of Interest Payment Period
Should Pacific Telesis exercise its right to defer payments of interest by
extending the interest payment period, each holder of Preferred Securities
will continue to accrue income (as original issue discount ( OID")) in respect
of the deferred interest allocable to its Preferred Securities for United
States federal income tax purposes. Such income will be allocated but not
distributed to holders of record of Preferred Securities. As a result, each
such holder of Preferred Securities will recognize income for United States
federal income tax purposes in advance of the receipt of cash and will not
receive the cash from Pacific Telesis Financing related to such income if such
holder disposes of its Preferred Securities prior to the record date for the
date on which distributions of such amounts are made. Pacific Telesis has no
current intention of exercising its right to defer payments of interest by
extending the interest payment period on the Subordinated Debentures.
However, should Pacific Telesis determine to exercise such right in the
future, the market price of the Preferred Securities is likely to be adversely
affected. A holder that disposes of its Preferred Securities during an
Extension Period, therefore, might not receive the same return on its
investment as a holder that continues to hold its Preferred Securities. In
addition, as a result of the existence of Pacific Telesis' right to defer
interest payments, the market price of the Preferred Securities (which
represent an undivided beneficial interest in the Subordinated Debentures) may
be more volatile than other securities on which OID accrues that do not have
such rights. See "United States Federal Income Taxation -- Original Issue
Discount."
Special Event Redemption or Distribution
Upon the occurrence of a Special Event, Pacific Telesis Financing shall be
dissolved, except in the limited circumstance described herein, with the
result that the Subordinated Debentures would be distributed to the holders of
the Trust Securities in connection with the liquidation of Pacific Telesis
Financing. In the case of a Special Event that is a Tax Event, in certain
circumstances, Pacific Telesis shall have the right to redeem the Subordinated
Debentures, in whole or in part, in which event Pacific Telesis Financing will
redeem the Trust Securities on a pro rata basis to the same extent as the
Subordinated Debentures are redeemed by Pacific Telesis. See Description of
the Preferred Securities -- Special Event Redemption or Distribution."
Under current United States federal income tax law, a distribution of
Subordinated Debentures upon the dissolution of Pacific Telesis Financing
would not be a taxable event to holders of the Preferred Securities. However,
a dissolution of Pacific Telesis Financing in which holders of the Preferred
Securities receive cash would be a taxable event to such holders. See "United
States Federal Income Taxation -- Receipt of Subordinated Debentures or Cash
Upon Liquidation of Pacific Telesis Financing."
There can be no assurance as to the market prices for the Preferred Securities
or the Subordinated Debentures that may be distributed in exchange for
Preferred Securities if a dissolution or liquidation of Pacific Telesis
Financing were to occur. Accordingly, the Preferred Securities that an
investor may purchase, whether pursuant to the offer made hereby or in the
secondary market, or the Subordinated Debentures that a holder of Preferred
Securities may receive on dissolution and liquidation of Pacific Telesis
Financing, may trade at a discount to the price that the investor paid to
purchase the Preferred Securities offered hereby. Because holders of
Preferred Securities may receive Subordinated Debentures upon the occurrence
of a Special Event, prospective purchasers of Preferred Securities are also
making an investment decision with regard to the Subordinated Debentures and
should carefully review all the information regarding the Subordinated
Debentures and Pacific Telesis contained herein and in the accompanying
Prospectus. See "Description of the Preferred Securities -- Special Event
Redemption or Distribution" and "Description of the Subordinated Debentures."
Limited Voting Rights
Holders of Preferred Securities will have only limited voting rights primarily
in connection with directing the activities of the Property Trustee as the
holder of the Subordinated Debentures. Such holders will not be entitled to
vote to appoint, remove or replace, or to increase or decrease the number of,
Pacific Telesis Trustees, which voting rights are vested exclusively in the
holder of the Common Securities. See Description of the Preferred Securities
- -- Voting Rights.
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Trading Price
The Preferred Securities may trade at a price that does not fully reflect the
value of accrued but unpaid interest with respect to the underlying
Subordinated Debentures. A holder who disposes of its Preferred Securities
between record dates for payments of distributions thereon will be required to
include as ordinary income OID on the Subordinated Debentures accrued through
the date of disposition, and to add such amount to its adjusted tax basis in
its pro rata share of the underlying Subordinated Debentures deemed disposed
of. To the extent the selling price is less than the holder's adjusted tax
basis (which will include, in the form of OID, all accrued but unpaid
interest), a holder will recognize a capital loss. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes. See "United States Federal Income
Taxation -- Original Issue Discount" and
"-- Sales of Preferred Securities."
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to combined fixed charges
from continuing operations of Pacific Telesis Group and its consolidated
subsidiaries for the periods indicated. For the purpose of calculating this
ratio, earnings consist of income before income taxes and fixed charges.
Fixed charges include interest on indebtedness (excluding discontinued
operations) and the portion of rentals representative of the interest factor.
Six
Months
Ended
June 30 Year Ended December 31,
Ratio of ------------- --------------------------------
Earnings 1995 1994 1994 1993 1992 1991 1990
to Fixed ---- ---- ---- ---- ---- ---- ----
Charges 4.35 4.61 4.60 1.37 4.21 3.42 3.27
==== ==== ==== ==== ==== ==== ====
CAPITALIZATION OF PACIFIC TELESIS GROUP
The following table sets forth the unaudited consolidated capitalization of
Pacific Telesis at June 30, 1995, and as adjusted to reflect the sale of the
Preferred Securities and the application of the estimated net proceeds
therefrom (assuming the Underwriters' over-allotment option is not exercised).
See Use of Proceeds." The table should be read in conjunction with Pacific
Telesis' consolidated financial statements and notes thereto included in the
documents incorporated by reference herein. See Incorporation of Certain
Documents by Reference" in the accompanying Prospectus.
At
June 30, 1995
--------------------
As
(Dollars in millions) Actual Adjusted
(1) (1)
------ --------
Short-term borrowings................................ $ 728 $
======= =======
Long-term borrowings ................................ $ 4,887 $
------- -------
Minority interest in financing trust (2) ............ $ - $
------- -------
Common shareholders' equity:
Common shares - $0.10 par value; 1,100,000,000
authorized; 424,065,165 outstanding (1)............. $ 43 $
Additional paid-in capital ......................... 3,502
Reinvested earnings ................................ 2,337 (3)
Treasury stock, at cost; 8,762,430 shares .......... (254)
Deferred compensation - LESOP TRUST ................ (271)
------- -------
Total common shareholders' equity ................... 5,357
------- -------
Total capitalization ................................ $10,244 $
======= =======
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(1) Does not give effect to the shares of common stock of Pacific Telesis
("Common Stock"), that may be issued upon exercise of options to purchase
6,521,193 shares of Common Stock that were exercisable at June 30, 1995
under Pacific Telesis' stock option plans.
(2) Accounting Treatment - The financial statements of the Trust will be
reflected in Pacific Telesis' consolidated financial statements. The
"Minority interest in financing trust" represents a guaranteed minority
interest in the Trust holding Subordinated Debentures of Pacific Telesis
Group. The footnotes to the consolidated financial statements will
describe the nature and terms of the Preferred Securities issued by the
Trust.
(3) Reinvested earnings will be affected by the recent discontinuance of SFAS
71. Refer to Footnote (2) in the Summary Financial Data section on page
___.
USE OF PROCEEDS
All of the proceeds from the sale of the Preferred Securities will be invested
by Pacific Telesis Financing in Subordinated Debentures of Pacific Telesis
issued pursuant to the Indenture therefor described herein and ultimately will
be used by Pacific Telesis for general corporate purposes, which may include
capital expenditures, repurchases of outstanding long-term debt securities,
retirement of bank debt, investments in subsidiaries, working capital,
repayment of short-term commercial paper and other business opportunities.
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the
Trust Indenture Act. The Property Trustee, The First National Bank of
Chicago, will act as the indenture trustee for purposes of compliance with the
provisions of the Trust Indenture Act. The terms of the Preferred Securities
will include those stated in the Declaration including those made part of the
Declaration by the Trust Indenture Act. The following summary of the
principal terms and provisions of the Preferred Securities does not purport to
be complete and is subject to, and qualified in its entirety by reference to,
the Declaration, a copy of which is filed as an exhibit to the Registration
Statement of which this Prospectus Supplement is a part, the Trust Act and the
Trust Indenture Act.
General
The Declaration authorizes the Regular Trustees to issue on behalf of Pacific
Telesis Financing the Trust Securities, which represent undivided beneficial
interests in the assets of Pacific Telesis Financing. All of the Common
Securities will be owned by Pacific Telesis. The Common Securities rank pari
passu, and payments will be made thereon on a pro rata basis, with the
Preferred Securities, except that upon the occurrence and during the
continuance of a Declaration Event of Default, the rights of the holders of
the Common Securities to receive payment of periodic distributions and
payments upon liquidation, redemption and otherwise will be subordinated to
the rights of the holders of the Preferred Securities. The Declaration does
not permit the issuance by Pacific Telesis Financing of any securities other
than the Trust Securities or the incurrence of any indebtedness by Pacific
Telesis Financing. Pursuant to the Declaration, the Property Trustee will
hold the Subordinated Debentures purchased by Pacific Telesis Financing for
the benefit of the holders of the Trust Securities. The payment of
distributions out of money held by Pacific Telesis Financing, and payments
upon redemption of the Preferred Securities or liquidation of Pacific Telesis
Financing, are guaranteed by Pacific Telesis to the extent described under
"Description of the Guarantees" in the accompanying Prospectus. The Guarantee
will be held by The First National Bank of Chicago, the Guarantee Trustee, for
the benefit of the holders of the Preferred Securities. The Guarantee only
covers payment of distributions when Pacific Telesis has made the
corresponding payment of interest or principal on the Subordinated Debentures
held by the Trust. In the absence of such payment of interest or principal,
the remedy of a holder of Preferred Securities is to direct the Property
Trustee to enforce the Property Trustee's rights as the holder of the
Subordinated Debentures. See "-- Voting Rights."
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Distributions
Distributions on the Preferred Securities will be fixed at a rate per annum of
____% of the stated liquidation amount of $25 per Preferred Security.
Distributions in arrears for more than one quarter will bear interest thereon
from and including the last day of such quarter at the rate per annum of ____%
thereof compounded quarterly. The term "distributions" as used herein
includes any such interest payable unless otherwise stated. The amount of
distributions payable for any period will be computed on the basis of a 360-
day year of twelve 30-day months.
Distributions on the Preferred Securities will be cumulative, will accrue from
______, 1995, and will be payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year, commencing ____________, when, as
and if available for payment by the Property Trustee, except as otherwise
described below.
Pacific Telesis has the right under the Indenture to defer payments of
interest on the Subordinated Debentures by extending the interest payment
period from time to time on the Subordinated Debentures, which, if exercised,
would defer quarterly distributions on the Preferred Securities (though, to
the extent permitted by law, such distributions would continue to accrue with
interest since interest would continue to accrue on the Subordinated
Debentures) during any such Extension Period. Such right to extend the
interest payment period for the Subordinated Debentures is limited to a period
not exceeding 20 consecutive quarters or extending beyond the Scheduled
Maturity Date of the Subordinated Debentures. In the event that Pacific
Telesis exercises this right, then (a) Pacific Telesis shall not declare or
pay dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of its capital
stock and (b) Pacific Telesis shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by Pacific Telesis that rank pari passu with or junior to
the Subordinated Debentures; provided, however, that, the foregoing
restriction (a) does not apply to any stock dividends paid by Pacific Telesis
where the dividend stock is the same stock as that on which the dividend is
being paid. Prior to the termination of any such Extension Period, Pacific
Telesis may further extend the interest payment period; provided that, such
Extension Period, together with all such previous and further extensions
thereof, may not exceed 20 consecutive quarters and may not extend beyond the
Maturity Date of the Subordinated Debentures. Upon the termination of any
Extension Period and the payment of all amounts then due, Pacific Telesis may
select a new Extension Period, subject to the above requirements. See
"Description of the Subordinated Debentures -- Interest" and "-- Option to
Extend Interest Payment Period." If distributions are deferred, the deferred
distributions and accrued interest thereon shall be paid to holders of record
of the Preferred Securities as they appear on the books and records of Pacific
Telesis Financing on the record date next following the termination of such
deferral period.
Distributions on the Preferred Securities must be paid on the dates payable to
the extent that Pacific Telesis Financing has funds available for the payment
of such distributions in the Property Account. Pacific Telesis Financing's
funds available for distribution to the holders of the Preferred Securities
will be limited to payments received from Pacific Telesis under the
Subordinated Debentures. See "Description of the Subordinated Debentures."
The payment of distributions out of moneys held by Pacific Telesis Financing
is guaranteed by Pacific Telesis to the extent set forth under "Description of
the Guarantees" in the accompanying Prospectus.
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the books and records of Pacific Telesis Financing
on the relevant record dates, which, as long as the Preferred Securities
remain in global form, will be one Business Day (as defined below) prior to
the relevant payment dates. Such distributions will be paid through the
Property Trustee who will hold amounts received in respect of the Subordinated
Debentures in the Property Account for the benefit of the holders of the Trust
Securities. Subject to any applicable laws and regulations and the provisions
of the Declaration, each such payment will be made as described under "Book-
Entry Only Issuance -- The Depository Trust Company" below. In the event that
the Preferred Securities do not continue to remain in global form, the Regular
Trustees shall have the right to select relevant record dates, which shall be
at least one Business Day but less than 60 Business Days prior to the relevant
payment dates. In the event that any date on which distributions are to be
17
<PAGE>
made on the Preferred Securities is not a Business Day, then payment of the
distributions payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other payment in respect
of any such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such record date. A "Business Day" shall mean any day other than Saturday,
Sunday or any other day on which banking institutions in the City of New York
are permitted or required by any applicable law or regulation to close.
Mandatory Redemption
Upon the repayment of the Subordinated Debentures, whether at maturity or upon
redemption, the proceeds from such repayment or redemption shall
simultaneously be applied to redeem Trust Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Subordinated
Debentures so repaid or redeemed at $25 per Preferred Security plus accrued
and unpaid distributions thereon to the date fixed for redemption (the
Redemption Price"); provided that, holders of Trust Securities shall be given
not less than 30 nor more than 60 days notice of such redemption. The
Subordinated Debentures will mature on __________, 2025 unless the maturity
date is extended at the option of Pacific Telesis (provided certain financial
conditions are met), and may be redeemed, in whole or in part, at any time on
or after __________, 2000 or at any time in certain circumstances upon the
occurrence of a Tax Event. See "Description of the Subordinated Debentures --
Optional Redemption." In the event that fewer than all of the outstanding
Preferred Securities are to be redeemed, the Preferred Securities will be
redeemed pro rata as described under "Book-Entry Only Issuance -- The
Depository Trust Company" below.
Special Event Redemption or Distribution
"Tax Event" means that the Regular Trustees shall have received an opinion of
a nationally recognized independent tax counsel experienced in such matters (a
"Dissolution Tax Opinion") to the effect that, as a result of (a) any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (b) any amendment to, or
change in, an interpretation or application of such laws or regulations by any
legislative body, court, governmental agency or regulatory authority, (c) any
interpretation or pronouncement that provides for a position with respect to
such laws or regulations that differs from the theretofore generally accepted
position or (d) any action taken by any governmental agency or regulatory
authority, which amendment, change, interpretation or pronouncement is
enacted, promulgated, issued or announced or which action is taken, in each
case on or after the date of this Prospectus Supplement, there is more than an
insubstantial risk that (i) Pacific Telesis Financing would be, subject to
United States federal income tax with respect to interest accrued or received
on the Subordinated Debentures, (ii) Pacific Telesis Financing would be
subject to more than a de minimis amount of taxes, duties or other
governmental charges, or (iii) interest payable to Pacific Telesis Financing
on the Subordinated Debentures would not be deductible, in whole or in part,
by Pacific Telesis for United States federal income tax purposes, which change
or amendment becomes effective on or after the date of this Prospectus
Supplement.
Investment Company Event" means that the Regular Trustees shall have received
an opinion of a nationally recognized independent counsel experienced in
practice under the Investment Company Act of 1940 (the "1940 Act") to the
effect that, as a result of the occurrence of a change in law or regulation or
a written change in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority (a
Change in 1940 Act Law"), there is more than an insubstantial risk that
Pacific Telesis Financing is or will be considered an investment company"
which is required to be registered under the 1940 Act, which Change in 1940
Act Law becomes effective on or after the date of this Prospectus Supplement.
If, at any time, a Tax Event or an Investment Company Event (each, as defined
above, a Special Event") shall occur and be continuing, Pacific Telesis
Financing shall, except in the circumstances described below, be dissolved
with the result that the Subordinated Debentures with an aggregate principal
amount equal to the aggregate stated liquidation amount of, with an interest
rate identical to the distribution rate of, and accrued and unpaid interest
equal to accrued and unpaid distributions on, the Trust Securities, would be
18
<PAGE>
distributed to the holders of the Trust Securities in liquidation of such
holders' interests in Pacific Telesis Financing on a pro rata basis within 90
days following the occurrence of such Special Event; provided, however, that,
in the case of the occurrence of a Tax Event, as a condition for such
dissolution and distribution the Regular Trustees shall have received an
opinion of nationally recognized independent tax counsel experienced in such
matters (a "No Recognition Opinion"), which opinion may rely on published
revenue rulings of the Internal Revenue Service, to the effect that the
holders of the Trust Securities will not recognize any gain or loss for United
States federal income tax purposes as a result of such dissolution of Pacific
Telesis Financing and distribution of Subordinated Debentures, and provided
further, that, if at the time there is available to Pacific Telesis Financing
the opportunity to eliminate, within such 90 day period, the Special Event by
taking some ministerial action, such as filing a form or making an election or
pursuing some other reasonable measure that will have no adverse effect on
Pacific Telesis Financing, Pacific Telesis or the holders of the Trust
Securities Pacific Telesis will pursue such measure in lieu of dissolution.
Furthermore, if in the case of the occurrence of a Tax Event (i) Pacific
Telesis has received an opinion (a "Redemption Tax Opinion") of nationally
recognized independent tax counsel experienced in such matters that, as a
result of a Tax Event, there is more than an insubstantial risk that Pacific
Telesis would be precluded from deducting the interest on the Subordinated
Debentures for United States federal income tax purposes, even after the
Subordinated Debentures were distributed to the holders of Trust Securities in
liquidation of such holders' interests in Pacific Telesis Financing as
described above, or (ii) the Regular Trustees shall have been informed by such
tax counsel that a No Recognition Opinion cannot be delivered, Pacific Telesis
shall have the right, upon not less than 30 nor more than 60 days notice, to
redeem the Subordinated Debentures, in whole or in part, for cash within 90
days following the occurrence of such Tax Event, and, following such
redemption, Trust Securities with an aggregate liquidation amount equal to the
aggregate principal amount of the Subordinated Debentures so redeemed shall be
redeemed by Pacific Telesis Financing at the Redemption Price on a pro rata
basis; provided, however, that, if at the time there is available to Pacific
Telesis or Pacific Telesis Financing the opportunity to eliminate, within such
90 day period, the Tax Event by taking some ministerial action such as filing
a form or making an election, or pursuing some other similar reasonable
measure which has no adverse effect on Pacific Telesis Financing, Pacific
Telesis or the holders of the Trust Securities, Pacific Telesis or Pacific
Telesis Financing will pursue such measure in lieu of redemption.
If the Subordinated Debentures are distributed to the holders of the Preferred
Securities, Pacific Telesis will use its best efforts to cause the
Subordinated Debentures to be listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities are then listed.
After the date for any distribution of Subordinated Debentures upon
dissolution of Pacific Telesis Financing, (i) the Preferred Securities will no
longer be deemed to be outstanding, (ii) the record holder(s) of the Preferred
Securities, will receive a registered global certificate or certificates
representing the Subordinated Debentures to be delivered upon such
distribution in exchange for the Preferred Securities held by such holder(s).
There can be no assurance as to the market prices for either the Preferred
Securities or the Subordinated Debentures that may be distributed in exchange
for the Preferred Securities if a dissolution and liquidation of Pacific
Telesis Financing were to occur. Accordingly, the Preferred Securities that an
investor may purchase, whether pursuant to the offer made hereby or in the
secondary market, or the Subordinated Debentures that an investor may receive
if a dissolution and liquidation of Pacific Telesis Financing were to occur,
may trade at a discount to the price that the investor paid to purchase the
Preferred Securities offered hereby.
Redemption Procedures
Pacific Telesis Financing may not redeem fewer than all of the out- standing
Preferred Securities unless all accrued and unpaid distributions have been
paid on all Preferred Securities for all quarterly distribution periods
terminating on or prior to the date of redemption.
If Pacific Telesis Financing gives a notice of redemption in respect of
Preferred Securities (which notice will be irrevocable), then, by 12:00 noon,
New York City time, on the redemption date, and if Pacific Telesis has paid to
the Property Trustee a sufficient amount of cash in connection with the
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<PAGE>
related redemption or maturity of the Subordinated Debentures, then Pacific
Telesis Financing will pay the Redemption Price to the holders of the
Preferred Securities. If notice of redemption shall have been given and funds
deposited as required, then, immediately prior to the close of business on the
date of such deposit, distributions will cease to accrue and all rights of
holders of such Preferred Securities so called for redemption will cease,
except the right of the holders of such Preferred Securities to receive the
Redemption Price but without interest on such Redemption Price. In the event
that any date fixed for redemption of Preferred Securities is not a Business
Day, then payment of the Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (without any interest or other
payment in respect of any such delay), except that, if such Business Day falls
in the next calendar year, such payment will be made on the immediately
preceding Business Day. In the event that payment of the Redemption Price in
respect of Preferred Securities is improperly withheld or refused and not paid
either by Pacific Telesis Financing, or by Pacific Telesis pursuant to the
Guarantee, distributions on such Preferred Securities will continue to accrue
at the then applicable rate from the original redemption date to the date of
payment, in which case the actual payment date will be considered the date
fixed for redemption for purposes of calculating the Redemption Price.
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), Pacific Telesis or its subsidiaries
may at any time, and from time to time, purchase outstanding Preferred
Securities by tender, in the open market or by private agreement.
Liquidation Distribution Upon Dissolution
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of Pacific Telesis Financing (each a "Liquidation"),
the then holders of the Preferred Securities will be entitled to receive out
of the assets of Pacific Telesis Financing, after satisfaction of liabilities
to creditors, distributions in an amount equal to the aggregate of the stated
liquidation amount of $25 per Preferred Security plus accrued and unpaid
distributions thereon to the date of payment (the "Liquidation Distribution"),
unless, in connection with such Liquidation, Subordinated Debentures in an
aggregate stated principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the distribution rate of, and
accrued and unpaid interest equal to accrued and unpaid distributions on, the
Preferred Securities have been distributed on a pro rata basis to the holders
of the Preferred Securities.
If, upon any such Liquidation, the Liquidation Distribution can be paid only
in part because Pacific Telesis Financing has insufficient assets available to
pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by Pacific Telesis Financing on the Preferred Securities shall be
paid on a pro rata basis. The holders of the Common Securities will be
entitled to receive distributions upon any such dissolution pro rata with the
holders of the Preferred Securities, except that if a Declaration Event of
Default has occurred and is continuing, the Preferred Securities shall have a
preference over the Common Securities with regard to such distributions.
Termination
Pursuant to the Declaration, Pacific Telesis Financing shall terminate upon
the earliest of (i) __________, 2050, (ii) the bankruptcy of Pacific Telesis,
(iii) the filing of a certificate of dissolution or its equivalent with
respect to Pacific Telesis, the filing of a certificate of cancellation with
respect to Pacific Telesis Financing, or the revocation of the charter of
Pacific Telesis and the expiration of 90 days after the date of revocation
without a reinstatement thereof, (iv) the distribution of Subordinated
Debentures upon the occurrence of a Special Event, (v) the entry of a decree
of a judicial dissolution of Pacific Telesis or Pacific Telesis Financing, or
(vi) the redemption of all the Trust Securities.
Declaration Events of Default
An event of default under the Indenture (an "Indenture Event of Default")
constitutes an event of default under the Declaration with respect to the
Trust Securities (a "Declaration Event of Default"), provided that, pursuant
to the Declaration, the holder of the Common Securities will be deemed to have
waived any Declaration Event of Default with respect to the Common Securities
until all Declaration Events of Default with respect to the Preferred
Securities have been cured, waived or otherwise eliminated. Until such
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Declaration Events of Default with respect to the Preferred Securities have
been so cured, waived, or otherwise eliminated, the Property Trustee will be
deemed to be acting solely on behalf of the holders of the Preferred
Securities and only the holders of the Preferred Securities will have the
right to direct the Property Trustee with respect to certain matters under the
Declaration, and therefore the Indenture.
Upon the occurrence of a Declaration Event of Default, the Indenture Trustee
(as defined herein) or the Property Trustee as the holder of the Subordinated
Debentures will have the right under the Indenture to declare the principal of
and interest on the Subordinated Debentures to be immediately due and payable.
Pacific Telesis and Pacific Telesis Financing are each required to file
annually with the Property Trustee an officer's certificate as to its
compliance with all conditions and covenants under the Declaration.
Voting Rights
Except as described herein, under the Trust Act, the Trust Indenture Act and
under "Description of the Guarantees -- Modification of the Guarantees;
Assignment" in the accompanying Prospectus, and as otherwise required by law
and the Declaration, the holders of the Preferred Securities will have no
voting rights.
Subject to the requirement of the Property Trustee obtaining a tax opinion in
certain circumstances set forth in the last sentence of this paragraph, the
holders of a majority in aggregate liquidation amount of the Preferred
Securities, have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Property Trustee, or direct the
exercise of any trust or power conferred upon the Property Trustee under the
Declaration including the right to direct the Property Trustee, as holder of
the Subordinated Debentures, to (i) exercise the remedies available under the
Indenture with respect to the Subordinated Debentures, (ii) waive any past
Indenture Event of Default that is waivable under the Base Indenture (as
defined herein), or (iii) exercise any right to rescind or annul a declaration
that the principal of all the Subordinated Debentures shall be due and
payable, consent to any amendment, modification or termination of the
Indenture or the Subordinated Debentures, where such consent should be
required; provided, however, that, where a consent or action under the
Indenture would require the consent or act of more than a majority of the
holders (a "Super-Majority") affected thereby, only the holders of at least
such Super-Majority of the Preferred Securities may direct the Property
Trustee to give such consent or take such action. If the Property Trustee
fails to enforce its rights under the Subordinated Debentures, a record holder
of Preferred Securities may institute a legal proceeding directly against
Pacific Telesis to enforce the Property Trustee's rights under the
Subordinated Debentures without first instituting any legal proceeding against
the Property Trustee or any other person or entity. The Property Trustee
shall notify all holders of the Preferred Securities of any notice of default
received from the Indenture Trustee with respect to the Subordinated
Debentures. Such notice shall state that such Indenture Event of Default also
constitutes a Declaration Event of Default. Except with respect to directing
the time, method and place of conducting a proceeding for a remedy, the
Property Trustee shall not take any of the actions described in clauses (i),
(ii) or (iii) above unless the Property Trustee has obtained an opinion of tax
counsel to the effect that, as a result of such action, Pacific Telesis
Financing will not be classified as other than a grantor trust for United
States federal income tax purposes.
In the event the consent of the Property Trustee, as the holder of the
Subordinated Debentures, is required under the Indenture with respect to any
amendment, modification or termination of the Indenture or the Subordinated
Debentures, the Property Trustee shall request the direction of the holders of
the Trust Securities with respect to such amendment, modification or
termination and shall vote with respect to such amendment, modification or
termination as directed by a majority in liquidation amount of the Trust
Securities voting together as a single class; provided, however, that where a
consent under the Indenture would require the consent of a Super Majority, the
Property Trustee may only give such consent at the direction of the holders of
at least the proportion in liquidation amount of the Trust Securities which
the relevant Super Majority represents of the aggregate principal amount of
the Subordinated Debentures outstanding. The Property Trustee shall be under
no obligation to consent in accordance with the directions of the holders of
the Trust Securities if such consent would cause Pacific Telesis Financing to
be classified as other than a grantor trust for United States federal income
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tax purposes.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of Preferred Securities may be
given at a separate meeting of holders of Preferred Securities convened for
such purpose, at a meeting of all of the holders of Trust Securities or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which holders of Preferred Securities are entitled to vote, or of
any matter upon which action by written consent of such holders is to be
taken, to be mailed to each holder of record of Preferred Securities. Each
such notice will include a statement setting forth the following information:
(i) the date of such meeting or the date by which such action is to be taken;
(ii) a description of any resolution proposed for adoption at such meeting on
which such holders are entitled to vote or of such matter upon which written
consent is sought; and (iii) instructions for the delivery of proxies or
consents. No vote or consent of the holders of Preferred Securities will be
required for Pacific Telesis Financing to redeem and cancel Preferred
Securities or distribute Subordinated Debentures in accordance with the
Declaration.
Notwithstanding that holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by Pacific Telesis or any entity
directly or indirectly controlling or controlled by, or under direct or
indirect common control with, Pacific Telesis, shall not be entitled to vote
or consent and shall, for purposes of such vote or consent, be treated as if
such Preferred Securities were not outstanding.
The procedures by which holders of Preferred Securities may exercise their
voting rights are described below. See "-- Book-Entry Only Issuance -- The
Depository Trust Company" below.
Holders of the Preferred Securities will have no rights to appoint or remove
the Pacific Telesis Trustees, who may be appointed, removed or replaced solely
by Pacific Telesis as the indirect or direct holder of all of the Common
Securities.
Modification of the Declaration
The Declaration may be modified and amended if approved by a majority of the
Regular Trustees (and in certain circumstances the Property Trustee), provided
that, if any proposed amendment provides for, or the Regular Trustees
otherwise propose to effect, (i) any action that would adversely affect the
powers, preferences or special rights of the Trust Securities, whether by way
of amendment to the Declaration or otherwise, or (ii) the dissolution,
winding-up or termination of Pacific Telesis Financing other than pursuant to
the terms of the Declaration, then the holders of the Trust Securities voting
together as a single class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of at least 66 2/3% in liquidation amount of the Trust Securities
affected thereby; provided that, if any amendment or proposal referred to in
clause (i) above would adversely affect only the Preferred Securities or the
Common Securities, then only the affected class will be entitled to vote on
such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of 66 2/3% in liquidation amount of such
class of Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made to the
Declaration if such amendment or modification would (i) cause Pacific Telesis
Financing to be classified as other than a grantor trust for United States
federal income tax purposes, (ii) reduce or otherwise adversely affect the
powers of the Property Trustee or (iii) cause Pacific Telesis Financing to be
deemed an "investment company" which is required to be registered under the
1940 Act.
Mergers, Consolidations or Amalgamations
Pacific Telesis Financing may not consolidate, amalgamate, merge with or into
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body, except as
described below. Pacific Telesis Financing may, with the consent of a
majority of the Regular Trustees and without the consent of the holders of the
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Trust Securities, the Property Trustee or the Delaware Trustee, consolidate,
amalgamate, merge with or into, or be replaced by a trust organized as such
under the laws of any State; provided that, (i) such successor entity either
(x) expressly assumes all of the obligations of Pacific Telesis Financing
under the Trust Securities or (y) substitutes for the Preferred Securities
other securities having substantially the same terms as the Trust Securities
(the "Successor Securities"), so long as the Successor Securities rank the
same as the Trust Securities rank with respect to distributions and payments
upon liquidation, redemption and otherwise, (ii) Pacific Telesis expressly
acknowledges a trustee of such successor entity possessing the same powers and
duties as the Property Trustee as the holder of the Subordinated Debentures,
(iii) the Preferred Securities or any Successor Securities are listed, or any
Successor Securities will be listed upon notification of issuance, on any
national securities exchange or with another organization on which the
Preferred Securities are then listed or quoted, (iv) such merger,
consolidation, amalgamation or replacement does not cause the Preferred
Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation or replacement does not adversely affect the
rights, preferences and privileges of the holders of the Trust Securities
(including any Successor Securities) in any material respect (other than with
respect to any dilution of the holders' interest in the new entity), (vi) such
successor entity has a purpose identical to that of Pacific Telesis Financing,
(vii) prior to such merger, consolidation, amalgamation or replacement,
Pacific Telesis has received an opinion of a nationally recognized independent
counsel to Pacific Telesis Financing experienced in such matters to the effect
that, (A) such merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the holders of the
Trust Securities (including any Successor Securities) in any material respect
(other than with respect to any dilution of the holders' interest in the new
entity), and (B) following such merger, consolidation, amalgamation or
replacement, neither Pacific Telesis Financing nor such successor entity will
be required to register as an investment company under the 1940 Act and (viii)
Pacific Telesis guarantees the obligations of such successor entity under the
Successor Securities at least to the extent provided by the Guarantee.
Notwithstanding the foregoing, Pacific Telesis Financing shall not, except
with the consent of holders of 100% in liquidation amount of the Trust
Securities, consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it, if such consolidation, amalgamation, merger or
replacement would cause Pacific Telesis Financing or the Successor Entity to
be classified as other than a grantor trust for United States federal income
tax purposes and each holder of the Trust Securities not to be treated as
owning an undivided beneficial interest in the Subordinated Debentures.
Book-Entry Only Issuance -- The Depository Trust Company
The Depository Trust Company ("DTC") will act as Depository for the Preferred
Securities. The Preferred Securities will be issued only as fully-registered
securities registered in the name of Cede & Co. (DTC's nominee). One or more
fully-registered global Preferred Securities certificates, representing the
total aggregate number of Preferred Securities, will be issued and will be
delivered to DTC.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in the global Preferred
Securities as represented by a global certificate.
DTC has advised Pacific Telesis and Pacific Telesis Financing that DTC is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). DTC holds securities
that its participants ("Participants") deposit with DTC. DTC also facilitates
the settlement among Participants of securities transactions, such as
transfers and pledges, in deposited securities through electronic computerized
book-entry changes in Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. Direct Participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations ("Direct Participants"). DTC is owned by a
number of its Direct Participants and by the New York Stock Exchange, Inc.
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(the "New York Stock Exchange"), the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others, such as securities brokers and dealers, banks and
trust companies that clear transactions through or maintain a direct or
indirect custodial relationship with a Direct Participant either directly or
indirectly ("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the Securities and Exchange Commission.
Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser
of each Preferred Security ("Beneficial Owner") is in turn to be recorded on
the Direct and Indirect Participants' records. Beneficial Owners will not
receive written confirmation from DTC of their purchases, but Beneficial
Owners are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the
Direct or Indirect Participants through which the Beneficial Owners purchased
Preferred Securities. Transfers of ownership interests in the Preferred
Securities are to be accomplished by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in the Preferred
Securities, except in the event that use of the book-entry system for the
Preferred Securities is discontinued.
To facilitate subsequent transfers, all the Preferred Securities deposited by
Participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of Preferred Securities with DTC and their registration in the
name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Preferred Securities. DTC's
records reflect only the identity of the Direct Participants to whose accounts
such Preferred Securities are credited, which may or may not be the Beneficial
Owners. The Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants,
by Direct Participants to Indirect Participants and by Direct Participants and
Indirect Participants to Beneficial Owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements that may be in
effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Preferred Securities are being redeemed, DTC will reduce pro rata the amount
of the interest of each Direct Participant in such Preferred Securities to be
redeemed in accordance with its procedures.
Although voting with respect to the Preferred Securities is limited, in those
cases where a vote is required, neither DTC nor Cede & Co. will itself consent
or vote with respect to Preferred Securities. Under its usual procedures, DTC
would mail an Omnibus Proxy to Pacific Telesis Financing as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Direct Participants to whose accounts the Preferred
Securities are credited on the record date (identified in a listing attached
to the Omnibus Proxy). Pacific Telesis and Pacific Telesis Financing believe
that the arrangements among DTC, Direct and Indirect Participants, and
Beneficial Owners will enable the Beneficial Owners to exercise rights
equivalent in substance to the rights that can be directly exercised by a
holder of a beneficial interest in Pacific Telesis Financing.
Distribution payments on the Preferred Securities will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payment
date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payments on such
payment date. Payments by Participants to Beneficial Owners will be governed
by standing instructions and customary practices, as is the case with
securities held for the account of customers in bearer form or registered in
"street name," and such payments will be the responsibility of such
Participant and not of DTC, Pacific Telesis Financing or Pacific Telesis,
subject to any statutory or regulatory requirements that may be in effect from
time to time. Payment of distributions to DTC is the responsibility of
Pacific Telesis Financing, disbursement of such payments to Direct
Participants is the responsibility of DTC, and disbursement of such payments
to the Beneficial Owners is the responsibility of Direct and Indirect
Participants.
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Except as provided herein, a Beneficial Owner in a global Preferred Security
certificate will not be entitled to receive physical delivery of Preferred
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC to exercise any rights under the Preferred Securities.
DTC may discontinue providing its services as securities Depository with
respect to the Preferred Securities at any time by giving reasonable notice to
Pacific Telesis Financing. Under such circumstances, in the event that a
successor securities Depository is not obtained, Preferred Securities
certificates are required to be printed and delivered. Additionally, the
Regular Trustees (with the consent of Pacific Telesis) may decide to
discontinue use of the system of book-entry transfers through DTC (or any
successor Depository) with respect to the Preferred Securities. In that
event, certificates for the Preferred Securities will be printed and
delivered.
The information in this section concerning DTC and DTC's book-entry system has
been obtained from sources that Pacific Telesis and Pacific Telesis Financing
believe to be reliable, but neither Pacific Telesis nor Pacific Telesis
Financing takes responsibility for the accuracy thereof.
Information Concerning the Property Trustee
The Property Trustee, prior to the occurrence of a default with respect to the
Trust Securities, undertakes to perform only such duties as are specifically
set forth in the Declaration, in the terms of the Trust Securities or in the
Trust Indenture Act and, after default, shall exercise the same degree of care
as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to such provisions, the Property Trustee is under no
obligation to exercise any of the powers vested in it by the Declaration at
the request of any holder of Preferred Securities, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which
might be incurred thereby. The holders of Preferred Securities will not be
required to offer such indemnity in the event such holders, by exercising
their voting rights, direct the Property Trustee to take any action following
a Declaration Event of Default. The Property Trustee also serves as Trustee
under the Guarantee.
Paying Agent
In the event that the Preferred Securities do not remain in book-entry only
form, the following provisions would apply:
The Property Trustee will act as paying agent, and may designate an additional
or substitute paying agent at any time.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of Pacific Telesis Financing, but upon payment (with
the giving of such indemnity as Pacific Telesis Financing or Pacific Telesis
may require) in respect of any tax or other government charges that may be
imposed in relation to it.
Pacific Telesis Financing will not be required to register or cause to be
registered the transfer of Preferred Securities after such Preferred
Securities have been called for redemption.
Governing Law
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
Miscellaneous
The Regular Trustees are authorized and directed to operate Pacific Telesis
Financing in such a way so that Pacific Telesis Financing will not be required
to register as an "investment company" under the 1940 Act or be characterized
as other than a grantor trust for United States federal income tax purposes.
Pacific Telesis is authorized and directed to conduct its affairs so that the
Subordinated Debentures will be treated as indebtedness of Pacific Telesis for
United States federal income tax purposes. In this connection, Pacific
Telesis and the Regular Trustees are authorized to take any action, not
inconsistent with applicable law, the certificate of trust of Pacific Telesis
Financing or the certificate of incorporation of Pacific Telesis, that each of
Pacific Telesis and the Regular Trustees determines in its discretion to be
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necessary or desirable to achieve such end, as long as such action does not
adversely affect the interests of the holders of the Preferred Securities or
vary the terms thereof.
Holders of the Preferred Securities have no preemptive rights.
DESCRIPTION OF THE SUBORDINATED DEBENTURES
Set forth below is a description of the specific terms of the Subordinated
Debentures in which Pacific Telesis Financing will invest the proceeds from
the issuance and sale of the Trust Securities. This description supplements
the description of the general terms and provisions of the Subordinated
Debentures set forth in the accompanying Prospectus under the caption
"Description of the Subordinated Debt Securities." The following description
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, the description in the accompanying Prospectus and
the Subordinated Debt Securities Indenture, dated as of ______, 1995 (the
"Base Indenture"), between Pacific Telesis and The First National Bank of
Chicago, as Trustee (the "Indenture Trustee"), as supplemented by a First
Supplemental Indenture, dated as of ______, 1995 (the Base Indenture, as so
supplemented, is hereinafter referred to as the "Indenture"), the forms of
which are filed as Exhibits to the Registration Statement of which this
Prospectus Supplement and the accompanying Prospectus form a part. Certain
capitalized terms used herein are defined in the Indenture.
Under certain circumstances involving the dissolution of Pacific Telesis
Financing following the occurrence of a Special Event, Subordinated Debentures
may be distributed to the holders of the Trust Securities in liquidation of
Pacific Telesis Financing. See "Description of the Preferred Securities --
Special Event Redemption or Distribution."
If the Subordinated Debentures are distributed to the holders of the Preferred
Securities, Pacific Telesis will use its best efforts to have the Subordinated
Debentures listed on the New York Stock Exchange or on such other exchange on
which the Preferred Securities are then listed.
General
The Subordinated Debentures will be issued as unsecured subordinated debt
securities under the Indenture. The Subordinated Debentures will be limited
in aggregate principal amount to approximately $___________, such amount being
the sum of the aggregate stated liquidation amount of the Preferred Securities
and the capital contributed by Pacific Telesis in exchange for the Common
Securities (the "Pacific Telesis Payment").
The Subordinated Debentures are not subject to a sinking fund provision. The
entire principal of the Subordinated Debentures will mature and become due and
payable, together with any accrued and unpaid interest thereon including
Compounded Interest (as hereinafter defined), if any, on __________, 2025,
subject to the election of Pacific Telesis to extend the scheduled maturity
date of the Subordinated Debentures to a date not later than __________, 2044,
which election is subject to Pacific Telesis' satisfying certain financial
conditions. See " -- Option to Extend Maturity Date."
If Subordinated Debentures are distributed to holders of Preferred Securities
in liquidation of such holders' interests in Pacific Telesis Financing, it is
presently anticipated that such Subordinated Debentures will initially be
issued as a Global Security (as defined below). As described herein, under
certain limited circumstances, Subordinated Debentures may be issued in
certificated form in exchange for a Global Security. See "--Book-Entry and
Settlement" below. In the event that Subordinated Debentures are issued in
certificated form, such Subordinated Debentures will be in denominations of
$25 and integral multiples thereof and may be transferred or exchanged at the
offices described below. Payments on Subordinated Debentures issued as a
Global Security will be made to DTC or its nominee, a successor Depository or
its nominee. In the event Subordinated Debentures are issued in certificated
form, principal and interest will be payable, the transfer of the Subordinated
Debentures will be registrable and Subordinated Debentures will be
exchangeable for Subordinated Debentures of other denominations of a like
aggregate principal amount at the corporate trust offices of the Indenture
Trustee in Chicago, Illinois and New York, New York; provided that, payment of
interest may be made at the option of Pacific Telesis by check mailed to the
address of the persons entitled thereto.
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Subordination
The Indenture provides that the Subordinated Debentures are subordinated and
junior in right of payment to the prior payment in full of all Senior
Indebtedness of Pacific Telesis whether now existing or hereafter incurred.
In the event and during the continuation of any default by Pacific Telesis in
the payment of principal, premium, interest or any other payment due on any
Senior Indebtedness of Pacific Telesis, or in the event that the maturity of
any Senior Indebtedness of Pacific Telesis has been accelerated because of a
default, then in either case, no payment will be made by Pacific Telesis with
respect to the principal (including redemption payments) of or interest on the
Subordinated Debentures. Upon any distribution of assets of Pacific Telesis
to creditors upon any dissolution, winding-up, liquidation or reorganization,
whether voluntary or involuntary, or in bankruptcy, insolvency, receivership
or other proceedings, all principal, premium, if any, and interest due or to
become due on all Senior Indebtedness of Pacific Telesis must be paid in full
before the holders of Subordinated Debentures are entitled to receive or
retain any payment. Upon satisfaction of all claims of all Senior
Indebtedness then outstanding, the rights of the holders of the Subordinated
Debentures will be subrogated to the rights of the holders of Senior
Indebtedness of Pacific Telesis to receive payments or distributions
applicable to Senior Indebtedness until all amounts owing on the Subordinated
Debentures are paid in full.
The term "Senior Indebtedness" means, with respect to Pacific Telesis, all
indebtedness of such obligor, whether now existing or hereafter created, but
excluding trade accounts payable arising in the ordinary course of business.
Without limiting the generality of the foregoing, Senior Indebtedness" shall
include (i) the principal, premium, if any, and interest in respect of (A)
indebtedness of such obligor for money borrowed and (B) indebtedness evidenced
by securities, debentures, bonds or other similar instruments issued by such
obligor (ii) all capital lease obligations of such obligor, (iii) all
obligations of such obligor issued or assumed as the deferred purchase price
of property, all conditional sale obligations of such obligor and all
obligations of such obligor under any title retention agreement (but excluding
trade accounts payable arising in the ordinary course of business), (iv) all
obligations of such obligor for the reimbursement on any letter of credit,
banker's acceptance, security purchase facility or similar credit transaction,
(v) all obligations of the type referred to in clauses (i) through (iv) above
of other persons for the payment of which such obligor is responsible or
liable as obligor, guarantor or otherwise, including, without limitation,
under all support agreements or guarantees by Pacific Telesis of debentures,
notes and other securities issued by PacTel Capital Resources and (vi) all
obligations of the type referred to in clauses (i) through (v) above of other
persons secured by any lien on any property or asset of such obligor (whether
or not such obligation is assumed by such obligor), except for (1) any such
indebtedness that is by its terms subordinated to or pari passu with the
Subordinated Debentures, as the case may be, and (2) any indebtedness between
or among such obligor or its affiliates, including all other debt securities
and guarantees in respect of those debt securities issued to (a) any other
Pacific Telesis Trust or a trustee of such trust and (b) any other trust, or a
trustee of such trust, partnership or other entity affiliated with Pacific
Telesis that is a financing vehicle of Pacific Telesis (a "financing entity")
in connection with the issuance by such financing entity of preferred
securities or other securities that rank pari passu with, or junior to, the
Preferred Securities. Such Senior Indebtedness shall continue to be Senior
Indebtedness and be entitled to the benefits of the subordination provisions
irrespective of any amendment, modification or waiver of any term of such
Senior Indebtedness.
The Indenture does not limit the aggregate amount of Senior Indebtedness that
may be issued by Pacific Telesis. As of June 30, 1995, the aggregate amount
of Senior Indebtedness and liabilities and obligations of Pacific Telesis'
subsidiaries and partnerships that would have effectively ranked senior to the
Subordinated Debentures was approximately $14,578 million.
Optional Redemption
Pacific Telesis shall have the right to redeem the Subordinated Debentures, in
whole or in part, from time to time, on or after __________, 2000, or at any
time in certain circumstances upon the occurrence of a Tax Event as described
under "Description of the Preferred Securities -- Special Event Redemption or
Distribution," upon not less than 30 nor more than 60 days notice, at a
redemption price equal to 100% of the principal amount to be redeemed plus any
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accrued and unpaid interest to the redemption date. If a partial redemption
of the Preferred Securities resulting from a partial redemption of the
Subordinated Debentures would result in the delisting of the Preferred
Securities, Pacific Telesis may only redeem the Subordinated Debentures in
whole.
Interest
Each Subordinated Debenture shall bear interest at the rate of ____% per annum
from the original date of issuance, or from the most recent Interest Payment
Date to which interest has been paid or provided for, payable quarterly in
arrears on March 31, June 30, September 30 and December 31 of each year (each
an "Interest Payment Date"), commencing _____________, to the person in whose
name such Subordinated Debt Security is registered, subject to certain
exceptions, at the close of business on the Business Day next preceding such
Interest Payment Date. In the event the Subordinated Debentures shall not
continue to remain in book-entry only form, Pacific Telesis shall have the
right to select record dates, which shall be more than one Business Day prior
to the Interest Payment Date.
The amount of interest payable for any period will be computed on the basis of
a 360-day year of twelve 30-day months. The amount of interest payable for
any period shorter than a full quarterly period for which interest is
computed, will be computed on the basis of the actual number of days elapsed
per 30-day month. In the event that any date on which interest is payable on
the Subordinated Debentures is not a Business Day, then payment of the
interest payable on such date will be made on the next succeeding day that is
a Business Day (and without any interest or other payment in respect of any
such delay), except that, if such Business Day is in the next succeeding
calendar year, then such payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on such
date.
Option to Extend Maturity Date
The maturity date of the Subordinated Debentures is _______, 2025. Pacific
Telesis, however, may, before the maturity date, extend such maturity date no
more than one time for up to an additional 19 years (_____, 2025 or the
extended maturity date then in effect, as the case may be, is hereinafter
referred to as the Scheduled Maturity Date"); provided that (a) Pacific
Telesis is not in bankruptcy or otherwise insolvent, (b) Pacific Telesis is
not in default on any Subordinated Debentures issued to a Pacific Telesis
Trust or to any trustee of such trust in connection with an issuance of Trust
Securities by such Pacific Telesis Trust, (c) Pacific Telesis has made timely
payments on the Subordinated Debentures for the immediately preceding six
quarters without deferrals, (d) Pacific Telesis Financing is not in arrears on
payments of distributions on the Preferred Securities, (e) the Subordinated
Debentures are rated Investment Grade by any one of Standard & Poor's
Corporation, Moody's Investors Service, Inc., Fitch Investor Services, Duff &
Phelps Credit Rating Company or any other nationally recognized statistical
rating organization, and (f) the final maturity of such Subordinated
Debentures is not later than the 49th anniversary of the issuance of the
Preferred Securities. Pursuant to the Declaration, the Regular Trustees are
required to give notice of Pacific Telesis' election to extend the maturity
date to the holders of the Preferred Securities.
Option to Extend Interest Payment Period
Pacific Telesis shall have the right at any time, and from time to time,
during the term of the Subordinated Debentures to defer payments of interest
by extending the interest payment period for a period not exceeding 20
consecutive quarters, at the end of which Extension Period, Pacific Telesis
shall pay all interest then accrued and unpaid, together with interest thereon
compounded quarterly at the rate specified for the Subordinated Debentures to
the extent permitted by applicable law ("Compounded Interest"); provided that
no Extension Period shall extend beyond the Scheduled Maturity Date; and
provided further that, during any such Extension Period, (a) Pacific Telesis
shall not declare or pay any dividends on, make any distribution with respect
to, or redeem, purchase, acquire or make a liquidation payment with respect to
any of its capital stock and (b) Pacific Telesis shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by Pacific Telesis that rank pari passu with or junior
to the Subordinated Debentures; provided, however, that, the foregoing
restriction (a) does not apply to any stock dividends paid by Pacific Telesis
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where the dividend stock is the same as that on which the dividend is paid.
Prior to the termination of any such Extension Period, Pacific Telesis may
further defer payments of interest by extending the interest payment period;
provided, however, that, such Extension Period, including all such previous
and further extensions, may not exceed 20 consecutive quarters or extend
beyond the Scheduled Maturity Date. Upon the termination of any Extension
Period and the payment of all amounts then due, Pacific Telesis may commence a
new Extension Period, subject to the terms set forth in this section. No
interest during an Extension Period, except at the end thereof, shall be due
and payable. Pacific Telesis has no present intention of exercising its right
to defer payments of interest by extending the interest payment period on the
Subordinated Debentures. If the Property Trustee shall be the sole holder of
the Subordinated Debentures, Pacific Telesis shall give the Regular Trustees
and the Property Trustee notice of its selection of such Extension Period one
Business Day prior to the earlier of (i) the date distributions on the
Preferred Securities are payable or (ii) the date the Regular Trustees are
required to give notice to the New York Stock Exchange (or other applicable
self-regulatory organization) or to holders of the Preferred Securities of the
record date or the date such distribution is payable. The Regular Trustees
shall give notice of Pacific Telesis' selection of such Extension Period to
the holders of the Preferred Securities. If the Property Trustee shall not be
the sole holder of the Subordinated Debentures, Pacific Telesis shall give the
holders of the Subordinated Debentures notice of its selection of such
Extension Period ten Business Days prior to the earlier of (i) the Interest
Payment Date or (ii) the date upon which Pacific Telesis is required to give
notice to the New York Stock Exchange (or other applicable self-regulatory
organization) or to holders of the Subordinated Debentures of the record or
payment date of such related interest payment.
Indenture Events of Default
If any Indenture Event of Default shall occur and be continuing, the Property
Trustee, as the holder of the Subordinated Debentures, will have the right to
declare the principal of and the interest on the Subordinated Debentures
(including any Compounded Interest and any other amounts payable under the
Indenture) to be forthwith due and payable and to enforce its other rights as
a creditor with respect to the Subordinated Debentures. See "Description of
the Subordinated Debt Securities -- Events of Default" in the accompanying
Prospectus for a description of the Events of Default. An Indenture Event of
Default also constitutes a Declaration Event of Default. The holders of
Preferred Securities in certain circumstances have the right to direct the
Property Trustee to exercise its rights as the holder of the Subordinated
Debentures. See "Description of the Preferred Securities -- Declaration
Events of Default" and "Voting Rights."
Book-Entry and Settlement
If distributed to holders of Preferred Securities in connection with the
involuntary or voluntary dissolution, winding-up or liquidation of Pacific
Telesis Financing as a result of the occurrence of a Special Event, it is
presently anticipated that the Subordinated Debentures will be issued in the
form of one or more global certificates (each a "Global Security") registered
in the name of a Depository or its nominee. Except under the limited
circumstances described below, Subordinated Debentures represented by the
Global Security will not be exchangeable for, and will not otherwise be
issuable as, Subordinated Debentures in definitive form. The Global
Securities described above may not be transferred except by the Depository to
a nominee of the Depository or by a nominee of the Depository to the
Depository or another nominee of the Depository or to a successor Depository
or its nominee.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such laws may
impair the ability to transfer beneficial interests in such a Global Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Subordinated
Debentures in definitive form and will not be considered the Holders (as
defined in the Indenture) thereof for any purpose under the Indenture, and no
Global Security representing Subordinated Debentures shall be exchangeable,
except for another Global Security of like denomination and tenor to be
registered in the name of the Depository or its nominee or to a successor
Depository or its nominee. Accordingly, each Beneficial Owner must rely on
the procedures of the Depository or if such person is not a Participant, on
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the procedures of the Participant through which such person owns its interest
to exercise any rights of a Holder under the Indenture.
The Depository
If Subordinated Debentures are distributed to holders of Preferred Securities
in liquidation of such holders' interests in Pacific Telesis Financing, DTC
will act as securities Depository for the Subordinated Debentures. For a
description of DTC and the specific terms of the Depository arrangements, see
"Description of the Preferred Securities -- Book-Entry Only Issuance -- The
Depository Trust Company." As of the date of this Prospectus Supplement, the
description therein of DTC's book-entry system and DTC's practices as they
relate to purchases, transfers, notices and payments with respect to the
Preferred Securities apply in all material respects to any debt obligations
represented by one or more Global Securities held by DTC. Pacific Telesis may
appoint a successor to DTC or any successor Depository in the event DTC or
such successor Depository is unable or unwilling to continue as a Depository
for the Global Securities.
None of Pacific Telesis, Pacific Telesis Financing, the Indenture Trustee, any
paying agent and any other agent of Pacific Telesis or the Indenture Trustee
will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in a
Global Security for such Subordinated Debentures or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
Discontinuance of the Depository's Services
A Global Security shall be exchangeable for Subordinated Debentures in
definitive certificated form registered in the names of persons other than the
Depository or its nominee only if (i) the Depository notifies Pacific Telesis
that it is unwilling or unable to continue as a Depository for such Global
Security and no successor Depository shall have been appointed, (ii) the
Depository, at any time, ceases to be a clearing agency registered under the
Exchange Act at which time the Depository is required to be so registered to
act as such Depository and no successor Depository shall have been appointed,
or (iii) Pacific Telesis, in its sole discretion, determines that such Global
Security shall be so exchangeable. Any Global Security that is exchangeable
pursuant to the preceding sentence shall be exchangeable for Subordinated
Debentures registered in such names as the Depository shall direct. It is
expected that such instructions will be based upon directions received by the
Depository from its Participants with respect to ownership of beneficial
interests in such Global Security.
Miscellaneous
The Indenture will provide that Pacific Telesis will pay all fees and expenses
related to (i) the offering of the Trust Securities and the Subordinated
Debentures, (ii) the organization, maintenance and dissolution of Pacific
Telesis Financing, (iii) the retention of the Pacific Telesis Trustees and
(iv) the enforcement by the Property Trustee of the rights of the holders of
the Preferred Securities. The payment of such fees and expenses will be fully
and unconditionally guaranteed by Pacific Telesis.
EFFECT OF OBLIGATIONS UNDER THE
SUBORDINATED DEBENTURES AND THE GUARANTEE
As set forth in the Declaration, the sole purpose of Pacific Telesis Financing
is to issue the Trust Securities evidencing undivided beneficial interests in
the assets of Pacific Telesis Financing, and to invest the proceeds from such
issuance and sale in the Subordinated Debentures.
As long as payments of interest and other payments are made when due on the
Subordinated Debentures, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because: (i) the
aggregate principal amount of Subordinated Debentures will be equal to the sum
of the aggregate stated liquidation amount of the Trust Securities; (ii) the
interest rate and the interest and other payment dates on the Subordinated
Debentures will match the distribution rate and distribution and other payment
dates for the Preferred Securities; (iii) Pacific Telesis shall pay all, and
Pacific Telesis Financing shall not be obligated to pay, directly or
indirectly, any, costs and expenses of Pacific Telesis Financing; and (iv) the
Declaration further provides that the Pacific Telesis Trustees shall not cause
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or permit Pacific Telesis Financing to, among other things, engage in any
activity that is not consistent with the purposes of Pacific Telesis
Financing.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Preferred Securities (to the extent funds therefor
are available) are guaranteed by Pacific Telesis as and to the extent set
forth under "Description of the Guarantees" in the accompanying Prospectus.
If Pacific Telesis does not make interest and/or principal payments on the
Subordinated Debentures purchased by Pacific Telesis Financing, it is expected
that Pacific Telesis Financing will not have sufficient funds to pay
distributions on the Preferred Securities. The Guarantee is a full and
unconditional guarantee from the time of its issuance but will not apply to
the payment of distributions and other payments on the Preferred Securities
when Pacific Telesis Financing does not have sufficient funds to make such
distributions or other payments.
If Pacific Telesis fails to make interest and/or principal payments on the
Subordinated Debentures when due (taking account of any Extension Period) or
another Indenture Event of Default occurs and is continuing, the Declaration
provides a mechanism whereby the holders of the Preferred Securities, using
the procedures described in "Description of the Preferred Securities -- Book-
Entry Only Issuance -- The Depository Trust Company" and "-- Voting Rights,"
may direct the Property Trustee to enforce its rights under the Subordinated
Debentures. If the Property Trustee fails to enforce its rights under the
Subordinated Debentures, a holder of Preferred Securities may institute a
legal proceeding against Pacific Telesis, as guarantor, to enforce the
Property Trustee's rights under the Subordinated Debentures without first
instituting any legal proceeding against the Property Trustee or any other
person or entity. Pacific Telesis, under the Guarantee, acknowledges that the
Guarantee Trustee shall enforce the Guarantee on behalf of the holders of the
Preferred Securities. If Pacific Telesis fails to make payments under the
Guarantee, the Guarantee provides a mechanism whereby the holders of the
Preferred Securities may direct the Guarantee Trustee to enforce its rights
thereunder. If the Guarantee Trustee fails to enforce the Guarantee, any
holder of Preferred Securities may institute a legal proceeding directly
against Pacific Telesis to enforce the Guarantee Trustee's rights under the
Guarantee without first instituting a legal proceeding against Pacific Telesis
Financing, the Guarantee Trustee, or any other person or entity.
Pacific Telesis and Pacific Telesis Financing believe that the above
mechanisms and obligations, taken together, are substantially equivalent to a
full and unconditional guarantee by Pacific Telesis of payments due on the
Preferred Securities. See "Description of the Guarantees -- General" in the
accompanying Prospectus.
UNITED STATES FEDERAL INCOME TAXATION
General
The following is a summary of certain of the material United States federal
income tax consequences of the purchase, ownership and disposition of
Preferred Securities. Unless otherwise stated, this summary deals only with
Preferred Securities held as capital assets by holders who purchase the
Preferred Securities upon original issuance ("Initial Holders"). It does not
deal with special classes of holders such as banks, thrifts, real estate
investment trusts, regulated investment companies, insurance companies,
dealers in securities or currencies, tax-exempt investors, or persons that
will hold the Preferred Securities as a position in a "straddle," as part of a
"synthetic security" or "hedge," as part of a "conversion transaction" or
other integrated investment, or as other than a capital asset. This summary
also does not address the tax consequences to persons that have a functional
currency other than the U.S. dollar or the tax consequences to shareholders,
partners or beneficiaries of a holder of Preferred Securities. Further, it
does not include any description of any alternative minimum tax consequences
or the tax laws of any state or local government or of any foreign government
that may be applicable to the Preferred Securities. This summary is based on
the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
regulations thereunder and administrative and judicial interpretations
thereof, as of the date hereof, all of which are subject to change, possibly
on a retroactive basis.
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Classification of the Subordinated Debentures and Pacific Telesis Financing
In connection with the issuance of the Subordinated Debentures, Phillip J.
Lauro, Executive Director of Taxes and tax counsel for Pacific Telesis and
Pacific Telesis Financing, will render his opinion generally to the effect
that under then current law and assuming full compliance with the terms of the
Indenture (and certain other documents), the Subordinated Debentures will be
classified for United States federal income tax purposes as indebtedness of
Pacific Telesis.
In connection with the issuance of the Preferred Securities, Phillip J. Lauro,
will render his opinion generally to the effect that, under then current law
and assuming full compliance with the terms of the Declaration, Pacific
Telesis Financing will be classified for United States federal income tax
purposes as a grantor trust and not as an association taxable as a
corporation. Accordingly, for United States federal income tax purposes, each
holder of Preferred Securities generally will be considered the owner of an
undivided interest in the Subordinated Debentures. Each holder will be
required to include in its gross income its allocable share of income accrued
on the Subordinated Debentures.
Investors should be aware that these tax opinions do not address any other
issue and are not binding on the Internal Revenue Service or the courts.
Original Issue Discount
The Subordinated Debentures will be treated as issued with "original issue
discount" ("OID"). Holders of debt instruments issued with OID must include
the OID in income on an economic accrual basis regardless of their method of
tax accounting and regardless of the timing of the receipt of cash
attributable to the OID. Generally, all of a holder's taxable interest income
with respect to the Subordinated Debentures will be accounted for as OID, and
actual payments and distributions of stated interest will not be separately
reported as taxable income. The amount of OID that accrues in any quarter
will approximately equal the amount of the interest that accrues on the
Subordinated Debentures in that quarter at the stated interest rate. In the
event that the interest payment period is extended, holders will continue to
accrue OID approximately equal to the amount of the interest payment due at
the end of the extended interest payment period on an economic accrual basis
over the length of the extended interest period.
Because income on the Preferred Securities will constitute OID, corporate
holders of Preferred Securities will not be entitled to a dividends - received
deduction with respect to any income recognized with respect to the Preferred
Securities.
Market Discount and Bond Premium
Holders of Preferred Securities other than Initial Holders may be considered
to have acquired their undivided interests in the Subordinated Debentures with
market discount or acquisition premium as such phrases are defined for United
States federal income tax purposes. Such holders are advised to consult their
tax advisors as to the income tax consequences of the acquisition, ownership
and disposition of the Preferred Securities.
Receipt of Subordinated Debentures or Cash Upon Liquidation of Pacific Telesis
Financing
Under certain circumstances, as described under the caption Description of
the Preferred Securities -- Tax Event Redemption or Distribution,"
Subordinated Debentures may be distributed to holders in exchange for the
Preferred Securities and in liquidation of Pacific Telesis Financing. Under
current law, such a distribution, for United States federal income tax
purposes, would be treated as a non-taxable event to each holder, and each
holder would receive an aggregate tax basis in the Subordinated Debentures
equal to such holder's aggregate tax basis in its Preferred Securities. A
holder's holding period in the Subordinated Debentures so received in
liquidation of Pacific Telesis Financing would include the period during which
the Preferred Securities were held by such holder.
Under certain circumstances described herein (see "Description of the
Preferred Securities"), the Subordinated Debentures may be redeemed for cash
and the proceeds of such redemption distributed to holders in redemption of
their Preferred Securities. Under current law, such a redemption would, for
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United States federal income tax purposes, constitute a taxable disposition of
the redeemed Preferred Securities, and a holder could recognize gain or loss
as if it sold such redeemed Preferred Securities for cash. See -- Sales of
Preferred Securities."
Sales of Preferred Securities
A holder that sells Preferred Securities will recognize gain or loss equal to
the difference between its adjusted tax basis in the Preferred Securities and
the amount realized on the sale of such Preferred Securities. A holder's
adjusted tax basis in the Preferred Securities generally will be its initial
purchase price increased by OID previously includable in such holder's gross
income to the date of disposition and decreased by payments received on the
Preferred Securities. Subject to the market discount rules described above,
such gain or loss generally will be a capital gain or loss and generally will
be a long-term capital gain or loss if the Preferred Securities have been held
for more than one year.
The Preferred Securities may trade at a price that does not accurately reflect
the value of accrued but unpaid interest with respect to the underlying
Subordinated Debentures. A holder who disposes of its Preferred Securities
between record dates for payments of distributions thereon will be required to
include in ordinary income OID on the Subordinated Debentures accrued through
the date of disposition, and to add such amount to its adjusted tax basis in
its Preferred Securities. To the extent the selling price is less than the
holder's adjusted tax basis (which will include, in the form of OID, all
accrued but unpaid interest) a holder will recognize a capital loss. Subject
to certain limited exceptions, capital losses cannot be applied to offset
ordinary income for United States federal income tax purposes.
United States Alien Holders
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is, as to the
United States, a foreign corporation, a non-resident alien individual, a
foreign partnership, or a non-resident fiduciary of a foreign estate or trust.
Under present United States federal income tax law: (i) payments by Pacific
Telesis Financing or any of its paying agents to any holder of a Preferred
Security who or which is a United States Alien Holder will not be subject to
United States federal withholding tax; provided that, (a) the beneficial owner
of the Preferred Security does not actually or constructively own 10% or more
of the total combined voting power of all classes of stock of Pacific Telesis
entitled to vote, (b) the beneficial owner of the Preferred Security is not a
controlled foreign corporation that is related to Pacific Telesis through
stock ownership, and (c) either (A) the beneficial owner of the Preferred
Security certifies to Pacific Telesis Financing or its agent, under penalties
of perjury, that it is not a United States holder and provides its name and
address or (B) a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of its
trade or business (a "Financial Institution"), and holds the Preferred
Security in such capacity, certifies to Pacific Telesis Financing or its
agent, under penalties of perjury, that such statement has been received from
the beneficial owner by it or by a Financial Institution between it and the
beneficial owner and furnishes Pacific Telesis Financing or its agent with a
copy thereof; and (ii) a United States Alien Holder of a Preferred Security
will not be subject to United States federal withholding tax on any gain
realized upon the sale or other disposition of a Preferred Security.
Information Reporting to Holders
Income on the Preferred Securities will be reported to holders on Forms 1099,
which forms should be mailed to holders of Preferred Securities by January 31
following each calendar year.
Backup Withholding
Payments made on, and
proceeds from the sale of, the Preferred Securities may be subject to a
"backup" withholding tax of 31% unless the holder complies with certain
identification requirements. Any withheld amounts will be allowed as a credit
against the holder's federal income tax, provided the required information is
provided to the Internal Revenue Service.
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THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A
HOLDER'S PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH
RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF THE PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES
IN UNITED STATES FEDERAL OR OTHER TAX LAWS.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), Pacific Telesis Financing has agreed to sell
to each of the Underwriters named below, and each of the Underwriters, for
whom ______________________________________ are acting as representatives (the
"Representatives"), has severally agreed to purchase the number of Preferred
Securities set forth opposite its name below. In the Underwriting Agreement,
the several Underwriters have agreed, subject to the terms and conditions set
forth therein, to purchase all the Preferred Securities offered hereby if any
of the Preferred Securities are purchased. In the event of default by an
Underwriter, the Underwriting Agreement provides that, in certain
circumstances, the purchase commitments of the nondefaulting Underwriters may
be increased or the Underwriting Agreement may be terminated.
Number of
Underwriters Preferred Securities
------------ --------------------
Merrill Lynch, Pierce Fenner & Smith
Incorporated ....................
Total........................................ _________
=========
The Underwriters propose to offer the Preferred Securities, in part, directly
to the public at the initial public offering price set forth on the cover page
of this Prospectus Supplement, and, in part, to certain securities dealers at
such price less a concession of $___ per Preferred Security, provided that
such concession for sales of 10,000 or more Preferred Securities to a single
purchaser will be $__________ per Preferred Security. The Underwriters may
allow, and such dealers may reallow, a concession not in excess of $___ per
Preferred Security to certain brokers and dealers. After the Preferred
Securities are released for sale to the public, the offering price and other
selling terms may from time to time be varied by the Representatives.
In view of the fact that the proceeds of the sale of the Preferred Securities
will ultimately be used to purchase the Subordinated Debentures of Pacific
Telesis, the Underwriting Agreement provides that Pacific Telesis will pay as
compensation ("Underwriters' Compensation") to the Underwriters' arranging the
investment therein of such proceeds, an amount in New York Clearing House
(next day) funds of $____ per Preferred Security (or $_________ in the
aggregate) for the accounts of the several Underwriters; provided that, such
compensation for sales of 10,000 or more Preferred Securities to any single
purchaser will be $___ per Preferred Security. Therefore, to the extent of
such sales, the actual amount of Underwriters Compensation will be less than
the aggregate amount specified in the preceding sentence.
During a period of 30 days from the date of the Prospectus Supplement, neither
Pacific Telesis Financing nor Pacific Telesis will, without the prior written
consent of the Underwriters, directly or indirectly, sell, offer to sell,
grant any option for the sale of, or otherwise dispose of, any Preferred
Securities, any security convertible into or exchangeable into or exercisable
for Preferred Securities or Subordinated Debentures or any debt securities
substantially similar to the Subordinated Debentures or equity securities
substantially similar to the Preferred Securities (except for the Subordinated
Debentures and the Preferred Securities offered hereby).
The Preferred Securities have been approved for listing on the New York Stock
Exchange. Trading of the Preferred Securities on the New York Stock Exchange
is expected to commence within a 30 day period after the initial delivery of
the Preferred Securities. The Representatives have advised Pacific Telesis
Financing that they intend to make a market in the Preferred Securities prior
to the commencement of trading on the New York Stock Exchange. The
Representatives will have no obligation to make a market in the Preferred
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Securities, however, and may cease market making activities, if commenced, at
any time.
Prior to this offering there has been no public market for the Preferred
Securities. In order to meet one of the requirements for listing the
Preferred Securities on the New York Stock Exchange, the Underwriters will
undertake to sell lots of 100 or more Preferred Securities to a minimum of 400
beneficial holders.
Pacific Telesis Financing and Pacific Telesis have agreed to indemnify the
Underwriters against, or contribute to payments that the Underwriters may be
required to make in respect of, certain liabilities, including liabilities
under the Securities Act of 1933, as amended.
Certain of the Underwriters engage in transactions with, and, from time to
time, have performed services for, Pacific Telesis and its subsidiaries in the
ordinary course of business.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon on behalf of Pacific Telesis Financing by
Skadden, Arps, Slate, Meagher & Flom, special Delaware counsel to Pacific
Telesis Financing. The validity of the Subordinated Debentures and the
Guarantee and certain matters relating thereto will be passed upon for Pacific
Telesis by Richard W. Odgers - Executive Vice President, General Counsel and
Secretary of Pacific Telesis. Pillsbury Madison & Sutro, San Francisco,
California, are acting as counsel to the Underwriters in connection with
certain legal matters relating to the securities offered hereby. Certain
United States Federal income taxation matters will be passed upon for Pacific
Telesis and Pacific Telesis Financing by Phillip J. Lauro, Executive Director
of Taxes of Pacific Telesis. As of August 31, 1995, Mr. Odgers beneficially
owned or had an interest in approximately 2143 shares of Pacific Telesis
common stock and had been granted options under the Pacific Telesis Group 1994
Stock Incentive Plan or its predecessor with respect to 70,000 shares of
Pacific Telesis common stock. As of August 31, 1995, Mr. Lauro beneficially
owned or had an interest in approximately 1440 shares of Pacific Telesis
common stock and had been granted options under the Pacific Telesis Group 1994
Stock Incentive Plan or its predecessor with respect to 10,400 shares of
Pacific Telesis common stock. For many years, Pillsbury Madison & Sutro has
acted and continues to act as counsel in certain matters for Pacific Telesis
and certain of its affiliates.
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SUBJECT TO COMPLETION, DATED OCTOBER 24, 1995
PROSPECTUS
$1,000,000,000
PACIFIC TELESIS GROUP
Subordinated Debt Securities
____________________
Pacific Telesis Financing I
Pacific Telesis Financing II
Pacific Telesis Financing III
Preferred Securities guaranteed to the extent set forth herein by
Pacific Telesis Group
Pacific Telesis Group ("Pacific Telesis" and, together with its subsidiaries,
the "Company"), a Nevada corporation, may offer, from time to time, unsecured
subordinated debt securities consisting of debentures, notes or other evidence
of indebtedness (the Subordinated Debt Securities") or any combination of the
foregoing, in each case in one or more series and in amounts, at prices and on
terms to be determined at or prior to the time of any such offering. The
Subordinated Debt Securities when issued will be unsecured obligations of
Pacific Telesis. Pacific Telesis' obligations under the Subordinated Debt
Securities will be subordinate and junior in right of payment to certain other
indebtedness of Pacific Telesis as may be described in an accompanying
Prospectus Supplement (the "Prospectus Supplement").
Pacific Telesis Financing I, Pacific Telesis Financing II and Pacific Telesis
Financing III (each, a "Pacific Telesis Trust"), each a statutory business
trust formed under the laws of the State of Delaware, may offer, from time to
time, preferred securities, representing undivided beneficial interests in the
assets of the respective Pacific Telesis Trust ("Preferred Securities"). The
payment of periodic cash distributions ("distributions") with respect to
Preferred Securities of each of the Pacific Telesis Trusts out of moneys held
by each of the Pacific Telesis Trusts, and payments on liquidation, redemption
or otherwise with respect to such Preferred Securities, will be guaranteed by
Pacific Telesis to the extent described herein (each a "Guarantee"). See
"Description of the Guarantees" below. Pacific Telesis' obligations under the
Guarantees are subordinate and junior in right of payment to all other
liabilities of Pacific Telesis and rank pari passu with the most senior
preferred stock, if any, issued from time to time by Pacific Telesis.
Subordinated Debt Securities may be issued and sold from time to time in one
or more series by Pacific Telesis to a Pacific Telesis Trust, or a trustee of
such trust, in connection with the investment of the proceeds from the
offering of Preferred Securities and Common Securities (as defined herein) of
such Pacific Telesis Trust. The Subordinated Debt Securities purchased by a
Pacific Telesis Trust may be subsequently distributed pro rata to holders of
Preferred Securities and Common Securities in connection with the dissolution
of such Pacific Telesis Trust upon the occurrence of certain events as may be
described in an accompanying Prospectus Supplement. The Subordinated Debt
Securities and the Preferred Securities and the related Guarantees are
sometimes collectively referred to hereafter as the "Offered Securities".
Specific terms of the Subordinated Debt Securities of any series or the
Preferred Securities of any Pacific Telesis Trust in respect of which this
Prospectus is being delivered (the "Offered Securities") will be set forth in
a Prospectus Supplement with respect to such Offered Securities, which will
describe, without limitation and where applicable, the following: (i) in the
case of Subordinated Debt Securities, the specific designation, aggregate
principal amount, denomination, maturity, premium, if any, any exchange,
conversion, redemption or sinking fund provisions, if any, interest rate
(which may be fixed or variable), if any, the time and method of calculating
interest payments, if any, dates on which premium, if any, and interest, if
any, will be payable, the right of Pacific Telesis, if any, to defer payment
of interest on the Subordinated Debt Securities and the maximum length of such
deferral period, the initial public offering price, subordination terms, and
any listing on a securities exchange and other specific terms of the offering;
and (ii) in the case of Preferred Securities, the designation, number of
securities, liquidation preference per security, initial public offering
price, any listing on a securities exchange, distribution rate (or method of
calculation thereof), dates on which distributions shall be payable and dates
from which distributions shall accrue, any voting rights, terms for any
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conversion or exchange into other securities, any redemption, exchange or
sinking fund provisions, any other rights, preferences, privileges,
limitations or restrictions relating to the Preferred Securities and the terms
upon which the proceeds of the sale of the Preferred Securities shall be used
to purchase a specific series of Subordinated Debt Securities of Pacific
Telesis.
The Offered Securities may be offered in amounts, at prices and on terms to be
determined at the time of offering; provided, however, that, the aggregate
initial public offering price of all Offered Securities shall not exceed
$1,000,000,000. The Prospectus Supplement relating to any series of Offered
Securities will contain information concerning certain United States federal
income tax considerations, if applicable to the Offered Securities.
Pacific Telesis and/or each of the Pacific Telesis Trusts may sell the Offered
Securities directly, through agents designated from time to time, or through
underwriters or dealers. See "Plan of Distribution" below. If any agents of
Pacific Telesis and/or any Pacific Telesis Trust or any underwriters or
dealers are involved in the sale of the Offered Securities, the names of such
agents, underwriters or dealers and any applicable commissions and discounts
will be set forth in any related 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. THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF
SECURITIES UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
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.
The date of this Prospectus is ___________, 1995.
No dealer, salesperson or any other individual has been authorized by Pacific
Telesis or any of the Pacific Telesis Trusts to give any information or to
make any representation other than those contained or incorporated by
reference in this Prospectus or any accompanying Prospectus Supplement and, if
given or made, such information or representation must not be relied upon as
having been authorized. This Prospectus does not constitute an offer to sell
or a solicitation of an offer to buy any of the securities offered hereby in
any jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. Neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances, create any implication
that there has been no change in the affairs of Pacific Telesis or any of the
Pacific Telesis Trusts since the date hereof.
AVAILABLE INFORMATION
This Prospectus constitutes a part of a combined Registration Statement on
Form S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") filed by Pacific Telesis and the Pacific Telesis Trusts with the
Securities and Exchange Commission (the "SEC") under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the Offered
Securities. This Prospectus does not contain all of the information set forth
in such Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the SEC. Reference is made to
such Registration Statement and to the exhibits relating thereto for further
information with respect to the Company, the Pacific Telesis Trusts and the
Offered Securities. Any statements contained herein concerning the provisions
of any document filed as an exhibit to the Registration Statement or otherwise
filed with the SEC or incorporated by reference herein are not necessarily
complete, and, in each instance, reference is made to the copy of such
document so filed for a more complete description of the matter involved.
Each such statement is qualified in its entirety by such reference.
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Pacific Telesis is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the SEC.
Reports, proxy statements and other information concerning Pacific Telesis can
be inspected and copied at prescribed rates at the SEC's Public Reference
Room, Judiciary Plaza, 450 Fifth Street, Northwest, Washington, D.C. 20549,
as well as the following Regional Offices of the SEC: 7 World Trade Center,
New York, New York 10048; and Northwestern Atrium Center, 500 West Madison
Street, Chicago, Illinois 60661. Such reports, proxy statements and other
information may also be inspected at the offices of the following stock
exchanges on which Pacific Telesis stock is traded: the New York Stock
Exchange ("NYSE"), 20 Broad Street, New York, New York 10005; the Chicago
Stock Exchange, One Financial Place, 440 La Salle Street, Chicago, Illinois
60605; and the Pacific Stock Exchange, 301 Pine Street, San Francisco,
California 94104.
No separate financial statements of any of the Pacific Telesis Trusts have
been included herein. Pacific Telesis does not consider that such financial
statements would be material to holders of the Preferred Securities because
(i) all of the voting securities of each of the Pacific Telesis Trusts will be
owned, directly or indirectly, by Pacific Telesis, a reporting company under
the Exchange Act, (ii) each of the Pacific Telesis Trusts has no independent
operations but exists for the sole purpose of issuing securities representing
undivided beneficial interests in the assets of such Pacific Telesis Trust and
investing the proceeds thereof in Subordinated Debt Securities issued by
Pacific Telesis, and (iii) the obligations of each of the Pacific Telesis
Trusts under the Trust Securities (as defined herein) are fully and
unconditionally guaranteed by Pacific Telesis to the extent that Pacific
Telesis has paid the principal of or interest on the Subordinated Debt
Securities to the Trust. See "Description of the Subordinated Debt
Securities" and "Description of the Guarantees."
The Trusts are not currently subject to the information reporting requirements
of the Exchange Act. The Trusts will become subject to such requirements upon
the effectiveness of the Registration Statement, although they intend to seek
and expect to receive exemptions therefrom.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Pacific Telesis (File No. 1-8609) with the
SEC pursuant to the Exchange Act are incorporated by reference herein and made
a part hereof:
1. Annual Report on Form 10-K for the year ended December 31, 1994.
2. Quarterly Reports on Form 10-Q for the quarters ended March 31, 1995 and
June 30, 1995.
3. Current Reports on Form 8-K dated April 19, 1995 and September 7, 1995.
All documents filed by Pacific Telesis pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date hereof and prior to the
termination of the offering of the Offered Securities pursuant hereto shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein or in any Prospectus Supplement shall be
deemed to be modified or superseded for purposes of this Prospectus, or in any
Prospectus Supplement, to the extent that a statement contained herein or
therein (or in any other subsequently filed document that also is or is deemed
to be incorporated by reference herein or therein) modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus
or any Prospectus Supplement.
Pacific Telesis undertakes to provide without charge to each person to whom a
copy of this Prospectus has been delivered, upon the written or oral request
of any such person, a copy of any or all of the foregoing documents
incorporated herein by reference, other than exhibits to such documents,
unless such exhibits are specifically incorporated by reference into such
documents. Such requests should be directed the Company's Investor Services
office, 130 Kearny Street, Suite 2926, San Francisco, California 94108
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(telephone number (415) 394-3078)
PACIFIC TELESIS GROUP
The Company was incorporated in 1983 under the laws of the State of Nevada and
has its principal executive offices at 130 Kearny Street, San Francisco,
California 94108 (telephone number (415) 394-3000).
The Company is one of seven regional holding companies formed in connection
with the 1984 divestiture by AT&T Corp. of its 22 wholly-owned operating
telephone companies ( BOCs") pursuant to a consent decree settling antitrust
litigation (the Consent Decree") approved by the United States District Court
for the District of Columbia, which has retained jurisdiction over the
interpretation and enforcement of the Consent Decree.
The Company includes a holding company, Pacific Telesis; two BOCs, Pacific
Bell and Nevada Bell; and certain diversified subsidiaries. The holding
company provides financial, strategic planning, legal and general
administrative functions on its own behalf and on behalf of its subsidiaries.
Pacific Bell and its wholly-owned subsidiaries, Pacific Bell Directory,
Pacific Bell Information Services and Pacific Bell Mobile Services, and Nevada
Bell provide a variety of communications and information services in
California and Nevada. These services include: (1) dialtone and usage
services including local service (both exchange and private line), message
toll services within a service area, Wide Area Toll Service (WATS) / 800
services within a service area, Centrex service (a central office-based
switching service) and various special and custom calling services; (2)
exchange access to interexchange carriers and information service providers
for the origination and termination of switched and non-switched (private
line) voice and data traffic; (3) billing services for interexchange carriers
and information service providers; (4) various operator services; (5)
installation and maintenance of customer premises wiring; (6) public
communications services; (7) directory publishing; and (8) selected
information services, such as voice mail and electronic mail. Pacific Bell
Mobile Services was formed in 1994 to offer personal communications services
and other mobile telecommunications services and has not yet commenced
service.
THE PACIFIC TELESIS FINANCING TRUSTS
Each of Pacific Telesis Financing I, Pacific Telesis Financing II and Pacific
Telesis Financing III is a statutory business trust formed under Delaware law
pursuant to (i) a separate declaration of trust executed by Pacific Telesis,
as sponsor for such trust (the "Sponsor"), and the Pacific Telesis Trustees
(as defined herein) of such trust and (ii) the filing of a certificate of
trust with the Secretary of State of the State of Delaware on October 17,
1995. Each of the declarations of trust will be amended and restated in its
entirety (as so amended and restated, the Declaration") substantially in the
form filed as an exhibit to the Registration Statement. Each Pacific Telesis
Trust exists for the exclusive purposes of (i) issuing the Preferred
Securities and common securities representing undivided beneficial interests
in the assets of the Trust (the "Common Securities" and, together with the
Preferred Securities, the "Trust Securities"), (ii) investing the gross
proceeds from the sale of the Trust Securities in the Subordinated Debt
Securities and (iii) engaging in only those other activities necessary or
incidental thereto. All of the Common Securities will be directly or
indirectly owned by Pacific Telesis. The Common Securities will rank pari
passu, and payments will be made thereon pro rata, with the Preferred
Securities, except that, upon an event of default under the Declaration, the
rights of the holders of the Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the Preferred Securities.
Pacific Telesis will directly or indirectly acquire Common Securities in an
aggregate liquidation amount equal to 3% of the total capital of each Pacific
Telesis Trust. Each Pacific Telesis Trust has a term of approximately 55
years but may terminate earlier, as provided in each Declaration. Each
Pacific Telesis Trust's business and affairs will be conducted by the trustees
(the "Pacific Telesis Trustees") appointed by Pacific Telesis as the direct or
indirect holder of all the Common Securities. The holder of the Common
Securities will be entitled to appoint, remove or replace any of, or increase
or reduce the number of, the Pacific Telesis Trustees of a Pacific Telesis
Trust. The duties and obligations of the Pacific Telesis Trustees shall be
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governed by the Declaration of such Pacific Telesis Trust. A majority of the
Pacific Telesis Trustees of each Pacific Telesis Trust will be persons who are
employees or officers of or who are affiliated with Pacific Telesis (the
"Regular Trustees"). One Pacific Telesis Trustee (the "Property Trustee") of
each Pacific Telesis Trust will be a financial institution that is not
affiliated with Pacific Telesis and has a specified minimum amount of
aggregate capital, surplus, and undivided profits of not less than
$50,000,000, which shall act as property trustee and as indenture trustee for
the purposes of the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), pursuant to the terms set forth in a Prospectus Supplement.
In addition, unless the Property Trustee maintains a principal place of
business in the State of Delaware and otherwise meets the requirements of
applicable law, one Pacific Telesis Trustee (the "Delaware Trustee") of each
Pacific Telesis Trust will either be a natural person and a resident of
Delaware or a legal entity having its principal place of business in Delaware.
Pacific Telesis will pay all fees and expenses related to the Pacific Telesis
Trusts and the offering of the Trust Securities, the payment of which will be
guaranteed by Pacific Telesis. The office of the Delaware Trustee for each
Pacific Telesis Trust is Michael J. Majchrzak, FCC National Bank, 300 King
Street, Wilmington, Delaware 19801. The address for each Pacific Telesis
Trust is c/o Pacific Telesis Group, the Sponsor of each Trust, at the
Company's corporate headquarters located at 130 Kearny Street, San Francisco,
California 94108, telephone (415) 394-3000.
USE OF PROCEEDS
Each Pacific Telesis Trust will use all proceeds received from the sale of its
Preferred Securities to purchase Subordinated Debt Securities from Pacific
Telesis. The Company intends to add the net proceeds from the sale of the
Subordinated Debt Securities to Pacific Telesis' general funds, to be used for
general corporate purposes, including capital expenditures, repurchases of
outstanding long-term debt securities, capital expenditures, investments in
subsidiaries, working capital, repayment of short-term commercial paper notes
and other business opportunities or as otherwise disclosed in any Prospectus
Supplement.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to combined fixed charges
from continuing operations of Pacific Telesis and its consolidated
subsidiaries for the periods indicated. For the purpose of calculating this
ratio, earnings consist of income before income taxes and fixed charges.
Fixed charges include interest on indebtedness (excluding discontinued
operations) and the portion of rentals representative of the interest factor.
Six
Months
Ended
June 30 Year Ended December 31,
------------- ----------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
Ratio of
Earnings
to Fixed
Charges 4.35 4.61 4.60 1.37 4.21 3.42 3.27
==== ==== ==== ==== ==== ==== ====
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DESCRIPTION OF THE SUBORDINATED DEBT SECURITIES
Subordinated Debt Securities may be issued from time to time in one or more
series under an Indenture, dated as of _____________1995 (the Subordinated
Debt Securities Indenture" or the Indenture"), between the Company and The
First National Bank of Chicago as trustee (the Subordinated Debt Securities
Trustee"). The terms of the Subordinated Debt Securities will include those
stated in the Indenture and those made part of the Indenture by reference to
the Trust Indenture Act. The following summary does not purport to be
complete and is subject in all respects to the provisions of, and is qualified
in its entirety by reference to, the Indenture, which is filed as an exhibit
to the Registration Statement of which this Prospectus forms a part, and the
Trust Indenture Act. Whenever particular provisions or defined terms in the
Indenture are referred to herein, such provisions or defined terms are
incorporated by reference herein.
The following description of the Subordinated Debt Securities sets forth the
general terms and provisions of the Subordinated Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Subordinated
Debt Securities offered by any Prospectus Supplement and the extent, if any,
to which such general provisions may apply will be described in the Prospectus
Supplement relating to such Subordinated Debt Securities.
General
The Subordinated Debt Securities will be unsecured, subordinated obligations
of Pacific Telesis. The Indenture does not limit the aggregate principal
amount of Subordinated Debt Securities which may be issued thereunder and
provides that the Subordinated Debt Securities may be issued from time to time
in one or more series pursuant to an indenture supplemental to the
Subordinated Debt Securities Indenture, or pursuant to a resolution of Pacific
Telesis' Board of Directors or pursuant to authority granted by such Board of
Directors (each a "Supplemental Indenture").
In the event Subordinated Debt Securities are issued to a Pacific Telesis
Trust (or a trustee of such trust) in connection with the issuance of Trust
Securities by any such Pacific Telesis Trust, such Subordinated Debt
Securities subsequently may be distributed pro rata to the holders of such
Trust Securities in connection with the dissolution of such Pacific Telesis
Trust upon the occurrence of certain events described in the Prospectus
Supplement relating to such Trust Securities. Only one series of Subordinated
Debt Securities will be issued to a Pacific Telesis Trust, or a trustee of
such trust, in connection with the issuance of Trust Securities by such
Pacific Telesis Trust.
Reference is made to the applicable Prospectus Supplement for any series of
Subordinated Debt Securities for the following terms: (1) the designation of
such series of Subordinated Debt Securities, (2) the aggregate principal
amount of such series of Subordinated Debt Securities, (3) the stated maturity
or maturities for payment of principal of such series of Subordinated Debt
Securities and any sinking fund or analogous provisions, (4) the rate or rates
at which such series of Subordinated Debt Securities shall bear interest and
the interest payment dates for such series of Subordinated Debt Securities,
(5) the rights, if any, to defer payments of interest on such series of
Subordinated Debt Securities by extending the interest payment period, (6)
the dates on which such interest will be payable, (7) the rights, if any to
extend the stated maturity or maturities for payment of principal of such
series of Subordinated Debt Securities, (8) the subordination terms of the
Subordinated Debt Securities of such series, (9) the currencies, currency unit
or index in or according to which principal of and interest and any premium on
such series of Subordinated Debt Securities shall be payable (if other than
United States Dollars), (10) the redemption date or dates, if any and the
redemption price or prices and other applicable redemption provisions for such
series of Subordinated Debt Securities, including the date, if any, after
which, and the price or prices at which, the Subordinated Debt Securities may,
pursuant to any optional redemption provisions be redeemed at the option of
Pacific Telesis or the Holder thereof, and other detailed terms and provisions
of such optional redemption, (11) whether the Subordinated Debt Securities
will be issued as bearer or registered securities, (12) the terms of any
guaranty, if any, issued with respect to such series of Subordinated Debt
Securities, (13) whether such series of Subordinated Debt Securities shall be
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issued as one or more global debt securities ("Global Debt Securities"), and
if so, the identity of the Depositary (the "Debt Depositary") for such Global
Debt Security or Securities, (14) if not issued as one or more Global Debt
Securities, the denominations in which such series of Subordinated Debt
Securities shall be issuable (if other than denominations of $5,000 and any
integral multiple thereof), (15) the date from which interest on such series
of Subordinated Debt Securities shall accrue, (16) the basis upon which
interest on such series of Subordinated Debt Securities shall be computed (if
other than on the basis of a 360-day year of twelve 30-day months), (17) if
other than the principal amount thereof, the portion of the principal amount
of such series of Subordinated Debt Securities which shall be payable upon
declaration of acceleration of the maturity thereof pursuant to the Indenture,
(18) whether and under what circumstances Pacific Telesis will pay Additional
Amounts as contemplated under the Indenture to any Holder who is not a United
States person (including any modification to the definition of such term as
contained in the Indenture as originally executed) in respect of any tax,
assessment or governmental charge and, if so, whether Pacific Telesis will
have an option to redeem such Subordinated Debt Securities rather than pay
such Additional Amounts (and the terms of any such option), (19) any deletions
from modifications of or additions to the Events of Default of covenants of
Pacific Telesis with respect to such series of Subordinated Debt Securities,
whether or not such Events of Default or covenants are consistent with the
terms of such Subordinated Debt Securities, (20) any restrictions on dividends
or distributions by Pacific Telesis under the Indenture, (21) the ability of
Pacific Telesis to incur additional indebtedness or issue additional
securities, (22) whether such series of Subordinated Debt Securities will be
offered at an "original issue discount," (23) if other than the Subordinated
Debt Securities Trustee, the person or persons who shall be registrar for such
series of Subordinated Debt Securities (24) the Record Date, (25) the identity
of the Subordinated Debt Securities Trustee, (26) the percentage of such
series of Subordinated Debt Securities necessary to require the Subordinated
Debt Securities Trustee to take action under the Indenture, (27) the place or
places, if any, other than the City of New York, where the principal of (and
premium, if any , on) and any interest no such series of Subordinated Debt
Securities shall be payable, where such Subordinated Debt Securities may be
surrendered for registration of transfer or exchange, and where any notices or
demands upon Pacific Telesis with respect to such series of Subordinated Debt
Securities may be served, (28) the designation of the initial Exchange Rate
Agent, if any, (29) the provisions, if any , granting special rights to the
holders of such series of Subordinated Debt Securities upon the occurrence of
such events as may be specified, and (30) any other term or provision relating
to such series of Subordinated Debt Securities.
The Indenture does not contain any provisions that afford holders of
Subordinated Debt Securities protection in the event of a highly leveraged
transaction involving Pacific Telesis.
Denomination
Subordinated Debt Securities may be issuable as Registered Securities solely,
as Bearer Securities solely, or as both. Registered Securities will be
issuable in denominations of $25 and integral multiples of $25 and Bearer
Securities will be issuable in the denomination of $5,000 and integral
multiples of $5,000 or, in each case, in such other denominations as may be in
the terms of the Subordinated Debt Securities. The Subordinated Debt
Securities Indenture also provides that Subordinated Debt Securities may be
issued in global form. Unless otherwise indicated in any Prospectus
Supplement, Bearer Securities will have interest coupons attached.
Registration and Transfer
The Subordinated Debt Securities may be issued as Registered Securities or
Bearer Securities. Registered Securities will be exchangeable for other
Registered Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations. If (but only if)
provided for in any Prospectus Supplement, Bearer Securities (with all
unmatured coupons, except as provided below, and all matured coupons in
default) of any series may be exchanged for Registered Securities of the same
series of any authorized denominations and of a like aggregate principal
amount and tenor. In such event, Bearer Securities surrendered in a permitted
exchange for Registered Securities between a Regular Record Date or a Special
Record Date and the relevant date for payment of interest shall be surrendered
without the coupon relating to such date for payment of interest, and interest
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will not be payable on such date for payment of interest in respect of the
Registered Security issued in exchange for such Bearer Security but will be
payable only to the holder of such coupon when due, in accordance with the
terms of the Indenture. Unless otherwise specified in any Prospectus
Supplement, Bearer Securities will not be issued in exchange for Registered
Securities.
The Subordinated Debt Securities may be presented for exchange as described
above, and Registered Securities may be presented for registration of transfer
(duly endorsed or accompanied by a written instrument of transfer), at the
corporate trust offices of the Subordinated Debt Securities Trustee in
Chicago, Illinois or New York, New York. No service charge will be made for
any transfer or exchange of Subordinated Debt Securities, but Pacific Telesis
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
In the event of any redemption of Subordinated Debt Securities, Pacific
Telesis shall not be required to: (i) issue, register the transfer of or
exchange Subordinated Debt Securities of any series during a period beginning
at the opening of business 15 days before any selection of Subordinated Debt
Securities of that series to be redeemed and ending at the close of business
on (A) if Subordinated Debt Securities of the series are issuable only as
Registered Securities, the day of mailing of the relevant notice of redemption
and (B) if Subordinated Debt Securities of the series are issuable as Bearer
Securities, the day of the first publication of the relevant notice of
redemption or, if Subordinated Debt Securities of the series are also issuable
as Registered Securities and there is no publication, the day of mailing of
the relevant notice of redemption; (ii) register the transfer of or exchange
any Registered Security, or portion thereof, called for redemption, except the
unredeemed portion of any Registered Security being redeemed in part; (iii)
exchange any Bearer Security selected for redemption, except to exchange such
Bearer Security for a Registered Security of that series and like tenor that
is simultaneously surrendered for redemption; or (iv) issue, register the
transfer of or exchange any Subordinated Debt Securities that have been
surrendered for repayment at the option of the Holder, except the portion if
any, thereof not to be so repaid.
Global Securities
The Subordinated Debt Securities of a series may be issued in whole or in part
in the form of one or more Global Securities (as such term is defined below),
which will be deposited with, or on behalf of, a Depository ("Depository") or
its nominee identified in the applicable Prospectus Supplement. In such case,
one or more Global Securities will be issued in a denomination or aggregate
denomination equal to the portion of the aggregate principal amount of
outstanding Subordinated Debt Securities of the series to be represented by
such Global Security or Global Securities. The term "Global Security," when
used with respect to any series of Subordinated Debt Securities, means a
Subordinated Debt Security that is executed by Pacific Telesis and
authenticated and delivered by the Trustee to the Depository or pursuant to
the Depository's instruction, which shall be registered in the name of the
Depository or its nominee and which shall represent, and shall be denominated
in an amount equal to the aggregate principal amount of, all of the
outstanding Subordinated Debt Securities of such series or any portion
thereof, in either case having the same terms, including, without limitation,
the same original issue date, date or dates on which principal is due, and
interest rate or method of determining interest.
The specific terms of the Depository arrangement with respect to any portion
of a series of Subordinated Debt Securities to be represented by a Global
Security will be described in the applicable Prospectus Supplement. Pacific
Telesis expects that the following provisions will apply to Depository
arrangements.
Unless otherwise specified in the applicable Prospectus Supplement,
Subordinated Debt Securities that are to be represented by a Global Security
to be deposited with or on behalf of a Depository will be represented by a
Global Security registered in the name of such Depository or its nominee.
Upon the issuance of such Global Security, and the deposit of such Global
Security with or on behalf of the Depository for such Global Security, the
Depository will credit on its book-entry registration and transfer system the
respective principal amounts of the Subordinated Debt Securities represented
by such Global Security to the accounts of institutions that have accounts
with such Depository or its nominee ("participants"). The accounts to be
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credited will be designated by the underwriters or agents of such Subordinated
Debt Securities or, if such Subordinated Debt Securities are offered and sold
directly by Pacific Telesis, by Pacific Telesis. Ownership of beneficial
interests in such Global Security will be limited to participants or Persons
that may hold interests through participants. Ownership of beneficial
interests by participants in such Global Security will be shown on, and the
transfer of that ownership interest will be effected only through, records
maintained by the Depository or its nominee for such Global Security.
Ownership of beneficial interests in such Global Security by Persons that hold
through participants will be shown on, and the transfer of that ownership
interest within such participant will be effected only through, records
maintained by such participant. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
certificated form. The foregoing limitations and such laws may impair the
ability to transfer beneficial interests in such Global Securities.
So long as the Depository for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depository or such nominee, as
the case may be, will be considered the sole owner or Holder of the
Subordinated Debt Securities represented by such Global Security for all
purposes under the Indenture. Unless otherwise specified in the applicable
Prospectus Supplement, owners of beneficial interests in such Global Security
will not be entitled to have Subordinated Debt Securities of the series
represented by such Global Security registered in their names, will not
receive or be entitled to receive physical delivery of Subordinated Debt
Securities of such series in certificated form and will not be considered the
Holders thereof for any purposes under the Indenture. Accordingly, each
Person owning a beneficial interest in such Global Security must rely on the
procedures of the Depository and, if such Person is not a participant, on the
procedures of the participant through which such Person owns its interest to
exercise any rights of a Holder under the Indenture. Pacific Telesis
understands that under existing industry practices, if Pacific Telesis
requests any action of Holders or an owner of a beneficial interest in such
Global Security desires to give any notice or take any action a Holder is
entitled to give or take under the Indenture, then the Depository would
authorize the participants to give such notice or take such action, and
participants would authorize beneficial owners owning through such
participants to give such notice or take such action or would otherwise act
upon the instructions of beneficial owners owning through them.
Principal of and any premium and interest on a Global Security will be payable
in the manner described in the applicable Prospectus Supplement.
Payment and Paying Agents
Unless otherwise indicated in an applicable Prospectus Supplement, payment of
principal of and premium (if any) on any Subordinated Debt Securities will be
made only against surrender to the Paying Agent of such Subordinated Debt
Securities. Unless otherwise indicated in an applicable Prospectus
Supplement, principal of and any premium and interest, if any, on Subordinated
Debt Securities will be payable, subject to any applicable laws and
regulations, at the office of such Paying Agent or Paying Agents as Pacific
Telesis may designate from time to time, except that at the option of Pacific
Telesis payment of any interest may be made by check mailed to the address of
the person entitled thereto as such address shall appear in the Debenture
Register with respect to such Subordinated Debt Securities. Unless otherwise
indicated in an applicable Prospectus Supplement, payment of interest on a
Subordinated Debt Security on any Interest Payment Date will be made to the
person in whose name such Subordinated Debt Security (or predecessor security)
is registered at the close of business on the Regular Record Date for such
interest payment.
Pacific Telesis will act as Paying Agent with respect to the Subordinated Debt
Securities. Pacific Telesis may at any time designate additional Paying
Agents or rescind the designation of any Paying Agents or approve a change in
the office through which any Paying Agent acts, except that Pacific Telesis
will be required to maintain a Paying Agent in each Place of Payment for each
series of the respective Subordinated Debt Securities.
Subordination
The Subordinated Debt Securities will be subordinated and junior in right of
payment to certain other indebtedness of Pacific Telesis to the extent set
forth in the Prospectus Supplement that will accompany this Prospectus.
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Certain Covenants
If Subordinated Debt Securities are issued to a Pacific Telesis Trust or a
trustee of such trust in connection with the issuance of Trust Securities by
such Pacific Telesis Trust and (i) there shall have occurred any event that
would constitute an Event of Default or (ii) Pacific Telesis shall be in
default with respect to its payment of any obligations under the related
Guarantee or Common Securities Guarantee, then (a) Pacific Telesis shall not
declare or pay dividends on, or make a distribution with respect to or redeem,
purchase or acquire, or make a liquidation payment with respect to, any of its
capital stock, and (b) Pacific Telesis shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by Pacific Telesis that rank pari passu with or junior to
such Subordinated Debt Securities; provided, however, that, restriction (a)
above does not apply to any stock dividends paid by Pacific Telesis, or any or
its subsidiaries where the dividend stock is the same stock as that on which
the dividend is being paid.
In the event Subordinated Debt Securities are issued to a Pacific Telesis
Trust or a trustee of such trust in connection with the issuance of Trust
Securities of such Pacific Telesis Trust, for so long as such Trust Securities
remain outstanding, Pacific Telesis will covenant (i) to directly or
indirectly maintain 100% ownership of the Common Securities of such Pacific
Telesis Trust; provided, however, that any permitted successor of Pacific
Telesis under the Indenture may succeed to Pacific Telesis' ownership of such
Common Securities and (ii) to use its reasonable efforts to cause such Pacific
Telesis Trust (a) to remain a statutory business trust, except in connection
with the distribution of Subordinated Debt Securities to the holders of Trust
Securities in liquidation of such Pacific Telesis Trust, the redemption of all
of the Trust Securities of such Pacific Telesis Trust, or certain mergers,
consolidations or amalgamations, each as permitted by the Declaration of such
Pacific Telesis Trust, and (b) to otherwise continue to be classified as a
grantor trust for United States federal income tax purposes.
Restrictions
The Subordinated Debt Securities Indenture provides that Pacific Telesis shall
not consolidate with or merge with or into any other corporation, or convey,
transfer or lease, or permit one or more of its Subsidiaries to convey,
transfer or lease, all or substantially all of the properties and assets of
the Company on a consolidated basis to any Person, unless either Pacific
Telesis is the continuing corporation or such corporation or Person assumes by
supplemental indenture all the obligations of Pacific Telesis under the
Indentures and the Subordinated Debt Securities.
Events of Default
The Indenture provides, with respect to any series of Subordinated Debt
Securities outstanding thereunder, that any one or more of the following
events that has occurred and is continuing shall constitute an Event of
Default: (i) default in the payment of any interest upon or any Additional
Amounts payable in respect of any Subordinated Debt Security of that series,
or of any coupon appertaining thereto, when the same becomes due and payable
if such default continues for a period of 90 days, provided however that an
extension of one or more Interest Payment Dates in accordance with the terms
of any Supplemental Indenture shall not constitute a default in the payment of
interest; (ii) default in the payment of the principal of (or any premium, if
any) on any Subordinated Debt Security of that series when due at maturity
with respect to that series; provided, however, that, a valid extension of the
maturity of the Subordinated Debt Securities in accordance with the terms of
any Supplemental Indenture shall not constitute a default for this purpose;
(iii) default in the deposit of any sinking fund payment when and as due; (iv)
default in the performance or breach of any covenant or agreement of Pacific
Telesis in the Indenture with respect to any Subordinated Debt Security of
that series (other than a default or breach which would otherwise constitute
an Event of Default under the Indenture) and continuance of such default or
breach for a period of 90 days after written notice to Pacific Telesis from
the Trustee or to Pacific Telesis and the Subordinated Debt Securities Trustee
from the holders of at least 25% in principal amount of the outstanding
Subordinated Debt Securities of that series; (v) certain events in bankruptcy,
insolvency or reorganization of Pacific Telesis; (vi) the voluntary or
involuntary dissolution, winding-up or termination of a Pacific Telesis Trust
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to which (or to a trustee of such trust to which) Subordinated Debt Securities
were issued in connection with the issuance of Trust Securities by such
Pacific Telesis Trust, except in connection with the distribution of
Subordinated Debt Securities to the holders of Trust Securities in liquidation
of such Pacific Telesis Trust, the redemption of all of the Trust Securities
of such Pacific Telesis Trust, or certain mergers, consolidations or
amalgamations, each as permitted by the Declaration of such Pacific Telesis
Trust; and (vii) any other Event of Default provided with respect to
Subordinated Debt Securities of that series. Pacific Telesis is required to
file annually with the Subordinated Debt Securities Trustee an officer's
certificate as to Pacific Telesis' compliance with all conditions and
covenants under the Indenture. The Indenture provides that the Trustee may
withhold notice to the Holders of Subordinated Debt Securities of any default,
except in the case of a default on the payment of the principal of (or
premium, if any) or interest on any Subordinated Debt Securities or the
payment of any sinking fund installment with respect to such Securities if it
considers it in the interest of the Holders of Subordinated Debt Securities to
do so.
If an Event of Default occurs and is continuing with respect to Subordinated
Debt Securities of a particular series, the Subordinated Debt Securities
Trustee or the Holders of not less than 25% in principal amount of Outstanding
Subordinated Debt Securities of that series may declare the Outstanding
Subordinated Debt Securities of that series due and payable immediately and
upon any such declaration, such principal amount shall become immediately due
and payable.
Subject to the provisions relating to the duties of the Subordinated Debt
Securities Trustee, if an Event of Default with respect to Subordinated Debt
Securities of a particular series occurs and is continuing, the Trustee shall
be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders of Subordinated
Debt Securities of such series, unless such Holders shall have offered to the
Trustee reasonable indemnity and security against the costs, expenses and
liabilities that might be incurred by it in compliance with such request.
Subject to such provisions for the indemnification of the Trustee, the Holders
of a majority in principal amount of the Outstanding Subordinated Debt
Securities of such series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee
under the Indenture, or exercising any trust or power conferred on the Trustee
with respect to the Subordinated Debt Securities of that series. The Trustee
may refuse to follow directions in conflict with law or the Indenture that may
involve Trustee in personal liability or may be unduly prejudicial to Holders
not joining therein.
The Holders of not less than a majority in principal amount of the Outstanding
Subordinated Debt Securities of any series may, on behalf of the Holders of
all the Subordinated Debt Securities of such series and any related coupons,
waive any past Event of Default under the Indenture with respect to such
series and its consequences and annul any declaration that any Subordinated
Debt Securities are due and payable immediately, except a default (i) in the
payment of the principal of (or premium, if any) or interest on any
Subordinated Debt Security of such series or (ii) in respect of a covenant or
provision that cannot be modified or amended without the consent of the Holder
of each Outstanding Subordinated Debt Security of such series affected
thereby.
Modification or Waiver
With the consent of the Holders of not less than a majority in principal
amount of all Outstanding Subordinated Debt Securities of any series, the
Company and the Trustee may enter into supplemental indentures for the purpose
of adding any provisions to or changing in any manner or eliminating in any
manner any of the provisions of the Indenture which affect such series of
Subordinated Debt Securities or of modifying in any manner the rights of the
Holders of such series; provided that, no such supplemental indenture may,
without the consent of the Holder of each Outstanding Subordinated Debt
Security of such series, among other things, (i) change the Stated Maturity of
the principal of or any installment of principal of or interest on any
Subordinated Debt Security of such series, (ii) reduce the principal amount or
the rate of interest on or any premium payable upon redemption of any
Subordinated Debt Security of such series, (iii) change any obligation of
Pacific Telesis to pay Additional Amounts in respect of any Subordinated Debt
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Security of such series, (iv) reduce the amount of principal of a Subordinated
Debt Security of such series that is an Original Issue Discount Security and
would be due and payable upon a declaration of acceleration of the Maturity
thereof on the amount thereof provable in bankruptcy, (v) adversely affect any
right of repayment at the option of the Holder of any Subordinated Debt
Security of such series, (vi) change the place or currency of payment of
principal of, or any premium or interest on, any Subordinated Debt Security of
such series, (vii) impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity thereof or any Redemption
Date or Repayment Date therefor, (viii) reduce the above-stated percentage of
Holders of Outstanding Subordinated Debt Securities of such series necessary
to modify or amend the Indenture or to consent to any waiver thereunder or
reduce the requirements for voting or quorum described below, (ix) change the
time of payment or reduce the amount of any minimum sinking fund payment
or (x) modify the foregoing requirements or reduce the percentage of
Outstanding Subordinated Debt Securities of such series necessary to waive any
past default.
Modification and amendment of the Indenture or any supplemental indenture may
be made by Pacific Telesis and the applicable Trustee without the consent of
any Holder, for any of the following purposes: (i) to evidence the succession
of another Person to Pacific Telesis as obligor under the Indenture or
supplemental indenture; (ii) to add to the covenants of Pacific Telesis for
the benefit of the Holders of all or any series of Subordinated Debt
Securities or to surrender any right or power conferred upon Pacific Telesis;
(iii) to add Events of Default for the benefit of the Holders of all or any
series of Subordinated Debt Securities; (iv) to add or change any provisions
of the Indenture to facilitate the issuance of Bearer Securities; (v) to
change or eliminate any provisions of the Indenture, provided that any such
change or elimination shall become effective only when there are no
Outstanding Subordinated Debt Securities of any series created prior thereto
that are entitled to the benefit of such provision; (vi) to establish the form
or terms of Subordinated Debt Securities of any series; (vii) to provide for
the acceptance of appointment by a successor Trustee or facilitate the
administration of the trusts under the Indenture by more than one Trustee; and
(viii) to close the Indenture with respect to the authentication and delivery
of additional series of Subordinated Debt Securities, to cure any ambiguity or
inconsistency in the Indenture or supplemental indenture, provided such action
does not adversely affect the interest of Holders of Subordinated Debt
Securities of any series in any material respect.
The Indenture contains provisions for convening meetings of the Holders of
Subordinated Debt Securities of a series if Subordinated Debt Securities of
that series are issuable as Bearer Securities. A meeting may be called at any
time by the Trustee and also by such Trustee pursuant to a request made to
such Trustee by Pacific Telesis or the Holders of at least 10% in principal
amount of the Subordinated Debt Securities of such series Outstanding, but in
any case, notice shall be given as provided in the Indenture. Except for any
consent that must be given by the Holder of each Subordinated Debt Security
affected thereby, as described above, any resolution presented at a meeting or
adjourned meeting duly reconvened at which a quorum is present may be adopted
by the affirmative vote of the Holders of a majority in principal amount of
the Subordinated Debt Securities of that series Outstanding; provided,
however, that, any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action that may be
made, given or taken by the Holders of a specified percentage that is less
than a majority in principal amount of Subordinated Debt Securities of a
series Outstanding may be adopted at a meeting or adjourned meeting, duly
reconvened and at which a quorum is present, by the affirmative vote of the
Holders of such specified percentage in principal amount of the Subordinated
Debt Securities of that series Outstanding. Any resolution passed or decision
taken at any meeting of Holders of Subordinated Debt Securities of any series
duly held in accordance with the Indenture will be binding on all Holders of
Subordinated Debt Securities of that series and the related coupons. The
quorum at any meeting called to adopt a resolution, and at any reconvened
meeting, will consist of persons entitled to vote a majority in principal
amount of the Subordinated Debt Securities of a series Outstanding; provided,
however, that, if any action is to be taken at such meeting with respect to a
consent or waiver that may be given by the Holders of not less than a
specified percentage in principal amount of the Subordinated Debt Securities
of a series Outstanding, the Persons entitled to vote such specified
percentage in principal amount of the Subordinated Debt Securities of such
series Outstanding will constitute a quorum. Notwithstanding the foregoing
provisions, if any action is to be taken at a meeting of Holders of
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Subordinated Debt Securities of any series with respect to any request,
demand, authorization, direction, notice, consent, waiver or other action that
the Indenture expressly provides may be made, given or taken by the Holders of
a specified percentage in principal amount of all Outstanding Subordinated
Debt Securities affected thereby, or of the Holders of such series and one or
more additional series, then (i) there shall be no minimum quorum requirement
for such meeting, and (ii) the principal amount of the Outstanding
Subordinated Debt Securities of such series that vote in favor of such
request, demand, authorization, direction, notice, consent, waiver or other
action shall be taken into account in determining whether such request,
demand, authorization, direction, notice, consent, waiver or other action has
been made, given or taken under the Indenture.
Governing Law
The Subordinated Debt Securities Indenture and the Subordinated Debt
Securities will be governed by, and construed in accordance with, the internal
laws of the State of California.
Information Concerning the Subordinated Debt Securities Trustee
The Subordinated Debt Securities Trustee, prior to default, undertakes to
perform only such duties as are specifically set forth in the Indenture and,
after default, shall exercise the same degree of care as a prudent individual
would exercise in the conduct of his or her own affairs. Subject to such
provision, the Subordinated Debt Securities Trustee is under no obligation to
exercise any of the powers vested in it by the Indenture at the request of any
holder of Subordinated Debt Securities, unless offered reasonable indemnity by
such holder against the costs, expenses and liabilities that might be incurred
thereby. The Subordinated Debt Securities Trustee is not required to expend
or risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the Trustee reasonably believes that repayment or
adequate indemnity is not reasonably assured to it.
Defeasance and Discharge
All liability of Pacific Telesis in respect to any outstanding Subordinated
Debt Securities shall cease, terminate and be completely discharged if Pacific
Telesis shall (a) deposit with the Subordinated Debt Securities Trustee, in
trust, at or before maturity, lawful money or direct obligations of the United
States of America (or in the case of Subordinated Debt Securities denominated
in a currency other than U.S. dollars, of the government that issued such
currency), or obligations the principal of and interest on which are
guaranteed by the United States of America (or in the case of Subordinated
Debt Securities denominated in a currency other than U.S. dollars, guaranteed
by the government that issued such currency), in such amounts and maturing at
such times that the proceeds of such obligations to be received upon the
respective maturities and interest payment dates will provide funds sufficient
to pay the principal of and interest and any premium to maturity or the
redemption date, as the case may be, with respect to such Subordinated Debt
Securities and (b) deliver to the Subordinated Debt Securities Trustee an
opinion of counsel to the effect that the holders of such Subordinated Debt
Securities will not recognize income, gain or loss for federal income tax
purposes as a result of such discharge. All obligations of Pacific Telesis to
comply with certain covenants applicable to any outstanding Subordinated Debt
Securities shall cease if Pacific Telesis shall deposit with the Subordinated
Debt Securities Trustee in trust, at or before maturity, lawful money or
direct obligations of the United States of America (or in the case of
Subordinated Debt Securities denominated in a currency other than U.S.
dollars, of the government that issued such currency), or obligations the
principal of and interest on which are guaranteed by the United States of
America (or in the case of Subordinated Debt Securities denominated in a
currency other than U.S. dollars, by the government that issued such
currency), in such amounts and maturing at such times that the proceeds of
such obligations to be received upon the respective maturities and interest
payment dates will provide funds sufficient to pay the principal of and
interest and any premium to maturity or to the redemption date, as the case
may be, with respect to such Subordinated Debt Securities.
Miscellaneous
Pacific Telesis will have the right at all times to assign any of its
respective rights or obligations under the Subordinated Debt Securities
Indenture to a direct or indirect wholly-owned subsidiary of Pacific Telesis;
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provided, that, in the event of any such assignment, Pacific Telesis will
remain liable for all of their respective obligations. Subject to the
foregoing, the Subordinated Debt Securities Indenture will be binding upon and
inure to the benefit of the parties thereto and their respective successors
and assigns. The Subordinated Debt Securities Indenture provides that it may
not otherwise be assigned by the parties thereto.
DESCRIPTION OF THE PACIFIC TELESIS TRUSTS' PREFERRED SECURITIES
Each Pacific Telesis Trust may issue, from time to time, only one series of
Preferred Securities having terms described in the Prospectus Supplement
relating thereto. The Declaration of each Pacific Telesis Trust authorizes
the Regular Trustees of such Pacific Telesis Trust to issue on behalf of such
Pacific Telesis Trust one series of Preferred Securities. The Declaration
will be qualified as an indenture under the Trust Indenture Act. The
Preferred Securities will have such terms, including distributions,
redemption, voting, liquidation rights and such other preferred, deferred or
other special rights or such restrictions as shall be set forth in the
Declaration or made part of the Declaration by the Trust Indenture Act.
Reference is made to any Prospectus Supplement relating to the Preferred
Securities of a Pacific Telesis Trust for specific terms, including (i) the
distinctive designation of such Preferred Securities, (ii) the number of
Preferred Securities issued by such Pacific Telesis Trust, (iii) the annual
distribution rate (or method of determining such rate) for Preferred
Securities issued by such Pacific Telesis Trust and the date or dates upon
which such distributions shall be payable (provided, however, that,
distributions on such Preferred Securities shall be payable on a quarterly
basis to holders of such Preferred Securities as of a record date in each
quarter during which such Preferred Securities are outstanding) (iv) whether
distributions on Preferred Securities issued by such Pacific Telesis Trust
shall be cumulative, and, in the case of Preferred Securities having such
cumulative distribution rights, the date or dates or method of determining the
date or dates from which distributions on Preferred Securities issued by such
Pacific Telesis Trust shall be cumulative, (v) the amount or amounts which
shall be paid out of the assets of such Pacific Telesis Trust to the holders
of Preferred Securities of such Pacific Telesis Trust upon voluntary or
involuntary dissolution, winding-up or termination of such Pacific Telesis
Trust, (vi) the obligation, if any, of such Pacific Telesis Trust to purchase
or redeem Preferred Securities issued by such Pacific Telesis Trust and the
price or prices at which, the period or periods within which and the terms and
conditions upon which Preferred Securities issued by such Pacific Telesis
Trust shall be purchased or redeemed, in whole or in part, pursuant to such
obligation, (vii) the voting rights, if any, of Preferred Securities issued by
such Pacific Telesis Trust in addition to those required by law, including the
number of votes per Preferred Security and any requirement for the approval by
the holders of Preferred Securities, or of Preferred Securities issued by one
or more Pacific Telesis Trusts, or of both, as a condition to specified action
or amendments to the Declaration of such Pacific Telesis Trust, (viii) the
rights, if any, to defer distributions on the Preferred Securities by
extending the interest payment period, (ix) the terms of any guaranty, if any,
issued with respect the Preferred Securities, (x) whether such series of
Subordinated Debt Securities shall be issued as one or more Global Securities,
and if so, the identity of the depository for such Global Security or
Securities, (xi) if not issued as one or more Global Securities, the
denominations in which the Preferred Securities shall be issuable (xii) the
Events of Default under the Declaration and any deletions from, modifications
of or additions to the Events of Default or covenants of such Pacific Telesis
Trust with respect to the Preferred Securities, whether or not such Events of
Default or covenants are consistent with the terms of the Preferred
Securities, (xiii) any restrictions on any distributions by such Pacific
Telesis Trust under the Declaration, (xiv) the ability of such Pacific Telesis
Trust to incur additional indebtedness or issue additional securities, (xv) if
other than the Trustee, the person or persons who shall be registrar for the
Preferred Securities (xvi) the identity of the Property Trustee, (xii) any
covenants of such Pacific Telesis Trust with respect the Preferred Securities,
and (xiii) any other relevant rights, preferences, privileges, limitations or
restrictions of Preferred Securities issued by such Pacific Telesis Trust
consistent with the Declaration of such Pacific Telesis Trust or with
applicable law. All Preferred Securities offered hereby will be guaranteed by
Pacific Telesis to the extent set forth below under "Description of the
Guarantees." Certain United States federal income tax considerations
applicable to any offering of Preferred Securities will be described in the
Prospectus Supplement relating thereto.
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In connection with the issuance of Preferred Securities, each Pacific Telesis
Trust will issue one series of Common Securities. The Declaration of each
Pacific Telesis Trust authorizes the Regular Trustees of such trust to issue
on behalf of such Pacific Telesis Trust one series of Common Securities having
such terms including distributions, redemption, voting, liquidation rights or
such restrictions as shall be set forth therein. The terms of the Common
Securities issued by a Pacific Telesis Trust will be substantially identical
to the terms of the Preferred Securities issued by such trust and the Common
Securities will rank pari passu, and payments will be made thereon pro rata
with the Preferred Securities except that, upon an event of default under the
Declaration, the rights of the holders of the Common Securities to payment in
respect of distributions and payments upon liquidation, redemption and
otherwise will be subordinated to the rights of the holders of the Preferred
Securities. Except in certain limited circumstances, the Common Securities
will also carry the right to vote and to appoint, remove or replace any of the
Pacific Telesis Trustees of a Pacific Telesis Trust. All of the Common
Securities of a Pacific Telesis Trust will be directly or indirectly owned by
Pacific Telesis.
DESCRIPTION OF THE GUARANTEES
Set forth below is a summary of information concerning the Guarantees that
will be executed and delivered by Pacific Telesis for the benefit of the
holders, from time to time, of Preferred Securities. Each Guarantee will be
qualified as an indenture under the Trust Indenture Act. The First National
Bank of Chicago will act as indenture trustee under each Guarantee (the
"Guarantee Trustee"). The terms of each Guarantee will be those set forth in
such Guarantee and those made part of such Guarantee by the Trust Indenture
Act. The summary does not purport to be complete and is subject in all
respects to the provisions of, and is qualified in its entirety by reference
to, the form of Guarantee, which is filed as an exhibit to the Registration
Statement of which this Prospectus forms a part, and the Trust Indenture Act.
Each Guarantee will be held by the Guarantee Trustee for the benefit of the
holders of the Preferred Securities of the applicable Pacific Telesis Trust.
General
Pursuant to each Guarantee, Pacific Telesis will irrevocably and
unconditionally agree, to the extent set forth herein, to pay in full to the
holders of the Preferred Securities issued by a Pacific Telesis Trust, the
Guarantee Payments (as defined herein) (except to the extent paid by such
Pacific Telesis Trust), as and when due, regardless of any defense, right of
set-off or counterclaim which such Pacific Telesis Trust may have or assert.
The following payments with respect to Preferred Securities issued by a
Pacific Telesis Trust (the "Guarantee Payments"), to the extent not paid by
such Pacific Telesis Trust, will be subject to the Guarantee (without
duplication): (i) any accrued and unpaid distributions that are required to
be paid on such Preferred Securities, but only if and to the extent that such
Trust has funds available therefor (ii) the redemption price, including all
accrued and unpaid distributions (the "Redemption Price") with respect to any
Preferred Securities called for redemption by the Trust, but only if and to
the extent that such Trust has funds available therefor and (iii) upon a
voluntary or involuntary dissolution, winding-up or termination of such
Pacific Telesis Trust (other than in connection with the distribution of
Subordinated Debt Securities to the holders of Preferred Securities or the
redemption of all of the Preferred Securities upon maturity or redemption of
the Subordinated Debt Securities held by such Trust) the lesser of (a) the
aggregate of the liquidation amount and all accrued and unpaid distributions
on such Preferred Securities to the date of payment to the extent such Pacific
Telesis Trust has funds available therefor or (b) the amount of assets of such
Pacific Telesis Trust remaining available for distribution to holders of such
Preferred Securities in liquidation of such Pacific Telesis Trust. Pacific
Telesis' obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by Pacific Telesis to the holders of Preferred
Securities or by causing the applicable Pacific Telesis Trust to pay such
amounts to such holders.
Each Guarantee will be a full and unconditional guarantee, to the extent
described herein, with respect to the Preferred Securities issued by the
applicable Pacific Telesis Trust from the time of issuance of such Preferred
Securities but will only apply to any payment of distributions on the
Preferred Securities if and to the extent that such Trust shall have funds
available therefor. If Pacific Telesis does not make interest payments on the
Subordinated Debt Securities purchased by a Pacific Telesis Trust, such
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Pacific Telesis Trust will not pay distributions on the Preferred Securities
issued by such Pacific Telesis Trust and will not have funds available
therefor. See "Description of the Subordinated Debt Securities."
Pacific Telesis has also agreed to irrevocably and unconditionally guarantee
the obligations of the Pacific Telesis Trusts with respect to the Common
Securities (the "Common Securities Guarantees") to the same extent as the
Guarantees, except that, upon an event of default under the Indenture, holders
of Preferred Securities under the Guarantees shall have priority over holders
of Common Securities under the Common Securities Guarantee with respect to
distributions and payments on liquidation, redemption or otherwise.
Certain Covenants of Pacific Telesis
In each Guarantee, Pacific Telesis will covenant that, so long as any
Preferred Securities issued by the applicable Pacific Telesis Trust remain
outstanding, if there shall have occurred any event that would constitute an
event of default under such Guarantee or the Declaration of such Pacific
Telesis Trust or if Pacific Telesis shall have given notice of its election to
extend interest payment period on the Subordinated Debt Securities as provided
in the Indenture, then (a) Pacific Telesis shall not declare or pay any
dividend on, or make any distribution with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital
stock and (b) Pacific Telesis shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by Pacific Telesis which rank pari passu with or junior to
such Subordinated Debt Securities. However, each Guarantee will except from
the foregoing any stock dividends paid by Pacific Telesis, or any of its
subsidiaries, where the dividend stock is the same stock as that on which the
dividend is being paid.
Modification of the Guarantees; Assignment
Except with respect to any changes that do not adversely affect the rights of
holders of Preferred Securities (in which case no vote will be required), each
Guarantee may be amended only with the prior approval of the holders of not
less than 66 2/3% in liquidation amount of the outstanding Preferred
Securities issued by the applicable Pacific Telesis Trust. The manner of
obtaining any such approval of holders of such Preferred Securities will be
set forth in an accompanying Prospectus Supplement. All guarantees and
agreements contained in a Guarantee shall bind the successors, assignees,
receivers, trustees and representatives of Pacific Telesis and shall inure to
the benefit of the holders of the Preferred Securities of the applicable
Pacific Telesis Trust then outstanding.
Events of Default
An Event of Default under the Guarantee will occur upon the failure of Pacific
Telesis to perform any of its payments or other obligations thereunder. The
holders of a majority in liquidation amount of the Preferred Securities to
which a Guarantee relates have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Guarantee Trustee
in respect of the Guarantee, to waive certain defaults thereunder or to direct
the exercise of any trust or power conferred upon the Guarantee Trustee under
the Guarantee.
If the Guarantee Trustee fails to enforce such Guarantee, any holder of
Preferred Securities relating to such Guarantee may institute a legal
proceeding directly against Pacific Telesis to enforce the Guarantee Trustee's
rights under such Guarantee without first instituting a legal proceeding
against the relevant Pacific Telesis Trust, the Guarantee Trustee or any other
person or entity.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, prior to the occurrence of a default, undertakes to
perform only such duties as are specifically set forth in the Guarantee and,
after default with respect to a Guarantee, shall exercise the same degree of
care as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to such provision, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by a Guarantee Agreement
at the request of any holder of Preferred Securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby.
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Termination of the Guarantees
Each Guarantee will terminate as to the Preferred Securities issued by the
applicable Pacific Telesis Trust upon the earlier of (a) full payment of the
Redemption Price of all Preferred Securities of such Pacific Telesis Trust,
(b) distribution of the Subordinated Debt Securities held by such Pacific
Telesis Trust to the holders of the Preferred Securities of such Pacific
Telesis Trust or (c) upon full payment of the amounts payable in accordance
with the Declaration of such Pacific Telesis Trust upon liquidation of such
Pacific Telesis Trust. Each Guarantee will continue to be effective or will
be reinstated, as the case may be, if at any time any holder of Preferred
Securities issued by the applicable Pacific Telesis Trust must restore payment
of any sums paid under such Preferred Securities or such Guarantee.
Status of the Guarantees
Each Guarantee will constitute an unsecured obligation of Pacific Telesis and
will rank (i) subordinate and junior in right of payment to all other
liabilities of Pacific Telesis including the Subordinated Debt Securities,
(ii) pari passu with the most senior preferred or preference stock now or
hereafter issued by Pacific Telesis and with any guarantee now or hereafter
entered into by Pacific Telesis in respect of any preferred or preference
stock of any affiliate of Pacific Telesis and (iii) senior to Pacific Telesis'
common stock. The terms of the Preferred Securities provide that each holder
of Preferred Securities issued by such Pacific Telesis Trust by acceptance
thereof agrees to the subordination provisions and other terms of the
applicable Guarantee.
Each Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly
against the guarantor to enforce its rights under a Guarantee without
instituting a legal proceeding against any other person or entity).
Each Guarantee will be deposited with the Guarantee Trustee and held for the
benefit of the holders of the Preferred Securities. Except as otherwise noted
herein, the Guarantee Trustee has the right to enforce the Guarantees on
behalf of the holders of the Preferred Securities. The Guarantees will not be
discharged except by payment of the Guarantee Payments in full (without
duplication of any amounts theretofore paid by the Trusts).
Governing Law
The Guarantees will be governed by and construed in accordance with the
internal laws of the State of California.
PLAN OF DISTRIBUTION
Pacific Telesis may sell any series of the Subordinated Debt Securities and
the Pacific Telesis Trusts may sell the Preferred Securities in one or more of
the following ways from time to time: (i) to or through underwriters or
dealers, (ii) directly to purchasers, (iii) or through agents. The Prospectus
Supplement with respect to any Offered Securities will set forth (i) the terms
of the offering of the Offered Securities, including the name or names of any
underwriters, dealers or agents, (ii) the purchase price of the Offered
Securities and the proceeds to Pacific Telesis or the applicable Pacific
Telesis Trust as the case may be from such sale, (iii) any underwriting
discounts and commissions or agency fees and other items constituting
underwriters' or agents' compensation, (iv) any initial public offering
prices, (v) any discounts or concessions allowed or reallowed or paid to
dealers, and (vi) any securities exchange on which such Offered Securities may
be listed. Any initial public offering price, discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
If underwriters are used in the sale, the Offered Securities will be acquired
by the underwriters for their own account and may be resold from time to time
in one or more transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the time of sale.
The Offered Securities may be offered to the public either through
underwriting syndicates represented by one or more managing underwriters or
directly by one or more firms acting as underwriters. The underwriter or
underwriters with respect to a particular underwritten offering of Offered
Securities will be named in the Prospectus Supplement relating to such
offering and, if an underwriting syndicate is used, the managing underwriter
or underwriters will be set forth on the cover of such Prospectus Supplement.
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Unless otherwise set forth in the Prospectus Supplement relating thereto, the
obligations of the underwriters to purchase the Offered Securities will be
subject to certain conditions precedent, and the underwriters will be
obligated to purchase all the Offered Securities if any are purchased. If
dealers are utilized in the sale of Offered Securities, Pacific Telesis and/or
the applicable Pacific Telesis Trust will sell such Offered Securities to the
dealers as principals. The dealers may then resell such Offered Securities to
the public at varying prices to be determined by such dealers at the time of
resale. The names of the dealers and the terms of the transaction will be set
forth in the Prospectus Supplement relating thereto.
Any series of Subordinated Debt Securities may be sold from time to time
either directly by Pacific Telesis or through agents designated by Pacific
Telesis. Any series of Preferred Securities may be sold from time to time
either directly by the applicable Pacific Telesis Trust or by agents
designated by such trust. Any agent involved in the offer or sale of the
Offered Securities in respect to which this Prospectus is delivered will be
named, and any commissions payable to Pacific Telesis and/or the applicable
Pacific Telesis Trust to such agent will be set forth, in the Prospectus
Supplement relating thereto. Unless otherwise indicated in the Prospectus
Supplement, any such agent will be acting on a best efforts basis for the
period of its appointment.
The Subordinated Debt Securities may be sold directly by Pacific Telesis and
the Preferred Securities may be sold directly by the applicable Pacific
Telesis Trust to institutional investors or others who may be deemed to be
underwriters within the meaning of the Securities Act with respect to any
resale thereof. The terms of any such sales will be described in the
Prospectus Supplement relating thereto.
If so indicated in the Prospectus Supplement, Pacific Telesis and/or the
applicable Pacific Telesis Trust will authorize agents, underwriters or
dealers to solicit offers from certain types of institutions to purchase
Offered Securities from Pacific Telesis and/or the applicable Pacific Telesis
Trust at the public offering price set forth in the Prospectus Supplement
pursuant to delayed delivery contracts providing for payment and delivery on a
specified date in the future. Such contracts will be subject only to those
conditions set forth in the Prospectus Supplement, and the Prospectus
Supplement will set forth the commission payable for solicitation of such
contracts.
Agents, dealers and underwriters may be entitled under agreements with Pacific
Telesis and/or the applicable Pacific Telesis Trust to indemnification by
Pacific Telesis and/or such Pacific Telesis Trust against certain civil
liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments that such agents, dealers or
underwriters may be required to make in respect thereof. Agents, dealers and
underwriters may be customers of, engage in transactions with, or perform
services for Pacific Telesis and/or the applicable Pacific Telesis Trust in
the ordinary course of business.
Each series of Offered Securities will be a new issue of securities and will
have no established trading market. Any underwriters to whom Offered
Securities are sold for public offering and sale may make a market in such
Offered Securities, but such underwriters will not be obligated to do so and
may discontinue any market making at any time without notice. The Offered
Securities may or may not be listed on a national securities exchange. No
assurance can be given that there will be a market for the Offered Securities.
VALIDITY OF SECURITIES
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon on behalf of the Pacific Telesis Trusts by
Skadden, Arps, Slate, Meagher & Flom, special Delaware counsel to the Pacific
Telesis Trusts. The validity of the Subordinated Debt Securities and the
Guarantee and certain matters relating thereto will be passed upon for Pacific
Telesis by Richard W. Odgers - Executive Vice President, General Counsel and
Secretary of Pacific Telesis. Certain United States federal income taxation
matters will be passed upon for Pacific Telesis and the Pacific Telesis Trusts
by Phillip J. Lauro, Executive Director of Taxes of Pacific Telesis. As of
August 31, 1995, Mr. Odgers beneficially owned or had an interest in
approximately 2,143 shares of Pacific Telesis common stock and had been
granted options under the Pacific Telesis Group 1994 Stock Incentive Plan or
its predecessor with respect to 70,000 shares of Pacific Telesis common stock.
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As of August 31, 1995, Mr. Lauro beneficially owned or had an interest in
approximately 1440 shares of Pacific Telesis common stock and had been granted
options under the Pacific Telesis Group 1994 Stock Incentive Plan or its
predecessor with respect to 10,400 shares of Pacific Telesis common stock.
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated balance sheets as of December 31, 1994 and 1993 , and the
consolidated statements of income, retained earnings, and cash flows for each
of the three years in the period ended December 31, 1994, and the financial
statement schedule included in Pacific Telesis Group's Annual Report on Form
10K for the year ended December 31, 1994, incorporated by reference in this
prospectus, have been included herein in reliance on the report of Coopers &
Lybrand L.L.P., independent accountants, given on the authority of that firm
as experts in auditing and accounting. With respect to the unaudited interim
financial information for the periods ended March 31, 1995 and 1994, and June
30, 1995, and 1994, incorporated by reference in this prospectus, the
independent certified public accountants have reported that they have applied
limited procedures in accordance with professional standards for a review of
such information. However, their separate reports included in the Company's
quarterly reports on Form 10-Q for the quarters ended March 31, 1995, and June
30, 1995, incorporated by reference herein, state that they did not audit and
they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their reports on such information
should be restricted in light of the limited nature of the review procedures
applied. The accountants are not subject to the liability provisions of
Section 11 of the Securities Act of 1933 for their reports on the unaudited
interim financial information because those reports are not a "report" or a
"part" of the registration statement prepared or certified by the accountants
within the meaning of Sections 7 and 11 of the Act.
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- ------------------------------------ ------------------------------------
No dealer, salesperson or other
individual has been authorized
to give any information or to
make any representations other
than those contained or incor-
porated by reference in this ----------
Prospectus Supplement or the Preferred Securities
Prospectus in connection with
the offer made by this Prospectus Pacific Telesis Financing I
Supplement and the Prospectus
and, if given or made, such _____% Trust Originated
information or representation Preferred Securities ("TOPrS")
must not be relied upon as guaranteed to the extent set
having been authorized by forth herein by
Pacific Telesis Group, Pacific Pacific Telesis Group
Telesis Financing I, or the
Underwriters. Neither the
delivery of this Prospectus
Supplement and the Prospectus
nor any sale made hereunder and
thereunder shall under any cir-
cumstance create an implication
that there has been no change
in the affairs of Pacific Telesis ---------------------
Group or Pacific Telesis Financing PROSPECTUS SUPPLEMENT
I, since the date hereof. This ---------------------
Prospectus Supplement and the
Prospectus 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 or solicitation is not quali-
fied to do so or to anyone to whom
it is unlawful to make such offer Merrill Lynch & Co.
or solicitation.
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TABLE OF CONTENTS
Prospectus Supplement
Page
____
Pacific Telesis Group Summary
Financial Data
Pacific Telesis Group
Recent Development
Pacific Telesis Financing I
Risk Factors ______, 1995
Ratio of Earnings to Fixed
Charges
Capitalization of Pacific
Telesis Group
Use of Proceeds
Description of the Pre-
ferred Securities
Description of the Subordi-
nated Debentures
Effect of Obligations Under
the Subordinated Debentures
and the Guarantee
United States Federal Income
Taxation
Underwriting
Legal Matters
Prospectus
Available Information
Incorporation of Certain Docu-
ments by Reference
Pacific Telesis Group
The Pacific Telesis Financing Trusts
Use of Proceeds
Ratio of Earnings to Fixed
Charges
Description of the Subordinated
Debt Securities
Description of the Pacific
Telesis Trusts' Preferred
Securities
Description of the Guarantees
Plan of Distribution
Validity of Securities
Independent Public Accountants
____________________________________ ____________________________________
56
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Securities and Exchange Commission Filing Fee . . $ 344,827.59
New York Stock Exchange Listing Fee . . . . . . . 170,300*
Rating Agency Fees. . . . . . . . . . . . . . . . 200,000*
Blue Sky Fees and Expenses. . . . . . . . . . . . 20,000*
Trustee's Expenses. . . . . . . . . . . . . . . . 15,000*
Printing Fees and Expenses. . . . . . . . . . . . 70,000*
Accounting Fees and Expenses. . . . . . . . . . . 25,000*
Legal Fees and Expenses . . . . . . . . . . . . . 90,000*
Miscellaneous . . . . . . . . . . . . . . . . . . 20,000*
----------------
Total. . . . . . . . . . . . . . . . . . . . $ 955,127.59*
================
_________________________________
* Estimated
Item 15. Indemnification of Directors and Officers.
Section 78.037 of the Nevada Revised Statutes ( N.R.S.") provides that a
Nevada corporation's articles may contain a provision eliminating or limiting
the personal liability of a director or officer to the corporation or its
stockholders for damages for breach of fiduciary duty but may not eliminate or
limit liability for acts or omissions involving intentional misconduct, fraud,
a knowing violation of the law or illegal payment of dividends. Pacific
Telesis' Articles of Incorporation ( Articles") contain such a provision and
therefore any lawsuits involving monetary damages would be subject to this
limitation. There is no such limitation in actions for equitable relief.
With respect to lawsuits not thus limited by Pacific Telesis' Articles, N.R.S.
Section 78.751 specifies the circumstances under which a Nevada corporation
may indemnify a director, officer, employee or agent. Generally, such person
must have acted in good faith and in a manner reasonably believed to be in, or
not opposed to, the best interests of the corporation, and with respect to any
criminal action or proceeding, such person must also have had no reasonable
cause to believe his or her conduct was unlawful. In any proceeding by or in
the right of the corporation where there is a judgment against such person,
indemnification may be made if such person acted in good faith, in a manner
which he or she reasonably believed to be in or not opposed to the best
interests of the corporation and was not found liable for negligence or
misconduct in the performance of his or her duties to the corporation.
However, indemnification may be had even where the person has been adjudged to
be liable for negligence or misconduct in the performance of his or her duties
if the court in which the action or suit was brought determines upon
application that despite the adjudication of liability but in view of all of
the circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses as the court deems proper. Where the director,
officer, employee or agent successfully defends any such civil or criminal
proceeding, indemnification is required.
Pacific Telesis' Articles provide that it shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such person is or
was a director or officer of Pacific Telesis, or is or was serving at the
request of Pacific Telesis as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, or
as a fiduciary of an employee benefit plan of Pacific Telesis or of a wholly
owned subsidiary corporation, against expenses incurred in connection with
such actions, suit or proceeding, including attorneys' fees, judgments, fines
and amounts paid in settlement, to the extent not prohibited by law, state or
federal. Expenses incurred in defending any such proceeding may be advanced
by Pacific Telesis prior to the final disposition of such action, suit or
proceeding upon receipt of an undertaking to repay such amount unless it shall
be determined ultimately that the person is entitled to be indemnified
thereunder. The Articles further provide that these provisions may not be
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<PAGE>
repealed or amended without the affirmative vote of at least 66-2/3% of the
voting power of the shares entitled to vote thereon.
Pacific Telesis' Articles also contain a provision authorizing the Corporation
to enter into indemnity agreements (the "Indemnity Agreements") with each of
Pacific Telesis' directors and officers. The Article states that such
agreements shall provide that Pacific Telesis shall indemnify (and advance
expenses to) the indemnitee to the fullest extent permitted by applicable law,
no later than 30 days after a written request has been made therefor, against
all expenses, judgments, fines, penalties, excise taxes and amounts paid in
settlement for claims with respect to events relating to such person's service
with or for Pacific Telesis, and that in any proceeding to enforce the
obligation to indemnify such person, Pacific Telesis shall have the burden to
establish that such indemnification is prohibited; provided, however, that
such agreements shall exclude indemnification if a judgment or other final
adjudication adverse to the indemnitee established (a) that his or her acts
were committed in bad faith or were the result of deliberate dishonesty, or
(b) that he or she in fact gained a financial advantage to which he or she was
not legally entitled, in which event the amount of the indemnification shall
be reduced by the amount of such financial advantage gained. Pacific Telesis
has entered into Indemnity Agreements with each of its directors and executive
officers as provided in this Article.
The directors and officers of Pacific Telesis are covered by insurance
policies indemnifying against certain liabilities, including certain
liabilities arising under the Securities Act of 1933, which might be incurred
by them in such capacities and against which they cannot be indemnified by
Pacific Telesis. Subject to certain exceptions, the Indemnity Agreements
obligate Pacific Telesis to use its best efforts to purchase and maintain in
effect such insurance with coverage no less favorable than that presently
provided.
The Indemnity Agreements also provide that if Pacific Telesis shall
discontinue any of its existing policies of directors' and officers' liability
insurance or limit the scope or the amount of the coverages thereunder, or if
such policies or coverages shall become unavailable in whole or in part for
any reason, then Pacific Telesis will hold harmless and indemnify the
indemnitee to the full extent of the coverage which would have been provided
if such insurance had been maintained.
The Declaration of each Pacific Telesis Trust provides that no Pacific Telesis
Trustee, affiliate of any Pacific Telesis Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Pacific Telesis Trustee, or any employee or agent of such Pacific Telesis
Trust or its affiliates (each an "Indemnified Person") shall be liable,
responsible or accountable in damages or otherwise to such Pacific Telesis
Trust or any employee or agent of the Trust or its affiliates for any loss,
damage or claim incurred by reason of any act or omission performed or omitted
by such Indemnified Person in good faith on behalf of such Pacific Telesis
Trust and in a manner such Indemnified Person reasonably believed to be within
the scope of the authority conferred on such Indemnified Person by such
Declaration or by law, except that an Indemnified Person shall be liable for
any such loss, damage or claim incurred by reason of such Indemnified Person's
negligence or willful misconduct with respect to such acts or omissions. The
Declaration of each Pacific Telesis Trust also provides that to the fullest
extent permitted by applicable law, Pacific Telesis shall indemnify and hold
harmless each Indemnified Person from and against any loss, damage or claim
incurred by such Indemnified Person by reason of any act or omission performed
or omitted by such Indemnified Person in good faith on behalf of such Pacific
Telesis Trust and in a manner such Indemnified Person reasonably believed to
be within the scope of authority conferred on such Indemnified Person by such
Declaration, except that no Indemnified Person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such
Indemnified Person by reason of the negligence of such Indemnified Person or
willful misconduct with respect to such acts or omissions. The Declaration of
each Pacific Telesis Trust further provides that, to the fullest extent
permitted by applicable law, expenses (including legal fees) incurred by an
Indemnified Person in defending any claim, demand, action, suit or proceeding
shall, from time to time, be advanced by Pacific Telesis prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt by
or an undertaking by or on behalf of the Indemnified Person to repay such
amount if it shall be determined that the Indemnified Person is not entitled
to be indemnified for the underlying cause of action as authorized by such
Declaration.
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<PAGE>
The directors and officers of Pacific Telesis and the Regular Trustees are
covered by insurance policies indemnifying against certain liabilities,
including certain liabilities arising under the Securities Act of 1933, as
amended (the "Securities Act"), which might be incurred by them in such
capacities and against which they cannot be indemnified by Pacific Telesis or
the Pacific Telesis Trusts.
Any agents, dealers or underwriters who execute any of the agreements filed as
Exhibit 1 to this registration statement will agree to indemnify Pacific
Telesis' directors and their officers and the Pacific Telesis Trustees who
signed the registration statement against certain liabilities that may arise
under the Securities Act with respect to information furnished to Pacific
Telesis or any of the Pacific Telesis Trusts by or on behalf of any such
indemnifying party.
Item 16. Exhibits.
Exhibits identified in parentheses below are on file with the SEC and are
incorporated herein by reference to such previous filings. All other exhibits
are provided as part of this electronic transmission.
*1 - Form of Underwriting Agreement for offering of Preferred
Securities.
4-A - Certificate of Trust of Pacific Telesis Financing I.
4-B - Certificate of Trust of Pacific Telesis Financing II.
4-C - Certificate of Trust of Pacific Telesis Financing III.
4-D-1 - Declaration of Trust of Pacific Telesis Financing I.
4-D-2 - Form of Amended and Restated Declaration of Trust of Pacific
Telesis Financing I.
4-E-1 - Declaration of Trust of Pacific Telesis Financing II.
4-E-2 - Form of Amended and Restated Declaration of Trust of Pacific
Telesis Financing II - identical to Exhibit 4-D-2
4-F-1 - Declaration of Trust of Pacific Telesis Financing III.
4-F-2 - Form of Amended and Restated Declaration of Trust of Pacific
Telesis Financing III - identical to Exhibit 4-D-2
4-G - Form of Debt Securities Indenture among Pacific Telesis Group
and The First National Bank of Chicago, as Trustee.
4-H - Form of Supplemental Indenture to Indenture to be used in
connection with the issuance of Subordinated Debt Securities
and Preferred Securities.
4-I- - Form of Preferred Security (included in 4-D-2 above).
4-J - Form of Subordinated Debt Security (included in 4-H above).
4-K - Form of Guarantee with respect to Preferred Securities.
5-A - Opinion of Richard W. Odgers, Esq.
5-B - Opinions of Skadden, Arps, Slate, Meagher & Flom
8 - Opinion of Phillip J. Lauro, Esq. as to certain federal income
taxation matters.
12 - Computation of Ratio of Earnings to Fixed Charges of Pacific
Telesis Group. (In addition, Exhibit 12 to Pacific Telesis'
Form 10-K for 1994 (File No. 1-8609) is incorporated by
reference herein).
15 - Letter re unaudited interim financial information.
23-A - Consent of Independent Accountants, Coopers & Lybrand L.L.P.
23-B - Consent of Richard W. Odgers, Esq., is contained in the opinion
of counsel filed as Exhibit 5-A.
23-C - Consents of Skadden, Arps, Slate, Meagher & Flom are contained
in its opinions of counsel filed as Exhibit 5-B.
23-D - Consent of Phillip J. Lauro, Esq., is contained in the opinion
of counsel filed as Exhibit 8.
24 - Powers of Attorney (the powers of attorney for the Pacific
Telesis Trustees of Pacific Telesis Financing I, Pacific
Telesis Financing II and Pacific Telesis Financing III are
included in Exhibits 4-D-1, 4-E-1 and 4-F-1, respectively).
25-A - Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The First National Bank of Chicago, as Trustee
under the Debt Securities Indenture.
25-B - Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The First National Bank of Chicago, as Trustee
under the Declaration of Trust of Pacific Telesis Financing I.
25-C - Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The First National Bank of Chicago, as Trustee
under the Declaration of Trust of Pacific Telesis Financing II.
25-D - Statement of Eligibility under the Trust Indenture Act of 1939,
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as amended, of The First National Bank of Chicago, as Trustee
under the Declaration of Trust of Pacific Telesis Financing
III.
25-E-1 - Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The First National Bank of Chicago, as Trustee
of the Preferred Securities Guarantees of Pacific Telesis for
the benefit of the holders of Preferred Securities of Pacific
Telesis Financing I.
25-E-2 - Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The First National Bank of Chicago, as Trustee
of the Preferred Securities Guarantees of Pacific Telesis for
the benefit of the holders of Preferred Securities of Pacific
Telesis Financing II.
25-E-3 - Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The First National Bank of Chicago, as Trustee
of the Preferred Securities Guarantees of Pacific Telesis for
the benefit of the holders of Preferred Securities of Pacific
Telesis Financing III.
________________________________
* To be filed by amendment.
Item 17. Undertaking.
The Registrants hereby undertake that, for purposes of determining any
liability under the Securities Act, each filing of Pacific Telesis' Annual
Report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (and where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d)
of the Exchange Act) that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the provisions referred to in Item 15 (other than the
insurance policies referred to therein), or otherwise, the Registrants have
been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrants of
expenses incurred or paid by a director, officer or controlling person of the
Registrants in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrants will, unless in the opinion
of their counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) that, individually or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement;
(iii) To include any material information with respect to the Plan of
Distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
60
<PAGE>
provided, however, that the undertakings set forth in paragraphs (i) and (ii)
above do not apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic reports filed
by Pacific Telesis pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
The Registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of San Francisco, State of California, on October 20,
1995.
PACIFIC TELESIS GROUP
By
/s/ William E. Downing
----------------------
(William E. Downing)
Executive Vice President,
Chief Financial Officer and
Treasurer
61
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on October 19, 1995.
Signature/Name Title
/s/ Philip J. Quigley*
------------------------ Chairman of the Board,
(Philip J. Quigley) President & Chief
Executive Officer
and Director
/s/ William E. Downing Executive Vice
------------------------ President, Chief
(William E. Downing) Financial Officer
and Treasurer
(principal financial
officer and principal
accounting officer)
/s/ Gilbert F. Amelio*
------------------------ Director
(Gilbert F. Amelio)
/s/ William P. Clark*
------------------------ Director
(William P. Clark)
/s/ Herman E. Gallegos*
------------------------ Director
(Herman E. Gallegos)
/s/ Frank C. Herringer*
------------------------ Director
(Frank C. Herringer)
/s/ Ivan J. Houston*
------------------------ Director
(Ivan J. Houston)
/s/ Mary S. Metz*
------------------------ Director
(Mary S. Metz)
/s/ Toni Rembe*
------------------------ Director
(Toni Rembe)
/s/ S. Donley Ritchey*
------------------------ Director
(S. Donley Ritchey)
/s/ Richard M. Rosenberg*
------------------------ Director
(Richard M. Rosenberg)
*By /s/ William E. Downing
------------------------
Attorney-in-fact
62
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of Pacific
Telesis Financing I, Pacific Telesis Financing II and Pacific Telesis
Financing III certifies that it has reasonable grounds to believe that it
meets all the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of San Francisco, State of California,
on the 19th day of October, 1995.
PACIFIC TELESIS FINANCING I
By
/s/ Roomy F. Balaporia*
---------------
Roomy F. Balaporia, Trustee
By
/s/ Miles H. Mochizuki*
---------------
Miles H. Mochizuki, Trustee
By
/s/ Marie B. Washington*
---------------
Marie B. Washington, Trustee
PACIFIC TELESIS FINANCING II
By
/s/ Roomy F. Balaporia*
---------------
Roomy F. Balaporia, Trustee
By
/s/ Miles H. Mochizuki*
---------------
Miles H. Mochizuki, Trustee
By
/s/ Marie B. Washington*
---------------
Marie B. Washington, Trustee
PACIFIC TELESIS FINANCING III
By
/s/ Roomy F. Balaporia*
---------------
Roomy F. Balaporia, Trustee
By
/s/ Miles H. Mochizuki*
---------------
Miles H. Mochizuki, Trustee
By
/s/ Marie B. Washington*
---------------
Marie B. Washington, Trustee
*By /s/ William E. Downing
------------------------
Attorney-in-fact
63
<PAGE>
Exhibits identified in parentheses below are on file with the SEC and are
incorporated herein by reference to such previous filings. All other exhibits
are provided as part of this electronic transmission.
*1 - Form of Underwriting Agreement for offering of Preferred
Securities.
4-A - Certificate of Trust of Pacific Telesis Financing I.
4-B - Certificate of Trust of Pacific Telesis Financing II.
4-C - Certificate of Trust of Pacific Telesis Financing III.
4-D-1 - Declaration of Trust of Pacific Telesis Financing I.
4-D-2 - Form of Amended and Restated Declaration of Trust of Pacific
Telesis Financing I.
4-E-1 - Declaration of Trust of Pacific Telesis Financing II.
4-E-2 - Form of Amended and Restated Declaration of Trust of Pacific
Telesis Financing II - identical to Exhibit 4-D-2
4-F-1 - Declaration of Trust of Pacific Telesis Financing III.
4-F-2 - Form of Amended and Restated Declaration of Trust of Pacific
Telesis Financing III - identical to Exhibit 4-D-2
4-G - Form of Debt Securities Indenture among Pacific Telesis Group
and The First National Bank of Chicago, as Trustee.
4-H - Form of Supplemental Indenture to Indenture to be used in
connection with the issuance of Subordinated Debt Securities
and Preferred Securities.
4-I - Form of Preferred Security (included in 4-D-2 above).
4-J - Form of Subordinated Debt Security (included in 4-H above).
4-K - Form of Guarantee with respect to Preferred Securities.
5-A - Opinion of Richard W. Odgers, Esq.
5-B - Opinions of Skadden, Arps, Slate, Meagher & Flom
8 - Opinion of Phillip J. Lauro, Esq. as to certain federal income
taxation matters.
12 - Computation of Ratio of Earnings to Fixed Charges of Pacific
Telesis Group. (In addition, Exhibit 12 to Pacific Telesis'
Form 10-K for 1994 (File No. 1-8609) is incorporated by
reference herein).
15 - Letter re unaudited interim financial information.
23-A - Consent of Independent Accountants, Coopers & Lybrand L.L.P.
23-B - Consent of Richard W. Odgers, Esq., is contained in the opinion
of counsel filed as Exhibit 5-A.
23-C - Consents of Skadden, Arps, Slate, Meagher & Flom are contained
in its opinions of counsel filed as Exhibit 5-B.
23-D - Consent of Phillip J. Lauro, Esq., is contained in the opinion
of counsel filed as Exhibit 8.
24 - Powers of Attorney (the powers of attorney for the Pacific
Telesis Trustees of Pacific Telesis Financing I, Pacific
Telesis Financing II and Pacific Telesis Financing III are
included in Exhibits 4-D-1, 4-E-1 and 4-F-1, respectively).
25-A - Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The First National Bank of Chicago, as Trustee
under the Debt Securities Indenture.
25-B - Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The First National Bank of Chicago, as Trustee
under the Declaration of Trust of Pacific Telesis Financing I.
25-C - Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The First National Bank of Chicago, as Trustee
under the Declaration of Trust of Pacific Telesis Financing II.
25-D - Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The First National Bank of Chicago, as Trustee
under the Declaration of Trust of Pacific Telesis Financing
III.
25-E-1 - Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The First National Bank of Chicago, as Trustee
of the Preferred Securities Guarantees of Pacific Telesis for
the benefit of the holders of Preferred Securities of Pacific
Telesis Financing I.
25-E-2 - Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The First National Bank of Chicago, as Trustee
of the Preferred Securities Guarantees of Pacific Telesis for
the benefit of the holders of Preferred Securities of Pacific
Telesis Financing II.
64
<PAGE>
25-E-3 - Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The First National Bank of Chicago, as Trustee
of the Preferred Securities Guarantees of Pacific Telesis for
the benefit of the holders of Preferred Securities of Pacific
Telesis Financing III.
________________________________
* To be filed by amendment.
65
<PAGE>
EXHIBIT 4-A
-----------
CERTIFICATE OF TRUST OF
PACIFIC TELESIS FINANCING I
This Certificate of Trust of Pacific Telesis Financing I (the "Trust"),
dated October 16, 1995, is being duly executed and filed by the undersigned as
trustees, to form a business trust under the Delaware Business Trust Act
(12 Del. C. Sections 3801 et seq.) (the "Business Trust Act").
1. The name of the business trust being formed hereby is
Pacific Telesis Financing I.
2. The name and business address of the trustee of the Trust meeting
the requirements of Section 3807 of the Business Trust Act is
Michael J. Majchrzak, FCC National Bank, 300 King Street,
Wilmington, Delaware 19802.
3. This Certificate of Trust shall be effective as of the date of its
filing.
IN WITNESS WHEREOF, the undersigned, being the trustees of the Trust,
have executed this Certificate of Trust as of the date first above written.
/s/ Roomy F. Balaporia
------------------------------
Roomy F. Balaporia, as Trustee
/s/ Miles H. Mochizuki
------------------------------
Miles H. Mochizuki, as Trustee
/s/ Marie B. Washington
-------------------------------
Marie B. Washington, as Trustee
/s/ Michael J. Majchrzak
-----------------------------------------
Michael J. Majchrzak, as Delaware Trustee
The First National Bank of Chicago, as
Property Trustee
By: /s/ R. D. Manella
------------------
Name: R. D. Manella
Title: Vice President
<PAGE>
EXHIBIT 4-B
-----------
CERTIFICATE OF TRUST OF
PACIFIC TELESIS FINANCING II
This Certificate of Trust of Pacific Telesis Financing II (the "Trust"),
dated October 16, 1995, is being duly executed and filed by the undersigned as
trustees, to form a business trust under the Delaware Business Trust Act
(12 Del. C. Sections 3801 et seq.) (the "Business Trust Act").
1. The name of the business trust being formed hereby is
Pacific Telesis Financing II.
2. The name and business address of the trustee of the Trust meeting
the requirements of Section 3807 of the Business Trust Act is
Michael J. Majchrzak, FCC National Bank, 300 King Street,
Wilmington, Delaware 19802.
3. This Certificate of Trust shall be effective as of the date of its
filing.
IN WITNESS WHEREOF, the undersigned, being the trustees of the Trust,
have executed this Certificate of Trust as of the date first above written.
/s/ Roomy F. Balaporia
------------------------------
Roomy F. Balaporia, as Trustee
/s/ Miles H. Mochizuki
------------------------------
Miles H. Mochizuki, as Trustee
/s/ Marie B. Washington
-------------------------------
Marie B. Washington, as Trustee
/s/ Michael J. Majchrzak
-----------------------------------------
Michael J. Majchrzak, as Delaware Trustee
The First National Bank of Chicago, as
Property Trustee
By: /s/ R. D. Manella
------------------
Name: R. D. Manella
Title: Vice President
<PAGE>
EXHIBIT 4-C
-----------
CERTIFICATE OF TRUST OF
PACIFIC TELESIS FINANCING III
This Certificate of Trust of Pacific Telesis Financing III (the "Trust"),
dated October 16, 1995, is being duly executed and filed by the undersigned as
trustees, to form a business trust under the Delaware Business Trust Act
(12 Del. C. Sections 3801 et seq.) (the "Business Trust Act").
1. The name of the business trust being formed hereby is Pacific Telesis
Financing III.
2. The name and business address of the trustee of the Trust meeting the
requirements of Section 3807 of the Business Trust Act is Michael J.
Majchrzak, FCC National Bank, 300 King Street, Wilmington, Delaware
19802.
3. This Certificate of Trust shall be effective as of the date of its
filing.
IN WITNESS WHEREOF, the undersigned, being the trustees of the Trust, have
executed this Certificate of Trust as of the date first above written.
/s/ Roomy F. Balaporia
------------------------------
Roomy F. Balaporia, as Trustee
/s/ Miles H. Mochizuki
------------------------------
Miles H. Mochizuki, as Trustee
/s/ Marie B. Washington
-------------------------------
Marie B. Washington, as Trustee
/s/ Michael J. Majchrzak
-----------------------------------------
Michael J. Majchrzak, as Delaware Trustee
The First National Bank of Chicago, as
Property Trustee
By: /s/ R. D. Manella
------------------
Name: R. D. Manella
Title: Vice President
<PAGE>
EXHIBIT 4-D-1
-------------
====================================
DECLARATION OF TRUST
PACIFIC TELESIS FINANCING I
Dated as of October 16, 1995
====================================
<PAGE>
DECLARATION OF TRUST OF
PACIFIC TELESIS FINANCING I
DECLARATION OF TRUST, dated as of October 16, 1995, between Pacific Telesis
Group, a Nevada corporation, as Sponsor, Roomy F. Balaporia,
Miles H. Mochizuki, and Marie B. Washington, not in their individual
capacities but solely as Trustees, Michael J. Majchrzak, not in his individual
capacity but solely as Delaware Trustee, and The First National Bank of
Chicago, a national banking association, not in its individual capacity but
solely as Property Trustee. The Sponsor and the Trustees hereby agree as
follows:
1. The trust created hereby shall be known as "Pacific Telesis Financing I"
(the "Trust"), in which name the Trustees, or the Sponsor to the extent
provided herein, may conduct the business of the Trust, make and execute
contracts, and sue and be sued.
2. The Sponsor hereby assigns, transfers, conveys and sets over to the Trust
the sum of $10. The Trustees hereby acknowledge receipt of such amount from
the Sponsor, which amount shall constitute the initial trust estate. It is the
intention of the parties hereto that the Trust created hereby constitute a
business trust under Chapter 38 of Title 12 of the Delaware Code, 12 Del. C.
Sec. 3801 et seq. (the "Business Trust Act"), and that this document
constitute the governing instrument of the Trust. The Trustees are hereby
authorized and directed to execute and file a certificate of trust with the
Delaware Secretary of State in the form attached hereto.
3. The Sponsor and the Trustees will enter into an amended and restated
Declaration of Trust, satisfactory to each such party and substantially in the
form to be included as Exhibit 4.5 to the Registration Statement referred to
below, to provide for the contemplated operation of the Trust created hereby
and the issuance of the Preferred Securities and Common Securities referred to
therein. Prior to the execution and delivery of such amended and restated
Declaration of Trust, the Trustees shall not have any duty or obligation
hereunder or with respect to the trust estate, except as otherwise required by
applicable law or as may be necessary to obtain prior to such execution and
delivery any licenses, consents or approvals required by applicable law or
otherwise.
4. The Trustees hereby authorize and direct the Sponsor, as the sponsor of
the Trust, (i) to file with the Securities and Exchange Commission (the
"Commission") and execute, in each case on behalf of the Trust, (a) a
Registration Statement on Form S-3 (the "Registration Statement") and any pre-
effective or post-effective amendments to such Registration Statement,
relating to the registration under the Securities Act of 1933, as amended, of
the Preferred Securities of the Trust, and (b) a Registration Statement on
Form 8-A (the "1934 Act Registration Statement") and any pre-effective and
post-effective amendments to such 1934 Act Registration Statement relating to
the registration of the Preferred Securities of the Trust under Section 12(b)
of the Securities Exchange Act of 1934, as amended; (ii) to file with the New
York Stock Exchange and execute on behalf of the Trust a listing application
and all other applications, statements, certificates, agreements and other
instruments as shall be necessary or desirable to cause the Preferred
Securities to be listed on the New York Stock Exchange; and (iii) to file and
execute on behalf of the Trust such applications, reports, surety bonds,
irrevocable consents, appointments of attorneys for service of process and
other papers and documents as shall be necessary or desirable to register the
Preferred Securities under the securities or "Blue Sky" laws of such
jurisdictions as the Sponsor, on behalf of the Trust, may deem necessary or
desirable. In the event that any filing referred to in clauses (i) - (iii)
above is required by the rules and regulations of the Commission, the New York
Stock Exchange or state securities or blue sky laws, to be executed on behalf
of the Trust by the Trustees, the Sponsor is hereby authorized and directed to
join in any such filing and to execute on behalf of the Trust any and all of
the foregoing, it being understood that Michael J. Majchrzak and The First
National Bank of Chicago in their capacities as Trustees of the Trust shall
not be required to join in any such filing or execute on behalf of the Trust
any such document unless required by the rules and regulations of the
Commission, the New York Stock Exchange or state securities or blue sky laws.
1
<PAGE>
In connection with all of the foregoing, the Sponsor and each Trustee, solely
in its capacity as Trustee of the Trust, hereby constitutes and appoints
Philip J. Quigley, William E. Downing and Richard W. Odgers and each of them,
as his, her or its, as the case may be, true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for the Sponsor or
such Trustee or in the Sponsor's or such Trustee's name, place and stead, in
any and all capacities, to sign any and all amendments (including post-
effective amendments) to the Registration Statement and the 1934 Act
Registration Statement and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Commission, granting unto
each said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as the Sponsor or
such Trustee might or could do in person, hereby ratifying and confirming all
that each said attorney-in-fact and agent, or her substitute or substitutes,
shall do or cause to be done by virtue hereof.
5. This Declaration of Trust may be executed in one or more counterparts.
6. The number of Trustees initially shall be five (5) and thereafter the
number of Trustees shall be such number as shall be fixed from time to time by
a written instrument signed by the Sponsor which may increase or decrease the
number of Trustees; provided that to the extent required by the Business Trust
Act, one Trustee shall either be a natural person who is a resident of the
State of Delaware or, if not a natural person, an entity which has its
principal place of business in the State of Delaware. Subject to the
foregoing, the Sponsor is entitled to appoint or remove without cause any
Trustee at any time. A Trustee may resign upon thirty (30) days prior notice
to the Sponsor.
IN WITNESS WHEREOF, the parties hereto have caused this Declaration of Trust
to be duly executed as of the day and year first above written.
Pacific Telesis Group as Sponsor
By: /s/ William E. Downing
----------------------
Name: William E. Downing
Title: Executive Vice President, Chief Financial Officer and Treasurer
The First National Bank of Chicago not in its individual capacity
but solely as Property Trustee
By: /s/ R. D. Manella
-----------------
Name: R. D. Manella
Title: Vice President
/s/ Michael J. Majchrzak
- ------------------------
Michael J. Majchrzak, as Delaware Trustee
/s/ Roomy F. Balaporia
- ----------------------
Roomy F. Balaporia, as Trustee
/s/ Miles H. Mochizuki
- ----------------------
Miles H. Mochizuki, as Trustee
/s/ Marie B. Washington
- -----------------------
Marie B. Washington, as Trustee
2
<PAGE>
EXHIBIT 4-D-2
-------------
=========================================
AMENDED AND RESTATED DECLARATION OF TRUST
PACIFIC TELESIS FINANCING I
Dated as of __________, 1995
=========================================
1
<PAGE>
TABLES OF CONTENTS
ARTICLE I
INTERPRETATION AND DEFINITIONS
Page
----
SECTION 1.1 Definitions...........................................
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application......................
SECTION 2.2 Lists of Holders of Securities........................
SECTION 2.3 Reports by the Property Trustee.......................
SECTION 2.4 Periodic Reports to Property Trustee..................
SECTION 2.5 Evidence of Compliance with Conditions Precedent......
SECTION 2.6 Events of Default; Waiver.............................
SECTION 2.7 Events of Default; Notice.............................
ARTICLE III
ORGANIZATION
SECTION 3.1 Name..................................................
SECTION 3.2 Office................................................
SECTION 3.3 Purpose...............................................
SECTION 3.4 Authority.............................................
SECTION 3.5 Title to Property of the Trust........................
SECTION 3.6 Powers and Duties of the Regular Trustees.............
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees..
SECTION 3.8 Powers and Duties of the Property Trustee.............
SECTION 3.9 Certain Duties and Responsibilities of the
Property Trustee......................................
SECTION 3.10 Certain Rights of the Property Trustee................
SECTION 3.11 Delaware Trustee......................................
SECTION 3.12 Execution of Documents................................
SECTION 3.13 Not Responsible for Recitals or Issuance
of Securities.........................................
SECTION 3.14 Duration of Trust.....................................
SECTION 3.15 Mergers...............................................
SECTION 3.16 Preferential Collection of Claims Against Trust.......
SECTION 3.17 Property Trustee May File Proofs of Claim.............
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities...............
SECTION 4.2 Responsibilities of the Sponsor.......................
SECTION 4.3 Expenses..............................................
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees....................................
SECTION 5.2 Delaware Trustee......................................
SECTION 5.3 Property Trustee; Eligibility.........................
SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee
Generally.............................................
SECTION 5.5 Initial Trustees......................................
SECTION 5.6 Appointment, Removal and Resignation of Trustees......
SECTION 5.7 Vacancies among Trustees..............................
SECTION 5.8 Effect of Vacancies...................................
SECTION 5.9 Meetings..............................................
SECTION 5.10 Delegation of Power...................................
2
<PAGE>
TABLES OF CONTENTS (Cont'd)
ARTICLE VI
DISTRIBUTIONS
Page
----
SECTION 6.1 Distributions.........................................
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities...............
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust..................................
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities................................
SECTION 9.2 Registration, Transfer and Exchange of Securities.....
SECTION 9.3 Deemed Security Holders...............................
SECTION 9.4 Global Securities.....................................
SECTION 9.5 Notices to Depository.................................
SECTION 9.6 Mutilated, Destroyed, Lost or Stolen Securities.......
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.............................................
SECTION 10.2 Exculpation...........................................
SECTION 10.3 Fiduciary Duty........................................
SECTION 10.4 Indemnification.......................................
SECTION 10.5 Outside Businesses....................................
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year...........................................
SECTION 11.2 Certain Accounting Matters............................
SECTION 11.3 Banking...............................................
SECTION 11.4 Withholding...........................................
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments............................................
SECTION 12.2 Meetings of the Holders of Securities;
Action by Written Consent.............................
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee....
SECTION 13.2 Representations and Warranties of Delaware Trustee....
3
<PAGE>
TABLES OF CONTENTS (Cont'd)
ARTICLE XIV
MISCELLANEOUS
Page
----
SECTION 14.1 Notices...............................................
SECTION 14.2 Governing Law.........................................
SECTION 14.3 Intention of the Parties..............................
SECTION 14.4 Headings..............................................
SECTION 14.5 Successors and Assigns................................
SECTION 14.6 Partial Enforceability................................
SECTION 14.7 Counterparts..........................................
EXHIBIT A TERMS OF SECURITIES...................................
ANNEX I FORM OF PREFERRED SECURITY CERTIFICATE................
ANNEX II FORM OF COMMON SECURITY CERTIFICATE...................
EXHIBIT B SPECIMEN OF DEBENTURE.................................
EXHIBIT C UNDERWRITING AGREEMENT................................
4
<PAGE>
CROSS-REFERENCE TABLE*
Section of Trust
Indenture Act of 1939, Section of
as amended Declaration
- ---------------------- -----------
310(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3(a)
310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3(a)
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 3.16(a);3.16(c)
311(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 3.16(b);3.16(c)
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a);2.2(b)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
312(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(d)
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
313(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
313(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
313(d) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(b),3.10(a)
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7(a)
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(b)
315(e) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6(d)
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6
316(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6(e)
316(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6(e)
317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 3.17
317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6(s)
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(c)
____________________
* This Cross-Reference Table does not constitute part of the Declaration
and shall not have any bearing upon the interpretation of any of its
terms or provisions.
5
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AMENDED AND RESTATED DECLARATION OF TRUST
OF
PACIFIC TELESIS FINANCING I
_______________, 1995
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and effective
as of ____________, 1995, by the undersigned trustees (together with all other
Persons from time to time duly appointed and serving as trustees in accordance
with the provisions of this Declaration, collectively the "Trustees"),
Pacific Telesis Group, a Nevada corporation, as trust sponsor (the "Sponsor"),
and by the holders, from time to time, of undivided beneficial interests in
the Trust to be issued pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor have established a trust (the "Trust")
under the Delaware Business Trust Act pursuant to a Declaration of Trust dated
as of ___________ ___, 1995, (the "Original Declaration")and a Certificate of
Trust filed with the Secretary of State of Delaware on ________ ___, 1995, for
the sole purpose of issuing and selling certain securities representing
undivided beneficial interests in the assets of the Trust and investing the
proceeds from the sale thereof in certain subordinated debentures.
WHEREAS, as of the date hereof, no interests in the Trust have been issued;
WHEREAS, all of the Trustees and the Sponsor by this Declaration, amend and
restate each and every term and provision of the Original Declaration; and
NOW, THEREFORE, it being the intention of the parties hereto to continue the
Trust as a business trust under the Business Trust Act and that the Original
Declaration be amended and restated in its entirety as provided herein and
that this Declaration constitute the governing instrument of such business
trust, the Trustees declare that all assets contributed to the Trust will be
held for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to
time;
(d) all references in this Declaration to Articles and Sections and
Exhibits are to Articles and Sections of and Exhibits to this
Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Declaration unless otherwise defined in this
Declaration or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act or any successor rule thereunder.
"Authorized Officer" of a Person means any Person that is authorized to bind
such Person.
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"Bankruptcy" means, with respect to an entity, (a) the entry of a decree or
order by a court having jurisdiction in the premises adjudging such entity a
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of
such entity under the Federal Bankruptcy Code or any other applicable federal
or state law, or appointing a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of such entity or of any substantial
part of its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order unstayed and in
effect for a period of 60 consecutive days or (b) the institution by such
entity of proceedings to be adjudicated a bankrupt or insolvent, or the
consent by it to the institution of bankruptcy or insolvency proceedings
against it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under the Federal Bankruptcy Code or any other
applicable federal or state law, or the consent by it to the filing of any
such petition or to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the company or of any
substantial part of its property, or the making by it of an assignment for the
benefit of creditors, or the admission by it in writing of its inability to
pay its debts generally as they become due.
"Business Day" means any day other than a day on which banking institutions in
New York, New York are authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12
Del. Code Section 3801 et seq., as it may be amended from time to time, or any
successor legislation.
"Closing Date" means ______________, [1995].
"Code" means the Internal Revenue Code of 1986 as amended and as it may be
amended from time to time after the date hereof, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Securities Guarantee" means the guarantee agreement dated as of
_______________, [1995], of the Sponsor in respect of the Common Securities.
"Common Security" has the meaning specified in Section 7.1.
"Covered Person" means: (a) any officer, director, shareholder, partner,
member, representative, employee or agent of (i) the Trust or (ii) the Trust's
Affiliates; and (b) any Holder of Securities.
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Depository" means DTC or its successor hereunder.
"Direction" by a Person means a written direction signed:
(a) if the Person is a natural person, by that Person; or
(b) in any other case, in the name of such Person by one or more
Authorized Officers of that Person.
"Distribution" means a distribution payable to Holders of Securities in
accordance with Section 6.1.
"DTC" means The Depository Trust Company, the initial Depository.
"Event of Default" in respect of the Securities means an Event of Default (as
defined in the Indenture) has occurred and is continuing in respect of the
Subordinated Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from time
to time, or any successor legislation.
"Global Security" means a certificate representing all or a portion of the
Common Securities or the Preferred Securities issued hereunder, as the case
may be, and delivered to the Depository in accordance with Section 9.4 and
bearing the legend set forth in Section 9.4.
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<PAGE>
"Holder" means a Person in whose name a Security is registered, such Person
being a beneficial owner within the meaning of the Business Trust Act.
"Indemnified Person" means (a) any Trustee; (b) any Affiliate of any Trustee;
(c) any officers, directors, shareholders, members, partners, employees,
representatives or agents of any Trustee; or (d) any employee or agent of the
Trust or its Affiliates.
"Indenture" means the Indenture dated as of __________, 1995, as supplemented
by the First Supplemental Indenture dated as of __________, 1995, each being
between the Subordinated Debenture Issuer and the Subordinated Debenture
Trustee as such Indenture may be further amended, supplemented or modified in
accordance with the terms thereof.
"Investment Company" means an investment company as defined in the Investment
Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as amended
from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in Exhibit A as such
exhibit may be amended or modified in accordance with the provisions of this
Declaration.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Majority in liquidation amount of the Securities" means Holder(s) of
outstanding Securities voting together as a single class or, as the context
may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities voting separately as a class, who are the record
owners of more than 50% of the aggregate liquidation amount (including the
stated amount that would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Distributions to the date upon which the voting percentages
are determined) of all outstanding Securities of the relevant class. In
determining whether the Holders of the requisite amount of Preferred
Securities have voted, if the Preferred Securities remain in the form of one
or more Global Securities, Holders shall be deemed to be the Persons who own
beneficial interests in such Global Securities as reflected on the books of
the Depository, or on the books of a Person maintaining an account with such
Depository, directly or indirectly (in each case in accordance with the rules
of the Depository), and Preferred Securities which are owned by the Sponsor,
the Trusts or any other obligor on the Preferred Securities or by any Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with the Sponsor, the Trustee or any other obligor on
the Preferred Securities shall be disregarded for the purpose of any such
determination.
"Ministerial Action" has the meaning set forth in the terms of the Securities
as set forth in Exhibit A as such exhibit may be amended or modified in
accordance with the provisions of this Declaration.
"Officer's Certificate" means, with respect to any Person, a certificate
signed by an Authorized Officer of such Person. Any Officer's Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Declaration shall include:
(a) a statement that the officer signing the Certificate has read the
covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the
Certificate;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of such officer, such
condition or covenant has been complied with.
8
<PAGE>
"100% in liquidation amount of the Securities" means Holders of outstanding
Securities voting together as a single class or, as the context may require,
Holders of outstanding Preferred Securities or Holders of outstanding Common
Securities, voting separately as a class, representing at least 100% of the
aggregate liquidation amount (including the stated amount that would be paid
on redemption, liquidation or otherwise, plus accrued and unpaid Distributions
to the date upon which the voting percentages are determined) of all
outstanding Securities of the relevant class. In determining whether the
Holders of the requisite amount of Preferred Securities have voted, if the
Preferred Securities remain in the form of one or more Global Securities,
Holders shall be deemed to be the Persons who own beneficial interests in such
Global Securities as reflected on the books of the Depository, or on the books
of a Person maintaining an account with such Depository, directly or
indirectly (in each case in accordance with the rules of the Depository), and
Preferred Securities which are owned by the Sponsor, the Trusts or any other
obligor on the Preferred Securities or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Sponsor, the Trustee or any other obligor on the Preferred Securities
shall be disregarded for the purpose of any such determination.
"Paying Agent" has the meaning specified in Section 3.8(h).
"Person" means a legal person, including any individual, corporation, estate,
partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency, authority, or political subdivision thereof.
"Preferred Securities Guarantee" means the guarantee agreement dated as of
_____________, [1995], of the Sponsor in respect of the Preferred Securities.
"Preferred Security" has the meaning specified in Section 7.1.
"Pricing Agreement" means the pricing agreement between the Trust, the
Subordinated Debenture Issuer, and the underwriters designated by the Regular
Trustees with respect to the offer and sale of the Preferred Securities.
"Property Trustee" means the Trustee meeting the eligibility requirements set
forth in Section 5.3.
"Property Trustee Account" has the meaning set forth in Section 3.8(c).
"Quorum" means a majority of the Regular Trustees or, if there are only two
Regular Trustees, both of them.
"Register" means the books for the registration and transfer of Securities
which books are kept by the Trustee in accordance with Section 9.2.
"Regular Trustee" means any Trustee other than the Property Trustee and the
Delaware Trustee.
"Related Party" means, with respect to the Sponsor, any direct or indirect
wholly owned subsidiary of the Sponsor or any other Person that owns, directly
or indirectly, 100% of the outstanding voting securities of the Sponsor.
"Responsible Officer" means, with respect to the Property Trustee, the
chairman of the board, the president, any vice-president, any assistant vice-
president, the secretary, any assistant secretary, the treasurer, any
assistant treasurer, any trust officer or assistant trust officer or any other
officer in the Corporate Trust Department of the Property Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
"Securities" means the Common Securities and the Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended and as it may be
amended from time to time hereafter, or any successor legislation.
9
<PAGE>
"66-2/3% in liquidation amount of the Securities" means Holders of outstanding
Securities voting together as a single class or, as the context may require,
Holders of outstanding Preferred Securities or Holder(s) of outstanding Common
Securities voting separately as a class, representing at least 66-2/3% of the
aggregate liquidation amount (including the stated amount that would be paid
on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions, to the date upon which the voting percentages are determined)
of all outstanding Securities of the relevant class. In determining whether
the Holders of the requisite amount of Preferred Securities have voted,
Preferred Securities which are owned by the Sponsor, the Trusts or any other
obligor on the Preferred Securities or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Sponsor, the Trustee or any other obligor on the Preferred Securities
shall be disregarded for the purpose of any such determination.
"Special Event" has the meaning set forth in Exhibit A as such exhibit may be
amended or modified in accordance with the provisions of this Declaration.
"Sponsor" means Pacific Telesis Group, a Nevada corporation in its capacity as
sponsor of the Trust or any successor entity.
"Subordinated Debenture Issuer" means the Sponsor in its capacity as issuer of
the Debentures.
"Subordinated Debenture Trustee" means The First National Bank of Chicago, as
trustee under the Indenture until a successor is appointed thereunder, and
thereafter means such successor trustee.
"Subordinated Debentures" means the series of Subordinated Debentures and/or
notes to be issued by the Subordinated Debenture Issuer under the Indenture to
be held by the Property Trustee pursuant to Section 3.6(c).
"Successor Property Trustee" means a successor Trustee possessing the
qualifications to act as Property Trustee under Section 5.3.
"Super Majority" has the meaning set forth in Section 2.6(a)(ii). In
determining whether the Holders of the requisite amount of Preferred
Securities have voted, if the Preferred Securities remain in the form of one
or more Global Securities, Holders shall be deemed to be the Persons who own
beneficial interests in such Global Securities as reflected on the books of
the Depository, or on the books of a Person maintaining an account with such
Depository, directly or indirectly (in each case in accordance with the rules
of the Depository), and Preferred Securities which are owned by the Sponsor,
the Trusts or any other obligor on the Preferred Securities or by any Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with the Sponsor, the Trustee or any other obligor on
the Preferred Securities shall be disregarded for the purpose of any such
determination.
"Tax Event" has the meaning set forth in Exhibit A as such exhibit may be
amended or modified in accordance with the provisions of this Declaration.
"10% in liquidation amount of the Securities" means Holders of outstanding
Securities voting together as a single class or, as the context may require,
Holders of outstanding Preferred Securities or Holders of outstanding Common
Securities, voting separately as a class, representing at least 10% of the
aggregate liquidation amount (including the stated amount that would be paid
on redemption, liquidation or otherwise, plus accrued and unpaid Distributions
to the date upon which the voting percentages are determined) of all
outstanding Securities of the relevant class. In determining whether the
Holders of the requisite amount of Preferred Securities have voted, if the
Preferred Securities remain in the form of one or more Global Securities,
Holders shall be deemed to be the Persons who own beneficial interests in such
Global Securities as reflected on the books of the Depository, or on the books
of a Person maintaining an account with such Depository, directly or
indirectly (in each case in accordance with the rules of the Depository), and
Preferred Securities which are owned by the Sponsor, the Trusts or any other
obligor on the Preferred Securities or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Sponsor, the Trustee or any other obligor on the Preferred Securities
shall be disregarded for the purpose of any such determination.
10
<PAGE>
"Treasury Regulations" means the income tax regulations, including temporary
and proposed regulations, promulgated under the Code by the United States
Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this Declaration as a
trustee, so long as such Person shall continue in office in accordance with
the terms hereof, and all other Persons who may from time to time be duly
appointed, qualified and serving as Trustees in accordance with the provisions
hereof, and references herein to a Trustee or the Trustees shall refer to such
Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended as the
date of this Declaration.
"25% in liquidation amount of the Securities" means Holders of outstanding
Securities voting together as a single class or, as the context may require,
Holders of outstanding Preferred Securities or Holders of outstanding Common
Securities, voting separately as a class, representing at least 25% of the
aggregate liquidation amount (including the stated amount that would be paid
on redemption, liquidation or otherwise, plus accrued and unpaid Distributions
to the date upon which the voting percentages are determined) of all
outstanding Securities of the relevant class. In determining whether the
Holders of the requisite amount of Preferred Securities have voted, if the
Preferred Securities remain in the form of one or more Global Securities,
Holders shall be deemed to be the Persons who own beneficial interests in such
Global Securities as reflected on the books of the Depository, or on the books
of a Person maintaining an account with such Depository, directly or
indirectly (in each case in accordance with the rules of the Depository), and
Preferred Securities which are owned by the Sponsor, the Trusts or any other
obligor on the Preferred Securities or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Sponsor, the Trustee or any other obligor on the Preferred Securities
shall be disregarded for the purpose of any such determination.
"Underwriting Agreement" means the Underwriting Agreement for the offering and
sale of Preferred Securities in the form of Exhibit C.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) So long as the Preferred Securities are outstanding, this
Declaration shall be subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and
shall, to the extent applicable, be governed by such provisions. At
such time as the Preferred Securities are no longer outstanding, the
Trust Indenture Act shall not govern this Declaration and all
provisions requiring compliance with specified provisions of the
Trust Indenture Act shall be of no further force and effect.
(b) The Property Trustee shall be the only Trustee which is a Trustee
for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration limits,
qualifies or conflicts with the duties imposed by Sections 310 to
317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
(d) The application of the Trust Indenture Act to this Declaration shall
not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the
Trust.
11
<PAGE>
SECTION 2.2 Lists of Holders of Securities.
(a) The Sponsor and the Regular Trustees on behalf of the Trust will
furnish or cause to be furnished to the Property Trustee, not less
than 45 days nor more than 60 days after each date (month and day)
that is a Distribution payment date, but in no event less frequently
than semiannually, and at such other times as the Property Trustee
may request in writing, within 30 days after receipt by the Sponsor
and the Regular Trustees of any such request, a list in such form as
the Property Trustee may reasonably require containing all the
information in the possession or control of the Sponsor, the
Trustees, or any Paying Agents other than the Property Trustee, as
to the names and addressees of the Holders of Securities, obtained
since the date as of which the next previous list, if any, was
furnished, excluding from any such list the names and addresses
received by the Property Trustee in its capacity as registrar (if so
acting). Any such list may be dated as of a date not more than 15
days prior to the time such information is furnished and need not
include information received after such date.
(b) The Property Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of
Securities (i) contained in the most recent list furnished to it as
provided in this Section 2.2, (ii) received by the Property Trustee
in the capacity of Paying Agent or registrar (if so acting), and
(iii) filed with the Property Trustee within the two preceding years
as provided for in Section 2.2(a). The Property Trustee may destroy
any list furnished to it as provided in this Section 2.2 upon
receipt of a new list so furnished.
(c) If three or more Holders of Securities (hereinafter referred to as
"applicants") apply in writing to the Property Trustee, and furnish
to the Property Trustee reasonable proof that each such applicant
has owned a Security for a period of at least six months preceding
the date of such application, and such application states that the
applicants desire to communicate with other Holders of Securities
with respect to their rights under this Declaration or under such
Securities, and is accompanied by a copy of the form of proxy or
other communication which such applicants propose to transmit, then
the Property Trustee shall, within five Business Days after the
receipt of such application, at its election, either:
(i) afford such applicants access to the information preserved at
the time by the Property Trustee in accordance with the
provisions of this Section 2.2 or
(ii) inform such applicants as to the approximate number of Holders
of Securities whose names and addresses appear in the
information preserved at the time by the Property Trustee in
accordance with the provisions of Section 2.2(b), and as to the
approximate cost of mailing to such Holders the form of proxy
or other communications, if any, specified in such application.
12
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If the Property Trustee shall elect not to afford such applicants
access to such information, the Property Trustee shall, upon the
written request of such applicants, mail to each of the Holders of
Securities whose name and address appear in the information
preserved at the time by the Property Trustee in accordance with the
provisions of Section 2.2(b), a copy of the form of proxy or other
communication which is specified in such request, with reasonable
promptness after a tender to the Property Trustee of the material to
be mailed and of payment, or provision for the payment, of the
reasonable expenses of mailing, unless within five days after such
tender, the Property Trustee shall mail to such applicants and file
with the Commission, together with a copy of the material to be
mailed, a written statement to the effect that, in the opinion of
the Property Trustee, such mailing would be contrary to the best
interests of the Holders of Securities or would be in violation of
applicable law. Such written statement shall specify the basis of
such opinion. If the Commission, after opportunity for a hearing
upon the objections specified in the written statement so filed,
shall enter an order refusing to sustain any of such objections or
if, after the entry of an order sustaining one or more of such
objections, the Commission shall find, after notice and opportunity
for hearing, that all the objections so sustained have been met and
shall enter an order so declaring, the Property Trustee shall mail
copies of such material to all such Holders of Securities with
reasonable promptness after the entry of such order and the renewal
of such tender; otherwise the Property Trustee shall be relieved of
any obligation or duty to such applicants respecting their
application.
(d) Each and every Holder of the Securities, by receiving and holding
the same, agrees with the Sponsor, the Regular Trustees and the
Property Trustee that none of them nor any Paying Agent nor any
registrar shall be held accountable by reason of the disclosure of
any such information as to the names and addresses of the Holders of
Securities in accordance with the provisions of Section 2.2(c),
regardless of the source from which such information was derived,
and that the Property Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under
Section 2.2(c).
(e) The Property Trustee shall comply with its obligations under
Sections 311(a) and 311(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Property Trustee.
Within 60 days after May 15 of each year, the Property Trustee shall provide
to the Holders of the Preferred Securities such reports as are required by
Section 313 of the Trust Indenture Act, if any, in the form and in the manner
provided by Section 313 of the Trust Indenture Act. The Property Trustee
shall also comply with the requirements of Section 313(d) of the Trust
Indenture Act.
SECTION 2.4 Periodic Reports to Property Trustee.
Each of the Sponsor and the Regular Trustees on behalf of the Trust shall
provide to the Property Trustee such documents, reports and information as
required by Section 314 (if any) and the compliance certificate required by
Section 314 of the Trust Indenture Act in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the Trust shall
provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act.
Any certificate or opinion required to be given by an officer pursuant to
Section 314(c)(1) may be given in the form of an Officer's Certificate.
13
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SECTION 2.6 Events of Default; Waiver.
The occurrence and continuance of an Event of Default under the Indenture with
respect to the Subordinated Debentures shall constitute an Event of Default
hereunder.
(a) The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the
Preferred Securities, waive any past Event of Default in respect of
the Preferred Securities and its consequences, provided that, if the
underlying Event of Default under the Indenture:
(i) is not waivable under the Indenture, the Event of Default under
the Declaration shall also not be waivable; or
(ii) requires the consent or vote of the holders of greater than a
majority in principal amount of the Subordinated Debentures (a
"Super Majority") to be waived under the Indenture, the Event
of Default under the Declaration may only be waived by the vote
of all of the Holders of the Preferred Securities or such
proportion thereof in liquidation amount as represents the
relevant Super Majority of the aggregate principal amount of
the Subordinated Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of
Section 316(a)(1)(B) of the Trust Indenture Act and such Section
316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded
from this Declaration and the Securities, as permitted by the Trust
Indenture Act.
Upon such waiver, any such default shall cease to exist, and any
Event of Default with respect to the Preferred Securities arising
therefrom shall be deemed to have been cured, for every purpose of
this Declaration, but no such waiver shall extend to any subsequent
or other default or Event of Default with respect to the Preferred
Securities or impair any right consequent thereon. Any waiver by
the Holders of the Preferred Securities of an Event of Default with
respect to the Preferred Securities shall also be deemed to
constitute a waiver by the Holders of the Common Securities of any
such Event of Default with respect to the Common Securities for all
purposes of this Declaration without any further act, vote, or
consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the
Common Securities, waive any past Event of Default with respect to
the Common Securities and its consequences, provided that, if the
underlying Event of Default under the Indenture:
(i) is not waivable under the Indenture, except where the Holders
of the Common Securities are deemed to have waived such Event
of Default under the Declaration as provided below in this
Section 2.6(b), the Event of Default under the Declaration
shall also not be waivable; or
(ii) requires the consent or vote of a Super Majority to be waived,
except where the Holders of the Common Securities are deemed to
have waived such Event of Default under the Declaration as
provided below in this Section 2(b), the Event of Default under
the Declaration may only be waived by the vote of the Holders
of at least the proportion in liquidation amount of the Common
Securities as represents the relevant Super Majority of the
aggregate principal amount of the Subordinated Debentures
outstanding;
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provided that, each Holder of Common Securities will be deemed to
have waived any such Event of Default and all Events of Default with
respect to the Common Securities and its consequences until all
Events of Default with respect to the Preferred Securities have been
cured, waived or otherwise eliminated, and until such Events of
Default have been so cured, waived or otherwise eliminated, the
Property Trustee will be deemed to be acting solely on behalf of the
Holders of the Preferred Securities and only the Holders of the
Preferred Securities will have the right to direct the Property
Trustee in accordance with the terms of the Securities. The
foregoing provisions of this Section 2.6(b) shall be in lieu of
Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act
and such Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust
Indenture Act are hereby expressly excluded from this Declaration
and the Securities, as permitted by the Trust Indenture Act.
Subject to the foregoing provisions of this Section 2.6(b), upon
such waiver, any such default shall cease to exist and any Event of
Default with respect to the Common Securities arising therefrom
shall be deemed to have been cured for every purpose of this
Declaration, but no such waiver shall extend to any subsequent or
other default or Event of Default with respect to the Common
Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the Property
Trustee at the direction of the Holders of the Preferred Securities
constitutes a waiver of the corresponding Event of Default under
this Declaration. The foregoing provisions of this Section 2.6(c)
shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act
and such Section 316(a)(1)(B) of the Trust Indenture Act is hereby
expressly excluded from this Declaration and the Securities, as
permitted by the Trust Indenture Act.
(d) The provisions of Section 315(e) of the Trust Indenture Act shall be
excluded from this Declaration.
(e) No Holder of any Preferred Security or of any Common Security shall
have any right by virtue or by availing of any provision of this
Declaration to institute any suit, action or proceeding in equity or
at law upon or under or with respect to this Declaration or for the
appointment of a receiver or trustee, or for any other remedy
hereunder, unless such Holder previously shall have given to the
Property Trustee written notice of a continuing Event of Default, as
hereinbefore provided, and unless also the Holders of not less than
25% in liquidation amount of the Preferred Securities or of the
Common Securities, as the case may be, then outstanding shall have
made written request upon the Property Trustee to institute such
action, suit or proceeding in its own name as Property Trustee
hereunder and shall have offered to the Property Trustee such
reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby (including the
reasonable fees of counsel for the Property Trustee), and the
Property Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding and no direction
inconsistent with such written request shall have been given to the
Property Trustee pursuant to this Section 2.2(e); it being
understood and intended, and being expressly covenanted by the taker
and Holder of every Security with every other taker and Holder and
the Property Trustee, that no one or more Holders of Securities
shall have any right in any manner whatever by virtue or by availing
of any provision of this Declaration to affect, disturb or prejudice
the rights of the Holders of any other of such Securities, or to
obtain or seek to obtain priority over or preference to any other
such Holder, or to enforce any right under this Declaration, except
in the manner herein provided and for the equal, ratable and common
benefit of all Holders of Securities. For the protection and
enforcement of the provisions of this Section 2.2(e), each and every
Holder and the Property Trustee shall be entitled to such relief as
can be given either at law or in equity.
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Notwithstanding any other provisions in this Indenture, the right of
any Holder of any Security to receive payment of the Distributions
on such Security on or after the respective due dates expressed in
such Security (or, in the case of redemption, on or after the date
fixed for redemption), or to institute suit for the enforcement of
any such payment on or after such respective dates shall not be
impaired or affected without the consent of such Holder.
SECTION 2.7 Event of Default; Notice.
(a) The Property Trustee shall, within 90 days after the occurrence of
an Event of Default, transmit by mail, first class postage prepaid,
to the Holders of the Securities, notices of such Event of Default
known to the Property Trustee, unless such Event of Default has been
cured, remedied or waived before the giving of such notice (the term
"Event of Default" for the purposes of this Section 2.7(a) being
hereby defined to be an Event of Default irrespective of any periods
of grace provided for in the Indenture and irrespective of the
giving of any notice provided therein); provided that, except for an
Event of Default in the payment of principal of (or premium, if any)
or interest on any of the Subordinated Debentures or in the payment
of any sinking fund installment established for the Subordinated
Debentures, the Property Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive
committee, or a trust committee of directors and/or Responsible
Officers of the Property Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders of the
Securities.
(b) The Property Trustee shall not be deemed to have knowledge of any
default except:
(i) a default under Sections 501(1) and 501(2) of the Indenture; or
(ii) any default as to which the Property Trustee shall have
received written notice or a Responsible Officer charged with
the administration of the Declaration shall have obtained
written notice of.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "Pacific Telesis Financing I", as such name may be modified
from time to time by the Regular Trustees following written notice to the
Holders of Securities. The Trust's activities may be conducted under the name
of the Trust or any other name deemed advisable by the Regular Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o Pacific Telesis Group,
130 Kearny Street, San Francisco, California 94108. On ten Business Days
written notice to the Holders of Securities, the Regular Trustees may
designate another principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to issue and sell
Securities and use the proceeds from such sale to acquire the Subordinated
Debentures, and (b) except as otherwise limited herein, to engage in only
those other activities necessary, or incidental thereto. The Trust shall not
borrow money, issue debt or reinvest proceeds derived from investments, pledge
any of its assets, or otherwise undertake (or permit to be undertaken) any
activity that would cause (i) the Trust to be classified as other than a
grantor trust for United States federal income tax purposes or (ii) each
Holder of Securities not to be treated as owning an undivided beneficial
interest in the Subordinated Debentures at any time the Securities are
outstanding.
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SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to the specific
duties of the Property Trustee, the Regular Trustees shall have exclusive and
complete authority to carry out the purposes of the Trust. An action taken by
the Regular Trustees in accordance with their powers shall constitute the act
of and serve to bind the Trust and an action taken by the Property Trustee in
accordance with its powers shall constitute the act of and serve to bind the
Trust. In dealing with the Trustees acting on behalf of the Trust, no person
shall be required to inquire into the authority of the Trustees to bind the
Trust. Persons dealing with the Trust are entitled to rely conclusively on
the power and authority of the Trustees as set forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the Subordinated Debentures
and the Property Trustee Account or as otherwise provided in this Declaration,
legal title to all assets of the Trust shall be vested in the Trust. The
Holders shall not have legal title to any part of the assets of the Trust, but
shall have an undivided beneficial interest in the assets of the Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and authority to
cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the Common Securities
in accordance with this Declaration; provided, however, that the
Trust may issue no more than one series of Preferred Securities and
no more than one series of Common Securities, and, provided further,
that there shall be no interests in the Trust other than the
Securities, and the issuance of Securities shall be limited to a
simultaneous issuance of both Preferred Securities and Common
Securities on each Closing Date;
(b) in connection with the issue and sale of the Preferred Securities,
at the direction of the Sponsor, to:
(i) execute and file with the Commission the registration
statement on Form S-3 prepared by the Sponsor, including
any amendments thereto, pertaining to the Preferred
Securities, the Subordinated Debentures and the Preferred
Securities Guarantee;
(ii) execute and file any documents prepared by the Sponsor, or
take any acts as determined by the Sponsor to be necessary
in order to qualify or register all or part of the
Preferred Securities in any State in which the Sponsor has
determined to qualify or register such Preferred
Securities for sale;
(iii) execute and file an application, prepared by the Sponsor,
to the New York Stock Exchange or any other national stock
exchange or the Nasdaq National Market for listing upon
notice of issuance of any Preferred Securities;
(iv) execute and file with the Commission a registration
statement on Form 8-A, including any amendments thereto,
prepared by the Sponsor relating to the registration of
the Preferred Securities under Section 12(b) of the
Exchange Act; and
(v) execute and enter into the Underwriting Agreement and
Pricing Agreement providing for the sale of the Preferred
Securities;
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(c) to acquire the Subordinated Debentures with the proceeds of the sale
of the Preferred Securities and the Common Securities; provided,
however, that the Regular Trustees shall cause legal title to the
Subordinated Debentures to be held of record in the name of the
Property Trustee for the benefit of the Trust and the Holders of the
Preferred Securities and the Holders of the Common Securities;
(d) to give the Sponsor and the Property Trustee prompt written notice
of the occurrence of a Special Event; provided that the Regular
Trustees shall consult with the Sponsor and the Property Trustee
before taking or refraining from taking any Ministerial Action in
relation to a Special Event;
(e) to establish a record date with respect to all actions to be taken
hereunder that require a record date be established, including for
the purposes of Section 316(c) of the Trust Indenture Act, and with
respect to Distributions, voting rights, redemptions and exchanges,
and to issue relevant notices to the Holders of Preferred Securities
and Holders of Common Securities as to such actions and applicable
record dates;
(f) to take all actions and perform such duties as may be required of
the Regular Trustees pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort to
legal action, or otherwise adjust claims or demands of or against
the Trust ("Legal Action"), unless pursuant to Section 3.8(e), the
Property Trustee has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors,
advisors, and consultants and pay reasonable compensation for such
services;
(i) to cause the Trust to comply with the Trust's obligations under the
Trust Indenture Act;
(j) to give the certificate required by Section 314(a)(4) of the Trust
Indenture Act to the Property Trustee, which certificate may be
executed by any Regular Trustee;
(k) to incur expenses that are necessary or incidental to carry out any
of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the Securities of
any notice received from the Subordinated Debenture Issuer of its
election (i) to defer payments of interest on the Subordinated
Debentures by extending the interest payment period under the
Indenture or, (ii) to extend the scheduled maturity date on the
Subordinated Debentures;
(n) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all
matters necessary or incidental to the foregoing;
(o) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence,
rights, franchises and privileges as a statutory business trust
under the laws of the State of Delaware and of each other
jurisdiction in which such existence is necessary to protect the
limited liability of the Holders of the Securities or to enable the
Trust to effect the purposes for which the Trust was created;
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(p) to take any action, not inconsistent with this Declaration or with
applicable law, that the Regular Trustees determine in their
discretion to be necessary or desirable in carrying out the
activities of the Trust as set out in this Section 3.6, including,
but not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment
Company Act;
(ii) causing the Trust not to be classified as other than a
grantor trust for United States federal income tax
purposes; and
(iii) cooperating with the Subordinated Debenture Issuer to
ensure that the Subordinated Debentures will be treated as
indebtedness of the Subordinated Debenture Issuer for
United States federal income tax purposes,
provided that such action does not adversely affect the interests of
Holders;
(q) to take all action necessary to cause all applicable tax returns and
tax information reports that are required to be filed with respect
to the Trust to be duly prepared and filed by the Regular Trustees,
on behalf of the Trust;
(r) subject to the requirements of Rule 3a-5 and Section 317(b) of the
Trust Indenture Act, to appoint one or more Paying Agents (as
defined herein) in addition to the Property Trustee; and
(s) as soon as is practicable, furnish the Property Trustee with notice
of any event which is an Event of Default or which with the giving
of notice or the passage of time or both would constitute an Event
of Default which has occurred and is continuing on the date of such
notice, which notice shall set forth the nature of such event and
the action which the Regular Trustees proposes to take with respect
thereto.
The Regular Trustees must exercise the powers set forth in this Section 3.6 in
a manner that is consistent with the purposes and functions of the Trust set
out in Section 3.3, and the Regular Trustees shall not take any action that is
inconsistent with the purposes and functions of the Trust set forth in Section
3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of the
powers or the authority of the Property Trustee set forth in Section 3.8.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including the Property
Trustee) shall cause the Trust not to, engage in any activity other
than as required or authorized by this Declaration. In particular,
the Trust shall not and the Trustees (including the Property
Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding the
Subordinated Debentures, but shall distribute all such
proceeds to Holders of Securities pursuant to the terms of
this Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided
herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans
represented by the Subordinated Debentures;
(v) possess any power or otherwise act in such a way as to
vary the Trust assets or the terms of the Securities in
any way whatsoever;
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(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other
than the Securities; or
(vii) other than as provided in this Declaration and in Exhibit
A both as may be amended or modified in accordance with
the provisions of this Declaration, (A) direct the time,
method and place of exercising any trust or power
conferred upon the Subordinated Debenture Trustee with
respect to the Subordinated Debentures, (B) waive any past
default that is waivable under Section 513 of the
Indenture, (C) exercise any right to rescind or annul any
declaration that the principal of all the Subordinated
Debentures shall be due and payable, or (D) consent to any
amendment, modification or termination of the Indenture or
the Subordinated Debentures where such consent shall be
required unless the Trust shall have received an opinion
of counsel to the effect that such modification will not
cause more than an insubstantial risk that the Trust will
be classified as other than a grantor trust for United
States federal income tax purposes.
SECTION 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Subordinated Debentures shall be owned
by and held of record in the name of the Property Trustee for
the benefit of the Trust and the Holders of the Securities. The
right, title and interest of the Property Trustee to the
Subordinated Debentures shall vest automatically in each Person
who may hereafter be appointed as Property Trustee in
accordance with Section 5.6. Such vesting and cessation of
title shall be effective whether or not conveyancing documents
with regard to the Subordinated Debentures have been executed
and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Subordinated Debentures to the Regular Trustees
or to the Delaware Trustee (if the Property Trustee does not
also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated trust account
(the "Property Trustee Account") in the name of and
under the exclusive control of the Property Trustee
on behalf of the Holders of the Securities and, upon
the receipt of payments of funds made in respect of
the Subordinated Debentures held by the Property
Trustee, deposit such funds into the Property Trustee
Account and make payments to the Holders of the
Preferred Securities and Holders of the Common
Securities from the Property Trustee Account in
accordance with Section 6.1. Funds in the Property
Trustee Account shall be held uninvested until
disbursed in accordance with this Declaration. The
Property Trustee Account shall be an account that is
maintained with a banking institution either (A)
whose long term unsecured indebtedness is rated "A"
or better by a "nationally recognized statistical
rating organization", as that term is defined for
purposes of Rule 436(g)(2) under the Securities Act
or (B) which has a capital surplus of at least
$150,000,000;
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect the redemption of
the Preferred Securities and the Common Securities to
the extent the Subordinated Debentures are redeemed
or mature; and
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(iii) upon notice of distribution issued by the Regular
Trustees in accordance with the terms of the
Securities, engage in such ministerial activities as
shall be necessary or appropriate to effect the
distribution of the Subordinated Debentures to
Holders of Securities upon the occurrence of certain
special events (as may be defined in the terms of the
Securities) arising from a change in law or a change
in legal interpretation or other specified
circumstances pursuant to the terms of the
Securities.
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee
pursuant to the terms of the Securities.
(e) The Property Trustee shall take any Legal Action which arises
out of or in connection with an Event of Default or the
Property Trustee's duties and obligations under this
Declaration or the Trust Indenture Act.
(f) The Property Trustee shall continue to serve as Trustee until
either:
(i) the Trust has been completely liquidated and the
proceeds of the liquidation distributed to the
Holders of Securities pursuant to the terms of the
Securities; or
(ii) a Successor Property Trustee has been appointed and
has accepted that appointment in accordance with
Section 5.6.
(g) The Property Trustee shall have the legal power to exercise all
of the rights, powers and privileges of a holder of
Subordinated Debentures under the Indenture and, if an Event of
Default occurs and is continuing, the Property Trustee shall,
for the benefit of Holders of the Securities, enforce its
rights as holder of the Subordinated Debentures subject to the
rights of the Holders pursuant to the terms of such Securities.
(h) The Property Trustee may authorize one or more Persons (each, a
"Paying Agent") to pay Distributions, redemption payments or
liquidation payments on behalf of the Trust with respect to all
securities and any such Paying Agent shall comply with Section
317(b) of the Trust Indenture Act. Any Paying Agent may be
removed by the Property Trustee at any time and a successor
Paying Agent or additional Paying Agents may be appointed at
any time by the Property Trustee.
(i) Subject to this Section 3.8, the Property Trustee shall have
none of the duties, liabilities, powers or the authority of the
Regular Trustees set forth in Section 3.6.
The Property Trustee must exercise the powers set forth in this Section
3.8 in a manner that is consistent with the purposes and functions of the
Trust set out in Section 3.3, and the Property Trustee shall not take any
action that is inconsistent with the purposes and functions of the Trust
set out in Section 3.3.
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SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee.
(a) The Property Trustee, before the occurrence of any Event of Default
and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are
specifically set forth in this Declaration, in the terms of the
Securities and in the Trust Indenture Act and no implied covenants
shall be read into this Declaration against the Property Trustee.
In case an Event of Default has occurred (that has not been cured or
waived pursuant to Section 2.6), the Property Trustee shall exercise
such of the rights and powers vested in it by this Declaration, and
use the same degree of care and skill in its exercise, as a prudent
person would exercise or use under the circumstances in the conduct
of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve the
Property Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except
that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Property Trustee shall
be determined solely by the express provisions of this
Declaration, in the terms of the Securities and in the
Trust Indenture Act and the Property Trustee shall not be
liable except for the performance of such duties and
obligations as are specifically set forth in this
Declaration, and no implied covenants or obligations shall
be read into this Declaration against the Property
Trustee; and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to
the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or
opinions furnished to the Property Trustee and conforming
to the requirements of this Declaration; but in the case
of any such certificates or opinions that by any provision
hereof are specifically required to be furnished to the
Property Trustee, the Property Trustee shall be under a
duty to examine the same to determine whether or not they
conform to the requirements of this Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the
Property Trustee, unless it shall be proved that the Property
Trustee was negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Securities at the time
outstanding relating to the time, method and place of
conducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power conferred
upon the Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that the repayment
of such funds or liability is not reasonably assured to it
under the terms of this Declaration or adequate indemnity
against such risk or liability is not reasonably assured to it;
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(v) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Subordinated
Debentures and the Property Trustee Account shall be to deal
with such property in a similar manner as the Property Trustee
deals with similar property for its own account, subject to the
protections and limitations on liability afforded to the
Property Trustee under this Declaration, and the Trust
Indenture Act;
(vi) the Property Trustee shall have no duty or liability for or
with respect to the value, genuineness, existence or
sufficiency of the Subordinated Debentures or the payment of
any taxes or assessments levied thereon or in connection
therewith;
(vii) the Property Trustee shall not be liable for any interest on
any money received by it except as it may otherwise agree with
the Sponsor. Money held by the Property Trustee need not be
segregated from other funds held by it except in relation to
the Property Trustee Account maintained by the Property Trustee
pursuant to Section 3.8(c)(i) and except to the extent
otherwise required by law; and
(viii) the Property Trustee shall not be responsible for monitoring
the compliance by the Regular Trustees or the Sponsor with
their respective duties under this Declaration, nor shall the
Property Trustee be liable for the default or misconduct of the
Regular Trustees or the Sponsor.
SECTION 3.10 Certain Rights of the Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may rely and shall be fully
protected in acting or refraining from acting upon
any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or
presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Regular
Trustees contemplated by this Declaration shall be
sufficiently evidenced by a Direction or an Officer's
Certificate;
(iii) whenever in the administration of this Declaration,
the Property Trustee shall deem it desirable that a
matter be proved or established before taking,
suffering or omitting any action hereunder, the
Property Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad
faith on its part request and rely upon an Officer's
Certificate which, upon receipt of such request,
shall be promptly delivered by the Sponsor or the
Regular Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument
(including any financing or continuation statement or
any filing under tax or securities laws) (or any
rerecording, refiling or registration thereof);
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(v) the Property Trustee may consult with counsel or
other experts and the advice or opinion of such
counsel and experts with respect to legal matters or
advice within the scope of such experts' area of
expertise shall be full and complete authorization
and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and
in accordance with such advice or opinion. Such
counsel may be counsel to the Sponsor or any of its
Affiliates, and may include any of its employees.
The Property Trustee shall have the right at any time
to seek instructions concerning the administration of
this Declaration from any court of competent
jurisdiction;
(vi) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by
this Declaration at the request or direction of any
Holder, unless such Holder shall have provided to the
Property Trustee adequate security and indemnity,
which would satisfy a reasonable person in the
position of the Property Trustee, against the costs,
expenses (including attorneys' fees and expenses) and
liabilities that might be incurred by it in complying
with such request or direction, including such
reasonable advances as may be requested by the
Property Trustee provided, that, nothing contained in
this Section 3.10(a)(vi) shall be taken to relieve
the Property Trustee, upon the occurrence of an Event
of Default, of its obligation to exercise the rights
and powers vested in it by this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the
Property Trustee, in its discretion, may make such
further inquiry or investigation into such facts or
matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder
either directly or by or through agents or attorneys,
and the Property Trustee shall not be responsible for
any misconduct or negligence on the part of any agent
or attorney appointed with due care by it hereunder;
(ix) any action taken by the Property Trustee or its
agents hereunder shall bind the Trust and the Holders
of the Securities, and the signature of the Property
Trustee or its agents alone shall be sufficient and
effective to perform any such action and no third
party shall be required to inquire as to the
authority of the Property Trustee to so act or as to
its compliance with any of the terms and provisions
of this Declaration, both of which shall be
conclusively evidenced by the Property Trustee's or
its agent's taking such action;
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(x) whenever in the administration of this Declaration
the Property Trustee shall deem it desirable to
receive instructions with respect to enforcing any
remedy or right or taking any other action hereunder,
the Property Trustee (i) may request instructions
from the Holders of the Securities which instructions
may only be given by the Holders of the same
proportion in liquidation amount of the Securities as
would be entitled to direct the Property Trustee
under the terms of the Securities in respect of such
remedy, right or action, (ii) may refrain from
enforcing such remedy or right or taking such other
action until such instructions are received, and
(iii) shall be protected in acting in accordance with
such instructions; and
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be under
any obligation to take any action that is
discretionary under the provisions of this
Declaration.
(b) No provision of this Declaration shall be deemed to impose any duty
or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed
on it, in any jurisdiction in which it shall be illegal, or in which
the Property Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts, or
to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other than Section
5.2, the Delaware Trustee shall not be entitled to exercise any powers, nor
shall the Delaware Trustee have any of the duties and responsibilities of the
Regular Trustees or the Property Trustee described in this Declaration.
Except as set forth in Section 5.2, the Delaware Trustee shall be a Trustee
for the sole and limited purpose of fulfilling the requirements of Section
3807 of the Business Trust Act.
SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Regular Trustees, and except as otherwise
required by the Business Trust Act, a majority of or, if there are only two,
both of the Regular Trustees or, if there is only one, such Regular Trustee is
authorized to execute on behalf of the Trust any documents that the Regular
Trustees have the power and authority to execute pursuant to Section 3.6;
provided that, any listing application prepared by the Sponsor referred to in
Section 3.6(b)(iii) may be executed by one Regular Trustee.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities shall be taken
as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as
to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of Article VIII
hereof, shall have existence for 55 years from the Closing Date.
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SECTION 3.15 Mergers.
(a) The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body,
except as described in Section 3.15(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees and without
the consent of the Holders of the Securities, the Delaware Trustee
or the Property Trustee, consolidate, amalgamate, merge with or
into, or be replaced by a trust organized as such under the laws of
any State; provided that:
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust
under the Securities; or
(B) substitutes for the Securities other securities
having substantially the same terms as the Preferred
Securities (the "Successor Securities") so long as
the Successor Securities rank the same as the
Preferred Securities rank with respect to
Distributions and payments upon liquidation,
redemption and maturity;
(ii) the Subordinated Debenture Issuer expressly acknowledges a
trustee of the Successor Entity that possesses the same
powers and duties as the Property Trustee as the holder of
the Subordinated Debentures;
(iii) the Preferred Securities or any Successor Securities are
listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities
exchange or other organization on which the Preferred
Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation or replacement
does not cause the Preferred Securities (including any
Successor Securities) to be downgraded by any nationally
recognized statistical rating organization;
(v) such merger, consolidation, amalgamation or replacement
does not adversely affect the rights, preferences and
privileges of the Holders of the Securities (including any
Successor Securities) in any material respect (other than
with respect to any dilution of such Holders' interests in
the Successor Entity);
(vi) such Successor Entity has a purpose identical to that of
the Trust;
(vii) prior to such merger, consolidation, amalgamation or
replacement, the Sponsor has received an opinion of a
nationally recognized independent counsel to the Trust
experienced in such matters to the effect that:
(A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights,
preferences and privileges of the Holders of the
Securities (including any Successor Securities) in
any material respect (other than with respect to any
dilution of the Holders' interest in the Successor
Entity); and
(B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor the Successor
Entity will be required to register as an Investment
Company; and
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(viii) the Sponsor guarantees the obligations of such Successor
Entity under the Successor Securities at least to the
extent provided by the Preferred Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except with
the consent of Holders of 100% in liquidation amount of the
Securities, consolidate, amalgamate, merge with or into, or be
replaced by any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger or replacement would cause the
Trust or Successor Entity to be classified as other than a grantor
trust for United States federal income tax purposes and each Holder
of the Securities not to be treated as owning an undivided
beneficial interest in the Subordinated Debentures.
SECTION 3.16 Preferential Collection of Claims Against Trust.
(a) Subject to the provisions of Section 3.16(b), if the Property
Trustee shall be or shall become a creditor, directly or indirectly,
secured or unsecured, of the Trust or any other obligor on the
Securities within three months prior to a default, as defined in
Section 3.16(c), or subsequent to such a default, then, unless and
until such default shall be cured, the Property Trustee shall set
apart and hold in a special account for the benefit of the Property
Trustee individually, the Holders of the Securities for which it is
acting as Property Trustee, and the holders of other indenture
securities (as defined in Section 3.16(c));
(i) an amount equal to any and all reductions in the amount
due owing upon any claim as such creditor in respect of
principal or interest, effected after the beginning of
such three months' period, and valid as against the Trust
or such other obligor on the Securities and its other
creditors, except any such reduction resulting from the
receipt or disposition of any property described in
paragraph (ii) of this subsection, or from the exercise of
any right of set-off which the Property Trustee could have
exercised if a petition in bankruptcy had been filed by or
against the Trust or such other obligor on the Securities
upon the date of such default; and
(ii) all property received by the Property Trustee in respect
of any claims as such creditor, either as security
therefor, or in satisfaction or composition thereof, or
otherwise, after the beginning of such three months'
period, or an amount equal to the proceeds of any such
property if disposed of, subject, however, to the rights,
if any, of the Trust or such other obligor on the
Securities and their respective other creditors in such
property or such proceeds.
Nothing herein contained, however, shall affect the right of the
Property Trustee:
(A) to retain for its own account (1) payments made on
account of any such claim by any Person (other than
the Trust or such other obligor on the Securities)
who is liable thereon, and (2) the proceeds of the
bona fide sale of any such claim by the Property
Trustee to a third Person, and (3) distributions made
in cash, securities or other property in respect of
claims filed against the Trust or such other obligor
on the Securities in bankruptcy or receivership or in
proceedings for reorganization pursuant to Title 11
of the United States Code or applicable State laws;
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(B) to realize, for its own account, upon any property
held by it as security for any such claim, if such
property was so held prior to the beginning of such
three months' period;
(C) to realize, for its own account, but only to the
extent of the claim hereinafter mentioned, upon any
property held by it as security for any such claim,
if such claim was created after the beginning of such
three months' period and such property was received
as security therefor simultaneously with the creation
thereof, and if the Property Trustee shall sustain
the burden of proving that at the time such property
was so received, the Property Trustee had no
reasonable cause to believe that a default, as
defined in Section 3.16(c), would occur within three
months; or
(D) to receive payment on any claim referred to in
paragraph (B) or (C), against the release of any
property held as security for such claim as provided
in such paragraph (B) or (C), as the case may be, to
the extent of the fair value of such property.
For the purposes of paragraphs (B), (C) and (D), property
substituted after the beginning of such three months' period for
property held as security at the time of such substitution shall, to
the extent of the fair value of the property released, have the same
status as the property released, and to the extent that any claim
referred to in any of such paragraphs is created in renewal of or in
substitution for or for the purposes of repaying or refunding any
preexisting claim of the Property Trustee as such creditor, such
claim shall have the same status as such preexisting claim.
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If the Property Trustee shall be required to account, the funds and
property held in such special account and the proceeds thereof shall
be apportioned among the Property Trustee, the Holders of Securities
for which it is acting as Property Trustee, and the holders of other
indenture securities in such manner that the Property Trustee, such
Holders of Securities and the holders of other indenture securities
realize, as a result of payments from such special account and
payments of dividends on claims filed against the Trust or such
other obligor on the Securities in bankruptcy or receivership or in
proceedings for reorganization pursuant to Title 11 of the United
States Code or applicable State law, the same percentage of their
respective claims, figured before crediting to the claim of the
Property Trustee anything on account of the receipt by it from the
Trust or such other obligor on the Securities of the funds and
property in such special account and before crediting to the
respective claims of the Property Trustee, such Holders of
Securities, and the holders of other indenture securities dividends
on claims filed against the Trust or such other obligor on the
Securities in bankruptcy or receivership or in proceedings for
reorganization pursuant to Title 11 of the United States Code or
applicable State law, but after crediting thereon receipts on
account of the indebtedness represented by their respective claims
from all sources other than from such dividends and from the funds
and property so held in such special account. As used in this
paragraph, with respect to any claim, the term "dividends" shall
include any distribution with respect to such claim in bankruptcy or
receivership or in proceedings for reorganization pursuant to Title
11 of the United States Code or applicable State law, whether such
distribution is made in cash, securities or other property, but
shall not include any such distribution with respect to the secured
portion, if any, of such claim. The court in which such bankruptcy,
receivership or proceeding for reorganization is pending shall have
jurisdiction (1) to apportion among the Property Trustee, such
Holders of Securities, and the holders of other indenture
securities, in accordance with the provisions of this paragraph, the
funds and property held in such special account and the proceeds
thereof, or (2) in lieu of such apportionment in whole or in part,
to give to the provisions of this paragraph due consideration in
determining the fairness of the distributions to be made to the
Property Trustee, such Holders of Securities and the holders of
other indenture securities with respect to their respective claims,
in which event it shall not be necessary to liquidate or appraise
the value of any securities or other property held in such special
account or as security for any such claim, or to make a specific
allocation of such distributions as between the secured and
unsecured portions of such claim, or otherwise to apply the
provisions of this paragraph as a mathematical formula.
Any Property Trustee who has resigned or been removed after the
beginning of such three months' period shall be subject to the
provisions of this subsection (a) as though such resignation or
removal had not occurred. If any Property Trustee has resigned or
been removed prior to the beginning of such three months' period, it
shall be subject to the provisions of this subsection (a) if and
only if the following conditions exist:
(1) the receipt of property or reduction of claim which would
have given rise to the obligation to account, if such
Property Trustee had continued, as trustee, occurred after
the beginning of such three months' period; and
(2) such receipt of property or reduction of claim occurred
within three months after such resignation or removal.
In every case commenced under the Bankruptcy Act of 1898, or any
amendment thereto enacted prior to November 6, 1978, all references
to periods of three months shall be deemed to be references to
periods of four months.
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(b) There shall be excluded from the operation of Section 3.6(a) a
creditor relationship arising from:
(i) the ownership or acquisition of securities issued under
any indenture, or any security or securities having a
maturity of one year or more at the time of acquisition by
the Property Trustee;
(ii) advances authorized by a receivership or bankruptcy court
of competent jurisdiction, or by the Indenture, for the
purpose of preserving any property which shall at any time
be subject to the lien of the Indenture or of discharging
tax liens or other prior liens or encumbrances thereon, if
notice of such advance and of the circumstances
surrounding the making thereof is given to the Holders of
Securities at the time and in the manner provided in
Section 2.3 with respect to reports pursuant to
subsections (a) and (b) thereof, respectively;
(iii) disbursements made in the ordinary course of business in
the capacity of trustee under an indenture, transfer
agent, registrar, custodian, paying agent, fiscal agent or
depository, or other similar capacity;
(iv) an indebtedness created as a result of services rendered
or premises rented, or an indebtedness created as a result
of goods or securities sold in a cash transaction as
defined in Section 3.16(c);
(v) the ownership of stock or other securities of a company
organized under the provisions of Section 25(a) of the
Federal Reserve Act, as amended, which is directly or
indirectly a creditor of the Trust or any other obligor on
the Securities; and
(vi) the acquisition, ownership, acceptance or negotiation of
any drafts, bills of exchange, acceptances or obligations
which fall within the classification of self-liquidating
paper in Section 3.16(c).
(c) As used in this Section 3.6 the following terms shall be accorded
the following definitions:
(i) the term "default" shall mean any failure to make payment
in full of the principal of or interest on any of the
Securities or on the other indenture securities when and
as such principal or interest becomes due and payable.
(ii) the term "other indenture securities" shall mean
securities upon which the Trust or any other obligor on
the Securities is an "obligor" (as defined in the Trust
Indenture Act) outstanding under any other indenture (A)
under which the Property Trustee is also trustee, (B)
which contains provisions substantially similar to the
provisions of Section 3.6(a), and (C) under which a
default exists at the time of the apportionment of the
funds and property held in said special account.
(iii) the term "cash transaction" shall mean any transaction in
which full payment for goods or securities sold is made
within seven days after delivery of the goods or
securities in currency or in checks or other orders drawn
upon banks or bankers and payable upon demand.
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(iv) the term "self-liquidating paper" shall mean any draft,
bill of exchange, acceptance or obligation which is made,
drawn, negotiated or incurred by the Trust or any other
obligor on the Securities for the purpose of financing the
purchase, processing, manufacture, shipment, storage or
sale of goods, wares or merchandise and which is secured
by documents evidencing title to, possession of, or a lien
upon, the goods, wares or merchandise or the receivables
or proceeds arising from the sale of the goods, wares or
merchandise previously constituting the security, provided
the security is received by the Property Trustee
simultaneously with the creation of the creditor
relationship with the Trust or any other obligor on the
Securities arising from the making, drawing, negotiating
or incurring of the draft, bill of exchange, acceptance or
obligation.
SECTION 3.17 Property Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
similar judicial proceeding relative to the Trust or any other obligor upon
the Securities or the property of the Trust or of such other obligor or their
creditors, the Property Trustee (irrespective of whether the principal of the
Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Property Trustee
shall have made any demand on the Trust for the payment of overdue principal
or interest) shall be entitled and empowered, to the fullest extent permitted
by law, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the
Securities (or, if the Securities are original issue discount
Securities, such portion of the principal amount as may be specified
in the terms of such Securities) and to file such other papers or
documents as may be necessary or advisable in order to have the
claims of the Property Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Property Trustee, its agents and counsel) and of the Holders allowed
in such judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Property Trustee and, in the event
that the Property Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Property Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Property Trustee, its agents and counsel, and any other amounts due the
Property Trustee.
Nothing herein contained shall be deemed to authorize the Property Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Property Trustee to
vote in respect of the claim of any Holder in any such proceeding.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
On the Closing Date the Sponsor will purchase all the Common Securities issued
by the Trust, in an amount equal to 3% of the capital of the Trust, at the
same time as the Preferred Securities are sold.
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SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred Securities, the Sponsor
shall have the exclusive right and responsibility to engage in the following
activities:
(a) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 in relation to the Preferred
Securities, the Subordinated Debentures and the Preferred Securities
Guarantee, including any amendments thereto;
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Preferred Securities
and to do any and all such acts, other than actions which must be
taken by the Trust, and advise the Trust of actions it must take,
and prepare for execution and filing any documents to be executed
and filed by the Trust, as the Sponsor deems necessary or advisable
in order to comply with the applicable laws of any such States;
(c) to prepare for filing by the Trust an application to the New York
Stock Exchange or any other national stock exchange or the Nasdaq
National Market for listing upon notice of issuance of any Preferred
Securities;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the registration of
the Preferred Securities under Section 12(b) of the Exchange Act,
including any amendments thereto; and
(e) to negotiate the terms of the Underwriting Agreement and Pricing
Agreement providing for the sale of the Preferred Securities.
SECTION 4.3 Expenses.
(a) The Sponsor shall be responsible for and shall pay for all debts and
obligations (other than with respect to the Securities) and all
costs and expenses of the Trust (including, but not limited to,
costs and expenses relating to the organization of the Trust, the
issuance and sale of the Preferred Securities, the fees and expenses
(including reasonable counsel fees and expenses) of the Trustees,
the costs and expenses of accountants, attorneys, statistical or
bookkeeping services, expenses for printing and engraving and
computing or accounting equipment, Paying Agents(s), registrar(s),
transfer agents(s), duplication, travel and telephone and other
telecommunications expenses and costs and expenses incurred in
connection with the disposition of Trust assets).
(b) The Sponsor will pay any and all taxes (other than United States
withholding taxes attributable to the Trust or its assets) and all
liabilities, costs and expenses with respect to such taxes of the
Trust.
(c) The Sponsor's obligations under this Section 4.3 shall be for the
benefit of, and shall be enforceable by, any Person to whom any such
debts, obligations, costs, expenses and taxes are owed (a
"Creditor") whether or not such Creditor has received notice hereof.
Any such Creditor may enforce the Sponsor's obligations under this
Section 4.3 directly against the Sponsor and the Sponsor irrevocably
waives any right or remedy to require that any such Creditor take
any action against the Trust or any other Person before proceeding
against the Sponsor. The Sponsor agrees to execute such additional
agreements as may be necessary or desirable in order to give full
effect to the provisions of this Section 4.3.
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ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.
The number of Trustees shall initially be five, and:
(a) at any time before the issuance of any Securities, the Sponsor may,
by written instrument, increase or decrease the number of Trustees;
and
(b) after the issuance of any Securities, the number of Trustees may be
increased or decreased by vote of the Holders of a Majority in
liquidation amount of the Common Securities voting as a class at a
meeting of the Holders of the Common Securities;
provided that, if the Property Trustee does not also act as Delaware Trustee,
the number of Trustees shall be at least five.
SECTION 5.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the "Delaware Trustee")
shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place of
business in the State of Delaware, and otherwise meets the
requirements of applicable law,
provided that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application.
SECTION 5.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee which shall act as Property
Trustee which shall:
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Commission to act
as an institutional trustee under the Trust Indenture Act,
authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least
$150,000,000, and subject to supervision or examination by
Federal, State, Territorial or District of Columbia
authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority
referred to above, then for the purposes of this Section
5.3(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of
condition so published; and
(iii) to the extent the rules and regulations promulgated under
the Investment Company Act require a trustee having
certain qualifications to hold title to the "eligible
assets" of the Trust, the Property Trustee shall possess
those qualifications.
(b) If at any time the Property Trustee shall cease to be eligible to so
act under Section 5.3(a), the Property Trustee shall immediately
resign in the manner and with the effect set forth in Section
5.6(c).
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(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Property Trustee and the Holder of the Common
Securities (as if it were the obligor referred to in Section 310(b)
of the Trust Indenture Act) shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture Act.
(d) The Preferred Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause
(i) of the first provisio contained in Section 310(b) of the Trust
Indenture Act.
SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee
Generally.
Each Regular Trustee and the Delaware Trustee (unless the Property Trustee
also acts as Delaware Trustee) shall be either a natural person who is at
least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.
SECTION 5.5 Initial Trustees.
The initial Regular Trustees shall be:
Roomy F. Balaporia
Pacific Telesis Group
130 Kearny Street
San Francisco, California 94108
Miles H. Mochizuki
Pacific Telesis Group
130 Kearny Street
San Francisco, California 94108
Marie B. Washington
Pacific Telesis Group
130 Kearny Street
San Francisco, California 94108
The initial Delaware Trustee shall be:
Michael J. Majchrzak
FCC National Bank
300 King Street
Wilmington, Delaware 19802
The initial Property Trustee shall be:
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, Illinois 60670
SECTION 5.6 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.6(b), Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of the Holders of
a Majority in liquidation amount of the Common Securities
voting as a class at a meeting of the Holders of the Common
Securities.
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(b) (i) The Trustee that acts as Property Trustee shall not be removed
in accordance with Section 5.6(a) until a Successor Property
Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Property Trustee
and delivered to the Regular Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be removed
in accordance with Section 5.6(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under
Sections 5.2 and 5.4 (a "Successor Delaware Trustee") has been
appointed and has accepted such appointment by written
instrument executed by such Successor Delaware Trustee and
delivered to the Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or
resignation. Any Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing signed
by the Trustee and delivered to the Sponsor and the Trust, which
resignation shall take effect upon such delivery or upon such
later date as is specified therein; provided, however, that:
(i) No such resignation of the Trustee that acts as the Property
Trustee shall be effective:
(A) until a Successor Property Trustee has been appointed and
has accepted such appointment by instrument executed by
such Successor Property Trustee and delivered to the
Trust, the Sponsor and the resigning Property Trustee; or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the
Holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee
has been appointed and has accepted such appointment by
instrument executed by such Successor Delaware Trustee and
delivered to the Trust, the Sponsor and the resigning Delaware
Trustee.
(d) The Holders of the Common Securities shall use their best efforts to
promptly appoint a Successor Delaware Trustee or Successor Property
Trustee as the case may be if the Property Trustee or the Delaware
Trustee delivers an instrument of resignation in accordance with
this Section 5.6.
(e) If no Successor Property Trustee or Successor Delaware Trustee shall
have been appointed and accepted appointment as provided in this
Section 5.6 within 60 days after delivery to the Sponsor and the
Trust of an instrument of resignation, the resigning Property
Trustee or Delaware Trustee, as applicable, may petition any court
of competent jurisdiction for appointment of a Successor Property
Trustee or Successor Delaware Trustee. Such court may thereupon,
after prescribing such notice, if any, as it may deem proper and
prescribe, appoint a Successor Property Trustee or Successor
Delaware Trustee, as the case may be.
SECTION 5.7 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number of Trustees
is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 5.6.
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SECTION 5.8 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee
shall not operate to annul the Trust. Whenever a vacancy in the number of
Regular Trustees shall occur, until such vacancy is filled by the appointment
of a Regular Trustee in accordance with Section 5.6, the Regular Trustees in
office, regardless of their number, shall have all the powers granted to the
Regular Trustees and shall discharge all the duties imposed upon the Regular
Trustees by this Declaration.
SECTION 5.9 Meetings.
If there is more than one Regular Trustee, meetings of the Regular Trustees
shall be held from time to time upon the call of any Regular Trustee. Regular
meetings of the Regular Trustees may be held at a time and place fixed by
resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than
48 hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees or any committee thereof shall be hand delivered or otherwise
delivered in writing (including by facsimile, with a hard copy by overnight
courier) not less than 24 hours before a meeting. Notices shall contain a
brief statement of the time, place and anticipated purposes of the meeting.
The presence (whether in person or by telephone) of a Regular Trustee at a
meeting shall constitute a waiver of notice of such meeting except where a
Regular Trustee attends a meeting for the express purpose of objecting to the
transaction of any activity on the ground that the meeting has not been
lawfully called or convened. Unless provided otherwise in this Declaration,
any action of the Regular Trustees may be taken at a meeting by vote of a
majority of the Regular Trustees present (whether in person or by telephone)
and eligible to vote with respect to such matter, provided that a Quorum is
present, or without a meeting by the unanimous written consent of the Regular
Trustees. In the event there is only one Regular Trustee, any and all action
of such Regular Trustee shall be evidenced by a written consent of such
Regular Trustee.
SECTION 5.10 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of
21 his or her power for the purpose of executing any documents
contemplated in Section 3.6, including any registration statement or
amendment thereto filed with the Commission, or making any other
governmental filing; and
(b) the Regular Trustees shall have power to delegate from time to time
to such of their number or to officers of the Trust the doing of
such things and the execution of such instruments either in the name
of the Trust or the names of the Regular Trustees or otherwise as
the Regular Trustees may deem expedient, to the extent such
delegation is not prohibited by applicable law or contrary to the
provisions of the Trust, as set forth herein.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
If and to the extent that the Subordinated Debenture Issuer makes a payment of
interest (including Compounded Interest (as defined in the Indenture) and
Additional Interest (as defined in the Indenture)), premium and/or principal
on the Subordinated Debentures held by the Property Trustee (the amount of any
such payment being a "Payment Amount"), the Property Trustee shall and is
directed, to the extent funds are available for that purpose, to make a
distribution (a "Distribution") of the Payment Amount to Holders. Holders
shall receive Distributions in accordance with the applicable terms of the
relevant Holder's Securities. Distributions shall be made on the Preferred
Securities and the Common Securities in accordance with the preferences set
forth in their respective terms.
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ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Regular Trustees shall on behalf of the Trust issue one class of
preferred securities representing undivided beneficial interests in
the assets (the "Preferred Securities") of the Trust having such
terms as are set forth in Exhibit A as such Exhibit may be amended
from time to time in accordance with the provisions of this
Declaration and which Exhibit A is hereby incorporated herein and
one class of common securities representing undivided beneficial
interests in the assets (the "Common Securities") of the Trust
having such terms as are set forth in Exhibit A as such Exhibit may
be amended from time to time in accordance with the provisions of
this Declaration. The Trust shall have no securities or other
interests in the assets of the Trust other than the Preferred
Securities and the Common Securities.
(b) The Securities shall be signed on behalf of the Trust by a Regular
Trustee. Such signature may be the manual or facsimile signature of
the present or any future Regular Trustee. Typographical and other
minor errors or defects in any such reproduction of any such
signature shall not affect the validity of any Security. In case
any Regular Trustee of the Trust who shall have signed any of the
Securities shall cease to be such Regular Trustee before the
Securities so signed shall be delivered by the Trust, such
Securities nevertheless may be delivered as though the person who
signed such Securities had not ceased to be such Regular Trustee;
and any Security may be signed on behalf of the Trust by such
persons who, at the actual date of execution of such Security, shall
be the Regular Trustees of the Trust, although at the date of the
execution and delivery of the Declaration any such person was not
such a Regular Trustee. Securities shall be printed, lithographed
or engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution
thereof, and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements as
the Regular Trustees may deem appropriate, or as may be required to
comply with any law or with any rule or regulation of any stock
exchange on which Securities may be listed, or to conform to usage.
(c) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the
Trust and shall not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this Declaration, the
Securities so issued shall be deemed to be validly issued, fully
paid and non-assessable.
(e) Every Person, by virtue of having become a Holder in accordance with
the terms of this Declaration, shall be deemed to have expressly
assented and agreed to the terms of, and shall be bound by, this
Declaration.
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ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
(a) The Trust shall terminate upon the earliest of:
(i) the Bankruptcy of the Holder of the Common Securities, the
Sponsor or the Subordinated Debenture Issuer;
(ii) the filing of a certificate of dissolution or its
equivalent with respect to the Holder of the Common
Securities or the Sponsor; the filing of a certificate of
cancellation with respect to the Trust or the revocation
of the Holder of the Common Securities or the Sponsor's
charter and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
(iii) the entry of a decree of judicial dissolution of the
Holder of the Common Securities, the Sponsor or the Trust;
(iv) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption
thereof shall have been paid to the Holders in accordance
with the terms of the Securities;
(v) the occurrence and continuation of a Special Event
pursuant to which the Trust shall have been dissolved in
accordance with the terms of the Securities and all of the
Subordinated Debentures endorsed thereon shall have been
distributed to the Holders of Securities in exchange for
all of the Securities;
(vi) before the issuance of any Securities, the consent of all
of the Regular Trustees and the Sponsor; or
(vii) the expiration of the Trust specified in Section 3.14
hereof.
(b) As soon as is practicable after the occurrence of an event referred
to in Section 8.1(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this
Declaration and in the terms of the Securities. Any transfer or
purported transfer of any Security not made in accordance with this
Declaration shall be null and void.
(b) Subject to this Article IX, Preferred Securities shall be freely
transferable, provided, however, that the Global Security or
Securities may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository or
by the Depository or any nominee to a successor Depository or a
nominee of any successor Depository.
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(c) Subject to this Article IX, the Sponsor and any Related Party may
only transfer Common Securities to the Sponsor or a Related Party of
the Sponsor; provided that, any such transfer is subject to the
condition precedent prior to any such transfer that the transferor
or the transferee shall have obtained or caused to be obtained
either a ruling from the Internal Revenue Service or an unqualified
written opinion addressed to the Trust and delivered to the Trustees
of a nationally recognized independent counsel experienced in such
matters that such transfer will not cause:
(i) the Trust to be treated as issuing a class of interests in
the Trust differing from the class of interests
represented by the Common Securities originally issued;
(ii) result in the Trust acquiring or disposing of, or being
deemed to have acquired or disposed of, an asset;
(iii) the Trust to be classified as other than a grantor trust
for United States federal income tax purposes; and
(iv) the Trust to be an Investment Company or the transferee to
become an Investment Company.
SECTION 9.2 Registration, Transfer and Exchange of Securities
Except as specifically otherwise provided herein with respect to Securities
issued in the form of Global Securities, Securities may be exchanged for
Securities representing a like aggregate liquidation amount of Securities.
Securities to be exchanged shall be surrendered at the offices or agencies of
the Property Trustee and the Regular Trustees shall execute the Securities,
and the Property Trustee shall authenticate and deliver in exchange therefor
the Security or Securities which the Holder making the exchange shall be
entitled to receive.
The Property Trustee shall keep or cause to be kept, at its principal trust
office, the Register in which, subject to such reasonable regulations as it
may prescribe, the Property Trustee shall provide for the registration of the
Securities and the transfer of Securities as in this Article provided. The
Register shall be in written form or in any other form capable of being
converted into written form within a reasonable time. At all reasonable times
the Register shall be open for inspection by the Sponsor and the Regular
Trustees. Upon due presentment for transfer of any Security at the principal
trust office of the Property Trustee, the Regular Trustees shall execute a new
Security and the Property Trustee shall authenticate and deliver in the name
of the transferee or transferees a new Security or Securities for a like
aggregate liquidation amount in authorized denominations.
Notwithstanding any other provisions of this Section 9.2, unless and until it
is exchanged in whole or in part for Securities in definitive form, a Global
Security representing all or a portion of the Securities may not be
transferred except as a whole by the Depository to a nominee of such
Depository or by a nominee of such Depository to such Depository or another
nominee of such Depository or by such Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
All Securities presented or surrendered for exchange, transfer, redemption, or
payment shall, if so required by the Property Trustee, be accompanied by a
written instrument or instruments of transfer, in form satisfactory to the
Regular Trustees, the Sponsor and the Property Trustee, duly executed by the
Holder or by such Holder's attorney duly authorized in writing. No service
charge shall be made for any exchange or registration of transfer of
Securities, but the Property Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto.
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The Property Trustee shall not be required to exchange or transfer (a) any
Securities during a period beginning at the opening of business 15 days before
the day of the first mailing of a notice of redemption of Securities and
ending at the close of business on the day of such mailing or (b) any
Securities called or selected for redemption in whole or in part, except, in
the case of Securities called for redemption in part, the portion thereof not
so called for redemption or during a period beginning at the opening of
business on any record date and ending at the close of business on the
relevant Distribution payment date therefor.
SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any Security shall be
registered on the Register as the sole holder of such Securities for purposes
of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to
or interest in such Securities on the part of any Person, whether or not the
Trust shall have actual or other notice thereof.
SECTION 9.4 Global Securities.
(a) The Preferred Securities, on original issuance, shall be issued in
the form of one or more fully registered Global Securities, to be
delivered to the Depository, by, or on behalf of, the Trust. Each
Global Security shall:
(i) represent and be denominated in an aggregate amount equal
to the aggregate liquidation amount of the Preferred
Securities to be represented by such Global Security,
(ii) be registered in the name of either the Depository for
such Global Security or the nominee of such Depository,
(iii) be delivered by the Trustee to such Depository or pursuant
such Depository's written instruction, and
(iv) bear a legend substantially to the following effect:
Unless and until it is exchanged in whole or in part for
Preferred Securities in definitive form, this Global
Security may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee
of the Depository to the Depository or another nominee of
the Depository or by the Depository or any nominee to a
successor Depository or a nominee of any successor
Depository." The notation of the record owner's interest
in such Global Security upon the original issuance thereof
shall be deemed to be delivery in connection with the
original issuance of each beneficial owner's interest in
such Global Security. Without limiting the foregoing, the
Sponsor and each of the Trustees shall have no
responsibility, obligation or liability with respect to:
(x) the maintenance, review or accuracy of the records of
the Depository or of any of its participating
organizations with respect to any ownership interest in or
payments with respect to such Global Security, (y) any
communication with or delivery of any notice (including
notices of redemption) with respect to the Preferred
Securities represented by the Global Security to any
Person having any ownership interest in such Global
Security or to any of the Depository's participating
organizations or (z) any payment made on account of any
beneficial ownership interest in such Global Security.
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(b) Each Global Security may provide that it shall represent the
aggregate liquidation amount of outstanding Preferred Securities
from time to time endorsed thereon and may also provide that the
aggregate liquidation amount of outstanding Preferred Securities
represented thereby may from time to time be reduced to reflect
exchanges. Any endorsement of a Global Security to reflect the
liquidation amount of outstanding Preferred Securities represented
thereby shall be made by the Property Trustee in such manner as
shall be specified on such Global Security. Any instructions by the
Sponsor or the Regular Trustee with respect to a Global Security,
after its initial issuance, shall be in writing.
(c) Each Depository designated pursuant to the provisions of this
Declaration for a Global Security must, at the time of its
designation and at all times while it serves as a depository, be a
clearing agency registered under the Exchange Act, and any other
applicable statute or regulation. If at any time the Depository for
the Preferred Securities notifies the Property Trustee that it is
unwilling or unable to continue as Depository for the Preferred
Securities or if at any time the Depository for the Preferred
Securities shall no longer be eligible under this Declaration, the
Regular Trustees shall appoint a successor Depository. If a
successor Depository is not appointed by the Trust within 90 days
after the Property Trustee receives such notice or learns of such
ineligibility, the Regular Trustees shall execute and the Regular
Trustees shall direct the Property Trustee to authenticate and
deliver definitive Preferred Securities in authorized denominations
in exchange for the Global Security or Securities. Upon receipt of
such Direction, the Property Trustee shall thereupon authenticate
and deliver the definitive Preferred Securities in the same
aggregate liquidation amount as the Global Security or Securities in
exchange for such Global Security or Securities, in accordance with
the provisions of Section 9.4(e), without any further action by the
Regular Trustees or the Sponsor.
(d) The Regular Trustees may at any time after consultation with the
Sponsor determine that the Preferred Securities shall no longer be
represented by a Global Security or Securities. In such event, the
Regular Trustees will execute and upon receipt of a written order
from the Regular Trustees, the Property Trustee shall thereupon
authenticate and deliver Preferred Securities in definitive form and
in authorized denominations in an aggregate liquidation amount equal
to the principal amount of the Global Security or Securities in
exchange for such Global Security or Securities, in accordance with
the provisions of Section 9.4(e) without any further action by the
Regular Trustees or the Sponsor.
(e) Upon any exchange hereunder of the Global Security or Securities for
Preferred Securities in definitive form, such Global Security or
Securities shall be canceled by the Property Trustee. Preferred
Securities issued hereunder in exchange for the Global Security or
Securities shall be registered in such names and in such authorized
denominations as the Depository for such Global Security, pursuant
to instructions from its direct or indirect participants or
otherwise, shall instruct the Property Trustee. The Property
Trustee shall deliver such definitive Preferred Securities in
exchange for the Global Security or Securities to the persons in
whose name such definitive Preferred Securities have been registered
in accordance with the directions of the Depository.
SECTION 9.5 Notices to Depository.
Whenever a notice or other communication to the Preferred Securities Holders
is required under this Declaration, unless and until Preferred Securities in
definitive form shall have been issued pursuant to Section 9.4, the Regular
Trustees shall give all such notices and communications specified herein to be
given to the Preferred Security Holders to the Depository.
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SECTION 9.6 Mutilated, Destroyed, Lost or Stolen Securities.
If:
(a) any mutilated Securities should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Security; and
(b) there shall be delivered to the Regular Trustees, the Sponsor and
the Property Trustees such security or indemnity as may be required
by them to keep each of them harmless.
then:
In the absence of notice that such Security shall have been acquired by a
bona fide purchaser, the Regular Trustees shall execute and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Security, a new Security of like denomination and in the same aggregate
liquidation amount as the mutilated, destroyed, lost or stolen Security.
In connection with the issuance of any new Security under this Section
9.6, the Regular Trustees may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicate Security issued pursuant to this
Section shall constitute conclusive evidence of an ownership interest in
the relevant Securities, as if originally issued, whether or not the
lost, stolen or destroyed Security shall be found at any time.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Declaration, the Common
Security Guarantee and Preferred Security Guarantee and the terms of
the Securities the Sponsor shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the
Securities which shall be made solely from assets of the Trust;
and
(ii) be required to pay to the Trust or to any Holder of Securities
any deficit upon dissolution of the Trust or otherwise.
(b) Pursuant to Section 3803(a) of the Business Trust Act, the Holders
of the Securities shall be entitled to the same limitation of
personal liability extended to stockholders of private corporations
for profit organized under the General Corporation Law of the State
of Delaware.
SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission
performed or omitted by such Indemnified Person in good faith on
behalf of the Trust and in a manner such Indemnified Person
reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Declaration or by law,
except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's
negligence or willful misconduct with respect to such acts or
omissions.
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(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information,
opinions, reports or statements presented to the Trust by any Person
as to matters the Indemnified Person reasonably believes are within
such other Person's professional or expert competence and who has
been selected with reasonable care by or on behalf of the Trust,
including information, opinions, reports or statements as to the
value and amount of the assets, liabilities, profits, losses, or any
other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Securities might properly be paid.
SECTION 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person has
duties (including fiduciary duties) and liabilities relating thereto
to the Trust or to any other Covered Person, an Indemnified Person
acting under this Declaration shall not be liable to the Trust or to
any other Covered Person for its good faith reliance on the
provisions of this Declaration. The provisions of this Declaration,
to the extent that they restrict the duties and liabilities of an
Indemnified Person otherwise existing at law or in equity (other
than the duties imposed on the Property Trustee under the Trust
Indenture Act), are agreed by the parties hereto to replace such
other duties and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between an
Indemnified Person and any Covered Person; or
(ii) whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act
in a manner that is, or provides terms that are, fair and
reasonable to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take
such action or provide such terms, considering in each case the
relative interest of each party (including its own interest) to such
conflict, agreement, transaction or situation and the benefits and
burdens relating to such interests, any customary or accepted
industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the
Indemnified Person, the resolution, action or term so made, taken or
provided by the Indemnified Person shall not constitute a breach of
this Declaration or any other agreement contemplated herein or of
any duty or obligation of the Indemnified Person at law or in equity
or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted or
required to make a decision
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests
and factors as it desires, including its own interests, and
shall have no duty or obligation to give any consideration to
any interest of or factors affecting the Trust or any other
Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and
shall not be subject to any other or different standard imposed
by this Declaration or by applicable law.
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SECTION 10.4 Indemnification.
(a) To the fullest extent permitted by applicable law, the Sponsor shall
indemnify and hold harmless each Indemnified Person from and against
any loss, damage, liability, tax, penalty, expense or claim of any
kind or nature whatsoever incurred by such Indemnified Person by
reason of the creation, operation or termination of the Trust or any
act or omission performed or omitted by such Indemnified Person in
good faith on behalf of the Trust and in a manner such Indemnified
Person reasonably believed to be within the scope of authority
conferred on such Indemnified Person by this Declaration, except
that no Indemnified Person shall be entitled to be indemnified in
respect of any loss, damage or claim incurred by such Indemnified
Person by reason of negligence or willful misconduct with respect to
such acts or omissions.
(b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in
defending any claim, demand, action, suit or proceeding shall, from
time to time, be advanced by the Sponsor prior to the final
disposition of such claim, demand, action, suit or proceeding upon
receipt by the Sponsor of an undertaking by or on behalf of the
Indemnified Person to repay such amount if it shall be determined
that the Indemnified Person is not entitled to be indemnified as
authorized in Section 10.4(a). This indemnification shall survive
the termination of this Declaration.
SECTION 10.5 Outside Businesses.
Any Covered Person, the Sponsor, the Subordinated Debenture Issuer, any
Regular Trustee, the Delaware Trustee and the Property Trustee may engage in
or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to the
business of the Trust, and the Trust and the Holders of Securities shall have
no rights by virtue of this Declaration in and to such independent ventures or
the income or profits derived therefrom and the pursuit of any such venture,
even if competitive with the business of the Trust, shall not be deemed
wrongful or improper. No Covered Person, the Sponsor, the Subordinated
Debenture Issuer, any Regular Trustee, the Delaware Trustee, or the Property
Trustee shall be obligated to present any particular investment or other
opportunity to the Trust even if such opportunity is of a character that, if
presented to the Trust, could be taken by the Trust, and any Covered Person,
the Sponsor, the Subordinated Debenture Issuer, any Regular Trustee, the
Delaware Trustee and the Property Trustee shall have the right to take for its
own account (individually or as a partner or fiduciary) or to recommend to
others any such particular investment or other opportunity. Any Covered
Person, any Regular Trustee, the Delaware Trustee and the Property Trustee may
engage or be interested in any financial or other transaction with the Sponsor
or any Affiliate of the Sponsor, or may act as depository for, trustee or
agent for, or act on any committee or body of holders of, securities or other
obligations of the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar year, or
such other year as is required by the Code or any other applicable law.
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SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Regular Trustees
shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each
transaction of the Trust. The books of account shall be maintained
on the accrual method of accounting, in accordance with generally
accepted accounting principles, consistently applied. The Trust
shall use the accrual method of accounting for United States federal
income tax purposes. The books of account and the records of the
Trust shall be examined by and reported upon as of the end of each
Fiscal Year of the Trust by a firm of independent certified public
accountants selected by the Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and delivered to
each of the Holders of Securities, within 90 days after the end of
each Fiscal Year of the Trust, annual financial statements of the
Trust, including a balance sheet of the Trust as of the end of such
Fiscal Year, and the related statements of income or loss.
(c) The Regular Trustees shall cause to be duly prepared and delivered
to each of the Holders of Securities, any annual United States
federal income tax information statement required by the Code,
containing such information with regard to the Securities held by
each Holder as is required by the Code and the Treasury Regulations.
Notwithstanding any right under the Code to deliver any such
statement at a later date, the Regular Trustees shall endeavor to
deliver all such statements within 30 days after the end of each
Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed with
the appropriate taxing authority, an annual United States federal
income tax return, on a Form 1041 or such other form required by
United States federal income tax law, and any other annual income
tax returns required to be filed by the Regular Trustees on behalf
of the Trust with any state or local taxing authority.
SECTION 11.3 Banking.
The Trust shall maintain one or more bank accounts in the name and for the
sole benefit of the Trust; provided, however, that all payments of funds in
respect of the Subordinated Debentures held by the Property Trustee shall be
made directly to the Property Trustee Account and no other funds of the Trust
shall be deposited in the Property Trustee Account. The signatories for such
accounts shall be designated by the Regular Trustees; provided, however, that
the Property Trustee shall designate the signatories for the Property Trustee
Account.
SECTION 11.4 Withholding.
The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust
shall request, and the Holders shall provide to the Trust, such forms or
certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably
be requested by the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations. The Regular Trustees shall file
required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that
the Trust is required to withhold and pay over any amounts to any authority
with respect to distributions or allocations to any Holder, the amount
withheld shall be deemed to be a distribution in the amount of the withholding
to the Holder. In the event of any claimed over- withholding, Holders shall
be limited to an action against the applicable jurisdiction. If the amount
required to be withheld was not withheld from actual Distributions made, the
Trust may reduce subsequent Distributions by the amount of such withholding.
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ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be
amended by a written instrument approved and executed by the Regular
Trustees (or, if there are more than two Regular Trustees a majority
of the Regular Trustees); provided, however:
(i) if the amendment affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the
amendment shall also be approved by the Property Trustee; and
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the
amendment shall also be approved by the Delaware Trustee;
(b) No amendment shall be made, and any purported amendment shall be
void and ineffective to the extent the result of such amendment
would be to:
(i) cause the Trust to be classified as other than a grantor
trust for United States federal income tax purposes;
(ii) reduce or otherwise adversely affect the powers of the
Property Trustee in contravention of the Trust Indenture
Act; or
(iii) cause the Trust to be deemed to be an Investment Company
required to be registered under the Investment Company
Act.
c) At such time after the Trust has issued any Securities that remain
outstanding, any amendment that would adversely affect the rights,
privileges or preferences of any Holder of Securities may be
effected only with such additional requirements as may be set forth
in the terms of such Securities;
(d) Sections 4.3 and 9.1(c) and this Section 12.1 shall not be amended
without the consent of all of the Holders of the Securities;
(e) Article IV shall not be amended without the consent of the Holders
of a Majority in liquidation amount of the Common Securities;
(f) The rights of the Holders of the Common Securities under Article V
to increase or decrease the number of, and appoint and remove
Trustees shall not be amended without the consent of the Holders of
a Majority in liquidation amount of the Common Securities;
(g) Notwithstanding Section 12.1(c), this Declaration may be amended
without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration
that may be defective or inconsistent with any other
provision of this Declaration;
(iii) add to the covenants, restrictions or obligations of the
Sponsor;
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(iv) conform to any change in the rules and regulations
promulgated under the Investment Company Act or written
change in interpretation or application of the rules and
regulations promulgated under the Investment Company Act
by any legislative body, court, government agency or
regulatory authority which amendment does not have a
material adverse effect on the rights, preferences or
privileges of the Holders; and
(h) Prior to the issuance of the Securities any terms of the Securities
may be amended by a written instrument approved and executed by the
Regular Trustees (or if there are more than two Regular Trustees a
majority of the Regular Trustees).
SECTION 12.2 Meetings of the Holders of Securities; Action by Written
Consent.
(a) Meetings of the Holders of any class of Securities may be called at
any time by the Regular Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of
such class of Securities are entitled to act under the terms of this
Declaration, the terms of the Securities or the rules of any stock
exchange on which the Preferred Securities are listed or admitted
for trading. The Regular Trustees shall call a meeting of the
Holders of such class if directed to do so by the Holders of at
least 10% in liquidation amount of such class of Securities. Such
direction shall be given by delivering to the Regular Trustees one
or more calls in a writing stating that the signing Holders of
Securities wish to call a meeting and indicating the general or
specific purpose for which the meeting is to be called. Any Holders
of Securities calling a meeting shall specify in writing the
Securities held by the Holders of Securities exercising the right to
call a meeting and only those Securities specified shall be counted
for purposes of determining whether the required percentage set
forth in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of
Holders of Securities:
(i) notice of any such meeting shall be given to all the Holders
of Securities having a right to vote thereat at least 7 days
and not more than 60 days before the date of such meeting.
Whenever a vote, consent or approval of the Holders of
Securities is permitted or required under this Declaration,
the terms of the Securities, or the rules of any stock
exchange on which the Preferred Securities are listed or
admitted for trading, such vote, consent or approval may be
given at a meeting of the Holders of Securities. Any action
that may be taken at a meeting of the Holders of Securities
may be taken without a meeting if a consent in writing setting
forth the action so taken is signed by the Holders of
Securities owning not less than the minimum amount of
Securities in liquidation amount that would be necessary to
authorize or take such action at a meeting at which all
Holders of Securities having a right to vote thereon were
present and voting. Prompt notice of the taking of action
without a meeting shall be given to the Holders of Securities
entitled to vote who have not consented in writing. The
Regular Trustees may specify that any written ballot submitted
to the Security Holder for the purpose of taking any action
without a meeting shall be returned to the Trust within the
time specified by the Regular Trustees;
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(ii) each Holder of a Security may authorize any Person to act
for it by proxy on all matters in which a Holder of
Securities is entitled to participate, including waiving
notice of any meeting, or voting or participating at a
meeting. No proxy shall be valid after the expiration of
11 months from the date thereof unless otherwise provided
in the proxy. Every proxy shall be revocable at the
pleasure of the Holder of Securities executing it. Except
as otherwise provided herein, all matters relating to the
giving, voting or validity of proxies shall be governed by
the General Corporation Law of the State of Delaware
relating to proxies, and judicial interpretations
thereunder, as if the Trust were a Delaware corporation
and the Holders of the Securities were stockholders of a
Delaware corporation;
(iii) each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other Person
that the Regular Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the terms
of the Securities, the Trust Indenture Act or the listing
rules of any stock exchange on which the Preferred
Securities are then listed or trading, otherwise provides,
the Regular Trustees, in their sole discretion, shall
establish all other provisions relating to meetings of
Holders of Securities, including notice of the time, place
or purpose of any meeting at which any matter is to be
voted on by any Holders of Securities, waiver of any such
notice, action by consent without a meeting, the
establishment of a record date, quorum requirements,
voting in person or by proxy or any other matter with
respect to the exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee.
The Trustee that acts as initial Property Trustee represents and warrants to
the Trust and to the Sponsor at the date of this Declaration, and each
Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) The Property Trustee is a banking association with trust powers,
duly organized, validly existing and in good standing under the laws
of the United States or one of the States of the United States, with
trust power and authority to execute and deliver, and to carry out
and perform its obligations under the terms of, the Declaration.
(b) The execution, delivery and performance by the Property Trustee of
the Declaration has been duly authorized by all necessary corporate
action on the part of the Property Trustee. The Declaration has
been duly executed and delivered by the Property Trustee, and it
constitutes a legal, valid and binding obligation of the Property
Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of
the court (regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law).
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(c) The execution, delivery and performance of the Declaration by the
Property Trustee does not conflict with or constitute a breach of
the Articles of Organization or By-laws of the Property Trustee.
(d) No consent, approval or authorization of, or registration with or
notice to, any State or Federal banking authority is required for
the execution, delivery or performance by the Property Trustee, of
the Declaration.
(e) The Property Trustee satisfies the qualifications set forth in
Section 5.3(a) hereof.
SECTION 13.2 Representations and Warranties of Delaware Trustee
The Trustee that acts as initial Delaware Trustee represents and warrants to
the Trust and to the Sponsor at the date of this Declaration, and each
Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee has been authorized to perform its obligations
under the Certificate of Trust and the Declaration. The Declaration
under Delaware law constitutes a legal, valid and binding obligation
of the Delaware Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors'
rights generally and to general principles of equity and the
discretion of the court (regardless of whether the enforcement of
such remedies is considered in a proceeding in equity or at law).
(b) The Delaware Trustee is a natural person who is a resident of the
State of Delaware or, if not a natural person, an entity which has
its principal place of business in the State of Delaware.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
(a) All notices provided for in this Declaration shall be in writing,
duly signed by the party giving such notice, and shall be
electronically communicated or hand delivered, or sent by overnight
courier, addressed to the relevant Person as provided in this
Section 14.1 as follows:
(i) if given to the Trust, in care of the Regular Trustees at
the Trust's mailing address set forth below (or such other
address as the Trust may give notice of to the Holders of
the Securities):
Pacific Telesis Financing I
130 Kearny Street
San Francisco, CA 94108
Attention: ________________
(ii) if given to the Delaware Trustee, at the mailing address
set forth below (or such other address as Delaware Trustee
may give notice of to the Holders of the Securities):
Michael J. Majchrzak
FCC National Bank
300 King Street
Wilmington, Delaware 19802
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(iii) if given to the Property Trustee, at the mailing address
set forth below (or such other address as the Property
Trustee may give notice of to the Holders of the
Securities):
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, Illinois 60670
Attention: Corporate Trust Administration
(iv) if given to the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below (or such
other address as the Holder of the Common Securities may
give notice to the Trust):
Pacific Telesis Group
130 Kearny Street
San Francisco, CA 94108
Attention: ________________
(v) if given to any other Holder, at the address set forth on
the books and records of the Trust.
For all purposes of this Declaration, a notice or communication will be deemed
effective:
(i) if delivered by hand or sent by overnight courier, on the day it
is delivered unless (A) that day is not a Business Day in the city
specified (a "Local Business Day") in the address for notice
provided by the recipient or (B) if delivered after the close of
business on a Local Business Day, then on the next succeeding Local
Business Day or
(ii) if sent by facsimile transmission, on the date transmitted,
provided that oral or written confirmation of receipt is obtained by
the sender unless the date of transmission and confirmation is not a
Local Business Day, in which case, on the next succeeding Local
Business Day.
Any notice, direction, request, demand, consent or waiver by the Sponsor or
any Holder of Securities, or the Regular Trustee to or upon the Property
Trustee shall be deemed to have been sufficiently given, made or filed, for
all purposes, if given, made or filed in writing at the principal office of
the Property Trustee in accordance with the provisions of this Section 14.1.
Any notice, request, consent or waiver by the Sponsor, the Regular Trustees or
the Property Trustee upon the Depository shall have been sufficiently given,
made or filed, for all purposes, if given or made in accordance with he
provisions of this Section 14.1 at the address shown for such Depository in
the Register or at such other address as the Depository shall have provided
for purposes of notice.
SECTION 14.2 Governing Law.
This Declaration and the rights of the parties hereunder shall be governed by
and interpreted in accordance with the laws of the State of Delaware and all
rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
SECTION 14.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust not be characterized
for United States federal income tax purposes as an association taxable as a
corporation or a partnership but rather that the Trust be characterized as a
grantor trust or otherwise in a manner such that each Holder of Securities
will be treated as owning an undivided beneficial interest in the Subordinated
Debentures. The provisions of this Declaration shall be interpreted to
further this intention of the parties.
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SECTION 14.4 Headings.
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
SECTION 14.5 Successors and Assigns
Whenever in this Declaration any of the parties hereto is named or referred
to, the successors and assigns of such party shall be deemed to be included,
and all covenants and agreements in this Declaration by the Sponsor and the
Trustees shall bind and inure to the benefit of their respective successors
and assigns, whether so expressed.
SECTION 14.6 Partial Enforceability.
If any provision of this Declaration, or the application of such provision to
any Person or circumstance, shall be held invalid, the remainder of this
Declaration, or the application of such provision to persons or circumstances
other than those to which it is held invalid, shall not be affected thereby.
SECTION 14.7 Counterparts.
This Declaration may contain more than one counterpart of the signature page
and this Declaration may be executed by the affixing of the signature of each
of the Trustees to one of such counterpart signature pages. All of such
counterpart signature pages shall be read as though one, and they shall have
the same force and effect as though all of the signers had signed a single
signature page.
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IN WITNESS WHEREOF, the undersigned has caused these presents to be executed
as of the day and year first above written.
______________________________
Roomy F. Balaporia, as Trustee
______________________________
Miles H. Mochizuki, as Trustee
_______________________________
Marie B. Washington, as Trustee
________________________________
Michael J. Majchrzak, as Delaware
Trustee
PACIFIC TELESIS GROUP
as Sponsor
By: ___________________________
Name:___________________________
Title:__________________________
THE FIRST NATIONAL BANK OF CHICAGO
as Property Trustee
By: ___________________________
Name:___________________________
Title:__________________________
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EXHIBIT A
TERMS OF
__% TRUST ORIGINATED PREFERRED SECURITIES
__% TRUST ORIGINATED COMMON SECURITIES
Pursuant to Section 7.1 and subject to Section 12.1(c) of the Amended and
Restated Declaration of Trust, dated as of __________________, 1995 (as
amended from time to time in accordance with the provisions thereof, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Securities and the Common
Securities are set out below (each capitalized term used but not defined
herein has the meaning set forth in the Declaration):
1. Designation and Number.
(a) "Preferred Securities." Preferred Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust
of $____________ and a liquidation amount with respect to the assets
of the Trust of $25 per Preferred Security, are hereby designated
for the purposes of identification only as "_____% Trust Originated
Preferred Securities" (the "Preferred Securities"). The Preferred
Securities shall be substantially in the form attached hereto as
Annex I, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or practice
or to conform to the rules of any stock exchange on which the
Preferred Securities are listed.
(b) "Common Securities." Common Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust
of $______ and a liquidation amount with respect to the assets of
the Trust of $25 per Common Security, are hereby designated for the
purposes of identification only as "____% Trust Originated Common
Securities" (the "Common Securities"). The Common Securities shall
be substantially in the form attached hereto as Annex II, with such
changes and additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice.
2. Distributions.
(a) Periodic Distributions payable on each Security will be fixed at a
rate per annum of {*.*}% (the "Coupon Rate") of the stated
liquidation amount of $25 per Security, such rate being the rate of
interest payable on the Subordinated Debentures to be held by the
Property Trustee. Distributions in arrears for more than one
quarter will bear interest thereon compounded quarterly at the
Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes such cash distributions and
any such interest payable unless otherwise stated. A Distribution
is payable only to the extent that payments are made in respect of
the Subordinated Debentures held by the Property Trustee and to the
extent the Property Trustee has funds available therefor. The
amount of Distributions payable for any period will be computed for
any full quarterly Distribution period on the basis of a 360-day
year of twelve 30-day months, and for any period shorter than a full
quarterly Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of
days elapsed per 90-day quarter.
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(b) Distributions on the Securities will be cumulative, will accrue from
__________, 1995, and will be payable quarterly in arrears, on March
31, June 30, September 30, and December 31 of each year, commencing
on __________________, except as otherwise described below but only
if and to the extent that the interest payments are made in respect
of the Subordinated Debentures held by the Trust. So long as the
Subordinated Debenture Issuer is not in default in the payment of
interest on the Subordinated Debentures, the Subordinated Debenture
Issuer has the right under the Indenture to defer payments of
interest by extending the interest payment period from time to time
on the Subordinated Debentures for a period not exceeding 20
consecutive quarters (each an "Extension Period"), provided that no
Extension Period shall last beyond the date of maturity of the
Subordinated Debentures, and, during such Extension Period,
Distributions will also be deferred. Despite such deferral,
quarterly Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the Coupon
Rate compounded quarterly during any such Extension Period. Prior to
the termination of any such Extension Period, the Subordinated
Debenture Issuer may further extend such Extension Period; provided
that such Extension Period together with all such previous and
further extensions thereof may not exceed 20 consecutive quarters.
Payments of accrued Distributions will be payable to Holders as they
appear on the Register on the first record date after the end of the
Extension Period. Upon the termination of any Extension Period and
the payment of all amounts then due, the Subordinated Debenture
Issuer may commence a new Extension Period, subject to the above
requirements.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the Register on the relevant record dates.
While the Preferred Securities remain in the form of one or more
Global Securities, the relevant record dates shall be one Business
Day prior to the relevant payment dates which payment dates
correspond to the interest payment dates on the Subordinated
Debentures. Subject to any applicable laws and regulations and the
provisions of the Declaration, each such payment in respect of the
Preferred Securities will be made to the Depository or its nominee.
The relevant record dates for the Common Securities shall be the
same record date as for the Preferred Securities. If the Preferred
Securities are in definitive form, the relevant record dates for the
Preferred Securities, shall conform to the rules of any securities
exchange on which the securities are listed and, if none, shall be
selected by the Regular Trustees, which dates shall be at least one
Business Day but less than 60 Business Days before the relevant
payment dates, which payment dates correspond to the interest
payment dates on the Subordinated Debentures. Distributions payable
on any Securities that are not punctually paid on any Distribution
payment date, as a result of the Subordinated Debenture Issuer
having failed to make a payment under the Subordinated Debentures,
will cease to be payable to the Person in whose name such Securities
are registered on the relevant record date, and such defaulted
Distribution will instead be payable to the Person in whose name
such Securities are registered on the special record date or other
specified date determined in accordance with the Indenture. If any
date on which Distributions are payable on the Securities is not a
Business Day, then payment of the Distribution payable on such date
will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay)
except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if made
on such date.
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(d) In the event that there is any money or other property held by or
for the Trust that is not accounted for hereunder, such property
shall be distributed Pro Rata in accordance with paragraph 8 hereof
among the Holders of the Securities.
(e) All Distributions paid with respect to the Preferred Securities and
the Common Securities will be paid Pro Rata in accordance with
paragraph 8 hereof to the Holders thereof entitled thereto. If an
Event of Default has occurred and is continuing, the Preferred
Securities shall have a priority over the Common Securities with
respect to Distributions.
3. Liquidation Distribution Upon Dissolution.
In the event of any voluntary or involuntary dissolution, winding-up or
termination of the Trust, the Holders of the Securities on the date of the
dissolution, winding-up or termination, as the case may be, will be entitled
to receive out of the assets of the Trust available for distribution to
Holders of Securities after satisfaction of liabilities of creditors an amount
equal to the aggregate of the stated liquidation amount of $25 per Security
plus accrued and unpaid Distributions thereon to the date of payment (such
amount being the "Liquidation Distribution"), unless, in connection with such
dissolution, winding-up or termination, Subordinated Debentures in an
aggregate principal amount equal to the aggregate stated liquidation amount of
such Securities, with an interest rate equal to the Coupon Rate of, and
bearing accrued and unpaid interest in an amount equal to the accrued and
unpaid Distributions on, such Securities, shall be distributed on a Pro Rata
basis to the Holders of the Securities in exchange for such Securities.
If, upon any such dissolution, the Liquidation Distribution can be paid only
in part because the Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Securities shall be paid on a Pro Rata basis in accordance with
paragraph 8 hereof.
4. Redemption and Distribution.
(a) Upon the repayment of the Subordinated Debentures in whole or in
part, whether at maturity or upon redemption, the proceeds from such
repayment or payment shall be simultaneously applied to redeem
Securities having an aggregate liquidation amount equal to the
aggregate principal amount of the Subordinated Debentures so repaid
or redeemed at a redemption price of $25 per Security plus an amount
equal to accrued and unpaid Distributions thereon at the date of the
redemption, payable in cash (the "Redemption Price"). Holders will
be given not less than 30 nor more than 60 days notice of such
redemption.
(b) If fewer than all the outstanding Securities are to be so redeemed,
the Common Securities and the Preferred Securities will be redeemed
Pro Rata in accordance with paragraph 8 hereof and the Preferred
Securities to be redeemed will be as described in Paragraph 4(f)(ii)
below.
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(c) If, at any time, a Tax Event or an Investment Company Event (each as
defined below, and each a "Special Event") shall occur and be
continuing the Regular Trustees shall, except in certain limited
circumstances in relation to a Tax Event described in this Section
4(c), dissolve the Trust and cause Subordinated Debentures held by
the Property Trustee, having an aggregate principal amount equal to
the aggregate stated liquidation amount of, with an interest rate
identical to the Coupon Rate of, and accrued and unpaid interest
equal to accrued and unpaid Distributions on and having the same
record date for payment as the Securities, to be distributed to the
Holders of the Securities in liquidation of such Holders' interests
in the Trust on a Pro Rata basis in accordance with paragraph 8
hereof, within 90 days following the occurrence of such Special
Event (the "90 Day Period"); provided, however, that in the case of
the occurrence of a Tax Event, as a condition of such dissolution
and distribution, the Regular Trustees shall have received an
opinion of a nationally recognized independent tax counsel
experienced in such matters (a "No Recognition Opinion"), which
opinion may rely on published revenue rulings of the Internal
Revenue Service, to the effect that the Holders of the Securities
will not recognize any gain or loss for United States federal income
tax purposes as a result of the dissolution of the Trust and the
distribution of Subordinated Debentures, and provided, further,
that, if at the time there is available to the Trust the opportunity
to eliminate, within the 90 Day Period, the Special Event by taking
some ministerial action, such as filing a form or making an
election, or pursuing some other similar reasonable measure that has
no adverse effect on the Trust, the Subordinated Debenture Issuer,
the Sponsor or the Holders of the Securities ("Ministerial Action"),
the Trust will pursue such Ministerial Action in lieu of
dissolution.
If in the event of a Tax Event, after receipt of a Dissolution Tax
Opinion (as defined hereinafter) by the Regular Trustees (i) the
Subordinated Debenture Issuer has received an opinion (a "Redemption
Tax Opinion") of a nationally recognized independent tax counsel
experienced in such matters that, as a result of a Tax Event, there
is more than an insubstantial risk that the Subordinated Debenture
Issuer would be precluded from deducting the interest on the
Subordinated Debentures for United States federal income tax
purposes even after the Subordinated Debentures were distributed to
the Holders of Securities in liquidation of such Holders' interests
in the Trust as described in this paragraph 4(c), or (ii) the
Regular Trustees shall have been informed by such tax counsel that a
No Recognition Opinion cannot be delivered, the Subordinated
Debenture Issuer shall have the right at any time, upon not less
than 30 nor more than 60 days notice, to redeem the Subordinated
Debentures in whole or in part for cash within 90 days following the
occurrence of such Tax Event, and, following such redemption,
Securities with an aggregate liquidation amount equal to the
aggregate principal amount of the Subordinated Debentures so
redeemed shall be redeemed by the Trust at the Redemption Price on a
Pro Rata basis in accordance with paragraph 8 hereof; provided,
however, that, if at the time there is available to the Trust the
opportunity to eliminate, within such 90 day period, the Tax Event
by taking some Ministerial Action, the Trust or the Subordinated
Debenture Issuer will pursue such Ministerial Action in lieu of
redemption. The Common Securities will be redeemed Pro Rata with
the Preferred Securities, except that if an Event of Default has
occurred and is continuing, the Preferred Securities will have
priority over the Common Securities with respect to payment of the
Redemption Price.
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"Tax Event" means that the Regular Trustees shall have received an
opinion of a nationally recognized independent tax counsel
experienced in such matters (a "Dissolution Tax Opinion") to the
effect that on or after the date of the Prospectus Supplement, as a
result of (a) any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority
thereof or therein, or (b) any amendment to, or change in, an
interpretation or application of any such laws or regulations by any
legislative body, court, governmental agency or regulatory
authority, which amendment or change is enacted, promulgated, issued
or announced or which interpretation or pronouncement is issued or
announced or which action is taken, in each case on or after the
date of the Prospectus Supplement, there is more than an
insubstantial risk that (i) the Trust would be subject to United
States federal income tax with respect to interest accrued or
received on the Subordinated Debentures, (ii) the Trust would be
subject to more than a de minimis amount of taxes, duties or other
governmental charges, or (iii) interest payable by the Subordinated
Debenture Issuer to the Trust on the Subordinated Debentures would
not be deductible, in whole or in part, by the Subordinated
Debenture Issuer for United States federal income tax purposes.
"Investment Company Event" means that the Regular Trustees shall
have received an opinion of a nationally recognized independent
counsel experienced in practice under the Investment Company Act
that, as a result of the occurrence of a change in law or regulation
or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or
regulatory authority (a "Change in 1940 Act Law"), there is a more
than an insubstantial risk that the Trust is or will be considered
an Investment Company which is required to be registered under the
Investment Company Act, which Change in 1940 Act Law becomes
effective on or after the date of the Prospectus Supplement.
On and from the date fixed by the Regular Trustees for any
distribution of Subordinated Debentures and dissolution of the
Trust: (i) the Securities will no longer be deemed to be
outstanding, (ii) the Depository or its nominee (or any successor
Depository or its nominee) will receive one or more global
certificate or certificates representing the Subordinated Debentures
to be delivered upon such distribution, and having an aggregate
principal amount equal to the aggregate stated liquidation amount
of, with an interest rate identical to the Coupon Rate of, and
accrued and unpaid interest equal to accrued and unpaid
Distributions on such Securities.
(d) The Trust may not redeem fewer than all the outstanding Securities
unless all accrued and unpaid Distributions have been paid on all
Securities for all quarterly Distribution periods terminating on or
before the date of redemption.
(e) If the Subordinated Debentures are distributed to Holders of the
Securities, pursuant to the terms of the Indenture, the Subordinated
Debenture Issuer will use its best efforts to have the Subordinated
Debentures listed on the New York Stock Exchange or on such other
exchange as the Preferred Securities were listed immediately prior
to the distribution of the Subordinated Debentures.
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(f) Redemption or Distribution Procedures.
(i) Notice of any redemption of, or notice of distribution of
Subordinated Debentures in exchange for the Securities (a
"Redemption/Distribution Notice") will be given by the
Trust by mail to each Holder of Securities to be redeemed
or exchanged not fewer than 30 nor more than 60 days
before the date fixed for redemption or exchange thereof
which, in the case of a redemption, will be the date fixed
for redemption of the Subordinated Debentures. For
purposes of the calculation of the date of redemption or
exchange and the dates on which notices are given pursuant
to this paragraph 4(f)(i), a Redemption/Distribution
Notice shall be deemed to be given on the day such notice
is first mailed by first-class mail, postage prepaid, to
Holders of Securities. Each Redemption/Distribution
Notice shall be addressed to the Holders of Securities at
the address of each such Holder appearing in the Register.
No defect in the Redemption/Distribution Notice or in the
mailing of either thereof with respect to any Holder shall
affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding
Securities are to be redeemed, the Securities to be
redeemed shall be redeemed Pro Rata in accordance with
paragraph 8 hereof.
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(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be
issued if the Subordinated Debentures are redeemed as set
out in this paragraph 4 (which notice will be
irrevocable), then (A) while the Preferred Securities are
in the form of Global Securities, with respect to the
Preferred Securities, by 12:00 noon, New York City time,
on the redemption date, provided that the Subordinated
Debenture Issuer has paid the Property Trustee a
sufficient amount of cash in connection with the related
redemption or maturity of the Subordinated Debentures, the
Property Trustee will pay the Depository (or successor
Depository or its nominee) the applicable Redemption Price
with respect to the Preferred Securities, and (B) with
respect to Preferred Securities issued in definitive form
and Common Securities, provided that the Subordinated
Debenture Issuer has paid the Property Trustee a
sufficient amount of cash in connection with the related
redemption or maturity of the Subordinated Debentures, the
Property Trustee will pay the relevant Redemption Price to
the Holders of such Securities by check mailed to the
address of the relevant Holder appearing on the Register
on the redemption date. If a Redemption/ Distribution
Notice shall have been given and funds deposited as
required, if applicable, then immediately prior to the
close of business on the date of such deposit, or on the
redemption date, as applicable, distributions will cease
to accrue on the Securities so called for redemption and
all rights of Holders of such Securities so called for
redemption will cease, except the right of the Holders of
such Securities to receive the Redemption Price, but
without interest on such Redemption Price. Neither the
Regular Trustees nor the Trust shall be required to
register or cause to be registered the transfer of any
Securities that have been so called for redemption. If
any date fixed for redemption of Securities is not a
Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding day that
is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such
Business Day falls in the next calendar year, such payment
will be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on
such date fixed for redemption. If payment of the
Redemption Price in respect of any Securities is
improperly withheld or refused and not paid either by the
Property Trustee or by the Sponsor as guarantor pursuant
to the relevant Securities Guarantee, Distributions on
such Securities will continue to accrue from the original
redemption date to the actual date of payment, in which
case the actual payment date will be considered the date
fixed for redemption for purposes of calculating the
Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the
Regular Trustees on behalf of the Trust to (A) in respect
of the Preferred Securities, the Depository (or successor
Depository or its nominee) if Preferred Securities are in
the form of Global Securities or, if Preferred Securities
have been issued in definitive form, to the Holders
thereof, and (B) in respect of the Common Securities to
the Holder thereof.
59
<PAGE>
(v) Subject to the foregoing and applicable law (including,
without limitation, United States federal securities
laws), provided the acquirer is not the Holder of the
Common Securities or the obligor under the Indenture, the
Sponsor or any of its subsidiaries may at any time and
from time to time purchase outstanding Preferred
Securities by tender, in the open market or by private
agreement.
5. Voting Rights - Preferred Securities.
(a) Except as provided under paragraphs 5(b) and 7 and as otherwise
required by law and the Declaration, the Holders of the Preferred
Securities will have no voting rights.
(b) Subject to the requirements set forth in this paragraph, the Holders
of a Majority in liquidation amount of the Preferred Securities,
voting separately as a class may direct the time, method, and place
of conducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power conferred upon
the Property Trustee under the Declaration, including (i) directing
the time, method, place of conducting any proceeding for any remedy
available to the Subordinated Debenture Trustee, or exercising any
trust or power conferred on the Subordinated Debenture Trustee with
respect to the Subordinated Debentures, (ii) waive any past default
and its consequences that is waivable under Section 513 of the
Indenture, or (iii) exercise any right to rescind or annul a
declaration that the principal of all the Subordinated Debentures
shall be due and payable, provided, however, that, where a consent
under the Indenture would require the consent or act of the Holders
of greater than a majority of the Holders in principal amount of
Subordinated Debentures affected thereby, (a "Super Majority"), the
Property Trustee may only give such consent or take such action at
the direction of the Holders of at least the proportion in
liquidation amount of the Preferred Securities which the relevant
Super Majority represents of the aggregate principal amount of the
Subordinated Debentures outstanding. The Property Trustee shall not
revoke any action previously authorized or approved by a vote of the
Holders of the Preferred Securities. Other than with respect to
directing the time, method and place of conducting any remedy
available to the Property Trustee or the Subordinated Debenture
Trustee as set forth above, the Property Trustee shall not take any
action in accordance with the directions of the Holders of the
Preferred Securities under this paragraph unless the Property
Trustee has obtained an opinion of tax counsel to the effect that
the Trust will not be classified as other than a grantor trust for
United States federal income tax purposes on account of such action.
If the Property Trustee fails to enforce its rights under the
Declaration, any Holder of Preferred Securities may institute a
legal proceeding directly against any Person to enforce the Property
Trustee's rights under the Declaration without first instituting a
legal proceeding against the Property Trustee or any other Person.
Any approval or direction of Holders of Preferred Securities may be
given at a separate meeting of Holders of Preferred Securities
convened for such purpose, at a meeting of all of the Holders of
Securities in the Trust or pursuant to written consent. The Regular
Trustees will cause a notice of any meeting at which Holders of
Preferred Securities are entitled to vote, or of any matter upon
which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Preferred Securities. Each
such notice will include a statement setting forth (i) the date of
such meeting or the date by which such action is to be taken, (ii) a
description of any resolution proposed for adoption at such meeting
on which such Holders are entitled to vote or of such matter upon
which written consent is sought, and (iii) instructions for the
delivery of proxies or consents.
60
<PAGE>
No vote or consent of the Holders of the Preferred Securities will
be required for the Trust to redeem and cancel Preferred Securities
or to distribute the Subordinated Debentures in accordance with the
Declaration and the terms of the Securities.
Notwithstanding that Holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any
of the Preferred Securities that are owned by the Sponsor or any
Affiliate of the Sponsor shall not be entitled to vote or consent
and shall, for purposes of such vote or consent, be treated as if
they were not outstanding.
6. Voting Rights - Common Securities.
(a) Except as provided under paragraphs 6(b), (c) and 7 and as otherwise
required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in accordance
with Article V of the Declaration, to vote to appoint, remove or
replace any Trustee or to increase or decrease the number of
Trustees.
(c) Subject to Section 2.6 of the Declaration and only after any Event
of Default with respect to the Preferred Securities has been cured,
waived, or otherwise eliminated, and subject to the requirements of
the second to last sentence of this paragraph, the Holders of a
Majority in liquidation amount of the Common Securities, voting
separately as a class, may direct the time, method, and place of
conducting any proceeding for any remedy available to the Property
Trustee, or exercising any trust or power conferred upon the
Property Trustee under the Declaration, including (i) directing the
time, method, place of conducting any proceeding for any remedy
available to the Subordinated Debenture Trustee, or exercising any
trust or power conferred on the Subordinated Debenture Trustee with
respect to the Subordinated Debentures, (ii) waive any past default
and its consequences that is waivable under the Indenture, or (iii)
exercise any right to rescind or annul a declaration that the
principal of all the Subordinated Debentures shall be due and
payable, provided, however, that, where a consent or action under
the Indenture would require the consent or act of the Holders of a
Super Majority in principal amount of Subordinated Debentures
affected thereby, the Property Trustee may only give such consent or
take such action at the direction of the Holders of at least the
proportion in liquidation amount of the Common Securities which the
relevant Super Majority represents of the aggregate principal amount
of the Subordinated Debentures outstanding. Pursuant to this
paragraph 6(c), the Property Trustee shall not revoke any action
previously authorized or approved by a vote of the Holders of the
Preferred Securities. Other than with respect to directing the
time, method and place of conducting any remedy available to the
Property Trustee or the Subordinated Debenture Trustee as set forth
above, the Property Trustee shall not take any action in accordance
with the directions of the Holders of the Common Securities under
this paragraph unless the Property Trustee has obtained an opinion
of tax counsel to the effect that the Trust will not be classified
as other than a grantor trust for United States federal income tax
purpose on account of such action. If the Property Trustee fails to
enforce its rights under the Declaration, any Holder of Common
Securities may institute a legal proceeding directly against any
Person to enforce the Property Trustee's rights under the
Declaration, without first instituting a legal proceeding against
the Property Trustee or any other Person.
61
<PAGE>
Any approval or direction of Holders of Common Securities may be
given at a separate meeting of Holders of Common Securities convened
for such purpose, at a meeting of all of the Holders of Securities
in the Trust or pursuant to written consent. The Regular Trustees
will cause a notice of any meeting at which Holders of Common
Securities are entitled to vote, or of any matter upon which action
by written consent of such Holders is to be taken, to be mailed to
each Holder of record of Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or
the date by which such action is to be taken, (ii) a description of
any resolution proposed for adoption at such meeting on which such
Holders are entitled to vote or of such matter upon which written
consent is sought, and (iii) instructions for the delivery of
proxies or consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to
distribute the Subordinated Debentures in accordance with the
Declaration and the terms of the Securities.
7. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 12.1 of the
Declaration, if any proposed amendment to the Declaration provides
for, or the Regular Trustees otherwise propose to effect, (i) any
action that would adversely affect the powers, preferences or
special rights of the Securities, whether by way of amendment to the
Declaration or otherwise, or (ii) the dissolution, winding-up or
termination of the Trust, other than as described in Section 8.1 of
the Declaration, then the Holders of outstanding Securities as a
class, will be entitled to vote on such amendment or proposal (but
not on any other amendment or proposal) and such amendment or
proposal shall not be effective except with the approval of the
Holders of at least 66-2/3% in liquidation amount of the Securities,
voting together as a single class; provided, further, if any
amendment or proposal referred to in clause (i) above would
adversely affect only the Preferred Securities or only the Common
Securities, then only the affected class will be entitled to vote on
such amendment or proposal and such amendment or proposal shall not
be effective except with the approval of 66-2/3% in liquidation
amount of such class of Securities.
(b) In the event the consent of the Property Trustee as the holder of
the Subordinated Debentures is required under the Indenture with
respect to any amendment, modification or termination of the
Indenture or the Subordinated Debentures, the Property Trustee shall
request the direction of the Holders of the Securities with respect
to such amendment, modification or termination and shall vote with
respect to such amendment, modification or termination as directed
by a Majority in liquidation amount of the Securities voting
together as a single class; provided, however, that where a consent
under the Indenture would require the consent of the Holders of a
Super Majority in aggregate principal amount of the Subordinated
Debentures, the Property Trustee may only give such consent at the
direction of the Holders of at least the proportion in liquidation
amount of the Securities which the relevant Super Majority
represents of the aggregate principal amount of the Subordinated
Debentures outstanding; provided, further, that the Property Trustee
shall not take any action in accordance with the directions of the
Holders of the Securities under this paragraph 7(b) unless the
Property Trustee has obtained an opinion of tax counsel to the
effect that the Trust will not be classified as other than a grantor
trust for United States federal income tax purposes on account of
such action.
62
<PAGE>
8. Pro Rata.
A reference in these terms of the Securities to any payment, distribution or
treatment as being "Pro Rata" shall mean pro rata to each Holder of Securities
according to the aggregate liquidation amount of the Securities held by the
relevant Holder in relation to the aggregate liquidation amount of all
Securities outstanding unless, in relation to a payment, an Event of Default
under the Indenture has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the
Preferred Securities pro rata according to the aggregate liquidation amount of
Preferred Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Preferred Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Preferred Securities,
to each Holder of Common Securities pro rata according to the aggregate
liquidation amount of Common Securities held by the relevant Holder relative
to the aggregate liquidation amount of all Common Securities outstanding.
9. Ranking.
The Preferred Securities rank pari passu and payment thereon shall be made Pro
Rata with the Common Securities except that, where an Event of Default occurs
and is continuing under the Indenture in respect of the Subordinated
Debentures held by the Property Trustee, the rights of Holders of the Common
Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to
payment of the Holders of the Preferred Securities.
10. Listing.
The Regular Trustees shall use their best efforts to cause the Preferred
Securities to be listed for quotation on the New York Stock Exchange, Inc.
11. Acceptance of Securities Guarantee and Indenture.
Each Holder of Preferred Securities and Common Securities, by the acceptance
thereof, agrees to the provisions of the Preferred Securities Guarantee and
the Common Securities Guarantee, respectively, including the subordination
provisions therein and to the provisions of the Indenture.
12. No Preemptive Rights.
The Holders of the Securities shall have no preemptive rights to subscribe for
any additional securities.
13. Miscellaneous.
These terms constitute a part of the Declaration and may be amended only in
accordance with the provisions of the Declaration.
These Securities shall be governed by the laws of the State of Delaware.
The Sponsor will provide a copy of the Declaration, the Preferred Securities
Guarantee or the Common Securities Guarantee (as may be appropriate), and the
Indenture to a Holder without charge on written request to the Trust at its
principal place of business.
63
<PAGE>
ANNEX I
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT - This
Preferred Security is a Global Certificate within the meaning of the
Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depository") or a nominee of the Depository.
This Preferred Security is exchangeable for Preferred Securities registered in
the name of a person other than the Depository or its nominee only in the
limited circumstances described in the Declaration and no transfer of this
Preferred Security (other than a transfer of this Preferred Security as a
whole by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository) may be
registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Trust or
its agent for registration of transfer, exchange or payment, and any Preferred
Security issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of DTC and any payment hereon is
made to Cede & Co. (or to such other entity, as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch the registered owner
hereof, Cede & Co., has an interest herein.]
Number Number of Preferred Securities
CUSIP NO. _____________
___% Trust Originated Preferred Securities.SM ("TOPrS"SM)
(liquidation amount $25 per Preferred Security)
of
PACIFIC TELESIS FINANCING I
PACIFIC TELESIS FINANCING I, a statutory business trust formed under the laws
of the State of Delaware (the "Trust"), hereby certifies that
_____________________________ (the "Holder") is the registered owner of
preferred securities of the Trust representing undivided beneficial interests
in the assets of the Trust designated the _______% Trust Originated Preferred
Securities (liquidation amount $25 per Preferred Security) (the "Preferred
Securities"). The Preferred Securities are transferable on the Register, in
person or by a duly authorized attorney, upon surrender of this certificate
duly endorsed and in proper form for transfer. The designation, rights,
privileges, restrictions, preferences and other terms and provisions of the
Preferred Securities are and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust dated as of
________, 1995, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Preferred
Securities as set forth in Exhibit A to the Declaration. Capitalized terms
used herein but not defined shall have the meaning given them in the
Declaration. The Holder is entitled to the benefits of the Declaration and of
the Preferred Securities Guarantee to the extent provided therein. Pacific
Telesis Group as the Sponsor will provide a copy of the Declaration, the
Preferred Securities Guarantee and the Indenture to a Holder without charge
upon written request to the Trust at its principal place of business.
Upon receipt hereof, the Holder is bound by the Declaration and is entitled to
the benefits thereunder.
64
<PAGE>
By acceptance, the Holder agrees to treat, for United States federal income
tax purposes, the Subordinated Debentures as indebtedness and the Preferred
Securities as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this day of
___________________, 199__.
{ }
as Trustee
______________________________________
{ }
as Trustee
_______________________________________
65
<PAGE>
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security to:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Insert assignee's social security or tax identification number)
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
_________________________________________________________________
_________________________________________________________________
___________________________________________________________ agent
to transfer this Preferred Security on the Register. The agent may substitute
another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Preferred
Security)
66
<PAGE>
ANNEX II
Number Number of Common Securities
___% Trust Originated Common Securities.
(liquidation amount $25 per Common Security)
of
PACIFIC TELESIS FINANCING I
PACIFIC TELESIS FINANCING I, a statutory business trust formed under the laws
of the State of Delaware (the "Trust"), hereby certifies that
_____________________________ (the "Holder") is the registered owner of common
securities of the Trust representing undivided beneficial interests in the
assets of the Trust designated the _______% Trust Originated Common Securities
(liquidation amount $25 per Common Security) (the "Common Securities"). The
Common Securities are transferable on the Register, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities are and
shall in all respects be subject to the provisions of the Amended and Restated
Declaration of Trust dated as of ___________________, 1995, as the same may be
amended from time to time (the "Declaration"), including the designation of
the terms of the Common Securities as set forth in Exhibit A to the
Declaration. Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits
of the Common Securities Guarantee to the extent provided therein. The Trust
will provide a copy of the Declaration, the Common Securities Guarantee and
the Indenture to a Holder without charge upon written request to the Trust at
its principal place of business.
Upon receipt hereof, the Holder is bound by the Declaration and is entitled to
the benefits thereunder.
By acceptance, the Holder agrees to treat for United States federal income tax
purposes the Subordinated Debentures as indebtedness and the Common Securities
as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this day of
_____________________, 199__.
{ }
as Trustee
___________________________________
{ }
as Trustee
_________________________________
67
<PAGE>
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
to:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Insert assignee's social security or tax identification number)
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
_________________________________________________________________
_________________________________________________________________
___________________________________________________________ agent to transfer
this Common Security on the Register. The agent may substitute another to act
for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Preferred
Security)
68
<PAGE>
EXHIBIT B
SPECIMEN OF DEBENTURE
69
<PAGE>
EXHIBIT C
UNDERWRITING AGREEMENT
70
<PAGE>
EXHIBIT 4-E-1
-------------
====================================
DECLARATION OF TRUST
PACIFIC TELESIS FINANCING II
Dated as of October 16, 1995
====================================
<PAGE>
DECLARATION OF TRUST OF
PACIFIC TELESIS FINANCING II
DECLARATION OF TRUST, dated as of October 16, 1995, between Pacific Telesis
Group, a Nevada corporation, as Sponsor, Roomy F. Balaporia,
Miles H. Mochizuki, and Marie B. Washington, not in their individual
capacities but solely as Trustees, Michael J. Majchrzak, not in his individual
capacity but solely as Delaware Trustee, and The First National Bank of
Chicago, a national banking association, not in its individual capacity but
solely as Property Trustee. The Sponsor and the Trustees hereby agree as
follows:
1. The trust created hereby shall be known as "Pacific Telesis Financing II"
(the "Trust"), in which name the Trustees, or the Sponsor to the extent
provided herein, may conduct the business of the Trust, make and execute
contracts, and sue and be sued.
2. The Sponsor hereby assigns, transfers, conveys and sets over to the Trust
the sum of $10. The Trustees hereby acknowledge receipt of such amount from
the Sponsor, which amount shall constitute the initial trust estate. It is the
intention of the parties hereto that the Trust created hereby constitute a
business trust under Chapter 38 of Title 12 of the Delaware Code, 12 Del. C.
Sec. 3801 et seq. (the "Business Trust Act"), and that this document
constitute the governing instrument of the Trust. The Trustees are hereby
authorized and directed to execute and file a certificate of trust with the
Delaware Secretary of State in the form attached hereto.
3. The Sponsor and the Trustees will enter into an amended and restated
Declaration of Trust, satisfactory to each such party and substantially in the
form to be included as Exhibit 4.5 to the Registration Statement referred to
below, to provide for the contemplated operation of the Trust created hereby
and the issuance of the Preferred Securities and Common Securities referred to
therein. Prior to the execution and delivery of such amended and restated
Declaration of Trust, the Trustees shall not have any duty or obligation
hereunder or with respect to the trust estate, except as otherwise required by
applicable law or as may be necessary to obtain prior to such execution and
delivery any licenses, consents or approvals required by applicable law or
otherwise.
4. The Trustees hereby authorize and direct the Sponsor, as the sponsor of
the Trust, (i) to file with the Securities and Exchange Commission (the
"Commission") and execute, in each case on behalf of the Trust, (a) a
Registration Statement on Form S-3 (the "Registration Statement") and any pre-
effective or post-effective amendments to such Registration Statement,
relating to the registration under the Securities Act of 1933, as amended, of
the Preferred Securities of the Trust, and (b) a Registration Statement on
Form 8-A (the "1934 Act Registration Statement") and any pre-effective and
post-effective amendments to such 1934 Act Registration Statement relating to
the registration of the Preferred Securities of the Trust under Section 12(b)
of the Securities Exchange Act of 1934, as amended; (ii) to file with the New
York Stock Exchange and execute on behalf of the Trust a listing application
and all other applications, statements, certificates, agreements and other
instruments as shall be necessary or desirable to cause the Preferred
Securities to be listed on the New York Stock Exchange; and (iii) to file and
execute on behalf of the Trust such applications, reports, surety bonds,
irrevocable consents, appointments of attorneys for service of process and
other papers and documents as shall be necessary or desirable to register the
Preferred Securities under the securities or "Blue Sky" laws of such
jurisdictions as the Sponsor, on behalf of the Trust, may deem necessary or
desirable. In the event that any filing referred to in clauses (i) - (iii)
above is required by the rules and regulations of the Commission, the New York
Stock Exchange or state securities or blue sky laws, to be executed on behalf
of the Trust by the Trustees, the Sponsor is hereby authorized and directed to
join in any such filing and to execute on behalf of the Trust any and all of
the foregoing, it being understood that Michael J. Majchrzak and The First
National Bank of Chicago in their capacities as Trustees of the Trust shall
not be required to join in any such filing or execute on behalf of the Trust
any such document unless required by the rules and regulations of the
Commission, the New York Stock Exchange or state securities or blue sky laws.
1
<PAGE>
In connection with all of the foregoing, the Sponsor and each Trustee, solely
in its capacity as Trustee of the Trust, hereby constitutes and appoints
Philip J. Quigley, William E. Downing and Richard W. Odgers and each of them,
as his, her or its, as the case may be, true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for the Sponsor or
such Trustee or in the Sponsor's or such Trustee's name, place and stead, in
any and all capacities, to sign any and all amendments (including post-
effective amendments) to the Registration Statement and the 1934 Act
Registration Statement and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Commission, granting unto
each said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as the Sponsor or
such Trustee might or could do in person, hereby ratifying and confirming all
that each said attorney-in-fact and agent, or her substitute or substitutes,
shall do or cause to be done by virtue hereof.
5. This Declaration of Trust may be executed in one or more counterparts.
6. The number of Trustees initially shall be five (5) and thereafter the
number of Trustees shall be such number as shall be fixed from time to time by
a written instrument signed by the Sponsor which may increase or decrease the
number of Trustees; provided that to the extent required by the Business Trust
Act, one Trustee shall either be a natural person who is a resident of the
State of Delaware or, if not a natural person, an entity which has its
principal place of business in the State of Delaware. Subject to the
foregoing, the Sponsor is entitled to appoint or remove without cause any
Trustee at any time. A Trustee may resign upon thirty (30) days prior notice
to the Sponsor.
IN WITNESS WHEREOF, the parties hereto have caused this Declaration of Trust
to be duly executed as of the day and year first above written.
Pacific Telesis Group as Sponsor
By: /s/ William E. Downing
----------------------
Name: William E. Downing
Title: Executive Vice President, Chief Financial Officer and Treasurer
The First National Bank of Chicago not in its individual capacity
but solely as Property Trustee
By: /s/ R. D. Manella
-----------------
Name: R. D. Manella
Title: Vice President
/s/ Michael J. Majchrzak
- ------------------------
Michael J. Majchrzak, as Delaware Trustee
/s/ Roomy F. Balaporia
- ----------------------
Roomy F. Balaporia, as Trustee
/s/ Miles H. Mochizuki
- ----------------------
Miles H. Mochizuki, as Trustee
/s/ Marie B. Washington
- -----------------------
Marie B. Washington, as Trustee
2
<PAGE>
EXHIBIT 4-F-1
-------------
====================================
DECLARATION OF TRUST
PACIFIC TELESIS FINANCING III
Dated as of October 16, 1995
====================================
<PAGE>
DECLARATION OF TRUST OF
PACIFIC TELESIS FINANCING III
DECLARATION OF TRUST, dated as of October 16, 1995, between Pacific Telesis
Group, a Nevada corporation, as Sponsor, Roomy F. Balaporia,
Miles H. Mochizuki, and Marie B. Washington, not in their individual
capacities but solely as Trustees, Michael J. Majchrzak, not in his individual
capacity but solely as Delaware Trustee, and The First National Bank of
Chicago, a national banking association, not in its individual capacity but
solely as Property Trustee. The Sponsor and the Trustees hereby agree as
follows:
1. The trust created hereby shall be known as "Pacific Telesis Financing
III" (the "Trust"), in which name the Trustees, or the Sponsor to the extent
provided herein, may conduct the business of the Trust, make and execute
contracts, and sue and be sued.
2. The Sponsor hereby assigns, transfers, conveys and sets over to the Trust
the sum of $10. The Trustees hereby acknowledge receipt of such amount from
the Sponsor, which amount shall constitute the initial trust estate. It is the
intention of the parties hereto that the Trust created hereby constitute a
business trust under Chapter 38 of Title 12 of the Delaware Code, 12 Del. C.
Sec. 3801 et seq. (the "Business Trust Act"), and that this document
constitute the governing instrument of the Trust. The Trustees are hereby
authorized and directed to execute and file a certificate of trust with the
Delaware Secretary of State in the form attached hereto.
3. The Sponsor and the Trustees will enter into an amended and restated
Declaration of Trust, satisfactory to each such party and substantially in the
form to be included as Exhibit 4.5 to the Registration Statement referred to
below, to provide for the contemplated operation of the Trust created hereby
and the issuance of the Preferred Securities and Common Securities referred to
therein. Prior to the execution and delivery of such amended and restated
Declaration of Trust, the Trustees shall not have any duty or obligation
hereunder or with respect to the trust estate, except as otherwise required by
applicable law or as may be necessary to obtain prior to such execution and
delivery any licenses, consents or approvals required by applicable law or
otherwise.
4. The Trustees hereby authorize and direct the Sponsor, as the sponsor of
the Trust, (i) to file with the Securities and Exchange Commission (the
"Commission") and execute, in each case on behalf of the Trust, (a) a
Registration Statement on Form S-3 (the "Registration Statement") and any pre-
effective or post-effective amendments to such Registration Statement,
relating to the registration under the Securities Act of 1933, as amended, of
the Preferred Securities of the Trust, and (b) a Registration Statement on
Form 8-A (the "1934 Act Registration Statement") and any pre-effective and
post-effective amendments to such 1934 Act Registration Statement relating to
the registration of the Preferred Securities of the Trust under Section 12(b)
of the Securities Exchange Act of 1934, as amended; (ii) to file with the New
York Stock Exchange and execute on behalf of the Trust a listing application
and all other applications, statements, certificates, agreements and other
instruments as shall be necessary or desirable to cause the Preferred
Securities to be listed on the New York Stock Exchange; and (iii) to file and
execute on behalf of the Trust such applications, reports, surety bonds,
irrevocable consents, appointments of attorneys for service of process and
other papers and documents as shall be necessary or desirable to register the
Preferred Securities under the securities or "Blue Sky" laws of such
jurisdictions as the Sponsor, on behalf of the Trust, may deem necessary or
desirable. In the event that any filing referred to in clauses (i) - (iii)
above is required by the rules and regulations of the Commission, the New York
Stock Exchange or state securities or blue sky laws, to be executed on behalf
of the Trust by the Trustees, the Sponsor is hereby authorized and directed to
join in any such filing and to execute on behalf of the Trust any and all of
the foregoing, it being understood that Michael J. Majchrzak and The First
National Bank of Chicago in their capacities as Trustees of the Trust shall
not be required to join in any such filing or execute on behalf of the Trust
any such document unless required by the rules and regulations of the
Commission, the New York Stock Exchange or state securities or blue sky laws.
1
<PAGE>
In connection with all of the foregoing, the Sponsor and each Trustee, solely
in its capacity as Trustee of the Trust, hereby constitutes and appoints
Philip J. Quigley, William E. Downing and Richard W. Odgers and each of them,
as his, her or its, as the case may be, true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for the Sponsor or
such Trustee or in the Sponsor's or such Trustee's name, place and stead, in
any and all capacities, to sign any and all amendments (including post-
effective amendments) to the Registration Statement and the 1934 Act
Registration Statement and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Commission, granting unto
each said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as the Sponsor or
such Trustee might or could do in person, hereby ratifying and confirming all
that each said attorney-in-fact and agent, or her substitute or substitutes,
shall do or cause to be done by virtue hereof.
5. This Declaration of Trust may be executed in one or more counterparts.
6. The number of Trustees initially shall be five (5) and thereafter the
number of Trustees shall be such number as shall be fixed from time to time by
a written instrument signed by the Sponsor which may increase or decrease the
number of Trustees; provided that to the extent required by the Business Trust
Act, one Trustee shall either be a natural person who is a resident of the
State of Delaware or, if not a natural person, an entity which has its
principal place of business in the State of Delaware. Subject to the
foregoing, the Sponsor is entitled to appoint or remove without cause any
Trustee at any time. A Trustee may resign upon thirty (30) days prior notice
to the Sponsor.
IN WITNESS WHEREOF, the parties hereto have caused this Declaration of Trust
to be duly executed as of the day and year first above written.
Pacific Telesis Group as Sponsor
By: /s/ William E. Downing
----------------------
Name: William E. Downing
Title: Executive Vice President, Chief Financial Officer and Treasurer
The First National Bank of Chicago not in its individual capacity
but solely as Property Trustee
By: /s/ R. D. Manella
-----------------
Name: R. D. Manella
Title: Vice President
/s/ Michael J. Majchrzak
- ------------------------
Michael J. Majchrzak, as Delaware Trustee
/s/ Roomy F. Balaporia
- ----------------------
Roomy F. Balaporia, as Trustee
/s/ Miles H. Mochizuki
- ----------------------
Miles H. Mochizuki, as Trustee
/s/ Marie B. Washington
- -----------------------
Marie B. Washington, as Trustee
2
<PAGE>
EXHIBIT 4-G
-----------
FORM OF DEBT SECURITIES INDENTURE
AMONG PACIFIC TELESIS GROUP AND
FIRST NATIONAL BANK OF CHICAGO, AS TRUSTEE
1
<PAGE>
___________________________________________________________________________
PACIFIC TELESIS GROUP
TO
THE FIRST NATIONAL BANK OF CHICAGO
Trustee
_________________________________
Indenture
Dated as of _____________, 1995
_________________________________
___________________________________________________________________________
2
<PAGE>
CROSS-REFERENCE TABLE*
Section of Trust
Indenture Act of 1939, Section of
as amended Indenture
- ------------------- ----------
310(a)...................................................... 607
310(b)...................................................... 608
310(c)...................................................... Inapplicable
311(a)...................................................... 612
311(b)...................................................... 612
311(c)...................................................... Inapplicable
312(a)...................................................... 701
312(b)...................................................... 702
312(c)...................................................... 702
313(a)...................................................... 703
313(b)(1) .................................................. Inapplicable
313(b)(2) .................................................. 703
313(c)...................................................... 703
313(d)...................................................... 703
314(a)(1)................................................... 704 (1)
314(a)(2)................................................... 704 (2)
314(a)(3)................................................... 704 (3)
314(a)(4)................................................... 704 (4)
314(b)...................................................... Inapplicable
314(c)...................................................... 102
314(d)...................................................... Inapplicable
314(e)...................................................... 102
314(f)...................................................... Inapplicable
315(a)...................................................... 602
315(b)...................................................... 601
315(c)...................................................... 601
315(d)...................................................... 601
315(e)...................................................... 515
316(a)...................................................... 501
316(b)...................................................... 508
316(c)...................................................... 104(d)
317(a)...................................................... 503, 504
317(b)...................................................... 1003
318(a)...................................................... 113
318(b)...................................................... Inapplicable
318(c)...................................................... 113
____________________
* This Cross-Reference Table does not constitute part of the Indenture and
shall not have any bearing upon the interpretation of any of its terms or
provisions.
3
<PAGE>
TABLE OF CONTENTS*
Page
====
PARTIES
RECITALS
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions..................................
Act
Additional Amounts
Affiliate
Authenticating Agent
Authorized Newspaper
Bearer Security
Board of Directors
Board Resolution
Business Day
CEDEL S.A.
Commission
Common Depositary
Common Securities
Common Securities Guarantee
Company
Company Request or Company Order
Conversion Date
Conversion Event
Corporate Trust Office
corporation
coupon
Currency
Declaration
Default
Defaulted Interest
Dollar or $
Dollar Equivalent of the Currency Unit
Dollar Equivalent of the Foreign Currency
ECU
Election Date
Euroclear
European Communities
____________________
* This Table of Contents does not constitute part of the Indenture and
shall not have any bearing upon the interpretation of any of its terms or
provisions.
4
<PAGE>
TABLE OF CONTENTS*
(CONT'D)
Page
====
European Monetary System
Event of Default
Exchange Date
Exchange Rate Agent
Exchange Rate Officer's Certificate
Federal Bankruptcy Code
Foreign Currency
Government Obligations
Holder
Indenture
Indexed Security
Interest Payment Date
Market Exchange Rate
Maturity
Officers' Certificate
Opinion of Counsel
Original Issue Discount Security
Outstanding
Pacific Telesis Trust
Paying Agent
Person
Place of Payment
Predecessor Security
Preferred Securities
Preferred Securities Guarantee
Redemption Date
Redemption Price
Registered Security
Regular Record Date
Repayment Date
Responsible Officer
Securities
Security Register and Security Registrar
Special Record Date
Stated Maturity
Subsidiary
Trust Indenture Act or TIA
Trust Securities
Trust Securities Guarantees
Trustee
United States
United States person
Valuation Date
Vice President
Voting Stock
Yield to Maturity
SECTION 102. Compliance Certificates and Opinions..................
SECTION 103. Form of Documents Delivered to Trustee................
SECTION 104. Acts of Holders.......................................
5
<PAGE>
TABLE OF CONTENTS*
(CONT'D)
Page
====
SECTION 105. Notices, etc. to Trustee and Company..................
SECTION 106. Notice to Holders; Waiver.............................
SECTION 107. Effect of Headings and Table of Contents..............
SECTION 108. Successors and Assigns................................
SECTION 109. Separability Clause...................................
SECTION 110. Benefits of Indenture.................................
SECTION 111. Governing Law.........................................
SECTION 112. Legal Holidays........................................
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.......................................
SECTION 202. Form of Trustee's Certificate of Authentication.......
SECTION 203. Securities Issuable in Global Form....................
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series..................
SECTION 302. Denominations.........................................
SECTION 303. Execution, Authentication, Delivery and Dating........
SECTION 304. Temporary Securities..................................
SECTION 305. Registration of Transfer and Exchange.................
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities......
SECTION 307. Payment of Interest; Interest Rights Preserved;
Optional Interest Reset..........................
SECTION 308. Persons Deemed Owners.................................
SECTION 309. Cancellation..........................................
SECTION 310. Computation of Interest...............................
SECTION 311. Currency and Manner of Payments in Respect of
Securities.......................................
SECTION 312. Appointment and Resignation of Successor Exchange
Rate Agent.......................................
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture................
SECTION 402. Application of Trust Money.............................
ARTICLE FIVE
EVENTS OF DEFAULT AND REMEDIES
SECTION 501. Events of Default......................................
SECTION 502. Acceleration of Maturity; Rescission and Annulment.....
SECTION 503. Collection of Indebtedness and Suits for Enforcemnt
by Trustee........................................
SECTION 504. Trustee May File Proofs of Claim.......................
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities........................................
SECTION 506. Application of Money Collected.........................
SECTION 507. Limitation on Suits ...................................
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest..............................
SECTION 509. Restoration of Rights and Remedies.....................
SECTION 510. Rights and Remedies Cumulative.........................
SECTION 511. Delay or Omission Not Waiver...........................
SECTION 512. Control by Holders.....................................
SECTION 513. Waiver of Past Defaults ...............................
SECTION 514. Waiver of Stay or Extension Laws.......................
SECTION 515. Undertaking for Costs..................................
6
<PAGE>
TABLE OF CONTENTS*
(CONT'D)
Page
====
ARTICLE SIX
THE TRUSTEE
SECTION 601. Notice of Defaults.....................................
SECTION 602. Certain Rights of Trustee. Subject to the provisions
of TIA Sections 315(a) through 315(d).............
SECTION 603. Trustee Not Responsible for Recitals or Issuance of
Securities........................................
SECTION 604. May Hold Securities ...................................
SECTION 605. Money Held in Trust ...................................
SECTION 606. Compensation and Reimbursement.........................
SECTION 607. Corporate Trustee Required; Eligibility................
SECTION 608. Resignation and Removal; Appointment of
Successor.........................................
SECTION 609. Acceptance of Appointment by Successor.................
SECTION 610. Merger, Conversion, Consolidation or Succession to
Business .........................................
SECTION 611. Appointment of Authenticating Agent....................
SECTION 612. Preferential Collection of Claims Against Company......
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Information As to Names
and Addresses of Holders of Securities............
SECTION 702 Preservation of Information; Communication to Holders
of Securities.....................................
SECTION 703. Reports by Trustee.....................................
SECTION 704. Reports by Company.....................................
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, etc., Only on Certain
Terms............................................
SECTION 802. Successor Person Substituted..........................
SECTION 803. Assignment of Rights..................................
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders...
SECTION 902. Supplemental Indentures with Consent of Holders......
SECTION 903. Execution of Supplemental Indentures.................
SECTION 904. Effect of Supplemental Indentures....................
SECTION 905. Conformity with Trust Indenture Act..................
SECTION 906. Reference in Securities to Supplemental Indentures...
SECTION 907. Notice of Supplemental Indentures....................
7
<PAGE>
TABLE OF CONTENTS*
(CONT'D)
ARTICLE TEN
COVENANTS
Page
====
SECTION 1001. Payment of Principal, Premium, if any, and Interest..
SECTION 1002. Maintenance of Office or Agency .....................
SECTION 1003. Money for Securities Payments to Be Held in Trust....
SECTION 1004. Statement as to Compliance...........................
SECTION 1005. Additional Amounts...................................
SECTION 1006. Limitation on Dividends..............................
SECTION 1007. Covenants as to Pacific Telesis Trusts...............
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article.............................
SECTION 1102. Election to Redeem; Notice to Trustee................
SECTION 1103. Selection by Trustee of Securities to Be Redeemed....
SECTION 1104. Notice of Redemption.................................
SECTION 1105. Deposit of Redemption Price .........................
SECTION 1106. Securities Payable on Redemption Date................
ECTION 1107. Securities Redeemed in Part..........................
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article.............................
SECTION 1202. Satisfaction of Sinking Fund Payments with
Securities......................................
SECTION 1203. Redemption of Securities for Sinking Fund............
ARTICLE THIRTEEN
REPAYMENT AT OPTION OF HOLDERS
SECTION 1301. Applicability of Article............................
SECTION 1302. Repayment of Securities ............................
SECTION 1303. Exercise of Option..................................
SECTION 1304. When Securities Presented for Repayment Become Due
and Payable ...................................
SECTION 1305. Securities Repaid in Part ..........................
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Discharge of Liability on Outstanding Securities
of any Series..................................
Section 1402. Discharge of Certain Covenants and Other
Obligations....................................
Section 1403. Discharge of Certain Obligations Upon Deposit of
Money or Government Obligations with Trustee...
Section 1404. Unclaimed Moneys....................................
ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
SECTION 1501. Purposes for Which Meetings May Be Called...........
SECTION 1502. Call, Notice and Place of Meetings..................
SECTION 1503. Persons Entitled to Vote at Meetings................
SECTION 1504. Quorum; Action......................................
SECTION 1505. Determination of Voting Rights; Conduct and
Adjournment of Meetings........................
SECTION 1506. Counting Votes and Recording Action of Meetings.....
8
<PAGE>
INDENTURE, dated as of ______________, 1995, between Pacific Telesis
Group, a corporation duly organized and existing under the laws of the State
of Nevada (herein called the "Company") having its principal office at
130 Kearny Street, San Francisco, CA 94108, and The First National Bank of
Chicago, a national banking association duly organized and existing under the
laws of the United States, Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this Indenture
to provide for the issuance from time to time of its unsecured debentures,
notes or other evidences of indebtedness (herein called the "Securities"), to
be issued in one or more series as in this Indenture provided.
This Indenture is subject to the provisions of the Trust Indenture Act of
1939, as amended, that are required to be part of this Indenture and shall, to
the extent applicable, be governed by such provisions.
All things necessary to make this Indenture a valid agreement of the Company,
in accordance with its terms, have been done.
For and in consideration of the premises and the purchase of the Securities by
the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities or of any series
thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided or
unless the context otherwise requires:
(1)the terms defined in this Article have the meanings assigned to them in
this Article and include the plural as well as the singular;
(2)all other terms used herein which are defined in the Trust Indenture Act,
either directly or by reference therein, have the meanings assigned to them
therein, and the terms "cash transaction" and "self-liquidating paper", as
used in TIA Section 311, shall have the meanings assigned to them in the rules
of the Commission adopted under the Trust Indenture Act;
(3) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the
term "generally accepted accounting principles" with respect to any
computation required or permitted hereunder shall mean such
accounting principles as are generally accepted at the date of such
computation; and
(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
Certain terms, used principally in Article Three, are defined in that Article.
"Act", when used with respect to any Holder (as defined below), has the
meaning specified in Section 104.
"Additional Amounts" has the meaning specified in Section 1005.
9
<PAGE>
"Affiliate" of any specified Person (as defined below) means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control" of any specified Person means possession of the power to
direct or cause the direction of the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Authenticating Agent" means any Person authorized by the Trustee pursuant to
Section 611 to act on behalf of the Trustee to authenticate Securities.
"Authorized Newspaper" means a newspaper, in the English language or in an
official language of the country of publication, customarily published on each
Business Day, whether or not published on Saturdays, Sundays or holidays, and
of general circulation in each place in connection with which the term is used
or in the financial community of each such place. Where successive
publications are required to be made in Authorized Newspapers, such
publications may be made in the same or in different newspapers in the same
city meeting the foregoing requirements and in each case on any Business Day.
"Bearer Security" means any Security except a Registered Security (as defined
below).
"Board of Directors" means either the Board of Directors of the Company or any
duly authorized committee of such Board of Directors.
"Board Resolution" means a copy of a resolution certified by the Secretary or
an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification.
"Business Day", when used with respect to any Place of Payment (as defined
below) or any other particular location referred to in this Indenture or in
the Securities, means, unless otherwise specified with respect to any
Securities pursuant to Section 301, each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in that Place of
Payment or other location are authorized or obligated by law or regulation to
close.
"CEDEL S.A." means Cedel, S.A., or its successor.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or, if at
any time after the execution of this Indenture such Commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act,
then the body performing such duties at such time.
"Common Depositary" has the meaning specified in Section 304.
"Common Securities" means undivided beneficial interests in the assets of a
Pacific Telesis Trust which rank pari passu with Preferred Securities (as
defined below) issued by such Pacific Telesis Trust (as defined below);
provided, however, that upon the occurrence of an Event of Default (as defined
below), the rights of Holders of Common Securities to payment in respect to
distributions and payments upon liquidation, redemption and otherwise are
subordinated to the rights of Holders of Preferred Securities.
"Common Securities Guarantee" means any Guarantee that the Company enters into
that operates directly or indirectly for the benefit of holders of Common
Securities of such Pacific Telesis Trust.
"Company" means the Person named as the "Company" in the first paragraph of
this Indenture until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
10
<PAGE>
"Company Request" or "Company Order" means a written request or order signed
in the name of the Company by its Chairman, its President, any Executive Vice
President, any Vice President, its Chief Financial Officer, its Controller,
its Treasurer or an Assistant Treasurer, and delivered to the Trustee.
"Conversion Date" has the meaning specified in Section 311(d).
"Conversion Event" means the cessation of use of (i) a Foreign Currency (as
defined below) both by the government of the country which issued such
Currency and by a central bank or other public institution of or within the
international banking community for the settlement of transactions, (ii) the
ECU both within the European Monetary System (as defined below) and for the
settlement of transactions by public institutions of or within the European
Communities (as defined below) or (iii) any currency unit (or composite
currency) other than the ECU for the purposes for which it was established.
"Corporate Trust Office" means the principal corporate trust office of the
Trustee at which at any particular time its corporate trust business shall be
administered, which office on the date of execution of this Indenture is
located at The First National Bank of Chicago, One First National Plaza, Suite
0126, Chicago, Illinois 60670-0126, except that with respect to presentation
of Securities for payment or for registration of transfer or exchange, such
term shall mean the office or agency of the Trustee at which, at any
particular time, its corporate agency business shall be conducted.
"corporation" includes corporations, associations, companies and business
trusts.
"coupon" means any interest coupon appertaining to a Bearer Security.
"Currency" means any currency or currencies, composite currency or currency
unit or currency units, including, without limitation, the ECU, issued by the
government of one or more countries or by any recognized confederation or
association of such governments.
"Declaration" means, in respect of a Pacific Telesis Trust, the declaration of
trust (or, if applicable, the most recent amended and restated version
thereof) of such Pacific Telesis Trust or any other governing instrument of
such Pacific Telesis Trust.
"Defaulted Interest" has the meaning specified in Section 307.
"Dollar" or "$" means a dollar or other equivalent unit in such coin or
currency of the United States of America as at the time shall be legal tender
for the payment of public and private debts.
"Dollar Equivalent of the Currency Unit" has the meaning specified in Section
311(g).
"Dollar Equivalent of the Foreign Currency" has the meaning specified in
Section 311(f).
"ECU" means the European Currency Unit as defined and revised from time to
time by the Council of the European Communities.
"Election Date" has the meaning specified in Section 311(h).
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels Office,
or its successor as operator of the Euroclear System.
"European Communities" means the European Economic Community, the European
Coal and Steel Community and the European Atomic Energy Community.
"European Monetary System" means the European Monetary System established by
the Resolution of December 5, 1978 of the Council of the European Communities.
11
<PAGE>
"Event of Default" with respect to Securities of any series shall mean any
event specified in Section 501 and any other event as may be established with
respect to the Securities of such series pursuant to Section 301.
"Exchange Date" has the meaning specified in Section 304.
"Exchange Rate Agent" means, with respect to Securities of or within any
series, unless otherwise specified with respect to any Securities pursuant to
Section 301, a New York Clearing House bank, designated pursuant to Section
301 or Section 312.
"Exchange Rate Officer's Certificate" means a tested telex or a certificate
setting forth (i) the applicable Market Exchange Rate (as defined below) and
(ii) the Dollar or Foreign Currency amounts of principal (and premium, if any)
and interest, if any (on an aggregate basis and on the basis of a Security
having the lowest denomination principal amount determined in accordance with
Section 302 in the relevant Currency), payable with respect to a Security of
any series on the basis of such Market Exchange Rate, sent (in the case of a
telex) or signed (in the case of a certificate) by the Chief Financial
Officer, any Executive Vice President, the Treasurer, any Vice President or
any Assistant Treasurer of the Company.
"Federal Bankruptcy Code" means the Bankruptcy Act of Title 11 of the United
States Code, as amended from time to time.
"Foreign Currency" means any Currency other than the Currency of the United
States.
"Government Obligations" means, unless otherwise specified with respect to any
series of Securities pursuant to Section 301, securities which are (i) direct
obligations of the government which issued the Currency in which the
Securities of a particular series are payable or (ii) obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of the
government which issued the Currency in which the Securities of such series
are payable, the payment of which is unconditionally guaranteed by such
government, which, in either case, are full faith and credit obligations of
such government payable in such Currency and are not callable or redeemable at
the option of the issuer thereof.
"Holder" means, in the case of a Registered Security, the Person in whose name
a Security is registered in the Security Register and, in the case of a Bearer
Security, the bearer thereof and, when used with respect to any coupon, shall
mean the bearer thereof.
"Indenture" means this instrument as originally executed and as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof, and shall
include the terms of particular series of Securities established as
contemplated by Section 301; provided, however, that, if at any time more than
one Person is acting as Trustee under this instrument, "Indenture" shall mean,
with respect to any one or more series of Securities for which such Person is
Trustee, this instrument as originally executed or as it may from time to time
be supplemented or amended by one or more indentures supplemental hereto
entered into pursuant to the applicable provisions hereof and shall include
the terms of particular series of Securities for which such Person is Trustee
established as contemplated by Section 301, exclusive, however, of any
provisions or terms which relate solely to other series of Securities for
which such Person is not Trustee, regardless of when such terms or provisions
were adopted, and exclusive of any provisions or terms adopted by means of one
or more indentures supplemental hereto executed and delivered after such
Person had become such Trustee but to which such Person, as such Trustee, was
not a party.
"Indexed Security" means a Security the terms of which provide that the
principal amount thereof payable at Stated Maturity (as defined below) may be
more or less than the principal face amount thereof at original issuance.
"Interest Payment Date", when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.
12
<PAGE>
"Market Exchange Rate" means, unless otherwise specified with respect to any
Securities pursuant to Section 301, (i) for any conversion involving a
currency unit on the one hand and Dollars or any Foreign Currency on the
other, the exchange rate between the relevant currency unit and Dollars or
such Foreign Currency calculated by the method specified pursuant to Section
301 for the Securities of the relevant series, (ii) for any conversion of
Dollars into any Foreign Currency, the noon (New York City time) buying rate
for such Foreign Currency for cable transfers quoted in New York City as
certified for customs purposes by the Federal Reserve Bank of New York and
(iii) for any conversion of one Foreign Currency into Dollars or another
Foreign Currency, the spot rate at noon local time in the relevant market at
which, in accordance with normal banking procedures, the Dollars or Foreign
Currency into which conversion is being made could be purchased with the
Foreign Currency from which conversion is being made from major banks located
in either New York City, London or any other principal market for Dollars or
such purchased Foreign Currency, in each case determined by the Exchange Rate
Agent. Unless otherwise specified with respect to any Securities pursuant to
Section 301, in the event of the unavailability of any of the exchange rates
provided for in the foregoing clauses (i), (ii) and (iii), the Exchange Rate
Agent shall use, in its sole discretion and without liability on its part,
such quotation of the Federal Reserve Bank of New York as of the most recent
available date, or quotations from one or more major banks in New York City,
London or another principal market for the Currency in question, or such other
quotations as the Exchange Rate Agent shall deem appropriate. Unless
otherwise specified by the Exchange Rate Agent, if there is more than one
market for dealing in any Currency by reason of foreign exchange regulations
or otherwise, the market to be used in respect of such Currency shall be that
upon which a non-resident issuer of securities designated in such Currency
would purchase such Currency in order to make payments in respect of such
securities.
"Maturity", when used with respect to any Security, means the date on which
the principal of such Security or an installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, notice of redemption, notice of option to elect
repayment or otherwise.
"Officers' Certificate" means a certificate signed by the Chairman, the
President, an Executive Vice President or a Vice President, and by the Chief
Financial Officer, the Controller, the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary of the Company, and delivered to the
Trustee. Each such certificate shall include the statements provided for in
Section 102, if and to the extent required by the provisions of such Section.
"Opinion of Counsel" means a written opinion of legal counsel, who may be
counsel for the Company, including an employee of the Company.
"Original Issue Discount Security" means (a) any Security which provides for
an amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502 or
(b) any other Security which for United States federal income tax purposes
would be considered an Original Issue Discount Security.
"Outstanding", when used with respect to Securities, means, as of the date of
determination, all Securities theretofore authenticated and delivered under
this Indenture except:
(i) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities, or portions thereof, for whose payment or
redemption moneys in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent (as defined
below) (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as
its own Paying Agent) for the Holders of such Securities and
any coupons appertaining thereto; provided that, if such
Securities are to be redeemed, notice of such redemption has
been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made;
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(iii) Securities, except to the extent provided in Sections 1402 and
1403, with respect to which the Company has effected defeasance
and/or covenant defeasance as provided in Article Fourteen; and
(iv) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other
than any such Securities in respect of which there shall have
been presented to the Trustee proof satisfactory to it that
such Securities are held by a bona fide purchaser in whose
hands such Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of
the requisite principal amount of the Outstanding Securities
have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or are present at a meeting
of Holders for quorum purposes, and for the purpose of making
the calculations required by TIA Section 313, (i) the principal
amount of an Original Issue Discount Security that may be
counted in making such determination or calculation and that
shall be deemed to be Outstanding for such purpose shall be
equal to the amount of principal thereof that would be (or
shall have been declared to be) due and payable, at the time of
such determination, upon a declaration of acceleration of the
Maturity thereof pursuant to Section 502, (ii) the principal
amount of any Security denominated in a Foreign Currency that
may be counted in making such determination or calculation and
that shall be deemed Outstanding for such purpose shall be
equal to the Dollar equivalent, determined as of the date such
Security is originally issued by the Company as set forth in an
Exchange Rate Officer's Certificate delivered to the Trustee,
of the principal amount (or, in the case of an Original Issue
Discount Security, the Dollar equivalent as of such date of
original issuance of the amount determined as provided in
clause (i) above), of such Security, (iii) the principal amount
of any Indexed Security that may be counted in making such
determination or calculation and that shall be deemed
Outstanding for such purpose shall be equal to the principal
face amount of such Indexed Security at original issuance,
unless otherwise provided with respect to such Security
pursuant to Section 301, and (iv) Securities owned by the
Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in making
such calculation or in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only
Securities which the Trustee knows to be so owned shall be so
disregarded. Securities so owned which have been pledged in
good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's
right so to act with respect to such Securities and that the
pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or such other
obligor.
"Pacific Telesis Trust" means each of Pacific Telesis Financing I, Pacific
Telesis Financing II and Pacific Telesis Financing III, each, a Delaware
statutory business trust.
"Paying Agent" means any Person (including the Company acting as Paying Agent)
authorized by the Company to pay the principal of (or premium, if any, on) or
interest on any Securities on behalf of the Company.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, or a
government or any agency, authority or political subdivision thereof.
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"Place of Payment" means, when used with respect to the Securities of or
within any series, the place or places where the principal of (and premium, if
any, on) and interest on such Securities are payable as specified as
contemplated by Sections 301 and 1002.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by
such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 306 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security or a Security to which
a mutilated, destroyed, lost or stolen coupon appertains shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security or
the Security to which the mutilated, destroyed, lost or stolen coupon
appertains, as the case may be.
"Preferred Securities" means undivided beneficial interests in the assets of a
Pacific Telesis Trust which rank pari passu with Common Securities issued by
such Pacific Telesis Trust, provided, however that upon the occurrence of an
Event of Default, the rights of Holders of Common Securities to payment in
respect of distributions and payments upon liquidation, redemption and
otherwise are subordinated to the rights of Holders of Preferred Securities.
"Preferred Securities Guarantee" means any Guarantee that the Guarantor may
enter into with The First National Bank of Chicago, as Trustee or other
Persons that operate directly or indirectly for the benefit of Holders of
Preferred Securities of such Pacific Telesis Trust.
"Redemption Date", when used with respect to any Security to be redeemed, in
whole or in part, means the date fixed for such redemption pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Registered Security" means any Security registered in the Security Register.
"Regular Record Date" for the interest payable on any Interest Payment Date on
the Registered Securities of or within any series means the date specified for
that purpose as contemplated by Section 301.
"Repayment Date" means, when used with respect to any Security to be repaid at
the option of the Holder, the date fixed for such repayment pursuant to this
Indenture.
"Responsible Officer", when used with respect to the Trustee, means the
chairman or any vice chairman of the board of directors, the chairman or any
vice chairman of the executive committee of the board of directors, the
chairman of the trust committee, the president, or any vice president,
secretary, any assistant secretary, treasurer, any assistant treasurer,
cashier, any assistant cashier, any trust officer or assistant trust officer,
the controller or any assistant controller within the corporate trust
administration division or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above-designated
officers, and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Securities" has the meaning stated in the first recital of this Indenture and
more particularly means any Securities without regard to series authenticated
and delivered under this Indenture; provided, however, that if at any time
there is more than one Person acting as Trustee under this Indenture,
"Securities" with respect to the Indenture as to which such Person is Trustee
shall have the meaning stated in the first recital of this Indenture and shall
more particularly mean Securities authenticated and delivered under this
Indenture, exclusive, however, of Securities of any series as to which such
Person is not Trustee.
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"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
"Special Record Date" for the payment of any Defaulted Interest on the
Registered Securities of or within any series means a date fixed by the
Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any installment
of principal thereof or interest thereon, means the date specified in such
Security or a coupon representing such installment of interest as the fixed
date on which the principal of such Security or such installment of principal
or interest is due and payable, as such date may be extended pursuant to the
provisions of any Indenture Supplemental hereto.
"Subsidiary" means any corporation of which at the time of determination the
Company, directly and/or indirectly through one or more Subsidiaries, owns
more than 50% of the shares of Voting Stock (as defined below).
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in
force at the date as of which this Indenture was executed, except as provided
in Section 905.
"Trust Securities" means Common Securities and Preferred Securities.
"Trust Securities Guarantees" means the Common Securities Guarantee and the
Preferred Securities Guarantee.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this Indenture until a successor Trustee shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Trustee" shall
mean or include each Person who is then a Trustee hereunder; provided,
however, that if at any time there is more than one such Person, "Trustee" as
used with respect to the Securities of any series shall mean only the Trustee
with respect to Securities of that series.
"United States" means, unless otherwise specified with respect to any
Securities pursuant to Section 301, the United States of America (including
the states and the District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction.
"United States person" means, unless otherwise specified with respect to any
Securities pursuant to Section 301, an individual who is a citizen or resident
of the United States, a corporation, partnership or other entity created or
organized in or under the laws of the United States or any political
subdivision thereof or an estate or trust the income of which is subject to
United States federal income taxation regardless of its source.
"Valuation Date" has the meaning specified in Section 311(c).
"Vice President", when used with respect to the Company or the Trustee, means
any vice president, whether or not designated by a number or a word or words
added before or after the title "vice president".
"Voting Stock" means stock of the class or classes having general voting power
under ordinary circumstances to elect at least a majority of the board of
directors, managers or trustees of a corporation (irrespective of whether or
not at the time stock of any other class or classes shall have or might have
voting power by reason of the happening of any contingency).
"Yield to Maturity" means the yield to maturity, computed at the time of
issuance of a Security (or, if applicable, at the most recent redetermination
of interest on such Security) and as set forth in such Security in accordance
with generally accepted United States bond yield computation principles.
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SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture (including any covenant compliance with
which constitutes a condition precedent) relating to the proposed action have
been complied with and an Opinion of Counsel stating that in the opinion of
such counsel all such conditions precedent which relate, or to the extent they
relate, to matters of law, if any, have been complied with, except that in the
case of any such application or request as to which the furnishing of such
documents is specifically required by any provision of this Indenture relating
to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture (other than pursuant to Section 1004)
shall include:
(1) a statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such covenant or condition has been complied with.
Any certificate, statement or opinion of an officer of the Company or of
counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants, unless such officer or counsel, as the case may be, knows that
the certificate or opinion or representations with respect to accounting
matters upon which his or her certificate, statement or opinion may be based
as aforesaid are erroneous, or in the exercise of reasonable care should know
that the same are erroneous. Any certificate or opinion of any firm of
independent public accountants filed with the Trustee shall contain a
statement that such firm is independent.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or covered
by an opinion of, any specified Person, it is not necessary that all such
matters be certified by, or covered by the opinion of, only one such Person,
or that they be so certified or covered by only one document, but one such
Person may certify or give an opinion with respect to some matters and one or
more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents. Any
certificate or opinion of an officer of the Company may be based, insofar as
it relates to matters of law, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows that the certificate or
opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate or Opinion
of Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of
the Company stating that the information with respect to such factual matters
is in the possession of the Company, unless such counsel knows that the
certificate or opinion or representations with respect to such matters are
erroneous.
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Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or
taken by Holders of the Outstanding Securities of all series or one
or more series, as the case may be, may be embodied in and evidenced
by one or more instruments of substantially similar tenor signed by
such Holders in person or by agents duly appointed in writing.
Alternatively, any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this Indenture
to be given or taken by Holders of such series may be embodied in
and evidenced by the record of Holders of Securities of such series
voting in favor thereof, either in person or by proxies duly
appointed in writing, at any meeting of Holders of Securities of
such series duly called and held in accordance with the provisions
of Article Fifteen, or a combination of such instruments and any
such record. Except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments or
record or both are delivered to the Trustee and, where it is hereby
expressly required, to the Company. Such instrument or instruments
and any such record (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments or so voting at any
such meeting. Proof of execution of any such instrument or of a
writing appointing any such agent, or of the holding by any Person
of a Security, shall be sufficient for any purpose of this Indenture
and conclusive in favor of the Trustee and the Company, if made in
the manner provided in this Section. The record of any meeting of
Holders of Securities shall be proved in the manner provided in
Section 1506.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of
such execution or by a certificate of a notary public or other
officer authorized by law to take acknowledgments of deeds,
certifying that the individual signing such instrument or writing
acknowledged to him the execution thereof. Where such execution is
by a signer acting in a capacity other than his individual capacity,
such certificate or affidavit shall also constitute sufficient proof
of authority. The fact and date of the execution of any such
instrument or writing, or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee
reasonably deems sufficient.
(c) The principal amount and serial numbers of Registered Securities
held by any Person, and the date of holding the same, shall be
proved by the Security Register.
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(d) The principal amount and serial numbers of Bearer Securities held by
any Person, and the date of holding the same, may be proved by the
production of such Bearer Securities or by a certificate executed,
as depositary, by any trust company, bank, banker or other
depositary, wherever situated, if such certificate shall be
reasonably deemed by the Trustee to be satisfactory, showing that at
the date therein mentioned such Person had on deposit with such
depositary, or exhibited to it, the Bearer Securities therein
described; or such facts may be proved by the certificate or
affidavit of the Person holding such Bearer Securities, if such
certificate or affidavit is reasonably deemed by the Trustee to be
satisfactory. The Trustee and the Company may assume that such
ownership of any Bearer Security continues until (1) another
certificate or affidavit bearing a later date issued in respect of
the same Bearer Security is produced, or (2) such Bearer Security is
produced to the Trustee by some other Person, or (3) such Bearer
Security is surrendered in exchange for a Registered Security, or
(4) such Bearer Security is no longer Outstanding. The principal
amount and serial numbers of Bearer Securities held by any Person,
and the date of holding the same, may also be proved in any other
manner which the Trustee reasonably deems sufficient.
(e) If the Company shall solicit from the Holders of Registered
Securities any request, demand, authorization, direction, notice,
consent, waiver or other Act, the Company may, at its option, by or
pursuant to a Board Resolution, fix in advance a record date for the
determination of Holders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other Act, but
the Company shall have no obligation to do so. Notwithstanding TIA
Section 316(c), such record date shall be the record date specified
in or pursuant to such Board Resolution, which shall be a date not
earlier than the date thirty (30) days prior to the first
solicitation of Holders generally in connection therewith and not
later than the date such solicitation is completed. If such a
record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other Act may be given before
or after such record date, but only the Holders of record at the
close of business on such record date shall be deemed to be Holders
for the purposes of determining whether Holders of the requisite
proportion of Outstanding Securities have authorized or agreed or
consented to such request, demand, authorization, direction, notice,
consent, waiver or other Act, and for that purpose the Outstanding
Securities shall be computed as of such record date; provided that
no such authorization, agreement or consent by the Holders on such
record date shall be deemed effective unless it shall become
effective pursuant to the provisions of this Indenture not later
than eleven months after the record date.
(f) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security
issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Trustee or the Company in reliance
thereon, whether or not notation of such action is made upon such
Security.
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SECTION 105. Notices, etc. to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or Act
of Holders or other documents provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient for
every purpose hereunder if made, given, furnished or filed in
writing to or with the Trustee at its Corporate Trust Office,
Attention: [Corporate Trust Administration Division,] or
(2) the Company by the Trustee or by any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to the
Company addressed to it at the address of its principal office
specified in the first paragraph of this Indenture or at any other
address previously furnished in writing to the Trustee by the
Company.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice of any event to Holders of Registered
Securities by the Company or the Trustee, such notice shall be sufficiently
given (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each such Holder affected by such event, at
his address as it appears in the Security Register, not later than the latest
date, and not earlier than the earliest date, prescribed for the giving of
such notice. In any case where notice to Holders of Registered Securities is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of
such notice with respect to other Holders of Registered Securities or the
sufficiency of any notice to Holders of Bearer Securities given as provided.
Any notice mailed to a Holder in the manner herein prescribed shall be
conclusively deemed to have been received by such Holder, whether or not such
Holder actually receives such notice.
In case, by reason of the suspension of or irregularities in regular mail
service or by reason of any other cause, it shall be impractical to mail
notice of any event to Holders of Registered Securities when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Trustee shall be
deemed to be sufficient giving of such notice for every purpose hereunder.
Except as otherwise expressly provided herein or otherwise specified with
respect to any Securities pursuant to Section 301, where this Indenture
provides for notice to Holders of Bearer Securities of any event, such notice
shall be sufficiently given to Holders of Bearer Securities if published in an
Authorized Newspaper in The City of New York and in such other city or cities
as may be specified in such Securities on a Business Day at least twice, the
first such publication to be not earlier than the earliest date, and not later
than the latest date, prescribed for the giving of such notice. Any such
notice shall be deemed to have been given on the date of the first such
publication.
In case by reason of the suspension of publication of any Authorized Newspaper
or Authorized Newspapers or by reason of any other cause it shall be
impracticable to publish any notice to Holders of Bearer Securities as
provided above, then such notification to Holders of Bearer Securities as
shall be given with the approval of the Trustee shall constitute sufficient
notice to such Holders for every purpose hereunder. Neither the failure to
give notice by publication to Holders of Bearer Securities as provided above,
nor any defect in any notice so published, shall affect the sufficiency of
such notice with respect to other Holders of Bearer Securities or the
sufficiency of any notice to Holders of Registered Securities given as
provided herein.
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Any request, demand, authorization, direction, notice, consent or waiver
required or permitted under this Indenture shall be in the English language,
except that any published notice may be in an official language of the country
of publication.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
SECTION 107. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 108. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind its
successors and assigns, whether so expressed or not.
SECTION 109. Separability Clause.
In case any provision in this Indenture or in any Security or coupon shall be
invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 110. Benefits of Indenture.
Nothing in this Indenture or in the Securities or coupons, express or implied,
shall give to any Person, other than the parties hereto, any Authenticating
Agent, any Paying Agent, any Securities Registrar and their successors
hereunder and the Holders of Securities or coupons, any benefit or any legal
or equitable right, remedy or claim under this Indenture.
SECTION 111. Governing Law.
THIS INDENTURE AND THE SECURITIES AND COUPONS SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF CALIFORNIA. THIS
INDENTURE IS SUBJECT TO THE PROVISIONS OF THE TRUST INDENTURE ACT OF 1939, AS
AMENDED, THAT ARE REQUIRED TO BE PART OF THIS INDENTURE AND SHALL, TO THE
EXTENT APPLICABLE, BE GOVERNED BY SUCH PROVISIONS.
SECTION 112. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity or Maturity of any Security shall not be a Business Day at any Place
of Payment, then (notwithstanding any other provision of this Indenture or of
any Security or coupon other than a provision in the Securities of any series
which specifically states that such provision shall apply in lieu of this
Section) payment of interest or principal (and premium, if any) need not be
made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and
effect as if made on the Interest Payment Date or Redemption Date, or at the
Stated Maturity or Maturity; provided that no interest shall accrue for the
period from and after such Interest Payment Date, Redemption Date, Stated
Maturity or Maturity, as the case may be. In the event that such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day.
SECTION 113. Trust Indenture Act Controls.
If any provision of the Indenture limits, qualifies or conflicts with the
duties imposed by TIA Section 318(c), the imposed duties shall control.
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ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.
The Registered Securities, if any, of each series and the Bearer Securities,
if any, of each series and related coupons shall be in substantially the forms
as shall be established by or pursuant to a Board Resolution or in one or more
indentures supplemental hereto, in each case with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities
or coupons. If the forms of Securities or coupons of any series are
established by action taken pursuant to a Board Resolution, a copy of an
appropriate record of such action shall be certified by the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Company Order contemplated by Section 303 for the
authentication and delivery of such Securities or coupons. Any portion of the
text of any Security may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Security.
Unless otherwise specified as contemplated by Section 301, Securities in
bearer form shall have interest coupons attached.
The Trustee's certificate of authentication on all Securities shall be in
substantially the form set forth in this Article.
The definitive Securities and coupons shall be printed, lithographed or
engraved on steel-engraved borders or may be produced in any other manner, all
as determined by the officers of the Company executing such Securities, as
evidenced by their execution of such Securities or coupons.
SECTION 202. Form of Trustee's Certificate of Authentication.
Subject to Section 611, the Trustee's certificate of authentication shall be
in substantially the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein referred to in
the within-mentioned Indenture.
The First National Bank of Chicago as Trustee
By:_______________________________
Authorized Officer
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SECTION 203. Securities Issuable in Global Form.
If Securities of or within a series are issuable in global form, as specified
as contemplated by Section 301, then, notwithstanding clause (10) of Section
301, any such Security shall represent such of the Outstanding Securities of
such series as shall be specified therein and may provide that it shall
represent the aggregate amount of Outstanding Securities of such series from
time to time endorsed thereon and that the aggregate amount of Outstanding
Securities of such series represented thereby may from time to time be
increased or decreased to reflect exchanges. Any endorsement of a Security in
global form to reflect the amount, or any increase or decrease in the amount,
of Outstanding Securities represented thereby shall be made by the Trustee in
such manner and upon instructions given by such Person or Persons as shall be
specified therein or in the Company Order to be delivered to the Trustee
pursuant to Section 303 or Section 304. Subject to the provisions of Section
303 and, if applicable, Section 304, the Trustee shall deliver and redeliver
any Security in permanent global form in the manner and upon instructions
given by the Person or Persons specified therein or in the applicable Company
Order. If a Company Order pursuant to Section 303 or Section 304 has been, or
simultaneously is, delivered, any instructions by the Company with respect to
endorsement or delivery or redelivery of a Security in global form shall be in
writing but need not comply with Section 102 and need not be accompanied by an
Opinion of Counsel.
The provisions of the last sentence of Section 303 shall apply to any Security
represented by a Security in global form if such Security was never issued and
sold by the Company and the Company delivers to the Trustee the Security in
global form together with written instructions (which need not comply with
Section 102 and need not be accompanied by an Opinion of Counsel) with regard
to the reduction in the principal amount of Securities represented thereby,
together with the written statement contemplated by the last sentence of
Section 303.
Notwithstanding the provisions of Section 307, unless otherwise specified as
contemplated by Section 301, payment of principal of and any premium and
interest on any Security in permanent global form shall be made to the Person
or Persons specified therein.
Notwithstanding the provisions of Section 309 and except as provided in the
preceding paragraph, the Company, the Trustee and any agent of the Company and
the Trustee shall treat as the Holder of such principal amount of Outstanding
Securities represented by a permanent global Security (i) in the case of a
permanent global Security in registered form, the Holder of such permanent
global Security in registered form, or (ii) in the case of a permanent global
Security in bearer form, Euroclear or CEDEL.
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ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in one or more Board Resolutions or pursuant to authority granted
by one or more Board Resolutions and, subject to Section 303, set forth in, or
determined in the manner provided in, an Officers' Certificate, or established
in one or more indentures supplemental hereto, prior to the issuance of
Securities of any series, any and all terms and provisions thereof, including,
without limitation, any or all of the following, as applicable (each of which
(except for the matters set forth in clauses (1), (2) and (19) below), if so
provided, may be determined from time to time by the Company with respect to
unissued Securities of the series and set forth in such Securities of the
series when issued from time to time):
(1) the title of the Securities of the series (which shall distinguish
the Securities of the series from all other series of Securities);
(2) any limit upon the aggregate principal amount of the Securities of
the series that may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of,
other Securities of the series pursuant to Section 304, 305, 306,
906, 1107 or 1305);
(3) the date or dates, or the method by which such date or dates will be
determined or extended, and the right, if any, to extend such date
or dates on which the principal of the Securities of the series is
payable;
(4) the rate or rates at which the Securities of the series shall bear
interest, if any, or the method by which such rate or rates shall be
determined, the date or dates from which such interest shall accrue,
or the method by which such date or dates shall be determined, the
Interest Payment Dates on which such interest shall be payable and
the Regular Record Date, if any, for the interest payable on any
Registered Security on any Interest Payment Date, or the method by
which such date or dates shall be determined, and the basis upon
which interest shall be calculated if other than on the basis of a
360-day year of twelve 30-day months;
(5) the rights, if any, to defer payments of interest on the Securities
by extending the times for the payment of interest and the terms and
duration of such extension;
(6) the terms of subordination applicable to the Securities of the
series;
(7) the place or places, if any, other than or in addition to The City
of New York, where the principal of (and premium, if any, on) and
any interest on Securities of the series shall be payable, any
Registered Securities of the series may be surrendered for
registration of transfer, Securities of the series may be
surrendered for exchange and, if different than the location
specified in Section 105, the place or places where notices or
demands to or upon the Company in respect of the Securities of the
series and this Indenture may be served;
(8) the period or periods within which, the price or prices at which,
the Currency in which, and other terms and conditions upon which
Securities of the series may be redeemed, in whole or in part, at
the option of the Company, if the Company is to have that option;
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(9) the obligation, if any, of the Company to redeem, repay or purchase
Securities of the series pursuant to any sinking fund or analogous
provision or at the option of a Holder thereof, and the period or
periods within which, the price or prices at which, the Currency in
which, and other terms and conditions upon which Securities of the
series shall be redeemed, repaid or purchased, in whole or in part,
pursuant to such obligation;
(10) if other than denominations of $25 and any integral multiple
thereof, the denomination or denominations in which any Registered
Securities of the series shall be issuable and, if other than
denominations of $5,000, the denomination or denominations in which
any Bearer Securities of the series shall be issuable;
(11) if other than the Trustee, the identity of each Security Registrar
and/or Paying Agent;
(12) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series that shall be payable
upon declaration of acceleration of the Maturity thereof pursuant to
Section 502 or the method by which such portion shall be determined;
(13) if other than Dollars, the Currency in which payment of the
principal of (and premium, if any, on) or interest, if any, on the
Securities of the series shall be payable or in which the Securities
of the series shall be denominated and the particular provisions
applicable thereto in accordance with, in addition to or in lieu of
any of the provisions of Section 311;
(14) whether the amount of payments of principal of (and premium, if any,
on) or interest on the Securities of the series may be determined
with reference to an index, formula or other method (which index,
formula or method may be based, without limitation, on one or more
Currencies, commodities, equity indices or other indices), and the
manner in which such amounts shall be determined;
(15) whether the principal of (and premium, if any, on) and interest, if
any, on the Securities of the series are to be payable, at the
election of the Company or a Holder thereof, in a Currency other
than that in which such Securities are denominated or stated to be
payable, the period or periods within which (including the Election
Date), and the terms and conditions upon which, such election may be
made, and the time and manner of determining the exchange rate
between the Currency in which such Securities are denominated or
stated to be payable and the Currency in which such Securities are
to be so payable, in each case in accordance with, in addition to or
in lieu of any of the provisions of Section 311;
(16) the designation of the initial Exchange Rate Agent, if any;
(17) any provisions in modification of, in addition to or in lieu of the
provisions of Article Fourteen that shall be applicable to the
Securities of the series;
(18) provisions, if any, granting special rights to the Holders of
Securities of the series upon the occurrence of such events as may
be specified;
(19) any deletions from, modifications of or additions to the Events of
Default or covenants of the Company with respect to Securities of
the series, whether or not such Events of Default or covenants are
consistent with the Events of Default or covenants set forth herein;
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(20) whether Securities of the series are to be issuable as Registered
Securities, Bearer Securities (with or without coupons) or both, any
restrictions applicable to the offer, sale or delivery of Bearer
Securities, whether any Securities of the series are to be issuable
initially in temporary global form and whether any Securities of the
series are to be issuable in permanent global form with or without
coupons and, if so, whether beneficial owners of interests in any
such permanent global Security may exchange such interests for
Securities of such series and of like tenor of any authorized form
and denomination and the circumstances under which any such
exchanges may occur, if other than in the manner provided in Section
305, whether Registered Securities of the series may be exchanged
for Bearer Securities of the series (if permitted by applicable laws
and regulations), whether Bearer Securities of the series may be
exchanged for Registered Securities of the series, and the
circumstances under which and the place or places where such
exchanges may be made and if Securities of the series are to be
issuable in global form, the identity of any initial depository
therefor; provided, that, unless otherwise provided, Securities
shall be issued as Registered Securities;
(21) the date as of which any Bearer Securities of the series and any
temporary global Security representing Outstanding Securities of the
series shall be dated if other than the date of original issuance of
the first Security of the series to be issued;
(22) the Person to whom any interest on any Registered Security of the
series shall be payable, if other than the Person in whose name that
Security (or one or more Predecessor Securities) is registered at
the close of business on the Regular Record Date for such interest,
the manner in which, or the Person to whom, any interest on any
Bearer Security of the series shall be payable, if otherwise than
upon presentation and surrender of the coupons appertaining thereto
as they severally mature, and the extent to which, or the manner in
which, any interest payable on a temporary global Security on an
Interest Payment Date will be paid if other than in the manner
provided in Section 304;
(23) if Securities of the series are to be issuable in definitive form
(whether upon original issue or upon exchange of a temporary
Security of such series) only upon receipt of certain certificates
or other documents or satisfaction of other conditions, the form
and/or terms of such certificates, documents or conditions;
(24) whether and under what circumstances the Company will pay Additional
Amounts as contemplated by Section 1005 on the Securities of the
series to any Holder who is not a United States person (including
any modification to the definition of such term) in respect of any
tax, assessment or governmental charge and, if so, whether the
Company will have the option to redeem such Securities rather than
pay such Additional Amounts (and the terms of any such option);
(25) if the Securities of the series are to be convertible into or
exchangeable for any securities of any Person (including the
Company), the terms and conditions upon which such Securities will
be so convertible or exchangeable; and
(26) any other terms, conditions, rights and preferences (or limitations
on such rights and preferences) relating to the series (which terms
shall not be inconsistent with the requirements of the Trust
Indenture Act or the provisions of this Indenture).
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All Securities of any one series and the coupons appertaining to any Bearer
Securities of such series shall be substantially identical except, in the case
of Registered Securities, as to denomination and except as may otherwise be
provided in or pursuant to such Board Resolution (subject to Section 303) and
set forth in such Officers' Certificate or in any such indenture supplemental
hereto. Not all Securities of any one series need be issued at the same time,
and, unless otherwise provided, a series may be reopened for issuances of
additional Securities of such series.
If any of the terms of the series are established by action taken pursuant to
one or more Board Resolutions, a copy of an appropriate record of such
action(s) shall be certified by the Secretary or an Assistant Secretary of the
Company and such Board Resolutions shall be delivered to the Trustee at or
prior to the delivery of the Officers' Certificate setting forth the terms of
the series.
SECTION 302. Denominations.
The Securities of each series shall be issuable in such denominations as shall
be specified as contemplated by Section 301. With respect to Securities of
any series denominated in Dollars, in the absence of any such provisions, the
Registered Securities of such series, other than Registered Securities issued
in global form (which may be of any denomination), shall be issuable in
denominations of $25 and any integral multiple thereof and the Bearer
Securities of such series, other than the Bearer Securities issued in global
form (which may be of any denomination), shall be issuable in denominations of
$5,000 or any integral multiple threof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities and any coupons appertaining thereto shall be executed on
behalf of the Company by its Chairman, its President, its Chief Financial
Officer, an Executive Vice President, its Treasurer or a Vice President, under
its corporate seal reproduced thereon attested by its Secretary or an
Assistant Secretary. The signature of any of these officers on the Securities
or coupons may be the manual or facsimile signatures of the present or any
future such authorized officer and may be imprinted or otherwise reproduced on
the Securities.
Securities or coupons bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of such
Securities or did not hold such offices at the date of such Securities or
coupons.
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At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series together with any
coupon appertaining thereto, executed by the Company to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of such Securities, and the Trustee in accordance with such Company
Order shall authenticate and deliver such Securities; provided, however, that,
in connection with its original issuance, no Bearer Security shall be mailed
or otherwise delivered to any location in the United States; and provided,
further, that, unless otherwise specified with respect to any series of
Securities pursuant to Section 301, a Bearer Security may be delivered in
connection with its original issuance only if the Person entitled to receive
such Bearer Security shall have furnished a certificate in such forms and on
such terms as may be established pursuant to Section 301. If any Security
shall be represented by a permanent global Bearer Security, then, for purposes
of this Section and Section 304, the notation of a beneficial owner's interest
therein upon original issuance of such Security or upon exchange of a portion
of a temporary global Security shall be deemed to be delivery in connection
with its original issuance of such beneficial owner's interest in such
permanent global Security. Except as permitted by Section 306, the Trustee
shall not authenticate and deliver any Bearer Security unless all appurtenant
coupons for interest then matured have been detached and canceled. If not all
the Securities of any series are to be issued at one time and if the Board
Resolution, Officers' Certificate or supplemental indenture establishing such
series shall so permit, such Company Order may set forth procedures acceptable
to the Trustee for the issuance of such Securities and determining terms of
particular Securities of such series such as interest rate, maturity date,
date of issuance and date from which interest shall accrue.
In authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to TIA Sections 315(a)
through 315(d)) shall be fully protected in relying upon, an Opinion of
Counsel to the effect:
(a) that the form or forms of such Securities and any coupons have been
established in conformity with the provisions of this Indenture;
(b) that the terms of such Securities and any coupons have been
established in conformity with the provisions of this Indenture;
(c) that such Securities, together with any coupons appertaining
thereto, when completed by appropriate insertions and executed and
delivered by the Company to the Trustee for authentication in
accordance with this Indenture, authenticated and delivered by the
Trustee in accordance with this Indenture and issued by the Company
in the manner and subject to any conditions specified in such
Opinion of Counsel, will constitute the legal, valid and binding
obligations of the Company, enforceable in accordance with their
terms, subject to applicable bankruptcy, insolvency, reorganization
and other similar laws of general applicability relating to or
affecting the enforcement of creditors' rights, to general equitable
principles and to such other qualifications as such counsel shall
conclude do not materially affect the rights of Holders of such
Securities and any coupons;
(d) that all laws and requirements in respect of the execution and
delivery by the Company of such Securities, any coupons and of the
supplemental indentures, if any, have been complied with and that
authentication and delivery of such Securities and any coupons and
the execution and delivery of the supplemental indenture, if any, by
the Trustee will not violate the terms of the Indenture;
(e) that the Company has the corporate power to issue such Securities
and any coupons, and has duly taken all necessary corporate action
with respect to such issuance; and
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(f) that the issuance of such Securities and any coupons will not
contravene the articles of incorporation or by-laws of the Company
or result in any violation of any of the terms or provisions of any
law or regulation or of any indenture, mortgage or other agreement
known to such Counsel by which the Company is bound.
Notwithstanding the provisions of Section 301 and of the preceding two
paragraphs, if not all the Securities of any series are to be issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 301 or the Company Order and Opinion of Counsel
otherwise required pursuant to the preceding two paragraphs prior to or at the
time of issuance of each Security, but such documents shall be delivered prior
to or at the time of issuance of the first Security of such series.
The Trustee shall not be required to authenticate and deliver any such
Securities if the issue of such Securities pursuant to this Indenture will
affect the Trustee's own rights, duties or immunities under the Securities and
this Indenture or otherwise in a manner which is not reasonably acceptable to
the Trustee.
Each Registered Security shall be dated the date of its authentication, and
each Bearer Security shall be dated as of the date specified as contemplated
by Section 301.
No Security or coupon shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
duly executed by the Trustee by manual signature of an authorized officer, and
such certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder and is entitled to the benefits of this Indenture. Notwithstanding
the foregoing, if any Security shall have been authenticated and delivered
hereunder but never issued and sold by the Company, and the Company shall
deliver such Security to the Trustee for cancellation as provided in Section
310 together with a written statement (which need not comply with Section 102
and need not be accompanied by an Opinion of Counsel) stating that such
Security has never been issued and sold by the Company, for all purposes of
this Indenture such Security shall be deemed never to have been authenticated
and delivered hereunder and shall never be entitled to the benefits of this
Indenture.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities of any series, the Company
may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued, in registered form or, if authorized, in bearer form with one or
more coupons or without coupons, and with such appropriate insertions,
omissions, substitutions and other variations as the officers executing such
Securities may determine, as conclusively evidenced by their execution of such
Securities. Such temporary Securities may be in global form.
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Except in the case of temporary Securities in global form (which shall be
exchanged in accordance with the provisions of the following paragraphs), if
temporary Securities of any series are issued, the Company will cause
definitive Securities of that series to be prepared without unreasonable
delay. After the preparation of definitive Securities of such series, the
temporary Securities of such series shall be exchangeable for definitive
Securities of such series, upon surrender of the temporary securities of such
series at the office or agency of the Company in a Place of Payment for that
series, without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Securities of any series (accompanied by any unmatured
coupons appertaining thereto), the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of the same series of authorized denominations;
provided, however, that no definitive Bearer Security shall be delivered in
exchange for a temporary Registered Security; and provided, further, that a
definitive Bearer Security shall be delivered in exchange for a temporary
Bearer Security only in compliance with the conditions set forth in Section
303. Until so exchanged the temporary Securities of any series shall in all
respects be entitled to the same benefits under this Indenture as definitive
Securities of such series.
If temporary Securities of any series are issued in global form, any such
temporary global Security shall, unless otherwise provided therein, be
delivered to the London office of a depositary or common depositary (the
"Common Depositary"), for the benefit of Euroclear and CEDEL S.A., for credit
to the respective accounts of the beneficial owners of such Securities (or to
such other accounts as they may direct).
Without unnecessary delay but in any event not later than the date specified
in, or determined pursuant to the terms of, any such temporary global Security
(the "Exchange Date"), the Company shall deliver to the Trustee definitive
Securities, in aggregate principal amount equal to the principal amount of
such temporary global Security, executed by the Company. On or after the
Exchange Date such temporary global Security shall be surrendered by the
Common Depositary to the Trustee, as the Company's agent for such purpose, to
be exchanged, in whole or from time to time in part, for definitive Securities
without charge and the Trustee shall authenticate and deliver, in exchange for
each portion of such temporary global Security, an equal aggregate principal
amount of definitive Securities of the same series of authorized denominations
and of like tenor as the portion of such temporary global Security to be
exchanged. The definitive Securities to be delivered in exchange for any such
temporary global Security shall be in bearer form, registered form, permanent
global bearer form or permanent global registered form, or any combination
thereof, as specified as contemplated by Section 301, and, if any combination
thereof is so specified, as requested by the beneficial owner thereof;
provided, however, that, unless otherwise specified in such temporary global
Security, upon such presentation by the Common Depositary, such temporary
global Security is accompanied by a certificate dated the Exchange Date or a
subsequent date and signed by Euroclear as to the portion of such temporary
global Security held for its account then to be exchanged and a certificate
dated the Exchange Date or a subsequent date and signed by CEDEL S.A. as to
the portion of such temporary global Security held for its account then to be
exchanged, each in such form as may be established pursuant to Section 301;
and provided, further, that definitive Bearer Securities shall be delivered in
exchange for a portion of a temporary global Security only in compliance with
the requirements of Section 303.
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Unless otherwise specified in such temporary global Security, the interest of
a beneficial owner of Securities of a series in a temporary global Security
shall be exchanged for definitive Securities of the same series and of like
tenor following the Exchange Date when the account holder instructs Euroclear
or CEDEL S.A., as the case may be, to request such exchange on his behalf and
delivers to Euroclear or CEDEL S.A., as the case may be, a certificate in such
form as may be established pursuant to Section 301, dated no earlier than 15
days prior to the Exchange Date, copies of which certificate shall be
available from the offices of Euroclear and CEDEL S.A., the Trustee, any
Authenticating Agent appointed for such series of Securities and each Paying
Agent. Unless otherwise specified in such temporary global Security, any such
exchange shall be made free of charge to the beneficial owners of such
temporary global Security, except that a Person receiving definitive
Securities must bear the cost of insurance, postage, transportation and the
like in the event that such Person does not take delivery of such definitive
Securities in person at the offices of Euroclear or CEDEL S.A. Definitive
Securities in bearer form to be delivered in exchange for any portion of a
temporary global Security shall be delivered only outside the United States.
Until exchanged in full as hereinabove provided, the temporary Securities of
any series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of the same series and of like tenor
authenticated and delivered hereunder, except that, unless otherwise specified
as contemplated by Section 301, interest payable on a temporary global
Security on an Interest Payment Date for Securities of such series occurring
prior to the applicable Exchange Date shall be payable to Euroclear and CEDEL
S.A. on such Interest Payment Date upon delivery by Euroclear and CEDEL S.A.
to the Trustee of a certificate or certificates in such form as may be
established pursuant to Section 301, for credit without further interest on or
after such Interest Payment Date to the respective accounts of the Persons who
are the beneficial owners of such temporary global Security on such Interest
Payment Date and who have each delivered to Euroclear or CEDEL S.A., as the
case may be, a certificate dated no earlier than 15 days prior to the Interest
Payment Date occurring prior to such Exchange Date in such form as may be
established pursuant to Section 301. Notwithstanding anything to the contrary
herein contained, the certifications made pursuant to this paragraph shall
satisfy the certification requirements of the preceding two paragraphs of this
Section and of the third paragraph of Section 303 of this Indenture and the
interests of the Persons who are the beneficial owners of the temporary global
Security with respect to which such certification was made will be exchanged
for definitive Securities of the same series and of like tenor on the Exchange
Date or the date of certification if such date occurs after the Exchange Date,
without further act or deed by such beneficial owners. Except as otherwise
provided in this paragraph, no payments of principal or interest owing with
respect to a beneficial interest in a temporary global Security will be made
unless and until such interest in such temporary global Security shall have
been exchanged for an interest in a definitive Security. Any interest so
received by Euroclear and CEDEL S.A. and not paid as herein provided shall be
returned to the Trustee immediately prior to the expiration of two years after
such Interest Payment Date in order to be repaid to the Company in accordance
with Section 1003.
SECTION 305. Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register for each series of Securities (referred to as the "Security
Register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Registered
Securities and of transfers of Registered Securities. The Security Register
shall be in written form or any other form capable of being converted into
written form within a reasonable time. At all reasonable times, the Security
Register shall be open to inspection by the Trustee. The Trustee is hereby
initially appointed as security registrar (the "Security Registrar") for the
purpose of registering Registered Securities and transfers of Registered
Securities as herein provided.
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Upon surrender for registration of transfer of any Registered Security of any
series at the office of the Security Registrar for that series, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee, one or more new Registered Securities of the same
series, of any authorized denominations and of a like aggregate principal
amount and tenor.
At the option of the Holder, Registered Securities of any series may be
exchanged for other Registered Securities of the same series, of any
authorized denomination and of a like aggregate principal amount, upon
surrender of the Registered Securities to be exchanged at such office or
agency. Whenever any Registered Securities are so surrendered for exchange,
the Company shall execute, and the Trustee shall authenticate and deliver, the
Registered Securities which the Holder making the exchange is entitled to
receive. Unless otherwise specified with respect to any series of Securities
as contemplated by Section 301, Bearer Securities may not be issued in
exchange for Registered Securities.
If (but only if) expressly permitted in or pursuant to the applicable Board
Resolution and (subject to Section 303) set forth in the applicable Officers'
Certificate, or in any indenture supplemental hereto, delivered as
contemplated by Section 301, at the option of the Holder, Bearer Securities of
any series may be exchanged for Registered Securities of the same series of
any authorized denomination and of a like aggregate principal amount and
tenor, upon surrender of the Bearer Securities to be exchanged at any such
office or agency, with all unmatured coupons and all matured coupons in
default thereto appertaining. If the Holder of a Bearer Security is unable to
produce any such unmatured coupon or coupons or matured coupon or coupons in
default, any such permitted exchange may be effected if the Bearer Securities
are accompanied by payment in funds acceptable to the Company in an amount
equal to the face amount of such missing coupon or coupons, or the surrender
of such missing coupon or coupons may be waived by the Company and the Trustee
if there is furnished to them such security or indemnity as they may require
to save each of them and any Paying Agent harmless. If thereafter the Holder
of such Security shall surrender to any Paying Agent any such missing coupon
in respect of which such a payment shall have been made, such Holder shall be
entitled to receive the amount of such payment; provided, however, that,
except as otherwise provided in Section 1002, interest represented by coupons
shall be payable only upon presentation and surrender of those coupons at an
office or agency located outside the United States. Notwithstanding the
foregoing, in case a Bearer Security of any series is surrendered at any such
office or agency in a permitted exchange for a Registered Security of the same
series and like tenor after the close of business at such office or agency on
(i) any Regular Record Date and before the opening of business at such office
or agency on the relevant Interest Payment Date, or (ii) any Special Record
Date and before the opening of business at such office or agency on the
related proposed date for payment of Defaulted Interest, such Bearer Security
shall be surrendered without the coupon relating to such Interest Payment Date
or proposed date for payment, as the case may be, and interest or Defaulted
Interest, as the case may be, will not be payable on such Interest Payment
Date or proposed date for payment, as the case may be, in respect of the
Registered Security issued in exchange for such Bearer Security, but will be
payable only to the Holder of such coupon when due in accordance with the
provisions of this Indenture.
Whenever any Securities are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive.
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Notwithstanding the foregoing, except as otherwise specified as contemplated
by Section 301, any permanent global Security shall be exchangeable only as
provided in this paragraph. If any beneficial owner of an interest in a
permanent global Security is entitled to exchange such interest for Securities
of such series and of like tenor and principal amount of another authorized
form and denomination, as specified as contemplated by Section 301 and
provided that any applicable notice provided in the permanent global Security
shall have been given, then without unnecessary delay but in any event not
later than the earliest date on which such interest may be so exchanged, the
Company shall deliver to the Trustee definitive Securities in aggregate
principal amount equal to the principal amount of such beneficial owner's
interest in such permanent global Security, executed by the Company. On or
after the earliest date on which such interests may be so exchanged, such
permanent global Security shall be surrendered by the Common Depositary or
such other depositary as shall be specified in the Company Order with respect
thereto to the Trustee, as the Company's agent for such purpose, to be
exchanged, in whole or from time to time in part, for definitive Securities
without charge, and the Trustee shall authenticate and deliver, in exchange
for each portion of such permanent global Security, an equal aggregate
principal amount of definitive Securities of the same series of authorized
denominations and of like tenor as the portion of such permanent global
Security to be exchanged which, unless the Securities of the series are not
issuable both as Bearer Securities and as Registered Securities, as specified
as contemplated by Section 301, shall be in the form of Bearer Securities or
Registered Securities, or any combination thereof, as shall be specified by
the beneficial owner thereof; provided, however, that no such exchanges may
occur during a period beginning at the opening of business 15 days before any
selection of Securities to be redeemed and ending on the relevant Redemption
Date if the Security for which exchange is requested may be among those
selected for redemption; and provided, further, that no Bearer Security
delivered in exchange for a portion of a permanent global Security shall be
mailed or otherwise delivered to any location in the United States. If a
Registered Security is issued in exchange for any portion of a permanent
global Security after the close of business at the office or agency where such
exchange occurs on (i) any Regular Record Date and before the opening of
business at such office or agency on the relevant Interest Payment Date, or
(ii) any Special Record Date and before the opening of business at such office
or agency on the related proposed date for payment of Defaulted Interest,
interest or Defaulted Interest, as the case may be, will not be payable on
such Interest Payment Date or proposed date for payment, as the case may be,
in respect of such Registered Security, but will be payable on such Interest
Payment Date or proposed date for payment, as the case may be, only to the
Person to whom interest in respect of such portion of such permanent global
Security is payable in accordance with the provisions of this Indenture.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Registered Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Security
Registrar) be duly endorsed, or be accompanied by a written instrument of
transfer, in form satisfactory to the Company and the Security Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or exchange
of Securities, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906, 1107 or 1305 not involving any
transfer.
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The Company shall not be required (i) to issue, register the transfer of or
exchange Securities of any series during a period beginning at the opening of
business 15 days before the day of the selection for redemption of Securities
of that series under Section 1103 or 1203 and ending at the close of business
on (A) if Securities of the series are issuable only as Registered Securities,
the date of the mailing of the relevant notice of redemption and (B) if
Securities of the series are issuable as Bearer Securities, the date of the
first publication of the relevant notice of redemption or, if Securities of
the series are also issuable as Registered Securities and there is no
publication, the mailing of the relevant notice of redemption, or (ii) to
register the transfer of or exchange any Registered Security so selected for
redemption in whole or in part, except the unredeemed portion of any Security
being redeemed in part, or (iii) to exchange any Bearer Security so selected
for redemption except that such a Bearer Security may be exchanged for a
Registered Security of that series and like tenor; provided that such
Registered Security shall be simultaneously surrendered for redemption, or
(iv) to issue, register the transfer of or exchange any Security which has
been surrendered for repayment at the option of the Holder, except the
portion, if any, of such Security not to be so repaid.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security or a Security with a mutilated coupon appertaining
to it is surrendered to the Trustee, the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor a new Security of the same
series and of like tenor and principal amount and bearing a number not
contemporaneously outstanding, with coupons corresponding to the coupons, if
any, appertaining to the surrendered Security, or, in case any such mutilated
Security or coupon has become or is about to become due and payable, the
Company in its discretion may, instead of issuing a new Security, with coupons
corresponding to the coupons, if any, appertaining to the surrendered
Security, pay such Security or coupon.
If there shall be delivered to the Company and to the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security or coupon
and (ii) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice
to the Company or the Trustee that such Security or coupon has been acquired
by a bona fide purchaser, the Company shall execute and upon Company Order the
Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or
stolen Security or in exchange for the Security for which a destroyed, lost or
stolen coupon appertains (with all appurtenant coupons not destroyed, lost or
stolen), a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding, with coupons
corresponding to the coupons, if any, appertaining to such destroyed, lost or
stolen Security or to the Security to which such destroyed, lost or stolen
coupon appertains, or, in case any such destroyed, lost or stolen Security or
coupon has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Security, with coupons corresponding
to the coupons, if any, appertaining to such destroyed, lost or stolen
Security or to the Security to which such destroyed, lost or stolen coupon
appertains, pay such Security or coupon.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other government
charge that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series with its coupons, if any, issued pursuant to
this Section in lieu of any destroyed, lost or stolen Security or in exchange
for a Security to which a destroyed, lost or stolen coupon appertains, shall
constitute an original additional contractual obligation of the Company,
whether or not the destroyed, lost or stolen Security and its coupons, if any,
or the destroyed, lost or stolen coupon shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Securities of that series and their
coupons, if any, duly issued hereunder.
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The provisions of this Section are exclusive and shall preclude (to the extent
lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities or coupons.
SECTION 307. Payment of Interest; Interest Rights Preserved; Optional
Interest Reset.
Unless otherwise provided as contemplated by Section 301 with respect to any
series of Securities, interest on any Registered Security which is payable,
and is punctually paid or duly provided for, on any Interest Payment Date
shall be paid to the Person in whose name such Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest at the office or agency of the Company
maintained for such purpose pursuant to Section 1002; provided, however, that
each installment of interest on any Registered Security may at the Company's
option be paid by (i) mailing a check for such interest, payable to or upon
the written order of the Person entitled thereto pursuant to Section 309, to
the address of such Person as it appears on the Security Register or (ii)
transfer to an account maintained by the payee located in the United States.
Unless otherwise provided as contemplated by Section 301 with respect to the
Securities of any series, payment of interest may be made, in the case of a
Bearer Security, by transfer to an account maintained by the payee with a bank
located outside the United States.
Unless otherwise provided as contemplated by Section 301, every permanent
global Security in bearer form will provide that interest, if any, payable on
any Interest Payment Date will be paid to each of Euroclear and CEDEL S.A.
with respect to that portion of such permanent global Security held for its
account by the Common Depositary, for the purpose of permitting each of
Euroclear and CEDEL S.A. to credit the interest received by it in respect of
such permanent global Security to the accounts of the beneficial owners
thereof.
Any interest on any Registered Security of any series which is payable, but is
not punctually paid or duly provided for, on any Interest Payment Date shall
forthwith cease to be payable to the Holder on the relevant Regular Record
Date by virtue of having been such Holder, and such defaulted interest and, if
applicable, interest on such defaulted interest (to the extent lawful) at the
rate specified in the Securities of such series (such defaulted interest and,
if applicable, interest thereon herein collectively called "Defaulted
Interest") may be paid by the Company, at its election in each case, as
provided in clause (1) or (2) below:
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(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Registered Securities of such series
(or their respective Predecessor Securities) are registered at the
close of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner.
The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Registered Security
of such series and the date of the proposed payment, and at the same
time the Company shall deposit with the Trustee an amount of money
in the Currency in which the Securities of such series are payable
(except as otherwise specified pursuant to Section 301 for the
Securities of such series and except, if applicable, as provided in
Sections 311(b), 311(d) and 311(e)) equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall
make arrangements satisfactory to the Trustee for such deposit on or
prior to the date of the proposed payment, such money when deposited
to be held in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this clause provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such
Defaulted Interest which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment and not less
than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of
such Special Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be given
in the manner provided in Section 106, not less than 10 days prior
to such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been
so given, such Defaulted Interest shall be paid to the Persons in
whose name the Registered Securities of such series (or their
respective Predecessor Securities) are registered at the close of
business on such Special Record Date and shall no longer be payable
pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest on the
Registered Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on
which such Securities may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the Company to
the Trustee of the proposed payment pursuant to this clause, such
manner of payment shall be reasonably deemed practicable by the
Trustee.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Registered Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Registered Security is registered as
the owner of such Registered Security for the purpose of receiving payment of
principal of (and premium, if any, on) and (subject to Sections 305 and 307)
interest on such Security and for all other purposes whatsoever, whether or
not such Security be overdue, and none of the Company, the Trustee or any
agent of the Company or the Trustee shall be affected by notice to the
contrary.
Title to any Bearer Security and any coupons appertaining thereto shall pass
by delivery. The Company, the Trustee and any agent of the Company or the
Trustee may treat the bearer of any Bearer Security and the bearer of any
coupon as the absolute owner of such Security or coupon for the purpose of
receiving payment thereof or on account thereof and for all other purposes
whatsoever, whether or not such Security or coupons be overdue, and none of
the Company, the Trustee or any agent of the Company or the Trustee shall be
affected by notice to the contrary.
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None of the Company, the Trustee, any Paying Agent or the Security Registrar
will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests of a
Security in global form or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Notwithstanding the foregoing, with respect to any global Security, nothing
herein shall prevent the Company, the Trustee, or any agent of the Company or
the Trustee, from giving effect to any written certification, proxy or other
authorization furnished by any depositary, as a Holder, with respect to such
global Security or impair, as between such depositary and owners of beneficial
interests in such global Security, the operation of customary practices
governing the exercise of the rights of such depositary (or its nominee) as
Holder of such global Security.
SECTION 309. Cancellation.
All Securities and coupons surrendered for payment, redemption, repayment at
the option of the Holder, registration of transfer or exchange or for credit
against any current or future sinking fund payment shall, if surrendered to
any Person other than the Trustee, be delivered to the Trustee. All
Securities and coupons so delivered to the Trustee shall be promptly canceled
by it. The Company may at any time deliver to the Trustee for cancellation
any Securities previously authenticated and delivered hereunder which the
Company may have acquired in any manner whatsoever, and may deliver to the
Trustee (or to any other Person for delivery to the Trustee) for cancellation
any Securities previously authenticated hereunder which the Company has not
issued and sold, and all Securities so delivered shall be promptly canceled by
the Trustee. If the Company shall so acquire any of the Securities, however,
such acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Securities unless and until the same are
surrendered to the Trustee for cancellation. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as
provided in this Section, except as expressly permitted by this Indenture.
All canceled Securities held by the Trustee shall be disposed of by the
Trustee in accordance with its customary procedures and certification of their
disposal delivered to the Company unless by Company Order the Company shall
direct that canceled Securities be returned to it.
SECTION 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 with respect to
any Securities, interest, if any, on the Securities of each series shall be
computed on the basis of a 360-day year of twelve 30-day months.
SECTION 311. Currency and Manner of Payments in Respect of Securities.
(a) With respect to Registered Securities of any series not permitting
the election provided for in paragraph (b) below or the Holders of
which have not made the election provided for in paragraph (b)
below, and with respect to Bearer Securities of any series, except
as provided in paragraph (d) below, payment of the principal of (and
premium, if any, on) and interest, if any, on any Registered or
Bearer Security of such series will be made in the Currency in which
such Registered Security or Bearer Security, as the case may be, is
payable. The provisions of this Section 311 may be modified or
superseded with respect to any Securities pursuant to Section 301.
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(b) It may be provided pursuant to Section 301 with respect to
Registered Securities of any series that Holders shall have the
option, subject to paragraphs (d) and (e) below, to receive payments
of principal of (and premium, if any, on) or interest, if any, on
such Registered Securities in any of the Currencies which may be
designated for such election by delivering to the Trustee a written
election with signature guarantees and in the applicable form
established pursuant to Section 301, not later than the close of
business on the Election Date immediately preceding the applicable
payment date. If a Holder so elects to receive such payments in any
such Currency, such election will remain in effect for such Holder
or any transferee of such Holder until changed by such Holder or
such transferee by written notice to the Trustee (but any such
change must be made not later than the close of business on the
Election Date immediately preceding the next payment date to be
effective for the payment to be made on such payment date and no
such change of election may be made with respect to payments to be
made on any Registered Security of such series with respect to which
an Event of Default has occurred or with respect to which the
Company has deposited funds pursuant to Article Four or Fourteen or
with respect to which a notice of redemption has been given by the
Company or a notice of option to elect repayment has been sent by
such Holder or such transferee). Any Holder of any such Registered
Security who shall not have delivered any such election to the
Trustee not later than the close of business on the applicable
Election Date will be paid the amount due on the applicable payment
date in the relevant Currency as provided in Section 311(a). The
Trustee shall notify the Exchange Rate Agent as soon as practicable
after the Election Date of the aggregate principal amount of
Registered Securities for which Holders have made such written
election.
(c) Unless otherwise specified pursuant to Section 301, if the election
referred to in paragraph (b) above has been provided for pursuant to
Section 301, then, unless otherwise specified pursuant to Section
301, not later than the fourth Business Day after the Election Date
for each payment date for Registered Securities of any series, the
Exchange Rate Agent will deliver to the Company a written notice
specifying, in the Currency in which Registered Securities of such
series are payable, the respective aggregate amounts of principal of
(and premium, if any, on) and interest, if any, on the Registered
Securities to be paid on such payment date, specifying the amounts
in such Currency so payable in respect of the Registered Securities
as to which the Holders of Registered Securities of such series
shall have elected to be paid in another Currency as provided in
paragraph (b) above. If the election referred to in paragraph (b)
above has been provided for pursuant to Section 301 and if at least
one Holder has made such election, then, unless otherwise specified
pursuant to Section 301, on the second Business Day preceding such
payment date the Company will deliver to the Trustee for such series
of Registered Securities an Exchange Rate Officer's Certificate in
respect of the Dollar or Foreign Currency payments to be made on
such payment date. Unless otherwise specified pursuant to Section
301, the Dollar or Foreign Currency amount receivable by Holders of
Registered Securities who have elected payment in a Currency as
provided in paragraph (b) above shall be determined by the Company
on the basis of the applicable Market Exchange Rate in effect on the
third Business Day (the "Valuation Date") immediately preceding each
payment date and such determination shall be conclusive and binding
for all purposes, absent manifest error.
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(d) If a Conversion Event occurs with respect to a Foreign Currency in
which any of the Securities are denominated or payable other than
pursuant to an election provided for pursuant to paragraph (b)
above, then with respect to each date for the payment of principal
of (and premium, if any, on) and interest, if any, on the applicable
Securities denominated or payable in such Foreign Currency occurring
after the last date on which such Foreign Currency was used (the
"Conversion Date"), the Dollar shall be the Currency of payment for
use on each such payment date. Unless otherwise specified pursuant
to Section 301, the Dollar amount to be paid by the Company to the
Trustee and by the Trustee or any Paying Agent to the Holders of
such Securities with respect to such payment date shall be, in the
case of a Foreign Currency other than a currency unit, the Dollar
Equivalent of the Foreign Currency or, in the case of a currency
unit, the Dollar Equivalent of the Currency Unit, in each case as
determined by the Exchange Rate Agent in the manner provided in
paragraph (f) or (g) below.
(e) Unless otherwise specified pursuant to Section 301, if the Holder of
a Registered Security denominated in any Currency shall have elected
to be paid in another Currency as provided in paragraph (b) above,
and a Conversion Event occurs with respect to such elected Currency,
such Holder shall receive payment in the Currency in which payment
would have been made in the absence of such election; and if a
Conversion Event occurs with respect to the Currency in which
payment would have been made in the absence of such election, such
Holder shall receive payment in Dollars as provided in paragraph (d)
above.
(f) The "Dollar Equivalent of the Foreign Currency" shall be determined
by the Exchange Rate Agent and shall be obtained for each subsequent
payment date by converting the specified Foreign Currency into
Dollars at the Market Exchange Rate on the Conversion Date.
(g) The "Dollar Equivalent of the Currency Unit" shall be determined by
the Exchange Rate Agent and subject to the provisions of paragraph
(h) below shall be the sum of each amount obtained by converting the
Specified Amount of each Component Currency into Dollars at the
Market Exchange Rate for such Component Currency on the Valuation
Date with respect to each payment.
(h) For purposes of this Section 311 the following terms shall have the
following meanings:
A "Component Currency" shall mean any Currency which, on the
Conversion Date, was a component currency of the relevant
currency unit, including, but not limited to, the ECU.
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A "Specified Amount" of a Component Currency shall mean the
number of units of such Component Currency or fractions thereof
which were represented in the relevant currency unit,
including, but not limited to, the ECU, on the Conversion Date.
If after the Conversion Date the official unit of any Component
Currency is altered by way of combination or subdivision, the
Specified Amount of such Component Currency shall be divided or
multiplied in the same proportion. If after the Conversion
Date two or more Component Currencies are consolidated into a
single currency, the respective Specified Amounts of such
Component Currencies shall be replaced by an amount in such
single Currency equal to the sum of the respective Specified
Amounts of such consolidated Component Currencies expressed in
such single Currency, and such amount shall thereafter be a
Specified Amount and such single Currency shall thereafter be a
Component Currency. If after the Conversion Date any Component
Currency shall be divided into two or more currencies, the
Specified Amount of such Component Currency shall be replaced
by amounts of such two or more currencies, having an aggregate
Dollar Equivalent value at the Market Exchange Rate on the date
of such replacement equal to the Dollar Equivalent value of the
Specified Amount of such former Component Currency at the
Market Exchange Rate immediately before such division and such
amounts shall thereafter be Specified Amounts and such
currencies shall thereafter be Component Currencies. If, after
the Conversion Date of the relevant currency unit, including,
but not limited to, the ECU, a Conversion Event (other than any
event referred to above in this definition of "Specified
Amount") occurs with respect to any Component Currency of such
currency unit and is continuing on the applicable Valuation
Date, the Specified Amount of such Component Currency shall,
for purposes of calculating the Dollar Equivalent of the
Currency Unit, be converted into Dollars at the Market Exchange
Rate in effect on the Conversion Date of such Component
Currency.
"Election Date" shall mean the date for any series of
Registered Securities as specified pursuant to clause (13) of
Section 301 by which the written election referred to in
paragraph (b) above may be made.
All decisions and determinations of the Exchange Rate Agent regarding the
Dollar Equivalent of the Foreign Currency, the Dollar Equivalent of the
Currency Unit, the Market Exchange Rate and changes in the Specified Amounts
as specified above shall be in its sole discretion and shall, in the absence
of manifest error, be conclusive for all purposes and irrevocably binding upon
the Company, the Trustee and all Holders of such Securities denominated or
payable in the relevant Currency. The Exchange Rate Agent shall promptly give
written notice to the Company and the Trustee of any such decision or
determination.
In the event that the Company determines in good faith that a Conversion Event
has occurred with respect to a Foreign Currency, the Company will immediately
give written notice thereof to the Trustee and to the Exchange Rate Agent (and
the Trustee will promptly thereafter give notice in the manner provided for in
Section 106 to the affected Holders) specifying the Conversion Date. In the
event the Company so determines that a Conversion Event has occurred with
respect to the ECU or any other currency unit in which Securities are
denominated or payable, the Company will immediately give written notice
thereof to the Trustee and to the Exchange Rate Agent (and the Trustee will
promptly thereafter give notice in the manner provided for in Section 106 to
the affected Holders) specifying the Conversion Date and the Specified Amount
of each Component Currency on the Conversion Date. In the event the Company
determines in good faith that any subsequent change in any Component Currency
as set forth in the definition of Specified Amount above has occurred, the
Company will similarly give written notice to the Trustee and the Exchange
Rate Agent.
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The Trustee shall be fully justified and protected in relying and acting upon
information received by it from the Company and the Exchange Rate Agent and
shall not otherwise have any duty or obligation to determine the accuracy or
validity of such information independent of the Company or the Exchange Rate
Agent.
SECTION 312. Appointment and Resignation of Successor Exchange Rate Agent.
(a) Unless otherwise specified pursuant to Section 301, if and so long
as the Securities of any series (i) are denominated in a Currency
other than Dollars or (ii) may be payable in a Currency other than
Dollars, or so long as it is required under any other provision of
this Indenture, then the Company will maintain with respect to each
such series of Securities, or as so required, at least one Exchange
Rate Agent. The Company will cause the Exchange Rate Agent to make
the necessary foreign exchange determinations at the time and in the
manner specified pursuant to Section 301 for the purpose of
determining the applicable rate of exchange and, if applicable, for
the purpose of converting the issued Currency into the applicable
payment Currency for the payment of principal (and premium, if any)
and interest, if any, pursuant to Section 311.
(b) No resignation of the Exchange Rate Agent and no appointment of a
successor Exchange Rate Agent pursuant to this Section shall become
effective until the acceptance of appointment by the successor
Exchange Rate Agent as evidenced by a written instrument delivered
to the Company and the Trustee.
(c) If the Exchange Rate Agent shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
the Exchange Rate Agent for any cause with respect to the Securities
of one or more series, the Company, by or pursuant to a Board
Resolution, shall promptly appoint a successor Exchange Rate Agent
or Exchange Rate Agents with respect to the Securities of that or
those series (it being understood that any such successor Exchange
Rate Agent may be appointed with respect to the Securities of one or
more or all of such series and that, unless otherwise specified
pursuant to Section 301, at any time there shall only be one
Exchange Rate Agent with respect to the Securities of any particular
series that are originally issued by the Company on the same date
and that are initially denominated and/or payable in the same
Currency).
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ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect with
respect to any series of Securities specified in such Company Request (except
as to any surviving rights of registration of transfer or exchange of
Securities of such series herein expressly provided for and the obligation of
the Company to pay any Additional Amounts as contemplated by Section 1005) and
the Trustee, at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture as to such series
when
(1) either
(A) all Securities of such series theretofore authenticated and
delivered and all coupons, if any, appertaining thereto (other
than (i) coupons appertaining to Bearer Securities surrendered
for exchange for Registered Securities and maturing after such
exchange, whose surrender is not required or has been waived as
provided in Section 305, (ii) Securities and coupons of such
series which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 306, (iii) coupons
appertaining to Securities called for redemption and maturing
after the relevant Redemption Date, whose surrender has been
waived as provided in Section 1106, and (iv) Securities and
coupons of such series for whose payment money has theretofore
been deposited in trust with the Trustee or any Paying Agent or
segregated and held in trust by the Company and thereafter
repaid to the Company, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(B) all Securities of such series and, in the case of (i) or (ii)
below, any coupons appertaining thereto not theretofore
delivered to the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) if redeemable at the option of the Company, are to be
called for redemption within one year under
arrangements satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in the
name, and at the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust for such purpose an amount in the Currency in
which the Securities of such series are payable, sufficient to pay
and discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for principal
(and premium, if any) and interest to the date of such deposit (in
the case of Securities which have become due and payable) or to the
Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture as to such series have been complied
with.
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Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 606, the obligations
of the Trustee to any Authenticating Agent under Section 611 and, if money
shall have been deposited with the Trustee pursuant to subclause (B) of clause
(1) of this Section, the obligations of the Trustee under Section 402 and the
last paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities, the
coupons and this Indenture, to the payment either directly or through any
Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal (and
premium, if any) and interest for whose payment such money has been deposited
with the Trustee; but such money need not be segregated from other funds
except to the extent required by law.
ARTICLE FIVE
EVENTS OF DEFAULT AND REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
(1) default in the payment of any interest on any Security of that
series, or any related coupon, when such interest or coupon becomes
due and payable, and continuance of such default for a period of 90
days; provided however, that an extension of one or more Interest
Payment Dates by the Company in accordance with the terms of any
indenture supplemental hereto, shall not constitute a default in the
payment of interest; or
(2) default in the payment of the principal of (or premium, if any, on)
any Security of that series at its Maturity; provided, however, that
a valid extension of the Maturity of the principal or premium, if
any, of such Securities in accordance with the terms of any
indenture supplemental hereto shall not constitute a default in the
payment of principal or premium, if any; or
(3) default in the deposit of any sinking fund payment, when and as due
by the terms of the Securities of that series and Article 12; or
(4) default in the performance, or breach, of any covenant or agreement
of the Company in this Indenture which affects or is applicable to
the Securities of that series (other than a default in the
performance, or breach of a covenant or agreement which is
specifically dealt with elsewhere in this Section or which has
expressly been included in this Indenture solely for the benefit of
one or more series of Securities other than that series), and
continuance of such default or breach for a period of 90 days after
there has been given, by registered or certified mail, to the
Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in principal amount of all Outstanding
Securities of that series a written notice specifying such default
or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder; or
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(5) the entry of a decree or order by a court having jurisdiction in the
premises adjudging the Company a bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company under the
Federal Bankruptcy Code or any other applicable federal or state
law, or appointing a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Company or of any
substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree
or order unstayed and in effect for a period of 90 consecutive days;
or
(6) in the event Securities are issued and sold to a Pacific Telesis
Trust or a trustee of such trust in connection with the issuance of
Trust Securities by such Pacific Telesis Trust, such Pacific Telesis
Trust shall have voluntarily or involuntarily dissolved, wound-up
its business or otherwise terminated its existence except in
connection with (i) the distribution of Securities to Holders of
Trust Securities in liquidation or redemption of their interests in
such Pacific Telesis Trust, (ii) the redemption of all of the
Outstanding Trust Securities of such Pacific Telesis Trust or (iii)
certain mergers, consolidations or amalgamations, each as permitted
by the Declaration of such Pacific Telesis Trust.
(7) the institution by the Company of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of
bankruptcy or insolvency proceedings against it, or the filing by it
of a petition or answer or consent seeking reorganization or relief
under the Federal Bankruptcy Code or any other applicable federal or
state law, or the consent by it to the filing of any such petition
or to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Company or of any
substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the admission by it in
writing of its inability to pay its debts generally as they become
due; or
(8) any other Event of Default provided with respect to Securities of
that series.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default described in Section 501 with respect to Securities of
any series at the time Outstanding occurs and is continuing, then in every
such case the Trustee or the Holders of not less than 25% in principal amount
of the Outstanding Securities of that series may declare the principal amount
(or, if the Securities of that series are Original Issue Discount Securities
or Indexed Securities, such portion of the principal amount as may be
specified in the terms of that series) of all of the Securities of that series
to be due and payable immediately, by a notice in writing to the Company (and
to the Trustee if given by Holders), and upon any such declaration such
principal amount (or specified portion thereof) shall become immediately due
and payable.
At any time after a declaration of acceleration with respect to Securities of
any series (or of all series, as the case may be) has been made and before a
judgment or decree for payment of the money due has been obtained by the
Trustee as hereinafter provided in this Article, the Holders of a majority in
principal amount of the Outstanding Securities of that series (or of all
series, as the case may be), by written notice to the Company and the Trustee,
may rescind and annul such declaration and its consequences if
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(1) the Company has paid or deposited with the Trustee a sum sufficient
to pay in the Currency in which the Securities of such series are
payable (except as otherwise specified pursuant to Section 301 for
the Securities of such series and except, if applicable, as provided
in Sections 311(b), 311(d) and 311(e)),
(A) all overdue interest on all Outstanding Securities of that
series (or of all series, as the case may be) and any related
coupons,
(B) all unpaid principal of (and premium, if any, on) any
Outstanding Securities of that series (or of all series, as the
case may be) which has become due otherwise than by such
declaration of acceleration, and interest on such unpaid
principal at the rate or rates prescribed therefor in such
Securities,
(C) interest on overdue interest at the rate or rates prescribed
therefore in such Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel; and
(2) all Events of Default with respect to Securities of that series (or
of all series, as the case may be), other than the non-payment of
amounts of principal of (or premium, if any, on) or interest on
Securities of that series (or of all series, as the case may be)
which have become due solely by such declaration of acceleration,
have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any installment of interest on any
Security of any series and any related coupon as and when such
interest becomes due and payable and which payment has not been
extended in accordance with the provision of any indenture
supplemental hereto, and such default continues for a period of 90
days, or
(2) default is made in the payment of all or any part of the principal
of (or premium, if any, on) any of the Securities of any series when
the same shall have become due and payable and which payment has not
been extended in accordance with the terms of any indenture
supplemental hereto, whether at the Stated Maturity of such series
or by any call for redemption or by declaration of acceleration or
otherwise or
(3) default is made in the satisfaction of any sinking fund obligation
when and as such obligation becomes due and payable and which
payment has not been extended in accordance with the terms of any
indenture supplemental hereto,
then the Company will, upon demand of the Trustee, pay to the Trustee for the
benefit of the Holders of such Securities and coupons, the whole amount then
due and payable on such Securities and coupons for principal (and premium, if
any) and interest, and interest on any overdue principal (and premium, if any)
and on any overdue interest, at the rate or rates prescribed therefor in such
Securities, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
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If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities,
wherever situated.
If an Event of Default with respect to Securities of any series (or of all
series, as the case may be) occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders of Securities of such series (or of all series, as the case may be) by
such appropriate judicial proceedings as the Trustee shall deem most effectual
to protect and enforce any such rights, whether for the specific enforcement
of any covenant or agreement in this Indenture or in aid of the exercise of
any power granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the
Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of overdue principal, premium,
if any, or interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any), or such portion of the principal amount of any
series of Original Issue Discount Securities or Indexed Securities
as may be specified in the terms of such series, and interest owing
and unpaid in respect of the Securities and to file such other
papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Holders allowed in such
judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders,
to pay to the Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
and any other amounts due the Trustee under Section 606.
Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
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SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities or
coupons may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or coupons or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Holders of the Securities and
coupons in respect of which such judgment has been recovered.
SECTION 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be applied
in the following order, at the date or dates fixed by the Trustee and, in case
of the distribution of such money on account of principal (or premium, if any)
or interest, upon presentation of the Securities or coupons, or both, as the
case may be, and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:
First: To the payment of all amounts due the Trustee under
Section 606;
Second: To the payment of the amounts then due and unpaid for
principal of (and premium, if any, on) and interest on the
Securities and coupons in respect of which or for the
benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to
the amounts due and payable on such Securities and coupons
for principal (and premium, if any) and interest,
respectively; and
Third: The balance, if any, to the Company or any other Person or
Persons entitled thereto.
SECTION 507. Limitation on Suits.
No Holder of any Security of any series or any related coupons shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities of that
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series in the case of any Event of
Default described in Section 501, shall have made written request to
the Trustee to institute proceedings in respect of such Event of
Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding;
and
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(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a
majority or more in principal amount of the Outstanding Securities
of that series in the case of any Event of Default described in
Section 501;
it being understood and intended that no one or more of such Holders shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Securities of the same series or to obtain or to seek to
obtain priority or preference over any other of such Holders or to enforce any
right under this Indenture, except in the manner herein provided and for the
equal and ratable benefit of all Holders of Securities of the same series.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment, as provided herein (including, if applicable, Article Fourteen) and
in such Security, of the principal of (and premium, if any, on) and (subject
to Section 307) interest on, such Security or payment of such coupon on the
respective Stated Maturities expressed in such Security or coupon (or, in the
case of redemption, on the Redemption Date) and to institute suit for the
enforcement of any such payment, and such rights shall not be impaired without
the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee
or to such Holder, then and in every such case, subject to any determination
in such proceeding, the Company, the Trustee and the Holders of Securities and
coupons shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the
Holders shall continue as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities or coupons in the last
paragraph of Section 306, no right or remedy herein conferred upon or reserved
to the Trustee or to the Holders of Securities or coupons is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security or coupon
to exercise any right or remedy accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be exercised from time
to time, and as often as may be deemed expedient, by the Trustee or by the
Holders, as the case may be.
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SECTION 512. Control by Holders.
With respect to the Securities of any series, the Holders of not less than a
majority in principal amount of the Outstanding Securities of such series
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee relating to or arising under Section 501,
provided that in each case
(1) such direction shall not be in conflict with any rule of law or with
this Indenture,
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(3) the Trustee need not take any action which might involve it in
personal liability or be unjustly prejudicial to the Holders of
Securities of such series not consenting.
SECTION 513. Waiver of Past Defaults.
Subject to Section 502, the Holders of not less than a majority in principal
amount of the Outstanding Securities of any series may on behalf of the
Holders of all the Securities of such series waive any past default described
in Section 501 and its consequences, except a default
(1) in respect of the payment of the principal of (or premium, if any,
on) or interest on any Security or any related coupon, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder
of each Outstanding Security of such series affected.
Upon any such waiver, any such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent
or other default or Event of Default or impair any right consequent thereon.
SECTION 514. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it will
not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law and covenants that it will not hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
SECTION 515. Undertaking for Costs
All parties to this Indenture agree, and each Holder of any Security by such
Holder's acceptance thereof shall be deemed to have agreed, that any court may
in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any action
taken or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 515 shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder of Securities of any series, or
group of such Holders, holding in the aggregate more than ten percent in
principal amount of the Securities of such series Outstanding, or to any suit
instituted by any Holder for the enforcement of the payment of the principal
of or any interest or premium on any Security, on or after the due date
expressed in such Security or for such interest (or in the case of any
redemption, on or after the Redemption Date).
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ARTICLE SIX
THE TRUSTEE
SECTION 601. Notice of Events of Default.
Within 90 days after the occurrence of any Event of Default hereunder with
respect to the Securities of any series, the Trustee shall transmit in the
manner and to the extent provided in TIA Section 313(c), notice of such
default hereunder known to the Trustee, unless such Event of Default shall
have been cured or waived; provided, however, that, except in the case of an
Event of Default in the payment of the principal of (or premium, if any, on)
or interest on any Security of such series or in the payment of any sinking
fund installment with respect to Securities of such series, the Trustee shall
be protected in withholding such notice if and so long as the Board of
Directors, the executive committee or a trust committee of directors and/or
Responsible Officers of the Trustee in good faith determine that the
withholding of such notice is in the interest of the Holders of Securities of
such series and any related coupons.
SECTION 602. Certain Rights of Trustee. Subject to the provisions of TIA
Sections 315(a) through 315(d):
(1) if an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs;
(2) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(3) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced
by a Board Resolution;
(4) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee
(unless other evidence be herein specifically prescribed) may, in
the absence of bad faith on its part, rely upon an Officers'
Certificate;
(5) the Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(6) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders of Securities of any series or any
related coupons pursuant to this Indenture, unless such Holders
shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred
by it in compliance with such request or direction;
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(7) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or
other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or
matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to
examine the books, records and premises of the Company, personally
or by agent or attorney;
(8) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents
or attorneys and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder; and
(9) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Indenture.
The Trustee shall not be required to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
SECTION 603. Trustee Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except for the Trustee's
certificates of authentication, and in any coupons shall be taken as the
statements of the Company, and neither the Trustee nor any Authenticating
Agent assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities or coupons, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Securities
and perform its obligations hereunder and that the statements made by it in a
Statement of Eligibility on Form T-1 supplied to the Company are true and
accurate, subject to the qualifications set forth therein. Neither the
Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Securities or the proceeds thereof.
SECTION 604. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company or of the Trustee, in its
individual or any other capacity, may become the owner or pledgee of
Securities and coupons and, subject to TIA Sections 310(b) and 311, may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such
other agent.
SECTION 605. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from other
funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
SECTION 606. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee from time to time reasonable compensation for
all services rendered by it hereunder (which compensation shall not
be limited by any provision of law in regard to the compensation of
a trustee of an express trust);
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(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements
and advances incurred or made by the Trustee in accordance with any
provision of this Indenture (including the reasonable compensation
and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs
and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or
duties hereunder.
The obligations of the Company under this Section to compensate the Trustee,
to pay or reimburse the Trustee for expenses, disbursements and advances and
to indemnify and hold harmless the Trustee shall constitute additional
indebtedness hereunder and shall survive the satisfaction and discharge of
this Indenture. As security for the performance of such obligations of the
Company, the Trustee shall have a claim prior to the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the payment of principal of (and premium, if any, on) or interest
on particular Securities or any coupons.
SECTION 607. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be eligible to act
as Trustee under TIA Section 310(a)(1) and shall have a combined capital and
surplus of at least $50,000,000. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of
Federal, State, territorial or District of Columbia supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If
at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
SECTION 608. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective
until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 609.
(b) The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company.
If the instrument of acceptance by a successor Trustee required by
Section 609 shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of
such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of not less than a
majority in principal amount of the Outstanding Securities of such
series, delivered to the Trustee and to the Company.
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(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of TIA
Section 310(b) after written request therefor by the Company or
by any Holder who has been a bona fide Holder of a Security for
at least six months, or
(2) the Trustee shall cease to be eligible under Section 607 and
shall fail to resign after written request therefor by the
Company or by any Holder who has been a bona fide Holder of a
Security for at least six months, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee
or of its property shall be appointed or any public officer
shall take charge or control of the Trustee or of its property
or affairs for the purpose of rehabilitation, conservation or
liquidation, or
(4) the Company shall determine that the Trustee has failed to
perform its obligations under this Indenture in any material
respect,
then, in any such case, (i) the Company, by a Board Resolution, may
remove the Trustee with respect to all Securities, or (ii) subject to TIA
Section 315(e), any Holder who has been a bona fide Holder of a Security
for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee with respect to all Securities and the appointment
of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any
cause, with respect to the Securities of one or more series, the
Company, by or pursuant to a Board Resolution, shall promptly
appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any
such successor Trustee may be appointed with respect to the
Securities of one or more or all of such series and that at any time
there shall be only one Trustee with respect to the Securities of
any particular series). If, within one year after such resignation,
removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Securities of any series shall
be appointed by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series delivered to the
Company and the retiring Trustee, the successor Trustee so appointed
shall, forthwith upon its acceptance of such appointment, become the
successor Trustee with respect to the Securities of such series and
to that extent supersede the successor Trustee appointed by the
Company. If no successor trustee with respect to the Securities of
any series shall have been so appointed by the Company or the
Holders and accepted appointment in the manner hereinafter provided,
any Holder who has been a bona fide Holder of a Security of such
series for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect
to the Securities of such series.
(f) The Company shall give notice of each resignation and each removal
of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of
any series to the Holders of Securities of such series in the manner
provided for in Section 106. Each notice shall include the name of
the successor Trustee with respect to the Securities of such series
and the address of its Corporate Trust Office.
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SECTION 609. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed
shall execute, acknowledge and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Trustee shall
become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on the
request of the Company or the successor Trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the
Company, the retiring Trustee and each successor Trustee with
respect to the Securities of one or more series shall execute and
deliver an indenture supplemental hereto wherein each successor
Trustee shall accept such appointment and which (1) shall contain
such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights,
powers, trusts and duties of the retiring Trustee with respect to
the Securities of that or those series to which the appointment of
such successor Trustee relates, (2) if the retiring Trustee is not
retiring with respect to all Securities, shall contain such
provisions as shall be deemed necessary or desirable to confirm that
all the rights, powers, trusts and duties of the retiring Trustee
with respect to the Securities of that or those series as to which
the retiring Trustee is not retiring shall continue to be vested in
the retiring Trustee, and (3) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than
one Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of
the same trust and that each such Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or
trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture the
resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates;
but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring
Trustee hereunder with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates.
Whenever there is a successor Trustee with respect to one or more
(but less than all) series of Securities issued pursuant to this
Indenture, the terms "Indenture" and "Securities" shall have the
meanings specified in the provisos to the respective definitions of
those terms in Section 101 which contemplate such situation.
(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting
in and confirming to such successor Trustee all rights, powers and
trusts referred to in paragraph (a) or (b) of this Section, as the
case may be.
(d) No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
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SECTION 610. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may
adopt such authentication and deliver the Securities so authenticated with the
same effect as if such successor Trustee had itself authenticated such
Securities; and in case at that time any of the Securities shall not have been
authenticated, any successor Trustee may authenticate such Securities either
in the name of any predecessor hereunder or in the name of the successor
Trustee; and in all such cases such certificates shall have the full force
which it is anywhere in the Securities or in this Indenture provided that the
certificate of the Trustee shall have; provided, however, that the right to
adopt the certificate of authentication of any predecessor Trustee or to
authenticate Securities in the name of any predecessor Trustee shall apply
only to its successor or successors by merger, conversion or consolidation.
SECTION 611. Appointment of Authenticating Agent.
At any time when any of the Securities remain Outstanding, the Trustee may
appoint an Authenticating Agent or Agents with respect to one or more series
of Securities which shall be authorized to act on behalf of the Trustee to
authenticate Securities of such series and the Trustee shall give written
notice of such appointment to all Holders of Securities of the series with
respect to which such Authenticating Agent will serve, in the manner provided
for in Section 106. Securities so authenticated shall be entitled to the
benefits of this Indenture and shall be valid and obligatory for all purposes
as if authenticated by the Trustee hereunder. Any such appointment shall be
evidenced by an instrument in writing signed by a Responsible Officer of the
Trustee, and a copy of such instrument shall be promptly furnished to the
Company. Wherever reference is made in this Indenture to the authentication
and delivery of Securities by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating
Agent. Each Authenticating Agent shall be acceptable to the Company and shall
at all times be a corporation organized and doing business under the laws of
the United States of America, any state thereof or the District of Columbia,
authorized under such laws to act as Authenticating Agent, having a combined
capital and surplus of not less than $50,000,000 and subject to supervision or
examination by federal or state authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of said supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation shall be deemed
to be its combined capital and surplus as set forth in its most recent report
of condition so published. If at any time an Authenticating Agent shall cease
to be eligible in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect specified in this
Section.
Any corporation into which an Authenticating Agent may be merged or converted
or with which it may be consolidated, or any corporation to which such
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate agency or corporate trust business of an Authenticating Agent, shall
continue to be an Authenticating Agent, provided such corporation shall be
otherwise eligible under this Section, without the execution or filing of any
paper or any further act on the part of the Trustee or the Authenticating
Agent.
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An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time
such Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give written notice
of such appointment to all Holders of Securities of the series with respect to
which such Authenticating Agent will serve, in the manner provided for in
Section 106. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and
duties of its predecessor hereunder, with like effect as if originally named
as an Authenticating Agent. No successor Authenticating Agent shall be
appointed unless eligible under the provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 606.
If an appointment with respect to one or more series is made pursuant to this
Section, the Securities of such series may have endorsed thereon, in addition
to the Trustee's certificate of authentication, an alternate certificate of
authentication in the following form:
This is one of the Securities of the series designated therein referred to in
the within-mentioned Indenture.
The First National Bank of Chicago,
as Trustee
By:_____________________________________________
as Authenticating Agent
By:_____________________________________________
Authorized Officer
SECTION 612. Preferential Collection of Claims Against Company
(a) Subject to the provisions of subsection (b) of this Section 612, if the
Trustee shall be or shall become a creditor, directly or indirectly,
secured or unsecured, of the Company or any other obligor on the
Securities within three months prior to a default, as defined in
subsection (c) of this Section 612, or subsequent to such a default,
then, unless and until such default shall be cured, the Trustee shall set
apart and hold in a special account for the benefit of the Trustee
individually, the Holders of Securities for which it is acting as
Trustee, and the holders of other indenture securities (as defined in
subsection (c) of this Section 612):
(1) an amount equal to any and all reductions in the amount due and
owing upon any claim as such creditor in respect of principal or
interest, effected after the beginning of such three months' period,
and valid as against the Company or such other obligor on the
Securities and its other creditors, except any such reduction
resulting from the receipt or disposition of any property described
in paragraph (2) of this subsection, or from the exercise of any
right of set-off which the Trustee could have exercised if a
petition in bankruptcy had been filed by or against the Company or
such other obligor on the Securities upon the date of such default;
and
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(2) all property received by the Trustee in respect of any claims as
such creditor either as security therefor, or in satisfaction or
composition thereof, or otherwise, after the beginning of such three
months' period, or an amount equal to the proceeds of any such
property if disposed of, subject, however, to the rights, if any, of
the Company or such other obligor on the Securities and their
respective other creditors in such property or such proceeds.
Nothing herein contained, however, shall affect the right of the Trustee:
(A) to retain for its own account (1) payments made on account of
any such claim by any Person (other than the Company or such
other obligor on the Securities) who is liable thereon, and
(ii) the proceeds of the bona fide sale of any such claim by
the Trustee to a third Person, and (iii) distributions made in
cash, securities or other property in respect of claims filed
against the Company or such other obligor on the Securities in
bankruptcy or receivership or in proceedings for reorganization
pursuant to Title 11 of the United States Code or applicable
state laws;
(B) to realize, for its own account, upon any property held by it
as security for any such claim, if such property was so held
prior to the beginning of such three months' period;
(C) to realize, for its own account, but only to the extent of the
claim hereinafter mentioned, upon any property held by it as
security for any such claim, if such claim was created after
the beginning of such three months' period and such property
was received as security therefor simultaneously with the
creation thereof, and if the Trustee shall sustain the burden
of proving that at the time such property was so received, the
Trustee had no reasonable cause to believe that a default, as
defined in subsection (c) of this Section 612, would occur
within three months; or
(D) to receive payment on any claim referred to in paragraph (B) or
(C) against the release of any property held as security for
such claim as provided in such paragraph (B) or (C), as the
case may be, to the extent of the fair value of such property.
For the purposes of paragraphs (B), (C) and (D), property substituted
after the beginning of such three months' period for property held as
security at the time of such substitution shall, to the extent of the
fair value of the property released, have the same status as the property
released, and to the extent that any claim referred to in any of such
paragraphs is created in renewal of or in substitution for or for the
purpose of repaying or refunding any preexisting claim of the Trustee as
such creditor, such claim shall have the same status as such preexisting
claim.
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If the Trustee shall be required to account, the funds and property held
in such special account and the proceeds thereof shall be apportioned
among the Trustee, the Holders of Securities for which it is acting as
Trustee, and the holders of other indenture securities in such manner
that the Trustee, such Holders of Securities and the holders of other
indenture securities realize, as a result of payments from such special
account and payments of dividends on claims filed against the Company or
such other obligor on the Securities in bankruptcy or receivership or in
proceedings for reorganization pursuant to Title 11 of the United States
Code or applicable state law, the same percentage of their respective
claims, figured before crediting to the claim of the Trustee anything on
account of the receipt by it from the Company or such other obligor on
the Securities of the funds and property in such special account and
before crediting to the respective claims of the Trustee, such Holders of
Securities, and the holders of other indenture securities dividends on
claims filed against the Company or such other obligor on the securities
in bankruptcy or receivership or in proceedings for reorganization
pursuant to Title 11 of the United States Code or applicable state law,
but after crediting thereon receipts on account of the indebtedness
represented by their respective claims from all sources other than from
such dividends and from the funds and property so held in such special
account. As used in this paragraph, with respect to any claim, the term
"dividends" shall include any distribution with respect to such claim in
bankruptcy or receivership or in proceedings for reorganization pursuant
to Title 11 of the United States Code or applicable State law, whether
such distribution is made in cash, securities or other property, but
shall not include any such distribution with respect to the secured
portion, if any, of such claim. The court in which such bankruptcy,
receivership or proceeding for reorganization is pending shall have
jurisdiction (i) to apportion among the Trustee, such Holders of
Securities, and the holders of other indenture securities, in accordance
with the provisions of this paragraph, the funds and property held in
such special account and the proceeds thereof, or (ii) in lieu of such
apportionment in whole or in part, to give to the provisions of this
paragraph due consideration in determining the fairness of the
distributions to be made to the Trustee, such Holders of Securities and
the holders of other indenture securities with respect to their
respective claims, in which event it shall not be necessary to liquidate
or to appraise the value of any securities or other property held in such
special account or as security for any such claim, or to make a specific
allocation of such distributions as between the secured and unsecured
portions of such claim, or otherwise to apply the provisions of this
paragraph as a mathematical formula.
Any Trustee who has resigned or been removed after the beginning of such
three moths' period shall be subject to the provisions of this subsection
(a) as though such resignation or removal had not occurred. If any
Trustee has resigned prior to the beginning of such three months'
period, it shall be subject to the provisions of this subsection (a) if
and only if the following conditions exist:
(i) the receipt of property or reduction of claim which would have
given rise to the obligation to account, if such Trustee had
continued, as trustee, occurred after the beginning of such
three months' period; and
(ii) such receipt of property or reduction of claim occurred within
three months after such resignation or removal.
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In every case commenced under the Bankruptcy Act of 1898, or any
amendment thereto enacted prior to November 6, 1978, all references to
periods of three months shall be deemed to be references to periods of
four months.
(b) There shall be excluded from the operation of subsection (a) of this
Section 612 a creditor relationship arising from:
(1) the ownership or acquisition of securities issued under any
indenture, or any security or securities having a maturity of
one year or more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court of
competent jurisdiction, or by this Indenture, for the purpose
of preserving any property which shall at any time be subject
to the lien of this Indenture or of discharging tax liens or
other prior liens or encumbrances thereon, if notice of such
advance and of the circumstances surrounding the making thereof
is given to the Holders of Securities at the time and in the
manner provided in Section 703;
(3) disbursements made in the ordinary course of business in the
capacity of trustee under an indenture, transfer agent,
registrar, custodian, paying agent, fiscal agent or depositary,
or other similar capacity;
(4) an indebtedness created as a result of services rendered or
premises rented, or an indebtedness created as a result of
goods or securities sold in a cash transaction as defined in
subsection (c) of this Section 612;
(5) the ownership of stock or of other securities of a company
organized under the provisions of Section 25(a) of the Federal
Reserve Act, as amended, which is directly or indirectly a
creditor of the Company or any other obligor on the Securities;
and
(6) the acquisition, ownership, acceptance or negotiation of any
drafts, bills of exchange, acceptances or obligations which
fall within the classification of self-liquidating paper as
defined in subsection (c) of this Section 612.
(c) As used in this Section 612 the following terms shall be accorded
the following definitions:
(1) the term "default" shall mean any failure to make payment in
full of the principal of or interest on any of the Securities
or on other indenture securities when and as such principal or
interest becomes due and payable.
(2) the term "other indenture securities" shall mean securities
upon which the Company or any other obligor on the Securities
is an "obligor" (as defined in the TIA) outstanding under any
other indenture (A) under which the Trustee is also trustee,
(B) which contains provisions substantially similar to the
provisions of subsection (a) of this Section 612, and (C) under
which a default exists at the time of the apportionment of the
funds and property held in said special account.
(3) the term "cash transaction" shall mean any transaction in which
full payment for goods or securities sold is made within seven
days after delivery of the goods or securities in currency or
in checks or other orders drawn upon banks or bankers and
payable upon demand.
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(4) the term "self-liquidating paper" shall mean any draft, bill of
exchange, acceptance or obligation which is made, drawn,
negotiated or incurred by the Company or any other obligor on
the Securities for the purpose of financing the purchase,
processing, manufacture, shipment, storage or sale of goods,
wares or merchandise and which is secured by documents
evidencing title to, possession of, or a lien upon, the goods,
wares or merchandise or the receivables or proceeds arising
from the sale of the goods, wares or merchandise previously
constituting the security, provided the security is received by
the Trustee simultaneously with the creation of the creditor
relationship with the Company or any other obligor on the
Securities arising from the making, drawing. negotiating or
incurring of the draft, bill of exchange, acceptance or
obligation.
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to furnish Trustee Information As to the Names and
Addresses of Holders of Securities.
The Company will furnish or cause to be furnished to the Trustee, not less
than 45 days nor more than 60 days after each date (month and day) specified
as an Interest Payment Date for the Securities of the first series issued
under this Indenture (whether or not any Securities of that series are then
Outstanding), but in no event less frequently than semiannually, and at such
other times as the Trustee may request in writing, within 30 days after
receipt by the Company of any such request, a list in such form as the Trustee
may reasonably require containing all information in the possession or control
of the Company, or any of its Paying Agents other than the Trustee, as to the
names and addresses of the Holders of Securities, obtained since the date as
of which the next previous list, if any, was furnished, excluding from any
such list the names and addresses received by the Trustee in its capacity as
registrar (if so acting). Any such list may be dated as of a date not more
than 15 days prior to the time such information is furnished and need not
include information received after such date.
SECTION 702. Preservation of Information; Communication to Holders of
Securities.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders of Securities of
each series (1) contained in the most recent list furnished to it as
provided in Section 701, (2) received by the Trustee in the capacity
of Paying Agent or registrar (if so acting), and (3) filed with the
Trustee within the two preceding years as provided for in Section
704. The Trustee may destroy any list furnished to it as provided
in Section 701 upon receipt of a new list so furnished.
(b) If three or more Holders of Securities (hereinafter referred to as
"applicants") apply in writing to the Trustee, and furnish to the
Trustee reasonable proof that each such applicant has owned a
Security for a period of at least six months preceding the date of
such application, and such application states that the applicants
desire to communicate with other Holders of Securities of any series
or with Holders of all Securities with respect to their rights under
this Indenture or under such Securities and is accompanied by a copy
of the form of proxy or other communication which such applicants
propose to transmit, then the Trustee shall, within five Business
Days after the receipt of such application, at its election, either:
(1) afford such applicants access to the information preserved at the
time by the Trustee in accordance with the provisions of subsection
(a) of this Section 702 or
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(2) inform such applicants as to the approximate number of Holders of
Securities of such series or all Securities, as the case may be,
whose names and addresses appear in the information preserved at the
time by the Trustee in accordance with the provisions of subsection
(a) of this Section 702, and as to the approximate cost of mailing
to such Holders of Securities the form of proxy or other
communications, if any, specified in such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such
applicants, mail to each of the Holders of Securities of such series, or
all Securities, as the case may be, whose name and address appear in the
information preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 702, a copy of the form of
proxy or other communication which is specified in such request, with
reasonable promptness after a tender to the Trustee of the material to be
mailed and of payment, or provision for the payment, of the reasonable
expenses of mailing, unless within five days after such tender, the
Trustee shall mail to such applicants and file with the Commission,
together with a copy of the material to be mailed, a written statement to
the effect that, in the opinion of the Trustee, such mailing would be
contrary to the best interests of the Holders of Securities of such
series or all Securities, as the case may be, or would be in violation of
applicable law. Such written statement shall specify the basis of such
opinion. If the Commission, after opportunity for a hearing upon the
objections specified in the written statement so filed, shall enter an
order refusing to sustain any of such objections or if, after the entry
of an order sustaining one or more of such objections, the Commission
shall find, after notice and opportunity for hearing, that all the
objections so sustained have been met and shall enter an order so
declaring, the Trustee shall mail copies of such material to all such
Holders of Securities with reasonable promptness after the entry of such
order and the renewal of such tender; otherwise the Trustee shall be
relieved of any obligation or duty to such applicants respecting their
application.
(c) Each and every Holder of the Securities, by receiving and holding
the same, agrees with the Company and the trustee that neither the
Company nor the Trustee nor any Paying Agent nor any registrar shall
be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Holders of
Securities in accordance with the provisions of subsection (b) of
this Section 702, regardless of the source from which such
information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request
made under said subsection (b).
SECTION 703. Reports by Trustee.
Within 60 days after May 15 of each year commencing with the first May 15
after the first issuance of Securities pursuant to this Indenture, the Trustee
shall transmit to the Holders of Securities, in the manner and to the extent
provided in TIA Section 313(c), a brief report dated as of such May 15 if
required by TIA Section 313(a).
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SECTION 704. Reports by Company.
The Company shall:
(1) file with the Trustee, within 15 days after the Company is required
to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Company
may be required to file with the Commission pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934; or, if the
Company is not required to file information, documents or reports
pursuant to either of such Sections, then it shall file with the
Trustee and the Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which
may be required pursuant to Section 13 of the Securities Exchange
Act of 1934 in respect of a security listed and registered on a
national securities exchange as may be prescribed from time to time
in such rules and regulations;
(2) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to
compliance by the Company with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(3) transmit to all Holders, in the manner and to the extent provided in
TIA Section 313(c), within 30 days after the filing thereof with the
Trustee, such summaries of any information, documents and reports
required to be filed by the Company pursuant to paragraphs (1) and
(2) of this Section as may be required by rules and regulations
prescribed from time to time by the Commission.
(4) furnish to the Trustee not less often than annually, a brief
certificate from the principal executive officer, principal
financial officer or principal accounting officer as to his or her
knowledge of the Company's compliance with all conditions and
covenants under the Indenture; such compliance to be determined
without regard to any period of grace or requirement of notice
provided under the Indenture.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other corporation or
convey, transfer or lease, or permit one or more of its Subsidiaries to
convey, transfer or lease, all or substantially all of the property and assets
of the Company and its Subsidiaries on a consolidated basis, to any Person,
unless the corporation formed by such consolidation or into which the Company
is merged or the Person which acquires by conveyance or transfer, or which
leases, the properties and assets of the Company and its Subsidiaries on a
consolidated basis shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form reasonably satisfactory
to the Trustee, the Company's obligation for the due and punctual payment of
the principal of (and premium, if any, on) and interest on all the Securities
and the performance and observance of every covenant of this Indenture on the
part of the Company to be performed or observed.
This Section shall only apply to a merger or consolidation in which the
Company is not the surviving corporation and to conveyances, leases and
transfers by the Company as transferor or lessor.
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SECTION 802. Successor Person Substituted.
Upon any consolidation by the Company with or merger by the Company into any
other corporation or any conveyance, transfer or lease of the properties and
assets of the Company and its Subsidiaries on a consolidated basis to any
Person in accordance with Section 801, the successor Person formed by such
consolidation or into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein,
and in the event of any such conveyance or transfer, the Company (which term
shall for this purpose mean the Person named as the "Company" in the first
paragraph of this Indenture or any successor Person which shall theretofore
become such in the manner described in Section 801), except in the case of a
lease, shall be discharged of all obligations and covenants under this
Indenture and the Securities and the coupons and may be dissolved and
liquidated.
SECTION 803. Assignment of Rights.
The Company will have the right at all times to assign any of its respective
rights or obligations under this Indenture to a direct or indirect wholly-
owned Subsidiary of the Company; provided, that in the event of any such
assignment, the Company will remain liable for all of its respective
obligations. Subject to the foregoing, this Indenture will be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns. This Indenture may not otherwise be assigned by the parties
hereto.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by or
pursuant to a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and the
assumption by any such successor of the covenants of the Company
contained herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities and any related coupons
(and if such covenants are to be for the benefit of less than all
series of Securities, stating that such covenants are being included
solely for the benefit of such series) or to surrender any right or
power herein conferred upon the Company; or
(3) to add any additional Events of Default (and if such Events of
Default are to be for the benefit of less than all series of
Securities, stating that such Events of Default are being included
solely for the benefit of such series); or
(4) to add to or change any of the provisions of this Indenture to
provide that Bearer Securities may be registrable as to principal,
to change or eliminate any restrictions on the payment of principal
of or any premium or interest on Bearer Securities, to permit Bearer
Securities to be issued in exchange for Registered Securities, to
permit Bearer Securities to be issued in exchange for Bearer
Securities of other authorized denominations or to permit or
facilitate the issuance of Securities in uncertificated form;
provided that any such action shall not adversely affect the
interests of the Holders of Securities of any series or any related
coupons in any material respect; or
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(5) to change or eliminate any of the provisions of this Indenture;
provided that any such change or elimination shall become effective
only when there is no Security Outstanding of any series created
prior to the execution of such supplemental indenture which is
entitled to the benefit of such provision; or
(6) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or
(7) to evidence and provide for the acceptance of appointment hereunder
by a successor Trustee with respect to the Securities of one or more
series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee,
pursuant to the requirements of Section 609(b); or
(8) to close this Indenture with respect to the authentication and
delivery of additional series of Securities, to cure any ambiguity,
to correct or supplement any provision herein which may be
inconsistent with any other provision herein, or to make any other
provisions with respect to matters or questions arising under this
Indenture; provided such action shall not adversely affect the
interests of the Holders of Securities of any series and any related
coupons in any material respect.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in principal
amount of all Outstanding Securities of any series, by Act of said Holders
delivered to the Company and the Trustee, the Company, when authorized by or
pursuant to a Board Resolution, and the Trustee may enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture
which affect such series of Securities or of modifying in any manner the
rights of the Holders of Securities of such series under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security of such series,
(1) change the Stated Maturity of the principal of, or any installment
of interest on, any Security of such series, or reduce the principal
amount thereof or the rate of interest thereon or any premium
payable upon the redemption thereof, or change any obligation of the
Company to pay Additional Amounts contemplated by Section 1005
(except as contemplated by Section 801 and permitted by Section
901(1)), or reduce the amount of the principal of an Original Issue
Discount Security of such series that would be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to
Section 502 or the amount thereof provable in bankruptcy pursuant to
Section 504, or adversely affect any right of repayment at the
option of any Holder of any Security of such series, or change any
Place of Payment where, or the Currency in which, any Security of
such series or any premium or interest thereon is payable, or impair
the right to institute suit for the enforcement of any such payment
on or after the Stated Maturity thereof (or, in the case of
redemption or repayment at the option of the Holder, on or after the
Redemption Date or Repayment Date, as the case may be), or
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(2) reduce the percentage in principal amount of the Outstanding
Securities of such series required for any such supplemental
indenture, for any waiver of compliance with certain provisions of
this Indenture which affect such series or certain defaults
applicable to such series hereunder and their consequences provided
for in this Indenture, or reduce the requirements of Section 1504
for quorum or voting with respect to Securities of such series, or
(3) change the time of payment or reduce the amount of any minimum
sinking fund payment, or
(4) modify any of the provisions of this Section or Section 513, except
to increase any such percentage or to provide that certain other
provisions of this Indenture which affect such series cannot be
modified or waived without the consent of the Holder of each
Outstanding Security of such series.
Any such supplemental indenture adding any provisions to or changing in any
manner or eliminating any of the provisions of this Indenture, or modifying in
any manner the rights of the Holders of Securities of such series, shall not
affect the rights under this Indenture of the Holders of Securities of any
other series.
It shall not be necessary for any Act of Holders under this Section to approve
the particular form of any proposed supplemental indenture, but it shall be
sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and shall
be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any
such supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified and amended in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes;
and every Holder of Securities theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall conform
to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article may, and shall if
reasonably required by the Trustee, bear a notation in form reasonably
approved by the Trustee as to any matter provided for in such supplemental
indenture. If the Company shall so determine, new Securities of any series so
modified as to conform, in the opinion of the Trustee and the Company, to any
such supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities of such series.
SECTION 907. Notice of Supplemental Indentures.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 902, the Company
shall give notice thereof to the Holders of each Outstanding Security
affected, in the manner provided for in Section 106, setting forth in general
terms the substance of such supplemental indenture.
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ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, if any, and Interest.
The Company covenants and agrees for the benefit of the Holders of each series
of Securities and any related coupons that it will duly and punctually pay or
cause to be paid the principal of (and premium, if any, on) and interest on
the Securities of that series in accordance with the terms of the Securities,
any coupons appertaining thereto and this Indenture, subject, however, to the
limitations set forth in this Section 1001. Unless otherwise specified as
contemplated by Section 301 with respect to any series of Securities, any
interest installments due on Bearer Securities on or before Maturity shall be
payable only upon presentation and surrender of the several coupons for such
interest installments as are evidenced thereby as they severally mature.
SECTION 1002. Maintenance of Office or Agency.
If the Securities of a series are issuable only as Registered Securities, the
Company will maintain in each Place of Payment for any series of Securities an
office or agency where Securities of that series may be presented or
surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Company in respect of the Securities of that series and this
Indenture may be served.
If Securities of a series are issuable as Bearer Securities, the Company will
maintain (A) in The City of New York, an office or agency where any Registered
Securities of that series may be presented or surrendered for payment, where
any Registered Securities of that series may be surrendered for registration
of transfer, where Securities of that series may be surrendered for exchange,
where notices and demands to or upon the Company in respect of the Securities
of that series and this Indenture may be served and where Bearer Securities of
that series and related coupons may be presented or surrendered for payment in
the circumstances described in this Section (and not otherwise), (B) subject
to any laws or regulations applicable thereto, in a Place of Payment for that
series which is located outside the United States, an office or agency where
Securities of that series and related coupons may be presented and surrendered
for payment; provided, however, that, if the Securities of that series are
listed on any stock exchange located outside the United States and such stock
exchange shall so require, the Company will maintain a Paying Agent for the
Securities of that series in any required city located outside the United
States so long as the Securities of that series are listed on such exchange,
and (C) subject to any laws or regulations applicable thereto, in a Place of
Payment for that series which is located outside the United States, an office
or agency where any Registered Securities of that series may be surrendered
for registration of transfer, where Securities of that series may be
surrendered for exchange and where notices and demands to or upon the Company
in respect of the Securities of that series and this Indenture may be served.
The Company will give prompt written notice to the Trustee of the location,
and any change in the location, of such office or agency.
If at any time the Company shall fail to maintain any such required office or
agency or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, except that Bearer Securities of any
series and the related coupons may be presented and surrendered for payment at
the offices specified in the Security, in London, and the Company hereby
appoints the same as its agent to receive such respective presentations,
surrenders, notices and demands.
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Unless otherwise specified with respect to any Securities pursuant to Section
301, no payment of principal, premium or interest on Bearer Securities shall
be made at any office or agency of the Company in the United States or by
check mailed to any address in the United States or by transfer to an account
maintained with a bank located in the United States; provided, however, that,
if the Securities of a series are payable in Dollars, payment of principal of
(and premium, if any, on) and interest on any Bearer Security shall be made at
the office of the Company's Paying Agent in The City of New York, if (but only
if) payment in Dollars of the full amount of such principal, premium or
interest, as the case may be, at all offices or agencies outside the United
States maintained for the purpose by the Company in accordance with this
Indenture is illegal or effectively precluded by exchange controls or other
similar restrictions.
The Company may also from time to time designate one or more other offices or
agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind any
such designation; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an
office or agency in accordance with the requirements set forth above for
Securities of any series for such purposes. The Company will give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency. Unless otherwise
specified with respect to any Securities as contemplated by Section 301 with
respect to a series of Securities, the Company hereby designates as a Place of
Payment for each series of Securities the office or agency of the Company in
the City of Chicago, and initially appoints the Trustee at its Corporate Trust
Office as Paying Agent in such city and as its agent to receive all such
presentations, surrenders, notices and demands.
Unless otherwise specified with respect to any Securities pursuant to Section
301, if and so long as the Securities of any series (i) are denominated in a
Currency other than Dollars or (ii) may be payable in a Currency other than
Dollars, or so long as it is required under any other provision of the
Indenture, then the Company will maintain with respect to each such series of
Securities, or as so required, at least one Exchange Rate Agent.
SECTION 1003. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect to
any series of Securities and any related coupons, it will, on or before each
due date of the principal of (and premium, if any, on) or interest on any of
the Securities of that series, segregate and hold in trust for the benefit of
the Persons entitled thereto a sum in the Currency in which the Securities of
such series are payable (except as otherwise specified pursuant to Section 301
for the Securities of such series and except, if applicable, as provided in
Sections 311(b), 311(d) and 311(e)) sufficient to pay the principal (and
premium, if any) or interest so becoming due until such sums shall be paid to
such Persons or otherwise disposed of as herein provided and will promptly
notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any series of
Securities and any related coupons, it will, prior to or on each due date of
the principal of (and premium, if any, on) or interest on any Securities of
that series, deposit with a Paying Agent a sum (in the Currency described in
the preceding paragraph) sufficient to pay the principal (and premium, if any)
or interest so becoming due, such sum to be held in trust for the benefit of
the Persons entitled to such principal, premium or interest, and (unless such
Paying Agent is the Trustee) the Company will promptly notify the Trustee of
its action or failure so to act.
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The Company will cause each Paying Agent (other than the Trustee) for any
series of Securities to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the
provisions of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of (and
premium, if any, on) and interest on Securities of such series in
trust for the benefit of the Persons entitled thereto until such
sums shall be paid to such Persons or otherwise disposed of as
herein provided;
(2) give the Trustee notice of any default by the Company (or any other
obligor upon the Securities of such series) in the making of any
payment of principal of (or premium, if any, on) or interest on the
Securities of such series; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all
sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction and
discharge of this Indenture or for any other purpose, pay, or by Company Order
direct any Paying Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which sums were held by the Company or such Paying
Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect to such sums.
Except as provided in the Securities of any series, any money deposited with
the Trustee or any Paying Agent, or then held by the Company, in trust for the
payment of the principal of (and premium, if any, on) or interest on any
Security of any series, or any coupon appertaining thereto, and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall be paid to the Company on Company Request, or
(if then held by the Company) shall be discharged from such trust; and the
Holder of such Security or coupon shall thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, and all liability of
the Trustee or such Paying Agent with respect to such trust money, and all
liability of the Company as trustee thereof, shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the request and expense of the Company cause to be
published once, in an Authorized Newspaper, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less
than 30 days from the date of such publication, any unclaimed balance of such
money then remaining will be repaid to the Company.
SECTION 1004. Statement as to Compliance.
The Company will deliver to the Trustee the certificate required by Section
704(4) hereof.
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SECTION 1005. Additional Amounts.
If any Securities of a series provide for the payment of additional amounts to
any Holder who is not a United States person in respect of any tax, assessment
or governmental charge ("Additional Amounts"), the Company will pay to the
Holder of any Security of such series or any coupon appertaining thereto such
Additional Amounts as may be specified as contemplated by Section 301.
Whenever in this Indenture there is mentioned, in any context, the payment of
the principal (or premium, if any, on) or interest on, or in respect of, any
Security of a series or payment of any related coupon or the net proceeds
received on the sale or exchange of any Security of a series, such mention
shall be deemed to include mention of the payment of Additional Amounts, if
any, provided for by the terms of such series established pursuant to Section
301 to the extent that, in such context, Additional Amounts are, were or would
be payable in respect thereof pursuant to such terms and express mention of
the payment of Additional Amounts (if applicable) in any provisions hereof
shall not be construed as excluding Additional Amounts in those provisions
hereof where such express mention is not made.
Except as otherwise specified as contemplated by Section 301, if the
Securities of a series provide for the payment of Additional Amounts, at least
10 days prior to the first Interest Payment Date with respect to that series
of Securities (or if the Securities of that series will not bear interest
prior to Maturity, the first day on which a payment of principal (and premium,
if any) is made), and at least 10 days prior to each date of payment of
principal (and premium, if any) or interest if there has been any change with
respect to the matters set forth in the below-mentioned Officers' Certificate,
the Company will furnish the Trustee and the Company's principal Paying Agent
or Paying Agents, if other than the Trustee, with an Officers' Certificate
instructing the Trustee and such Paying Agent or Paying Agents whether such
payment of principal of (and premium, if any, on) or interest on the
Securities of that series shall be made to Holders of Securities of that
series or any related coupons who are not United States persons without
withholding for or on account of any tax, assessment or other governmental
charge described in the Securities of the series. If any such withholding
shall be required, then such Officers' Certificate shall specify by country
the amount, if any, required to be withheld on such payments to such Holders
of Securities of that series or related coupons, and the Company will pay to
the Trustee or such Paying Agent the Additional Amounts required by the terms
of such Securities. In the event that the Trustee or any Paying Agent, as the
case may be, shall not so receive the above-mentioned certificate, then the
Trustee or such Paying Agent shall be entitled to (i) assume that no such
withholding or deduction is required with respect to any payment of principal
(and premium, if any) or interest with respect to any Securities of a series
or related coupons until it shall have received a certificate advising
otherwise and (ii) to make all payments of principal (and premium, if any) and
interest with respect to the Securities of a series or related coupons without
withholding or deductions until otherwise advised. The Company covenants to
indemnify the Trustee and any Paying Agent for, and to hold them harmless
against, any loss, liability or expense reasonably incurred without negligence
or bad faith on their part arising out of or in connection with actions taken
or omitted by any of them in reliance on any Officers' Certificate furnished
pursuant to this Section.
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SECTION 1006. Limitation on Dividends.
(a) If Securities are issued to a Pacific Telesis Trust or a trustee of such
trust in connection with the issuance of Trust Securities by such Pacific
Telesis Trust and (i) there shall have occurred any event that would
constitute an Event of Default or (ii) the Company shall be in default
with respect of its payment or any other obligations under the Preferred
Securities Guarantee or Common Securities Guarantee relating to such
Pacific Telesis Trust, then (A) the Company shall not declare or pay any
dividend on, make any distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital
stock, and (B) the Company shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by the Company which rank pari passu with or junior to
such Securities, provided that the foregoing restriction in paragraph (A)
does not apply to any stock dividends paid by the Company where the
dividend stock is the same stock as that on which the dividend is being
paid.
(b) If Securities are issued to a Pacific Telesis Trust or a trustee of such
a trust in connection with the issuance of Trust Securities by such
Pacific Telesis Trust and the Company shall have given notice of its
election to defer payments of interest on such Securities by extending
the interest payment period as provided in the Indenture and such period,
or any extension thereof, shall be continuing, then (A) the Company shall
not declare or pay any dividend or, make any distributions with respect
to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock, and (B) the Company shall not make
any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities issued by the Company which rank
pari passu with or junior to such Securities, provided that the foregoing
restriction in paragraph (A) does not apply to any stock dividends paid
by the Company where the dividend stock is the same as that on which the
dividend is being paid.
SECTION 1007. Covenants as to Pacific Telesis Trusts.
In the event Securities are issued and sold to a Pacific Telesis Trust or a
trustee of such trust in connection with the issuance of Trust Securities by
such Pacific Telesis Trust, for so long as such Trust Securities remain
Outstanding, the Company will (i) maintain 100% direct or indirect ownership
of the Common Securities of such Pacific Telesis Trust; provided, however,
that any permitted successor of the Company under the Indenture may succeed to
the Company's ownership of the Common Securities, and (ii) use its reasonable
efforts to cause such Pacific Telesis Trust (a) to remain a statutory business
trust, except in connection with a distribution of Securities as provided in
the Declaration of such Pacific Telesis Trust, the redemption of all of the
Trust Securities and in connection with certain mergers, consolidations or
amalgamations permitted by the Declaration of such Pacific Telesis Trust, and
(b) otherwise continue to be treated as a grantor trust for United States
federal income tax purposes.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated Maturity
shall be redeemable in accordance with the terms of such Securities and
(except as otherwise specified as contemplated by Section 301 for Securities
of any series) in accordance with this Article.
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SECTION 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced by or
pursuant to a Board Resolution. In case of any redemption at the election of
the Company, the Company shall, at least 60 days prior to the Redemption Date
fixed by the Company (unless a shorter notice shall be reasonably satisfactory
to the Trustee), notify the Trustee of such Redemption Date and of the
principal amount of Securities of such series to be redeemed and shall deliver
to the Trustee such documentation and records as shall enable the Trustee to
select the Securities to be redeemed pursuant to Section 1103. In the case of
any redemption of Securities prior to the expiration of any restriction on
such redemption provided in the terms of such Securities or elsewhere in this
Indenture, the Company shall furnish the Trustee with an Officers' Certificate
evidencing compliance with such restriction.
SECTION 1103. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities
of such series not previously called for redemption, by such method as the
Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions of the principal of Securities of such
series; provided, however, that no such partial redemption shall reduce the
portion of the principal amount of a Security not redeemed to less than the
minimum authorized denomination for Securities of such series established
pursuant to Section 301.
The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption and, in the case of any Securities selected for
partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Securities shall relate, in the case
of any Security redeemed or to be redeemed only in part, to the portion of the
principal amount of such Security which has been or is to be redeemed.
SECTION 1104. Notice of Redemption.
Except as otherwise specified as contemplated by Section 301,
notice of redemption shall be given in the manner provided for in
Section 106 not less than 30 nor more than 60 days prior to the
Redemption Date, to each Holder of Securities to be redeemed.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series are to be
redeemed, the identification (and, in the case of partial
redemption, the principal amounts) of the particular Securities to
be redeemed,
(4) that on the Redemption Date the Redemption Price (together with
accrued interest, if any, to the Redemption Date payable as provided
in Section 1106) will become due and payable upon each such
Security, or the portion thereof, to be redeemed and, if applicable,
that interest thereon will cease to accrue on and after said date,
(5) the place or places where such Securities, together in the case of
Bearer Securities with all coupons appertaining thereto, if any,
maturing after the Redemption Date, are to be surrendered for
payment of the Redemption Price,
(6) that the redemption is for a sinking fund, if such is the case,
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(7) that, unless otherwise specified in such notice, Bearer Securities
of any series, if any, surrendered for redemption must be
accompanied by all coupons maturing subsequent to the Redemption
Date or the amount of any such missing coupon or coupons will be
deducted from the Redemption Price unless security or indemnity
satisfactory to the Company, the Trustee and any Paying Agent is
furnished, and
(8) if Bearer Securities of any series are to be redeemed and any
Registered Securities of such series are not to be redeemed, and if
such Bearer Securities may be exchanged for Registered Securities
not subject to redemption on such Redemption Date pursuant to
Section 305 or otherwise, the last date, as determined by the
Company, on which such exchanges may be made.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 1105. Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with the Trustee or
with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 1003) an amount of money in
the Currency in which the Securities of such series are payable (except as
otherwise specified pursuant to Section 301 for the Securities of such series
and except, if applicable as provided in Sections 311(b), 311(d) and 312(e))
sufficient to pay the Redemption Price of, and accrued interest on, all the
Securities which are to be redeemed on that date.
SECTION 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to be
redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified in the Currency in which the Securities of
such series are payable (except as otherwise specified pursuant to Section 301
for the Securities of such series and except, if applicable as provided in
Sections 311(b), 311(d) and 311(e)) (together with accrued interest, if any,
to the Redemption Date), and from and after such date (unless the Company
shall default in the payment of the Redemption Price and accrued interest)
such Securities shall, if the same were interest bearing, cease to bear
interest and the coupons for such interest appertaining to any Bearer
Securities so to be redeemed, except to the extent provided below, shall be
void. Upon surrender of any such Security for redemption in accordance with
said notice, together with all coupons, if any, appertaining thereto maturing
after the Redemption Date, such Security shall be paid by the Company at the
Redemption Price, together with accrued interest, if any, to the Redemption
Date; provided, however, that installments of interest on Bearer Securities
whose Stated Maturity is on or prior to the Redemption Date shall be payable
only at an office or agency located outside the United States (except as
otherwise provided in Section 1002) and, unless otherwise specified as
contemplated by Section 301, only upon presentation and surrender of coupons
for such interest, and provided, further, that installments of interest on
Registered Securities whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such at the close of business on the
relevant Record Dates according to their terms and the provisions of Section
307.
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If any Bearer Security surrendered for redemption shall not be accompanied by
all appurtenant coupons maturing after the Redemption Date, such Security may
be paid after deducting from the Redemption Price an amount equal to the face
amount of all such missing coupons, or the surrender of such missing coupon or
coupons may be waived by the Company and the Trustee if there be furnished to
them such security or indemnity as they may require to save each of them and
any Paying Agent harmless. If thereafter the Holder of such Security shall
surrender to the Trustee or any Paying Agent any such missing coupon in
respect of which a deduction shall have been made from the Redemption Price,
such Holder shall be entitled to receive the amount so deducted; provided,
however, that interest represented by coupons shall be payable only at an
office or agency located outside the United States (except as otherwise
provided in Section 1002) and, unless otherwise specified as contemplated by
Section 301, only upon presentation and surrender of those coupons.
If any Security called for redemption or portion thereof shall not be so paid
upon surrender thereof for redemption, the principal (and premium, if any)
shall, until paid, bear interest from the Redemption Date at the rate of
interest or Yield to Maturity (in the case of Original Issue Discount
Securities) set forth in the Security.
SECTION 1107. Securities Redeemed in Part.
Any Security which is to be redeemed only in part (pursuant to the provisions
of this Article or of Article Twelve) shall be surrendered at a Place of
Payment therefor (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or such
Holder's attorney duly authorized in writing), and the Company shall execute,
and the Trustee shall authenticate and deliver to the Holder of such Security
without service charge, a new Security or Securities of the same series, of
any authorized denomination as requested by such Holder, in aggregate
principal amount equal to and in exchange for the unredeemed portion of the
principal of the Security so surrendered.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article.
Retirements of Securities of any series pursuant to any sinking fund shall be
made in accordance with the terms of such Securities and (except as otherwise
specified as contemplated by Section 301 for Securities of any series) in
accordance with this Article.
The minimum amount of any sinking fund payment provided for by the terms of
Securities of any series is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an "optional
sinking fund payment". If provided for by the terms of Securities of any
series, the cash amount of any mandatory sinking fund payment may be subject
to reduction as provided in Section 1202. Each sinking fund payment shall be
applied to the redemption of Securities of any series as provided for by the
terms of Securities of such series.
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SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.
Subject to Section 1203, in lieu of making all or any part of any mandatory
sinking fund payment with respect to any Securities of a series in cash,
subject to the limitations set forth at Section 1001, the Company may at its
option (1) deliver to the Trustee Outstanding Securities of a series (other
than any previously called for redemption) theretofore purchased or otherwise
acquired by the Company together in the case of any Bearer Securities of such
series with all unmatured coupons appertaining thereto, and/or (2) receive
credit for the principal amount of Securities of such series which have been
previously delivered to the Trustee by the Company or for Securities of such
series which have been redeemed either at the election of the Company pursuant
to the terms of such Securities or through the application of permitted
optional sinking fund payments pursuant to the terms of such Securities, in
each case in satisfaction of all or any part of any mandatory sinking fund
payment with respect to the Securities of the same series required to be made
pursuant to the terms of such Securities as provided for by the terms of such
series; provided, however, that such Securities have not been previously so
credited. Such Securities shall be received and credited for such purpose by
the Trustee at the Redemption Price specified in such Securities for
redemption through operation of the sinking fund and the amount of such
mandatory sinking fund payment shall be reduced accordingly.
SECTION 1203. Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any series
of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash in the Currency in which the
Securities of such series are payable (except as otherwise specified pursuant
to Section 301 for the Securities of such series and except, if applicable, as
provided in Sections 311(b), 311(d) and 311(e)) and the portion thereof, if
any, which is to be satisfied by delivering or crediting Securities of that
series pursuant to Section 1202 (which Securities will, if not previously
delivered, accompany such certificate) and whether the Company intends to
exercise its right to make a permitted optional sinking fund payment with
respect to such series. Such certificate shall be irrevocable and upon its
delivery the Company shall be obligated to make the cash payment or payments
therein referred to, if any, on or before the next succeeding sinking fund
payment date. In the case of the failure of the Company to deliver such
certificate, the sinking fund payment due on the next succeeding sinking fund
payment date for that series shall be paid entirely in cash and shall be
sufficient to redeem the principal amount of such Securities subject to a
mandatory sinking fund payment without the option to deliver or credit
Securities as provided in Section 1202 and without the right to make any
optional sinking fund payment, if any, with respect to such series.
Not more than 60 days before each such sinking fund payment date the Trustee
shall select the Securities to be redeemed upon such sinking fund payment date
in the manner specified in Section 1103 and cause notice of the redemption
thereof to be given in the name of and at the expense of the Company in the
manner provided in Section 1104. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 1106 and 1107.
Prior to any sinking fund payment date, the Company shall pay to the Trustee
or a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 1103) in cash a sum equal
to any interest that will accrue to the date fixed for redemption of
Securities or portions thereof to be redeemed on such sinking fund payment
date pursuant to this Section 1203.
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Notwithstanding the foregoing, with respect to a sinking fund for any series
of Securities, if at any time the amount of cash to be paid into such sinking
fund on the next succeeding sinking fund payment date, together with any
unused balance of any preceding sinking fund payment or payments for such
series, does not exceed in the aggregate $100,000, the Trustee, unless
requested by the Company, shall not give the next succeeding notice of the
redemption of Securities of such series through the operation of the sinking
fund. Any such unused balance of moneys deposited in such sinking fund shall
be added to the sinking fund payment for such series to be made in cash on the
next succeeding sinking fund payment date or, at the request of the Company,
shall be applied at any time or from time to time to the purchase of
Securities of such series, by public or private purchase, in the open market
or otherwise, at a purchase price for such Securities (excluding accrued
interest and brokerage commissions, for which the Trustee or any Paying Agent
will be reimbursed by the Company) not in excess of the principal amount
thereof.
ARTICLE THIRTEEN
REPAYMENT AT OPTION OF HOLDERS
SECTION 1301. Applicability of Article.
Repayment of Securities of any series before their Stated Maturity at the
option of Holders thereof shall be made in accordance with the terms of such
Securities and (except as otherwise specified as contemplated by Section 301
for Securities of any series) in accordance with this Article.
SECTION 1302. Repayment of Securities.
Securities of any series subject to repayment in whole or in part at the
option of the Holders thereof will, unless otherwise provided in the terms of
such Securities, be repaid at a price equal to the principal amount thereof,
together with interest, if any, thereon accrued to the Repayment Date
specified in or pursuant to the terms of such Securities. The Company
covenants that on or before the Repayment Date it will deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money in the Currency in which the Securities of such series are payable
(except as otherwise specified pursuant to Section 301 for the Securities of
such series and except, if applicable, as provided in Sections 311(b), 311(d)
and 311(e)) sufficient to pay the principal (or, if so provided by the terms
of the Securities of any series, a percentage of the principal) of, and
(except if the Repayment Date shall be an Interest Payment Date) accrued
interest on, all the Securities or portions thereof, as the case may be, to be
repaid on such date.
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SECTION 1303. Exercise of Option.
Securities of any series subject to repayment at the option of the Holders
thereof will contain an "Option to Elect Repayment" form on the reverse of
such Securities. To be repaid at the option of the Holder, any Security so
providing for such repayment, with the "Option to Elect Repayment" form on the
reverse of such Security duly completed by the Holder (or by the Holder's
attorney duly authorized in writing), must be received by the Company at the
Place of Payment therefor specified in the terms of such Security (or at such
other place or places of which the Company shall from time to time notify the
Holders of such Securities) not earlier than 45 days nor later than 30 days
prior to the Repayment Date. If less than the entire principal amount of such
Security is to be repaid in accordance with the terms of such Security, the
principal amount of such Security to be repaid, in increments of the minimum
denomination for Securities of such series, and the denomination or
denominations of the Security or Securities to be issued to the Holder for the
portion of the principal amount of such Security surrendered that is not to be
repaid, must be specified. The principal amount of any Security providing for
repayment at the option of the Holder thereof may not be repaid in part if,
following such repayment, the unpaid principal amount of such Security would
be less than the minimum authorized denomination of Securities of the series
of which such Security to be repaid is a part. Except as otherwise may be
provided by the terms of any Security providing for repayment at the option of
the Holder thereof, exercise of the repayment option by the Holder shall be
irrevocable unless waived by the Company.
SECTION 1304. When Securities Presented for Repayment Become Due and Payable.
If Securities of any series providing for repayment at the option of the
Holders thereof shall have been surrendered as provided in this Article and as
provided by or pursuant to the terms of such Securities, such Securities or
the portions thereof, as the case may be, to be repaid shall become due and
payable and shall be paid by the Company on the Repayment Date therein
specified, and on and after such Repayment Date (unless the Company shall
default in the payment of such Securities on such Repayment Date) such
Securities shall, if the same were interest-bearing, cease to bear interest
and the coupons for such interest appertaining to any Bearer Securities so to
be repaid, except to the extent provided below, shall be void. Upon surrender
of any such Security for repayment in accordance with such provisions,
together with all coupons, if any, appertaining thereto maturing after the
Repayment Date, the principal amount of such Security so to be repaid shall be
paid by the Company, together with accrued interest, if any, to the Repayment
Date; provided, however, that coupons whose Stated Maturity is on or prior to
the Repayment Date shall be payable only at an office or agency located
outside the United States (except as otherwise provided in Section 1002) and,
unless otherwise specified as contemplated pursuant to Section 301, only upon
presentation and surrender of those coupons; and provided further that, in the
case of Registered Securities, installments of interest, if any, whose Stated
Maturity is on or prior to the Repayment Date shall be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such
at the close of business on the relevant Record Dates according to their terms
and the provisions of Section 307.
If any Bearer Security surrendered for repayment shall not be accompanied by
all appurtenant coupons maturing after the Repayment Date, such Security may
be paid after deducting from the amount payable therefor as provided in
Section 1302 an amount equal to the face amount of all such missing coupons,
or the surrender of such missing coupon or coupons may be waived by the
Company and the Trustee if there be furnished to them such security or
indemnity as they may require to save each of them and any Paying Agent
harmless. If thereafter the Holder of such Security shall surrender to the
Trustee or any Paying Agent any such missing coupon in respect of which a
deduction shall have been made as provided in the preceding sentence, such
Holder shall be entitled to receive the amount so deducted; provided, however,
that interest represented by coupons shall be payable only at an office or
agency located outside the United States (except as otherwise provided in
Section 1002) and, unless otherwise specified as contemplated by Section 301,
only upon presentation and surrender of those coupons.
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If the principal amount of any Security surrendered for repayment shall not be
so repaid upon surrender thereof, such principal amount (together with
interest, if any, thereon accrued to such Repayment Date) shall, until paid,
bear interest from the Repayment Date at the rate of interest or Yield to
Maturity (in the case of Original Issue Discount Securities) set forth in such
Security.
SECTION 1305. Securities Repaid in Part.
Upon surrender of any Registered Security which is to be repaid in part only,
the Company shall execute and the Trustee shall authenticate and deliver to
the Holder of such Security, without service charge and at the expense of the
Company, a new Registered Security or Securities of the same series, of any
authorized denomination specified by the Holder, in an aggregate principal
amount equal to and in exchange for the portion of the principal of such
Security so surrendered which is not to be repaid.
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Discharge of Liability on Outstanding Securities of any Series.
Upon the deposit with the Trustee, in trust, at or before Maturity, of money
or securities of the kind and in the necessary amount (as provided in Section
1403 of this Indenture) to pay or redeem Outstanding Securities of any Series
(whether upon or prior to their Stated Maturity or the Redemption Date of such
Outstanding Securities, provided that, if such Outstanding Securities are to
be redeemed prior to the Stated Maturity thereof, notice of such redemption
shall have been given as in Article Eleven hereof provided or provision
satisfactory to the Trustee shall have been made for the giving of such
notice), the obligation of the Company duly and punctually to pay or cause to
be paid the principal of and any interest and premium in respect of such
Outstanding Securities and all liability of the Company in respect of such
payment shall cease, terminate and be completely discharged and the Holders
thereof shall thereafter be entitled only to payment out of the money or
securities deposited with the Trustee as aforesaid for their payment; provided
however, that this discharge of the Company's obligation so to pay and of the
liability of the Company in respect of such payment shall not occur unless the
Company shall have delivered to the Trustee an Opinion of Counsel to the
effect that Holders of the Outstanding Securities of such Series will not
recognize income, gain or loss for Federal income tax purposes as a result of
such discharge.
SECTION 1402. Discharge of Certain Covenants and Other Obligations.
Upon the deposit with the Trustee, in trust, prior to Maturity of money or
securities of the kind and in the necessary amount (as provided in Section
1403 of this Indenture) to pay or redeem Outstanding Securities of one or more
Series (whether upon or prior to their Stated Maturity or the Redemption Date
of such Outstanding Securities, provided that, if such Outstanding Securities
are to be redeemed prior to the Stated Maturity thereof, notice of such
redemption shall have been given as in Article Eleven hereof provided or
provision satisfactory to the Trustee shall have been made for the giving of
such notice), all of the obligations, covenants and agreements of the Company
with respect to such Outstanding Securities except those set forth in Section
1001, 1002 and 1005 and except those specified pursuant to Section 301 or in
any supplemental indenture pertaining to such Outstanding Securities, shall
cease, terminate and be completely discharged.
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SECTION 1403. Discharge of Certain Obligations Upon Deposit of Money or
Government Obligations with Trustee.
The conditions for deposit of money or Government Obligations contained in
Sections 1401 and 1402 shall have been satisfied whenever with respect to any
Outstanding Securities denominated in Dollars, the Company shall have
deposited or caused to be deposited irrevocably in trust with the Trustee
dedicated solely to the benefit of the Holders of such Outstanding Securities:
a) Dollars in an amount equal to the principal amount of such
Outstanding Securities and all unpaid interest thereon to Stated
Maturity, except that, in the case of Outstanding Securities which
are to be redeemed prior to Stated Maturity, the amount so to be
deposited or held shall be the principal amount of such Outstanding
Securities and interest thereon to the Redemption Date, together
with the redemption premium, if any; or
b) Government Obligations in such amounts and maturing at such times
that the proceeds of said obligations to be received upon their
respective maturities and interest payment dates will provide funds
sufficient to pay the principal, premium, if any, and interest to
Stated Maturity, or to the Redemption Date, as the case may be, with
respect to all of the Outstanding Securities to be paid or redeemed,
as such principal, premium and interest become due, provided that
the Trustee shall have been irrevocably instructed to apply the
proceeds of said obligations to the payment of said principal,
premium, if any, and interest with respect to said Outstanding
Securities.
The conditions for deposit of money or Government Obligations contained in
Sections 1401 and 1402 shall have been satisfied whenever with respect to any
Outstanding Securities denominated in one or more currencies or composite
currency other than Dollars, the Company shall have deposited or caused to be
deposited irrevocably in trust with the Trustee dedicated solely to the
benefit of the Holders of such Subordinated Securities:
(i) Lawful money in such Currency in which such Outstanding
Securities are payable and in an amount equal to the principal
amount of such Outstanding Securities and all unpaid interest
thereon to Stated Maturity, except that, in the case of
Outstanding Securities which are to be redeemed prior to Stated
Maturity, the amount so to be deposited or held shall be the
principal amount of such Outstanding Securities and interest
thereon to the Redemption Date, together with the redemption
premium, if any; or
(ii) Government Obligations in such amounts and maturing at such
times that the proceeds of said obligations to be received upon
their respective maturities and interest payment dates will
provide funds sufficient to pay the principal, premium, if any,
and interest to Stated Maturity, or to the Redemption Date, as
the case may be, with respect to all of the Outstanding
Securities to be paid or redeemed, as such principal, premium
and interest become due, provided that the Trustee shall have
been irrevocably instructed to apply to the proceeds of said
obligations to the payment of said principal, premium, if any,
and interest with respect to said Outstanding Securities.
SECTION 1404. Unclaimed Moneys.
Any moneys deposited with or paid to the Trustee or any Paying Agent for the
payment of the principal of and any premium and interest on any Outstanding
Security and not so applied but remaining unclaimed under applicable law shall
be transferred by the Trustee to the appropriate Persons in accordance with
applicable laws, and the Holder of such Outstanding Security shall thereafter
look only to such Persons for any payment which such Holder may be entitled to
collect and all liability of the Trustee and such Paying Agent with respect to
such moneys shall thereupon cease.
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ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
SECTION 1501. Purposes for Which Meetings May Be Called.
If Securities of a series are issuable as Bearer Securities, a meeting of
Holders of Securities of such series may be called at any time and from time
to time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Securities of such
series.
SECTION 1502. Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Holders of Securities
of any series for any purpose specified in Section 1501, to be held
at such time and at such place in the cities of San Francisco, New
York or London as the Trustee shall reasonably determine after
consultation with the Company. Notice of every meeting of Holders
of Securities of any series, setting forth the time and the place of
such meeting and in general terms the action proposed to be taken at
such meeting, shall be given, in the manner provided for in Section
106, not less than 21 nor more than 180 days prior to the date fixed
for the meeting.
(b) In case at any time the Company, pursuant to a Board Resolution, or
the Holders of at least 10% in principal amount of the Outstanding
Securities of any series shall have requested the Trustee to call a
meeting of the Holders of Securities of such series for any purpose
specified in Section 1501, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting,
and the Trustee shall not have made the first publication of the
notice of such meeting within 21 days after receipt of such request
or shall not thereafter proceed to cause the meeting to be held as
provided herein, then the Company or the Holders of Securities of
such series in the amount above specified, as the case may be, may
determine the time and the place in the cities of San Francisco, New
York or London for such meeting and may call such meeting for such
purposes by giving notice thereof as provided in paragraph (a) of
this Section.
SECTION 1503. Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders of Securities of any series,
a Person shall be (1) a Holder of one or more Outstanding Securities of such
series, or (2) a Person appointed by an instrument in writing as proxy for a
Holder or Holders of one or more Outstanding Securities of such series by such
Holder or Holders. The only Persons who shall be entitled to be present or to
speak at any meeting of Holders of Securities of any series shall be the
Person entitled to vote at such meeting and their counsel, any representatives
of the Trustee and its counsel and any representatives of the Company and its
counsel.
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SECTION 1504. Quorum; Action.
The Persons entitled to vote a majority in principal amount of the Outstanding
Securities of a series shall constitute a quorum for a meeting of Holders of
Securities of such series; provided, however, that, if any action is to be
taken at such meeting with respect to a consent or waiver which this Indenture
expressly provides may be given by the Holders of not less than a specified
percentage in principal amount of the Outstanding Securities of a series, the
Persons entitled to vote such specified percentage in principal amount of the
Outstanding Securities of such series shall constitute a quorum. In the
absence of a quorum within 30 minutes of the time appointed for any such
meeting, the meeting shall, if convened at the request of Holders of
Securities of such series, be dissolved. In any other case the meeting may be
adjourned for a period of not less than 10 days as determined by the chairman
of the meeting prior to the adjournment of such meeting. In the absence of a
quorum at any such adjourned meeting, such adjourned meeting may be further
adjourned for a period of not less than 10 days as determined by the chairman
of the meeting prior to the adjournment of such adjourned meeting. Notice of
the reconvening of any adjourned meeting shall be given as provided in Section
1502(a), except that such notice need be given only once not less than five
days prior to the date on which the meeting is scheduled to be reconvened.
Notice of the reconvening of any adjourned meeting shall state expressly the
percentage, as provided above, of the principal amount of the Outstanding
Securities of such series which shall constitute a quorum.
Except as limited by the proviso to Section 902, any resolution presented to a
meeting or adjourned meeting duly reconvened at which a quorum is present as
aforesaid may be adopted by the affirmative vote of the Holders of not less
than a majority in principal amount of the Outstanding Securities of that
series; provided, however, that, except as limited by the proviso to Section
902, any resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action which this Indenture
expressly provides may be made, given or taken by the Holders of a specified
percentage, which is less than a majority, in principal amount of the
Outstanding Securities of a series may be adopted at a meeting or an adjourned
meeting duly reconvened and at which a quorum is present as aforesaid by the
affirmative vote of the Holders of not less than such specified percentage in
principal amount of the Outstanding Securities of that series.
Any resolution passed or decision taken at any meeting of Holders of
Securities of any series duly held in accordance with this Section shall be
binding on all the Holders of Securities of such series and the related
coupons, whether or not present or represented at the meeting.
Notwithstanding the foregoing provisions of this Section 1504, if any action
is to be taken at a meeting of Holders of Securities of any series with
respect to any request, demand, authorization, direction, notice, consent,
waiver or other action that this Indenture expressly provides may be made,
given or taken by the Holders of a specified percentage in principal amount of
all Outstanding Securities affected thereby, or of the Holders of such series
and one or more additional series:
(i) there shall be no minimum quorum requirement for such meeting;
and
(ii) the principal amount of the Outstanding Securities of such
series that vote in favor of such request, demand,
authorization, direction, notice, consent, waiver or other
action shall be taken into account in determining whether such
request, demand, authorization, direction, notice, consent,
waiver or other action has been made, given or taken under this
Indenture.
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SECTION 1505. Determination of Voting Rights; Conduct and Adjournment of
Meetings.
(a) Notwithstanding any provisions of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any
meeting of Holders of Securities of a series in regard to proof of
the holding of Securities of such series and of the appointment of
proxies and in regard to the appointment and duties of inspectors of
votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall deem appropriate.
Except as otherwise permitted or required by any such regulations,
the holding of Securities shall be proved in the manner specified in
Section 104 and the appointment of any proxy shall be proved in the
manner specified in Section 104 or by having the signature of the
person executing the proxy witnessed or guaranteed by any trust
company, bank or banker authorized by Section 104 to certify to the
holding of Bearer Securities. Such regulations may provide that
written instruments appointing proxies, regular on their face, may
be presumed valid and genuine without the proof specified in Section
104 or other proof.
(b) The Trustee shall, by an instrument in writing appoint a temporary
chairman of the meeting, unless the meeting shall have been called
by the Company or by Holders of Securities as provided in Section
1502(b), in which case the Company or the Holders of Securities of
the series calling the meeting, as the case may be, shall in like
manner appoint a temporary chairman. A permanent chairman and a
permanent secretary of the meeting shall be elected by vote of the
Persons entitled to vote a majority in principal amount of the
Outstanding Securities of such series represented at the meeting.
(c) At any meeting each Holder of a Security of such series or proxy
shall be entitled to one vote for each $25 principal amount of
Outstanding Securities of such series held or represented by him
(determined as specified in the definition of "Outstanding" in
Section 101); provided, however, that no vote shall be cast or
counted at any meeting in respect of any Security challenged as not
Outstanding and ruled by the chairman of the meeting to be not
Outstanding. The chairman of the meeting shall have no right to
vote, except as a Holder of a Security of such series or proxy.
(d) Any meeting of Holders of Securities of any series duly called
pursuant to Section 1502 at which a quorum is present may be
adjourned from time to time by Persons entitled to vote a majority
in principal amount of the Outstanding Securities of such series
represented at the meeting; and the meeting may be held as so
adjourned without further notice.
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SECTION 1506. Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of Holders of Securities
of any series shall be by written ballots on which shall be subscribed the
signatures of the Holders of Securities of such series or of their
representatives by proxy and the principal amounts and serial numbers of the
Outstanding Securities of such series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and
who shall make and file with the secretary of the meeting their verified
written reports in duplicate of all votes cast at the meeting. A record, at
least in duplicate, of the proceedings of each meeting of Holders of
Securities of any series shall be prepared by the secretary of the meeting and
there shall be attached to said record the original reports of the inspectors
of votes on any vote by ballot taken thereat and affidavits by one or more
persons having knowledge of the facts setting forth a copy of the notice of
the meeting and showing that said notice was given as provided in Section 1502
and, if applicable, Section 1504. Each copy shall be signed and verified by
the affidavits of the permanent chairman and secretary of the meeting and one
such copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots
voted at the meeting. Any record so signed and verified shall be conclusive
evidence of the matters therein stated.
This Indenture may be executed in any number of counterparts, each of which so
executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same Indenture.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
{Seal} PACIFIC TELESIS GROUP
Attest:
__________________________ By:_____________________________
Name:___________________________
Title:__________________________
{Seal} THE FIRST NATIONAL BANK OF CHICAGO
Attest:
__________________________ By:_____________________________
Trust Officer Name:___________________________
Title:__________________________
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EXHIBIT 4-H
-----------
FORM OF SUPPLEMENTAL INDENTURE
to be used in connection with the issuance of
SUBORDINATED DEBT SECURITIES AND PREFERRED SECURITIES
FIRST SUPPLEMENTAL INDENTURE, dated as of _________, 1995 (the "First
Supplemental Indenture"), between Pacific Telesis Group, a Nevada corporation
(the "Company"), and The First National Bank of Chicago, as trustee (the
"Trustee") under the Indenture dated as of ________, 1995 between the Company
and the Trustee (the "Indenture").
WHEREAS, the Company executed and delivered the Indenture to the Trustee to
provide for the future issuance of the Company's unsecured debt securities to
be issued from time to time in one or more series as might be determined by
the Company under the Indenture, in an unlimited aggregate principal amount
which may be authenticated and delivered as provided in the Indenture;
WHEREAS, pursuant to the terms of the Indenture, the Company desires to
provide for the establishment of a new series of its Securities to be known as
its ___% Subordinated Deferrable Interest Debentures due 2025 (the
"Subordinated Debentures"), the form and substance of such Subordinated
Debentures and the terms, provisions and conditions thereof to be set forth as
provided in the Indenture and this First Supplemental Indenture;
WHEREAS, Pacific Telesis Financing I, a Delaware statutory business trust (the
"Trust"), has offered to the public $_________ aggregate liquidation amount of
its ___% Trust Originated Preferred Securities (the "Preferred Securities"),
representing undivided beneficial interests in the assets of the Trust and
proposes to invest the proceeds from such offering in $_________ aggregate
principal amount of the Subordinated Debentures; and
WHEREAS, the Company has requested that the Trustee execute and deliver this
First Supplemental Indenture and all requirements necessary to make this First
Supplemental Indenture a valid instrument in accordance with its terms and to
make the Subordinated Debentures, when executed by the Company and
authenticated and delivered by the Trustee, the valid obligations of the
Company have been performed, and the execution and delivery of this First
Supplemental Indenture has been duly authorized in all respects:
NOW THEREFORE, in consideration of the purchase and acceptance of the
Subordinated Debentures by the Holders thereof, and for the purpose of setting
forth, as provided in the Indenture, the form and substance of the
Subordinated Debentures and the terms, provisions and conditions thereof, the
Company covenants and agrees with the Trustee as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.1. Definition of Terms.
Unless the context otherwise requires:
(a) a term defined in the Indenture has the same meaning when used in
this First Supplemental Indenture;
(b) a term defined anywhere in this First Supplemental Indenture has the
same meaning throughout;
(c) the singular includes the plural and vice versa;
(d) a reference to a Section or Article is to a Section or Article of
this First Supplemental Indenture;
(e) headings are for convenience of reference only and do not affect
interpretation;
(f) the following terms have the meanings given to them in the
Declaration (as defined hereafter): (i) Business Day; (ii) Delaware
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Trustee; (iii) Redemption Tax Opinion; (iv) Distribution; (v)
Dissolution Tax Opinion; (vi) No Recognition Opinion; (vii) Property
Trustee; (viii) Preferred Security; (ix) Regular Trustees; (x)
Special Event; (xi) Tax Event and (xii) Trust; and
(g) the following terms have the meanings given to them in this Section
1.1(g):
"Declaration" means the Amended and Restated Declaration of Trust of Pacific
Telesis Financing I, a Delaware statutory business trust, dated as of
____________________ 1995.
"Depository" means DTC or its successor hereunder.
"Dissolution Event" means that as a result of the occurrence and continuation
of a Special Event, the Trust is to be dissolved in accordance with the
Declaration, and the Subordinated Debentures held by the Property Trustee are
to be distributed to the holders of the Trust Securities issued by the Trust
pro rata in accordance with the Declaration.
"DTC" means The Depository Trust Company, the initial Depository hereunder.
"Extended Maturity Date" means, if the Company elects to extend the Maturity
Date in accordance with Section 2.2(b), the date selected by the Company which
is after the Scheduled Maturity Date but before _________, 2044.
"Maturity Date" means the date on which the Subordinated Debentures mature and
on which the principal shall be due and payable together with all accrued and
unpaid interest thereon including Compounded Interest, if any.
"Scheduled Maturity Date" means ______________, 2025.
"Senior Indebtedness" means with respect to the Company, all indebtedness of
such obligor, whether now existing or hereafter created, but excluding trade
accounts payable arising in the ordinary course of business. Without limiting
the generality of the foregoing, Senior Indebtedness" shall include (i) the
principal, premium, if any, and interest in respect of (A) indebtedness of
such obligor for money borrowed and (B) indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by such obligor; (ii)
all capital lease obligations of such obligor; (iii) all obligations of such
obligor issued or assumed as the deferred purchase price of property, all
conditional sale obligations of such obligor and all obligations of such
obligor under any title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business); (iv) all obligations of
such obligor for the reimbursement on any letter of credit, banker's
acceptance, security purchase facility or similar credit transaction; (v) all
obligations of the type referred to in clauses (i) through (iv) of other
persons for the payment of which such obligor is responsible or liable as
obligor, guarantor or otherwise, including, without limitation, under all
support agreements or guarantees by the Company of debentures, notes and other
securities issued by PacTel Capital Resources; and (vi) all obligations of the
type referred to in clauses (i) through (v) of other persons secured by any
lien on any property or asset of such obligor (whether or not such obligation
is assumed by such obligor), except for (1) any such indebtedness that is by
its terms subordinated to or pari passu with the Subordinated Debentures, as
the case may be, and (2) any indebtedness between or among any obligor and its
Affiliates, including all other debt securities and guarantees in respect of
those debt securities, issued to (y) any other Pacific Telesis Trust or (z)
any trusts, partnerships or any other entities affiliated with the Company
which is a financing vehicle of the Company ("Financing Entity") in connection
with an issuance by such Financing Entity of preferred securities or other
securities which rank pari passu with or junior to the Preferred Securities.
Such Senior Indebtedness shall continue to be Senior Indebtedness and be
entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any term of such Senior Indebtedness.
ARTICLE TWO
GENERAL TERMS AND CONDITIONS OF THE SUBORDINATED DEBENTURES
SECTION 2.1. Designation and Principal Amount.
There is hereby authorized a series of Securities designated the "_____%
Subordinated Deferrable Interest Debentures due 2025", limited in aggregate
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principal amount to $_____ million, which amount shall be as set forth in any
written Company Order for the authentication and delivery of Subordinated
Debentures pursuant to Section 303 of the Indenture.
SECTION 2.2. Maturity.
(a) The Maturity Date will be either:
(i) the Scheduled Maturity Date; or
(ii) if the Company elects to extend the Maturity Date beyond the
Scheduled Maturity Date in accordance with Section 2.2(b), the
Extended Maturity Date;
(b) the Company may at any time before the day which is 90 days before
the Scheduled Maturity Date, elect to extend the Maturity Date only
once to the Extended Maturity Date, provided that the following
conditions in this Section 2.2(b) are satisfied both at the date the
Company gives notice in accordance with Section 2.2(c) of its
election to extend the Maturity Date and at the Scheduled Maturity
Date:
(i) the Company is not in bankruptcy or otherwise insolvent;
(ii) the Company is not in default on any Securities issued to any
Pacific Telesis Trust or any trustee of such Pacific Telesis
Trust in connection with the issuance of Trust Securities by
such Pacific Telesis Trust;
(iii) the Company has made timely payments on the Subordinated
Debentures for the immediately preceding 18 months without
deferrals;
(iv) the Trust is not in arrears on payments of Distributions on the
Trust Securities issued by it; and
(v) the Subordinated Debentures are rated investment grade or the
equivalent by any one of Standard & Poor's Corporation, Moody's
Investors Service, Inc., Fitch Investor Services, Duff & Phelps
Credit Rating Company or any other nationally recognized
statistical rating organization; and
(c) if the Company elects to extend the Maturity Date in accordance with
Section 2.2(b), the Company shall give notice to Holders of the
Subordinated Debentures, the Property Trustee, the Trust and the
Trustee of the extension of the Maturity Date and the Extended
Maturity Date at least 90 days before the Scheduled Maturity Date.
SECTION 2.3. Form and Payment.
Except as provided in Section 2.4, the Subordinated Debentures shall be issued
as Registered Securities in fully registered certificated form without
interest coupons. Principal and interest on the Subordinated Debentures
issued in certificated form will be payable, the transfer of such Subordinated
Debentures will be registrable and such Subordinated Debentures will be
exchangeable for Subordinated Debentures bearing identical terms and
provisions at the Corporate Trust Office of the Trustee; provided, however,
that payment of interest may be made at the option of the Company by check
mailed to the Holder at such address as shall appear in the Security Register.
Notwithstanding the foregoing, so long as the Holder of any Subordinated
Debentures is the Property Trustee, the payment of the principal of and
interest (including Compounded Interest, if any) on such Subordinated
Debentures held by the Property Trustee will be made by wire transfer in
immediately available funds at such place and to such account as may be
designated by the Property Trustee. Payment of principal of the Subordinated
Debentures will only be made upon surrender of the Subordinated Debentures to
the Trustee.
SECTION 2.4. Global Subordinated Debenture.
(a) In connection with a Dissolution Event;
(i) the Subordinated Debentures in certificated form may be
presented to the Trustee by the Property Trustee in exchange
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for a global Subordinated Debenture in an aggregate principal
amount equal to all Outstanding Subordinated Debentures (a
"Global Subordinated Debenture"), to be registered in the name
of the Depository, or its nominee, and delivered by the Trustee
to the Depository for crediting to the accounts of its
participants pursuant to the instructions of the Regular
Trustees. The Company upon any such presentation shall execute
a Global Subordinated Debenture in such aggregate principal
amount and deliver the same to the Trustee for authentication
and delivery in accordance with the Indenture and this First
Supplemental Indenture. Payments on the Subordinated
Debentures issued as a Global Subordinated Debenture will be
made to the Depository; and
(ii) if any Preferred Securities are held in non book-entry
certificated form, the Subordinated Debentures in certificated
form may be presented to the Trustee by the Property Trustee
and any Preferred Security which represents Preferred
Securities other than Preferred Securities held by the
Depository or its nominee ("Non Book-Entry Preferred
Securities") will be deemed to represent beneficial interests
in Subordinated Debentures presented to the Trustee by the
Property Trustee having an aggregate principal amount equal to
the aggregate liquidation amount of the Non Book-Entry
Preferred Securities until such Preferred Securities are
presented to the Security Registrar for transfer or reissuance
at which time such Preferred Securities will be canceled and a
Subordinated Debenture registered in the name of the holder of
the Preferred Security or the transferee of the holder of such
Preferred Security, as the case may be, with an aggregate
principal amount equal to the aggregate liquidation amount of
the Preferred Security canceled will be executed by the Company
and delivered to the Trustee for authentication and delivery in
accordance with the Indenture and this First Supplemental
Indenture. On issue of such Subordinated Debentures,
Subordinated Debentures with an equivalent aggregate principal
amount that were presented by the Property Trustee to the
Trustee will be deemed to have been canceled.
(b) Unless and until it is exchanged for Subordinated Debentures in
registered certificated form, a Global Subordinated Debenture may be
transferred, in whole but not in part only to another nominee of the
Depository or to the Depository, or to a successor Depository
selected or approved by the Company or to a nominee of such
successor Depository.
(c) If at any time the Depository notifies the Company that it is
unwilling or unable to continue as Depository or if at any time the
Depository for such series shall no longer be registered or in good
standing under the Securities Exchange Act of 1934, as amended, or
other applicable statute or regulation, the Company shall appoint a
successor Depository. If a successor Depository for such series is
not appointed by the Company within 90 days after the Company
receives such notice or becomes aware of such condition, as the case
may be, the Company will execute, and, subject to Article Two of the
Indenture, the Trustee will authenticate and deliver the
Subordinated Debentures in definitive registered form without
coupons, in authorized denominations, and in an aggregate principal
amount equal to the principal amount of the Global Subordinated
Debenture in exchange for such Global Subordinated Debenture. In
addition, the Company may at any time determine that the
Subordinated Debentures shall no longer be represented by a Global
Subordinated Debenture. In such event the Company will execute and
upon receipt of a Company Request evidencing such determination by
the Company, the Trustee will authenticate and deliver the
Subordinated Debentures in definitive registered form without
coupons, in authorized denominations, and in an aggregate principal
amount equal to the principal amount of the Global Subordinated
Debenture in exchange for such Global Subordinated Debenture. Upon
the exchange of the Global Subordinated Debenture for such
Subordinated Debentures in definitive registered form without
coupons, in authorized denominations, the Global Subordinated
Debenture shall be canceled by the Trustee. Such Subordinated
Debentures in definitive registered form issued in exchange for the
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Global Subordinated Debenture shall be registered in such names and
in such authorized denominations as the Depository, pursuant to
instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee. The Trustee shall deliver such
registered certificated Subordinated Debentures in definitive form
in exchange for the Global Subordinated Debenture to the Depository
for delivery to the Persons in whose names such Subordinated
Debentures are so registered.
(d) The Company and the Trustee shall have no responsibility, obligation
or liability with respect to: (x) the maintenance, review or
accuracy of the records of the Depository or of any of its
participating organizations with respect to any ownership interest
in or payments with respect to such Global Subordinated Debentures,
(y) any communication with or delivery of any notice (including
notices of redemption) with respect to the Subordinated Debentures
represented by any Global Subordinated Debenture to any Person
having any ownership interest in such Global Subordinated Debenture
or to any of the Depository's participating organizations or (z) any
payment made on account of any beneficial ownership interest in such
Global Subordinated Debenture.
SECTION 2.5. Interest.
(a) Each Subordinated Debenture will bear interest at the rate of ___%
per annum (the "Coupon Rate") from the original date of issuance or
from the most recent Interest Payment Date (as hereinafter defined)
to which interest has been paid or duly provided for until the
principal thereof becomes due and payable, and on any overdue
principal and (to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of
interest at the Coupon Rate, compounded quarterly, payable (subject
to the provisions of Article Four) quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year (each, an
"Interest Payment Date"), commencing on __________, 1995, to the
Person in whose name such Subordinated Debenture or any predecessor
Subordinated Debenture is registered, at the close of business on
the regular record date for such interest installment, which, with
respect to any Subordinated Debentures of which the Property Trustee
is the Holder or with respect to a Global Subordinated Debenture,
shall be the close of business on the Business Day next preceding
that Interest Payment Date. Notwithstanding the foregoing sentence,
if the Preferred Securities are no longer in book-entry only form or
if pursuant to the Indenture and this First Supplemental Indenture
the Subordinated Debentures are not represented by a Global
Subordinated Debenture, the Company may select a regular record date
for such interest installment which shall conform to the rules of
any securities exchange on which the Subordinated Debentures are
listed, and which shall be at least one Business Day but less than
60 Business Days before an Interest Payment Date.
(b) The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months. Except as
provided in the following sentence, the amount of interest payable
for any period shorter than a full quarterly period for which
interest is computed, will be computed on the basis of the actual
number of days elapsed in such a 30-day month. In the event that
any date on which interest is payable on the Subordinated Debentures
is not a Business Day, then payment of interest payable on such date
will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if made
on such date.
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ARTICLE THREE
REDEMPTION OF THE SUBORDINATED DEBENTURES
SECTION 3.1. Tax Event Redemption.
If a Tax Event has occurred and is continuing and
(a) the Company has received a Redemption Tax Opinion or
(b) after receiving a Dissolution Tax Opinion, the Regular Trustees
shall have been informed by a nationally recognized independent tax
counsel experienced in such matters rendering the Dissolution Tax
Opinion that a No Recognition Opinion cannot be delivered to the
Trust, then, notwithstanding Section 3.2(a) but subject to Section
3.2(b), the Company shall have the right at any time, upon not less
than 30 days nor more than 60 days notice to the Holders of the
Subordinated Debentures, to redeem the Subordinated Debentures, in
whole or in part, for cash at the Optional Redemption Price (as
hereinafter defined) within 90 days following the occurrence of such
Tax Event (the "90 Day Period"), provided that, if at the time there
is available to the Company the opportunity to eliminate within the
90 Day Period, the Tax Event by taking some ministerial action
("Ministerial Action"), such as filing a form or making an election,
or pursuing some other similar reasonable measure which has no
adverse effect on the Company, the Trust or the holders of the Trust
Securities issued by the Trust, the Company shall pursue such
Ministerial Action in lieu of redemption, and provided, further,
that the Company shall have no right to redeem the Subordinated
Debentures while the Trust is pursuing any such Ministerial Action
pursuant to its obligations under the Declaration.
SECTION 3.2. Optional Redemption by Company.
(a) Subject to the provisions of Section 3.2(b) and to the provisions of
Article Eleven of the Indenture, except as otherwise may be
specified in this First Supplemental Indenture, the Company shall
have the right to redeem the Subordinated Debentures, in whole or in
part, at any time and from time to time, on or after ____________,
2000, at a redemption price equal to 100% of the principal amount to
be redeemed plus any accrued and unpaid interest thereon, including
Compounded Interest (as hereinafter defined), if any, to the date of
such redemption (the "Optional Redemption Price"). Any redemption
pursuant to this paragraph will be made upon not less than 30 nor
more than 60 days' notice to the Holder of the Subordinated
Debentures, at the Optional Redemption Price.
(b) If a partial redemption of the Subordinated Debentures would result
in the delisting of the Preferred Securities issued by the Trust
from any national securities exchange or other organization on which
the Preferred Securities are then listed, the Company shall not be
permitted to effect such partial redemption and may only redeem the
Subordinated Debentures in whole.
ARTICLE FOUR
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1. Extension of Interest Payment Period.
So long as the Company is not in default in the payment of interest on the
Subordinated Debentures, the Company shall have the right, at any time during
the term of the Subordinated Debentures, from time to time to defer payments
of interest by extending the interest payment period of such Subordinated
Debentures for up to 20 consecutive quarters (the "Extended Interest Payment
Period"), during which Extended Interest Payment Period no interest shall be
due and payable; provided that no Extended Interest Payment Period may extend
beyond the Maturity Date of the Subordinated Debentures. At the end of the
Extended Interest Payment Period, the Company shall pay all interest accrued
and unpaid on the Subordinated Debentures (together with interest thereon to
the extent permitted by applicable law, at the Coupon Rate, compounded
quarterly ( Compounded Interest")) to the Holders of the Subordinated
Debentures on the record date relating to the Interest Payment Date that
corresponds to the end of such Extended Interest Payment Period. Before the
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termination of any Extended Interest Payment Period, the Company may further
extend such period, provided that such period together with all such further
extensions thereof shall not exceed 20 consecutive quarters, or extend beyond
the Maturity Date of the Subordinated Debentures. Upon the termination of any
Extended Interest Payment Period and upon the payment of all Deferred Interest
then due, the Company may commence a new Extended Interest Payment Period,
subject to the foregoing requirements. No interest shall be due and payable
during an Extended Interest Payment Period, except at the end thereof, but the
Company may prepay at any time all or any portion of the interest accrued
during an Extended Interest Payment Period.
SECTION 4.2. Notice of Extension.
(a) If the Property Trustee is the only registered Holder of the
Subordinated Debentures at the time the Company selects an Extended
Interest Payment Period, the Company shall give written notice to
the Regular Trustees, the Property Trustee and the Trustee of its
selection of such Extended Interest Payment Period one Business Day
before the earlier of (a) the next succeeding date on which
Distributions on the Trust Securities issued by the Trust are
payable, or (b) the date the Trust is required to give notice of the
record date or the date such Distributions are payable to the New
York Stock Exchange or other applicable self-regulatory organization
or to holders of the Preferred Securities issued by the Trust, but
in any event at least one Business Day before such record date.
(b) If the Property Trustee is not the only Holder of the Subordinated
Debentures at the time the Company selects an Extended Interest
Payment Period, the Company shall give the Holders of the
Subordinated Debentures and the Trustee written notice of its
selection of such Extended Interest Payment Period 10 Business Days
before the earlier of (i) the next succeeding Interest Payment Date,
or (ii) the date the Company is required to give notice of the
record or payment date of such interest payment to the New York
Stock Exchange or other applicable self-regulatory organization or
to Holders of the Subordinated Debentures.
(c) The quarter in which any notice is given pursuant to paragraphs (a)
or (b) of this Section 4.2 shall be counted as one of the 20
quarters permitted in the maximum Extended Interest Payment Period
permitted under Section 4.1.
ARTICLE FIVE
EXPENSES
SECTION 5.1. Payment of Expenses.
In connection with the offering, sale and issuance of the Subordinated
Debentures to the Property Trustee in connection with the sale of the Trust
Securities by the Trust and during the existence of the Trust, the Company
shall:
(a) pay for all costs and expenses relating to the offering, sale and
issuance of the Subordinated Debentures, including commissions to
the underwriters payable pursuant to the Underwriting Agreement and
the Pricing Agreement and compensation of the Trustee under the
Indenture in accordance with the provisions of Section 606 of the
Indenture;
(b) pay for all costs and expenses of the Trust (including, but not
limited to, costs and expenses relating to the organization of the
Trust, the offering, sale and issuance of the Trust Securities
(including commissions to the underwriters in connection therewith),
the fees and expenses of the Property Trustee and the Delaware
Trustee, the costs and expenses relating to the operation of the
Trust, including without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services,
expenses for printing and engraving and computing or accounting
equipment, paying agent(s), registrar(s), transfer agent(s),
duplicating, travel and telephone and other telecommunications
expenses and costs and expenses incurred in connection with the
acquisition, financing, and disposition of Trust assets);
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(c) be primarily liable for any indemnification obligations arising with
respect to the Declaration; and
(d) pay any and all taxes, duties, assessments or governmental charges
of whatever nature (other than withholding taxes) imposed on the
Trust or its assets and all liabilities, costs and expenses of the
Trust with respect to such taxes, duties, assessments or
governmental charges.
ARTICLE SIX
SUBORDINATION
SECTION 6.1. Agreement to Subordinate.
The Company covenants and agrees, and each Holder of Subordinated Debentures
issued hereunder by such Holder's acceptance thereof likewise covenants and
agrees, that all Subordinated Debentures shall be issued subject to the
provisions of this Article Six; and each Holder of a Subordinated Debenture,
whether upon original issue or upon transfer or assignment thereof, accepts
and agrees to be bound by such provisions.
The payment by the Company of the principal of and interest on all
Subordinated Debentures issued hereunder shall, to the extent and in the
manner hereinafter set forth, be subordinated and junior in right of payment
to the prior payment in full of all Senior Indebtedness of the Company,
whether outstanding at the date of this Indenture or thereafter incurred.
No provision of this Article Six shall prevent the occurrence of any default
or Event of Default hereunder.
SECTION 6.2. Default on Senior Indebtedness.
In the event and during the continuation of any default by the Company in the
payment of principal, premium, interest or any other payment due on any Senior
Indebtedness of the Company, or in the event that the maturity of any Senior
Indebtedness of the Company has been accelerated because of a default, then,
in either case, no payment shall be made by the Company with respect to the
principal (including redemption payments) of or interest on the Subordinated
Debentures.
In the event that, notwithstanding the foregoing or the provisions of Section
6.3, any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, prohibited by the
foregoing or by Section 6.3, shall be received by the Trustee before all
Senior Indebtedness of the Company is paid in full, or provision is made for
such payment in money in accordance with its terms, such payment or
distribution shall be held in trust for the benefit of and shall be paid over
or delivered to the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior
Indebtedness may have been issued, as their respective interests may appear,
as calculated by the Company, for application to the payment of all Senior
Indebtedness of the Company remaining unpaid to the extent necessary to pay
such Senior Indebtedness in full in money in accordance with its terms, after
giving effect to any concurrent payment or distribution to or for the holders
of such Senior Indebtedness.
SECTION 6.3. Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Company or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, to creditors
upon any dissolution or winding-up or liquidation or reorganization of the
Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due upon all Senior
Indebtedness of the Company shall first be paid in full, or payment thereof
provided for in money in accordance with its terms, before any payment is made
by the Company on account of the principal or interest on the Subordinated
Debentures; and upon any such dissolution or winding-up or liquidation or
reorganization, any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
which the Holders of the Subordinated Debentures or the Trustee would be
entitled to receive from the Company, except for the provisions of this
Article Six, shall be paid by the Company or by any receiver, trustee in
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bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the Holders of the Subordinated Debentures or by the
Trustee under this Indenture if received by them or it, directly to the
holders of Senior Indebtedness of the Company (pro rata to such holders on the
basis of the respective amounts of Senior Indebtedness held by such holders,
as calculated by the Company) or their representative or representatives, or
to the trustee or trustees under any indenture pursuant to which any
instruments evidencing such Senior Indebtedness may have been issued, as their
respective interests may appear, to the extent necessary to pay such Senior
Indebtedness in full, in money or money's worth, after giving effect to any
concurrent payment or distribution to or for the holders of such Senior
Indebtedness, before any payment or distribution is made to the Holders of
Subordinated Debentures or to the Trustee.
For purposes of this Article Six, the words "cash, property or securities"
shall not be deemed to include shares of stock of the Company as reorganized
or readjusted, or securities of the Company or any other corporation provided
for by a plan of reorganization or readjustment, the payment of which is
subordinated at least to the extent provided in this Article Six with respect
to the Subordinated Debentures to the payment of all Senior Indebtedness of
the Company that may at the time be outstanding, provided that (i) such Senior
Indebtedness is assumed by the new corporation, if any, resulting from any
such reorganization or readjustment, and (ii) the rights of the holders of
such Senior Indebtedness are not, without the consent of such holders, altered
by such reorganization or readjustment. The consolidation of the Company
with, or the merger of the Company into, another corporation or the
liquidation or dissolution of the Company following the conveyance or transfer
of its property as an entirety, or substantially as an entirety, to another
corporation upon the terms and conditions provided for in Article Eight of the
Indenture shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section 6.3 if such other corporation
shall, as a part of such consolidation, merger, conveyance or transfer, comply
with the conditions stated in Article Eight of the Indenture. Nothing in
Section 6.2 or in this Section 6.3 shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 606 of the Indenture.
SECTION 6.4. Prior Payment to Senior Indebtedness Upon Acceleration of
Subordinated Debentures.
In the event that the Subordinated Debentures are declared due and payable
before the Maturity Date, then and in such event the holders of the Senior
Indebtedness outstanding at the time such Subordinated Dentures so become due
and payable shall be entitled to receive payment in full of all amounts due or
to become due on or in respect of all Senior Indebtedness, or provision shall
be made for such payment in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of such Senior Indebtedness, before the Holders of
the Subordinated Debentures are entitled to receive any principal of or
interest on the Subordinated Debentures (including any payment which may be
payable by reason of the payment of any other indebtedness of the Company
being subordinated to the payment of the Subordinated Debentures).
In the event that, notwithstanding the foregoing, the Company shall make any
payment of principal or interest on the Subordinated Debentures to the Trustee
or any Holder prohibited by the foregoing provisions of this Section, and if
such fact shall, at or prior to the time of such payment, have been made known
to the Trustee or, as the case may be, such Holder, then and in such event
such payment shall be paid over and delivered forthwith to the Company.
SECTION 6.5. Subrogation.
Subject to the payment in full of all amounts due or to become due on or in
respect of Senior Indebtedness of the Company, the rights of the Holders of
the Subordinated Debentures shall be subrogated (equally and ratably with the
Holders of all indebtedness of the Company which by its express terms is
subordinated to indebtedness of the Company to substantially the same extent
as the Subordinated Debentures are subordinated and is entitled to like rights
of subrogation) to the rights of the holders of such Senior Indebtedness to
receive payments or distributions of cash, property or securities of the
Company applicable to such Senior Indebtedness until the principal of and
interest on the Subordinated Debentures shall be paid in full; and, for the
purposes of such subrogation, no payments or distributions to the holders of
such Senior Indebtedness of any cash, property or securities to which the
Holders of the Subordinated Debentures or the Trustee would be entitled except
for the provisions of this Article Six, and no payment over pursuant to the
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provisions of this Article Six to or for the benefit of the holders of such
Senior Indebtedness by Holders of the Subordinated Debentures or the Trustee,
shall, as between the Company, its creditors other than Holders of Senior
Indebtedness of the Company, and the holders of the Subordinated Debentures,
be deemed to be a payment by the Company to or on account of such Senior
Indebtedness. It is understood that the provisions of this Article Six are
and are intended solely for the purposes of defining the relative rights of
the Holders of the Subordinated Debentures, on the one hand, and the holders
of such Senior Indebtedness on the other hand.
Nothing contained in this Article Six or elsewhere in this Indenture or in the
Subordinated Debentures is intended to or shall impair, as between the
Company, its creditors other than the holders of Senior Indebtedness of the
Company, and the Holders of the Subordinated Debentures, the obligation of the
Company, which is absolute and unconditional, to pay to the Holders of the
Subordinated Debentures the principal of and interest on the Subordinated
Debentures as and when the same shall become due and payable in accordance
with their terms, or is intended to or shall affect the relative rights of the
Holders of the Subordinated Debentures and creditors of the Company, other
than the holders of Senior Indebtedness of the Company, nor shall anything
herein or therein prevent the Trustee or the Holder of any Subordinated
Debenture from exercising all remedies otherwise permitted by applicable law
upon default under the Indenture, subject to the rights, if any, under this
Article Six of the holders of such Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.
Upon any payment or distribution of assets of the Company referred to in this
Article Six, the Trustee, subject to the provisions of Section 602 of the
Indenture, and the Holders of the Subordinated Debentures shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction in
which such dissolution, winding-up, liquidation or reorganization proceedings
are pending, or a certificate of the receiver, trustee in bankruptcy,
liquidation trustee, agent or other Person making such payment or
distribution, delivered to the Trustee or to the Holders of the Subordinated
Debentures, for the purposes of ascertaining the Persons entitled to
participate in such distribution, the holders of Senior Indebtedness and other
indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto
or to this Article Six.
SECTION 6.6. Trustee to Effectuate Subordination.
Each Holder of Subordinated Debentures by such Holder's acceptance thereof
authorizes and directs the Trustee on such Holder's behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article Six and appoints the Trustee such Holder's attorney-in-fact for
any and all such purposes.
SECTION 6.7. Notice by the Company.
The Company shall give prompt written notice to a Responsible Officer of the
Trustee of any fact known to the Company that would prohibit the making of any
payment of moneys to or by the Trustee in respect of the Subordinated
Debentures pursuant to the provisions of this Article Six. Notwithstanding
the provisions of this Article Six or any other provision of the Indenture and
this First Supplemental Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts that would prohibit the making of any
payment of moneys to or by the Trustee in respect of the Subordinated
Debentures pursuant to the provisions of this Article Six, unless and until a
Responsible Officer of the Trustee shall have received written notice thereof
from the Company or a holder or holders of Senior Indebtedness or from any
trustee therefor; and before the receipt of any such written notice, the
Trustee, subject to the provisions of Section 602 of the Indenture, shall be
entitled in all respects to assume that no such facts exist; provided,
however, that, if the Trustee shall not have received the notice provided for
in this Section 6.7 at least two Business Days prior to the date upon which by
the terms hereof any money may become payable for any purpose (including,
without limitation, the payment of the principal of (or premium, if any) or
interest on any Subordinated Debenture), then, anything herein contained to
the contrary notwithstanding, the Trustee shall have full power and authority
to receive such money and to apply the same to the purposes for which they
were received, and shall not be affected by any notice to the contrary that
may be received by it within two Business Days prior to such date.
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The Trustee, subject to the provisions of Section 602 of the Indenture, shall
be entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness of the Company (or
a trustee on behalf of such holder) to establish that such notice has been
given by a holder of such Senior Indebtedness or a trustee on behalf of any
such holder or holders. In the event that the Trustee determines in good
faith that further evidence is required with respect to the right of any
Person as a holder of such Senior Indebtedness to participate in any payment
or distribution pursuant to this Article Six, the Trustee may request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as to
the amount of such Senior Indebtedness held by such Person, the extent to
which such Person is entitled to participate in such payment or distribution
and any other facts pertinent to the rights of such Person under this Article
Six, and, if such evidence is not furnished, the Trustee may defer any payment
to such Person pending judicial determination as to the right of such Person
to receive such payment.
SECTION 6.8. Rights of the Trustee; Holders of Senior Indebtedness.
The Trustee in its individual capacity shall be entitled to all the rights set
forth in this Article Six in respect of any Senior Indebtedness at any time
held by it, to the same extent as any other holder of Senior Indebtedness, and
nothing in this Indenture shall deprive the Trustee of any of its rights as
such holder.
With respect to the holders of Senior Indebtedness of the Company, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Six, and no implied covenants or
obligations with respect to the holders of such Senior Indebtedness shall be
read into this Indenture against the Trustee. The Trustee shall not be deemed
to owe any fiduciary duty to the holders of such Senior Indebtedness and,
subject to the provisions of Section 602 of the Indenture, the Trustee shall
not be liable to any holder of such Senior Indebtedness if it shall pay over
or deliver to Holders of Subordinated Debentures, the Company or any other
Person money or assets to which any holder of such Senior Indebtedness shall
be entitled by virtue of this Article Six or otherwise.
SECTION 6.9. Subordination May Not Be Impaired.
No right of any present or future holder of any Senior Indebtedness of the
Company to enforce subordination as herein provided shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such holder, or
by any noncompliance by the Company with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof that any such holder
may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness of the Company may, at any time and from time
to time, without the consent of or notice to the Trustee or the Holders of the
Subordinated Debentures, without incurring responsibility to the Holders of
the Subordinated Debentures and without impairing or releasing the
subordination provided in this Article Six or the obligations hereunder of the
Holders of the Subordinated Debentures to the holders of such Senior
Indebtedness, do any one or more the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, such
Senior Indebtedness, or otherwise amend or supplement in any manner such
Senior Indebtedness or any instrument evidencing the same or any agreement
under which such Senior Indebtedness is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing such Senior Indebtedness; (iii) release any Person liable in any
manner for the collection of such Senior Indebtedness; and (iv) exercise or
refrain from exercising any rights against the Company and any other Person.
ARTICLE SEVEN
COVENANT TO LIST ON EXCHANGE
SECTION 7.1. Listing on an Exchange.
If the Subordinated Debentures are to be issued as a Global Subordinated
Debenture in connection with the distribution of the Subordinated Debentures
to the holders of the Preferred Securities issued by the Trust upon a
Dissolution Event, the Company will use its best efforts to list such
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Subordinated Debentures on the New York Stock Exchange or on such other
exchange as the Preferred Securities are then listed.
ARTICLE EIGHT
FORM OF SUBORDINATED DEBENTURE
SECTION 8.1. Form of Subordinated Debenture.
The Subordinated Debentures and the Trustee's Certificate of Authentication to
be endorsed thereon are to be substantially in the following forms:
(FORM OF FACE OF SUBORDINATED DEBENTURE)
{IF THE SUBORDINATED DEBENTURE IS TO BE A GLOBAL SUBORDINATED DEBENTURE,
INSERT - This Subordinated Debenture is a Global Subordinated Debenture within
the meaning of the Indenture hereinafter referred to and is registered in the
name of a Depository or a nominee of a Depository. This Subordinated
Debenture is exchangeable for Subordinated Debentures registered in the name
of a person other than the Depository or its nominee only in the limited
circumstances described in the Indenture, and no transfer of this Subordinated
Debenture (other than a transfer of this Subordinated Debenture as a whole by
the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository) may be
registered except in limited circumstances.
Unless this Subordinated Debenture is presented by an authorized
representative of The Depository Trust Company, a New York corporation ( DTC")
to the issuer or its agent for registration of transfer, exchange or payment,
and any Subordinated Debenture issued is registered in the name of Cede & Co.
or such other name as requested by an authorized representative of DTC (and
any payment hereon is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since
the registered owner hereof, Cede & Co., has an interest herein.}
No. __________________
$_____________
CUSIP No._____________
____________________
____% SUBORDINATED DEFERRABLE INTEREST SUBORDINATED DEBENTURE
DUE 2025
Pacific Telesis Group, a Nevada corporation (the "Company", which term
includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to _______________, or
registered assigns, the principal sum of _____________ Dollars on
____________, 2025, (or on such later date before ______, 2044, if the Company
elects to extend the Maturity Date as further described herein), and to pay
interest on said principal sum from ____________, 1995, or from the most
recent interest payment date (each such date, an "Interest Payment Date") to
which interest has been paid or duly provided for, quarterly (subject to
deferral as set forth herein) in arrears on March 31, June 30, September 30
and December 31 of each year commencing _____________, 1995, at the rate of
_____% per annum until the principal hereof shall have become due and payable,
and on any overdue principal and (without duplication and to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest at the same rate per annum compounded quarterly. The
amount of interest payable on any Interest Payment Date shall be computed on
the basis of a 360-day year of twelve 30-day months. In the event that any
date on which interest is payable on this Subordinated Debenture is not a
Business Day, then payment of interest payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on such date. The interest installment so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in the Indenture, be paid to the person in whose name this
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Subordinated Debenture (or one or more Predecessor Subordinated Debentures, as
defined in said Indenture) is registered at the close of business on the
regular record date for such interest installment, which shall be the close of
business on the Business Day next preceding such Interest Payment Date. {IF
PURSUANT TO THE PROVISIONS OF THE INDENTURE THE SUBORDINATED DEBENTURES ARE NO
LONGER REPRESENTED BY A GLOBAL SUBORDINATED DEBENTURE -- which shall be the
close of business on the ____ Business Day next preceding such Interest
Payment Date.} Any such interest installment not punctually paid or duly
provided for shall forthwith cease to be payable to the registered Holders on
such regular record date and may be paid to the Person in whose name this
Subordinated Debenture (or one or more Predecessor Subordinated Debentures) is
registered at the close of business on a special record date to be fixed by
the Trustee for the payment of such defaulted interest, notice whereof shall
be given to the registered Holders of this series of Subordinated Debentures
not less than 10 days prior to such special record date, or may be paid at any
time in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Subordinated Debentures may be listed, and
upon such notice as may be required by such exchange, all as more fully
provided in the Indenture. The principal of and the interest on this
Subordinated Debenture shall be payable at the office or agency of the Trustee
maintained for that purpose in any coin or currency of the United States of
America that at the time of payment is legal tender for payment of public and
private debts; provided, however, that payment of interest may be made at the
option of the Company by check mailed to the registered Holder at such address
as shall appear in the Security Register. Notwithstanding the foregoing, so
long as the Holder of this Subordinated Debenture is the Property Trustee, the
payment of the principal of and interest on this Subordinated Debenture will
be made by wire transfer in immediately available funds at such place and to
such account as may be designated by the Property Trustee. Payment of
principal of the Subordinated Debentures will only be made upon surrender of
the Subordinated Debentures to the Trustee.
The indebtedness evidenced by this Subordinated Debenture is, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of all Senior Indebtedness, and this Subordinated
Debenture is issued subject to the provisions of the Indenture with respect
thereto. Each Holder of this Subordinated Debenture, by accepting the same,
(a) agrees to and shall be bound by such provisions, (b) authorizes and
directs the Trustee on his or her behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination so
provided and (c) appoints the Trustee his or her attorney-in-fact for any and
all such purposes. Each Holder hereof, by his or her acceptance hereof,
hereby waives all notice of the acceptance of the subordination provisions
contained herein and in the Indenture by each holder of Senior Indebtedness,
whether now outstanding or hereafter incurred, and waives reliance by each
such holder upon said provisions.
This Subordinated Debenture shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any
purpose until the Certificate of Authentication hereon shall have been signed
by or on behalf of the Trustee.
The provisions of this Subordinated Debenture are continued on the reverse
side hereof and such continued provisions shall for all purposes have the same
effect as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed.
Dated___________________
PACIFIC TELESIS GROUP
By______________________
{ }
Attest:
By_____________________
Secretary
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(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Subordinated Debentures of the series of Subordinated
Debentures described in the within-mentioned Indenture.
The First National Bank of Chicago as Trustee
The First National Bank of Chicago By:________________________
as Trustee or as Authenticating Agent
By:_______________________________ By:________________________
Authorized Officer Authorized Officer
(FORM OF REVERSE OF SUBORDINATED DEBENTURE)
This Subordinated Debenture is one of a duly authorized series of Subordinated
Debentures of the Company (herein sometimes referred to as the Subordinated
Debentures"), specified in the Indenture, all issued or to be issued in one or
more series under and pursuant to an Indenture dated as of ______________,
1995, duly executed and delivered between the Company and The First National
Bank of Chicago, as Trustee (the "Trustee"), as supplemented by the First
Supplemental Indenture dated as of ____________, 1995, between the Company and
the Trustee (the Indenture as so supplemented, the "Indenture"), to which
Indenture and all indentures supplemental thereto reference is hereby made for
a description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the Holders of the
Subordinated Debentures, and to all of which provisions the Holder of this
Subordinated Debenture, by acceptance hereof, assents and agrees. By the
terms of the Indenture, the Subordinated Debentures are issuable in series
that may vary as to amount, date of maturity, rate of interest and in other
respects as provided in the Indenture. This series of Subordinated Debentures
is limited in aggregate principal amount as specified in said First
Supplemental Indenture.
Except as provided in the next paragraph, the Subordinated Debentures may not
be redeemed by the Company prior to __________, 2000. The Company shall have
the right to redeem this Subordinated Debenture at the option of the Company,
without premium or penalty, in whole or in part at any time and from time to
time on or after __________, 2000 (an Optional Redemption"), at a redemption
price equal to 100% of the principal amount plus any accrued but unpaid
interest, including any Compounded Interest, if any, to the date of such
redemption (the Optional Redemption Price"). Any redemption pursuant to this
paragraph will be made upon not less than 30 nor more than 60 days' notice, at
the Optional Redemption Price.
If, at any time, a Tax Event (as defined below) shall occur or be continuing
after receipt of a Dissolution Tax Opinion (as defined below) and (i) the
Regular Trustees and the Company shall have received an opinion (a Redemption
Tax Opinion") of a nationally recognized independent tax counsel experienced
in such matters that, as a result of a Tax Event, there is more than an
insubstantial risk that the Company would be precluded from deducting the
interest on the Subordinated Debentures for United States federal income tax
purposes even after the Subordinated Debentures were distributed to the
Holders of Preferred Securities and Common Securities in liquidation of such
holder's interest in the Trust as set forth in the Declaration of Trust or
(ii) the Regular Trustees shall have been informed by such tax counsel that a
No Recognition Opinion (as defined below) cannot be delivered, the Company
shall have the right at any time, upon not less than 30 nor more than 60 days'
notice, to redeem the Subordinated Debentures in whole or in part for cash at
the Optional Redemption Price within 90 days following the occurrence of such
Tax Event; provided, however, that, if at that time there is available to the
Company or the Trust the opportunity to eliminate, within such 90 day period,
the Tax Event by taking some ministerial action ( Ministerial Action"), such
as filing a form or making an election, or pursuing some other similar
reasonable measure, which has no adverse effect on the Trust, the Company or
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the Holders of the Preferred Securities, the Company or the Trust will pursue
such measure in lieu of redemption and provided further that the Company shall
have no right to redeem the Subordinated Debentures while the Trust is
pursuing any such Ministerial Action.
Tax Event" means that the Regular Trustees shall have obtained an opinion of
nationally recognized independent tax counsel experienced in such matters (a
Dissolution Tax Opinion") to the effect that on or after __________, 1995, as
a result of (a) any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein,
(b) any amendment to, or change in, an interpretation or application of any
such laws or regulations by any legislative body, court, governmental agency
or regulatory authority (including the enactment of any legislation and the
publication of any judicial decision or regulatory determination), (c) any
interpretation or pronouncement that provides for a position with respect to
such laws or regulations that differs from the theretofore generally accepted
position or (d) any action taken by any governmental agency or regulatory
authority, which amendment or change is enacted, promulgated, issued or
announced or which interpretation or pronouncement is issued or announced or
which action is taken, in each case on or after __________, 1995, there is
more than an insubstantial risk that (i) the Trust would be subject to United
States federal income tax with respect to income accrued or received on the
Subordinated Debentures, (ii) the Trust would be subject to more than a de
minimis amount of taxes, duties or other governmental charges or (iii)
interest payable by the Company to the Trust on the Subordinated Debentures
would not be deductible by the Company for United States federal income tax
purposes.
"No Recognition Opinion" means an opinion of a nationally recognized
independent tax counsel experienced in such matters, which opinion may rely on
published revenue rulings of the Internal Revenue Service, to the effect that
the Holders of the Preferred Securities will not recognize any gain or loss
for United States federal income tax purposes as a result of a dissolution of
the Trust and distribution of the Subordinated Debentures as provided in the
Declaration of Trust.
If the Debentures are only partially redeemed by the Company pursuant to an
Optional Redemption or as a result of a Tax Event as described above, the
Debentures will be redeemed pro rata or by lot or in some other equitable
manner determined by the Trustee. Notwithstanding the foregoing, if a partial
redemption of the Subordinated Debentures would result in the delisting of the
Preferred Securities by any national securities exchange or other organization
on which the Preferred Securities are then listed, the Company shall not be
permitted to effect such partial redemption and will only redeem the
Subordinated Debentures in whole.
In the event of redemption of this Subordinated Debenture in part only, a new
Subordinated Debenture or Subordinated Debentures of this series for the
unredeemed portion hereof will be issued in the name of the Holder hereof upon
the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have occurred
and be continuing, the principal of all of the Subordinated Debentures may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions and limitations provided
in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee, with
the consent of the Holders of not less than a majority in aggregate principal
amount of the Subordinated Debentures of each series affected at the time
outstanding, as defined in the Indenture, to execute supplemental indentures
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any supplemental
indenture or of modifying in any manner the rights of the Holders of the
Subordinated Debentures; provided, however, that no such supplemental
indenture shall (i) extend the fixed maturity of any Subordinated Debentures
of any series, or reduce the principal amount thereof, or reduce the rate or
extend the time of payment of interest thereon, or reduce any premium payable
upon the redemption thereof, without the consent of the Holder of each
Subordinated Debenture so affected, or (ii) reduce the aforesaid percentage of
Subordinated Debentures, the Holders of which are required to consent to any
such supplemental indenture, without the consent of the Holders of each
Subordinated Debenture then outstanding and affected thereby. The Indenture
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also contains provisions permitting the Holders of a majority in aggregate
principal amount of the Subordinated Debentures of any series at the time
outstanding affected thereby, on behalf of all of the Holders of the
Subordinated Debentures of such series, to waive any past default in the
performance of any of the covenants contained in the Indenture, or established
pursuant to the Indenture with respect to such series, and its consequences,
except a default in the payment of the principal of or premium, if any, or
interest on any of the Subordinated Debentures of such series. Any such
consent or waiver by the registered Holder of this Subordinated Debenture
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such Holder and upon all future Holders and owners of this Subordinated
Debenture and of any Subordinated Debenture issued in exchange herefor or in
place hereof (whether by registration of transfer or otherwise), irrespective
of whether or not any notation of such consent or waiver is made upon this
Subordinated Debenture.
No reference herein to the Indenture and no provision of this Subordinated
Debenture or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest on this Subordinated Debenture at the time and
place and at the rate and in the money herein prescribed.
So long as the Company is not in default in the payment of interest on the
Subordinated Debentures, the Company shall have the right at any time during
the term of the Subordinated Debentures from time to time to extend the
interest payment period of such Subordinated Debentures to up to 20
consecutive quarters not to extend beyond the Maturity Date of the
Subordinated Debentures (an "Extended Interest Payment Period"), at the end of
which period the Company shall pay all interest then accrued and unpaid
(together with interest thereon at the rate specified for the Subordinated
Debentures to the extent that payment of such interest is enforceable under
applicable law). In the event that Pacific Telesis exercises this right to
defer interest payments, then, prior to the payment of all accrued interest on
outstanding Subordinated Debentures, (a) Pacific Telesis shall not declare or
pay dividends on, or make a distribution with respect to, or redeem, purchase
or acquire, or make a liquidation payment with respect to, any of its capital
stock and (b) Pacific Telesis shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by Pacific Telesis that rank pari passu with or junior to
the Subordinated Debentures; provided, however, that restriction (a) above
does not apply to any stock dividends paid by Pacific Telesis, or any of its
subsidiaries, where the dividend stock is the same stock as that on which the
dividend is being paid. Before the termination of any such Extended Interest
Payment Period, the Company may further extend such Extended Interest Payment
Period, provided that such Extended Interest Payment Period together with all
such further extensions thereof shall not exceed 20 consecutive quarters and
shall not extend beyond the Maturity Date of the Subordinated Debentures. At
the termination of any such Extended Interest Payment Period and upon the
payment of all accrued and unpaid interest and any additional amounts then
due, the Company may commence a new Extended Interest Payment Period.
As provided in the Indenture and subject to certain limitations therein set
forth, this Subordinated Debenture is transferable by the registered Holder
hereof on the Security Register of the Company, upon surrender of this
Subordinated Debenture for registration of transfer at the Corporate Trust
Office of the Trustee accompanied by a written instrument or instruments of
transfer in form satisfactory to the Company or the Trustee duly executed by
the registered Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Subordinated Debentures of authorized denominations
and for the same aggregate principal amount and series will be issued to the
designated transferee or transferees. No service charge will be made for any
such transfer, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this Subordinated
Debenture, the Company, the Trustee, any paying agent and any Security
Registrar may deem and treat the registered holder hereof as the absolute
owner hereof (whether or not this Subordinated Debenture shall be overdue and
notwithstanding any notice of ownership or writing hereon made by anyone other
than the Security Registrar) for the purpose of receiving payment of or on
account of the principal hereof and premium, if any, and interest due hereon
and for all other purposes, and neither the Company nor the Trustee nor any
paying agent nor any Subordinated Debenture Registrar shall be affected by any
notice to the contrary.
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No recourse shall be had for the payment of the principal of or the interest
on this Subordinated Debenture, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether
by virtue of any constitution, statute or rule of law, or by the enforcement
of any assessment or penalty or otherwise, all such liability being, by the
acceptance hereof and as part of the consideration for the issuance hereof,
expressly waived and released.
{The Subordinated Debentures of this series are issuable only in registered
form without coupons in denominations of $25 and any integral multiple thereof
provided that this Global Subordinated Debenture is exchangeable for
Subordinated Debentures in definitive form only under certain limited
circumstances set forth in the Indenture. Subordinated Debentures of this
series so issued are issuable only in registered form without coupons in
denominations of $25 and any integral multiple thereof.} As provided in the
Indenture and subject to certain limitations {herein and} therein set forth,
Subordinated Debentures of this series {so issued} are exchangeable for a like
aggregate principal amount of Subordinated Debentures of this series of a
different authorized denomination, as requested by the Holder surrendering the
same. All terms used in this Subordinated Debenture that are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
ARTICLE NINE
ORIGINAL ISSUE OF SUBORDINATED DEBENTURES
SECTION 9.1. Original Issue of Subordinated Debentures.
Subordinated Debentures in the aggregate principal amount of $________ may,
upon execution of this First Supplemental Indenture, be executed by the
Company and delivered to the Trustee for authentication, and the Trustee shall
thereupon authenticate and deliver said Subordinated Debentures to or upon the
written order of the Company, signed by its Chairman, its President, its Chief
Financial Officer, or any Executive Vice President or Vice President and its
Treasurer or an Assistant Treasurer, without any further action by the
Company.
ARTICLE TEN
MISCELLANEOUS
SECTION 10.1. Ratification of Indenture.
The Indenture, as supplemented by this First Supplemental Indenture, is in all
respects ratified and confirmed, and this First Supplemental Indenture shall
be deemed part of the Indenture in the manner and to the extent herein and
therein provided.
SECTION 10.2. Trustee Not Responsible for Recitals.
The recitals herein contained are made by the Company and not by the Trustee,
and the Trustee assumes no responsibility for the correctness thereof. The
Trustee makes no representation as to the validity or sufficiency of this
First Supplemental Indenture.
SECTION 10.3. Governing Law.
This First Supplemental Indenture and each Subordinated Debenture shall be
deemed to be a contract made under the internal laws of the State of
California, and for all purposes shall be construed in accordance with the
laws of said State.
SECTION 10.4. Separability.
In case any one or more of the provisions contained in this First Supplemental
Indenture or in the Subordinated Debentures shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provisions of this First
Supplemental Indenture or of the Subordinated Debentures, but this First
Supplemental Indenture and the Subordinated Debentures shall be construed as
if such invalid or illegal or unenforceable provision had never been contained
herein or therein.
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SECTION 10.5. Counterparts.
This First Supplemental Indenture may be executed in any number of
counterparts each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, on the date or dates indicated in the
acknowledgments and as of the day and year first above written.
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PACIFIC TELESIS GROUP
By___________________________
Attest:
________________________
Secretary
The First National Bank of Chicago
as Trustee
By_____________________________
Attest:
__________________________________
Trust Officer
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EXHIBIT 4-K
-----------
PREFERRED SECURITIES GUARANTEE AGREEMENT
====================================
PREFERRED SECURITIES GUARANTEE AGREEMENT
PACIFIC TELESIS FINANCING { }
Dated as of __________, 1995
====================================
1
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CROSS REFERENCE TABLE*
Section of Section of
Trust Indenture Act Guarantee
of 1939, as amended Agreement
310(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(a)
310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(a)
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
311(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
312(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
313(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
313(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
313(d) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(d); 3.2(a)
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7(a)
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(c)
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(d)
315(e) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7(c)
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6
316(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9
316(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6
317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.10
317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7(b)
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)
_________________________
* This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not have any bearing upon the interpretation of any
of its terms or provisions.
2
<PAGE>
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of _____________,
1995, is executed and delivered by Pacific Telesis Group, a Nevada corporation
(the "Guarantor"), and The First National Bank of Chicago, a national banking
association, as trustee (the "Preferred Guarantee Trustee"), for the benefit
of the Holders (as defined herein) from time to time of the Preferred
Securities (as defined herein) of Pacific Telesis Financing { }, a Delaware
statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of __________, among the trustees of the Issuer named
therein, the Guarantor as Sponsor and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof $__________ aggregate stated liquidation amount of
Preferred Securities designated the ____% Trust Originated Preferred
Securities (the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred Securities,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth in this Guarantee Agreement, to pay to the Holders of the Preferred
Securities the Guarantee Payments (as defined herein) and to make certain
other payments on the terms and conditions set forth herein; and
WHEREAS, the Guarantor is also executing and delivering a guarantee agreement
(the "Common Securities Guarantee Agreement") in substantially identical terms
to this Guarantee Agreement for the benefit of the holders of the Common
Securities (as defined herein) except that if an Event of Default (as defined
in the Indenture (as defined herein)), has occurred and is continuing, the
rights of holders of the Common Securities to receive Guarantee Payments under
the Common Securities Guarantee are subordinated to the rights of Holders of
Preferred Securities to receive Guarantee Payments under this Guarantee
Agreement.
NOW, THEREFORE, in consideration of the purchase by each Holder of Preferred
Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee Agreement for
the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1Definitions and Interpretation
In this Guarantee Agreement, unless the context otherwise requires:
(a) Capitalized terms used in this Guarantee Agreement but not defined
in the preamble above have the respective meanings assigned to them
in this Section 1.1;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented
or amended from time to time;
(d) all references in this Guarantee Agreement to Articles and Sections
are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement or unless the context otherwise requires; and
(f)a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act of 1933, as amended, or any successor rule thereunder.
"Authorized Officer" of a Person means any Person that is authorized to bind
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such Person.
"Business Day" means any day other than a day on which banking institutions in
New York, New York are authorized or required by law to close.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer.
"Covered Person" means any Holder or beneficial owner of Preferred Securities.
"Direction" by a Person means a written direction signed:
(a) if the Person is a natural person, by that Person; or
(b) in any other case in the name of such Person by one or more
Authorized Officers of that Person.
"Distribution" means the periodic distribution and other payments payable to
Holders of Preferred Securities in accordance with the terms of the Preferred
Securities set forth in Exhibit A to the Declaration.
"Guarantee Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Guarantee Agreement.
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Preferred Securities, to the extent not paid
or made by the Issuer: (i) any accrued and unpaid Distributions that are
required to be paid on such Preferred Securities to the extent the Issuer
shall have funds available therefor, (ii) the redemption price, including all
accrued and unpaid Distributions to the date of redemption (the "Redemption
Price")to the extent the Issuer has funds available therefor, with respect to
any Preferred Securities called for redemption by the Issuer, and (iii) upon a
voluntary or involuntary dissolution, winding-up or termination of the Issuer
(other than in connection with the distribution of Subordinated Debentures to
the Holders in exchange for Preferred Securities as provided in the
Declaration or the redemption of all the Preferred Securities upon the
maturity or redemption of the Subordinated Debentures), the lesser of (a) the
aggregate of the liquidation amount and all accrued and unpaid Distributions
on the Preferred Securities to the date of payment, and (b) the amount of
assets of the Issuer remaining available for distribution to Holders in
liquidation of the Issuer (in either case, the "Liquidation Distribution").
If an event of default under the Indenture has occurred and is continuing, the
rights of holders of the Common Securities to receive payments under the
Common Securities Guarantee Agreement are subordinated to the rights of
Holders of Preferred Securities to receive Guarantee Payments.
"Holder" shall mean any registered owner shown on the Register of the Issuer
of any Preferred Securities.
"Indemnified Person" means the Preferred Guarantee Trustee, any Affiliate of
the Preferred Guarantee Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives or agents of the Preferred
Guarantee Trustee.
"Indenture" means the Indenture dated as of ___________, 1995, as supplemented
by the First Supplemental Indenture dated as of ___________, 1995, each being
among Pacific Telesis Group as issuer (the "Subordinated Debenture Issuer")
and The First National Bank of Chicago, as trustee and any indenture
supplemental thereto pursuant to which certain subordinated debt securities of
the Subordinated Debenture Issuer are to be issued to the Property Trustee of
the Issuer.
"Majority in liquidation amount of the Preferred Securities" means, except as
provided by the Trust Indenture Act, a vote by Holder(s) of Preferred
Securities, voting separately as a class, of more than 50% of the liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date
upon which the voting percentages are determined) of all Preferred Securities.
In determining whether the Holders of the requisite amount of Preferred
Securities have voted, if the Preferred Securities remain in the form of
global securities, Holders shall be deemed to be the Persons who own
beneficial interests in such global securities as reflected on the books of
The Depository Trust Company, or any successor depository, or on the books of
a Person maintaining an account with such depository, directly or indirectly
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(in each case in accordance with the rules of the depository) and Preferred
Securities which are owned by the Guarantor or any Affiliate of the Guarantor
or any other obligor on the Preferred Securities shall be disregarded for the
purpose of any such determination
"Officer's Certificate" means, with respect to any Person, a certificate
signed by an Authorized Officer of such Person. Any Officer's Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Guarantee Agreement shall include:
(a) a statement that such officer signing the Officer's Certificate has
read the covenant or condition and the definition relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation on which the statements or opinions contained in such
Officer's Certificate are based;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation, estate,
partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency, authority or political subdivision thereof.
"Preferred Guarantee Trustee" means The First National Bank of Chicago until a
Successor Preferred Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Guarantee Agreement and thereafter
means each such Successor Preferred Guarantee Trustee.
"Responsible Officer" means, with respect to the Preferred Guarantee Trustee,
any vice-president, any assistant vice-president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, any trust officer or
assistant trust officer or any other officer of the Corporate Trust Department
of the Preferred Guarantee Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.
"66 2/3% in liquidation amount of the Preferred Securities" means, except as
provided by the Trust Indenture Act, a vote by Holder(s) of Preferred
Securities, voting separately as a class, of 66 2/3% of the liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all Preferred Securities. In
determining whether the Holders of the requisite amount of Preferred
Securities have voted, if the Preferred Securities remain in the form of
global securities, Holders shall be deemed to be the Persons who own
beneficial interests in such global securities as reflected on the books of
The Depository Trust Company, or any successor depository, or on the books of
a Person maintaining an account with such depository, directly or indirectly
(in each case in accordance with the rules of the depository) and Preferred
Securities which are owned by the Guarantor or any Affiliate of the Guarantor
or any other obligor on the Preferred Securities shall be disregarded for the
purpose of any such determination
"Subordinated Debentures" means the series of subordinated debt securities of
the Guarantor designated the ___% Subordinated Deferrable Interest Debentures
due ____ held by the Property Trustee (as defined in the Declaration) of the
Issuer.
Subsidiary" means any corporation of which at the time of determination the
Guarantor, directly and/or indirectly through one or more Subsidiaries owns
50% or more of the shares of the voting stock of such corporation.
"Successor Preferred Guarantee Trustee" means a successor Preferred Guarantee
Trustee possessing the qualifications to act as Preferred Guarantee Trustee
under Section 4.1.
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"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended to the
date of this Guarantee Agreement.
"25% in liquidation amount of the Preferred Securities" means, except as
provided by the Trust Indenture Act, a vote by Holder(s) of Preferred
Securities, voting separately as a class, of 25% of the liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all Preferred Securities. In
determining whether the Holders of the requisite amount of Preferred
Securities have voted, if the Preferred Securities remain in the form of
global securities, Holders shall be deemed to be the Persons who own
beneficial interests in such global securities as reflected on the books of
The Depository Trust Company, or any successor depository, or on the books of
a Person maintaining an account with such depository, directly or indirectly
(in each case in accordance with the rules of the depository) and Preferred
Securities which are owned by the Guarantor or any Affiliate of the Guarantor
or any other obligor on the Preferred Securities shall be disregarded for the
purpose of any such determination
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee
Agreement and shall, to the extent applicable, be governed by such
provisions.
(b) If and to the extent that any provision of this Guarantee agreement
limits, qualifies or conflicts with the duties imposed by Section
310 to 317, inclusive, of the Trust Indenture Act, such imposed
duties shall control.
SECTION 2.2 Lists of Holders of Securities.
(a) The Guarantor will furnish or cause to be furnished to the Preferred
Guarantee Trustee, not less than 45 days nor more than 60 days after
each date (month and day) that is a Distribution payment date under
the Declaration, but in no event less frequently than semiannually,
and at such other times as the Preferred Guarantee Trustee may
request in writing, within 30 days after receipt by the Guarantor of
any such request, a list in such form as the Preferred Guarantee
Trustee may reasonably require containing all the information in the
possession or control of the Guarantor, as to the names and
addressees of the Holders of Preferred Securities, obtained since
the date as of which the next previous list, if any, was furnished.
Any such list may be dated as of a date not more than 15 days prior
to the time such information is furnished and need not include
information received after such date.
(b) The Preferred Guarantee Trustee shall comply with its obligations
under Section 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3 Reports by the Preferred Guarantee Trustee.
Within 60 days after May 15 of each year, the Preferred Guarantee Trustee
shall provide to the Holders of the Preferred Securities such reports as are
required by Section 313 of the Trust Indenture Act, if any, in the form and in
the manner provided by Section 313 of the Trust Indenture Act. The Preferred
Guarantee Trustee shall also comply with the requirements of Section 313(d) of
the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee.
The Guarantor shall provide to the Preferred Guarantee Trustee such documents,
reports and information as required by Section 314 (if any) and the compliance
certificate required by Section 314 of the Trust Indenture Act in the form, in
the manner and at the times required by Section 314 of the Trust Indenture
Act.
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SECTION 2.5 Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Preferred Guarantee Trustee such evidence
of compliance with any conditions precedent, if any, provided for in this
Guarantee Agreement that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) may be given in the form of
an Officer's Certificate.
SECTION 2.6 Guarantee Events of Default; Waiver.
The Holders of a Majority in liquidation amount of Preferred Securities may,
by vote, on behalf of the Holders of all of the Preferred Securities, waive
any past Guarantee Event of Default and its consequences. Upon such waiver,
any such Guarantee Event of Default shall cease to exist, and any Guarantee
Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Guarantee Agreement, but no such waiver shall extend to
any subsequent or other default or Guarantee Event of Default or impair any
right consequent thereon. The Guarantor may set a special record date for
purposes of determining the identity of the Holders of the Preferred
Securities entitled to vote or consent to any action by vote or consent
authorized or permitted by this Section 2.6. Such record date shall be the
later of 15 days prior to the first solicitation of such consent or the date
of the most recent list of Holders furnished to the Preferred Guarantee
Trustee pursuant to Section 2.2 of this Guarantee Agreement prior to such
solicitation.
SECTION 2.7 Guarantee Event of Default Notice.
(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of a Guarantee Event of Default, transmit by mail, first
class postage prepaid, to the Holders of the Preferred Securities,
notices of all Guarantee Events of Default known to the Preferred
Guarantee Trustee, unless such defaults have been cured before the
giving of such notice, provided, that, the Preferred Guarantee
Trustee shall be protected in withholding such notice if and so long
as the board of directors, the executive committee, or a trust
committee of directors and/or Responsible Officers of the Preferred
Guarantee Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders of the Preferred
Securities.
(b) The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Guarantee Event of Default unless the Preferred
Guarantee Trustee shall have received written notice, or a
Responsible Officer charged with the administration of the
Declaration shall have obtained written notice, of such Guarantee
Event of Default.
(c) The provisions of Section 315(e) of The Trust Indenture Act shall be
excluded from this Guarantee Agreement.
Section 2.8 Disclosure of Information.
The disclosure of information as to the names and addresses of the Holders
of the Preferred Securities in accordance with Section 312 of the Trust
Indenture Act, regardless of the source from which such information was
derived, shall not be deemed to be a violation of any existing law, or any law
hereafter enacted which does not specifically refer to Section 312 of the
Trust Indenture Act, nor shall the Guarantee Trustee be held accountable by
reason of mailing any material pursuant to a request made under Section 312(b)
of the Trust Indenture Act.
SECTION 2.9 Conflicting Interests.
The Declaration shall be deemed to be specifically described in this Guarantee
Agreement for the purposes of clause (i) of the first proviso contained in
Section 310(b) of the Trust Indenture Act.
SECTION 2.10 Limitation on Suits by Holders.
No Holder of any Preferred Security shall have any right by virtue or by
availing of any provision of this Guarantee Agreement to institute any suit,
action or proceeding in equity or at law upon or under or with respect to this
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Guarantee Agreement or for the appointment of a receiver or trustee, or for
any other remedy hereunder, unless such Holder previously shall have given to
the Preferred Guarantee Trustee written notice of a continuing Guarantee Event
of Default, as hereinbefore provided, and unless also the Holders of not less
than 25% in liquidation amount of the Preferred Securities than outstanding
shall have made written request upon the Preferred Guarantee Trustee to
institute such action, suit or proceeding in its own name as Preferred
Guarantee Trustee hereunder and shall have offered to the Preferred Guarantee
Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby (including the
reasonable fees of counsel for the Preferred Guarantee Trustee), and the
Preferred Guarantee Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity, shall have neglected or refused to institute
any such action, suit or proceeding and no direction inconsistent with such
written request shall have been given to the Preferred Guarantee Trustee
pursuant to this Section 2.10; it being understood and intended, and being
expressly covenanted by the taker and Holder of every Preferred Security with
every other taker and Holder and the Preferred Guarantee Trustee, that no one
or more Holders of Preferred Securities shall have any right in any manner
whatever by virtue or by availing of any provision of this Guarantee to
affect, disturb or prejudice the rights of the Holders of any other of such
Preferred Securities, or to obtain or seek to obtain priority over or
preference to any other such Holder, or to enforce any right under this
Guarantee, except in the manner herein provided and for the equal, ratable and
common benefit of all Holders of Preferred Securities. For the protection and
enforcement of the provisions of this Section 2.10, each and every Holder and
the Preferred Guarantee Trustee shall be entitled to such relief as can be
given either at law or in equity.
Notwithstanding any other provisions in this Guarantee Agreement, the right of
any Holder of any Preferred Security to receive payment of the Guarantee
Payments when due or to institute suit for the enforcement of any such payment
on or after such respective dates shall not be impaired or affected without
the consent of such Holder.
SECTION 2.11 Preferred Guarantee Trustee May File Proofs of Claim.
Upon the occurrence of a Guarantee Event of Default, the Preferred Guarantee
Trustee is hereby authorized to (a) recover judgment, in its own name and as
trustee of an express trust, against the Guarantor for the whole amount of any
Guarantee payments remaining unpaid and (b) file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have
its claims and those of the Holders of the Preferred Securities allowed in any
judicial proceedings relative to the Guarantor, its creditors or its property.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Preferred Guarantee
Trustee for the benefit of the Holders of the Preferred Securities,
and the Preferred Guarantee Trustee shall not transfer this
Guarantee Agreement to any Person except a Holder of Preferred
Securities exercising his or her rights pursuant to Section 5.4(b)
or to a Successor Preferred Guarantee Trustee on acceptance by such
Successor Preferred Guarantee Trustee of its appointment to act as
Successor Preferred Guarantee Trustee. The right, title and
interest of the Preferred Guarantee Trustee shall automatically vest
in any Successor Preferred Guarantee Trustee, and such vesting and
cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the
appointment of such Successor Preferred Guarantee Trustee.
(b) If a Guarantee Event of Default has occurred and is continuing, the
Preferred Guarantee Trustee shall enforce this Guarantee Agreement
for the benefit of the Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of any
Guarantee Event of Default and after the curing of all Guarantee
Events of Default that may have occurred, shall undertake to perform
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only such duties as are specifically set forth in this Guarantee
Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Preferred Guarantee Trustee. In
case a Guarantee Event of Default has occurred (that has not been
cured or waived pursuant to Section 2.6), the Preferred Guarantee
Trustee shall exercise such of the rights and powers vested in it by
this Guarantee Agreement, and use the same degree of care and skill
in its exercise thereof, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be construed to
relieve the Preferred Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(i) prior to the occurrence of any Guarantee Event of Default and
after the curing or waiving of all such Guarantee Events of
Default that may have occurred:
(A) the duties and obligations of the Preferred Guarantee
Trustee shall be determined solely by the express
provisions of this Guarantee Agreement, and the Preferred
Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are
specifically set forth in this Guarantee Agreement, and no
implied covenants or obligations shall be read into this
Guarantee Agreement against the Preferred Guarantee
Trustee; and
(B) in the absence of bad faith on the part of the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee may
conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the Preferred
Guarantee Trustee and conforming to the requirements of
this Guarantee Agreement; but in the case of any such
certificates or opinions that by any provision hereof are
specifically required to be furnished to the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee shall
be under a duty to examine the same to determine whether
or not they conform to the requirements of this Guarantee
Agreement;
(ii) the Preferred Guaranty Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer
of the Preferred Guarantee Trustee, unless it shall be proved
that the Preferred Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was
made;
(iii) the Preferred Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in
good faith in accordance with the direction of the Holders of
not less than a Majority in liquidation amount of the Preferred
Securities relating to the time, method and place of conducting
any proceeding for any remedy available to the Preferred
Guarantee Trustee, or exercising any trust or power conferred
upon the Preferred Guarantee Trustee under this Guarantee
Agreement; and
(iv) no provision of this Guarantee Agreement shall require the
Preferred Guarantee Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance
of any of its duties or in the exercise of any of its rights or
powers, if the Preferred Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such
funds or liability is not reasonably assured to it under the
terms of this Guarantee Agreement or adequate indemnity against
such risk or liability is not reasonably assured to it.
e) The Preferred Guarantee Trustee may authorize one or more persons
(each a Paying Agent") to pay Guarantee Payments and any such
Paying Agent shall comply with Section 317(b) of the Trust Indenture
Act. Any Paying Agent may be removed by the Preferred Guarantee
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Trustee at any time and a successor Paying Agent or additional
Paying Agents may be appointed at any time by the Preferred
Guarantee Trustee.
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may rely and shall be fully
protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper
or document believed by it to be genuine and to have been
signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be sufficiently evidenced by a
Direction or an Officer's Certificate.
(iii) Whenever, in the administration of this Guarantee Agreement,
the Preferred Guarantee Trustee shall deem it desirable that a
matter be proved or established before taking, suffering or
omitting any action hereunder, the Preferred Guarantee Trustee
(unless other evidence is herein specifically prescribed) may,
in the absence of bad faith on its part, request and rely upon
an Officer's Certificate which, upon receipt of such request,
shall be promptly delivered by the Guarantor.
(iv) The Preferred Guarantee Trustee shall have no duty to see to
any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).
(v) The Preferred Guarantee Trustee may consult with counsel, and
the written advice or opinion of such counsel with respect to
legal matters shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in accordance with such
advice or opinion. Such counsel may be counsel to the
Guarantor or any of its Affiliates and may include any of its
employees. The Preferred Guarantee Trustee shall have the
right at any time to seek instructions concerning the
administration of this Guarantee Agreement from any court of
competent jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Guarantee Agreement at the request or direction of any Holder,
unless such Holder shall have provided to the Preferred
Guarantee Trustee such adequate security and indemnity as would
satisfy a reasonable person in the position of the Preferred
Guarantee Trustee, against the costs, expenses (including
attorneys' fees and expenses) and liabilities that might be
incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the
Preferred Guarantee Trustee; provided that, nothing contained
in this Section 3.2(a)(vi) shall be taken to relieve the
Preferred Guarantee Trustee, upon the occurrence of a Guarantee
Event of Default, of its obligation to exercise the rights and
powers vested in it by this Guarantee Agreement.
(vii) The Preferred Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper
or document, but the Preferred Guarantee Trustee, in its
discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit.
(viii) The Preferred Guarantee Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys, and the
Preferred Guarantee Trustee shall not be responsible for any
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misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
(ix) Any action taken by the Preferred Guarantee Trustee or its
agents hereunder shall bind the Holders of the Preferred
Securities, and the signature of the Preferred Guarantee
Trustee or its agents alone shall be sufficient and effective
to perform any such action. No third party shall be required
to inquire as to the authority of the Preferred Guarantee
Trustee to so act or as to its compliance with any of the terms
and provisions of this Guarantee Agreement, both of which shall
be conclusively evidenced by the Preferred Guarantee Trustee's
or its agent's taking such action.
(x) Whenever in the administration of this Guarantee Agreement the
Preferred Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or
taking any other action hereunder, the Preferred Guarantee
Trustee (i) may request instructions from the Holders of a
Majority in liquidation amount of the Preferred Securities,
(ii) may refrain from enforcing such remedy or right or taking
such other action until such instructions are received, and
(iii) shall be protected in acting in accordance with such
instructions.
(b) No provision of this Guarantee Agreement shall be deemed to impose
any duty or obligation on the Preferred Guarantee Trustee to perform
any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it in any jurisdiction in which it shall be
illegal, or in which the Preferred Guarantee Trustee shall be
unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power,
duty or obligation. No permissive power or authority available to
the Preferred Guarantee Trustee shall be construed to be a duty.
c) The Guarantor assumes responsibility for being and remaining
informed of the financial condition of the Subordinated Debenture
Issuer and of all other circumstances bearing upon the risk of non-
payment of amounts owing under the Preferred Securities which
diligent inquiry would reveal and agrees that the Holders of the
Preferred Securities shall have no duty to advise the Guarantor of
information known to any of them regarding such condition or any
such circumstances.
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee Agreement.
The recitals contained in this Guarantee Agreement shall be taken as the
statements of the Guarantor, and the Preferred Guarantee Trustee does not
assume any responsibility for their correctness. The Preferred Guarantee
Trustee makes no representation as to the validity or sufficiency of this
Guarantee Agreement.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility.
(a) There shall at all times be a Preferred Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation or Person
permitted by the Securities and Exchange Commission to act as
an institutional trustee under the Trust Indenture Act,
authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least $150,000,000,
and subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the supervising or
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examining authority referred to above, then, for the purposes
of this Section 4.1(a)(ii), the combined capital and surplus of
such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guarantee
Trustee shall immediately resign in the manner and with the effect
set out in Section 4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Preferred Guarantee Trustee and Guarantor
shall in all respects comply with the provisions of Section 310(b)
of the Trust Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation of Preferred Guarantee
Trustees.
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in accordance
with Section 4.2(a) until a Successor Preferred Guarantee Trustee
has been appointed and has accepted such appointment by written
instrument executed by such Successor Preferred Guarantee Trustee
and delivered to the Guarantor.
(c) The Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have been
appointed or until its removal or resignation. The Preferred
Guarantee Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing executed by the
Preferred Guarantee Trustee and delivered to the Guarantor, which
resignation shall not take effect until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such
appointment by instrument in writing executed by such Successor
Preferred Guarantee Trustee and delivered to the Guarantor and the
resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2
within 60 days after delivery to the Guarantor of an instrument of
resignation, the resigning Preferred Guarantee Trustee may petition
any court of competent jurisdiction for appointment of a Successor
Preferred Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a
Successor Preferred Guarantee Trustee.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full to the
Holders the Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer), as and when due, regardless of any defense, right of set-
off or counterclaim that the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of
the required amounts by the Guarantor to the Holders or by causing the Issuer
to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of this Guarantee Agreement
and of any liability to which it applies or may apply, presentment, demand for
payment, any right to require a proceeding first against the Issuer or any
other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.
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SECTION 5.3 Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor under this
Guarantee Agreement shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Preferred
Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the
Preferred Securities or the extension of time for the performance of
any other obligation under, arising out of, or in connection with,
the Preferred Securities (other than an extension of time for
payment of Distributions, Redemption Price, Liquidation Distribution
or other sum payable that results from the extension of any interest
payment period on the Subordinated Debentures or any extension of
the maturity date of the Subordinated Debentures permitted by the
Indenture);
(c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power
or remedy conferred on the Holders pursuant to the terms of the
Preferred Securities, or any action on the part of the Issuer
granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the
Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the
intent of this Section 5.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all
circumstances.
There shall be no obligation on the Holders or any other Person to give notice
to, or obtain consent of, the Guarantor with respect to the happening of any
of the foregoing.
SECTION 5.4 Rights of Holders.
(a) The Holders of a Majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of
conducting of any proceeding for any remedy available to the
Preferred Guarantee Trustee in respect of this Guarantee Agreement
or exercising any trust or power conferred upon the Preferred
Guarantee Trustee under this Guarantee Agreement.
(b) If the Preferred Guarantee Trustee fails to enforce this Guarantee
Agreement, any Holder of Preferred Securities may institute a legal
proceeding directly against the Guarantor to enforce its rights
under this Guarantee Agreement, without first instituting a legal
proceeding against the Issuer, the Preferred Guarantee Trustee or
any other Person.
SECTION 5.5 Enforcement of Guarantee.
The Guarantor and the Preferred Guarantee Trustee expressly acknowledge that
(i) this Guarantee Agreement will be deposited with the Preferred Guarantee
Trustee to be held for the benefit of the Holders; (ii) the Preferred
Guarantee Trustee has the right to enforce this Guarantee Agreement on behalf
of the Holders; (iii) Holders representing not less than a Majority in
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liquidation amount of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available
in respect of this Guarantee Agreement including the giving of directions to
the Preferred Guarantee Trustee, or exercising any trust or other power
conferred upon the Preferred Guarantee Trustee under this Guarantee Agreement,
and (iv) if the Preferred Guarantee Trustee fails to enforce this Guarantee
Agreement, any Holder of Preferred Securities may institute a legal proceeding
directly against the Guarantor to enforce its rights under this Guarantee
Agreement, without first instituting a legal proceeding against the Issuer,
the Preferred Guarantee Trustee, or any other Person.
SECTION 5.6 Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and not of collection.
SECTION 5.7 Subrogation.
The Guarantor shall be subrogated to all (if any) rights of the Holders of
Preferred Securities against the Issuer in respect of any amounts paid to such
Holders by the Guarantor under this Guarantee Agreement; provided, however,
that the Guarantor shall not (except to the extent required by mandatory
provisions of law) be entitled to enforce or exercise any right that it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee Agreement,
if, at the time of any such payment, any amounts are due and unpaid under this
Guarantee Agreement. If any amount shall be paid to the Guarantor in
violation of the preceding sentence, the Guarantor agrees to hold such amount
in trust for the Holders and to pay over such amount to the Holders. The
Guarantor shall not exercise its right of subrogation if such exercise would
adversely affect the rights of Holders of any outstanding Preferred
Securities.
SECTION 5.8 Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are independent of
the obligations of the Issuer with respect to the Preferred Securities, and
that the Guarantor shall be liable as principal and as debtor hereunder to
make Guarantee Payments pursuant to the terms of this Guarantee Agreement
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.
SECTION 5.9 Unconditional Nature of Obligations.
The obligations of the Guarantor under this Guarantee Agreement shall be
absolute and unconditional and shall remain in full force and effect until the
entire liquidation amount of all outstanding Preferred Securities shall have
been paid and such obligation shall not be affected, modified or impaired upon
the happening from time to time of any event, including without limitation any
of the following, whether or not with notice to, or the consent of, the
Guarantor:
(a) the waiver, surrender, compromise, settlement, release or
termination of any or all of the obligations, covenants or
agreements of the Issuer under the Preferred Securities;
(b) the failure to give notice to the Guarantor of the occurrence of a
default under the Preferred Securities;
(c) the waiver, compromise or release of the payment, performance or
observance by the Issuer or by the Guarantor, respectively, of any
or all of the obligations, covenants or agreements contained in the
case of the Issuer, in the Preferred Securities, and, in the case of
the Guarantor, in this Guarantee Agreement;
(d) the extension of the time for payment of the liquidation amount of
any Preferred Securities or of the time for performance of any other
obligations, covenants or agreements under or arising out of the
Preferred Securities;
e) the modification or amendment (whether material or otherwise) of any
obligation, covenant or agreement set forth in the Preferred
Securities;
(f) any failure, omission, delay or lack on the part of any Holder to
enforce, assert or exercise any right, power or remedy conferred on
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it in or in connection with the Preferred Securities;
(g) the voluntary or involuntary liquidation, dissolution, sale or other
disposition of all or substantially all the assets, marshalling of
assets and liabilities, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization,
arrangement, composition with creditors or readjustment of, or other
similar proceedings affecting the Guarantor or the Issuer or any of
the respective assets of either of them, or any allegation or
contest of the validity of this Guarantee Agreement in any such
proceeding;
(h) any defense based upon any legal disability of the Issuer or, to the
extent permitted by law, any release, discharge, reduction or
limitation of or with respect of any sums owing by the Issuer or any
other liability of the Issuer to any Holder;
(i) to the extent permitted by law, the release or discharge by
operation of law of the Guarantor from the performance or observance
of any obligation, covenant or agreement contained in this Guarantee
Agreement;
(j) the default or failure of the Guarantor fully to perform any of its
obligations set forth in this Guarantee Agreement; or
(k) the invalidity of the Preferred Securities or any defense which the
Issuer may have against any Holder.
If any payment by the Issuer to any Holder is rescinded or must be returned by
such Holder, the obligations of the Guarantor hereunder shall be reinstated
with respect of such payment.
No set-off, counterclaim, reduction, or diminution of any obligation, or any
defense of any kind or nature which the Guarantor has or may have against any
Holder shall be available hereunder to the Guarantor against such Holder to
reduce the payments to it under this Guarantee Agreement.
The Guarantor assumes responsibility for being and remaining informed of the
financial condition of the Issuer and of all other circumstances bearing upon
the risk of nonpayment of amounts owing under the Preferred Securities which
diligent inquiry would reveal and agrees that no Holder shall have any duty to
advise the Guarantor of information known to it regarding such condition or
any such circumstances.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions.
So long as any Preferred Securities remain outstanding, if there shall have
occurred a Guarantee Event of Default or an event of default under the
Declaration or if the Subordinated Debenture Issuer shall have selected an
Extended Interest Payment Period (as defined in the First Supplemental
Indenture, then (a) the Guarantor shall not declare or pay any dividend on, or
make any distributions with respect to, or redeem, purchase, or acquire any of
its capital stock and (b) the Guarantor shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by the Guarantor which rank pari passu with or junior
to the Subordinated Debentures, provided, that, the foregoing restriction in
this Section 6.1 (a) shall not apply to any stock dividends paid by the
Guarantor where the dividend stock is the same stock as that on which the
dividend is being paid. In addition, so long as any Preferred Securities
remain outstanding, the Guarantor (i) will remain the sole direct or indirect
owner of all of the outstanding Common Securities and shall not cause or
permit the Common Securities to be transferred except to the extent such
transfer is permitted under Section 9.1(c) of the Declaration; provided that
any permitted successor of the Guarantor under the Indenture may succeed to
the Guarantor's ownership of the Common Securities and (ii) will not take any
action which would cause the Issuer to be treated as other than grantor trust
for United States federal income tax purposes except in connection with a
distribution of Subordinated Debentures as provided in the Declaration.
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SECTION 6.2 Ranking.
This Guarantee Agreement will constitute an unsecured obligation of the
Guarantor and will rank (i) subordinate and junior in right of payment to all
other liabilities of the Guarantor except those made pari passu or subordinate
by their terms, (ii) pari passu with the most senior preferred or preference
stock now or hereafter issued by the Guarantor and with any guarantee now or
hereafter entered into by the Guarantor in respect of any preferred or
preference stock of any Affiliate of the Guarantor, and (iii) senior to the
Guarantor's common stock.
If an Event of Default has occurred and is continuing under the Indenture, the
rights of the holders of the Common Securities to receive any payments under
the Common Securities Guarantee Agreement shall be subordinated to the rights
of the Holders of Preferred Securities to receive Guarantee Payments
hereunder.
SECTION 6.3 Guarantor Existence.
The Guarantor shall not consolidate with or merge into any other corporation
or convey, transfer or lease, or permit one or more of its Subsidiaries to
convey, transfer or lease, all or substantially all of the property and assets
of the Guarantor and its Subsidiaries on a consolidated basis, to any Person,
unless the corporation formed by such consolidation or into which the
Guarantor is merged or the Person which acquires by conveyance or transfer, or
which leases, the properties and assets of the Guarantor and its Subsidiaries
on a consolidated basis shall expressly assume the Guarantor's obligations
hereunder.
This Section shall only apply to a merger or consolidation in which the
Guarantor is not the surviving corporation and to conveyances, leases and
transfers by the Guarantor as transferor or lessor.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.
This Guarantee Agreement shall terminate upon the earliest of (i) full payment
of the Redemption Price of all Securities, (ii) the distribution of the
Subordinated Debentures to the Holder's of all of the Preferred Securities or
(iii) full payment of the amounts payable in accordance with the Declaration
upon liquidation of the Issuer. Notwithstanding the foregoing, this Guarantee
Agreement will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder of Preferred Securities must restore payment of
any sums paid under the Preferred Securities or under this Preferred
Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission
performed or omitted by such Indemnified Person in good faith in
accordance with this Guarantee Agreement and in a manner that such
Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Guarantee
Agreement or by law, except that an Indemnified Person shall be
liable for any such loss, damage or claim incurred by reason of such
Indemnified Person's negligence or willful misconduct with respect
to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any
Person as to matters the Indemnified Person reasonably believes are
within such other Person's professional or expert competence and who
has been selected with reasonable care by or on behalf of the
Guarantor, including information, opinions, reports or statements as
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to the value and amount of the assets, liabilities, profits, losses,
or any other facts pertinent to the existence and amount of assets
from which Distributions to Holders of Preferred Securities might
properly be paid.
SECTION 8.2 Indemnification.
(a) To the fullest extent permitted by applicable law, the Guarantor
shall indemnify and hold harmless each Indemnified Person from and
against any loss, damage or claim incurred by such Indemnified
Person by reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Guarantee
Agreement and in a manner such Indemnified Person reasonably
believed to be within the scope of authority conferred on such
Indemnified Person by this in accordance with this Guarantee
Agreement, except that no Indemnified Person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such
Indemnified Person by reason of negligence or willful misconduct
with respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in
defending any claim, demand, action, suit or proceeding shall, from
time to time, be advanced by the Guarantor prior to the final
disposition of such claim, demand, action, suit or proceeding upon
receipt by the Guarantor of an undertaking by or on behalf of the
Indemnified Person to repay such amount if it shall be determined
that the Indemnified Person is not entitled to be indemnified as
authorized in Section 8.2(a).
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns.
All guarantees and agreements contained in this Guarantee Agreement shall bind
the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Preferred
Securities then outstanding.
SECTION 9.2 Amendments.
Except with respect to any changes that do not adversely affect the rights of
Holders (in which case no consent of Holders will be required), this Guarantee
Agreement may only be amended with the prior approval of the Holders of at
least 66-2/3% in liquidation amount (including the stated amount that would be
paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined) of
all the outstanding Preferred Securities. The provisions of Section 12.2 of
the Declaration with respect to meetings of Holders of the Securities apply to
the giving of such approval.
SECTION 9.3 Notices.
All notices provided for in this Guarantee Agreement shall be in writing, duly
signed by the party giving such notice, and shall be electronically
communicated or hand delivered or sent by overnight courier, as follows:
(a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other
address as the Preferred Guarantee Trustee may give notice of to the
Holders of the Preferred Securities):
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, Illinois 60670
Attention: Corporate Trust Administration
(b) If given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice
of to the Holders of the Preferred Securities):
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Pacific Telesis Group
130 Kearny Street
San Francisco, California 94108
Attention: ____________________
(c) If given to any Holder of Preferred Securities, at the address set
forth on the books and records of the Issuer.
For all purposes of this Guarantee Agreement, a notice or communication will
be deemed effective:
(a) if delivered by hand or sent by overnight courier, on the day it
is delivered unless (i) that day is not a Business Day in the city
specified (a Local Business Day") in the address for notice
provided by the recipient or (ii) if delivered after the close of
business on a Local Business Day, then on the next succeeding Local
Business Day, or
(b) if sent by facsimile transmission, on the date transmitted,
provided that oral or written confirmation of receipt is obtained by
the sender unless the date of transmission and confirmation is not a
Local Business Day, in which case, on the next succeeding Local
Business Day.
Any notice, direction, requires, demand, consent or waiver by the Subordinated
Debenture Issuer, or any Holder of Securities to or upon the Preferred
Guarantee Trustee shall be deemed to have been sufficiently given, made or
filed, for all purposes, if given, made or filed in writing at the principal
office of the Preferred Guarantee Trustee in accordance with the provisions of
this Section 9.3.
SECTION 9.4 Benefit.
This Guarantee Agreement is solely for the benefit of the Holders of the
Preferred Securities and, subject to Section 3.1(a), is not separately
transferable from the Preferred Securities.
SECTION 9.5 Governing Law.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
18
<PAGE>
THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
Pacific Telesis Group
By:_______________________________
Name:_____________________________
Title:____________________________
The First National Bank of Chicago
as Preferred Guarantee Trustee
By:_______________________________
Name:_____________________________
Title:____________________________
19
<PAGE>
Exhibit 5-A
Richard W. Odgers
Executive Vice President, General Counsel, and External Affairs
Pacific Telesis Group
130 Kearny Street
Suite 3700
San Francisco, California 94108
October 19, 1995
Pacific Telesis Group
130 Kearny Street
San Francisco, California 94108
Gentlemen and Ladies:
I have acted as counsel to Pacific Telesis Group ("Pacific Telesis"), a Nevada
corporation, and to Pacific Telesis Financing I, Pacific Telesis Financing II
and Pacific Telesis Financing III, each a Delaware business trust
(collectively, the "Trusts"), in connection with the preparation of the
registration statement of Pacific Telesis and the Trusts on Form S-3 (the
"Registration Statement"), to be filed on or about October 19, 1995 with the
Securities and Exchange Commission (the "Commission"), relating to the
registration under the Securities Act of 1933, as amended (the "Securities
Act"), of preferred securities of the Trusts (the "Preferred Securities"),
guarantees of the Preferred Securities by Pacific Telesis (the "Preferred
Securities Guarantees") and subordinated debt securities of Pacific Telesis
(the "Subordinated Debt Securities"). The Subordinated Debt Securities will
be issued in accordance with the provisions of an indenture and a supplemental
indenture (together, the "Indenture") to be executed by Pacific Telesis and
The First National Bank of Chicago, a national banking association (the
"Bank"), as trustee (the "Debt Trustee"), the forms of which are being filed
as exhibits to the Registration Statement. The Preferred Securities
Guarantees will be set forth in a guarantee agreement to be executed by
Pacific Telesis and the Bank, as preferred guarantee trustee (the "Preferred
Guarantee Trustee"), the form of which is being filed as an exhibit to the
Registration Statement.
In so acting, I have reviewed the Registration Statement, including the
prospectus (the "Prospectus") and prospectus supplement (the "Prospectus
Supplement") contained therein, and the form of Indenture, form of
Subordinated Debt Security and form of Preferred Securities Guarantee being
filed with the Commission as exhibits to the Registration Statement. In
addition, I have examined originals or copies, certified or otherwise
identified to my satisfaction, of such corporate records, agreements,
documents and other instruments, and such certificates or comparable documents
of public officials and of officers and representatives of Pacific Telesis,
and have made such inquiries of such officers and representatives, as I have
deemed relevant and necessary as a basis for the opinions hereinafter set
forth.
In such examination, I have assumed the genuineness of all signatures, the
legal capacity of natural persons, the authenticity of all documents submitted
to me as originals, the conformity to original documents of all documents
submitted to me as certified or photostatic copies and the authenticity of the
originals of such latter documents. As to all questions of fact material to
this opinion that have not been independently established, I have relied upon
certificates or comparable documents of officers and representatives of
Pacific Telesis.
1
<PAGE>
Based on the foregoing, and subject to the qualifications stated herein, I am
of the opinion that:
1. Pacific Telesis is a corporation duly organized and validly existing
under the laws of the State of Nevada.
2. Pacific Telesis has all requisite corporate power and authority to
execute and deliver the Indenture, the Subordinated Debt Securities and
the Preferred Securities Guarantees in conformity with the resolutions of
the Board of Directors of Pacific Telesis adopted on September 22, 1995
(the "Board Resolutions") and to perform its obligations under the
Indenture, the Subordinated Debt Securities and the Preferred Securities
Guarantees.
3. The execution and delivery of the Indenture, the Subordinated Debt
Securities and the Preferred Securities Guarantees in conformity with the
Indenture, the Registration Statement and the Board Resolutions have been
duly authorized by all necessary corporate action on the part of the
Pacific Telesis.
4. Upon the qualification of the Indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"), the due execution and
delivery of the Indenture by Pacific Telesis and the Debt Trustee and the
effectiveness of the Registration Statement under the Securities Act, the
Subordinated Debt Securities, when duly established as a series,
executed, authenticated, issued, sold and delivered in the manner
contemplated in the Indenture, the Registration Statement and the Board
Resolutions, will constitute legal, valid and binding obligations of
Pacific Telesis, entitled to the benefits of the Indenture and
enforceable against it in accordance with their terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and
fair dealing (regardless of whether enforcement is sought in a proceeding
at law or equity) and except to the extent that rights to indemnification
thereunder may be limited by federal or state securities laws or public
policy relating thereto.
5. Upon the qualification of the Preferred Securities Guarantees under the
Trust Indenture Act, the due execution and delivery of the Preferred
Securities Guarantees by Pacific Telesis and the Preferred Guarantee
Trustee, the effectiveness of the Registration Statement under the
Securities Act and the lawful issuance and sale of the Preferred
Securities in the manner contemplated in the Preferred Securities
Guarantees, the Registration Statement and the Board Resolutions, the
Preferred Securities Guarantees will constitute the legal, valid and
binding obligation of Pacific Telesis enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally; and subject, as to
enforceability, to the rules governing the availability of specific
performance, injunctive relief or other equitable remedies; to general
principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought
in a proceeding at law or in equity); to the effect of applicable court
decisions, invoking statutes or principles of equity, which have held
that certain covenants and provisions of agreements are unenforceable
where the breach of such covenants or provisions imposes restrictions or
burdens upon a borrower, and it cannot be demonstrated that the
enforcement of such restrictions or burdens is necessary for the
protection of the creditor, or which have held that the creditor's
enforcement of such covenants or provisions under the circumstances would
violate the creditor's covenants of good faith and fair dealing implied
under California law; the effect of California statutes and rules of law
that cannot be waived prospectively by a borrower; and the effect of
California statutes and cases to the effect that a surety may be
exonerated if the creditor alters the original obligation of the
principal without the surety's consent, elects remedies for default that
may impair the surety's subrogation rights against the principal,
proceeds against the surety without first exhausting its remedies against
the principal or otherwise takes action which prejudices the surety,
without notification of and consent by the surety, unless such rights of
the surety are validly waived.
2
<PAGE>
The opinions expressed herein are limited to the laws of the State of
California, the general corporation law of the State of Nevada and the federal
law of the United States of America, and I express no opinion as to the effect
on the matters covered by this letter of the laws of any other jurisdiction.
I do not purport herein to cover the application of the Blue Sky or securities
laws of the various states or other jurisdictions to the issuance and sale of
the Subordinated Debt Securities and the Preferred Securities Guarantees.
The opinions expressed herein are rendered solely for your benefit in
connection with the transactions described herein. These opinions may not be
used or relied upon by any other person, nor may this letter or any copies
thereof be furnished to a third party, filed with a governmental agency,
quoted, cited or otherwise referred to without my prior written consent.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to me under the headings
"Validity of Securities" in the Prospectus and "Legal Matters" in the
Prospectus Supplement, without admitting that I am an "expert" under the
Securities Act or the rules and regulations of the Commission issued
thereunder with respect to any part of the Registration Statement, including
this exhibit thereto.
Very truly yours,
/s/ Richard W. Odgers
Richard W. Odgers
Executive Vice President, General Counsel,
and External Affairs
3
<PAGE>
EXHIBIT 5B
----------
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
ONE RODNEY SQUARE
BOX 636
WILMINGTON, DELAWARE 19899-0636
(302) 651-3000
October 24, 1995
Pacific Telesis Financing I
c/o Pacific Telesis Group
130 Kearny Street
San Francisco, California 94108
Re: Pacific Telesis Group;
Pacific Telesis Financing I;
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as special counsel to Pacific Telesis Financing I, a
statutory business trust formed under the laws of the State of Delaware (the
"Trust"), in connection with the preparation of a Registration Statement on
Form S-3, which was filed by Pacific Telesis Group (the "Company") and the
Trust with the Securities and Exchange Commission (the "Commission") on the
date hereof under the Securities Act of 1933, as amended (the "Act") (such
Registration Statement being hereinafter referred to as the "Registration
Statement") relating to the registration under the Act of the preferred
securities (the "Preferred Securities") of the Trust.
The Preferred Securities are to be issued pursuant to the Amended and
Restated Declaration of Trust (the "Declaration") among the Company, as
sponsor, First National Bank of Chicago, as the property trustee (the
"Property Trustee"), Michael J. Majchrzak, as Delaware trustee (the "Delaware
Trustee") and Roomy F. Balaporia, Miles H. Mochizuki and Marie B. Washington,
as regular trustees (together, the "Regular Trustees"). Capitalized terms
used but not otherwise defined herein have the meanings ascribed to them in
the Registration Statement.
This opinion is being delivered in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Act.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the certificate
of trust (the "Certificate of Trust") filed by the Property Trustee, the
Delaware Trustee and the Regular Trustees with the Secretary of State of the
State of Delaware on October 17, 1995; (ii) the form of the Declaration
(including the form of the terms of the Preferred Securities annexed thereto);
and (iii) the form of the Preferred Securities. We have also examined
originals or copies, certified or otherwise identified to our satisfaction, of
such other documents, certificates and records as we have deemed necessary or
appropriate as a basis for the opinions set forth herein.
1
<PAGE>
Pacific Telesis Financing I
October 24, 1995
Page 2
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies. In making our examination of
documents executed by parties other than the Trust, we have assumed that such
parties had the power, corporate or other, to enter into and perform all
obligations thereunder and have also assumed the due authorization by all
requisite action, corporate or other, and execution and delivery by such
parties of such documents and that such documents constitute valid and binding
obligations of such parties. In addition, we have assumed that each of the
Declaration and the Preferred Securities as executed will be in the form
reviewed by us as of the date hereof. As to any facts material to the
opinions expressed herein which were not independently established or
verified, we have relied upon oral or written statements and representations
of officers, trustees and other representatives of the Company, the Trust and
others.
Members of our firm are admitted to the bar in the State of Delaware, and
we express no opinion as to the laws of any other jurisdiction other than the
laws of the United States of America to the extent specifically referred to
herein.
Based on and subject to the foregoing and to the other qualifications and
limitations set forth herein, we are of the opinion that the Preferred
Securities, when the Declaration is executed and delivered and the terms of
the Preferred Securities are established in accordance with the terms of the
Declaration, will be duly authorized for issuance and, when issued and
executed in accordance with the Declaration and delivered and paid for as set
forth in the form of Prospectus Supplement included in the Registration
Statement, will be validly issued, fully paid and nonassessable, representing
undivided beneficial interests in the assets of Trust. We bring to your
attention that the Preferred Securities holders may be obligated, pursuant to
the Trust Declaration, to (i) provide indemnity and/or security in connection
with and pay taxes or governmental charges arising from transfers of Preferred
Securities and (ii) provide security and indemnity in connection with the
requests of or directions to the Property Trustee to exercise its rights and
powers under the Declaration.
This opinion is furnished to you solely for your benefit in connection
with the filing of the Registration Statement and, except as set forth in the
next sentence, is not to be used, circulated, quoted or otherwise referred to
for any other purpose or relied upon by any other person for any purpose
without our prior written consent. We also consent to the use of our name
under the heading "Legal Matters" in the Registration Statement. We hereby
consent to the filing of this opinion with the Commission as part of Exhibit
5-B to the Registration Statement. In giving this consent, we do not thereby
admit that we are within the category of persons whose consent is required
under Section 7 of the Act or the rules and regulations of the Commission
promulgated thereunder. This opinion is expressed as of the date hereof
unless otherwise expressly stated and we disclaim any undertaking to advise
you of any subsequent changes of the facts stated or assumed herein or any
subsequent changes in applicable law.
Very truly yours,
/s/ SKADDEN, ARPS, SLATE, MEAGHER & FLOM
2
<PAGE>
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
ONE RODNEY SQUARE
BOX 636
WILMINGTON, DELAWARE 19899-0636
(302) 651-3000
October 24, 1995
Pacific Telesis Financing II
c/o Pacific Telesis Group
130 Kearny Street
San Francisco, California 94108
Re: Pacific Telesis Group;
Pacific Telesis Financing II;
Registration Statement on Form S-3
Ladies and Gentlemen:
We We have acted as special counsel to Pacific Telesis Financing II, a
statutory business trust formed under the laws of the State of Delaware (the
"Trust"), in connection with the preparation of a Registration Statement on
Form S-3, which was filed by Pacific Telesis Group (the "Company") and the
Trust with the Securities and Exchange Commission (the "Commission") on the
date hereof under the Securities Act of 1933, as amended (the "Act") (such
Registration Statement being hereinafter referred to as the "Registration
Statement") relating to the registration under the Act of the preferred
securities (the "Preferred Securities") of the Trust.
The Preferred Securities are to be issued pursuant to the Amended and
Restated Declaration of Trust (the "Declaration") among the Company, as
sponsor, First National Bank of Chicago, as the property trustee (the
"Property Trustee"), Michael J. Majchrzak, as Delaware trustee (the "Delaware
Trustee") and Roomy F. Balaporia, Miles H. Mochizuki and Marie B. Washington,
as regular trustees (together, the "Regular Trustees"). Capitalized terms
used but not otherwise defined herein have the meanings ascribed to them in
the Registration Statement.
This opinion is being delivered in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Act.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the certificate
of trust (the "Certificate of Trust") filed by the Property Trustee, the
Delaware Trustee and the Regular Trustees with the Secretary of State of the
State of Delaware on October 17, 1995; (ii) the form of the Declaration
(including the form of the terms of the Preferred Securities annexed thereto);
and (iii) the form of the Preferred Securities. We have also examined
originals or copies, certified or otherwise identified to our satisfaction, of
such other documents, certificates and records as we have deemed necessary or
appropriate as a basis for the opinions set forth herein.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies. In making our examination of
documents executed by parties other than the Trust, we have assumed that such
parties had the power, corporate or other, to enter into and perform all
obligations thereunder and have also assumed the due authorization by all
requisite action, corporate or other, and execution and delivery by such
parties of such documents and that such documents constitute valid and binding
obligations of such parties. In addition, we have assumed that each of the
Declaration and the Preferred Securities as executed will be in the form
reviewed by us as of the date hereof. As to any facts material to the
opinions expressed herein which were not independently established or
verified, we have relied upon oral or written statements and representations
of officers, trustees and other representatives of the Company, the Trust and
others.
3
<PAGE>
Pacific Telesis Financing II
October 24, 1995
Page 2
Members of our firm are admitted to the bar in the State of Delaware, and
we express no opinion as to the laws of any other jurisdiction other than the
laws of the United States of America to the extent specifically referred to
herein.
Based on and subject to the foregoing and to the other qualifications and
limitations set forth herein, we are of the opinion that the Preferred
Securities, when the Declaration is executed and delivered and the terms of
the Preferred Securities are established in accordance with the terms of the
Declaration, will be duly authorized for issuance and, when issued and
executed in accordance with the Declaration and delivered and paid for as set
forth in the form of Prospectus Supplement included in the Registration
Statement, will be validly issued, fully paid and nonassessable, representing
undivided beneficial interests in the assets of Trust. We bring to your
attention that the Preferred Securities holders may be obligated, pursuant to
the Trust Declaration, to (i) provide indemnity and/or security in connection
with and pay taxes or governmental charges arising from transfers of Preferred
Securities and (ii) provide security and indemnity in connection with the
requests of or directions to the Property Trustee to exercise its rights and
powers under the Declaration.
This opinion is furnished to you solely for your benefit in connection
with the filing of the Registration Statement and, except as set forth in the
next sentence, is not to be used, circulated, quoted or otherwise referred to
for any other purpose or relied upon by any other person for any purpose
without our prior written consent. We also consent to the use of our name
under the heading "Legal Matters" in the Registration Statement. We hereby
consent to the filing of this opinion with the Commission as part of Exhibit
5-B to the Registration Statement. In giving this consent, we do not thereby
admit that we are within the category of persons whose consent is required
under Section 7 of the Act or the rules and regulations of the Commission
promulgated thereunder. This opinion is expressed as of the date hereof
unless otherwise expressly stated and we disclaim any undertaking to advise
you of any subsequent changes of the facts stated or assumed herein or any
subsequent changes in applicable law.
Very truly yours,
/s/ SKADDEN, ARPS, SLATE, MEAGHER & FLOM
4
<PAGE>
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
ONE RODNEY SQUARE
BOX 636
WILMINGTON, DELAWARE 19899-0636
(302) 651-3000
October 24, 1995
Pacific Telesis Financing III
c/o Pacific Telesis Group
130 Kearny Street
San Francisco, California 94108
Re: Pacific Telesis Group;
Pacific Telesis Financing III;
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as special counsel to Pacific Telesis Financing III, a
statutory business trust formed under the laws of the State of Delaware (the
"Trust"), in connection with the preparation of a Registration Statement on
Form S-3, which was filed by Pacific Telesis Group (the "Company") and the
Trust with the Securities and Exchange Commission (the "Commission") on the
date hereof under the Securities Act of 1933, as amended (the "Act") (such
Registration Statement being hereinafter referred to as the "Registration
Statement") relating to the registration under the Act of the preferred
securities (the "Preferred Securities") of the Trust.
The Preferred Securities are to be issued pursuant to the Amended and
Restated Declaration of Trust (the "Declaration") among the Company, as
sponsor, First National Bank of Chicago, as the property trustee (the
"Property Trustee"), Michael J. Majchrzak, as Delaware trustee (the "Delaware
Trustee") and Roomy F. Balaporia, Miles H. Mochizuki and Marie B. Washington,
as regular trustees (together, the "Regular Trustees"). Capitalized terms
used but not otherwise defined herein have the meanings ascribed to them in
the Registration Statement.
This opinion is being delivered in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Act.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the certificate
of trust (the "Certificate of Trust") filed by the Property Trustee, the
Delaware Trustee and the Regular Trustees with the Secretary of State of the
State of Delaware on October 17, 1995; (ii) the form of the Declaration
(including the form of the terms of the Preferred Securities annexed thereto);
and (iii) the form of the Preferred Securities. We have also examined
originals or copies, certified or otherwise identified to our satisfaction, of
such other documents, certificates and records as we have deemed necessary or
appropriate as a basis for the opinions set forth herein.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies. In making our examination of
documents executed by parties other than the Trust, we have assumed that such
parties had the power, corporate or other, to enter into and perform all
obligations thereunder and have also assumed the due authorization by all
requisite action, corporate or other, and execution and delivery by such
parties of such documents and that such documents constitute valid and binding
obligations of such parties. In addition, we have assumed that each of the
Declaration and the Preferred Securities as executed will be in the form
reviewed by us as of the date hereof. As to any facts material to the
opinions expressed herein which were not independently established or
verified, we have relied upon oral or written statements and representations
of officers, trustees and other representatives of the Company, the Trust and
others.
5
<PAGE>
Pacific Telesis Financing III
October 24, 1995
Page 2
Members of our firm are admitted to the bar in the State of Delaware, and
we express no opinion as to the laws of any other jurisdiction other than the
laws of the United States of America to the extent specifically referred to
herein.
Based on and subject to the foregoing and to the other qualifications and
limitations set forth herein, we are of the opinion that the Preferred
Securities, when the Declaration is executed and delivered and the terms of
the Preferred Securities are established in accordance with the terms of the
Declaration, will be duly authorized for issuance and, when issued and
executed in accordance with the Declaration and delivered and paid for as set
forth in the form of Prospectus Supplement included in the Registration
Statement, will be validly issued, fully paid and nonassessable, representing
undivided beneficial interests in the assets of Trust. We bring to your
attention that the Preferred Securities holders may be obligated, pursuant to
the Trust Declaration, to (i) provide indemnity and/or security in connection
with and pay taxes or governmental charges arising from transfers of Preferred
Securities and (ii) provide security and indemnity in connection with the
requests of or directions to the Property Trustee to exercise its rights and
powers under the Declaration.
This opinion is furnished to you solely for your benefit in connection
with the filing of the Registration Statement and, except as set forth in the
next sentence, is not to be used, circulated, quoted or otherwise referred to
for any other purpose or relied upon by any other person for any purpose
without our prior written consent. We also consent to the use of our name
under the heading "Legal Matters" in the Registration Statement. We hereby
consent to the filing of this opinion with the Commission as part of Exhibit
5-B to the Registration Statement. In giving this consent, we do not thereby
admit that we are within the category of persons whose consent is required
under Section 7 of the Act or the rules and regulations of the Commission pro-
mulgated thereunder. This opinion is expressed as of the date hereof unless
otherwise expressly stated and we disclaim any undertaking to advise you of
any subsequent changes of the facts stated or assumed herein or any subsequent
changes in applicable law.
Very truly yours,
/s/ SKADDEN, ARPS, SLATE, MEAGHER & FLOM
6
<PAGE>
EXHIBIT 8
---------
October 19, 1995
Phillip J. Lauro
Executive Director - Taxes
Pacific Telesis Group
130 Kearny Street
Suite 3501
San Francisco, California 94108
RE: Pacific Telesis Group
Pacific Telesis Financing I
130 Kearny Street
San Francisco, California 94108
Ladies & Gentlemen:
I have acted as special tax counsel for Pacific Telesis Group ("PTG"), a
Nevada corporation, and Pacific Telesis Financing I ( PTF"), a Delaware
business trust, in connection with a Registration Statement on Form S-3 filed
with the Securities and Exchange Commission on or about October 19, 1995 (the
"Registration Statement"), for the purpose of registering Trust Originated
Preferred Securities (the "Preferred Securities") of PTF (liquidation amount
of $25 per Preferred Security), Subordinated Deferrable Interest Debentures of
PTG due 2025 (the "Subordinated Debentures"), and PTG Guarantees of the
Preferred Securities (the Guarantees"). In connection therewith, we have
participated in the preparation of, and have reviewed, the Registration
Statement, including the prospectus (the "Prospectus") and the form of
prospectus supplement (the "Prospectus Supplement") included therewith.
We have examined and relied upon the Registration Statement and, in each
case as filed with the Registration Statement, (i) the form of indenture (the
"Indenture") between PTG and The First National Bank of Chicago, as trustee,
(ii) the form of supplemental indenture to be used in connection with the
issuance of the Subordinated Debentures (the "Supplemental Indenture"), which
Supplemental Indenture includes the form of the Subordinated Debentures, (iii)
the form of declaration of trust for PTF (the "Declaration"), which
Declaration includes the form of the Preferred Securities, (iv) the form of
guarantee with respect to the Preferred Securities, and (v) certain other
relevant documents used in connection with the issuance of the Subordinated
Debt Securities, the Preferred Securities and the Guarantees (collectively the
"Operative Documents").
Based on the foregoing and assuming that the Operative Documents are
executed and delivered in substantially the form filed as exhibits to the
Registration Statement and that the transactions contemplated to occur under
the Operative Documents in fact occur in accordance with the terms thereof, I
hereby confirm, in all material respects, that the discussion set forth in the
Prospectus Supplement under the heading "UNITED STATES FEDERAL INCOME
TAXATION" is a fair and accurate summary of the matters addressed therein,
based upon current law and the assumptions stated or referred to therein.
There can be no assurance that contrary positions may not be taken by the
Internal Revenue Service.
I hereby consent to the use of my name in the above-captioned
Registration Statement and to the filing of this opinion as Exhibit 8 to the
Registration Statement. In giving such consent, I do not thereby admit that I
am in the category of persons whose consent is required under Section 7 of the
Securities Act of 1993.
Very truly yours,
/s/Phillip J. Lauro
Phillip J. Lauro
Executive Director-Taxes
Pacific Telesis Group
<PAGE>
EXHIBIT 12
----------
PACIFIC TELESIS GROUP AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions) 6/30/95 6/30/94
------- -------
1. Earnings
--------
Adjusted income from continuing operations before
income taxes $ 831 $ 888
Interest expense 233 229
Interest in operating rental expense (a) 15 17
------- -------
Total earnings - continuing operations $1,079 $1,134
------- -------
2. Fixed Charges
-------------
Interest expense (b) $ 233 $ 229
Interest in operating rental expense (a) 15 17
------- -------
Total fixed charges - continuing operations $ 248 $ 246
------- -------
RATIO OF EARNINGS TO FIXED CHARGES
(1 divided by 2) 4.35 4.61
======= =======
(a) Computed as 1/3 of operating rental expense.
(b) Includes capitalized interest.
<PAGE>
EXHIBIT 15
----------
COOPERS & LYBRAND
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen and Ladies:
Re: Pacific Telesis Group Registration on From S-3
of Trust Originated Preferred Securities
-------------------------------------------------------
We are aware that our reports dated May 12, 1995 and August 11, 1995 on our
reviews of interim financial information of Pacific Telesis Group for the
periods ended March 31, 1995 and June 30, 1995 and included in the Company's
quarterly reports on Form 10-Q for the quarters then ended are incorporated by
reference in this registration statement. Pursuant to Rule 436(c) under the
Securities Act of 1993, this report should not be considered part of the
registration statement prepared or certified by us within the meaning of
Sections 7 and 11 of that Act.
Very truly yours,
/s/Coopers & Lybrand
San Francisco, California
October 19, 1995
<PAGE>
EXHIBIT 23A
-----------
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Pacific Telesis Group on Form S-3 (for the Trust Originated Preferred
Securities) of our reports dated February 23, 1995 on our audits of the
consolidated financial statements and financial statement schedules of Pacific
Telesis Group as of December 31, 1994 and 1993 and for the years ended
December 31, 1994, 1993, and 1992, which reports are included or incorporated
by reference in Pacific Telesis Group's 1994 Annual Report on Form 10-K.
/s/ Coopers & Lybrand
San Francisco, California
October 19, 1995
EXHIBIT 24
----------
POWER OF ATTORNEY
WHEREAS, PACIFIC TELESIS GROUP, a Nevada corporation (the "Corporation"),
proposes to file with the Securities and Exchange Commission (the "SEC"),
under the provisions of the Securities Act of 1933, as amended, a Registration
Statement on Form S-3 registering Trust Originated Preferred Stock and Pacific
Telesis Group Subordinated Debt and Guarantees related thereto; and
WHEREAS, each of the undersigned is an officer or director, or both, of the
Corporation, as indicated below under his name;
NOW, THEREFORE, each of the undersigned, hereby constitutes and appoints P. J.
Quigley, W. E. Downing and R. W. Odgers, and each of them, his attorney for
him in his stead, in his capacity as an officer or director, or both, of the
Corporation, to execute and file such Registration Statement on Form S-3 and
any and all amendments, modifications or supplements thereto, and any exhibits
thereto, and granting to each of said attorneys full power and authority to
sign and file any and all other documents and to perform and do all and every
act and thing whatsoever requisite and necessary to be done as fully, to all
intents and purposes, as he might or could do if personally present at the
doing thereof, and hereby ratifying and confirming all that said attorneys may
or shall lawfully do, or cause to be done, by virtue hereof in connection with
effecting the filing of the Registration Statement on Form S-3.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his hand this
22nd day of September, 1995.
/s/ Philip J. Quigley /s/ William E. Downing
- ---------------------------- ---------------------------
Philip J. Quigley William E. Downing
Chairman of the Board, Executive Vice President,
President and Chief Chief Financial Officer and
Executive Officer and Treasurer
Director (Chief Accounting Officer)
/s/ Eugene O. Laico
- ----------------------------
Eugene O. Laico
Controller
<PAGE>
POWER OF ATTORNEY
WHEREAS, PACIFIC TELESIS GROUP, a Nevada corporation (the "Corporation"),
proposes to file with the Securities and Exchange Commission (the "SEC"),
under the provisions of the Securities Act of 1933, as amended, a Registration
Statement on Form S-3 registering Trust Originated Preferred Stock and Pacific
Telesis Group Subordinated Debt and Guarantees related thereto; and
WHEREAS, each of the undersigned is a director of the Corporation;
NOW, THEREFORE, each of the undersigned, hereby constitutes and appoints P. J.
Quigley, W. E. Downing and R. W. Odgers, and each of them, his/her attorney
for him/her in his/her stead, in his/her capacity as a director of the
Corporation, to execute and file such Registration Statement on
Form S-3 and any and all amendments, modifications or supplements thereto, and
any exhibits thereto, and granting to each of said attorneys full power and
authority to sign and file any and all other documents and to perform and do
all and every act and thing whatsoever requisite and necessary to be done as
fully, to all intents and purposes, as he/she might or could do if personally
present at the doing thereof, and hereby ratifying and confirming all that
said attorneys may or shall lawfully do, or cause to be done, by virtue hereof
in connection with effecting the filing of the Registration Statement on Form
S-3.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his hand this
22nd day of September, 1995.
/s/ Gilbert F. Amelio /s/ Mary S. Metz
- ---------------------------- ----------------------------
Gilbert F. Amelio, Director Mary S. Metz, Director
/s/ William P Clark /s/ Lewis E. Platt
- ---------------------------- ----------------------------
William P Clark, Director Lewis E. Platt, Director
/s/ Herman E. Gallegos /s/ Toni Rembe
- ---------------------------- ----------------------------
Herman E. Gallegos, Director Toni Rembe, Director
/s/ Frank C. Herringer /s/ S. Donley Ritchey
- ---------------------------- ----------------------------
Frank C. Herringer, Director S. Donley Ritchey, Director
/s/ Ivan J. Houston /s/ Richard M. Rosenberg
- ---------------------------- ----------------------------
Ivan J. Houston, Director Richard M. Rosenberg, Director
<PAGE>
EXHIBIT 25A
-----------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
--------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)
-----------------------
THE FIRST NATIONAL BANK OF CHICAGO
(Exact name of trustee as specified in its charter)
A National Banking Association 36-0899825
(I.R.S. employer
identification number)
One First National Plaza, Chicago, Illinois 60670-012
(Address of principal executive offices) (Zip Code)
The First National Bank of Chicago
One First National Plaza, Suite 0286
Chicago, Illinois 60670-0286
Attn: Lynn A. Goldstein, Law Department (312) 732-6919
(Name, address and telephone number of agent for service)
---------------------------
PACIFIC TELESIS GROUP
(Exact name of obligor as specified in its charter)
Nevada 94-2919931
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
130 Kearny Street
San Francisco, California 94108
(Address of principal executive offices) (Zip Code)
Debt Securities
(Title of Indenture Securities)
Item 1. GENERAL INFORMATION. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation, Washington, D.C.,
The Board of Governors of the Federal Reserve System,
Washington D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
1
<PAGE>
Item 2. AFFILIATIONS WITH THE OBLIGOR. If the obligor is an affiliate of
the trustee, describe each such affiliation.
No such affiliation exists with the trustee.
Item 16. LIST OF EXHIBITS. List below all exhibits filed as a part of this
Statement of Eligibility.
1. A copy of the articles of association of the trustee now in
effect.*
2. A copy of the certificates of authority of the trustee to
commence business.*
3. A copy of the authorization of the trustee to exercise
corporate trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by Section 321(b) of the
Act.
7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, The First National Bank of Chicago, a national
banking association organized and existing under the laws of the
United States of America, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto
duly authorized, all in the City of Chicago and State of Illinois,
on the 16th day of October, 1995
The First National Bank of Chicago, Trustee,
By /s/ R. D. Manella
R. D. Manella
Vice President
* Exhibit 1,2,3 and 4 are herein incorporated by reference to Exhibits
bearing identical numbers in Item 12 of the Form T-1 of The First National
Bank of Chicago, filed as Exhibit 26 to the Registration Statement on Form
S-3 of The CIT Group Holdings, Inc., filed with the Securities and Exchange
Commission on February 16, 1993 (Registration No. 33-58418).
2
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
October 16, 1995
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of an indenture between Pacific Telesis
Group and The First National Bank of Chicago, the undersigned, in accordance
with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby
consents that the reports of examinations of the undersigned, made by Federal
or State authorities authorized to make such examinations, may be furnished by
such authorities to the Securities and Exchange Commission upon its request
therefor.
Very truly yours,
The First National Bank of Chicago
By: /s/ R. D. Manella
R. D. Manella
Vice President
3
<PAGE>
<TABLE>
EXHIBIT 7
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Consolidated Report of Condition for Insured Commercial and State-Chartered Savings Banks for June 30, 1995
All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last
business day of the quarter.
Schedule RC--Balance Sheet
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- ---- ------------- ----
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from
Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1)... 0081 3,184,875 1.a.
b. Interest-bearing balances(2)............................ 0071 8,932,069 1.b.
2. Securities
a. Held-to-maturity securities(from Schedule RC-B,
column A................................................. 1754 249,502 2.a.
b. Available-for-sale securities (from Schedule RC-B,
column D)................................................ 1773 536,856 2.b.
3. Federal funds sold and securities purchased under agreements
to resell in domestic offices of the bank and its Edge and
Agreement subsidiaries, and in IBFs:
a. Federal Funds sold....................................... 0276 2,897,736 3.a.
b. Securities purchased under agreements to resell.......... 0277 1,417,129...3.b.
4
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- ---- ------------- ----
<S> <C> <C> <C> <C>
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income
(from Schedule RC-C).................................. RCFD 2122 16,567,408 4.a.
b. LESS: Allowance for loan and lease losses.......... RCFD 3123 358,877 4.b.
c. LESS: Allocated transfer risk reserve.............. RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance,
and reserve (item 4.a minus 4.b and 4.c).............. 2125 16,208,531 4.d.
5. Assets held in trading accounts....................... 3545 13,486,931 5.
6. Premises and fixed assets (including capitalized
leases)............................................... 2145 516,279 6.
7. Other real estate owned (from Schedule RC-M).......... 2150 11,216 7.
8. Investments in unconsolidated subsidiaries and
associated companies (from Schedule RC-M)............. 2130 12,946 8.
9. Customers' liability to this bank on acceptances
outstanding........................................... 2155 501,943 9.
10. Intangible assets (from Schedule RC-M)................ 2143 111,683 10.
11. Other assets (from Schedule RC-F)..................... 2160 1,258,270 11.
12. Total assets (sum of items 1 through 11).............. 2170 49,325,966 12.
5
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
13.Deposits:
a. In domestic offices (sum of totals of columns A and C from
Schedule RC-E, part 1)....................................... RCON 2200 14,889,235 13.a.
(1) Noninterest-bearing(1)................................... RCON 6631 5,895,584 13.a.(1)
(2) Interest-bearing......................................... RCON 6636 8,993,651 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
(from Schedule RC-E, part II)................................ RCFN 2200 13,289,760 13.b.
(1) Noninterest bearing...................................... RCFN 6631 315,549 13.b.(1)
(2) Interest-bearing......................................... RCFN 6636 12,974,211 13.b.(2)
<FN>
(1) Includes cash items in process of collection and unposted debits
(2) Includes time certificates of deposit not held in trading accounts
</FN>
6
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
LIABILITIES
14. Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of its
Edge and Agreement subsidiaries, and in IBFs:
a. Federal funds purchased.................................. RCFD 0278 2,942,186 14.a.
b. Securities sold under agreements to repurchase........... RCFD 0279 1,160,512 14.b.
15. a. Demand notes issued to the U.S. Treasury................. RCON 2840 112,768 15.a.
b. Trading Liabilities...................................... RCFD 3548 7,872,221 15.b.
16. Other borrowed money:
a. With original maturity of one year or less............... RCFD 2332 2,402,829 16.a.
b. With original maturity of more than one year............. RCFD 2333 643,987 16.b.
7
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
EQUITY CAPITAL
17. Mortgage indebtedness and obligations under capitalized
leases...................................................... RCFD 2910 278,108 17.
18. Bank's liability on acceptance executed and outstanding..... RCFD 2920 501,943 18.
19. Subordinated notes and debentures........................... RCFD 3200 1,225,000 19.
20. Other liabilities (from Schedule RC-G) ..................... RCFD 2930 981,938 20.
21. Total liabilities (sum of items 13 through 20).............. RCFD 2948 46,300,487 21.
22. Limited-Life preferred stock and related surplus............ RCFD 3282 0 22.
23. Perpetual preferred stock and related surplus.............. RCFD 3838 0 23.
24. Common stock............................................... RCFD 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred stock)... RCFD 3839 2,314,642 25.
26. a. Undivided profits and capital reserves.................. RCFD 3632 510,093 26.a.
b. Net unrealized holding gains (losses) on
available-for-sale securities........................... RCFD 8434 (880) 26.b.
8
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
27. Cumulative foreign currency translation adjustments........ RCFD 3284 ........766 27.
28. Total equity capital (sum of items 23 through 27).......... RCFD 3210 3,025,479 28.
29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28)...................... RCFD 3300 49,325,966 29.
<FN>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best
describes the most comprehensive level of auditing work performed for the bank
by independent external Number
auditors as of any date during 1993 .................................................. RCFD 6724 N/A M.1.
</FN>
9
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<FN>
1 = Independent audit of the bank conducted 4 = Directors' examination of the bank
in accordance with generallly accepted performed by other external auditors
auditing standards by a certified public (may be required by state chartering
accounting firm which submits a report authority).
on the bank.
2 = Independent audit of the bank's parent 5 = Review of the bank's financial
holding company conducted in accordance statements by external auditors.
with generally accepted auditing standards 6 = Compilation of the bank's financial
by a certified public accounting firm which statements by external auditors.
submits a report on the consolidated holding 7 = Other audit procedures (excluding
company (but not on the bank separately). tax preparation work)
3 = Director's examination of the bank conducted 8 = No external audit work.
in accordanced with generally accepted
auditing standards by a certified public
accounting firm (may be required by state
chartering authority).
_________________
(1) Includes total demand deposits and noninterest-bearing time and savings deposits.
</FN>
</TABLE>
10
<PAGE>
EXHIBIT 25-B
------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) _________
--------------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
(Exact name of trustee as specified in its charter)
A National Banking Association 36-0899825
(I.R.S. employer
identification number)
One First National Plaza, Chicago, Illinois 60670-0126
(Address of principal executive offices) (Zip Code)
The First National Bank of Chicago
One First National Plaza, Suite 0286
Chicago, Illinois 60670-0286
Attn: Lynn A. Goldstein, Law Department (312) 732-6919
(Name, address and telephone number of agent for service)
---------------------------------------
PACIFIC TELESIS FINANCING I
(Exact name of obligor as specified in its charter)
Delaware To be applied for
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
130 Kearny Street
San Francisco, California 94108
(Address of principal executive offices) (Zip Code)
Preferred Securities
(Title of Indenture Securities)
Item 1. GENERAL INFORMATION. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation,
Washington, D.C., The Board of Governors of the Federal
Reserve System, Washington D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
1
<PAGE>
Item 2. AFFILIATIONS WITH THE OBLIGOR. If the obligor is an affiliate of
the trustee, describe each such affiliation.
No such affiliation exists with the trustee.
Item 16. LIST OF EXHIBITS. List below all exhibits filed as a part of
this Statement of Eligibility.
1. A copy of the articles of association of the trustee now in
effect.*
2. A copy of the certificates of authority of the trustee to
commence business.*
3. A copy of the authorization of the trustee to exercise
corporate trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by Section 321(b) of the
Act.
7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended,
the trustee, The First National Bank of Chicago, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this Statement of Eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Chicago and State of Illinois, on the 16th day of October, 1995
The First National Bank of Chicago, Trustee,
By /s/ R. D. Manella
R. D. Manella
Vice President
* Exhibit 1,2,3 and 4 are herein incorporated by reference to Exhibits
bearing identical numbers in Item 12 of the Form T-1 of The First
National Bank of Chicago, filed as Exhibit 26 to the Registration
Statement on Form S-3 of The CIT Group Holdings, Inc., filed with the
Securities and Exchange Commission on February 16, 1993 (Registration No.
33-58418).
2
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
October 16, 1995
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of an indenture between Pacific Telesis
Group and The First National Bank of Chicago, the undersigned, in accordance
with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby
consents that the reports of examinations of the undersigned, made by
Federal or State authorities authorized to make such examinations, may be
furnished by such authorities to the Securities and Exchange Commission upon
its request therefor.
Very truly yours,
The First National Bank of Chicago
By: /s/ R. D. Manella
R. D. Manella
Vice President
3
<PAGE>
<TABLE>
EXHIBIT 7
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Consolidated Report of Condition for Insured Commercial and State-Chartered Savings Banks for June 30, 1995
All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last
business day of the quarter.
Schedule RC--Balance Sheet
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- ---- ------------- ----
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from
Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1)... 0081 3,184,875 1.a.
b. Interest-bearing balances(2)............................ 0071 8,932,069 1.b.
2. Securities
a. Held-to-maturity securities(from Schedule RC-B,
column A................................................. 1754 249,502 2.a.
b. Available-for-sale securities (from Schedule RC-B,
column D)................................................ 1773 536,856 2.b.
3. Federal funds sold and securities purchased under agreements
to resell in domestic offices of the bank and its Edge and
Agreement subsidiaries, and in IBFs:
a. Federal Funds sold....................................... 0276 2,897,736 3.a.
b. Securities purchased under agreements to resell.......... 0277 1,417,129...3.b.
4
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- ---- ------------- ----
<S> <C> <C> <C> <C>
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income
(from Schedule RC-C).................................. RCFD 2122 16,567,408 4.a.
b. LESS: Allowance for loan and lease losses.......... RCFD 3123 358,877 4.b.
c. LESS: Allocated transfer risk reserve.............. RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance,
and reserve (item 4.a minus 4.b and 4.c).............. 2125 16,208,531 4.d.
5. Assets held in trading accounts....................... 3545 13,486,931 5.
6. Premises and fixed assets (including capitalized
leases)............................................... 2145 516,279 6.
7. Other real estate owned (from Schedule RC-M).......... 2150 11,216 7.
8. Investments in unconsolidated subsidiaries and
associated companies (from Schedule RC-M)............. 2130 12,946 8.
9. Customers' liability to this bank on acceptances
outstanding........................................... 2155 501,943 9.
10. Intangible assets (from Schedule RC-M)................ 2143 111,683 10.
11. Other assets (from Schedule RC-F)..................... 2160 1,258,270 11.
12. Total assets (sum of items 1 through 11).............. 2170 49,325,966 12.
5
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
13.Deposits:
a. In domestic offices (sum of totals of columns A and C from
Schedule RC-E, part 1)....................................... RCON 2200 14,889,235 13.a.
(1) Noninterest-bearing(1)................................... RCON 6631 5,895,584 13.a.(1)
(2) Interest-bearing......................................... RCON 6636 8,993,651 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
(from Schedule RC-E, part II)................................ RCFN 2200 13,289,760 13.b.
(1) Noninterest bearing...................................... RCFN 6631 315,549 13.b.(1)
(2) Interest-bearing......................................... RCFN 6636 12,974,211 13.b.(2)
<FN>
(1) Includes cash items in process of collection and unposted debits
(2) Includes time certificates of deposit not held in trading accounts
</FN>
6
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
LIABILITIES
14. Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of its
Edge and Agreement subsidiaries, and in IBFs:
a. Federal funds purchased.................................. RCFD 0278 2,942,186 14.a.
b. Securities sold under agreements to repurchase........... RCFD 0279 1,160,512 14.b.
15. a. Demand notes issued to the U.S. Treasury................. RCON 2840 112,768 15.a.
b. Trading Liabilities...................................... RCFD 3548 7,872,221 15.b.
16. Other borrowed money:
a. With original maturity of one year or less............... RCFD 2332 2,402,829 16.a.
b. With original maturity of more than one year............. RCFD 2333 643,987 16.b.
7
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
EQUITY CAPITAL
17. Mortgage indebtedness and obligations under capitalized
leases...................................................... RCFD 2910 278,108 17.
18. Bank's liability on acceptance executed and outstanding..... RCFD 2920 501,943 18.
19. Subordinated notes and debentures........................... RCFD 3200 1,225,000 19.
20. Other liabilities (from Schedule RC-G) ..................... RCFD 2930 981,938 20.
21. Total liabilities (sum of items 13 through 20).............. RCFD 2948 46,300,487 21.
22. Limited-Life preferred stock and related surplus............ RCFD 3282 0 22.
23. Perpetual preferred stock and related surplus.............. RCFD 3838 0 23.
24. Common stock............................................... RCFD 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred stock)... RCFD 3839 2,314,642 25.
26. a. Undivided profits and capital reserves.................. RCFD 3632 510,093 26.a.
b. Net unrealized holding gains (losses) on
available-for-sale securities........................... RCFD 8434 (880) 26.b.
8
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
27. Cumulative foreign currency translation adjustments........ RCFD 3284 ........766 27.
28. Total equity capital (sum of items 23 through 27).......... RCFD 3210 3,025,479 28.
29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28)...................... RCFD 3300 49,325,966 29.
<FN>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best
describes the most comprehensive level of auditing work performed for the bank
by independent external Number
auditors as of any date during 1993 .................................................. RCFD 6724 N/A M.1.
</FN>
9
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<FN>
1 = Independent audit of the bank conducted 4 = Directors' examination of the bank
in accordance with generallly accepted performed by other external auditors
auditing standards by a certified public (may be required by state chartering
accounting firm which submits a report authority).
on the bank.
2 = Independent audit of the bank's parent 5 = Review of the bank's financial
holding company conducted in accordance statements by external auditors.
with generally accepted auditing standards 6 = Compilation of the bank's financial
by a certified public accounting firm which statements by external auditors.
submits a report on the consolidated holding 7 = Other audit procedures (excluding
company (but not on the bank separately). tax preparation work)
3 = Director's examination of the bank conducted 8 = No external audit work.
in accordanced with generally accepted
auditing standards by a certified public
accounting firm (may be required by state
chartering authority).
_________________
(1) Includes total demand deposits and noninterest-bearing time and savings deposits.
</FN>
</TABLE>
10
<PAGE>
EXHIBIT 25-C
------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)__________
----------------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
(Exact name of trustee as specified in its charter)
A National Banking Association 36-0899825
(I.R.S. employer
identification number)
One First National Plaza, Chicago, Illinois 60670-0126
(Address of principal executive offices) (Zip Code)
The First National Bank of Chicago
One First National Plaza, Suite 0286
Chicago, Illinois 60670-0286
Attn: Lynn A. Goldstein, Law Department (312) 732-6919
(Name, address and telephone number of agent for service)
---------------------------------------
PACIFIC TELESIS FINANCING II
(Exact name of obligor as specified in its charter)
Delaware To be applied for
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
130 Kearny Street
San Francisco, California 94108
(Address of principal executive offices) (Zip Code)
Preferred Securities
(Title of Indenture Securities)
Item 1. GENERAL INFORMATION. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation, Washington, D.C.,
The Board of Governors of the Federal Reserve System,
Washington D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
Item 2. AFFILIATIONS WITH THE OBLIGOR. If the obligor is an affiliate of
______________________________
the trustee, describe each such affiliation.
No such affiliation exists with the trustee.
1
<PAGE>
Item 16. LIST OF EXHIBITS. List below all exhibits filed as a part of
this Statement of Eligibility.
1. A copy of the articles of association of the trustee now in
effect.*
2. A copy of the certificates of authority of the trustee to
commence business.*
3. A copy of the authorization of the trustee to exercise
corporate trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by Section 321(b) of the
Act.
7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939,
as amended, the trustee, The First National Bank of Chicago, a
national banking association organized and existing under the laws
of the United States of America, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Chicago and State of
Illinois, on the 16th day of October, 1995
The First National Bank of Chicago, Trustee,
By /s/ R. D. Manella
R. D. Manella
Vice President
* Exhibit 1,2,3 and 4 are herein incorporated by reference to Exhibits
bearing identical numbers in Item 12 of the Form T-1 of The First
National Bank of Chicago, filed as Exhibit 26 to the Registration
Statement on Form S-3 of The CIT Group Holdings, Inc., filed with the
Securities and Exchange Commission on February 16, 1993 (Registration No.
33-58418).
2
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
October 16, 1995
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of an indenture between Pacific Telesis
Group and The First National Bank of Chicago, the undersigned, in accordance
with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby
consents that the reports of examinations of the undersigned, made by
Federal or State authorities authorized to make such examinations, may be
furnished by such authorities to the Securities and Exchange Commission upon
its request therefore.
Very truly yours,
The First National Bank of Chicago
By: /s/ R. D. Manella
R. D. Manella
Vice President
3
<PAGE>
<TABLE>
EXHIBIT 7
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Consolidated Report of Condition for Insured Commercial and State-Chartered Savings Banks for June 30, 1995
All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last
business day of the quarter.
Schedule RC--Balance Sheet
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- ---- ------------- ----
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from
Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1)... 0081 3,184,875 1.a.
b. Interest-bearing balances(2)............................ 0071 8,932,069 1.b.
2. Securities
a. Held-to-maturity securities(from Schedule RC-B,
column A................................................. 1754 249,502 2.a.
b. Available-for-sale securities (from Schedule RC-B,
column D)................................................ 1773 536,856 2.b.
3. Federal funds sold and securities purchased under agreements
to resell in domestic offices of the bank and its Edge and
Agreement subsidiaries, and in IBFs:
a. Federal Funds sold....................................... 0276 2,897,736 3.a.
b. Securities purchased under agreements to resell.......... 0277 1,417,129...3.b.
4
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- ---- ------------- ----
<S> <C> <C> <C> <C>
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income
(from Schedule RC-C).................................. RCFD 2122 16,567,408 4.a.
b. LESS: Allowance for loan and lease losses.......... RCFD 3123 358,877 4.b.
c. LESS: Allocated transfer risk reserve.............. RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance,
and reserve (item 4.a minus 4.b and 4.c).............. 2125 16,208,531 4.d.
5. Assets held in trading accounts....................... 3545 13,486,931 5.
6. Premises and fixed assets (including capitalized
leases)............................................... 2145 516,279 6.
7. Other real estate owned (from Schedule RC-M).......... 2150 11,216 7.
8. Investments in unconsolidated subsidiaries and
associated companies (from Schedule RC-M)............. 2130 12,946 8.
9. Customers' liability to this bank on acceptances
outstanding........................................... 2155 501,943 9.
10. Intangible assets (from Schedule RC-M)................ 2143 111,683 10.
11. Other assets (from Schedule RC-F)..................... 2160 1,258,270 11.
12. Total assets (sum of items 1 through 11).............. 2170 49,325,966 12.
5
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
13.Deposits:
a. In domestic offices (sum of totals of columns A and C from
Schedule RC-E, part 1)....................................... RCON 2200 14,889,235 13.a.
(1) Noninterest-bearing(1)................................... RCON 6631 5,895,584 13.a.(1)
(2) Interest-bearing......................................... RCON 6636 8,993,651 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
(from Schedule RC-E, part II)................................ RCFN 2200 13,289,760 13.b.
(1) Noninterest bearing...................................... RCFN 6631 315,549 13.b.(1)
(2) Interest-bearing......................................... RCFN 6636 12,974,211 13.b.(2)
<FN>
(1) Includes cash items in process of collection and unposted debits
(2) Includes time certificates of deposit not held in trading accounts
</FN>
6
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
LIABILITIES
14. Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of its
Edge and Agreement subsidiaries, and in IBFs:
a. Federal funds purchased.................................. RCFD 0278 2,942,186 14.a.
b. Securities sold under agreements to repurchase........... RCFD 0279 1,160,512 14.b.
15. a. Demand notes issued to the U.S. Treasury................. RCON 2840 112,768 15.a.
b. Trading Liabilities...................................... RCFD 3548 7,872,221 15.b.
16. Other borrowed money:
a. With original maturity of one year or less............... RCFD 2332 2,402,829 16.a.
b. With original maturity of more than one year............. RCFD 2333 643,987 16.b.
7
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
EQUITY CAPITAL
17. Mortgage indebtedness and obligations under capitalized
leases...................................................... RCFD 2910 278,108 17.
18. Bank's liability on acceptance executed and outstanding..... RCFD 2920 501,943 18.
19. Subordinated notes and debentures........................... RCFD 3200 1,225,000 19.
20. Other liabilities (from Schedule RC-G) ..................... RCFD 2930 981,938 20.
21. Total liabilities (sum of items 13 through 20).............. RCFD 2948 46,300,487 21.
22. Limited-Life preferred stock and related surplus............ RCFD 3282 0 22.
23. Perpetual preferred stock and related surplus.............. RCFD 3838 0 23.
24. Common stock............................................... RCFD 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred stock)... RCFD 3839 2,314,642 25.
26. a. Undivided profits and capital reserves.................. RCFD 3632 510,093 26.a.
b. Net unrealized holding gains (losses) on
available-for-sale securities........................... RCFD 8434 (880) 26.b.
8
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
27. Cumulative foreign currency translation adjustments........ RCFD 3284 ........766 27.
28. Total equity capital (sum of items 23 through 27).......... RCFD 3210 3,025,479 28.
29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28)...................... RCFD 3300 49,325,966 29.
<FN>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best
describes the most comprehensive level of auditing work performed for the bank
by independent external Number
auditors as of any date during 1993 .................................................. RCFD 6724 N/A M.1.
</FN>
9
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<FN>
1 = Independent audit of the bank conducted 4 = Directors' examination of the bank
in accordance with generallly accepted performed by other external auditors
auditing standards by a certified public (may be required by state chartering
accounting firm which submits a report authority).
on the bank.
2 = Independent audit of the bank's parent 5 = Review of the bank's financial
holding company conducted in accordance statements by external auditors.
with generally accepted auditing standards 6 = Compilation of the bank's financial
by a certified public accounting firm which statements by external auditors.
submits a report on the consolidated holding 7 = Other audit procedures (excluding
company (but not on the bank separately). tax preparation work)
3 = Director's examination of the bank conducted 8 = No external audit work.
in accordanced with generally accepted
auditing standards by a certified public
accounting firm (may be required by state
chartering authority).
_________________
(1) Includes total demand deposits and noninterest-bearing time and savings deposits.
</FN>
</TABLE>
10
<PAGE>
EXHIBIT 25-D
------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
--------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ______
----------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
(Exact name of trustee as specified in its charter)
A National Banking Association 36-0899825
(I.R.S. employer
identification number)
One First National Plaza, Chicago, Illinois 60670-0126
(Address of principal executive offices) (Zip Code)
The First National Bank of Chicago
One First National Plaza, Suite 0286
Chicago, Illinois 60670-0286
Attn: Lynn A. Goldstein, Law Department (312) 732-6919
(Name, address and telephone number of agent for service)
------------------------------------
PACIFIC TELESIS FINANCING III
(Exact name of obligor as specified in its charter)
Delaware To be applied for
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
130 Kearny Street
San Francisco, California 94108
(Address of principal executive offices) (Zip Code)
Preferred Securities
(Title of Indenture Securities)
Item 1. GENERAL INFORMATION. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation, Washington, D.C.,
The Board of Governors of the Federal Reserve System,
Washington D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
1
<PAGE>
Item 2. AFFILIATIONS WITH THE OBLIGOR. If the obligor is an affiliate of
the trustee, describe each such affiliation.
No such affiliation exists with the trustee.
Item 16. LIST OF EXHIBITS. List below all exhibits filed as a part of
this Statement of Eligibility.
1. A copy of the articles of association of the trustee now in
effect.*
2. A copy of the certificates of authority of the trustee to
commence business.*
3. A copy of the authorization of the trustee to exercise
corporate trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by Section 321(b) of the
Act.
7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939,
as amended, the trustee, The First National Bank of Chicago, a
national banking association organized and existing under the laws
of the United States of America, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Chicago and State of
Illinois, on the 16th day of October, 1995
The First National Bank of Chicago, Trustee,
By /s/ R. D. Manella
R. D. Manella
Vice President
* Exhibit 1,2,3 and 4 are herein incorporated by reference to Exhibits
bearing identical numbers in Item 12 of the Form T-1 of The First
National Bank of Chicago, filed as Exhibit 26 to the Registration
Statement on Form S-3 of The CIT Group Holdings, Inc., filed with the
Securities and Exchange Commission on February 16, 1993 (Registration No.
33-58418).
2
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
October 16, 1995
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of an indenture between Pacific Telesis
Group and The First National Bank of Chicago, the undersigned, in accordance
with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby
consents that the reports of examinations of the undersigned, made by
Federal or State authorities authorized to make such examinations, may be
furnished by such authorities to the Securities and Exchange Commission upon
its request therefore.
Very truly yours,
The First National Bank of Chicago
By: /s/ R. D. Manella
R. D. Manella
Vice President
3
<PAGE>
<TABLE>
EXHIBIT 7
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Consolidated Report of Condition for Insured Commercial and State-Chartered Savings Banks for June 30, 1995
All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last
business day of the quarter.
Schedule RC--Balance Sheet
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- ---- ------------- ----
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from
Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1)... 0081 3,184,875 1.a.
b. Interest-bearing balances(2)............................ 0071 8,932,069 1.b.
2. Securities
a. Held-to-maturity securities(from Schedule RC-B,
column A................................................. 1754 249,502 2.a.
b. Available-for-sale securities (from Schedule RC-B,
column D)................................................ 1773 536,856 2.b.
3. Federal funds sold and securities purchased under agreements
to resell in domestic offices of the bank and its Edge and
Agreement subsidiaries, and in IBFs:
a. Federal Funds sold....................................... 0276 2,897,736 3.a.
b. Securities purchased under agreements to resell.......... 0277 1,417,129...3.b.
4
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- ---- ------------- ----
<S> <C> <C> <C> <C>
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income
(from Schedule RC-C).................................. RCFD 2122 16,567,408 4.a.
b. LESS: Allowance for loan and lease losses.......... RCFD 3123 358,877 4.b.
c. LESS: Allocated transfer risk reserve.............. RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance,
and reserve (item 4.a minus 4.b and 4.c).............. 2125 16,208,531 4.d.
5. Assets held in trading accounts....................... 3545 13,486,931 5.
6. Premises and fixed assets (including capitalized
leases)............................................... 2145 516,279 6.
7. Other real estate owned (from Schedule RC-M).......... 2150 11,216 7.
8. Investments in unconsolidated subsidiaries and
associated companies (from Schedule RC-M)............. 2130 12,946 8.
9. Customers' liability to this bank on acceptances
outstanding........................................... 2155 501,943 9.
10. Intangible assets (from Schedule RC-M)................ 2143 111,683 10.
11. Other assets (from Schedule RC-F)..................... 2160 1,258,270 11.
12. Total assets (sum of items 1 through 11).............. 2170 49,325,966 12.
5
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
13.Deposits:
a. In domestic offices (sum of totals of columns A and C from
Schedule RC-E, part 1)....................................... RCON 2200 14,889,235 13.a.
(1) Noninterest-bearing(1)................................... RCON 6631 5,895,584 13.a.(1)
(2) Interest-bearing......................................... RCON 6636 8,993,651 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
(from Schedule RC-E, part II)................................ RCFN 2200 13,289,760 13.b.
(1) Noninterest bearing...................................... RCFN 6631 315,549 13.b.(1)
(2) Interest-bearing......................................... RCFN 6636 12,974,211 13.b.(2)
<FN>
(1) Includes cash items in process of collection and unposted debits
(2) Includes time certificates of deposit not held in trading accounts
</FN>
6
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
LIABILITIES
14. Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of its
Edge and Agreement subsidiaries, and in IBFs:
a. Federal funds purchased.................................. RCFD 0278 2,942,186 14.a.
b. Securities sold under agreements to repurchase........... RCFD 0279 1,160,512 14.b.
15. a. Demand notes issued to the U.S. Treasury................. RCON 2840 112,768 15.a.
b. Trading Liabilities...................................... RCFD 3548 7,872,221 15.b.
16. Other borrowed money:
a. With original maturity of one year or less............... RCFD 2332 2,402,829 16.a.
b. With original maturity of more than one year............. RCFD 2333 643,987 16.b.
7
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
EQUITY CAPITAL
17. Mortgage indebtedness and obligations under capitalized
leases...................................................... RCFD 2910 278,108 17.
18. Bank's liability on acceptance executed and outstanding..... RCFD 2920 501,943 18.
19. Subordinated notes and debentures........................... RCFD 3200 1,225,000 19.
20. Other liabilities (from Schedule RC-G) ..................... RCFD 2930 981,938 20.
21. Total liabilities (sum of items 13 through 20).............. RCFD 2948 46,300,487 21.
22. Limited-Life preferred stock and related surplus............ RCFD 3282 0 22.
23. Perpetual preferred stock and related surplus.............. RCFD 3838 0 23.
24. Common stock............................................... RCFD 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred stock)... RCFD 3839 2,314,642 25.
26. a. Undivided profits and capital reserves.................. RCFD 3632 510,093 26.a.
b. Net unrealized holding gains (losses) on
available-for-sale securities........................... RCFD 8434 (880) 26.b.
8
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
27. Cumulative foreign currency translation adjustments........ RCFD 3284 ........766 27.
28. Total equity capital (sum of items 23 through 27).......... RCFD 3210 3,025,479 28.
29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28)...................... RCFD 3300 49,325,966 29.
<FN>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best
describes the most comprehensive level of auditing work performed for the bank
by independent external Number
auditors as of any date during 1993 .................................................. RCFD 6724 N/A M.1.
</FN>
9
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<FN>
1 = Independent audit of the bank conducted 4 = Directors' examination of the bank
in accordance with generallly accepted performed by other external auditors
auditing standards by a certified public (may be required by state chartering
accounting firm which submits a report authority).
on the bank.
2 = Independent audit of the bank's parent 5 = Review of the bank's financial
holding company conducted in accordance statements by external auditors.
with generally accepted auditing standards 6 = Compilation of the bank's financial
by a certified public accounting firm which statements by external auditors.
submits a report on the consolidated holding 7 = Other audit procedures (excluding
company (but not on the bank separately). tax preparation work)
3 = Director's examination of the bank conducted 8 = No external audit work.
in accordanced with generally accepted
auditing standards by a certified public
accounting firm (may be required by state
chartering authority).
_________________
(1) Includes total demand deposits and noninterest-bearing time and savings deposits.
</FN>
</TABLE>
10
<PAGE>
EXHIBIT 25-E-1
--------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
--------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)______
-------------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
(Exact name of trustee as specified in its charter)
A National Banking Association 36-0899825
(I.R.S. employer
identification number)
One First National Plaza, Chicago, Illinois 60670-0126
(Address of principal executive offices) (Zip Code)
The First National Bank of Chicago
One First National Plaza, Suite 0286
Chicago, Illinois 60670-0286
Attn: Lynn A. Goldstein, Law Department (312) 732-6919
(Name, address and telephone number of agent for service)
---------------------------------------
PACIFIC TELESIS GROUP
(Exact name of obligor as specified in its charter)
Nevada 94-2919931
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
130 Kearny Street
San Francisco, California 94108
(Address of principal executive offices) (Zip Code)
Guarantee of Pacific Telesis Group of Preferred Securities of
Pacific Telesis Financing I
(Title of Indenture Securities)
Item 1. GENERAL INFORMATION. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation, Washington, D.C.,
The Board of Governors of the Federal Reserve System,
Washington D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
1
<PAGE>
Item 2. AFFILIATIONS WITH THE OBLIGOR. If the obligor is an affiliate of
the trustee, describe each such affiliation.
No such affiliation exists with the trustee.
Item 16. LIST OF EXHIBITS. List below all exhibits filed as a part of
this Statement of Eligibility.
1. A copy of the articles of association of the trustee now in
effect.*
2. A copy of the certificates of authority of the trustee to
commence business.*
3. A copy of the authorization of the trustee to exercise
corporate trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by Section 321(b) of the
Act.
7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939,
as amended, the trustee, The First National Bank of Chicago, a
national banking association organized and existing under the laws
of the United States of America, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Chicago and State of
Illinois, on the 16th day of October, 1995
The First National Bank of Chicago, Trustee,
By /s/ R. D. Manella
R. D. Manella
Vice President
* Exhibit 1,2,3 and 4 are herein incorporated by reference to Exhibits
bearing identical numbers in Item 12 of the Form T-1 of The First
National Bank of Chicago, filed as Exhibit 26 to the Registration
Statement on Form S-3 of The CIT Group Holdings, Inc., filed with the
Securities and Exchange Commission on February 16, 1993 (Registration No.
33-58418).
2
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
October 16, 1995
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of an indenture between Pacific Telesis
Group and The First National Bank of Chicago, the undersigned, in accordance
with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby
consents that the reports of examinations of the undersigned, made by
Federal or State authorities authorized to make such examinations, may be
furnished by such authorities to the Securities and Exchange Commission upon
its request therefor.
Very truly yours,
The First National Bank of Chicago
By: /s/ R. D. Manella
R. D. Manella
Vice President
3
<PAGE>
<TABLE>
EXHIBIT 7
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Consolidated Report of Condition for Insured Commercial and State-Chartered Savings Banks for June 30, 1995
All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last
business day of the quarter.
Schedule RC--Balance Sheet
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- ---- ------------- ----
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from
Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1)... 0081 3,184,875 1.a.
b. Interest-bearing balances(2)............................ 0071 8,932,069 1.b.
2. Securities
a. Held-to-maturity securities(from Schedule RC-B,
column A................................................. 1754 249,502 2.a.
b. Available-for-sale securities (from Schedule RC-B,
column D)................................................ 1773 536,856 2.b.
3. Federal funds sold and securities purchased under agreements
to resell in domestic offices of the bank and its Edge and
Agreement subsidiaries, and in IBFs:
a. Federal Funds sold....................................... 0276 2,897,736 3.a.
b. Securities purchased under agreements to resell.......... 0277 1,417,129...3.b.
4
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- ---- ------------- ----
<S> <C> <C> <C> <C>
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income
(from Schedule RC-C).................................. RCFD 2122 16,567,408 4.a.
b. LESS: Allowance for loan and lease losses.......... RCFD 3123 358,877 4.b.
c. LESS: Allocated transfer risk reserve.............. RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance,
and reserve (item 4.a minus 4.b and 4.c).............. 2125 16,208,531 4.d.
5. Assets held in trading accounts....................... 3545 13,486,931 5.
6. Premises and fixed assets (including capitalized
leases)............................................... 2145 516,279 6.
7. Other real estate owned (from Schedule RC-M).......... 2150 11,216 7.
8. Investments in unconsolidated subsidiaries and
associated companies (from Schedule RC-M)............. 2130 12,946 8.
9. Customers' liability to this bank on acceptances
outstanding........................................... 2155 501,943 9.
10. Intangible assets (from Schedule RC-M)................ 2143 111,683 10.
11. Other assets (from Schedule RC-F)..................... 2160 1,258,270 11.
12. Total assets (sum of items 1 through 11).............. 2170 49,325,966 12.
5
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
13.Deposits:
a. In domestic offices (sum of totals of columns A and C from
Schedule RC-E, part 1)....................................... RCON 2200 14,889,235 13.a.
(1) Noninterest-bearing(1)................................... RCON 6631 5,895,584 13.a.(1)
(2) Interest-bearing......................................... RCON 6636 8,993,651 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
(from Schedule RC-E, part II)................................ RCFN 2200 13,289,760 13.b.
(1) Noninterest bearing...................................... RCFN 6631 315,549 13.b.(1)
(2) Interest-bearing......................................... RCFN 6636 12,974,211 13.b.(2)
<FN>
(1) Includes cash items in process of collection and unposted debits
(2) Includes time certificates of deposit not held in trading accounts
</FN>
6
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
LIABILITIES
14. Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of its
Edge and Agreement subsidiaries, and in IBFs:
a. Federal funds purchased.................................. RCFD 0278 2,942,186 14.a.
b. Securities sold under agreements to repurchase........... RCFD 0279 1,160,512 14.b.
15. a. Demand notes issued to the U.S. Treasury................. RCON 2840 112,768 15.a.
b. Trading Liabilities...................................... RCFD 3548 7,872,221 15.b.
16. Other borrowed money:
a. With original maturity of one year or less............... RCFD 2332 2,402,829 16.a.
b. With original maturity of more than one year............. RCFD 2333 643,987 16.b.
7
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
EQUITY CAPITAL
17. Mortgage indebtedness and obligations under capitalized
leases...................................................... RCFD 2910 278,108 17.
18. Bank's liability on acceptance executed and outstanding..... RCFD 2920 501,943 18.
19. Subordinated notes and debentures........................... RCFD 3200 1,225,000 19.
20. Other liabilities (from Schedule RC-G) ..................... RCFD 2930 981,938 20.
21. Total liabilities (sum of items 13 through 20).............. RCFD 2948 46,300,487 21.
22. Limited-Life preferred stock and related surplus............ RCFD 3282 0 22.
23. Perpetual preferred stock and related surplus.............. RCFD 3838 0 23.
24. Common stock............................................... RCFD 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred stock)... RCFD 3839 2,314,642 25.
26. a. Undivided profits and capital reserves.................. RCFD 3632 510,093 26.a.
b. Net unrealized holding gains (losses) on
available-for-sale securities........................... RCFD 8434 (880) 26.b.
8
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
27. Cumulative foreign currency translation adjustments........ RCFD 3284 ........766 27.
28. Total equity capital (sum of items 23 through 27).......... RCFD 3210 3,025,479 28.
29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28)...................... RCFD 3300 49,325,966 29.
<FN>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best
describes the most comprehensive level of auditing work performed for the bank
by independent external Number
auditors as of any date during 1993 .................................................. RCFD 6724 N/A M.1.
</FN>
9
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<FN>
1 = Independent audit of the bank conducted 4 = Directors' examination of the bank
in accordance with generallly accepted performed by other external auditors
auditing standards by a certified public (may be required by state chartering
accounting firm which submits a report authority).
on the bank.
2 = Independent audit of the bank's parent 5 = Review of the bank's financial
holding company conducted in accordance statements by external auditors.
with generally accepted auditing standards 6 = Compilation of the bank's financial
by a certified public accounting firm which statements by external auditors.
submits a report on the consolidated holding 7 = Other audit procedures (excluding
company (but not on the bank separately). tax preparation work)
3 = Director's examination of the bank conducted 8 = No external audit work.
in accordanced with generally accepted
auditing standards by a certified public
accounting firm (may be required by state
chartering authority).
_________________
(1) Includes total demand deposits and noninterest-bearing time and savings deposits.
</FN>
</TABLE>
10
<PAGE>
EXHIBIT 25-E-2
--------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
--------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)_______
--------------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
(Exact name of trustee as specified in its charter)
A National Banking Association 36-0899825
(I.R.S. employer
identification number)
One First National Plaza, Chicago, Illinois 60670-0126
(Address of principal executive offices) (Zip Code)
The First National Bank of Chicago
One First National Plaza, Suite 0286
Chicago, Illinois 60670-0286
Attn: Lynn A. Goldstein, Law Department (312) 732-6919
(Name, address and telephone number of agent for service)
---------------------------------
PACIFIC TELESIS GROUP
(Exact name of obligor as specified in its charter)
Nevada 94-2919931
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
130 Kearny Street
San Francisco, California 94108
(Address of principal executive offices) (Zip Code)
Guarantee of Pacific Telesis Group of Preferred Securities of
Pacific Telesis Financing II
(Title of Indenture Securities)
Item 1. GENERAL INFORMATION. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation, Washington, D.C.,
The Board of Governors of the Federal Reserve System,
Washington D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
1
<PAGE>
Item 2. AFFILIATIONS WITH THE OBLIGOR. If the obligor is an affiliate of
the trustee, describe each such affiliation.
No such affiliation exists with the trustee.
Item 16. LIST OF EXHIBITS. List below all exhibits filed as a part of
this Statement of Eligibility.
1. A copy of the articles of association of the trustee now in
effect.*
2. A copy of the certificates of authority of the trustee to
commence business.*
3. A copy of the authorization of the trustee to exercise
corporate trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by Section 321(b) of the
Act.
7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939,
as amended, the trustee, The First National Bank of Chicago, a
national banking association organized and existing under the laws
of the United States of America, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Chicago and State of
Illinois, on the 16th day of October, 1995
The First National Bank of Chicago, Trustee,
By /s/ R. D. Manella
R. D. Manella
Vice President
* Exhibit 1,2,3 and 4 are herein incorporated by reference to Exhibits
bearing identical numbers in Item 12 of the Form T-1 of The First
National Bank of Chicago, filed as Exhibit 26 to the Registration
Statement on Form S-3 of The CIT Group Holdings, Inc., filed with the
Securities and Exchange Commission on February 16, 1993 (Registration No.
33-58418).
2
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
October 16, 1995
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of an indenture between Pacific Telesis
Group and The First National Bank of Chicago, the undersigned, in accordance
with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby
consents that the reports of examinations of the undersigned, made by
Federal or State authorities authorized to make such examinations, may be
furnished by such authorities to the Securities and Exchange Commission upon
its request therefor.
Very truly yours,
The First National Bank of Chicago
By: /s/ R. D. Manella
R. D. Manella
Vice President
3
<PAGE>
<TABLE>
EXHIBIT 7
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Consolidated Report of Condition for Insured Commercial and State-Chartered Savings Banks for June 30, 1995
All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last
business day of the quarter.
Schedule RC--Balance Sheet
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- ---- ------------- ----
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from
Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1)... 0081 3,184,875 1.a.
b. Interest-bearing balances(2)............................ 0071 8,932,069 1.b.
2. Securities
a. Held-to-maturity securities(from Schedule RC-B,
column A................................................. 1754 249,502 2.a.
b. Available-for-sale securities (from Schedule RC-B,
column D)................................................ 1773 536,856 2.b.
3. Federal funds sold and securities purchased under agreements
to resell in domestic offices of the bank and its Edge and
Agreement subsidiaries, and in IBFs:
a. Federal Funds sold....................................... 0276 2,897,736 3.a.
b. Securities purchased under agreements to resell.......... 0277 1,417,129...3.b.
4
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- ---- ------------- ----
<S> <C> <C> <C> <C>
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income
(from Schedule RC-C).................................. RCFD 2122 16,567,408 4.a.
b. LESS: Allowance for loan and lease losses.......... RCFD 3123 358,877 4.b.
c. LESS: Allocated transfer risk reserve.............. RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance,
and reserve (item 4.a minus 4.b and 4.c).............. 2125 16,208,531 4.d.
5. Assets held in trading accounts....................... 3545 13,486,931 5.
6. Premises and fixed assets (including capitalized
leases)............................................... 2145 516,279 6.
7. Other real estate owned (from Schedule RC-M).......... 2150 11,216 7.
8. Investments in unconsolidated subsidiaries and
associated companies (from Schedule RC-M)............. 2130 12,946 8.
9. Customers' liability to this bank on acceptances
outstanding........................................... 2155 501,943 9.
10. Intangible assets (from Schedule RC-M)................ 2143 111,683 10.
11. Other assets (from Schedule RC-F)..................... 2160 1,258,270 11.
12. Total assets (sum of items 1 through 11).............. 2170 49,325,966 12.
5
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
13.Deposits:
a. In domestic offices (sum of totals of columns A and C from
Schedule RC-E, part 1)....................................... RCON 2200 14,889,235 13.a.
(1) Noninterest-bearing(1)................................... RCON 6631 5,895,584 13.a.(1)
(2) Interest-bearing......................................... RCON 6636 8,993,651 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
(from Schedule RC-E, part II)................................ RCFN 2200 13,289,760 13.b.
(1) Noninterest bearing...................................... RCFN 6631 315,549 13.b.(1)
(2) Interest-bearing......................................... RCFN 6636 12,974,211 13.b.(2)
<FN>
(1) Includes cash items in process of collection and unposted debits
(2) Includes time certificates of deposit not held in trading accounts
</FN>
6
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
LIABILITIES
14. Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of its
Edge and Agreement subsidiaries, and in IBFs:
a. Federal funds purchased.................................. RCFD 0278 2,942,186 14.a.
b. Securities sold under agreements to repurchase........... RCFD 0279 1,160,512 14.b.
15. a. Demand notes issued to the U.S. Treasury................. RCON 2840 112,768 15.a.
b. Trading Liabilities...................................... RCFD 3548 7,872,221 15.b.
16. Other borrowed money:
a. With original maturity of one year or less............... RCFD 2332 2,402,829 16.a.
b. With original maturity of more than one year............. RCFD 2333 643,987 16.b.
7
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
EQUITY CAPITAL
17. Mortgage indebtedness and obligations under capitalized
leases...................................................... RCFD 2910 278,108 17.
18. Bank's liability on acceptance executed and outstanding..... RCFD 2920 501,943 18.
19. Subordinated notes and debentures........................... RCFD 3200 1,225,000 19.
20. Other liabilities (from Schedule RC-G) ..................... RCFD 2930 981,938 20.
21. Total liabilities (sum of items 13 through 20).............. RCFD 2948 46,300,487 21.
22. Limited-Life preferred stock and related surplus............ RCFD 3282 0 22.
23. Perpetual preferred stock and related surplus.............. RCFD 3838 0 23.
24. Common stock............................................... RCFD 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred stock)... RCFD 3839 2,314,642 25.
26. a. Undivided profits and capital reserves.................. RCFD 3632 510,093 26.a.
b. Net unrealized holding gains (losses) on
available-for-sale securities........................... RCFD 8434 (880) 26.b.
8
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
27. Cumulative foreign currency translation adjustments........ RCFD 3284 ........766 27.
28. Total equity capital (sum of items 23 through 27).......... RCFD 3210 3,025,479 28.
29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28)...................... RCFD 3300 49,325,966 29.
<FN>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best
describes the most comprehensive level of auditing work performed for the bank
by independent external Number
auditors as of any date during 1993 .................................................. RCFD 6724 N/A M.1.
</FN>
9
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<FN>
1 = Independent audit of the bank conducted 4 = Directors' examination of the bank
in accordance with generallly accepted performed by other external auditors
auditing standards by a certified public (may be required by state chartering
accounting firm which submits a report authority).
on the bank.
2 = Independent audit of the bank's parent 5 = Review of the bank's financial
holding company conducted in accordance statements by external auditors.
with generally accepted auditing standards 6 = Compilation of the bank's financial
by a certified public accounting firm which statements by external auditors.
submits a report on the consolidated holding 7 = Other audit procedures (excluding
company (but not on the bank separately). tax preparation work)
3 = Director's examination of the bank conducted 8 = No external audit work.
in accordanced with generally accepted
auditing standards by a certified public
accounting firm (may be required by state
chartering authority).
_________________
(1) Includes total demand deposits and noninterest-bearing time and savings deposits.
</FN>
</TABLE>
10
<PAGE>
EXHIBIT 25-E-3
--------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
--------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)_______
-------------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
(Exact name of trustee as specified in its charter)
A National Banking Association 36-0899825
(I.R.S. employer
identification number)
One First National Plaza, Chicago, Illinois 60670-0126
(Address of principal executive offices) (Zip Code)
The First National Bank of Chicago
One First National Plaza, Suite 0286
Chicago, Illinois 60670-0286
Attn: Lynn A. Goldstein, Law Department (312) 732-6919
(Name, address and telephone number of agent for service)
-----------------------------------
PACIFIC TELESIS GROUP
(Exact name of obligor as specified in its charter)
Nevada 94-2919931
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
130 Kearny Street
San Francisco, California 94108
(Address of principal executive offices) (Zip Code)
Guarantee of Pacific Telesis Group of Preferred Securities of
Pacific Telesis Financing III
(Title of Indenture Securities)
Item 1. GENERAL INFORMATION. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation, Washington, D.C.,
The Board of Governors of the Federal Reserve System,
Washington D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
1
<PAGE>
Item 2. AFFILIATIONS WITH THE OBLIGOR. If the obligor is an affiliate of
the trustee, describe each such affiliation.
No such affiliation exists with the trustee.
Item 16. LIST OF EXHIBITS. List below all exhibits filed as a part of
this Statement of Eligibility.
1. A copy of the articles of association of the trustee now in
effect.*
2. A copy of the certificates of authority of the trustee to
commence business.*
3. A copy of the authorization of the trustee to exercise
corporate trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by Section 321(b) of the
Act.
7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939,
as amended, the trustee, The First National Bank of Chicago, a
national banking association organized and existing under the laws
of the United States of America, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Chicago and State of
Illinois, on the 16th day of October, 1995
The First National Bank of Chicago, Trustee,
By /s/ R. D. Manella
R. D. Manella
Vice President
* Exhibit 1,2,3 and 4 are herein incorporated by reference to Exhibits
bearing identical numbers in Item 12 of the Form T-1 of The First
National Bank of Chicago, filed as Exhibit 26 to the Registration
Statement on Form S-3 of The CIT Group Holdings, Inc., filed with the
Securities and Exchange Commission on February 16, 1993 (Registration No.
33-58418).
2
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
October 16, 1995
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of an indenture between Pacific Telesis
Group and The First National Bank of Chicago, the undersigned, in accordance
with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby
consents that the reports of examinations of the undersigned, made by
Federal or State authorities authorized to make such examinations, may be
furnished by such authorities to the Securities and Exchange Commission upon
its request therefor.
Very truly yours,
The First National Bank of Chicago
By: /s/ R. D. Manella
R. D. Manella
Vice President
3
<PAGE>
<TABLE>
EXHIBIT 7
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Consolidated Report of Condition for Insured Commercial and State-Chartered Savings Banks for June 30, 1995
All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last
business day of the quarter.
Schedule RC--Balance Sheet
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- ---- ------------- ----
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from
Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1)... 0081 3,184,875 1.a.
b. Interest-bearing balances(2)............................ 0071 8,932,069 1.b.
2. Securities
a. Held-to-maturity securities(from Schedule RC-B,
column A................................................. 1754 249,502 2.a.
b. Available-for-sale securities (from Schedule RC-B,
column D)................................................ 1773 536,856 2.b.
3. Federal funds sold and securities purchased under agreements
to resell in domestic offices of the bank and its Edge and
Agreement subsidiaries, and in IBFs:
a. Federal Funds sold....................................... 0276 2,897,736 3.a.
b. Securities purchased under agreements to resell.......... 0277 1,417,129...3.b.
4
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- ---- ------------- ----
<S> <C> <C> <C> <C>
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income
(from Schedule RC-C).................................. RCFD 2122 16,567,408 4.a.
b. LESS: Allowance for loan and lease losses.......... RCFD 3123 358,877 4.b.
c. LESS: Allocated transfer risk reserve.............. RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance,
and reserve (item 4.a minus 4.b and 4.c).............. 2125 16,208,531 4.d.
5. Assets held in trading accounts....................... 3545 13,486,931 5.
6. Premises and fixed assets (including capitalized
leases)............................................... 2145 516,279 6.
7. Other real estate owned (from Schedule RC-M).......... 2150 11,216 7.
8. Investments in unconsolidated subsidiaries and
associated companies (from Schedule RC-M)............. 2130 12,946 8.
9. Customers' liability to this bank on acceptances
outstanding........................................... 2155 501,943 9.
10. Intangible assets (from Schedule RC-M)................ 2143 111,683 10.
11. Other assets (from Schedule RC-F)..................... 2160 1,258,270 11.
12. Total assets (sum of items 1 through 11).............. 2170 49,325,966 12.
5
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
13.Deposits:
a. In domestic offices (sum of totals of columns A and C from
Schedule RC-E, part 1)....................................... RCON 2200 14,889,235 13.a.
(1) Noninterest-bearing(1)................................... RCON 6631 5,895,584 13.a.(1)
(2) Interest-bearing......................................... RCON 6636 8,993,651 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
(from Schedule RC-E, part II)................................ RCFN 2200 13,289,760 13.b.
(1) Noninterest bearing...................................... RCFN 6631 315,549 13.b.(1)
(2) Interest-bearing......................................... RCFN 6636 12,974,211 13.b.(2)
<FN>
(1) Includes cash items in process of collection and unposted debits
(2) Includes time certificates of deposit not held in trading accounts
</FN>
6
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
LIABILITIES
14. Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of its
Edge and Agreement subsidiaries, and in IBFs:
a. Federal funds purchased.................................. RCFD 0278 2,942,186 14.a.
b. Securities sold under agreements to repurchase........... RCFD 0279 1,160,512 14.b.
15. a. Demand notes issued to the U.S. Treasury................. RCON 2840 112,768 15.a.
b. Trading Liabilities...................................... RCFD 3548 7,872,221 15.b.
16. Other borrowed money:
a. With original maturity of one year or less............... RCFD 2332 2,402,829 16.a.
b. With original maturity of more than one year............. RCFD 2333 643,987 16.b.
7
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
EQUITY CAPITAL
17. Mortgage indebtedness and obligations under capitalized
leases...................................................... RCFD 2910 278,108 17.
18. Bank's liability on acceptance executed and outstanding..... RCFD 2920 501,943 18.
19. Subordinated notes and debentures........................... RCFD 3200 1,225,000 19.
20. Other liabilities (from Schedule RC-G) ..................... RCFD 2930 981,938 20.
21. Total liabilities (sum of items 13 through 20).............. RCFD 2948 46,300,487 21.
22. Limited-Life preferred stock and related surplus............ RCFD 3282 0 22.
23. Perpetual preferred stock and related surplus.............. RCFD 3838 0 23.
24. Common stock............................................... RCFD 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred stock)... RCFD 3839 2,314,642 25.
26. a. Undivided profits and capital reserves.................. RCFD 3632 510,093 26.a.
b. Net unrealized holding gains (losses) on
available-for-sale securities........................... RCFD 8434 (880) 26.b.
8
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<CAPTION>
Dollar Amounts C400
in Thousands RCFD BILL MIL THOU <-
-------------- --------- ------------- ------
<S> <C> <C> <C> <C>
27. Cumulative foreign currency translation adjustments........ RCFD 3284 ........766 27.
28. Total equity capital (sum of items 23 through 27).......... RCFD 3210 3,025,479 28.
29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28)...................... RCFD 3300 49,325,966 29.
<FN>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best
describes the most comprehensive level of auditing work performed for the bank
by independent external Number
auditors as of any date during 1993 .................................................. RCFD 6724 N/A M.1.
</FN>
9
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/95
Address: One First National Plaza, Suite 460 ST-BK: 17-1630-FFIEC 031
City, State, Zip: Chicago, IL 60670-0460 Page RC-1
FDIC Certificate No.: 0/3/6/1/8
=========
Schedule RC--Continued
<FN>
1 = Independent audit of the bank conducted 4 = Directors' examination of the bank
in accordance with generallly accepted performed by other external auditors
auditing standards by a certified public (may be required by state chartering
accounting firm which submits a report authority).
on the bank.
2 = Independent audit of the bank's parent 5 = Review of the bank's financial
holding company conducted in accordance statements by external auditors.
with generally accepted auditing standards 6 = Compilation of the bank's financial
by a certified public accounting firm which statements by external auditors.
submits a report on the consolidated holding 7 = Other audit procedures (excluding
company (but not on the bank separately). tax preparation work)
3 = Director's examination of the bank conducted 8 = No external audit work.
in accordanced with generally accepted
auditing standards by a certified public
accounting firm (may be required by state
chartering authority).
_________________
(1) Includes total demand deposits and noninterest-bearing time and savings deposits.
</FN>
</TABLE>
10
