<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: March 31, 1997
SBC COMMUNICATIONS INC.
A Delaware Corporation
Commission File No. 1-8610
IRS Employer No. 43-1301883
175 E. Houston, San Antonio, Texas 78205
Telephone Number (210) 821-4105
<PAGE> 2
Item 7. Financial Statements and Exhibits
SBC Communications Inc. is filing herewith the following exhibits:
(c) Exhibits.
Exhibit
Number Description
1 Underwriting Agreement, dated as of March 20, 1997, among SBC
Communications Inc., Telefonos de Mexico, S.A. de C.V. and Salomon
Brothers Inc for itself and as Representative for the several
Underwriters named in Schedule I thereto.
4-a Indenture Agreement, dated as of November 1, 1994, between SBC
Communications Inc. and The Bank of New York, as Trustee.
4-b SBC Communications Inc. Officers' Certificate dated March 26, 1997,
setting forth the terms of the 7 3/4% Exchangeable Notes Due March
15, 2001, pursuant to Section 2.02(a) of the Indenture.
4-c Form of Global Security
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SBC Communications Inc.
By: /s/ Donald E. Kiernan
---------------------------------
Donald E. Kiernan
Senior Vice President, Treasurer
and Chief Financial Officer
March 31, 1997
<PAGE> 4
EXHIBIT INDEX
-------------
Exhibit No. Description
- ----------- -----------
1 Underwriting Agreement, dated as of March 20, 1997, among SBC
Communications Inc., Telefonos de Mexico, S.A. de C.V. and Salomon
Brothers Inc for itself and as Representative for the several
Underwriters named in Schedule I thereto.
4-a Indenture Agreement, dated as of November 1, 1994, between SBC
Communications Inc. and The Bank of New York, as Trustee.
4-b SBC Communications Inc. Officers' Certificate dated March 26, 1997,
setting forth the terms of the 7 3/4% Exchangeable Notes Due March
15, 2001, pursuant to Section 2.02(a) of the Indenture.
4-c Form of Global Security
<PAGE> 1
Exhibit 1
SBC Communications Inc.
9,000,000 DECSSM (Debt Exchangeable for Common Stock SM)*
7 3/4% Exchangeable Notes Due March 15, 2001
(Subject to Exchange into American Depositary Shares, each representing twenty
Series L Shares, without par value, of Telefonos de Mexico, S.A. de C.V.)
UNDERWRITING AGREEMENT
New York, New York
March 20, 1997
SALOMON BROTHERS INC
As Representative for the several Underwriters
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
SBC Communications Inc., a Delaware corporation ("SBC"), proposes to
sell to the underwriters named in Schedule I hereto (the "Underwriters"), for
whom you (the "Representative") are acting as representative, an aggregate of
9,000,000 DECSSM (Debt Exchangeable for Common StockSM) consisting of its 7 3/4%
Exchangeable Notes Due March 15, 2001 (the "Firm DECS"), to be issued under an
indenture, dated as of November 1, 1994, as supplemented by the First
Supplemental Indenture, dated as of the Firm Delivery Date (as defined below)
(as may be further supplemented from time to time, the "Indenture"), between SBC
and The Bank of New York, as trustee (the "Trustee"). SBC also proposes to grant
to the Underwriters an option to purchase up to an additional 1,000,000 DECS
(the "Option DECS"; the Option DECS, together with the Firm DECS, being
hereinafter called the "DECS") to cover over-allotments, if any. At maturity
(including as a result of acceleration or otherwise) the principal amount of
each DECS will be exchanged by SBC into a number of American Depositary Shares
("Telmex ADSs"), each representing the right to receive twenty Series L Shares,
without par value ("L Shares"), of Telefonos de Mexico, S.A. de C.V., a
corporation organized under the laws of Mexico ("Telmex") (or, at SBC's option,
the cash
- --------
* Plus an option to purchase from SBC Communications Inc. up to 1,000,000
additional DECS to cover over-allotments. "DECS" and "Debt Exchangeable for
Common Stock" are service marks of Salomon Brothers Inc.
<PAGE> 2
equivalent and/or such other consideration as permitted or required by the terms
of the DECS) at the exchange rate specified in the Prospectus.
In connection with the foregoing, Telmex has filed with the
Commission (as defined below) registration statements with respect to
200,000,000 L Shares represented by 9,000,000 Telmex ADSs (the "Firm ADSs") in
respect of the Firm DECS, plus an additional 1,000,000 Telmex ADSs (the "Option
ADSs"; the Option ADSs, together with the Firm ADSs, being hereinafter called
the "ADSs") in respect of the Option DECS, for delivery by SBC pursuant to the
DECS, which registration statements are referred to in Sections 1(b)(i) and
1(b)(iii) of this Agreement. The L Shares represented by the Firm ADSs are
hereinafter called the "Firm Shares"; the L Shares represented by the Option
ADSs are hereinafter called the "Option Shares"; and the Firm Shares and the
Option Shares are hereinafter collectively called the "Shares."
1. Representations and Warranties.
(a) Representation and Warranties of SBC. SBC represents and
warrants to, and agrees with, the several Underwriters and Telmex that:
(i) A registration statement on Form S-3 (File No. 33-56909)
with respect to the DECS has been prepared by SBC in conformity with
the requirements of the Securities Act of 1933, as amended
("Securities Act"), and the rules and regulations ("Rules and
Regulations") of the Securities and Exchange Commission
("Commission") thereunder and has become effective. SBC meets the
requirements for use of Form S-3 under the Securities Act. As used
in this Agreement, (A) "Registration Statement" means that
registration statement, as amended or supplemented to the date
hereof (including all documents incorporated therein by reference);
(B) "Preliminary Prospectus" means each prospectus (including all
documents incorporated therein by reference) included in that
Registration Statement, or amendments thereto or supplements
thereof, before it became effective under the Securities Act,
including any prospectus filed with the Commission pursuant to Rule
424(a) of the Rules and Regulations; (C) "Basic Prospectus" means
the prospectus (including all documents incorporated therein by
reference) included in the Registration Statement; and (D)
"Prospectus" means the Basic Prospectus, together with any
prospectus amendment or supplement (including in each case all
documents incorporated therein by reference) specifically relating
to the DECS, as filed with, or mailed for filing to, the Commission
pursuant to paragraph (b) or (c) of Rule 424 of the Rules and
Regulations. The Commission has not issued any order preventing or
suspending the use of the Prospectus.
(ii) The Registration Statement and each Prospectus contain,
and (in the case of any amendment or supplement to any such
document, or any material incorporated by reference in any such
document, filed with the
2
<PAGE> 3
Commission after the date as of which this representation is being
made) will contain at all times during the period specified in
Section 6(a)(iii) hereof, all statements which are required by the
Securities Act, the Securities Exchange Act of 1934, as amended
("Exchange Act"), the Trust Indenture Act of 1939, as amended
("Trust Indenture Act"), and the rules and regulations of the
Commission under such Acts; the Indenture, including any amendments
and supplements thereto, pursuant to which the DECS will be issued
will conform with the requirements of the Trust Indenture Act and
the rules and regulations of the Commission thereunder, and the
Registration Statement and the Prospectus do not, and (in the case
of any amendment or supplement to any such document, or any material
incorporated by reference in any such document, filed with the
Commission after the date as of which this representation is being
made) will not at any time during the period specified in Section
6(a)(iii) hereof, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; provided
that SBC makes no representation or warranty (A) as to information
contained in or omitted from the Registration Statement or the
Prospectus in reliance upon and in conformity with information
furnished in writing to SBC through the Representative by or on
behalf of any Underwriter specifically for use therein, or (B) as to
any statements in or omissions from the Statement of Eligibility and
Qualification of the Trustee under the Indenture.
(iii) SBC is not in violation of its corporate charter or
bylaws or in default under any agreement, indenture or instrument,
the effect of which violation or default would be material to SBC;
the execution, delivery and performance of this Agreement and
compliance by SBC with the provisions of the DECS and the Indenture
will not conflict with, result in the creation or imposition of any
lien, charge or encumbrance upon any of the assets of SBC or any of
its material subsidiaries pursuant to the terms of, or constitute a
default under, any agreement, indenture or instrument, or result in
a violation of the corporate charter or bylaws of SBC or any order,
rule or regulation of any court or governmental agency having
jurisdiction over SBC; and except as required by the Securities Act,
the Trust Indenture Act and applicable state securities laws, no
consent, authorization or order of, or filing or registration with,
any court or governmental agency is required for the execution,
delivery and performance of this Agreement and the Indenture.
(iv) There has not occurred any material adverse change, or
any development involving a prospective material adverse change, in
the condition, financial or otherwise, or in the earnings, business
or operations of SBC and its subsidiaries, taken as a whole, from
that set forth in the Prospectus.
(v) On each Delivery Date (as defined in Section 5 hereof)
(i) the Indenture will have been duly authorized, executed and
delivered by SBC and will constitute the legally binding obligation
of SBC, enforceable in accordance
3
<PAGE> 4
with its terms, (ii) the DECS will have been duly authorized and,
upon payment therefor as provided in this Agreement, will constitute
legally binding obligations of SBC entitled to the benefits of the
Indenture, and (iii) the DECS and the Indenture will conform to the
descriptions thereof contained in the Prospectus.
(vi) Each of SBC and its subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, with full
corporate power and authority to own its properties and conduct its
business as described in the Prospectus, and is duly qualified to do
business as a foreign corporation and is in good standing under the
laws of each jurisdiction which requires such qualification wherein
it owns or leases properties or conducts business, except where the
failure to so qualify would not have a material adverse effect on
SBC and its subsidiaries taken as a whole.
(vii) Except as described in the Prospectus, there is no legal
or governmental proceeding pending or, to the knowledge of SBC,
threatened against SBC or any of its subsidiaries which is
reasonably expected to result in any material adverse change in the
financial condition, results of operations, business or prospects of
SBC and its subsidiaries taken as a whole or which is required to be
disclosed in the Registration Statement.
(viii) The financial statements filed as part of the
Registration Statement or included in any Preliminary Prospectus or
the Prospectus present, or (in the case of any amendment or
supplement to any such document, or any material incorporated by
reference in any such document, filed with the Commission after the
date as of which this representation is being made) will present at
all times during the period specified in Section 6(a)(iii) hereof,
fairly, the consolidated financial condition and results of
operations of SBC and its subsidiaries, at the dates and for the
periods indicated, and have been, and (in the case of any amendment
or supplement to any such document, or any material incorporated by
reference in any such document, filed with the Commission after the
date as of which this representation is being made) will be at all
times during the period specified in Section 6(a)(iii) hereof,
prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved
(except as described in the notes thereto).
(ix) The documents incorporated by reference into any
Preliminary Prospectus or the Prospectus have been, and (in the case
of any amendment or supplement to any such document, or any material
incorporated by reference in any such document, filed with the
Commission after the date as of which this representation is being
made) will be, at all times during the period specified in Section
6(a)(iii) hereof, prepared by SBC in conformity with the applicable
requirements of the Securities Act and the Rules and Regulations and
the
4
<PAGE> 5
Exchange Act and the rules and regulations of the Commission
thereunder and such documents have been, or (in the case of any
amendment or supplement to any such document, or any material
incorporated by reference in any such document, filed with the
Commission after the date as of which this representation is being
made) will be at all times during the period specified in Section
6(a)(iii) hereof, timely filed as required thereby.
(x) There are no contracts or other documents which are
required to be filed as exhibits to the Registration Statement by
the Securities Act or by the Rules and Regulations, or which were
required to be filed as exhibits to any document incorporated by
reference in the Prospectus by the Exchange Act or the rules and
regulations of the Commission thereunder, which have not been filed
as exhibits to the Registration Statement or to such document or
incorporated therein by reference as permitted by the Rules and
Regulations or the rules and regulations of the Commission under the
Exchange Act as required.
(xi) SBC has not taken and will not take, directly or
indirectly, any action designed to or which has constituted or which
might reasonably be expected to cause or result, under the Exchange
Act or otherwise, in stabilization or manipulation of the price of
any security of Telmex to facilitate the sale or resale of the DECS,
the Shares or the ADSs.
(xii) No stamp or other issuance or transfer taxes or duties
and no capital gains, income, withholding or other taxes are payable
by or on behalf of SBC or the Underwriters to Mexico or any
political subdivision or taxing authority thereof or therein in
connection with (A) the deposit with the Depositary of Shares by or
on behalf of SBC against the issuance of ADRs evidencing ADSs or (B)
the delivery by or on behalf of SBC of the ADSs and the Shares to or
for the respective accounts of the holders of the DECS.
(xiii) No facts have come to the attention of SBC which lead SBC
to believe, or should lead SBC to believe, that (i) on the date each
became effective, and on the date any post-effective amendments
thereto became or become effective, the Telmex Registration
Statement or the ADS Registration Statement did not or will not
contain any untrue statement of a material fact or omit to state a
fact required to be stated therein or necessary in order to make the
statements therein not misleading and (ii) the Telmex Prospectus
(together with any supplement thereto) did not or will not include
any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(b) Representations and Warranties of Telmex. Telmex represents
and warrants to, and agrees with, SBC and the several Underwriters that:
5
<PAGE> 6
(i) A registration statement on Form F-3 (File No. 333-6614)
with respect to the Shares has been prepared by Telmex in conformity
with the requirements of the Securities Act and the Rules and
Regulations of the Commission thereunder and has become effective in
the form delivered to the Underwriters. Telmex meets the
requirements for use of Form F-3 under the Securities Act. As used
in this Agreement, (A) "Telmex Registration Statement" means that
registration statement (including all documents incorporated therein
by reference); (B) "Telmex Preliminary Prospectus" means each
prospectus (including all documents incorporated therein by
reference) included in the Telmex Registration Statement, or
amendments thereto, before it became effective under the Securities
Act, including any prospectus filed with the Commission pursuant to
Rule 424(a) of the Rules and Regulations; and (C) "Telmex
Prospectus" means the prospectus (including all documents
incorporated therein by reference) included in the Telmex
Registration Statement as filed with, or mailed for filing to, the
Commission pursuant to Rule 424(b) of the Rules and Regulations and
in the form attached to the SBC Prospectus. The Commission has not
issued any order preventing or suspending the use of the Telmex
Prospectus.
(ii) The Telmex Registration Statement and the Telmex
Prospectus contain, and (in the case of any amendment or supplement
to any such document, or any material incorporated by reference in
any such document, filed with the Commission after the date as of
which this representation is being made) will contain at all times
during the period specified in Section 6(b)(iii) hereof, all
statements which are required by the Securities Act, the Exchange
Act and the rules and regulations of the Commission under such Acts;
and the Telmex Registration Statement and the Telmex Prospectus do
not, and (in the case of any amendment or supplement to any such
document, or any material incorporated by reference in any such
document, filed with the Commission after the date as of which this
representation is being made) will not at any time during the period
specified in Section 6(b)(iii) hereof, contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading; provided that Telmex makes no representation or warranty
as to information contained in or omitted from the Telmex
Registration Statement or the Telmex Prospectus made in reliance
upon and in conformity with information furnished in writing to
Telmex through the Representative by or on behalf of any Underwriter
specifically for use therein.
(iii) Registration statements on Form F-6 (File No. 33-39894
and File No. 33-47506) with respect to the ADSs have been filed with
the Commission and have become effective in the form delivered to
the Representative and, excluding exhibits, to the Representative
for each of the other Underwriters. "ADS Registration Statements"
means those registration statements. The Commission has not issued
any stop order suspending the effectiveness of such registration
statements, and no proceeding for the purpose
6
<PAGE> 7
has been initiated or threatened by the Commission. The ADS
Registration Statements conform, and any further amendments thereto
will conform, in all material respects to the requirements of the
Securities Act and the rules and regulations of the Commission
thereunder, and do not and will not, as of the applicable effective
date, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading.
(iv) There has not occurred any material adverse change, or
any development involving a prospective material adverse change, in
the condition, financial or otherwise, or in the earnings, business
or operations of Telmex and its subsidiaries, taken as a whole, from
that set forth in the Telmex Prospectus.
(v) Each of Telmex and its subsidiaries has been duly
incorporated and is validly existing as a corporation (sociedad
anonima de capital variable) with full power and authority
(corporate and other) to own its properties and conduct its business
as described in the Telmex Prospectus, and is duly qualified to do
business as a corporation under the laws of each jurisdiction which
requires such qualification wherein it owns or leases properties or
conducts business, except where the failure to so qualify would not
have a material adverse effect on Telmex and its subsidiaries taken
as a whole.
(vi) Except as described in the Telmex Prospectus, there is no
legal or governmental proceeding pending or, to the knowledge of
Telmex, threatened against Telmex or any of its subsidiaries which
is reasonably expected to result in any material adverse change in
the financial condition, results of operations, business or
prospectus of Telmex and its subsidiaries taken as a whole or which
is required to be disclosed in the Telmex Registration Statement.
(vii) The financial statements filed as part of the Telmex
Registration Statement or included in any Telmex Preliminary
Prospectus or the Telmex Prospectus present, or (in the case of any
amendment or supplement to any such document, or any material
incorporated by reference in any such document, filed with the
Commission after the date as of which this representation is being
made) will, at all times during the period specified in Section
6(b)(iii) hereof, present fairly the consolidated financial
condition and results of operations of Telmex and its subsidiaries,
at the dates and for the periods indicated, and have been, and (in
the case of any amendment or supplement to any such document, or any
material incorporated by reference in any such document, filed with
the Commission after the date as of which this representation is
being made) will be at all times during the period specified in
Section 6(b)(iii) hereof, prepared in conformity with generally
accepted accounting principles applied on a consistent basis
throughout the periods involved (except as described in the notes
thereto).
7
<PAGE> 8
(viii) The documents incorporated by reference into any Telmex
Preliminary Prospectus or the Telmex Prospectus have been, and (in
the case of any amendment or supplement to any such document, or any
material incorporated by reference in any such document, filed with
or furnished to the Commission after the date as of which this
representation is being made) will be, at all times during the
period specified in Section 6(b)(iii) hereof, prepared by Telmex in
conformity with the applicable requirements of the Exchange Act and
the rules and regulations of the Commission thereunder and such
documents have been, or (in the case of any amendment or supplement
to any such document, or any material incorporated by reference in
any such document, filed with or furnished to the Commission after
the date as of which this representation is being made) will be at
all times during the period specified in Section 6(b)(iii) hereof,
timely filed with or furnished to the Commission as required
thereby.
(ix) Telmex has not taken and will not take, directly or
indirectly, any action designed to or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of Telmex
to facilitate the sale or resale of the DECS, the Shares or the
ADSs.
(x) There are no contracts or other documents which are
required to be filed as exhibits to the Telmex Registration
Statement by the Securities Act or by the Rules and Regulations, or
which were required to be filed as exhibits to any document
incorporated by reference in the Telmex Prospectus by the Exchange
Act or the rules and regulations of the Commission thereunder, which
have not been filed as exhibits to the Telmex Registration Statement
or to such document or incorporated therein by reference as
permitted by the Rules and Regulations or the rules and regulations
of the Commission under the Exchange Act as required.
(xi) Telmex has an authorized capitalization as set forth in
the Telmex Prospectus, and all of the issued shares of capital stock
of Telmex (including the Shares) have been duly and validly
authorized and issued and are fully paid and non-assessable, except
for Shares repurchased by Telmex under its buy-back program; the L
Shares (including the Shares), the Series A Shares, without par
value, of Telmex (the "A Shares") and the Series AA Shares, without
par value, of Telmex (the "AA Shares"), conform to, and entitle the
holders thereof to the rights set forth in, the description of the L
Shares, the A Shares and the AA Shares, respectively, contained in
the Telmex Prospectus; all of the A Shares and L Shares (including
the Shares) have been duly registered with the Securities and
Special Sections of the National Registry of Securities and
Intermediaries maintained by the Mexican National Banking and
Securities Commission and have been duly listed and admitted for
trading on the Bolsa Mexicana de Valores, S.A. de C.V. (the "Mexican
Stock Exchange") and the ADSs have been duly listed on the New York
Stock
8
<PAGE> 9
Exchange; except with respect to voting rights (to the extent
described in the Telmex Prospectus), each L Share is entitled to the
same rights as each AA Share and A Share; the holders of outstanding
shares of capital stock of Telmex are not entitled to preemptive or
other rights to acquire the ADSs or the Shares; and there are no
limitations or restrictions under Mexican law, the Estatutos of
Telmex or any agreement to which Telmex is a party with respect to
the deposit by SBC of Shares with the Depositary (as defined herein)
against issuance of ADRs (as defined herein) evidencing ADSs or the
transfer at SBC's election of the ADSs and the Shares (in accordance
with the terms of the DECS) to or for the account of the holders of
the DECS;
(xii) The Deposit Agreement, dated as of May 1, 1991 (as
amended, the "Deposit Agreement"), among Telmex, Morgan Guaranty
Trust Company of New York, as depositary (the "Depositary") and the
holders from time to time of the American Depositary Receipts
("ADRs") evidencing ADSs, has been duly authorized and constitutes a
valid and legally binding agreement of Telmex, enforceable in
accordance with its terms, subject, as to enforcement, to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors' rights
and to general equity principles; upon issuance by the Depositary of
ADRs evidencing ADSs against the deposit of Shares in respect
thereof in accordance with the provisions of the Deposit Agreement,
such ADRs will be duly and validly issued and the persons in whose
names the ADRs are registered will be entitled to the rights
specified therein and in the Deposit Agreement; and the Deposit
Agreement and the ADRs conform in all material respects to the
descriptions thereof contained in the Telmex Prospectus.
(xiii) No governmental authorization is required to effect
dividend payments on any shares of capital stock of Telmex or for
the Depositary to convert such payments into U.S. dollars for
distribution to holders of ADRs.
(xiv) The deposit of the Shares by or on behalf of SBC with the
Depositary against issuance of ADRs evidencing the ADSs to be
delivered upon exchange for the DECS and the performance of this
Agreement and the Deposit Agreement and the consummation of the
transactions herein and therein contemplated, will not conflict with
or result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which
Telmex or any of its subsidiaries is a party or by which Telmex or
any of its subsidiaries is bound or to which any of the property or
assets of Telmex or any of its subsidiaries is subject, which
conflict, breach, violation or default is material to the
transactions contemplated by this Agreement or the Deposit Agreement
or to Telmex and its subsidiaries taken as a whole, nor will such
action result in any violation of the provisions of the Estatutos of
Telmex, any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over Telmex or any
of its subsidiaries or any of their
9
<PAGE> 10
properties, and no governmental authorization or filing is required
for the consummation by Telmex of the transactions contemplated by
this Agreement and the Deposit Agreement, except (A) the
registration under the Securities Act and the Exchange Act of Shares
and ADSs, (B) such governmental authorizations as have been duly
obtained and are in full force and effect and (C) such governmental
authorizations as may be required under state securities or Blue Sky
laws or any laws of jurisdictions outside Mexico and the United
States in connection with the exchange of ADSs for DECS.
(xv) Telmex and each of its subsidiaries have all licenses,
franchises, permits, concessions, authorizations, approvals and
orders of and from all governmental regulatory officials and bodies
that are necessary to own or lease their properties and conduct
their businesses as described in the Telmex Prospectus and are
material in relation to the business of Telmex and its subsidiaries
taken as a whole.
(xvi) Telmex and its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable to
all personal property owned by them that are material to Telmex and
its subsidiaries taken as a whole, in each case free and clear of
all liens, encumbrances and defects except such as are described in
the Telmex Prospectus or such as do not materially affect the value
of such property and do not interfere in any material respect with
the use made and proposed to be made of such property by Telmex and
its subsidiaries; and any real property and buildings held under
lease by Telmex and its subsidiaries that are material to Telmex and
its subsidiaries taken as a whole are held by them under valid,
subsisting and enforceable leases with such exceptions are not
material in relation to Telmex and its subsidiaries taken as a whole
and do not interfere in any material respect with the use made and
proposed to be made of such property and buildings by Telmex and its
subsidiaries taken as a whole.
2. Purchase and Sale.
(a) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, SBC agrees to sell to
each Underwriter, and each Underwriter agrees, severally and not jointly,
to purchase from SBC, at a purchase price of $38.445 per DECS, plus
accrued interest, if any, on the DECS from the issue date of the DECS to
the Firm Delivery Date (as defined below), the number of DECS set forth
opposite such Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, SBC hereby grants an
option to the several Underwriters to purchase up to 1,000,000 Option DECS
at the same purchase price per DECS, plus accrued interest, if any, from
the issue date of the DECS to the Option Delivery Date (as defined below),
as the Underwriters shall pay for the Firm DECS. Said option may be
exercised only to cover over-allotments in the sale of the
10
<PAGE> 11
Firm DECS by the Underwriters. Said option may be exercised in whole or in
part at any time (but not more than once) on or before the 30th day after
the date of the Prospectus upon written or telegraphic notice by the
Underwriters to SBC setting forth the number of Option DECS as to which
the Underwriters are exercising the option and the Option Delivery Date
(as defined below). Delivery of certificates for the Option DECS, and
payment therefor, shall be made as provided in Section 5 hereof. The
number of Option DECS to be purchased by each Underwriter shall be the
same percentage of the total number of Option DECS to be purchased by the
several Underwriters as such Underwriter is purchasing of the Firm DECS,
subject to such adjustments as the Representative in its sole discretion
shall make to eliminate any fractional shares.
3. SBC shall not be obligated to deliver any DECS except upon
payment for all DECS to be purchased pursuant to this Agreement as hereinafter
provided.
4. Default by an Underwriter. If any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Underwriters shall be obligated to purchase the DECS which the
defaulting Underwriter agreed but failed to purchase in the respective
proportions which the number of DECS set forth in Schedule I hereto to be
purchased by each remaining non-defaulting Underwriter set forth therein bears
to the aggregate number of DECS set forth therein to be purchased by all the
remaining non-defaulting Underwriters; provided that the remaining
non-defaulting Underwriters shall not be obligated to purchase any DECS if the
aggregate number of DECS which the defaulting Underwriting or Underwriters
agreed but failed to purchase exceeds 9.09% of the total number of DECS, and any
remaining non-defaulting Underwriter shall not be obligated to purchase more
than 110% of the number of DECS set forth in Schedule I hereto to be purchased
by it. If the foregoing maximums are exceeded, the remaining non-defaulting
Underwriters, or those other underwriters satisfactory to the Representative who
so agree, shall have the right, but shall not be obligated, to purchase, in such
proportion as may be agreed upon among them, all the DECS. If the remaining
Underwriters or other underwriters satisfactory to the Representative do not
elect to purchase the DECS which the defaulting Underwriter or Underwriters
agreed but failed to purchase, this Agreement shall terminate without liability
on the part of any non-defaulting Underwriter, or SBC, except that SBC will
continue to be liable for the payment of expenses as set forth in Section
6(a)(viii) hereof.
Nothing contained in this Section 4 shall relieve a defaulting
Underwriter of any liability it may have to SBC for damages caused by its
default. If other Underwriters are obligated or agree to purchase the DECS of a
defaulting or withdrawing Underwriter, either the Representative or SBC may
postpone each Delivery Date for up to seven full business days in order to
effect any changes that in the opinion of SBC or the Representative may be
necessary in the Registration Statement, the Prospectus or in any other document
or arrangement.
11
<PAGE> 12
5. Delivery and Payment. Delivery of and payment for Firm DECS (and
the Option DECS (if and to the extent the option provided for in Section 2(b)
hereof shall have been exercised on or before the first business day prior to
the Firm Delivery Date)) shall be made at 10:00 AM, New York City time, on March
26, 1997, or such later date (not later than April 2, 1997) as the
Representative shall designate, which date and time may be postponed by
agreement between the Representative and SBC (such date and time of delivery and
payment for the Firm DECS being herein called the "Firm Delivery Date"), at the
offices of the Representative, Seven World Trade Center, New York, New York.
Delivery of the DECS shall be made on the instructions of the Representative for
the account of each Underwriter against payment by the Representative of the
purchase price thereof to or upon the order of SBC in immediately available
funds. Delivery of, and payment for, the DECS shall be made through the
facilities of The Depository Trust Company. Certificates for the DECS shall be
registered in such names and in such denominations as the Representative shall
request not less than one full business day in advance of the Firm Delivery
Date.
SBC agrees to have the DECS available for inspection, checking and
packaging by the Representative in New York, New York, not later than 1:00 PM on
the business day prior to the Firm Delivery Date.
If the option provided for in Section 2(b) hereof is exercised after
the first full business day prior to the Firm Delivery Date, SBC will deliver to
the Representative, at Seven World Trade Center, New York, New York, on the date
specified by the Representative in the notice described in Section 2(b), or such
later date (not later than April 19, 1997) specified by the Representative (such
date and time of delivery and payment for the Option DECS being herein called
the "Option Delivery Date"; the Firm Delivery Date and the Option Delivery Date,
collectively, the "Delivery Dates"), certificates for the Option DECS in such
names and denominations as the Representative shall have requested against
payment of the purchase price thereof to or upon the order of SBC in immediately
available funds. If settlement for the Option DECS occurs after the Delivery
Date, SBC will deliver to the Representative on the Option Delivery Date, and
the obligation of the Underwriters to purchase the Option DECS shall be
conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date the opinions, certificates and letters delivered on
the Firm Delivery Date pursuant to Section 9 hereof.
6. Agreements.
(a) Agreements of SBC. SBC agrees with the several Underwriters
and Telmex that:
(i) SBC will furnish promptly to the Representative and to
counsel for the Underwriters a copy of the Registration Statement as
originally filed and each amendment and supplement thereto filed
prior to the date hereof and relating to or covering the DECS, and a
copy of the Prospectus filed with the Commission, including all
documents incorporated therein by reference and all consents and
exhibits filed therewith.
12
<PAGE> 13
(ii) During any period when a Prospectus relating to the DECS
is required by law to be delivered, SBC will deliver promptly to the
Representative such reasonable number of the following documents as
the Representative may request: (A) conformed copies of the
Registration Statement (excluding exhibits other than the
computation of the ratio of earnings to fixed charges, the Indenture
and this Agreement), (B) the Prospectus and (C) any documents
incorporated by reference in the Prospectus.
(iii) During any period when a Prospectus relating to the DECS
is required by law to be delivered, SBC will not file any amendment
of the Registration Statement nor will SBC file any amendment or
supplement to the Prospectus (except for (A) an amendment or
supplement consisting solely of the filing of a document under the
Exchange Act or (B) a supplement relating to an offering of
securities other than the DECS), unless SBC has furnished the
Representative a copy of such proposed amendment or supplement for
its review prior to filing and will not file any such proposed
amendment or supplement to which the Representative reasonably
objects. Subject to the foregoing sentence, SBC will cause the
Prospectus and any amendment or supplement thereto to be filed with
the Commission as required pursuant to Rule 424 under the Securities
Act. SBC will promptly advise the Representative (A) when the
Prospectus or any amendment or supplement thereto shall have been
filed with the Commission pursuant to Rule 424 under the Securities
Act, (B) when any amendment of the Registration Statement shall have
become effective, (C) of any request by the Commission for any
amendment of the Registration Statement or amendment of or
supplement to the Prospectus or for any additional information, (D)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (E) of the
receipt by SBC of any notification with respect to the suspension of
the qualification of the DECS or the ADSs for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose. SBC will promptly (upon filing thereof) furnish the
Representative a copy of any amendment or supplement to the
Prospectus or Registration Statement not furnished to the
Representative for prior review pursuant to exceptions (A) or (B) of
the first sentence of this subsection (iii). SBC will use its best
efforts to prevent the issuance of any such stop order and, if
issued, to obtain as soon as possible the withdrawal thereof.
(iv) If, at any time when a Prospectus relating to the DECS is
required by law to be delivered, in the reasonable opinion of the
Representative, any event occurs as a result of which the
Registration Statement, as then amended, or the Prospectus, as then
supplemented, would include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading, or if it shall be necessary to amend the
Registration Statement or to supplement the Prospectus to comply
13
<PAGE> 14
with the Securities Act or the Exchange Act or the respective rules
thereunder, SBC promptly will (A) notify the Representative of the
happening of such event, (B) prepare and file with the Commission,
subject to the first sentence of subsection (iii) of this Section
6(a), an amendment or supplement which will correct such statement
or omission or an amendment or supplement which will effect such
compliance and (C) supply any such amended or supplemented
Prospectus to the Representative in such quantities as the
Representative may reasonably request.
(v) As soon as practicable, SBC will make generally available
to its security holders and to the Representative an earnings
statement or statements of SBC which will satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 under the
Securities Act.
(vi) During a period of five years after the date hereof, SBC
will furnish to the Representative copies of all reports and
financial statements furnished by SBC to each securities exchange on
which securities issued by SBC may be listed pursuant to
requirements of or agreements with such exchange or to the
Commission pursuant to the Exchange Act or any rule or regulation of
the Commission thereunder.
(vii) SBC hereby agrees to cooperate with Telmex to effect
compliance with the covenants and agreements of SBC and Telmex
hereunder.
(viii) Until the termination of the offering of the DECS, SBC
will timely file all documents, and any amendments to previously
filed documents, required to be filed by SBC pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act.
(ix) Without the prior written consent of the Representative
on behalf of the Underwriters, SBC will not (and will not permit any
subsidiary to), during the period ending 90 days after the date of
the Prospectus, (A) offer, pledge, sell contract to sell, sell any
option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of, directly or indirectly, or announce the
offering of, any L Shares, Telmex ADSs or any securities convertible
into or exercisable or exchangeable for L Shares or Telmex ADSs
(whether such L Shares or Telmex ADSs or any such securities are now
owned by SBC or are hereafter acquired) or (B) enter into any swap
or other arrangement that transfers to another, in whole or in part,
any of the economic consequences of ownership of the L Shares or
Telmex ADSs, whether any such transaction described in clause (A) or
(B) above is to be settled by delivery of L Shares or Telmex ADSs or
such other securities, in cash or otherwise. In addition, SBC agrees
that, without the prior written consent of the Representative on
behalf of the Underwriters, it will not, during the period ending 90
days after the date of the Prospectus, make any demand for, or
exercise any right with respect to,
14
<PAGE> 15
the registration of any L Shares or Telmex ADSs or any security
convertible into or exercisable or exchangeable for L Shares or
Telmex ADSs.
(x) During the period beginning on the date hereof and
continuing to the latest Delivery Date, SBC will not offer, sell,
contract to sell or otherwise dispose of any debt securities of SBC
or any guarantees or support obligations of debt securities of
others, in any case with maturities longer than one year, other than
DECS to the Underwriters.
(b) Agreements of Telmex. Telmex agrees with SBC and the several
Underwriters that:
(i) Telmex will furnish promptly to the Representative and to
counsel for the Underwriters a copy of the Telmex Registration
Statement, as originally filed and each amendment and supplement
thereto filed prior to the date hereof and relating to or covering
the Shares, and a copy of the Telmex Prospectus filed with the
Commission, including all documents incorporated therein by
reference and all consents and exhibits filed therewith.
(ii) During any period when a Prospectus relating to the DECS
is required by law to be delivered prior to the expiration of nine
months after the time of issue of the Telmex Prospectus in
connection with the offered DECS, Telmex will deliver to the
Representative such reasonable number of the following documents as
the Representative may reasonably request: (A) conformed copies of
the Telmex Registration Statement (excluding exhibits other than
this Agreement), (B) the Telmex Prospectus and (C) any documents
incorporated by reference in the Telmex Prospectus.
(iii) During any period when a Prospectus relating to the DECS
is required by law to be delivered, Telmex will not file any
amendment of the Telmex Registration Statement or the ADS
Registration Statement nor will Telmex file any amendment or
supplement to the Telmex Prospectus (except for an amendment or
supplement consisting solely of the filing of a document under the
Exchange Act) unless Telmex has furnished the Representative a copy
of such proposed amendment or supplement for its review prior to
filing and will not file any such proposed amendment or supplement
to which the Representative reasonably objects, unless Telmex shall
conclude in good faith that such filing is required by applicable
law. Subject to the foregoing sentence, Telmex will cause the Telmex
Prospectus and any amendment or supplement thereto to be filed with
the Commission as required pursuant to Rule 424 under the Securities
Act. Telmex will promptly advise the Representative (A) when the
Telmex Prospectus or any amendment or supplement thereto shall have
been filed with the Commission pursuant to Rule 424 under the
Securities Act, (B) when any amendment of the Telmex Registration
Statement shall have become effective, (C) of any request by the
Commission for any amendment of the Telmex Registration Statement or
15
<PAGE> 16
amendment of or supplement to the Telmex Prospectus or for any
additional information, (D) of the issuance by the Commission of any
stop order suspending the effectiveness of the Telmex Registration
Statement, the ADS Registration Statement or the institution or
threatening of any proceeding for that purpose and (E) of the
receipt by Telmex of any notification with respect to the suspension
of the qualification of the ADSs or the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose. Telmex will promptly (upon filing thereof) furnish the
Representative a copy of any amendment or supplement to the Telmex
Prospectus or Telmex Registration Statement not furnished to the
Representative for prior review pursuant to exceptions (A) or (B) of
the first sentence of this subsection (iii). Telmex will advise the
Representative promptly after it receives notice thereof, of the
issuance by the Commission of any such stop order and, if issued, to
use promptly its reasonable best efforts to obtain as soon as
possible the withdrawal thereof.
(iv) If, at any time when a Telmex Prospectus relating to the
ADSs or the L Shares is required by law to be delivered prior to the
expiration of nine months after the time of issue of the Telmex
Prospectus in connection with the offering of DECS (including in
respect of the offering and sale of the DECS), any event occurs as a
result of which the Telmex Registration Statement, as then amended,
or the Telmex Prospectus, as then supplemented, would include any
untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it
shall be necessary to amend the Telmex Registration Statement or the
ADS Registration Statement or to supplement the Telmex Prospectus to
comply with the Securities Act or the Exchange Act or the respective
rules thereunder, Telmex promptly will (i) notify the Representative
of the happening of such event, (ii) prepare and file with the
Commission, subject to the first sentence of subsection (iii) of
this Section 6(b), an amendment or supplement which will correct
such statement or omission or an amendment or supplement which will
effect such compliance and (iii) will supply any such amended or
supplemented Telmex Prospectus to the Representative in such
quantities as the Representative may reasonably request.
(v) As soon as practicable, Telmex will make generally
available to its security holders and to the Representative an
earnings statement or statements of Telmex which will satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 under
the Securities Act.
(vi) During a period of five years after the date hereof,
Telmex will furnish to the Representative copies of all reports and
financial statements furnished by Telmex to each securities exchange
on which securities issued by Telmex may be listed pursuant to
requirements of or agreements with such
16
<PAGE> 17
exchange or to the Commission pursuant to the Exchange Act or any
rule or regulation of the Commission thereunder.
(vii) Telmex hereby agrees to cooperate with SBC to effect
compliance with the covenants and agreements of SBC set forth in
Section 6(a)(iii).
(viii) Until the termination of the offering of the DECS, the
ADSs and the Shares, Telmex will timely file all documents, and any
amendments to previously filed documents, required to be filed by
Telmex pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Exchange Act.
(ix) Without the prior written consent of the Representative
on behalf of the Underwriters, Telmex will not (and will not permit
any subsidiary to), during the period ending 90 calendar days after
the date of the Prospectus, (A) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase,
or otherwise transfer or dispose of, directly or indirectly, or
announce the offering of, any L Shares or Telmex ADSs or any
securities convertible into or exercisable or exchangeable for L
Shares or Telmex ADSs (whether such L Shares or Telmex ADSs or any
such securities are now owned by Telmex or are hereafter acquired)
or (B) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of
ownership of L Shares or Telmex ADSs, whether any such transaction
described in clause (A) or (B) above is to be settled by delivery of
L Shares or Telmex ADSs or such other securities, in cash or
otherwise; provided, however, that Telmex may issue L Shares upon
conversion of outstanding A Shares or AA Shares and Telmex may sell
L Shares pursuant to any employee stock option plan of Telmex in
effect on the date hereof.
(x) Telmex will take such actions as may be reasonably
necessary to comply with the rules and regulations of the NYSE in
respect of the offering and listing of the ADSs in connection with
the DECS.
(xi) Telmex will comply with the Deposit Agreement so that
ADRs evidencing ADSs will be executed by the Depositary and
delivered to the holders of the DECS at the election of SBC (in
accordance with the terms of the DECS).
7. Indemnification.
(a) SBC agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of
either the Securities Act or the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which that
Underwriter or any such person may become subject under the Securities
Act, the Exchange Act or other Federal or state statutory
17
<PAGE> 18
law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration
Statement as originally filed or in any amendment thereof, or in the Basic
Prospectus, any Preliminary Prospectus or the Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending or any such loss, claim,
damage, liability or action; provided, however, that SBC will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to SBC
by or on behalf of any Underwriter through the Representative specifically
for inclusion therein. This indemnity agreement will be in addition to any
liability which SBC may otherwise have.
(b) SBC agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of
either the Securities Act or the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which that
Underwriter or any such person may become subject under the Securities
Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a material
fact contained in the Telmex Registration Statement or the ADS
Registration Statement, as originally filed or in any amendment thereof,
or in any Telmex Preliminary Prospectus or the Telmex Prospectus, or in
any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein above or necessary to make the statements
therein not misleading, and agrees to reimburse each such indemnified
party, as incurred, for any legal or other expenses reasonably incurred by
them in connection with investigating or defending against any such loss,
claim, damage, liability or action; provided, however, that SBC shall not
be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to
Telmex by or on behalf of any Underwriter through the Representative
specifically for inclusion therein. This indemnity agreement will be in
addition to any liability which SBC may otherwise have.
(c) Each Underwriter agrees to indemnify and hold harmless SBC, each
of its directors, each of its officers who signs the Registration
Statement and each person who controls SBC within the meaning of either
the Securities Act or the Exchange Act, to the same extent as the
foregoing indemnities in paragraphs (a) and (b) from SBC to
18
<PAGE> 19
the Underwriters, but only with reference to written information relating
to the Underwriters furnished to SBC by or on behalf of any Underwriter
through the Representative specifically for inclusion in the documents
referred to in the foregoing indemnities. This indemnity agreement will be
in addition to any liability which the Underwriters may otherwise have.
SBC acknowledges that the statements set forth in the last paragraph of
the cover page, in the first paragraph of the inside cover page and under
the heading "Plan of Distribution" in any Preliminary Prospectus or the
Prospectus constitute the only information furnished in writing by or on
behalf of any Underwriter through the Representative for inclusion in any
Preliminary Prospectus or the Prospectus.
(d) Each Underwriter agrees to indemnify and hold harmless Telmex,
each of its directors, each of its officers who signs the Telmex
Registration Statement or the ADS Registration Statement and each person
who controls Telmex within the meaning of either the Securities Act or the
Exchange Act, to the same extent as the foregoing indemnity in paragraph
(b) from SBC to the Underwriters, but only with reference to written
information furnished to Telmex by or on behalf of any Underwriter through
the Representative specifically for inclusion in the documents referred to
in the foregoing indemnity. This indemnity agreement will be in addition
to any liability which any Underwriter may otherwise have. Telmex
acknowledges that the statements set forth in the last paragraph of the
cover page, in the first paragraph of the inside cover page and under the
heading "Plan of Distribution" in any Telmex Preliminary Prospectus or the
Telmex Prospectus constitute the only information furnished in writing by
or on behalf of any Underwriter through the Representative for inclusion
in any Telmex Preliminary Prospectus or the Telmex Prospectus, and each
Underwriter confirms that such statements are correct.
(e) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify the indemnifying party in
writing of the claim or the commencement of that action; but the failure
so to notify the indemnifying party (i) will not relieve it from any
liability under paragraph (a), (b), (c) or (d) above unless and to the
extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and
defenses and (ii) will not, in any event, relieve the indemnifying party
from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a), (b), (c) or (d)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to
represent the indemnified party in any action for which indemnification is
sought (in which case the indemnifying party shall not thereafter be
responsible for the fees and expenses of any separate counsel retained by
the indemnified party or parties except as set forth below); provided,
however, that such counsel shall be satisfactory to the indemnified party.
Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall
have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees,
19
<PAGE> 20
costs and expenses of such separate counsel if (i) the use of counsel
chosen by the indemnifying party to represent the indemnified party would
present such counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be legal defenses available
to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable
time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ
separate counsel at the expense of the indemnifying party. An indemnifying
party will not, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any pending or threatened claim, action, suit or proceeding in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified parties are actual or potential parties to
such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(f) In the event that the indemnity provided in paragraph (a), (b),
(c) or (d) of this Section 7 is unavailable to or insufficient to hold
harmless an indemnified party for any reason, SBC and the Underwriters
agree to contribute to the aggregate loses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) (collectively "Losses")
to which SBC and the Underwriters may be subject in such proportion as is
appropriate to reflect the relative benefits received by SBC and the
Underwriters from the offering of the DECS; provided, however, that in no
case shall any Underwriter be responsible for any amount in excess of the
underwriting discount or commission applicable to the DECS purchased by
such Underwriter hereunder. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, SBC and the Underwriters
shall contribute in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of SBC and the
Underwriters in connection with the statements or omissions which resulted
in such Losses as well as any other relevant equitable considerations.
Benefits received by SBC shall be deemed to be equal to the total net
proceeds from the offering (before deducting expenses) received by SBC,
and benefits received by the Underwriters shall be deemed to be equal to
the total underwriting discounts and commissions, in each case as set
forth on the cover page of the Prospectus. Relative fault shall be
determined by reference to whether any alleged untrue statement or
omission relates to information provided by SBC and the Underwriters. SBC
and the Underwriters agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this paragraph (f),
no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person who controls any Underwriter
within the meaning of either the Securities Act or the Exchange Act and
each director, officer, employee and agent of such Underwriter shall have
the same rights to contribution as such Underwriter; each person who
20
<PAGE> 21
controls SBC within the meaning of either the Securities Act or the
Exchange Act, each officer of SBC who shall have signed the Registration
Statement and each director of SBC shall have the same rights to
contribution as SBC.
(g) The respective agreements, representations, warranties,
indemnities and other statements of SBC, Telmex or their officers and of
the Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by
or on behalf of any Underwriter through the Representative, SBC or Telmex
or any of the officers, directors or controlling persons referred to in
this Section 7, and will survive delivery of and payment for the DECS. The
provisions of this Section 7 and Section 10 hereof shall survive the
termination or cancellation of this Agreement.
8. Termination.
This Agreement shall be subject to termination in the absolute
discretion of the Representative, by notice given to SBC and Telmex prior to the
delivery of and payment for the DECS, if prior to such time (a) trading in any
securities of SBC or Telmex shall have been suspended by the Commission or on
any exchange or over-the-counter market or trading in any securities generally
on the NYSE or the Mexican Stock Exchange shall have been suspended or minimum
prices shall have been established on either such Exchange or (b) a banking
moratorium shall have been declared by either U.S. Federal or New York State
authorities or by Mexican banking authorities, or (c) there shall have occurred
any outbreak or material escalation of hostilities, declaration by the United
States or Mexico of a national emergency or war or other calamity or crisis the
effect of which on the financial markets is such as to make it, in the judgment
of the Representative, impracticable or inadvisable to proceed with the offering
or delivery of the DECS as contemplated by the Prospectus (exclusive of any
supplement thereto).
9. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Firm DECS and the Option DECS,
as the case may be, shall be subject to the accuracy of the representations and
warranties on the part of each of SBC and Telmex contained herein as of the date
hereof and each Delivery Date, to the accuracy of the statements of SBC and
Telmex made in any certificates pursuant to the provisions hereof, to the
performance by each of SBC and Telmex of its obligations hereunder, and to the
following additional terms and conditions:
(a) At or before such Delivery Date, no stop order suspending the
effectiveness of the Registration Statement, the Telmex Registration
Statement or the ADS Registration Statement nor any order directed to any
document incorporated by reference in the Prospectus or the Telmex
Prospectus shall have been issued and prior to that time no stop order
proceeding shall have been initiated or threatened by the Commission and
no challenge shall have been made by the Commission or its staff as
21
<PAGE> 22
to the accuracy or adequacy of any document incorporated by reference in
the Prospectus or the Telmex Prospectus; any request of the Commission for
inclusion of additional information in the Registration Statement, the ADS
Registration Statement or the Telmex Registration Statement or the
Prospectus or the Telmex Prospectus or otherwise shall have been complied
with; and after the date hereof neither SBC nor Telmex shall have filed
with the Commission any amendment or supplement to the Registration
Statement, the ADS Registration Statement or the Telmex Registration
Statement or the Prospectus or the Telmex Prospectus (or any document
incorporated by reference therein) that shall have been disapproved by the
Representative.
(b) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the DECS and the
Indenture, the Shares, the ADSs and the form of the Registration
Statement, the ADS Registration Statement and the Telmex Registration
Statement, the Prospectus and the Telmex Prospectus (other than financial
statements and other financial data) and all other legal matters relating
to this Agreement and the transactions contemplated hereby shall be
satisfactory in all respects to Sullivan & Cromwell and Ritch, Heather y
Mueller, S.C., counsel for the Underwriters, and SBC shall have furnished
to such counsel all documents and information that they may reasonably
request to enable them to pass upon such matters.
(c) The Senior Executive Vice President and General Counsel to SBC
shall have furnished to the Representative his opinion addressed to the
Underwriters and dated such Delivery Date, as counsel, to the effect that:
(i) SBC has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of
Delaware; each material subsidiary of SBC has been duly incorporated
and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation; and each of SBC and
its material subsidiaries has full corporate power and authority to
own its properties and conduct its business as described in the
Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each
jurisdiction which requires such qualification wherein it owns or
leases properties or conducts business, except where the failure to
so qualify would not have a material adverse effect on SBC and its
subsidiaries taken as a whole;
(ii) the Indenture has been duly authorized, executed and
delivered, has been duly qualified under the Trust Indenture Act,
and constitutes a legal, valid and binding instrument enforceable
against SBC in accordance with its terms (subject, as to enforcement
of remedies, to applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium or other similar laws of
general applicability relating to or affecting creditors' rights
generally from time to time in effect and to general principles of
equity);
22
<PAGE> 23
(iii) to the best knowledge of such counsel, there is no
pending or threatened action, suit or proceeding before any court or
governmental agency, authority, body or any arbitrator involving SBC
or any of its subsidiaries of a character required to be disclosed
in the Registration Statement which is not adequately disclosed in
the Prospectus, and there is no franchise, contract or other
document of a character required to be described in the Registration
Statement or Prospectus, or to be filed as an exhibit, which is not
described or filed as required; and the statements included or
incorporated by reference in the Prospectus describing any legal
proceedings or material contracts or agree ments relating to SBC or
any of its subsidiaries fairly summarize such matters; the DECS and
the Indenture conform to the descriptions thereof contained under
the following captions of the Prospectus: "Description of the DECS"
and "Plan of Distribution";
(iv) the DECS have been duly authorized, executed,
authenticated, issued and delivered and are valid and legally
binding obligations of SBC entitled to the benefits of the
Indenture;
(v) the Registration Statement and any amendments thereto
have become effective under the Securities Act; to the best
knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued, no
proceedings for that purpose have been instituted or threatened, and
the Registration Statement, the Prospectus and each amendment
thereof or supplement thereto as of their respective effective or
issue dates (other than the financial statements and other financial
and statistical information contained therein as to which such
counsel need express no opinion) complied as to form in all material
respects with the applicable requirements of the Securities Act, the
Exchange Act and the Trust Indenture Act and the respective rules
and regulations thereunder; and such counsel has no reason to
believe that the Registration Statement, or any amendment thereof,
at the time it became effective or at the date of this Agreement or
at such Delivery Date, contained any untrue statement of a material
fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading
or that the Prospectus, at the date of this Agreement or at such
Delivery Date, included any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading;
(vi) this Agreement has been duly authorized, executed and
delivered by SBC;
(vii) no order, consent, approval, authorization, registration
or qualification of or with any governmental agency or body having
jurisdiction over SBC or any of its properties is required for the
issue and sale of the DECS or the consummation by SBC of the
transactions contemplated by this
23
<PAGE> 24
Agreement or the Indenture, except such as have been obtained under
the Securities Act and the Trust Indenture Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with
the sale and distribution of the DECS; and
(viii) neither the execution and delivery of the Indenture or
this Agreement, the issue and sale of the DECS, nor the consummation
of any other of the transactions herein or therein contemplated nor
the fulfillment of the terms hereof or thereof will conflict with,
result in a breach of, or constitute a default under, the charter or
by-laws of SBC or the terms of any indenture or other agreement or
instrument known to such counsel and to which SBC or any of its
material subsidiaries is a party or by which SBC, any such
subsidiary or any of their assets is bound, or any order or
regulation known to such counsel to be applicable to SBC or any such
subsidiary of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over SBC or any
such subsidiary.
In rendering such opinion, such counsel may rely, as to the execution of
the Indenture by the Trustee, upon a certificate of the Trustee setting
forth the facts as to such execution.
In rendering such opinion, such counsel may also rely (A) as to matters
involving the application of laws of any jurisdiction other than the State
of Delaware, upon the opinion of other counsel of good standing believed
to be reliable, provided that such counsel states in such opinion that
such counsel and the Representative are justified in relying upon the
opinion of such other counsel, and (B) as to matters or fact, to the
extent deemed proper, on certificates of responsible officers of SBC and
public officials.
In rendering such opinion with respect to clause (vii) above, insofar as
it relates to regulatory authorities in the states in which SBC or any
material subsidiary operates, such counsel may rely on the opinions of
local counsel satisfactory to such counsel.
(d) The Representative shall have received from Sullivan & Cromwell,
counsel for the Underwriters, such opinion or opinions, dated such
Delivery Date, with respect to the issuance and sale of the DECS, the
Indenture, the Registration Statement, the Prospectus, the ADSs, the ADS
Registration Statement, the Telmex Registration Statement, the Telmex
Prospectus and other related matters as the Representative may reasonably
require, and SBC shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass upon such matters.
(e) The Representative shall have received from Ritch, Heather y
Mueller, S.C., Mexican counsel for the Underwriters, such opinion or
opinions, dated such Delivery Date, with respect to such matters as the
Representative may reasonably
24
<PAGE> 25
require, and Telmex shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass upon such matters.
(f) SBC shall have furnished to the Representative a certificate,
dated such Delivery Date, signed by its Chairman of the Board or its
President or a Senior Vice President and its Treasurer or an Assistant
Treasurer stating that the signers of such certificate have carefully
examined the Registration Statement, the Prospectus (and any supplement
thereto) and this Agreement and that:
(i) the representations and warranties of SBC in this Agreement
are true and correct in all material respects on and as of such
Delivery Date with the same effect as if made on such Delivery Date;
SBC has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied as a condition
to the obligation of the Underwriters to purchase the DECS
hereunder; the conditions set forth in Sections 9(a) and 9(q) have
been fulfilled; and no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for
that purpose have been instituted or, to SBC's knowledge,
threatened;
(ii) as of the date of the Prospectus, the Registration Statement
and the Prospectus did not include any untrue statement of a
material fact and did not omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading; and
(iii) since the date of the most recent financial statements
included or incorporated by reference in the Prospectus, there has
been no material adverse change in the condition (financial or
other), earnings, business, operations or properties of SBC or its
subsidiaries, whether or not arising from transactions in the
ordinary course of business, except as set forth in or contemplated
in the Prospectus.
(g) SBC shall have furnished to the Representative (i) a letter of
Ernst & Young LLP, addressed to the Board of Directors of SBC and the
Underwriters and dated the later of the effective date of the Registration
Statement or the date of the filing of SBC's latest Annual Report on Form
10-K, of the type described in the American Institute of Certified Public
Accountants' Statement on Auditing Standards No. 72 and covering such
financial statement items as counsel for the Underwriters may reasonably
have requested and (ii) a letter of Ernst & Young LLP, addressed to the
Underwriters and dated such Delivery Date, stating, as of the date of such
letter (or, with respect to matters involving changes or developments
since the respective dates as of which specified financial information is
given in the Prospectus, as of a date not more than five days prior to the
date of such letter), the conclusions and findings of such firm with
respect to the financial information and other matters covered by its
letter referred to in subclause (i) above and confirming in all material
respects the conclusions and findings set forth in such prior letter.
25
<PAGE> 26
(h) Subsequent to the date hereof or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement
thereto), there shall not have been (i) any change or decrease specified
in the letter or letters referred to in paragraph (g) of this Section 9 or
(ii) any change, or any development involving a prospective change, in or
affecting the condition (financial or other), earnings, business,
operations or properties of SBC and its subsidiaries the effect of which,
in any case referred to in clause (i) or (ii) above, is, in the judgment
of the Representative, so material and adverse as to make it impractical
or inadvisable to proceed with the offering or delivery of the DECS as
contemplated by the Registration Statement (exclusive of any amendment
thereof) and the Prospectus (exclusive of any supplement thereto).
(i) Subsequent to the date hereof, there shall not have been any
decrease in the ratings of any of SBC's debt securities by any "nationally
recognized statistical rating organization" (as defined for purposes of
Rule 436(g) under the Securities Act) or any notice given of any intended
or potential decrease in any such rating or of a possible change in any
such rating that does not indicate the direction of the possible change.
(j) SBC shall have furnished to the Representative on behalf of
Pacific Telesis Group a letter of Coopers & Lybrand LLP, addressed to the
Underwriters and dated such Delivery Date, of the type described in the
American Institute of Certified Public Accountants' Statement on Auditing
Standards No. 72 and covering such financial statements and financial
statement items of Pacific Telesis Group as counsel for the Underwriters
may reasonably have requested.
(k) Cleary, Gottlieb, Steen & Hamilton, United States special
counsel for Telmex, shall have furnished to the Representative their
written opinion, dated such Delivery Date in form and substance
satisfactory to the Representative, to the effect that:
(i) The Underwriting Agreement has been duly executed and
delivered by Telmex under the law of New York;
(ii) The Deposit Agreement has been duly executed and delivered
by Telmex under the law of New York and is a legal, valid, binding
and enforceable agreement of Telmex, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights
generally and to general principles of equity.
(iii) Upon due issuance by the Depositary of ADRs evidencing ADSs
against the deposit of Shares in respect thereof in accordance with
the provisions of the Depositary Agreement, such ADRs will be duly
and validly issued and the persons in whose names the ADRs are
registered will be entitled to the rights specified therein and in
the Depositary Agreement.
26
<PAGE> 27
(iv) Under the laws of the State of New York relating to
submission to jurisdiction, Telmex has validly and irrevocably
submitted to the jurisdiction of any state or federal court located
in the Borough of Manhattan, The City of New York, New York (each a
"New York court"), has validly and irrevocably waived any objection
to the venue of a proceeding in any such court, and has validly and
irrevocably appointed CT Corporation System as its authorized agent
for the purpose described in Section 14 hereof; service of process
effected in the manner set forth in Section 14 hereof will be
effective to confer valid personal jurisdiction over Telmex;
(v) In addition to the foregoing opinions, such counsel shall
additionally confirm that (based solely upon a telephonic
confirmation from a representative of the Commission) the Telmex
Registration Statement has become effective under the Act, and to
the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Telmex Registration Statement has been issued
and no proceeding for that purpose has been instituted or
threatened, and shall additionally state that they have participated
in the preparation of the Telmex Registration Statement and the
Telmex Prospectus and discussions with officers and other
representatives of Telmex, representatives of the independent public
accountants for Telmex and the Underwriter's representatives at
which the contents of the Telmex Registration Statement and the
Telmex Prospectus and related matters were discussed, and, on the
basis of the foregoing, the Telmex Registration Statement (except
the financial statements and schedules and other financial and
statistical data included therein, as to which no view is
expressed), at the time it became effective, and the Telmex
Prospectus (except as aforesaid), as of the date thereof, appeared
on their face to be appropriately responsive in all material
respects to the requirements of the Securities Act and the rules and
regulations thereunder; no information has come to their attention
that causes them to believe that the Telmex Registration Statement
(except for the financial statements and other financial and
statistical data included therein, as to which no view is
expressed), at the time it became effective or at the Delivery Date,
contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Telmex Prospectus
(except for the financial statements and other financial and
statistical data included therein, as to which no view is
expressed), at the date hereof or at the Delivery Date, contained or
contains an untrue statement of a material fact or omitted or omits
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; and they do not know of any contracts or other
documents of a character required to be filed as exhibits to the
Telmex Registration Statement or required to be described in the
Telmex Registration Statement or the Prospectus which are not filed
or described as required.
27
<PAGE> 28
In giving such opinions, such counsel may state that (x) such opinions are
limited to matters of the federal law of the United States of American and
the law of the State of New York and (y) insofar as the foregoing opinions
relate to the legality, validity, binding effect or enforceability of any
agreement or obligation of Telmex, that they have assumed that Telmex and
each other party to such agreement or obligation has satisfied those legal
requirements that are applicable to it to the extent necessary to make
such agreement or obligation enforceable against it (except that no such
assumption shall be made as to Telmex regarding matters of the law of the
State of New York). Such counsel need express no opinion as to any
provision of the Deposit Agreement to the extent such provisions provides
indemnity in respect of liabilities arising under federal or state
securities laws. Such counsel need express no opinion as to whether the
United States federal courts would exercise jurisdiction over any action
brought against Telmex by any party not a United States natural or
juridical person.
(l) Franck, Galicia, Duclaud y Robles, S.C., special Mexican counsel
for Telmex, shall have furnished to the Representative their written
opinion, dated such Delivery Date, in form and substance satisfactory to
the Representative, to the effect that:
(i) Telmex has been duly incorporated and is validly existing as
a corporation (sociedad anonima de capital variable) under the laws
of Mexico, with power and authority (corporate and other) to own or
lease its properties and conduct its business as described in the
Telmex Prospectus, and, insofar as matters governed by Mexican law,
is duly qualified for the transaction of business under the laws of
each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, except
where the failure to so qualify would not have a material adverse
effect on Telmex and its subsidiaries taken as a whole.
(ii) Telmex has an authorized capitalization as set forth in the
Telmex Prospectus, and all of the issued shares of capital stock of
Telmex (including the Shares) have been duly and validly authorized
and issued and are fully paid and non-assessable, except for shares
repurchased by Telmex under its buy-back program; the AA Shares, the
A Shares and the Shares conform to, and entitle the holders thereof
to the rights set forth in, the descriptions thereof contained in
the Telmex Prospectus; all of the A Shares and L Shares (including
the Shares) have been duly listed and admitted for trading on the
Mexican Stock Exchange; except with respect to voting rights (to the
extent described in the Telmex Prospectus), each L Share is entitled
to the same rights as each AA Share and A Share; based upon Mexican
law and the Estatutos of Telmex and agreements to which Telmex is a
party and known to such counsel: (a) the holders of outstanding
shares of capital stock of Telmex are not entitled to preemptive or
other rights to acquire the ADSs or the Shares, (b) the Shares may
be freely deposited by SBC with the Depositary against issuance of
ADRs evidencing ADSs, (c) the ADSs and the Shares are freely
transferable by SBC to or for the account of the Underwriters and
(d) there are no restrictions on
28
<PAGE> 29
subsequent transfers of the ADSs or the Shares except as described
in the Telmex Prospectus under "Description of Capital Stock",
"Description of American Depositary Receipts" and "Regulation".
(iii) The Deposit Agreement has been duly authorized, executed and
delivered by Telmex and, assuming that the Deposit Agreement
constitutes a valid and legally binding agreement under New York
law, constitutes a valid and legally binding agreement of Telmex,
enforceable in accordance with its terms.
(iv) The deposit of the Shares being deposited with the
Depositary against issuance of ADRs evidencing the ADSs to be
delivered at SBC's election to the holder of the DECS in accordance
with the terms of the DECS, the delivery of the ADSs to be delivered
at such time and the performance of this Agreement, and the Deposit
Agreement and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to such counsel to
which Telmex or any of its subsidiaries is a party or by which
Telmex or any of its subsidiaries is bound or to which any of the
property or assets of Telmex or any of its subsidiaries is subject,
nor will such action result in any violation of the provisions of
the charter and Estatutos of Telmex or the Mexican Constitution, any
statute or order, rule or regulation known to such counsel of any
court or governmental agency or body having jurisdiction over Telmex
or any of its subsidiaries or any of their properties.
(v) In connection with the offering of the DECS, no governmental
authorization in Mexico is required for the deposit of the Shares
being deposited with the Depositary against issuance of ADRs
evidencing the ADSs to be delivered at SBC's election to the holders
of the DECS in accordance with the terms of the DECS or the delivery
of the ADS and the Shares to be delivered at such time or the
consummation of the transactions contemplated by this Agreement and
the Deposit Agreement, except such governmental authorizations as
have been duly obtained and are in full force and effect.
(vi) No holder of securities of Telmex has or will have rights,
pursuant to any agreement with Telmex known to such counsel, to
include the registration of such securities under the Telmex
Registration Statement or the ADS Registration Statement.
(vii) The Telmex Registration Statement and the ADS Registration
Statement and the filing of such documents with the Commission have
been duly authorized by and on behalf of Telmex; and the Telmex
Registration Statement and the ADS Registration Statement have been
duly executed pursuant to such authorization by and on behalf of
Telmex.
29
<PAGE> 30
(viii) The statements in the Telmex Prospectus under "Exchange
Rates" and "Recent Developments", to the extent such statements
relate to matters of Mexican law or regulation or to the provisions
of documents therein described, are true and accurate in all
material respects, and nothing has been omitted from such statements
which would make the same misleading in any material respect.
(ix) The opinions of such counsel set forth in the Telmex
Prospectus under "Enforceability of Civil Liabilities" and
"Description of Capital Stock" are confirmed as of such Delivery
Date.
(x) Telmex's agreement to the choice of law provisions set
forth in Section 17 hereof will be recognized by the Mexican courts;
Telmex can sue and be sued in its own name; under the laws of
Mexico, the provisions of Section 14 and 17 hereof (i.e., the
irrevocable submission of Telmex to the exclusive jurisdiction of a
New York court, the waiver by Telmex of any objection to the venue
of a proceeding in a New York court and the agreement of Telmex that
this Agreement shall be governed by and construed in accordance with
the laws of New York) are legal, valid and binding; service of
process effected in the manner set forth in Section 14 hereof,
assuming its validity under New York law, will be effective, insofar
as Mexican law is concerned, to confer valid personal jurisdiction
over Telmex; and judgment obtained in a New York court arising out
of or in relation to the obligations of Telmex under this Agreement
would be enforceable against Telmex in the courts of Mexico pursuant
to Articles 569 and 571 of the Federal Civil Procedure Code and
Article 1347A of the Commerce Code, which provide, inter alia, that
any judgment rendered outside Mexico may be enforced by Mexican
courts, provided that:
(A) such judgment is obtained in compliance with legal
requirements of the jurisdiction of the court rendering such
judgment and in compliance with all legal requirements of this
Agreement;
(B) such judgment is strictly for the payment of a certain
sum of money, provided that, under Mexican monetary law,
payments which should be made in Mexico in the foreign
currency, whether by agreement or upon a judgment of a Mexican
court, may be discharged in Mexican currency at a rate of
exchange for such currency prevailing at the time of payment;
(C) service of process was made personally on Telmex or on
the appropriate process agent (service of process effected in
the manner set forth in Section 14 hereof, assuming its
validity under New York law, will be effective, insofar as
Mexican law is concerned, to confer valid personal
jurisdiction over Telmex);
30
<PAGE> 31
(D) such judgment does not contravene Mexican public policy
or laws;
(E) the applicable procedure under the law of Mexico with
respect to the enforcement of foreign judgments (including the
issuance of a letter rogatory by the competent authority of
such jurisdiction requesting enforcement of such judgment and
the certification of such judgment as authentic by the
corresponding authorities of such jurisdiction in accordance
with the laws thereof), is complied with; and
(F) the courts of such jurisdiction recognize the
principles of reciprocity in connection with the enforcement
of Mexican judgments in such jurisdiction;
(xi) All dividends and other distributions declared and
payable on the shares of capital stock of Telmex may under current
Mexican laws and regulations be paid to the Depositary in Mexican
pesos that may be converted into foreign currency that may be freely
transferred out of Mexico, and all such dividends and other
distributions will not be subject to Mexican withholding tax under
Mexican laws and regulations and are otherwise free and clear of any
other tax, duty, withholding or deduction in Mexico and without the
necessity of obtaining any governmental authorization in Mexico.
(xii) Pension and retirement funds that are organized for the
benefit of employees of states, municipalities, counties or other
political entities (or agencies or departments thereof) located in
the United States or any other country (including, without
limitation, of such funds that are managed or directed, directly or
indirectly, by officials or employee of such political entities or
agencies or departments thereof) and state-owned companies organized
as separate entities with their own assets (including, without
limitation, state owned banks and telecommunications companies) that
agree to be treated as Mexican with respect to the shares of capital
stock of Telmex that they acquire and not request or accept
diplomatic intervention from their country of origin, from any other
foreign country, or from any international public or private
organization and that acquire any A Shares, A Share ADSs, ADSs or L
Shares will not be considered to be foreign states or governments,
directly or indirectly, owning shares of capital stock of Telmex in
contravention of the Estatutos, the Concession or the Communications
Law.
(xiii) To the best of such counsel's knowledge, Telmex and
each of its subsidiaries have all licenses, franchises, permits,
authorizations, approvals and orders of and from all governmental
regulatory officials and bodies that are necessary to own or lease
their properties and conduct their businesses as described in the
Telmex Prospectus and are material in relation to the business of
Telmex and its subsidiaries taken as a whole.
31
<PAGE> 32
(xiv) To the best of such counsel's knowledge (after
reasonable inquiry) and other than as set forth in the Telmex
Prospectus there are no legal or governmental proceedings pending to
which Telmex or any of its subsidiaries is a party or of which any
property of Telmex or any of its subsidiaries is the subject which,
if determined adversely to Telmex or any of its subsidiaries, would
individually or in the aggregate have a material adverse effect on
the consolidated financial position, stockholders' equity or results
of operations of Telmex and its subsidiaries taken as a whole; and,
to the best of their knowledge (after reasonable inquiry), no such
proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(xv) Such counsel have no reason to believe that, as of its
effective date, the Telmex Registration Statement or any further
amendment thereto made by Telmex prior to such Delivery Date (other
than the financial statements and related schedules therein, as to
which such counsel need express no opinion) contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading or that, as of its date, the Telmex
Prospectus or any further amendment or supplement thereto made by
Telmex prior to such Delivery Date (other than the financial
statements and related schedules therein, as to which such counsel
need express no opinion) contained an untrue statement of a material
fact or omitted to state a material fact necessary to make the
statements therein, in light of the circumstances in which they were
made, not misleading or that, as of such Delivery Date, either the
Registration Statement or the Telmex Prospectus or any further
amendment or supplement thereto made by Telmex prior to such
Delivery Date (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion)
contains an untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
In giving such opinion, among other assumptions and qualifications
customary for this type of transaction, such counsel may state that with
respect to all matters of United States federal and New York law they have
relied upon the opinion of United States counsel for Telmex delivered
pursuant to paragraph (k) of this Section 9.
(m) Telmex shall have furnished to the Representative a certificate
signed by its Chairman of the Board, its Chief Executive Officer or Chief
Financial Officer stating that the signers of such certificate have
carefully examined the Telmex Registration Statement, the ADS Registration
Statement, the Telmex Prospectus (and any supplement thereto) and this
Agreement and that:
(i) the representations and warranties of Telmex in this
Agreement are true and correct in all material respects on and as of
such Delivery Date with the same effect as if made on such Delivery
Date; Telmex has complied with all the agreements and satisfied all
the conditions on its part to be performed or
32
<PAGE> 33
satisfied as a condition to the obligation of the Underwriters to
purchase the DECS hereunder; and the conditions set forth in
Sections 9(a) and 9(q) have been fulfilled; and no stop order
suspending the effectiveness of the Telmex Registration Statement or
the ADS Registration Statement has been issued and no proceedings
for that purpose have been instituted or, to Telmex's knowledge,
threatened;
(ii) as of the date of the Telmex Prospectus, the Telmex
Registration Statement, the ADS Registration Statement and the
Telmex Prospectus did not include any untrue statement of a material
fact and did not omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
and
(iii) since the date of the most recent financial statements
included or incorporated by reference in the Telmex Prospectus,
there has been no material adverse change in the condition
(financial or other), earnings, business, operations or properties
of Telmex or its subsidiaries, whether or not arising from
transactions in the ordinary course of business, except as set forth
in or contemplated in the Telmex Prospectus.
(n) Telmex shall have furnished to the Representative (i) a letter
of Mancera, S.C., addressed to the Board of Directors of Telmex and the
Underwriters and dated the later of the effective date of the Registration
Statement or the date of the filing of Telmex's latest Annual Report on
Form 20-F, of the type described in the American Institute of Certified
Public Accountants' Statement on Auditing Standards No. 49 and covering
such financial statement items as counsel for the Underwriters may
reasonably have requested and (ii) a letter of Mancera, S.C., addressed to
the Underwriters and dated such Delivery Date, stating, as of the date of
such letter (or, with respect to matters involving changes or developments
since the respective dates as of which specified financial information is
given in the Telmex Prospectus, as of a date not more than five days prior
to the date of such letter), the conclusions and findings of such firm
with respect to the financial information and other matters covered by its
letter referred to in subclause (i) above and confirming in all material
respects the conclusions and findings set forth in such prior letter.
(o) Subsequent to the date hereof or, if earlier, the dates as of
which information is given in the Telmex Registration Statement (exclusive
of any amendment thereof) and the Telmex Prospectus (exclusive of any
supplement thereto), there shall not have been (i) any change or decrease
specified in the letter or letters referred to in paragraph (n) of this
Section 9 or (ii) any change, or any development involving a prospective
change, in or affecting the condition (financial or other), earnings,
business, operations or properties of Telmex and its subsidiaries the
effect of which, in any case referred to in clause (i) or (ii) above, is,
in the judgment of the Representative, so material and adverse as to make
it impractical or inadvisable to proceed with the offering or delivery of
the DECS as contemplated by the Registration
33
<PAGE> 34
Statement (exclusive of any amendment thereof) and the Prospectus
(exclusive of any supplement thereto).
(p) Subsequent to the date hereof, there shall not have been any
decrease in the ratings of any of Telmex's debt securities by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Securities Act) or any notice given of
any intended or potential decrease in any such rating or of a possible
change in any such rating that does not indicate the direction of the
possible change.
(q) No order, consent, approval, authorization, registration or
qualification of or with any governmental agency or body having
jurisdiction over SBC or any of its properties is required for the issue
and sale of the DECS or the consummation by SBC of the transactions
contemplated by this Agreement or the Indenture, except such as have been,
or will have been prior to such Delivery Date, obtained under the
Securities Act and the Trust Indenture Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under
state securities or Blue Sky laws in connection with the purchase and
distribution of the DECS by the Underwriters.
(r) The DECS to be sold by SBC at such Delivery Date shall have been
duly listed, subject to notice of issuance, on the New York Stock
Exchange.
(s) All of the issued L Shares (including the Shares) and A Shares
shall have been duly registered with the Securities and Special Sections
of the National Registry of Securities and Intermediaries maintained by
the Mexican National Banking and Securities Commission and have duly
registered and listed on the Mexican Stock Exchange, the Shares and the A
Shares shall have been duly admitted for trading on the Mexican Stock
Exchange and all of the issued L Shares (including the Shares) and the
Telmex ADSs (including the ADSs) shall have been duly listed, subject to
notice of issuance, on the New York Stock Exchange.
(t) On or prior to such Delivery Date, each of SBC and Telmex shall
have furnished to the Representative such further information,
certificates and documents as the Representative may reasonably request.
If any of the conditions specified in this Section 9 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all respects satisfactory in form and substance to the
Representative and counsel for the Underwriters, this Agreement and all
obligations of the Underwriters hereunder may be cancelled at, or any time prior
to, such Delivery Date by the Underwriters. Notice of such cancellation shall be
given to SBC and Telmex in writing or by telephone confirmed in writing.
10. Expenses.
34
<PAGE> 35
(a) In the event that the sale and purchase of the DECS as
contemplated in Section 2 herein is not consummated, SBC agrees to pay or
cause to be paid all expenses incident to the performance of its
obligations and the obligations of Telmex under this Agreement, including:
(i) the fees, disbursements and expenses of counsel and accountants of SBC
and Telmex in connection with the registration and delivery of the DECS
under the Securities Act and all other fees or expenses in connection with
the preparation and filing of the Registration Statement, each Preliminary
Prospectus, the Prospectus, the Telmex Registration Statement, the ADS
Registration Statement, each Telmex Preliminary Prospectus, the Telmex
Prospectus, and amendments, post-effective amendments and supplements to
any of the foregoing (including exhibits), including all registration fees
and printing costs associated therewith, and the mailing and delivering of
copies thereof to the Underwriters and dealers, in the quantities
hereinabove specified, (ii) all costs and expenses related to the
authorization, issuance, transfer and delivery of the DECS to the
Underwriters, including any transfer or other taxes payable thereon, (iii)
the cost of printing or producing any Blue Sky or Legal Investment
memorandum in connection with the offer and sale of the DECS under state
securities laws and all expenses in connection with the qualification of
the DECS for offer and sale under state securities laws as provided
herein, including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection with such qualification and in
connection with the Blue Sky or Legal Investment memorandum, (iv) all
filing fees and disbursements of counsel to the Underwriters incurred in
connection with the review and qualification of the offering, of the DECS
by the National Association of Securities Dealers, Inc., if any, (v) all
costs and expenses incident to listing the DECS on the NYSE, (vi) the cost
of printing certificates representing the DECS, (vii) the costs and
charges of any transfer agent, registrar or depositary, (viii) the costs
and expenses of SBC and of Telmex relating to investor presentations on
any "road show" undertaken in connection with the marketing of the
offering of the DECS, including, without limitation, expenses associated
with the production of road show slides and graphics, fees and expenses of
any consultants engaged in connection with the road show presentations
with the prior approval of SBC and of Telmex, travel and lodging expenses
of the Underwriters and officers of SBC and of Telmex and any such
consultants, and the cost of any aircraft chartered in connection with the
road show, (ix) all costs and fees paid to rating agencies in connection
with the rating of the DECS, and (x) all other costs and expenses incident
to the performance of the obligations of SBC and Telmex hereunder for
which provision is not otherwise made in this Section 10.
(b) In the event that the purchase and sale of DECS as contemplated
in Section 2 hereof is consummated, the Underwriters agree to pay or cause to be
paid all expenses referred to in Section 10(a) hereof to the extent that such
expenses are incurred in connection with the initial offering and issuance of
the DECS and notice of the incurrence of such costs or expenses shall have been
given to the Representative within 30 days of the Firm Delivery Date (or the
Option Delivery Date, in the event that the Underwriters exercise the option
referred to in Section 2(b) hereof).
11. If SBC shall fail to tender the DECS for delivery to the
Underwriters for any reason permitted under this Agreement, or if the
Underwriters shall decline to purchase the DECS for any reason permitted under
this Agreement (other than pursuant to Section 8(a)-(c) hereof), SBC shall
reimburse the Underwriters for the reasonable fees and
35
<PAGE> 36
expenses of their counsel and for such other out-of-pocket expenses as shall
have been incurred by them in connection with this Agreement and the proposed
purchase of DECS, and upon demand SBC shall pay the full amount thereof to the
Representative. If this Agreement is terminated or pursuant to Section 8(a)-(c)
hereof, SBC shall not be obligated to reimburse any Underwriter on account of
those expenses.
12. Notices. Any notice by SBC or Telmex or the Underwriters (except
for service of process upon Telmex, which shall be made pursuant to Section 14
hereof) shall be sufficient if given in writing or by facsimile transmission
confirmed promptly in writing addressed to (i) the Representative at Salomon
Brothers Inc., Seven World Trade Center, New York, New York 10048, Telecopy
Number (212) 783-2274, Attention of Legal Department, and any notice by the
Underwriters to SBC or Telmex shall be sufficient if given in writing or by
facsimile transmission confirmed promptly in writing addressed (ii) to SBC at
SBC Communications Inc., 175 E. Houston Street, 7th Floor, San Antonio, Texas
78205-2233, Telecopy Number: (210) 351-3849, Attention of the Senior Vice
President, Treasurer, and Chief Financial Officer with a copy to the Senior
Executive Vice President and General Counsel, SBC Communications Inc., 175 E.
Houston Street, 13th Floor, San Antonio, Texas 78205-2233, Telecopy Number:
(210) 351-2298 and (iii) to Telmex at Telefonos de Mexico, S.A. de C.V., Parque
Via 190, Colonia Cuauhtemoc, 06599 Mexico, D.F., Mexico, Telecopy Number:
011-525-255-1576 Attention: Ing. Adolfo Cerezo Perez.
13. This Agreement shall be binding upon the Underwriters, SBC,
Telmex and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
(a) the representations, warranties, indemnities and agreements of SBC and
Telmex contained in this Agreement shall also be deemed to be for the benefit of
the person or persons, if any, who control any Underwriter within the meaning of
Section 15 of the Securities Act, and (b) the indemnity agreement of the
Underwriters con tained in Section 7 hereof shall be deemed to be for the
benefit of (i) directors of SBC, officers of SBC who have signed the
Registration Statement and any person controlling SBC and (ii) directors of
Telmex, officers of Telmex who have signed the Telmex Registration Statement or
the ADS Registration Statement and any person controlling Telmex. Nothing in
this Agreement is intended or shall be construed to give any person, other than
the persons referred to in this Section 13, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision contained
herein.
14. Each of the parties hereto irrevocably agrees that any legal
suit, action or proceeding arising out of or based upon this Agreement or the
transactions contemplated hereby may be instituted in any New York court,
irrevocably waives, to the fullest extent it may effectively do so, any
objection which it may now or hereafter have to the laying of venue of any such
proceeding and waives any right to which it may be entitled on account of place
of residence or domicile and irrevocably submits to the exclusive jurisdiction
of such courts in any such suit, action or proceeding. Telmex has appointed CT
Corporation System as its authorized agent (the "Authorized Agent") upon whom
process may be served in any such action arising out of or based on this
Agreement or the transactions contemplated hereby which may be instituted in any
New York court by any Underwriter or by any person who controls any Underwriter,
designates CT Corporation System's address in New York City as its
36
<PAGE> 37
designated address to receive such process, expressly consents to the
jurisdiction of any such court in respect of any such action, and waives any
other requirements of or objections to personal jurisdiction with respect
thereto. Such appointment shall be irrevocable. Telmex represents and warrants
that the Authorized Agent has agreed to act as said agent for service of
process, and Telmex agrees to take any and all action, including the filing of
any and all documents and instruments, that may be necessary to continue such
appointment in full force and effect as aforesaid. Personal service of process
upon the Authorized Agent in a manner permitted by applicable law and written
notice of such service to Telmex shall be deemed, in every respect, effective
service of process upon Telmex.
15. For purposes of this Agreement, "business day" means any day
on the New York Stock Exchange, Inc. is open for trading.
16. This Agreement may be executed by the parties hereto in any
number of counterparts, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same instrument.
17. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
37
<PAGE> 38
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this Agreement and your acceptance shall represent a binding agreement among
SBC, Telmex and the Several Underwriters.
Very truly yours,
SBC COMMUNICATIONS INC.
By: /s/ D.E. Kiernan
-------------------------------------
Name: Donald E. Kiernan
Title: Senior Vice President,
Treasurer and Chief Financial
Officer
TELEFONOS DE MEXICO, S.A. DE C.V.
By: /s/ Adolfo Cerezo
-------------------------------------
Name: Adolfo Cerezo
Title: Chief Financial Officer
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
Salomon Brothers Inc
By: /s/ Tim Davies
- -------------------------------------
Name: Tim Davies
Title: Vice President
For itself and as Representative of the several Underwriters named in Schedule I
to the foregoing Agreement.
38
<PAGE> 39
SCHEDULE I
Number of DECS
Underwriters to be Purchased
Salomon Brothers Inc...................................... 8,500,000
Credit Suisse First Boston Corporation.................... 200,000
Bear Stearns & Co. Inc. ................................. 100,000
J.P. Morgan Securities Inc. .............................. 100,000
Morgan Stanley & Co. Incorporated......................... 100,000
----------
Total............................................... 9,000,000
39
<PAGE> 1
Exhibit 4-a
Execution Copy
SBC COMMUNICATIONS INC.
as Issuer and Registrant of Securities
AND
THE BANK OF NEW YORK
Trustee
--------------------
INDENTURE
Dated as of November 1, 1994
-------------------
Providing for Issuance of Securities in Series
<PAGE> 2
Certain Sections of this Indenture relating to Sections 310 through 318,
inclusive, of the Trust Indenture Act of 1939. This reconciliation section does
not constitute part of the Indenture.
Trust Indenture Act Indenture
of 1939 Section Section
- ------------------- ---------
310(a)(1) . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . Inapplicable
(a)(4) . . . . . . . . . . . . . . . . . . . Inapplicable
(b) . . . . . . . . . . . . . . . . . . . . . 7.08; 7.10
(c) . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(a) . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . 2.07
(b) . . . . . . . . . . . . . . . . . . . . . 10.03
(c) . . . . . . . . . . . . . . . . . . . . . 10.03
313(a) . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . Inapplicable
(b)(2) . . . . . . . . . . . . . . . . . . . 7.06; 10.02
(c) . . . . . . . . . . . . . . . . . . . . . 10.02
(d) . . . . . . . . . . . . . . . . . . . . . 7.06
314(a) . . . . . . . . . . . . . . . . . . . . . 4.02; 10.02
(b) . . . . . . . . . . . . . . . . . . . . . Inapplicable
(c)(1) . . . . . . . . . . . . . . . . . . . 10.04
(c)(2) . . . . . . . . . . . . . . . . . . . 10.04
(c)(3) . . . . . . . . . . . . . . . . . . . Inapplicable
(d) . . . . . . . . . . . . . . . . . . . . . Inapplicable
(e) . . . . . . . . . . . . . . . . . . . . . 10.05
(f) . . . . . . . . . . . . . . . . . . . . . Inapplicable
315(a) . . . . . . . . . . . . . . . . . . . . . 7.01(b)
(b) . . . . . . . . . . . . . . . . . . . . . 7.05; 10.02
(c) . . . . . . . . . . . . . . . . . . . . . 7.01(a)
(d) . . . . . . . . . . . . . . . . . . . . . 7.01(c)
(e) . . . . . . . . . . . . . . . . . . . . . 6.11
316(a)(last sentence) . . . . . . . . . . . . . 2.11
(a)(1)(A) . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . . 6.04
(a)(2) . . . . . . . . . . . . . . . . . . . Inapplicable
(b) . . . . . . . . . . . . . . . . . . . . . 6.07
317(a)(1) . . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . 2.06
318(a) . . . . . . . . . . . . . . . . . . . . . 10.01
<PAGE> 3
TABLE OF CONTENTS*
PAGE
----
ARTICLE 1DEFINITIONS AND INCORPORATION BY REFERENCE......1
1.01 Definitions...............................................1
1.02 Other Definitions.........................................4
1.03 Incorporation by Reference of Trust Indenture Act.........4
1.04 Rules of Construction.....................................4
ARTICLE 2
THE SECURITIES................................5
2.01 Issuable in Series........................................5
2.02 Establishment of Terms and Form of Series of
Securities..............................................5
2.03 Execution, Authentication and Delivery....................7
2.04 Registrar and Paying Agent...............................10
2.05 Payment on Securities....................................10
2.06 Paying Agent to Hold Money in Trust......................11
2.07 Securityholder Lists; Ownership of Securities............12
2.08 Registration of Transfer and Exchange....................12
2.09 Replacement Securities...................................15
2.10 Outstanding Securities...................................16
2.11 Treasury Securities......................................17
2.12 Temporary Securities.....................................17
2.13 Cancellation.............................................18
2.14 Defaulted Interest.......................................18
2.15 CUSIP Numbers............................................18
ARTICLE 3 REDEMPTION.........................19
3.01 Notice to Trustee........................................19
3.02 Selection of Securities to be Redeemed...................19
3.03 Notice of Redemption.....................................19
3.04 Effect of Notice of Redemption...........................20
3.05 Deposit of Redemption Price..............................20
3.06 Securities Redeemed in Part..............................21
ARTICLE 4 COVENANTS..........................21
4.01 Payment of Securities....................................21
4.02 Reports by SBC...........................................21
4.03 Statement as to Compliance...............................22
4.04 Calculation of Original Issue Discount...................22
ARTICLE 5 SUCCESSORS.........................22
- --------
* This Table of Contents Does Not Constitute Part of the Indenture.
-i-
<PAGE> 4
5.01 When SBC May Merge, etc..................................22
ARTICLE 6 DEFAULTS AND REMEDIES..............23
6.01 Events of Default........................................23
6.02 Acceleration.............................................24
6.03 Other Remedies Available to Trustee......................25
6.04 Waiver of Existing Defaults..............................26
6.05 Control by Majority......................................26
6.06 Limitation on Suits by Securityholders...................27
6.07 Rights of Holders to Receive Payment.....................27
6.08 Collection Suits by Trustee..............................27
6.09 Trustee May File Proofs of Claim.........................28
6.10 Priorities...............................................28
6.11 Undertaking for Costs....................................28
ARTICLE 7 TRUSTEE............................29
7.01 Duties of Trustee........................................29
7.02 Rights of Trustee........................................30
7.03 Individual Rights of Trustee.............................31
7.04 Trustee's Disclaimer.....................................31
7.05 Notice of Defaults.......................................31
7.06 Reports by Trustee to Holders............................31
7.07 Compensation and Indemnity...............................32
7.08 Replacement of Trustee...................................32
7.09 Successor Trustee, Agents by Merger, etc.................34
7.10 Eligibility; Disqualification............................34
7.11 Preferential Collection of Claims Against ...............35
ARTICLE 8 DISCHARGE OF INDENTURE.............35
8.01 Termination of SBC's Obligations.........................35
8.02 Application of Trust Money...............................36
8.03 Repayment to ............................................36
8.04 Indemnity for Government Obligations.....................36
ARTICLE 9 AMENDMENTS AND WAIVERS.............37
9.01 Without Consent of Holders...............................37
9.02 With Consent of Holders..................................37
9.03 Compliance with Trust Indenture Act......................39
9.04 Revocation and Effect of Consents........................39
9.05 Notation on or Exchange of Securities....................39
9.06 Trustee Protected........................................39
9.07 Execution of Supplemental Indentures.....................39
ARTICLE 10 MISCELLANEOUS.....................40
10.01 Trust Indenture Act Controls............................40
10.02 Notices.................................................40
-ii-
<PAGE> 5
10.03 Communication by Holders with Other Holders.............41
10.04 Certificate and Opinion as to Conditions Precedent......41
10.05 Statements Required in Certificate or Opinion...........41
10.06 Rules by Trustee and Agents.............................42
10.07 Legal Holidays..........................................42
10.08 Governing Law...........................................42
10.09 No Adverse Interpretation of Other Agreements...........42
10.10 No Recourse Against Others..............................42
10.11 Acts of Holders.........................................42
10.12 Execution in Counterparts...............................44
SIGNATURES............................................................44
-iii-
<PAGE> 6
INDENTURE dated as of November 1, 1994 between SBC COMMUNICATIONS INC., a
Delaware corporation ("SBC"), and THE BANK OF NEW YORK, a New York banking
company duly organized and validly existing under the laws of the State of New
York ("Trustee").
RECITALS OF SBC
SBC has duly authorized the execution and delivery of this Indenture for
the issuance from time to time of its unsecured debentures, notes or other
evidences of indebtedness ("Securities") as herein provided.
All things necessary to make this Indenture a valid agreement of SBC, 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 as
follows for the equal and ratable benefit of the Holders of the Securities:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions.
"Affiliate" means any person directly or indirectly controlling or
controlled by, or under direct or indirect common control with, SBC.
"Agent" means any Paying Agent, Registrar, or co-Registrar.
"Authorized Newspaper" means a newspaper of general circulation, in an
official language of the country of publication or in the English language,
customarily published on days other than Legal Holidays, as defined in Section
10.07, in such country. Whenever successive weekly publications in an Authorized
Newspaper are required hereunder, they may be made (unless otherwise expressly
provided herein) on the same or different days of the week and in the same or
different Authorized Newspapers.
"Board of Directors" means the Board of Directors of SBC, or any duly
authorized committee thereof.
"Board Resolution" means a copy of a resolution of the Board of Directors,
certified by the Secretary or an Assistant Secretary of SBC to have been duly
adopted by the Board of Directors and to be in full force and effect.
"Default" means any event which is, or after notice or passage of time
would be, an Event of Default.
<PAGE> 7
"Depository" means, with respect to the Securities of any Series issuable
or issued in whole or in part in the form of one or more Global Securities, the
person designated as Depository by SBC pursuant to Section 2.02.
"Global Security" means a Security in the form prescribed in Section 2.02
evidencing all or part of a Series of Securities, issued to the Depository for
such series or its nominee, and registered in the name of such Depository or
nominee.
"Holder" or "Securityholder" means the bearer of an Unregistered Security
or of a coupon appertaining thereto or the person in whose name a Registered
Security is registered on the Registrar's books.
"Indenture" means this Indenture as amended or supplemented from time to
time including, for all purposes of this instrument and any such amendment or
supplement, the provisions of the TIA that are deemed to be a part of and govern
this instrument and any such amendment or supplement, respectively. The term
"Indenture" shall also include the forms and terms of a particular Series of
Securities established as contemplated hereunder.
"Officer" means the Chairman of the Board of Directors, any Vice Chairman
of the Board of Directors, the President, any Vice-President, the Treasurer or
the Secretary of SBC.
"Officers' Certificate" means a certificate signed by two Officers or by
any Officer and an Assistant Treasurer or an Assistant Secretary of SBC.
"Opinion of Counsel" means a written opinion of legal counsel who is
acceptable to SBC and the Trustee. Counsel may be an employee of or counsel to
SBC or the Trustee.
"Order" means an order in the name of SBC signed by two Officers or by any
Officer and an Assistant Treasurer or an Assistant Secretary of SBC.
"Original Issue Discount Security" means any Security which provides for
an amount less than the stated principal amount thereof to be due and payable
upon declaration of acceleration of the maturity thereof pursuant to Section
6.02.
"Principal" of a debt security means the principal of the security plus,
when appropriate, the premium, if any, on the security.
"Registered Security" means any Security issued hereunder and
registered by the Registrar.
"Responsible Officer", when used with respect to the Trustee,
shall mean the chairman or any vice-chairman of the board of directors
-2-
<PAGE> 8
or trustees, the chairman or any vice-chairman of the executive committee of the
board of directors or trustees, the president, any vice-president, the
treasurer, the secretary, any trust officer, any second or assistant
vice-president or any other officer or assistant officer of the Trustee
customarily performing functions similar to those performed by the persons who
at the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of his knowledge of and familiarity with a particular
subject.
"SBC" means the party named as such in this Indenture until a successor
replaces it pursuant to the applicable provisions hereof and thereafter means
the successor.
"SEC" means the Securities and Exchange Commission.
"Series" or "Series of Securities" means a series of Securities.
"Securities" means the debentures, notes or other obligations of SBC
issued, authenticated and delivered under this Indenture.
"Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by SBC or by one or more other
of its Subsidiaries, or by SBC and one or more other of its Subsidiaries. For
the purposes of this definition, "voting stock" means stock which ordinarily has
voting power for the election of directors, whether at all times or only so long
as no senior class of stock has such voting power by reason of any contingency.
"TIA" means the Trust Indenture Act of 1939 as in effect on the date of
this Indenture provided, however, that in the event the Trust Indenture Act of
1939 is amended after such date, "TIA" means, to the extent required by any such
amendment, the Trust Indenture Act of 1939 as so amended.
"Trustee" means the party named as such in this Indenture until a
successor replaces it pursuant to the applicable provisions hereof and
thereafter means the successor and if, at any time, there is more than one
Trustee, "Trustee" as used with respect to the Securities of any Series shall
mean the Trustee with respect to that Series.
"U.S. person" means 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 a political subdivision thereof, or an estate or
trust the income of which is subject to United States Federal income taxation
regardless of its source.
"United States" means the United States of America (including the States
and the District of Columbia), its territories, its possessions and all other
areas subject to its jurisdiction.
-3-
<PAGE> 9
"Unregistered Security" means any Security issued hereunder which
is not a Registered Security.
"Yield to Maturity" means the yield to maturity, calculated by SBC at the
time of issuance of a Series of Securities or, if applicable, at the most recent
determination of interest on such Series in accordance with accepted financial
practice.
SECTION 1.02 Other Definitions.
Term Section
---- -------
"Bankruptcy Law". . . . . . . . . . . . 6.01
"Custodian" . . . . . . . . . . . . . . 6.01
"Event of Default" . . . . . . . . . . 6.01
"Legal Holiday" . . . . . . . . . . . . 10.07
"Paying Agent" . . . . . . . . . . . . 2.04
"Registrar" . . . . . . . . . . . . . . 2.04
"U.S. Government Obligations" . . . . . 8.01
SECTION 1.03 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means SBC.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings assigned to them therein.
SECTION 1.04 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with accounting principles generally accepted
in the United States of America.
(3) "or" is not exclusive; and
-4-
<PAGE> 10
(4) words in the singular include the plural, and words
in the plural include the singular.
ARTICLE 2
THE SECURITIES
SECTION 2.01 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 may be Registered Securities and Unregistered
Securities within a Series and the Unregistered Securities may be subject to
such restrictions, and contain such legends, as may be required by United States
laws and regulations. Except as provided in the foregoing sentence or as
otherwise provided by or pursuant to the Board Resolution referred to in Section
2.02, all Securities of a Series shall be identical in all respects. Securities
of different Series may differ in any respect; provided that all Series of
Securities shall be equally and ratably entitled to the benefits of this
Indenture.
SECTION 2.02 Establishment of Terms and Form of Series of Securities.
(a) At or prior to the issuance of any Series of Securities, the following
shall be established either by or pursuant to a Board Resolution, and set forth
in an Officers' Certificate, or by an indenture supplemental hereto:
(1) the title of the Securities of the Series (which title shall
distinguish the Securities of the Series from the Securities of all other
Series and from all other securities issued by SBC);
(2) any limit upon the aggregate principal amount of the
Securities of the Series which 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 2.08, 2.09, 2.12, 3.06 or
9.05);
(3) the 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 of calculating such rate or rates of
interest, the date or dates from which such interest shall accrue, the
dates on which such interest shall be payable and, with respect to
Registered Securities, the record date for the interest payable on any
interest payment date;
-5-
<PAGE> 11
(5) the place or places where the principal of and
interest on Registered and any Unregistered Securities of the
Series shall be payable;
(6) the period or periods within which, the price or prices at
which, and the terms and conditions upon which, Securities of the Series
may be redeemed, in whole or in part, at the option of SBC;
(7) the obligation, if any, of SBC to redeem or purchase
Securities of the Series pursuant to any sinking fund or analogous
provisions or upon the happening of a specified event or at the option of
a Holder thereof and the period or periods within which, the price or
prices at which, and the terms and conditions upon which, Securities of
the Series shall be redeemed or purchased, in whole or in part, pursuant
to such obligation;
(8) if in other than denominations of $1,000 and any integral
multiple thereof, the denominations in which Securities of the Series
shall be issuable;
(9) if other than the principal amount thereof, the portion of
the principal amount of Securities of the Series which shall be payable
upon declaration or acceleration of the maturity thereof pursuant to
Section 6.02;
(10) whether Securities of the Series shall be issuable as
Registered Securities or Unregistered Securities (with or without interest
coupons), or both, and any restrictions applicable to the offering, sale
or delivery of Unregistered Securities and whether, and the terms upon
which, Unregistered Securities of a Series may be exchanged for Registered
Securities of the same Series and vice versa;
(11) whether and under what circumstances SBC will pay additional
amounts on the Securities of that Series held by a person who is not a
U.S. person in respect of taxes or similar charges withheld or deducted
and, if so, whether SBC will have the option to redeem such Securities
rather than pay such additional amounts;
(12) the currency or currencies, including composite currencies,
in which payment of the principal of and interest on the Securities of the
Series shall be payable (if other than the currency of the United States
of America);
(13) if the amount or payments of principal of or interest on the
Securities of the Series may be determined with reference to an index, the
manner in which such amounts shall be determined;
-6-
<PAGE> 12
(14) the obligation, if any, of SBC to permit the conversion or
exchange of the Securities of the Series into other securities (whether or
not issued by, or the obligation of, SBC), and the terms and conditions
upon which such conversion or exchange shall be effected (including,
without limitation, the initial conversion or exchange price or rate, the
conversion or exchange period and any other provisions in addition to or
in lieu of those set forth in this Indenture relative to such obligation;
(15) whether the Securities of the Series shall be issuable in
whole or in part in the form of one or more Global Securities and, in such
case, the Depository for such Global Security or Securities, which
Depository shall be a clearing agency registered under the Securities
Exchange Act of 1934, as amended;
(16) any other terms of the Series (which terms shall not be
inconsistent with the provisions of this Indenture), including any terms
which may be required by or advisable under United States laws or
regulations or advisable in connection with the marketing of Securities of
that Series;
(17) the form of the Securities (or forms thereof if Unregistered
and Registered Securities shall be issuable in such Series, including such
legends as may be required by United States laws or regulations, the form
of any coupons or temporary global Security which may be issued and the
forms of any certificates which may be required hereunder or under United
States laws or regulations in connection with the offering, sale, delivery
or exchange of Unregistered Securities); and
(18) the CUSIP number, if any.
(b) If the terms and form or forms of any Series of Securities are
established by or pursuant to a Board Resolution, SBC shall deliver a copy of
such Board Resolution to the Trustee at or prior to the issuance of such Series
with (1) the form or forms of Security which have been approved attached
thereto, or (2) if such Board Resolution authorized Officers to approve the
terms and form or forms of the Securities, an Officers' Certificate approving
the terms and form or forms of Security with such form or forms of Securities
attached thereto.
SECTION 2.03 Execution, Authentication and Delivery.
(a) Securities shall be executed on behalf of SBC by its Chairman of the
Board of Directors or a Vice-Chairman of the Board of Directors or its President
or a Vice-President, and its Treasurer or an Assistant Treasurer or its
Secretary or an Assistant Secretary. Signatures shall be manual or facsimile.
SBC's seal shall be reproduced on the Securities and may, but need not, be
attested. The coupons of
-7-
<PAGE> 13
Unregistered Securities shall bear the facsimile signature of the Treasurer or
an Assistant Treasurer of SBC.
(b) If an Officer, an Assistant Treasurer or an Assistant Secretary of SBC
whose signature is on a Security or coupon no longer holds that office at the
time the Security is authenticated, the Security or coupon shall be valid
nevertheless.
(c) A Security shall not be valid until authenticated by the manual
signature of the Trustee or an authenticating agent and no coupon shall be valid
until the Security to which it appertains has been so authenticated. Such
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture. Each Registered Security shall be dated the date of its
authentication, and each Unregistered Security shall be dated as provided in
connection with the establishment of the Series thereof.
(d) The Trustee shall at any time, and from time to time, authenticate and
deliver Securities of any Series executed and delivered by SBC for original
issue in an aggregate principal amount not in excess of the principal amount
authorized for such Series, upon receipt by the Trustee of (i) an Order for the
authentication and delivery of such Securities, (ii) if the terms and form or
forms of the Securities of such Series have been established by or pursuant to a
Board Resolution as permitted by Section 2.02, a copy of such Board Resolution
and any Officers' Certificate that may be required pursuant to Section 2.02(b),
and (iii) an Opinion of Counsel stating,
(1) if the form of such Securities has been established by or
pursuant to a Board Resolution as permitted by Section 2.02, that such
form has been established in conformity with the provisions of this
Indenture;
(2) if the terms of such Securities have been established by or
pursuant to a Board Resolution as permitted by Section 2.02, that such
terms have been established in conformity with the provisions of this
Indenture; and
(3) that such Securities, when authenticated and delivered by the
Trustee and issued by SBC in the manner and subject to any conditions
specified in such Opinion of Counsel, will constitute valid and legally
binding obligations of SBC entitled to the benefits of the Indenture.
Notwithstanding the provisions of Section 2.02 and of the preceding
paragraph, if all Securities of a Series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 2.02(b) or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the time
of authentication of each Security of such Series if such documents are
delivered at or prior
-8-
<PAGE> 14
to the time of authentication upon original issuance of the first Security of
such series to be issued.
If the terms and form or forms of such Securities have been established by
or pursuant to a Board Resolution as permitted by Section 2.02, the Trustee
shall not be required to authenticate such Securities if the issue of such
Securities pursuant to this Indenture will adversely 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.
Notwithstanding the foregoing, until SBC has delivered an Officers'
Certificate to the Trustee and the Registrar stating that, as a result of the
action described, SBC would not suffer adverse consequences under the provisions
of United States law or regulations in effect at the time of the delivery of
Unregistered Securities, (i) delivery of Unregistered Securities by the Trustee
or Registrar will be made only outside the United States and (ii) Unregistered
Securities will be released by the Trustee or Registrar in definitive form to
the person entitled to physical delivery thereof only upon presentation of a
certificate in the form prescribed by SBC.
(e) If SBC shall establish pursuant to Section 2.02 that the Securities of
a Series are to be issued in whole or in part in the form of one or more Global
Securities, then SBC shall execute and the Trustee shall, in accordance with
this Section and SBC's Order with respect to such Series, authenticate and
deliver one or more Global Securities that (i) shall represent and shall be
denominated in an amount equal to the aggregate principal amount of outstanding
Securities of such series to be represented by one or more Global Securities;
(ii) shall be registered in the name of the Depository for such Global Security
or Securities or the nominee of such Depository, (iii) shall be delivered by the
Trustee to such Depository or pursuant to such Depository's instruction and (iv)
shall bear a legend substantially to the following effect: "This Security is a
Global Security within the meaning of the Indenture hereinafter referred to and
is registered in the name of a Depository or a nominee of a Depository. Unless
and until it is exchanged in whole or in part for Securities in definitive form
in accordance with the provisions of the Indenture and the terms of the
Securities, this 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
such nominee to a successor Depository or a nominee of such successor
Depository."
Each depository designated pursuant to Section 2.02 for a Global Security
must, at the time of its designation and at all times while it serves as
Depository, be a clearing agency registered under the Securities Exchange Act of
1934, as amended, and any other applicable statute or regulation.
-9-
<PAGE> 15
(f) The Trustee may appoint an authenticating agent to authenticate
Securities. An authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with SBC or an Affiliate thereof.
SECTION 2.04 Registrar and Paying Agent.
SBC shall maintain in the Borough of Manhattan, The City of New York,
State of New York, an office or agency where Registered Securities may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where (subject to Sections 2.05(c) and 2.08(b)) Securities may
be presented for payment or for exchange ("Paying Agent"). With respect to any
Series of Securities issued in whole or in part as Unregistered Securities, SBC
shall maintain one or more Paying Agents located outside the United States and
shall maintain such Paying Agents for a period of two years after the principal
of such Unregistered Securities has become due and payable. During any period
thereafter for which it is necessary in order to conform to United States tax
law or regulations, SBC will maintain a Paying Agent outside the United States
to which the Unregistered Securities or coupons appertaining thereto may be
presented for payment and will provide the necessary funds therefor to such
Paying Agent upon reasonable notice. The Registrar shall keep a register with
respect to each Series of Securities issued in whole or in part as Registered
Securities and to their transfer and exchange. SBC may appoint one or more
co-Registrars acceptable to the Trustee and one or more additional Paying Agents
for each Series of Securities and SBC may terminate the appointment of any
co-Registrar or Paying Agent at any time upon written notice. The term
"Registrar" includes any co-Registrar. The term "Paying Agent" includes any
additional Paying Agent. SBC shall notify the Trustee of the name and address of
any Agent not a party to this Indenture. If SBC fails to maintain a Registrar or
Paying Agent, the Trustee shall act as such.
SBC initially appoints the Trustee as Registrar and Paying Agent.
SECTION 2.05 Payment on Securities.
(a) Subject to the following provisions, SBC will pay to the Trustee the
amounts, in such coin or currency as is at the time legal tender for the payment
of public or private debt, in the manner, at the times and for the purposes set
forth herein and in the text of the Securities for each Series, and SBC hereby
authorizes and directs the Trustee from funds so paid to it to make or cause to
be made payment of the principal of and interest, if any, on the Securities and
coupons of each Series as set forth herein and in the text of such Securities
and coupons. The Trustee will arrange directly with any Paying Agents for the
payment, or the Trustee will make payment, from funds furnished by SBC, of the
principal and interest, if any, on the Securities and
-10-
<PAGE> 16
coupons of each Series by check drawn upon a bank in The City of New York.
(b) Interest, if any, on Registered Securities of a Series shall be paid
on each interest payment date for such Series to the Holder thereof at the close
of business on the relevant record dates specified in the Securities of such
Series. SBC may pay such interest by check mailed to such Holder's address as it
appears on the register for Securities of such Series. Principal of Registered
Securities shall be payable only against presentation and surrender thereof at
the office of the Paying Agent in New York, New York, unless SBC shall have
otherwise instructed the Trustee in writing.
(c) To the extent provided in the Securities of a Series, (i) interest, if
any, on Unregistered Securities shall be paid only against presentation and
surrender of the coupons for such interest installments as are evidenced thereby
as they mature and (ii) original issue discount (as defined in Section 1273 of
the Internal Revenue Code of 1986, as amended), if any, on Unregistered
Securities shall be paid only against presentation and surrender of such
Securities, in either case at the office of a Paying Agent located outside of
the United States, unless SBC shall have otherwise instructed the Trustee in
writing. Principal of Unregistered Securities shall be paid only against
presentation and surrender thereof as provided in the Securities of a Series. If
at the time a payment of principal of or interest, if any, or original issue
discount, if any, on an Unregistered Security or coupon shall become due the
payment of the full amount so payable at the office or offices of all the Paying
Agents outside the United States is illegal or effectively precluded because of
the imposition of exchange controls or other similar restrictions on the payment
of such amount in the United States currency, then SBC may instruct the Trustee
to make such payments at the office of a Paying Agent located in the United
States, provided that provision for such payment in the United States would not
cause such Unregistered Security to be treated as a "registration-required
obligation" under United States law and regulations.
SECTION 2.06 Paying Agent to Hold Money in Trust.
SBC will require each Paying Agent for any Series of Securities other than
the Trustee to agree in writing that it will hold all sums held by it for the
payment of principal of and interest on Securities of that Series in trust for
the benefit of the persons entitled thereto until such sums are paid to such
persons or otherwise disposed of as herein provided, and that the Paying Agent
will notify promptly the Trustee of any default by SBC in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. If SBC acts as Paying Agent,
it shall segregate the money held by it for the payment of principal of and
interest on any Series of Securities and hold such money as a separate trust
fund. SBC at any time may require a Paying Agent to pay all money
-11-
<PAGE> 17
held by it to the Trustee. Upon so doing the Paying Agent shall have no
further liability for the money so paid.
SECTION 2.07 Securityholder Lists; Ownership of Securities.
(a) The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list received by or furnished to it of the names and
addresses of Holders of Securities. If the Trustee is not the Registrar or if
Unregistered Securities are outstanding under the Indenture, SBC shall furnish
to the Trustee semiannually on or before the last day of June and December in
each year, and at such other times as the Trustee may request in writing, a
list, in such form and as of such date as the Trustee may reasonably require,
containing all the information in the possession or control of the Registrar,
any co- Registrar, SBC or any of its Paying Agents other than the Trustee as to
the names and addresses of Holders of Securities.
(b) Ownership of Registered Securities of a Series shall be proved by the
register for such Series kept by the Registrar. Ownership of Unregistered
Securities may be proved by the production of such Unregistered Securities or by
a certificate or affidavit executed by the person holding such Unregistered
Securities or by a depository with whom such Unregistered Securities were
deposited, if the certificate or affidavit is satisfactory to the Trustee. SBC,
the Trustee, and any agent of SBC may treat the bearer of any Unregistered
Security or coupon and the person in whose name a Registered Security is
registered as the absolute owner thereof for all purposes.
(c) Notwithstanding the foregoing, with respect to any Global Security,
nothing herein shall prevent SBC, the Trustee or any agent of SBC or the Trustee
from giving effect to any written certification, proxy or other authorization
furnished by a Depository or impair, as between a Depository and holders of
beneficial interests in any Global Security, the operation of customary
practices governing the exercise of the rights of the Depository as Holder of
such Global Security. None of SBC, 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 Global Security or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
SECTION 2.08 Registration of Transfer and Exchange.
(a) When Registered Securities of a Series are presented to the Registrar
with a request to register their transfer or to exchange them for an equal
principal amount of Registered Securities of the same Series and of like tenor
of other authorized denominations, the Registrar shall register the transfer or
make the exchange if its customary requirements for such transactions are met.
-12-
<PAGE> 18
(b) If both Registered and Unregistered Securities are authorized for a
Series of Securities and the terms of such Securities permit, Unregistered
Securities may be exchanged for an equal principal amount of Registered or
Unregistered Securities of the same Series and of like tenor in any authorized
denominations upon delivery to the Registrar (or a Paying Agent, if the exchange
is for Unregistered Securities) of the Unregistered Security with all unmatured
coupons and all matured coupons in default appertaining thereto and if all other
requirements of the Registrar (or such Paying Agent) and such Securities for
such exchange are met.
Notwithstanding the foregoing, the exchange of Unregistered Securities for
Registered Securities will be subject to the satisfaction of the provisions of
United States law and regulations in effect at the time of such exchange, and no
exchange will be made until SBC has notified the Trustee and the Registrar that,
as a result of such exchange, SBC would not suffer adverse consequences under
such law or regulations.
(c) To permit registrations of transfers and exchanges, the Trustee shall
authenticate Securities upon surrender of Securities for registration of
transfer or for exchange as provided in this Section. SBC will not make any
charge for any registration of transfer or exchange but may require the payment
by the party requesting such registration of transfer or exchange of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith, but not for any exchange pursuant to Section 2.12, 3.06 or 9.05.
(d) Neither SBC nor the Registrar shall be required (i) to issue, register
the transfer of or exchange Securities of any Series for the period beginning at
the opening of business 15 days immediately preceding the selection of any such
Securities to be redeemed and ending at the close of business on the day of
first publication of the relevant notice of redemption or, if there is no
publication, the mailing of the relevant notice of redemption, or (ii) to
register the transfer of or exchange Securities of any Series selected, called
or being called for redemption as a whole or the portion being redeemed of any
such Securities selected, called or being called for redemption in part.
(e) Unregistered Securities or any coupons appertaining thereto
shall be transferable by delivery.
(f) Notwithstanding the foregoing, any Global Security shall be
exchangeable pursuant to this Section 2.08 for Securities registered in the
names of Persons other than the Depository for such Security or its nominee only
if (i) such Depository notifies SBC that it is unwilling or unable to continue
as Depository for such Global Security or if at any time such Depository ceases
to be a clearing agency registered under the Securities Exchange Act of 1934, as
amended, (ii) SBC executes and delivers to the Trustee an Order that such Global
Security shall be so exchangeable or (iii) there shall have occurred and be
continuing an
-13-
<PAGE> 19
Event of Default with respect to the Securities. Any Global Security that is
exchangeable pursuant to the preceding sentence shall be exchangeable for
Securities registered in such names as such Depository shall direct.
Notwithstanding any other provision in this Indenture, a Global Security
may not be transferred except as a whole by the Depository with respect to such
Global Security to a nominee of such Depository or by a nominee of such
Depository to such Depository or another nominee of such Depository.
(g) If at any time the Depository for the Securities of a Series notifies
SBC that it is unwilling or unable to continue as Depository for the Securities
of such Series or if at any time the Depository for the Securities of such
Series shall no longer be eligible under Section 2.03, SBC shall appoint a
successor Depository with respect to the Securities of such Series. If a
successor Depository for the Securities of such Series is not appointed by SBC
within 90 days after SBC receives such notice or becomes aware of such
ineligibility, SBC's election pursuant to Section 2.02(15) shall no longer be
effective with respect to the Securities of such series and SBC will execute,
and the Trustee, upon receipt of the Order for the authentication and delivery
of definitive Securities of such Series, will authenticate and deliver,
Securities of such Series in definitive form in an aggregate principal amount
equal to the principal amount of the Global Security or Securities representing
such Series in exchange for such Global Security or Securities.
SBC may at any time and in its sole discretion determine that the
Securities of any series issued in the form of one or more Global Securities
shall no longer be represented by such Global Security or Securities. In such
event SBC will execute, and the Trustee, upon receipt of the Order for the
authentication and delivery of the definitive Securities of such Series, will
authenticate and deliver, Securities of such Series in definitive form and in an
aggregate principal amount equal to the principal amount of the Global Security
or Securities representing such Series in exchange for such Global Security or
Securities.
If (a) there shall have occurred and be continuing an Event of Default (as
defined in Section 6.01) or an event which, with the giving of notice or lapse
of time, or both, would constitute an Event of Default with respect to a Series
of Securities issued in the form of one or more Global Securities, or (b) if
specified by SBC pursuant to Section 2.02 with respect to a Series of
Securities, the Depository for such Series of Securities may surrender a Global
Security for such Series of Securities in exchange in whole or in part for
Securities of such Series in definitive form. Thereupon, SBC shall execute, and
the Trustee shall authenticate and deliver, without service closing charge:
-14-
<PAGE> 20
(i) to each person specified by such Depository a new Security or
Securities of the same series, of any authorized denomination as requested
by such person in aggregate principal amount equal to and in exchange for
such person's beneficial interest in the Global Security; and
(ii) to such Depository a new Global Security in a denomination
equal to the difference, if any, between the principal amount of the
surrendered Global Security and the aggregate principal amount of
Securities delivered to Holders thereof.
In any exchange provided for in any of the preceding three paragraphs, SBC
will execute and the Trustee will authenticate and deliver Securities in
definitive registered form in authorized denominations.
Upon the exchange of a Global Security for Securities in definitive form,
such Global Security shall be canceled by the Trustee. Registered Securities
issued in exchange for a Global Security pursuant to this Section 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 Trustee.
SECTION 2.09 Replacement Securities.
(a) If a mutilated Security or a Security with a mutilated coupon
appertaining to it is surrendered to the Trustee, SBC shall issue and the
Trustee shall authenticate and deliver in exchange therefor a replacement
Registered Security, if such surrendered security was a Registered Security, or
a replacement Unregistered Security with coupons corresponding to the coupons
appertaining to the surrendered Security, if such surrendered Security was an
Unregistered Security, of the same Series and of like tenor, if the Trustee's
requirements are met.
(b) If the Holder of a Security claims that the Security or any coupon
appertaining thereto has been lost, destroyed or wrongfully taken, SBC shall
issue (and the Trustee shall authenticate) a replacement Registered Security of
like tenor, if such Holder's claim pertains to a Registered Security, or a
replacement Unregistered Security of like tenor with coupons corresponding to
the coupons appertaining to the lost, destroyed or wrongfully taken Unregistered
Security or the Unregistered Security to which such lost, destroyed or
wrongfully taken coupon appertains, if such Holder's claim pertains to an
Unregistered Security, of the same Series and of like tenor, if the Trustee's
requirements are met; provided, however, that the Trustee or SBC may require any
such Holder to provide to the Trustee and SBC security or indemnity sufficient
in the judgment of SBC and the Trustee to protect SBC, the Trustee, any Agent or
any authenticating agent from any loss which any of them may suffer if a
Security or any coupon
-15-
<PAGE> 21
appertaining thereto is replaced. SBC may charge the party requesting a
replacement Security for its expenses in replacing a Security.
(c) Every replacement Security is an additional obligation of
SBC.
(d) The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other remedies with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities or coupons.
SECTION 2.10 Outstanding Securities.
(a) Securities outstanding at any time are all Securities authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, and those described in this Section as not outstanding.
(b) If a Security is replaced pursuant to Section 2.09, it ceases to be
outstanding until the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
(c) If a Paying Agent (other than SBC) holds on a redemption date or
maturity date money sufficient to pay all amounts due on Securities of any
Series on that date, then on and after that date all Securities of such Series
due on such date cease to be outstanding and interest on them ceases to accrue,
provided that if the 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.
(d) A Security does not cease to be outstanding because SBC or an
Affiliate holds the Security.
(e) In determining whether the Holders of the requisite principal amount
of Securities of any Series have concurred in any direction, waiver or consent,
(i) the principal amount of an Original Issue Discount Security that shall be
deemed to be outstanding shall be the amount of the principal thereof that would
be due and payable as of the date of such determination upon acceleration of the
maturity thereof pursuant to Section 6.02 and (ii) the principal amount of a
Security denominated in a foreign currency or currencies shall be the U.S.
dollar equivalent, determined on the date of original issuance of such Security,
of the principal amount (or, in the case of an Original Issue Discount Security,
the U.S. dollar equivalent on the date of original issuance of such Security of
the amount determined as provided in (i) above) of such Security.
-16-
<PAGE> 22
SECTION 2.11 Treasury Securities.
In determining whether the Holders of the requisite principal amount of
Securities of any Series have concurred in any direction, waiver or consent,
Securities of such Series owned by SBC or an Affiliate shall be disregarded,
except that for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, waiver or consent, only Securities
of such Series which the Trustee knows are so owned shall be so disregarded.
Securities of such Series owned by SBC or which have been pledged in good faith
may be considered by the Trustee if the pledgee establishes to the satisfaction
of the Trustee the pledgee's right to so act with respect to such Securities and
that the pledgee is not SBC or an Affiliate.
SECTION 2.12 Temporary Securities.
(a) Until definitive Registered Securities of any Series are ready for
delivery, SBC may prepare and execute and the Trustee shall authenticate
temporary Registered Securities of such Series. Temporary Registered Securities
of any Series shall be substantially in the form of definitive Registered
Securities of such Series but may have variations that SBC considers appropriate
for temporary Securities. Every temporary Registered Security shall be executed
by SBC and authenticated by the Trustee, and registered by the Registrar, upon
the same conditions, and with like effect, as a definitive Registered Security.
Without unreasonable delay, SBC shall prepare and the Trustee shall authenticate
definitive Registered Securities of the same Series and of like tenor in
exchange for temporary Registered Securities.
(b) Until definitive Unregistered Securities of any Series are ready for
delivery, SBC may prepare and execute and the Trustee shall authenticate one or
more temporary Unregistered Securities, which may have coupons attached or which
may be in the form of a single temporary global Unregistered Security of that
Series without coupons. The temporary Unregistered Security or Securities of any
Series shall be substantially in the form approved by or pursuant to a Board
Resolution and shall be delivered to one of the Paying Agents located outside
the United States or to such other person or persons as SBC shall direct against
such certifications as SBC may from time to time prescribe. The temporary
Unregistered Security or Securities of a Series shall be executed by SBC and
authenticated by the Trustee upon the same conditions, and with like effect, as
a definitive Unregistered Security of such Series, except as provided herein or
in the Board Resolution or supplemental indenture relating thereto. A temporary
Unregistered Security or Securities shall be exchangeable for definitive
Unregistered Securities of like tenor at the time and on the conditions, if any,
specified in the temporary Security.
Upon any exchange of a part of a temporary Unregistered Security of a
Series for definitive Unregistered Securities of such Series and of like tenor,
the temporary Unregistered Security shall be endorsed by the
-17-
<PAGE> 23
Trustee or Paying Agent to reflect the reduction of its principal amount by an
amount equal to the aggregate principal amount of the definitive Unregistered
Securities of such Series and of like tenor so exchanged and endorsed.
SECTION 2.13 Cancellation.
SBC at any time may deliver Securities and coupons to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities and coupons surrendered to them for registration of transfer, for
exchange or for payment. The Trustee shall cancel all Securities and coupons
surrendered for registration of transfer, exchange, payment or cancellation and
may dispose of cancelled Securities and coupons as SBC directs; provided,
however, that any Unregistered Securities of a Series delivered to the Trustee
for exchange prior to maturity shall be retained by the Trustee for reissue as
provided herein or in the Securities of such Series. SBC may not issue new
Securities to replace Securities that it has paid or delivered to the Trustee
for cancellation, provided that the Trustee shall not be required to destroy
cancelled Securities but may be required to deliver such Securities to SBC upon
demand.
SECTION 2.14 Defaulted Interest.
If SBC defaults on a payment of interest on a Series of Securities, SBC
shall pay the defaulted interest as provided in such Securities or in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which such Securities may be listed and acceptable to the Trustee. With
respect to Registered Securities, the Trustee may pay the defaulted interest,
plus any interest payable on the defaulted interest, to the Holders of such
Registered Securities on a subsequent special record date. SBC shall fix the
record date and the payment date. At least 15 days before the record date SBC
shall mail to such Holders a notice that states the record date, the payment
date and the amount of interest to be paid.
SECTION 2.15 CUSIP Numbers.
SBC in issuing the Securities may use "CUSIP" numbers (if then generally
in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of
redemption as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness of such numbers either as
printed on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.
-18-
<PAGE> 24
ARTICLE 3
REDEMPTION
SECTION 3.01 Notice to Trustee.
SBC may, with respect to any Series of Securities, reserve the right to
redeem and pay such Series of Securities or any part thereof, or may covenant to
redeem and pay the Series of Securities or any part thereof, before maturity at
such time and on such terms as provided for in such Securities. If a Series of
Securities is redeemable and SBC wants or is obligated to redeem all or part of
the Series of Securities pursuant to the terms of such Securities, it shall
notify the Trustee of the redemption date and the principal amount of the Series
of Securities to be redeemed. SBC shall give such notice at least 75 days before
the redemption date (or such shorter notice as may be acceptable to the
Trustee).
SECTION 3.02 Selection of Securities to be Redeemed.
If less than all the Securities of a Series are to be redeemed, the
Trustee, not more than 75 days prior to the redemption date, shall select the
Securities of the Series to be redeemed pro rata or by lot or in such other
manner as the Trustee shall deem fair and appropriate. The Trustee shall make
the selection from Securities of the Series that are outstanding and that have
not previously been called for redemption. Securities of the Series and portions
of them selected by the Trustee shall be in amounts of $1,000 or integral
multiples of $1,000 or, with respect to Securities of any Series issuable in
other denominations pursuant to Section 2.02(a)(8), in amounts equal to the
minimum principal denomination for each such Series and integral multiples
thereof. Provisions of this Indenture that apply to Securities of that Series
called for redemption also apply to portions of Securities of that Series called
for redemption. The Trustee shall promptly notify SBC 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.
SECTION 3.03 Notice of Redemption.
(a) At least 30 days but not more than 60 days before a redemption date,
SBC shall mail a notice of redemption by first-class mail to each Holder of
Registered Securities that are to be redeemed.
(b) If Unregistered Securities are to be redeemed, notice of redemption
shall be published in an Authorized Newspaper in each of The City of New York,
London and, if such Securities to be redeemed are listed on the Luxembourg Stock
Exchange, Luxembourg twice in different calendar weeks, the first publication to
be not less than 30 nor more than 60 days before the redemption date.
-19-
<PAGE> 25
(c) All notices shall identify the Series of Securities to be
redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) if less than all the outstanding Securities of a 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) the name and address of the Paying Agent;
(5) that Securities of the Series called for redemption and all
unmatured coupons, if any, appertaining thereto must be surrendered to the
Paying Agent to collect the redemption price; and
(6) that interest on Securities of the Series called for
redemption ceases to accrue on and after the redemption date.
At SBC's request, the Trustee shall give the notice of redemption in SBC's
name and at its expense.
SECTION 3.04 Effect of Notice of Redemption.
Once notice of redemption is mailed or published, Securities of a Series
called for redemption become due and payable on the redemption date at the
redemption price. Upon surrender to the Paying Agent of such Securities together
with all unmatured coupons, if any, appertaining thereto, such Securities shall
be paid at the redemption price plus accrued interest to the redemption date,
but installments of interest due on or prior to the redemption date will be
payable, in the case of Unregistered Securities, to the bearers of the coupons
for such interest upon surrender thereof and, in the case of Registered
Securities, to the Holders of such Securities of record at the close of business
on the relevant record dates.
SECTION 3.05 Deposit of Redemption Price.
On or before the redemption date, SBC shall deposit with the Trustee money
sufficient to pay the redemption price of and (unless the redemption date shall
be an interest payment date) interest accrued to the redemption date on all
Securities to be redeemed on that date.
-20-
<PAGE> 26
SECTION 3.06 Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, SBC shall issue and
the Trustee shall authenticate for the Holder of that Security a new Security or
Securities of the same Series and like tenor and the same form in authorized
denominations equal in aggregate principal amount to the unredeemed portion of
the Security surrendered. If a Global Security is so surrendered, such new
Security so issued shall be a new Global Security.
ARTICLE 4
COVENANTS
SECTION 4.01 Payment of Securities.
SBC shall pay or cause to be paid the principal of and interest on the
Securities on the dates and in the manner provided herein and in the Securities.
SBC shall pay interest on overdue principal of a Security of any Series at
the rate of interest (or, in the case of Original Issue Discount Securities,
Yield to Maturity) borne by the Securities of that Series, and, to the extent
lawful, it shall pay interest on overdue installments of interest at the same
rate.
SECTION 4.02 Reports by SBC.
SBC agrees:
(a) to file with the Trustee, within 15 days after SBC is required to file
the same with the SEC, 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 SEC may from time to time by rules and regulations prescribe) which SBC
may be required to file with the SEC pursuant to section 13 or section 15(d) of
the Securities Exchange Act of 1934, as amended; or, if SBC is not required to
file information, documents or reports pursuant to either of such sections, then
to file with the Trustee and the SEC, in accordance with rules and regulations
prescribed from time to time by the SEC, 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, as amended, in respect of a security
listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations;
(b) to file with the Trustee and the SEC, in accordance with the rules and
regulations prescribed from time to time by the SEC, such additional
information, documents, and reports with respect to compliance by SBC with the
conditions and covenants provided for in this
-21-
<PAGE> 27
Indenture as may be required from time to time by such rules and
regulations; and
(c) to transmit by mail to all Holders of Registered Securities, as the
names and addresses of such Holders appear on the register for each Series of
Securities, to such Holders of Unregistered Securities as have, within the two
years preceding such transmission, filed their names and addresses with the
Trustee for that purpose and to all Holders of Securities whose names and
addresses have been furnished to the Trustee pursuant to Section 2.07, within 30
days after the filing thereof with the Trustee, such summaries of any
information, documents and reports required to be filed by the SBC pursuant to
subsections (a) and (b) of this Section 4.02 as may be required by rules and
regulations prescribed from time to time by the SEC.
SECTION 4.03 Statement as to Compliance.
SBC will deliver to the Trustee annually, commencing March 1, 1998, a
certificate, from its principal executive officer, principal financial officer
or principal accounting officer, stating whether or not to the best knowledge of
the signer thereof the Company is in compliance (without regard to periods of
grace or notice requirements) with all conditions and covenants under this
Indenture, and if SBC shall not be in compliance, specifying such non-compliance
and the nature and status thereof of which such signer may have knowledge.
SECTION 4.04 Calculation of Original Issue Discount.
SBC shall file with the Trustee promptly at the end of each calendar year
a written notice specifying the amount of original issue discount (including
daily rates and accrual periods) accrued on outstanding Securities as of the end
of such year.
ARTICLE 5
SUCCESSORS
SECTION 5.01 When SBC May Merge, etc.
SBC may not consolidate with, or merge into, or be merged into, or
transfer or lease its properties and assets substantially as an entirety to, any
person, unless the person is a corporation organized under the laws of the
United States, any State thereof or the District of Columbia, the person assumes
by supplemental indenture all the obligations of SBC under this Indenture and
the Securities and any coupons appertaining thereto, shall have provided for
conversion or exchange rights in accordance with the terms of any Securities
contemplating conversion or exchange pursuant to Section 2.01(a)(14),
-22-
<PAGE> 28
and, after giving effect thereto, no Default or Event of Default shall have
occurred and be continuing. The surviving, transferee or lessee corporation
shall be the successor to SBC and SBC, except in the case of a lease, shall be
relieved of all obligations under this Indenture and the Securities.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTIONS 6.01 Events of Default.
An "Event of Default" occurs with respect to the Securities of any Series
if:
(1) SBC defaults in the payment of interest on any Security of that Series
when the same becomes due and payable and the Default continues for a period of
90 days;
(2) SBC defaults in the payment of the principal of any Security of that
Series when the same becomes due and payable at maturity, upon redemption or
otherwise;
(3) SBC fails to comply with any of its other agreements in the Securities
of that Series, or in any supplemental indenture under which the Securities of
that Series may have been issued or in the Indenture (other than an agreement
included solely for the benefit of Series of Securities other than that Series)
and the Default continues for the period and after the notice specified below;
(4) SBC pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against
it in an involuntary case,
(C) consents to the appointment of a Custodian of it or
for all or substantially all of its property, or
(D) makes a general assignment for the benefit of its
creditors; or
(5) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(A) is for relief against SBC in an involuntary case,
(B) appoints a Custodian of SBC or for all or
substantially all of its property, or
-23-
<PAGE> 29
(C) orders the liquidation of SBC, and the order or decree
remains unstayed and in effect for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar federal
or state law for the relief of debtors. The term "Custodian" means any receiver,
trustee, assignee, liquidator or similar official under any Bankruptcy Law.
A Default under clause (3) is not an Event of Default until the Trustee or
the Holders of at least 25% in principal amount of all the outstanding
Securities of that Series notify SBC (and the Trustee in the case of
notification by such Holders) of the Default and SBC does not cure the Default
within 90 days after receipt of the notice. The notice must specify the Default,
demand that it be remedied and state that the notice is a "Notice of Default".
Upon receipt by the Trustee of any Notice of Default pursuant to this
Section 6.01 with respect to Securities of a Series all or part of which is
represented by a Global Security, a record date shall be established for
determining Holders of outstanding Securities of such Series entitled to join in
such Notice of Default, which record date shall be at the close of business on
the day the Trustee receives such Notice of Default. The Holders on such record
date, or their duly designated proxies, and only such Persons, shall be entitled
to join in such Notice of Default, whether or not such Holders remain Holders
after such record date; provided, that unless Holders of at least 10% in
principal amount of the outstanding Securities of such Series, or their proxies,
shall have joined in such Notice of Default prior to the day which is 90 days
after such record date, such Notice of Default shall automatically and without
further action by any Holder be canceled and of no further effect. Nothing in
this paragraph shall prevent a Holder, or a proxy of a Holder, from giving,
after expiration of such 90-day period, a new Notice of Default identical to a
Notice of Default which has been canceled pursuant to the proviso to the
preceding sentence, in which event a new record date shall be established
pursuant to the provisions of this Section 6.01.
SECTION 6.02 Acceleration.
If an Event of Default occurs with respect to the Securities of any Series
and is continuing, the Trustee, by notice to SBC, or the Holders of at least 25%
in principal amount of all of the outstanding Securities of that Series, by
notice to SBC and the Trustee, may declare the principal (or, if any of the
Securities of that Series are Original Issue Discount Securities, such portion
of the principal amount of such Securities as may be specified in the terms
thereof) of, and any accrued interest on, all the Securities of that Series to
be due and payable. Upon such declaration, such principal (or, in the case of
Original Issue Discount Securities, such specified amount) and any accrued
interest shall be due and payable immediately. The Holders of a majority in
principal amount of all of the Securities of that Series, by notice to
-24-
<PAGE> 30
SBC and the Trustee, may rescind such acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default have been cured or waived except nonpayment of principal or
interest that have become due solely because of the acceleration.
Upon receipt by the Trustee of any declaration of acceleration, or
rescission thereof, with respect to Securities of a Series all or part of which
is represented by a Global Security, the Trustee shall establish a record date
for determining Holders of outstanding Securities of such Series entitled to
join in such declaration of acceleration, or rescission, as the case may be,
which record date shall be at the close of business on the date the Trustee
receives such declaration of acceleration, or rescission, as the case may be.
The Holders on such record date, or their duly designated proxies, and only such
persons, shall be entitled to join in such declaration of acceleration, or
rescission, as the case may be, whether or not such Holders remain Holders after
such record date; provided, that unless such declaration of acceleration, or
rescission, as the case may be, shall have become effective by virtue of the
requisite percentage having been obtained prior to the day which is 90 days
after such record date, such declaration of acceleration, or rescission, as the
case may be, shall automatically and without further action by any Holder be
canceled and of no further effect. Nothing in this paragraph shall prevent a
Holder, or a proxy of a Holder, from giving, after expiration of such 90-day
period, a new declaration of acceleration, or rescission thereof, as the case
may be, that is identical to a declaration of acceleration, or rescission
thereof, which has been canceled pursuant to the proviso to the preceding
sentence, in which even a new record date shall be established pursuant to the
provisions of this Section 6.02.
SECTION 6.03 Other Remedies Available to Trustee.
(a) If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal of and interest
on the Securities of the Series that is in Default or to enforce the performance
of any provision of the Securities of that Series or this Indenture.
(b) The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. To the extent
permitted by law no remedy is exclusive of any other remedy and all available
remedies are cumulative.
-25-
<PAGE> 31
SECTION 6.04 Waiver of Existing Defaults.
The Holders of a majority in principal amount of any Series of Securities
by notice to the Trustee may waive an existing Default with respect to that
Series and its consequences except a Default in the payment of principal of or
interest on any Security.
SBC may, but shall not be obligated to, fix a record date for the purpose
of determining the Persons entitled to waive any past default hereunder. If a
record date is fixed, the Holders on such record date, or their duly designated
proxies, and only such Persons, shall be entitled to waive any default
hereunder, whether or not such Holders remain Holders after such record date;
provided, that unless such majority in principal amount shall have waived such
default prior to the date which is 90 days after such record date, any such
waiver previously given shall automatically and without further action by any
Holder be canceled and of no further effect.
SECTION 6.05 Control by Majority.
The Holders of a majority in principal amount of the Securities of each
Series affected (with each such Series voting as a class) may 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 it with respect to
Securities of that Series. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture or that is unduly
prejudicial to the rights of the Securityholders of that Series.
Upon receipt by the Trustee of any such direction with respect to
Securities of a Series all or part of which is represented by a Global Security,
the Trustee shall establish a record date for determining Holders of outstanding
Securities of such Series entitled to join in such direction, which record date
shall be at the close of business on the day the Trustee receives such
direction. The Holders on such record date, or their duly designated proxies,
and only such Persons, shall be entitled to join in such direction, whether or
not such Holders remain Holders after such record date; provided, that unless
such majority in principal amount shall have been obtained prior to the day
which is 90 days after such record date, such direction shall automatically and
without further action by any Holder be canceled and of no further effect.
Nothing in this paragraph shall prevent a Holder, or a proxy of a Holder, from
giving, after expiration of such 90-day period, a new direction identical to a
direction which has been canceled pursuant to the proviso to the preceding
sentence, in which event a new record date shall be established pursuant to the
provisions of this Section 6.05.
-26-
<PAGE> 32
SECTION 6.06 Limitation on Suits by Securityholders.
A Securityholder may pursue a remedy with respect to this Indenture or the
Securities of any Series only if:
(1) the Holder gives to the Trustee written notice of a continuing Event
of Default with respect to Securities of that Series;
(2) the Holders of at least 25% in principal amount of the Securities of
that Series make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity satisfactory to
the Trustee against any loss, liability or expense to be, or which may be,
incurred by the Trustee in pursuing the remedy;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
(5) during such 60-day period, the Holders of a majority in principal
amount of the Securities of that Series do not give the Trustee a direction
inconsistent with the request.
A Securityholder of any Series may not use this Indenture to prejudice the
rights of another Securityholder of that Series or any other Series or to obtain
a preference or priority over another Securityholder of that Series or any other
Series.
SECTION 6.07 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security to receive payment of principal of and (subject to Section
2.14) interest on the Security (whether at maturity or upon redemption), on or
after the respective due dates expressed in the Security, the right of any
Holder of a Security of a Series the terms of which provide for conversion or
exchange as contemplated in Section 2.01(a)(14) to have the Security be
converted or exchanged as so provided, and the right of any Holder of a coupon
to receive payment of (subject to Section 2.14) interest due as provided in such
coupon, or to bring suit for the enforcement of any such payment on or after
such respective dates or any such conversion or exchange right, shall not be
impaired or affected without the consent of such Holder.
SECTION 6.08 Collection Suits by Trustee.
If an Event of Default specified in Section 6.01(1) or (2) occurs with
respect to Securities of any Series and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against SBC for the
whole amount of the principal of and interest on Securities of that Series
remaining unpaid.
-27-
<PAGE> 33
SECTION. 6.09 Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable, and take any and all actions authorized under the
TIA, in order to have the claims of the Trustee and the Securityholders allowed
in any judicial proceedings relating to SBC (or any other obligor upon the
Securities), its creditors or its property.
SECTION 6.10 Priorities.
If the Trustee collects any money pursuant to this Article, it shall pay
out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Holders of Securities in respect of which or for the benefit of
which such money has been collected for amounts due and unpaid on such
Securities for principal and interest, ratably, without preference or priority
of any kind, according to the amounts due and payable on such Securities for
principal and interest, respectively; and
THIRD: to SBC.
The Trustee may fix a record date (with respect to Registered Securities)
and payment date for any such payment to Holders of Securities.
SECTION 6.11 Undertaking for Costs.
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, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable attorneys' fees, against any party
litigant in the suit, in the manner and to the extent provided in the TIA. This
Section does not apply to a suit by SBC, the Trustee, a Holder pursuant to
Section 6.07, or a Holder or Holders of more than 10% in principal amount of the
Securities of any Series.
-28-
<PAGE> 34
ARTICLE 7
TRUSTEE
SECTION 7.01 Duties of Trustee.
(a) The duties and responsibilities of the Trustee shall be as provided by
the TIA. If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of its rights and powers under this Indenture, and use the
same degree of care and skill in their exercise, as a prudent man would exercise
or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) Subject to the provisions of the TIA, the Trustee need
perform only those duties that are specifically set forth in this
Indenture, and no implied covenants or obligations shall be read into this
Indenture against the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
(1) This paragraph does not limit the effect of
paragraph (b) of this Section.
(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
-29-
<PAGE> 35
(e) The Trustee may refuse to perform any duty or exercise any right or
power unless it receives indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree with SBC. Money held in trust by the Trustee
need not be segregated from other funds except to the extent required by law.
(g) Except as expressly provided herein, no provision of this Indenture
shall require the Trustee 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 7.02 Rights of Trustee.
(a) The Trustee may rely on any document believed by it to be genuine and
to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult with
counsel of its selection after consultation with SBC or require an Officers'
Certificate or an Opinion of Counsel. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on a Board
Resolution, an Officers' Certificate, an Opinion of Counsel or the advice of
counsel selected in consultation with SBC.
(c) The Trustee may act through agents and shall not be responsible for
the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers.
(e) 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 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.
-30-
<PAGE> 36
SECTION 7.03 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Securities and may otherwise deal with SBC or an Affiliate with
the same rights it would have if it were not Trustee. Any Agent may do the same
with like rights. However, the Trustee is subject to Sections 7.10 and 7.11.
SECTION 7.04 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of this
Indenture or the Securities, shall not be accountable for SBC's use of the
proceeds from the Securities and shall not be responsible for any statement in
the Securities other than its certificate of authentication.
SECTION 7.05 Notice of Defaults.
If a Default occurs and is continuing with respect to the Securities of
any Series and if it is known to the Trustee, the Trustee shall mail to each
Holder of a Security of that Series entitled to receive reports pursuant to
Section 4.02(c) (and, if Unregistered Securities of that Series are outstanding,
shall cause to be published at least once in an Authorized Newspaper in each of
The City of New York, London and, if Securities of that Series are listed on the
Luxembourg Stock Exchange, Luxembourg) notice of the Default as and to the
extent provided by the TIA. Except in the case of a Default in payment on the
Securities of any Series, the Trustee may withhold the notice if and so long as
a committee of its Responsible Officers in good faith determines that
withholding such notice is in the interests of Securityholders of that Series.
SECTION 7.06 Reports by Trustee to Holders.
(a) Within 60 days after each anniversary date of the first issue of a
Series of Securities, the Trustee shall mail to each Securityholder of that
Series entitled to receive reports pursuant to Section 4.02(c) a brief report,
dated as of such date, that complies with TIA Section 313(a). The Trustee also
shall comply with TIA Section 313(b)(2).
(b) At the time that it mails such a report to Securityholders of any
Series, the Trustee shall file a copy of that report with the SEC and with each
stock exchange on which the Securities of that Series are listed. SBC shall
provide written notice to the Trustee when the Securities of any Series are
listed on any stock exchange.
-31-
<PAGE> 37
SECTION 7.07 Compensation and Indemnity.
(a) SBC shall pay to the Trustee from time to time such compensation as
SBC and the Trustee shall from time to time agree in writing for all services
rendered by the Trustee hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. SBC shall
reimburse the Trustee upon request for all reasonable out-of-pocket expenses
incurred by it in connection with the performance of its duties under this
Indenture. Such expenses shall include the reasonable compensation and
out-of-pocket expenses of the Trustee's agents and counsel.
(b) SBC shall indemnify each of the Trustee or any successor Trustee for,
and hold the Trustee harmless against, any and all loss, damage, claims,
liability or expense, including taxes (other than taxes based upon, measured by
or determined by the income of the Trustee), arising out of or in connection
with the acceptance or administration of the trust or trusts hereunder,
including the reasonable costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of the
Trustee's powers or duties hereunder, except to the extent that such loss,
damage, claim, liability or expense is due to the Trustee's own negligence or
bad faith. The Trustee shall notify SBC promptly of any claim for which it may
seek indemnity. SBC shall defend the claim and the Trustee shall cooperate in
the defense. The Trustee may have separate counsel and SBC shall pay the
reasonable fees and expenses of such counsel. SBC need not pay for any
settlement made without its consent.
(c) SBC need not reimburse any expense or indemnify against any loss or
liability incurred by the Trustee through its negligence or bad faith.
(d) To secure the payment obligations of SBC pursuant to this Section, the
Trustee shall have a lien prior to the Securities of any Series on all money or
property held or collected by the Trustee, except that held in trust to pay
principal of and interest on particular Securities of a Series.
(e) If the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(4) or (5) occurs, such expenses and the
compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law.
(f) The provisions of this Section 7.07 shall survive termination of this
Indenture and the resignation or removal of the Trustee.
SECTION 7.08 Replacement of Trustee.
(a) The resignation or removal of the Trustee and the appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
-32-
<PAGE> 38
(b) The Trustee may resign with respect to the Securities of any Series by
so notifying SBC. The Holders of a majority in principal amount of the
Securities of any Series may remove the Trustee with respect to that Series by
so notifying the Trustee and SBC. SBC may remove the Trustee with respect to
Securities of any Series if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or public officer takes charge of the
Trustee or its property; or
(4) the Trustee becomes incapable of acting.
(c) If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason with respect to Securities of any Series, SBC
shall promptly appoint a successor Trustee for such Series. Within one year
after a successor Trustee with respect to the Securities of any Series takes
office the Holders of a majority in principal amount of Securities of that
Series may appoint a successor Trustee with respect to the Securities of that
Series to replace the successor Trustee appointed by SBC.
(d) If a successor Trustee with respect to the Securities of any Series
does not take office within 60 days after the retiring Trustee resigns or is
removed, the retiring Trustee, SBC or the Holders of at least 10% in principal
amount of the Securities of the applicable Series may petition any court of
competent jurisdiction for the appointment of a successor Trustee with respect
to the Securities of such Series.
(e) If the Trustee with respect to the Securities of any Series fails to
comply with Section 7.10, any Securityholder of the applicable Series may
petition any court of competent jurisdiction for the removal of such Trustee and
the appointment of a successor Trustee.
(f) A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and SBC. Thereupon, the resignation or
removal of the retiring Trustee for any Series of Securities shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the retiring Trustee with respect to all Series of Securities for
which the successor Trustee is to be acting as Trustee under this Indenture. The
retiring Trustee shall promptly transfer all property held by it as Trustee with
respect to such Series of Securities to the successor Trustee subject to the
lien provided for in Section 7.07. SBC shall give notice of each appointment of
a successor Trustee for any Series of Securities by mailing written notice of
such event by first-class mail to the Holders of Securities of such Series
entitled to receive reports pursuant to Section 4.03(c) and, if any Unregistered
Securities are outstanding, by publishing notice of such event once in an
Authorized Newspaper in each of The City of New York, London, and, if
-33-
<PAGE> 39
Securities of that Series are listed on the Luxembourg Stock Exchange,
Luxembourg.
(g) All provisions of this Section 7.08 except subparagraphs (b)(1), (e)
and (h) and the words "subject to the lien provided for in Section 7.07" in
subparagraph (f) shall apply also to any Paying Agent located outside the United
States and its possessions and required by Section 2.04.
(h) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) Series, SBC, the retiring
Trustee and such successor Trustee shall execute and deliver a supplemental
indenture wherein such 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, such 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.
SECTION 7.09 Successor Trustee, Agents by Merger, etc.
If the Trustee or any Agent consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business assets to,
another corporation, the successor corporation, without any further act, shall
be the successor Trustee or Agent, as the case may be.
SECTION 7.10 Eligibility; Disqualification.
This Indenture shall always have a Trustee with respect to each Series of
Securities which satisfies the requirements of TIA Section 310(a)(1). The
Trustee shall always have a combined capital and surplus of at least
$100,000,000, as set forth in its most recent published annual report of
condition. If the Trustee has or shall acquire a conflicting interest within the
meaning of the TIA, the Trustee shall either eliminate such interest or resign,
to the extent and in the manner provided by, and subject to the provisions of,
the TIA and this Indenture. To the extent permitted by the TIA, the Trustee
shall not be
-34-
<PAGE> 40
deemed to have a conflicting interest by virtue of being a trustee under this
Indenture with respect to Securities of more than one Series or a trustee under
all indentures now or hereafter existing pursuant to which indenture securities
have been issued on which SBC is an obligor and which may be excluded under the
proviso of TIA Section 310(b)(1).
SECTION 7.11 Preferential Collection of Claims Against SBC.
If and when the Trustee shall be or become a creditor of SBC (or any other
obligor upon the Securities), the Trustee shall be subject to the provisions of
the TIA regarding the collection of claims against SBC (or any such other
obligor).
ARTICLE 8
DISCHARGE OF INDENTURE
SECTION 8.01 Termination of SBC's Obligations.
(a) SBC reserves the right to terminate all of its obligations under (i)
this Indenture and the Securities, or (ii) the Securities of any Series if SBC
irrevocably deposits in trust with the Trustee money or U.S. Government
Obligations sufficient to pay, when due, the principal of and any interest on
all the Securities or all the Securities of that Series, as the case may be, to
maturity or redemption and if all other conditions set forth in the Securities
of that Series are met. However, SBC's obligations in Sections 2.04, 2.05, 2.06,
2.07, 2.08, 2.09, 2.15, 4.01, 7.07, 7.08, 8.03 and 8.04 shall survive until the
Securities are no longer outstanding. Thereafter SBC's obligations in Sections
7.07, 8.03 and 8.04 shall survive. Unless otherwise provided in the terms of
Securities of a Series that are convertible or exchangeable as contemplated in
Section 2.01(a)(14), SBC shall not be entitled to terminate its obligations
under the Securities of that Series pursuant to this Section 8.01.
(b) Before or after a deposit SBC may make arrangements satisfactory to
the Trustee for the redemption of Securities at a future date in accordance with
Article 3.
(c) After a deposit by SBC in accordance with this Section in respect of
the Securities of a Series, the Trustee upon request shall acknowledge in
writing the discharge of SBC's obligations under the Securities of the Series in
respect of which the deposit has been made and this Indenture with respect to
the Securities of that Series except for those surviving obligations specified
above.
(d) In order to have money available on a payment date to pay
principal of and interest on the Securities of any Series, the U.S.
Government Obligations shall be payable as to principal or interest on
-35-
<PAGE> 41
or before such payment date in such amounts as will provide the necessary money.
(e) "U.S. Government Obligations" means:
(i) direct obligations of the United States of America for the
payment of which the full faith and credit of the United States of America
are pledged; or
(ii) obligations of a person controlled or supervised by and
acting as an agency or instrumentality of the United States of America
pursuant to authority granted by the Congress of the United States of
America the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States of America;
provided, however, that U.S. Government Obligations shall not be
callable at the issuer's option.
SECTION 8.02 Application of Trust Money.
The Trustee shall hold in trust all money or U.S. Government Obligations
deposited with it pursuant to Section 8.01. It shall apply the deposited money
and the money from U.S. Government Obligations through the Paying Agent and in
accordance with this Indenture to the payment of principal of and interest on
the Securities of each Series in respect of which the deposit shall have been
made.
SECTION 8.03 Repayment to SBC.
(a) The Trustee and the Paying Agent shall promptly pay to SBC upon
request any excess money or securities held by them at any time.
(b) The Trustee and the Paying Agent shall pay to SBC upon request any
money held by them for the payment of principal or interest that remains
unclaimed for two years after such principal or interest became due. After
payment to SBC, Securityholders entitled to the money must look to SBC for
payment as general creditors unless an applicable abandoned property law
designates another person.
SECTION 8.04 Indemnity for Government Obligations.
SBC shall pay and shall indemnify the Trustee and each Securityholder of
each Series in respect of which the deposit shall have been made against any
tax, fee or other charge imposed on or assessed against deposited U.S.
Government Obligations or the principal and interest received on such
obligations.
-36-
<PAGE> 42
ARTICLE 9
AMENDMENTS AND WAIVERS
SECTION 9.01 Without Consent of Holders.
SBC and the Trustee may enter into one or more supplemental indentures
without consent of any Securityholder for any of the following purposes:
(1) to cure any ambiguity, defect or inconsistency herein or in
the Securities of any Series;
(2) to provide for the issuance of and establish the form and terms and
conditions of Securities of any Series as provided in Section 2.02, and to
establish the form of any certifications required to be furnished pursuant to
the terms of this Indenture or any Series of Securities;
(3) to secure the Securities pursuant to Section 4.02;
(4) to comply with Section 5.01 or 5.02;
(5) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
(6) to add to the rights of the Holders of any Series of
Securities or to surrender any right or power herein conferred on SBC;
(7) to make provision with respect to the conversion or exchange rights of
Holders pursuant to the requirements of the terms of Securities of a Series that
is convertible or exchangeable as contemplated in Section 2.01(a)(14); or
(8) to make any change that does not adversely affect the rights
of any Securityholder.
SECTION 9.02 With Consent of Holders.
(a) With the written consent of the Holders of a majority in principal
amount of the outstanding Securities of each Series affected by such
supplemental indenture (with each Series voting as a class), SBC and the Trustee
may enter into a supplemental indenture to add any provisions to or to change or
eliminate any provisions of this Indenture or of any supplemental indenture or
to modify, in each case in any manner not covered by Section 9.01, the rights of
the Securityholders of each such Series. The Holders of a majority in principal
amount of the outstanding Securities of each Series affected by such waiver
(with each Series voting as a class), by notice to the Trustee, may waive
compliance by SBC with any provision of this Indenture, any supplemental
-37-
<PAGE> 43
indenture or the Securities of any such Series except a Default in the payment
of the principal of or interest on a Security. However, without the consent of
each Securityholder affected, an amendment or waiver may not:
(1) reduce the amount of Securities whose Holders must
consent to an amendment or waiver;
(2) reduce the rate of or change the time for payment of
interest on any Security;
(3) reduce the principal of or change the fixed maturity
of any Security;
(4) waive a Default in the payment of the principal of
or interest on any Security;
(5) make any Security payable in currency other than
that stated in the Security;
(6) adversely affect the right to convert or exchange, as
provided in the terms thereof, any Security that is convertible or
exchangeable as contemplated in Section 2.01(a)(14); or
(7) make any change in Section 6.04, 6.07 or 9.02(a)
(third sentence).
(b) SBC may, but shall not be obligated to, fix a record date for the
purpose of determining the Persons entitled to consent to any indenture
supplemental hereto. If a record date is fixed, the Holders on such record date,
or their duly designated proxies, and only such Persons, shall be entitled to
consent to such supplemental indenture, whether or not such Holders remain
Holders after such record date; provided, that unless such consent shall have
become effective by virtue of the requisite percentage having been obtained
prior to the date which is 90 days after such record date, any such consent
previously given shall automatically and without further action by any Holder be
canceled and of no further effect.
(c) It is not necessary under this Section 9.02 for the Security- holders
to consent to the particular form of any proposed supplemental indenture, but it
is sufficient if they consent to the substance thereof.
(d) Promptly after the execution by SBC and the Trustee of any
supplemental indenture pursuant to the provisions of this Section 9.02, SBC
shall transmit by mail a notice, setting forth in general terms the substance of
such supplemental indenture, to all Holders of Registered Securities, as the
names and addresses of such Holders appear on the register for each Series of
Securities, and to such Holders of Unregistered Securities as are entitled to
receive reports pursuant to
-38-
<PAGE> 44
Section 4.02(c). Any failure of SBC to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
supplemental indenture.
SECTION 9.03 Compliance with Trust Indenture Act.
Every amendment to this Indenture or the Securities of one or more Series
shall be set forth in a supplemental indenture that complies with the TIA as
then in effect.
SECTION 9.04 Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to it by a
Holder of a Security is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made on
any Security. However, any such Holder or subsequent Holder may revoke the
consent as to his Security or portion of a Security if the Trustee receives the
notice of revocation before the date the amendment or waiver becomes effective.
After an amendment or waiver becomes effective, it shall bind every
Securityholder of each Series affected by such amendment or waiver.
SECTION 9.05 Notation on or Exchange of Securities.
The Trustee may place an appropriate notation about an amendment or waiver
on any Security of any Series thereafter authenticated. SBC in exchange for
Securities of that Series may issue and the Trustee shall authenticate new
Securities of that Series that reflect the amendment or waiver.
SECTION 9.06 Trustee Protected.
The Trustee need not sign any supplemental indenture that is reasonably
likely to adversely affect its rights.
SECTION 9.07 Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modification 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.
-39-
<PAGE> 45
ARTICLE 10
MISCELLANEOUS
SECTION 10.01 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
another provision of the TIA that is required under the TIA to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the TIA which may be so
modified or excluded, the latter provision shall be deemed to apply to this
Indenture as so modified or to be excluded, as the case may be.
SECTION 10.02 Notices.
(a) Any notice or communication by SBC or the Trustee to the other is duly
given if in writing and delivered in person or mailed by first-class mail:
if to SBC to:
SBC Communications Inc.
175 E. Houston Street
San Antonio, Texas 78205-4105
Attention: Assistant Treasurer-Corporate Finance
if to the Trustee to:
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
(b) SBC or the Trustee by notice to the other may designate additional or
different addresses for subsequent notices or communications.
(c) Any notice or communication to Holders of Securities entitled to
receive reports pursuant to Section 4.02(c) shall be mailed by first-class mail
to the addresses for Holders of Registered Securities shown on the register kept
by the Registrar and to addresses filed with the Trustee for other Holders.
Failure to so mail a notice or communication or any defect in such notice or
communication shall not affect its sufficiency with respect to other Holders of
Securities of that or any other Series entitled to receive notice.
-40-
<PAGE> 46
(d) If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
(e) If SBC mails a notice or communication to Securityholders, it shall
mail a copy to the Trustee and to each Agent at the same time.
(f) If it shall be impractical in the opinion of the Trustee or SBC to
make any publication of any notice required hereby in an Authorized Newspaper,
any publication or other notice in lieu thereof which is made or given with the
approval of the Trustee shall constitute a sufficient publication of such
notice.
(g) All other notices or communications will be in writing.
(h) All notices or other communications given to the Trustee shall be
effective when actually received by the Trustee.
SECTION 10.03 Communication by Holders with Other Holders.
The rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Securities, and the corresponding
rights and privileges of the Trustee, shall be as provided by the TIA.
SECTION 10.04 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by SBC to the Trustee to take any action
under this Indenture, SBC shall furnish to the Trustee:
(1) an Officers' Certificate stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 10.05 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall comply with the requirements of
the TIA and shall include:
(1) a statement that the person making such certificate or opinion has
read such covenant or condition and related definitions;
(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;
-41-
<PAGE> 47
(3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of such person, such
condition or covenant has been complied with.
SECTION 10.06 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders of one or more Series. The Paying Agent or Registrar may make
reasonable rules and set reasonable requirements for its functions.
SECTION 10.07 Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions are not required to be open. If a payment date or a date for
conversion or exchange is a Legal Holiday at a place of payment, conversion or
exchange, then such payment, conversion or exchange may be made at such place on
the next succeeding day this is not a Legal Holiday with the same force and
effect as if made on such date, and no interest shall accrue for the intervening
period.
SECTION 10.08 Governing Law.
The laws of the State of New York shall govern this Indenture, the
Securities and any coupons appertaining thereto without regard to principles of
conflicts of laws.
SECTION 10.09 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of SBC or any Affiliate. No such indenture, loan or debt
agreement may be used to interpret this Indenture.
SECTION 10.10 No Recourse Against Others.
No director, officer, employee or stockholder, as such, of SBC shall have
any liability for any obligation of SBC under the Securities or the Indenture or
for any claim based on, in respect of or by reason of such obligations or their
creation. Each Securityholder by accepting a Security waives and releases all
such liability. The waiver and release are part of the consideration for the
issue of the Securities.
SECTION 10.11 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 may
be embodied in and evidenced by one or more
-42-
<PAGE> 48
instruments of substantially similar tenor signed by such Holders in person or
by an agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and, where it is hereby expressly required, to SBC.
Such instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of Holders signing such
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee and SBC, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be provided 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 his 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 deems sufficient.
(c) The ownership of Unregistered Securities may be proved by the
production of such Unregistered Securities or by a certificate executed by any
trust company, bank, banker or other depository, wherever situated, if such
certificate shall be deemed by the Trustee to be satisfactory, showing that at
the date therein mentioned such Person has on deposit with such depository, or
exhibited to it, the Unregistered Securities therein described; or such facts
may be proved by the certificate or affidavit of the Person holding such
Unregistered Securities, if such certificate or affidavit is deemed by the
Trustee to be satisfactory. The Trustee and SBC may assume that such ownership
of any Unregistered Security continues until (i) another such certificate or
affidavit bearing a later date issued in respect of the same Unregistered
Security is produced, (ii) such Unregistered Security is produced to the Trustee
by some other Person, (iii) such Unregistered Security is surrendered in
exchange for a Registered Security or (iv) such Unregistered Security is no
longer outstanding. The ownership of Unregistered Securities may also be proved
in any other manner which the Trustee deems sufficient.
(d) The ownership of Registered Securities shall be proved by the
Registrar.
(e) 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
-43-
<PAGE> 49
suffered to be done by the Trustee or SBC in reliance thereon, whether or not
notation of such action is made upon such Security.
SECTION 10.12 Execution in Counterparts.
This Indenture may be executed in any number of counterparts, each of
which shall be an original, but such counterparts shall together constitute but
one instrument.
SBC COMMUNICATIONS INC.
By: /s/Donald E. Kiernan
----------------------
Title: Senior Vice President,
Treasuer and Chief
Financial Officer
(SEAL)
ATTEST:
/s/Wayne Wirtz
- ---------------------------
Title: Assistant Secretary
THE BANK OF NEW YORK
By: /s/Remo Reale
----------------------------
Title: Assistant Vice President
(SEAL)
ATTEST:
/s/Mary LaGumina
- -------------------------------
Title: Assistant Vice President
-44-
<PAGE> 1
Exhibit 4-b
SBC COMMUNICATIONS INC.
Officers' Certificate
Pursuant to Section 2.02(a) of the Indenture
A. Pursuant to Section 2.02(a) of the Indenture, dated as of November 1,
1994 (as supplemented from time to time, the "Indenture"), between SBC
Communications Inc. (the "Company") and The Bank of New York, as Trustee
(the "Trustee"), and pursuant to the resolutions of the Board of
Directors of the Company adopted on November 18, 1994 (the
"Resolutions"), attached hereto as Annex A, we the undersigned officers,
do hereby determine and establish a Series (as that term is used in the
Indenture) of the Securities (as that term is used in the Indenture) to
be issued under the Indenture, which Series of Securities shall have the
terms set forth below (unless otherwise defined, all capitalized terms
shall have the meanings ascribed to them in the Indenture):
1. The title of the Securities of the Series is "7 3/4% Exchangeable
Notes Due March 15, 2001" (the "Notes").
2. The limit upon the aggregate principal amount of the Notes which may
be authenticated and delivered under the Indenture (except for Notes
authenticated and delivered upon transfer of, or in exchange for, or
in lieu of, other Notes pursuant to Section 2.08, 2.09, 2.12, 3.06
or 9.05 of the Indenture) is equal to 10,000,000 times $39.625 (the
"Initial Price").
3. The date on which the principal of each of the Notes is exchangeable
("Maturity") shall be the earlier of (a) March 15, 2001 or (b)
maturity as a result of acceleration or otherwise. At Maturity, the
Company is required to exchange the principal amount of the Notes
into a number of American Depository Shares, each representing
twenty Series L Shares, without par value ("L Shares"), of Telefonos
de Mexico, S.A. de C.V. (such Company being referred to herein as
"Telmex" and such American Depository Shares being referred to as
"Telmex ADSs") at the Exchange Rate (as defined in and adjusted in
accordance with the Form of Note attached as Annex B), or an
equivalent amount of cash or securities as hereinafter provided.
4. The Notes will bear interest at the annual rate of 7 3/4% (the
"Interest Rate") of the principal amount per annum from the date of
original issuance, or from the most recent Interest Payment Date (as
defined
<PAGE> 2
below) to which interest has been paid or duly provided for, until the
principal amount thereof is paid or made available for payment, and on
any overdue principal and (to the extent that payment of and interest
shall be legally enforceable) on any overdue installment of interest at
the Interest Rate. Interest on the Notes will be payable on March 15,
June 15, September 15 and December 15, commencing June 15, 1997 (each,
an "Interest Payment Date"), to the persons in whose names the Notes are
registered at the close of business on the last day of the calendar
month immediately preceding such Interest Payment Date (each a "Record
Date"), provided that interest payable at Maturity shall be payable to
the person to whom the principal is payable. Interest on the Notes will
be computed on the basis of a 360-day year of twelve 30-day months. If
an Interest Payment Date falls on a day that is not a Business Day (as
defined in the Form of Note attached as Annex B), the interest payment
to be made on such Interest Payment Date will be made on the next such
succeeding Business Day with the same force and effect as if made on
such Interest Payment Date, and no additional interest will accrue as a
result of such delayed payment. Any due and payable interest on a Note
not paid on an Interest Payment Date (or the next succeeding Business
Day if the relevant Interest Payment Date falls on a day which is not a
Business Day) will cease to be payable to the Holder of such Note on the
preceding Record Date, and may either be paid to the person in whose
name such Note (or the Note in exchange or substitution for which such
Note was issued) is registered at the close of business on a special
record date for the payment of such defaulted upon interest to be fixed
by the Trustee, notice whereof shall be given to such Holder not less
than 15 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 securities are listed, and upon
such notice as may be required by such exchange, all as more fully
provided in the Indenture.
5. The American Depositary Receipts ("ADRs") evidencing Telmex ADSs (or
cash or securities) deliverable and interest payable at Maturity will be
deliverable or payable, as the case may be, at the office or agency of
the Company maintained for such purposes (the "Registrar"); provided,
however, that payment of interest may be made at the option of the
Company by check mailed to the persons in whose names the Notes are
registered at the close of business on the last day of the calendar
month immediately preceding the relevant Interest Payment Date.
Initially such office will be the principal corporate trust office of
the Trustee in New York City, which is located at 101 Barclay Street,
Floor 21 West, New
2
<PAGE> 3
York, New York 10286. The Notes will be transferrable at any
time or from time to time at such office.
6. Notes are not subject to redemption at the option of the
Company.
7. There is no obligation of the Company to redeem, repay or
purchase the Notes pursuant to any sinking fund or analogous
provision, or at the option of a Holder thereof.
8. The authorized denominations of Notes are the Initial Price and
any larger amount that is an integral multiple of the Initial
Price.
9. In the event of an acceleration of principal pursuant to Section
6.02 of the Indenture, the principal amount payable shall be the
exchange of principal at such Maturity into a number of Telmex
ADSs (or cash or securities as provided herein) at the Exchange
Rate.
10. The Notes shall be issued only as Registered Securities.
11. The Company is not required to pay any additional amounts on
Notes held by a person who is not a U.S. person in respect of
taxes or similar charges withheld or deducted.
12. Payment of the principal of the Notes, subject to the
requirement to exchange as described in paragraph 3, and payment
of interest on the Notes shall be in U.S. dollars.
13. Amounts of principal to be exchanged and interest payable on the
Notes will not be determined with reference to an index.
14. The Company will exchange the Notes at Maturity as described in
paragraph 3 and in accordance with the provisions of the Form of
the Notes attached as Annex B.
15. The Notes will be issuable in the form of one or more Global
Securities registered in the name of a nominee of The Depository
Trust Company, as Depository, or other depository selected by
the Company.
16. The Company and every Holder of a Note will be obligated (in the
absence of an administrative determination or judicial ruling to
the contrary) to characterize a Note for all tax purposes as a
forward purchase contract to purchase Telmex ADSs at Maturity
(including as a
3
<PAGE> 4
result of acceleration or otherwise), under the terms of which
contract (a) at the time of issuance of the Notes the Holder
deposits irrevocably with the Company a fixed amount of cash
equal to the purchase price of the Notes to assure the
fulfillment of the Holder's purchase obligation described in
clause (c) below, which deposit will unconditionally and
irrevocably be applied at Maturity to satisfy such obligation,
(b) until Maturity the Company will be obligated to pay interest
on such deposit at a rate equal to the stated rate of interest
on the Notes as compensation to the Holder for the Company's use
of such cash deposit during the term of the Notes, and (c) at
Maturity such cash deposit unconditionally and irrevocably will
be applied by the Company in full satisfaction of the Holder's
obligation under the forward purchase contract, and the Company
will deliver to the Holder the number of Telmex ADSs that the
Holder in entitled to receive at that time pursuant to the terms
of the Notes (subject to the Company's right to deliver cash in
lieu of the Telmex ADSs). The other terms of the Notes shall be
as set forth in the Form of the Notes attached hereto as
Annex B.
17. The Form of the Notes, which is hereby approved, is attached as
Annex B.
18. The CUSIP number of the Notes shall be 783876G202.
B. Each of the undersigned has read the Indenture, including the provisions
of Section 2.02 and the definitions relating thereto, and the
Resolutions. In the opinion of each of the undersigned, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to
4
<PAGE> 5
whether or not all the conditions precedent provided in the Indenture relating
to the establishment of the form and terms of a Series of Securities under the
Indenture, designated as the Notes in this Officers' Certificate, have been
complied with. In the opinion of the undersigned, all such conditions precedent
have been complied with.
IN WITNESS WHEREOF, the undersigned have hereunto executed this
Officers' Certificate as of the 26th day of March, 1997.
/s/ Donald E. Kiernan
-------------------------------------
Donald E. Kiernan
Senior Vice President, Treasurer
And Chief Financial Officer
/s/ Robert W. Wohlert
-------------------------------------
Robert W. Wohlert
Managing Director-Finance and
Assistant Treasurer
5
<PAGE> 1
Exhibit 4-c
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to SBC
Communications Inc. or its agent for registration of transfer, exchange, or
payment, and any certificate issued is registered in the name of Cede & Co. or
in such other name as is requested by an authorized representative of DTC (and
any payment 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 as the registered
owner hereof, Cede & Co., has an interest herein.
This Security is a Global Security within the meaning of the
Indenture hereinafter referred to and is registered in the name of a Depository
or a nominee of a Depository. Unless and until it is exchanged in whole or in
part for Securities in definitive form in accordance with the provisions of the
Indenture and the terms of the Securities, 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 such nominee to a successor Depository or
a nominee of such successor Depository.
SBC COMMUNICATIONS INC.
DECS(sm)
(Debt Exchangeable for Common Stock(sm))
No. R-_ CUSIP __________
7 3/4% Exchangeable Note Due March 15, 2001
(Subject to Exchange at Maturity into
American Depositary shares, each representing
20 Series L Shares, without Par Value,
of Telefonos de Mexico, S.A. de C.V.)
SBC COMMUNICATIONS INC., a Delaware corporation (hereinafter the
"Company"), for value received, hereby promises to pay to Cede & Co., as nominee
of The Depository Trust Company, or registered assigns, the principal sum of
$______________ (or $39.625 for each Debt Exchangeable for Common Stock (each, a
"DECS") represented by this Global Security), at Maturity (defined below)
(subject to the mandatory exchange provisions at Maturity described below), and
to pay interest on said principal sum, on March 15, June 15, September 15 and
December 15 (each, an
<PAGE> 2
Interest Payment Date) and at Maturity, commencing June 15, 1997, in arrears at
the annual rate of 7 3/4% (the "Interest Rate") from the original issue date of
this Global Security or the most recent date to which interest has been paid or
duly provided for, until the principal hereof is paid or made available for
payment, and on any overdue principal and (to the extent that the payment of
such interest shall be legally enforceable) on any overdue installment of
interest at the Interest Rate. If an Interest Payment Date falls on a day that
is not a Business Day (defined on the reverse hereof), the interest payment to
be made on such Interest Payment Date will be made on the next succeeding
Business Day with the same force and effect as if made on such Interest Payment
Date, and no additional interest will accrue as a result of such delayed
payment. "Maturity" means the earlier of (a) March 15, 2001, or (b) maturity as
a result of acceleration or otherwise.
At Maturity, the principal amount of this Global Security will be
mandatorily exchanged into a number of American Depository Shares ("Telmex
ADSs"), each representing twenty Series L Shares, without par value ("Telmex L
Shares"), of Telefonos de Mexico, S.A. de C.V. ("Telmex") at the Exchange Rate
(as defined below) or an equivalent amount of cash or securities. The "Exchange
Rate" is equal to, (a) if the Maturity Price (defined on the reverse hereof) is
greater than or equal to $46.76 (the "Threshold Appreciation Price"), .8474
Telmex ADS per DECS, (b) if the Maturity Price is less than the Threshold
Appreciation Price but is greater than the Initial Price, (i) a fraction equal
to the Initial Price divided by the Maturity Price of (ii) one Telmex ADS per
DECS and (c) if the Maturity Price is less than or equal to the Initial Price,
one Telmex ADS per DECS. ACCORDINGLY, THE VALUE OF THE TELMEX ADSs TO BE
RECEIVED BY THE HOLDER OF THIS GLOBAL SECURITY (OR, AS DISCUSSED BELOW, THE
EQUIVALENT IN CASH OR SECURITIES THAT MAY BE RECEIVED IN LIEU OF SUCH TELMEX
ADSs) AT MATURITY WILL NOT NECESSARILY EQUAL THE PRINCIPAL AMOUNT OF SUCH GLOBAL
SECURITY. The Exchange Rate is subject to adjustment as provided on the reverse
hereof. The ratios of Telmex ADSs per DECS specified in clauses (a), (b) and (c)
above of the Exchange Rate definition are hereinafter referred to as the "Share
Components". Any Telmex ADSs delivered by the Company to the Holder of this
Global Security, provided that the Holder is not affiliated with Telmex, shall
be free of any transfer restrictions and the Holder will be responsible for the
payment of any and all brokerage costs upon the subsequent sale of such ADSs. No
fractional Telmex ADSs will be issued at Maturity. The Company may at its option
deliver cash and in certain circumstances (discussed on the reverse hereof)
securities, in lieu of delivering Telmex ADSs at Maturity. The amount of cash
deliverable in respect of this Global Security shall be equal to the product of
the number of Telmex ADSs otherwise deliverable in respect of this Global
Security on the date of Maturity multiplied by the Maturity Price. On or prior
to the fourth Business Day prior to March 15, 2001, the Company will notify the
Trustee, which in turn will
2
<PAGE> 3
notify DTC and publish a notice in a daily newspaper of national circulation
stating whether the principal amount of this Global Security will be exchanged
for Telmex ADSs or cash.
This Global Security is unsecured and ranks on a parity with all
other unsecured and unsubordinated indebtedness of the Company and on a parity
with the Company's support obligations pursuant to the Support Agreement, dated
as of November 10, 1986, between the Company and SBC Communications Capital
Corporation.
Interest payable under this Global Security, and punctually paid or
duly provided for on any Interest Payment Date, will be paid to the person in
whose name this Global Security is registered on the close of business on the
last day of the calendar month (each, a "Record Date") immediately preceding
such Interest Payment Date, provided that interest payable at Maturity shall be
payable to the person to whom the principal is payable. Any due and payable
interest not paid on an Interest Payment Date (or on the next succeeding
Business Day if the relevant Interest Payment Date falls on a day which is not a
Business Day) will cease to be payable to Holder on the preceding Record Date,
and may either be paid to the person in whose name this Global Security (or the
Global Security in exchange or substitution for which this Global Security was
issued) is registered at the close of business on a special record date for the
payment of such defaulted upon interest to be fixed by the Trustee, notice
whereof shall be given to the Holder of this Global Security not less than 15
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 securities are listed, and upon such notice as may be required by
such exchange, all as more fully provided in the Indenture. The American
Depository Receipts ("ADRs") evidencing Telmex ADSs (or cash or securities)
deliverable and interest payable at Maturity will be deliverable or payable, as
the case may be, to the Person in whose name this Global Security is registered
at Maturity upon surrender of this Global Security, at the office or agency of
the Company maintained for such purposes (the "Registrar"); provided, however,
that payment of interest may be made at the option of the Company by check
mailed to the person in whose name this Global Security is registered at the
close of business on the last day of the calendar month immediately preceding
the relevant Interest Payment Date.
Reference is made to the further provisions of this Global Security
set forth on the reverse hereof, which shall have the same effect as though
fully set forth at this place.
This Global Security shall not be valid or obligatory for any
purpose and shall not be entitled to any benefit under the Indenture until the
certificate of
3
<PAGE> 4
authentication hereon shall have been manually signed by the Trustee. "DECS" and
"Debt Exchangeable for Common Stock" are service marks of Salomon Brothers Inc.
4
<PAGE> 5
IN WITNESS WHEREOF, SBC COMMUNICATIONS INC. has caused this instrument
to be signed by its duly authorized officers and has caused a facsimile of its
corporate seal to be affixed hereto or imprinted hereon.
Dated: March 26, 1997 SBC COMMUNICATIONS INC.
By:
--------------------------------
Donald E. Kiernan
Senior Vice President, Treasurer
and Chief Financial Officer
By:
--------------------------------
Roger W. Wohlert
Managing Director-Finance and
Assistant Treasurer
Certificate of Authentication
This Global Security is one of the Securities of the series designated herein
referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK, as Trustee
By:
---------------------
Authorized Signature
5
<PAGE> 6
REVERSE OF GLOBAL SECURITY
SBC COMMUNICATIONS INC.
7 3/4% Exchangeable Notes Due March 15, 2001
This Global Security is one of the duly authorized issue of debt
securities of the Company (herein referred to as the "Securities") to be issued
under and pursuant to an Indenture dated as of November 1, 1994 (herein referred
to as the "Indenture"), duly executed and delivered by the Company to The Bank
of New York, as Trustee (herein referred to as the "Trustee"), 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
Securities.
The Securities may be issued in one or more series, which different
series may be issued in various aggregate principal amounts, may mature at
different times, may bear interest, if any, at different rates, may be subject
to additional covenants and Events of Default and may otherwise vary as provided
in the Indenture. This Global Security is one of the series designated on the
face hereof and such series is limited in aggregate principal amount to the
Initial Price times 10,000,000 DECS. References herein to "Securities" shall
mean the Securities of said series.
The authorized denominations of Securities will be the Initial Price
and any larger amount that is an integral multiple of the Initial Price.
In the case of certain dilution events, the Exchange Rate will be
subject to adjustment. In the case of certain adjustment events, the
consideration received by the Holder of this Global Security at Maturity will be
Telmex ADSs, other securities and/or cash.
The Exchange Rate is subject to adjustment if Telmex shall (i) pay a
stock dividend or make a distribution, in each case, with respect to the Telmex
L Shares in Telmex L Shares or any other shares of common stock of Telmex, (ii)
subdivide or split the outstanding Telmex L Shares, (iii) combine the
outstanding Telmex L Shares into a smaller number of shares, (iv) issue by
reclassification (other than a reclassification pursuant to clause (ii), (iii),
(iv) or (v) of the definition of "Adjustment Event" below) of the Telmex L
Shares any shares of common stock of Telmex, (v) issue rights or warrants to all
holders of Telmex L Shares entitling them to subscribe for or purchase Telmex L
Shares (other than rights to purchase Telmex L Shares pursuant to a plan for the
reinvestment of dividends) at a price per share less than the Market Price (as
defined below) of the Telmex L Shares on the Business Day
<PAGE> 7
next following the record date for the determination of holders of Telmex L
Shares entitled to receive such rights or warrants, or (vi) takes any action
that results in any increase or decrease in the number of Telmex L Shares
represented by Telmex ADSs.
In the case of the events referred to in clauses (i), (ii), (iii)
and (iv) above, the Exchange Rate shall be adjusted by adjusting each of the
Share Components of the Exchange Rate in effect immediately prior to such event
so that the Holder of this Security shall be entitled to receive, upon exchange
of the principal amount of this Security at Maturity, the number of Telmex ADSs
(or, in the case of a stock dividend or distribution referred to clause (i)
above paid or made in other shares of common stock of Telmex or a
reclassification referred to in clause (iv) above, the number of American
Depository Shares representing other shares of common stock of Telmex issued
pursuant thereto) which the Holder of this Security would have owned or been
entitled to receive immediately following such event had this Security been
exchanged immediately prior to such event or any record date with respect
thereto.
In the case of the event referred to in clause (v) above, the
Exchange Rate shall be adjusted by multiplying each of the Share Components of
the Exchange Rate in effect on the record date for the determination of Holders
of Telmex L Shares entitled to receive the rights or warrants referred to in
clause (v) above, by a fraction, of which the numerator shall be (A) the number
of Telmex L Shares outstanding on such record date, plus (B) the number of
additional Telmex L Shares offered for subscription or purchase pursuant to such
rights or warrants, and of which the denominator shall be (x) the number of
Telmex L Shares outstanding on such record date, plus (y) the number of
additional Telmex L Shares which the aggregate offering price of the total
number of Telmex L Shares so offered for subscription or purchase pursuant to
such rights or warrants would purchase at the Market Price of the Telmex L
Shares on the Business Day next following such record date, which number of
additional shares shall be determined by multiplying such total number of shares
by the exercise price of such rights or warrants and dividing the product so
obtained by such Market Price of Telmex L Shares. To the extent that such rights
or warrants expire prior to the Maturity of this Security and shares of Telmex L
Shares are not delivered pursuant to such rights or warrants prior to such
expiration, the Exchange Rate shall be readjusted to the Exchange Rate which
would then be in effect had such adjustments for the issuance of such rights or
warrants been made upon the basis of delivery of only the number of Telmex L
Shares actually delivered pursuant to such rights or warrants. Any Telmex L
Shares issuable in payment of a dividend shall be deemed to have been issued
immediately prior to the close of business on the record date for such dividend
for purposes of calculating the number of outstanding Telmex L Shares under this
paragraph.
In the case of the event referred to in clause (vi) above, the
Exchange Rate shall be adjusted by adjusting each of the Share Components of the
Exchange Rate
2
<PAGE> 8
in effect immediately prior to such event so that a Holder of this Security
shall be entitled to receive, upon exchange of the principal amount of this
Security at Maturity, the number of Telmex ADSs representing the same number of
Telmex L Shares as were represented by the Telmex ADSs which the Holder of this
Security would have owned or been entitled to receive immediately prior to such
event had this Security been exchanged immediately prior to such event or any
record date with respect thereto.
All adjustments to the Exchange Rate will be calculated to the
nearest 1/10,000th of a Telmex ADS (or if there is not a nearest 1/10,000th of a
Telmex ADS to the next lower 1/10,000th of a Telmex ADS). No adjustment in the
Exchange Rate shall be required unless such adjustment would require an increase
or decrease of at least one percent therein; provided, however, that any
adjustments which by reason of the foregoing are not required to be made shall
be carried forward and taken into account in any subsequent adjustment.
If an adjustment is made to the Exchange Rate pursuant to clauses
(i), (ii), (iii), (iv), (v) or (vi) above, an adjustment shall also be made to
the Maturity Price as such term is used to determine which of clauses (a), (b)
or (c) of the Exchange Rate definition will apply at Maturity. The required
adjustment to the Maturity Price shall be made at Maturity by multiplying the
original Maturity Price by the cumulative number or fraction determined pursuant
to the Exchange Rate adjustment procedure described above. In the case of a
stock dividend or distribution paid or made in, or the reclassification of any
Telmex L Shares into, any common stock of Telmex other than Telmex L Shares,
such common stock shall be deemed to be Telmex L Shares (and the Telmex ADSs to
be representing such Telmex L Shares) solely to determine the Maturity Price and
to apply the Exchange Rate at Maturity. Each such adjustment to the Exchange
Rate and the Maturity Price shall be made successively.
In the event of (i) any dividend or distribution by Telmex to all
Holders of Telmex L Shares of evidences of its indebtedness or other assets
(excluding (1) dividends or distributions referred to in clause (i) of the
paragraph above containing clauses (i)-(vi) describing Exchange Rate adjustment
events, (2) any common shares issued pursuant to a reclassification referred to
in clause (iv) of such paragraph above and (3) Ordinary Cash Dividends (as
defined below)) or any issuance by Telmex to all holders of Telmex L Shares of
rights or warrants (other than rights or warrants referred to in clause (v) of
such paragraph above), (ii) any consolidation or merger of Telmex with or into
another entity (other than a merger or consolidation in which Telmex is the
continuing corporation and in which the Telmex L Shares outstanding immediately
prior to the merger or consolidation are not exchanged for cash, securities or
other property of Telmex or another corporation), (iii) any sale, transfer,
lease or conveyance to another corporation of the property of Telmex as an
entirety or substantially as an
3
<PAGE> 9
entirety, (iv) any statutory exchange of securities of Telmex with another
corporation (other than in connection with a merger or acquisition) or (v) any
liquidation, dissolution or winding up of Telmex (any such event, an "Adjustment
Event"), the Holder of this Security will receive at Maturity, in lieu of or (in
the case of an Adjustment Event described in clause (i) of this paragraph) in
addition to, Telmex ADSs as described above, cash in an amount equal to (A) if
the Maturity Price is greater than or equal to the Threshold Appreciation Price,
$46.76 multiplied by the Transaction Value (as defined below), (B) if the
Maturity Price is less than the Threshold Appreciation Price but is greater than
the Initial Price, the product of (x) the Initial Price divided by the Maturity
Price multiplied by (y) the Transaction Value and (C) if the Maturity Price is
less than or equal to the Initial Price, the Transaction Value. Following an
Adjustment Event, the Maturity Price, as such term is used in this paragraph and
throughout the definition of Exchange Rate, shall be deemed to equal (A) the
Maturity Price of the Telmex ADSs, as adjusted pursuant to the method set forth
in the preceding paragraph, plus (B) the Transaction Value.
Notwithstanding the foregoing, with respect to any securities
received in an Adjustment Event that (A) are (i) listed on a United States
national securities exchange, (ii) reported on a United States national
securities system subject to last sale reporting, (iii) traded in the
over-the-counter market and reported on the National Quotation Bureau or similar
organization or (iv) for which bid and ask prices are available from at least
three nationally recognized investment banking firms and (B) are either (x)
perpetual equity securities or (y) non-perpetual equity or debt securities with
a stated maturity after the stated maturity of this Security ("Reported
Securities"), the Company may, at its option, in lieu of delivering the amount
of cash deliverable in respect of Reported Securities received in an Adjustment
Event, as determined in accordance with the previous paragraph, deliver a number
of such Reported Securities with a value equal to such cash amount, as
determined in accordance with clause (ii) of the definition of Transaction
Value, as applicable; provided, however, that (i) if such option is exercised,
the Company shall deliver Reported Securities in respect of all, but not less
than all, cash amounts that would otherwise be deliverable in respect of
Reported Securities received in an Adjustment Event, (ii) the Company may not
exercise such option if the Company has elected to deliver cash in lieu of
Telmex ADSs, if any, deliverable upon Maturity or if such Reported Securities
have not yet been delivered to the Holders entitled thereto following such
Adjustment Event or any record date with respect thereto, and (iii) subject to
clause (ii) of this proviso, the Company must exercise such option if the
Company does not elect to deliver cash in lieu of Telmex ADSs, if any,
deliverable upon Maturity. If the Company elects to deliver Reported Securities,
the Holder of this Security will be responsible for the payment of any and all
brokerage and other transaction costs upon the sale of such Reported Securities.
If, following any Adjustment Event, any Reported Security ceases to qualify as a
Reported Security, then (x) the Company may no longer elect to deliver
4
<PAGE> 10
such Reported Security in lieu of an equivalent amount of cash and (y)
notwithstanding clause (ii) of the definition of Transaction Value, the
Transaction Value of such Reported Security shall mean the fair market value of
such Reported Security on the date such security ceases to qualify as a Reported
Security, as determined by a nationally recognized investment banking firm
retained for this purpose by the Company.
The amount of cash and/or the kind and amount of securities into
which this Security shall be exchangeable after an Adjustment Event shall be
subject to adjustment following such Adjustment Event in the same manner and
upon the occurrence of the same type of events as described above with respect
to Telmex ADSs, Telmex L Shares and Telmex.
The Company shall, within ten Business Days following the occurrence
of an event that requires an adjustment to the Exchange Rate or the occurrence
of an Adjustment Event (or, in either case, if the Company is not aware of such
occurrence, as soon as practicable after becoming so aware), provide written
notice to the Trustee and to the Holder of this Security of the occurrence of
such event, including a statement in reasonable detail setting forth the method
by which the adjustment to the Exchange Rate or change in the consideration to
be received by the Holder of this Security following the Adjustment Event was
determined and setting forth the revised Exchange Rate or consideration, as the
case may be; provided, however, that in respect of any adjustment to the
Maturity Price, such notice will only disclose the factor by which the Maturity
Price is to be multiplied in order to determine which clause of the Exchange
Rate definition will apply at Maturity.
No fractional Telmex ADSs or Reported Securities will be issued if
the Company exchanges this Security for Telmex ADSs. The number of full Telmex
ADSs or Reported Securities which shall be delivered upon exchange, in whole or
in part, as the case may be, shall be computed on the basis of the aggregate
principal amount of this Security surrendered at Maturity. In lieu of any
fractional Telmex ADSs or other security otherwise issuable in respect of the
principal amount of this Security exchanged at Maturity, the Holder shall be
entitled to receive an amount in cash equal to the value of such fractional
Telmex ADS or security at the Maturity Price.
All Telmex ADSs and Reported Securities deliverable the Holder of
this Security upon Maturity will be delivered to such Holder, to the extent
practicable, in such manner (such as by book-entry transfer) so as to assure
same-day transfer of such securities to the Holder and otherwise in the manner
customary at such time for delivery of such securities and securities of the
same type. Notwithstanding the foregoing, it may not be possible under market
practices prevailing at the Maturity of the Note to transfer Telmex ADSs and/or
Reported Securities so as to assure same-day
5
<PAGE> 11
transfer of such securities to the Holder. Accordingly, the Holder may receive
all or a portion of the Telmex ADSs and/or Reported Securities into which the
Security is exchangeable after the date of Maturity.
This Global Security is not subject to redemption prior to Maturity
and does not contain sinking fund or other mandatory redemption provisions. This
Global Security is not subject to payment prior to Maturity at the option of the
Holder.
"Business Day" means any day that is not a Saturday, a Sunday or any
day on which the New York Stock Exchange ("NYSE"), banking institutions or trust
companies in The City of New York are authorized or obligated by law or
executive order to close.
"Closing Price" of any security on any date of determination means
(i) the closing sale price (or, if no closing price is reported, the last
reported sale price) of such security (regular way) on the NYSE on such date,
(ii) if such security is not listed for trading on the NYSE on any such date, as
reported in the composite transactions for the principal United States
securities exchange on which such security is so listed, (iii) if such security
is not so listed on a United States national or regional securities exchange, as
reported by the Nasdaq Stock Market, (iv) if such security is not so reported,
the last quoted bid price for such security in the over-the-counter market as
reported by the National Quotation Bureau or similar organization, or (v) if
such security is not so quoted, the average of the mid-point of the last bid and
ask prices for such security from each of at least three nationally recognized
independent investment banking firms selected by the Company for such purpose.
"Market Price" means, as of any date of determination, the average
Closing Price per Telmex ADS for the 20 Trading Days immediately prior to the
date of determination; provided, however, that if there are not 20 Trading Days
for the Telmex ADSs occurring later than the 60th calendar day immediately prior
to, but not including, such date, the Market Price shall be determined as the
market value per Telmex ADS as of such date as determined by a nationally
recognized investment banking firm retained for such purpose by the Company.
"Market Price of Telmex L Shares" shall be determined in the same manner as
Market Price pursuant to the previous sentence, except that in computing average
Closing Price, the Closing Price per Telmex ADS for each Trading Day shall be
divided by the number of Telmex L Shares represented by one Telmex ADS on such
Trading Day and market value per Telmex L Share shall be used in the proviso
instead of market value per Telmex ADS.
"Maturity Price" means the average Closing Price per Telmex ADS on
the 20 Trading Days immediately prior to, but not including, the date of
Maturity, provided, however, that if there are not 20 Trading Days for the
Telmex ADSs
6
<PAGE> 12
occurring later than the 60th calendar day immediately prior to, but not
including, the date of Maturity, "Maturity Price" means as the market value per
Telmex ADS as of Maturity as determined by a nationally recognized investment
banking firm retained for such purpose by the Company. The Maturity Price is
subject to adjustment as provided above.
"Ordinary Cash Dividend" means, with respect to any consecutive
365-day period, any dividend with respect to Telmex L Shares paid in cash to the
extent that the amount of such dividend, together with the aggregate amount of
all other dividends on Telmex L Shares paid in cash during such 365-day period,
does not exceed on a per Telmex ADS basis 10% of the average of the Closing
Prices of Telmex ADSs over such 365-day period.
"Trading Day" means a Business Day on which the security the Closing
Price of which is being determined (A) is not suspended from trading on any
national or regional securities exchange or association or over-the-counter
market at the close of business and (B) has traded at least once on the national
or regional securities exchange or association or over-the-counter market that
is the primary market for the trading of such security.
"Transaction Value" means (i) for any cash received in any
Adjustment Event, the amount of cash received per Telmex ADS, (ii) for any
Reported Securities received in any Adjustment Event, an amount equal to (x) the
average Closing Price per security of such Reported Securities for the 20
Trading Days immediately prior to Maturity multiplied by (y) the number of such
Reported Securities (as adjusted pursuant to the second preceding paragraph)
received for each Telmex ADS and (iii) for any property received in any
Adjustment Event other than cash or such Reported Securities, an amount equal to
the fair market value of the property received per Telmex ADS on the date such
property is received, as determined by a nationally
7
<PAGE> 13
recognized investment banking firm retained for this purpose by the Company;
provided, however, that in the case of clause (ii), (x) with respect to
securities that are Reported Securities by virtue of only clause (A)(iv) of the
definition of Reported Securities (in the twelfth preceding paragraph),
Transaction Value with respect to any such Reported Security means the average
of the mid-point of the last bid and ask prices for such Reported Security as of
Maturity from each of at least three nationally recognized investment banking
firms retained for such purpose by the Company multiplied by the number of such
Reported Securities (as adjusted pursuant to the method set forth in the second
preceding paragraph) received for each Telmex ADS and (y) with respect to all
other Reported Securities, if there are not 20 Trading Days for the Telmex ADSs
occurring later than the 60th calendar day immediately prior to, but not
including, the date of Maturity, Transaction Value with respect to such Reported
Security means the market value per security of such Reported Security as of
Maturity as determined by a nationally recognized investment banking firm
retained for such purpose by the Company multiplied by the number of such
Reported Securities (as adjusted pursuant to the method set forth in the second
preceding paragraph) received for each Telmex ADS. For purposes of calculating
the Transaction Value, any cash, Reported Securities or other property
receivable in any Adjustment Event shall be deemed to have been received (i)
immediately prior to the close of business on the record date for such
Adjustment Event or, if there is no record date for such Adjustment Event,
immediately prior to the close of business on the effective date of such
Adjustment Event and (ii) by holders of ADSs in proportion to the fraction of an
ADS representing one Telmex L Share, whether or not such holders actually
received or were entitled to receive such cash, Reported Securities or other
property pursuant to the terms of the deposit agreement under which the ADSs are
issued.
All payments in respect of this Security will be made in U.S.
dollars. Until the Securities are exchanged or exchange therefor is provided
for, the Company will, at all times, maintain a paying agent in The City of New
York.
Interest on the Securities will be computed on the basis of a
360-day year of twelve 30-day months.
In case an Event of Default, as defined in the Indenture, with
respect to the Securities, shall have occurred and be continuing, the principal
hereof may be declared, and upon such declaration shall become, due and payable,
in the manner, with the effect and subject to the conditions provided in the
Indenture.
The Indenture contains provisions permitting the Company and the
Trustee with the written consent of the Holders of a majority in principal
amount of the outstanding Securities of each series affected by a supplemental
indenture, to enter into a supplemental indenture to add any provisions to or to
change or eliminate any provisions of the Indenture or of any supplemental
indenture or to modify, in each case in any manner not covered by provisions in
the Indenture relating to amendments permitted under the Indenture without the
consent of Holders, the rights of the Holders of each such series. The Holders
of a majority in principal amount of the outstanding Securities of each series
affected by such waiver (with each series voting as a class), by notice to the
Trustee, may waive compliance by the Company with any provisions of the
Indenture, any supplemental indenture or the Securities of any such series
except a default in the payment of the principal of or interest on any Security.
Any consent or waiver by the Holder of this Global Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Global Security
and of any Global Security issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof, whether or not a notation of such consent or
waiver is made upon this Global Security.
8
<PAGE> 14
No reference herein to the Indenture and no provision of this Global
Security or of the Indenture shall alter or impair the obligations of the
Company, which are absolute and unconditional, to pay the principal of and
interest on this Global Security, at the times, place and rate, and in the
manner herein prescribed.
The Securities are only issued in registered form without coupons.
This Global Security will be transferable at any time or from time
to time at the office of the Registrar. Initially the Registrar will be the
principal corporate trust office of the Trustee in New York City, which is
located at 101 Barclay Street, Floor 21 West, New York, New York 10286. When
Securities are presented to the Registrar with a request to register their
transfer or to exchange them for an equal principal amount of Securities of
other authorized denominations and like tenor, the Registrar shall register the
transfer or make the exchange if its requirements for such transactions are met.
The Company will not make any charge for any registration of transfer or
exchange but may require the payment by the party requesting such registration
of transfer or exchange of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Ownership of this Global Security shall be proved by the register
for the Securities kept by the Registrar. The Company, the Trustee and any agent
of the Company may treat the person in whose name this Global Security is
registered as the absolute owner thereof for all purposes.
No director, officer, employee or stockholder, as such, of the
Company shall have any liability for any obligations of the Company under this
Global Security or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting this
Global Security waives and releases all such liability. The waiver and release
are part of the consideration for the issue of this Global Security.
All terms used in this Global Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
The Indenture and this Global Security shall be governed by and
construed in accordance with the laws of the State of New York.
9
