FIRST AND REFUNDING MORTGAGE THE BELL TELEPHONE COMPANY OF PENNSYLVANIA to BANKERS TRUST COMPANY, Trustee. Dated, October 1, 1920 i _ / >) > tv J J \ i; v C7~~ Osi N ©Ijia Snbpnturf, dated the first day of October, 19'20, but executed on the date recited at the end hereof, made by and between The Bell Telephone Company of Pennsylvania, a corporation duly organized and existing under the laws of the State of Pennsylvania (hereinafter called the “Telephone Company”), party of the first part, and Bankers Trust Company, a corporation duly organized and existing under the laws of the State of New York (hereinafter called the “Trus- tee”), party of the second part, witnesseth: Whereas, the Telephone Company is authorized by Authoriza- law to borrow money, and to secure the payment of the Venture and same by mortgage on its property, real, personal and issue of mixed, and has, by votes of its Board of Directors and '° n s its stockholders, at meetings duly called and held in ac- cordance with law, authorized the execution of this inden- ture, and the immediate issue thereunder of bonds, of the aggregate principal amount of twenty-five million dollars ($25,000,000), to be designated “Twenty-Five Year First and Refunding Mortgage 7% Sinking Fund Gold Bonds Series A”; and Whereas, subject to the provisions of Article First hereof, the text of the bonds (which may be issued in series and may lie coupon bonds or registered bonds with- out coupons), and of the coupons to be attached to such thereof as may be coupon bonds, is to be substantially in the following form (the blanks to be appropriately filled), provided that, in the case of bonds issued here- under, which shall be secured by a sinking fund or which shall be made redeemable before maturity, or convertible into capital stock, or in respect of which there are other covenants and provisions permitted by this indenture, there are to be inserted in such bonds paragraphs stating 2 Form of coupon bonds briefly such sinking fund provisions, reserved right of re- demption, right of conversion, or other covenants or pro- visions, and in such coupons, appropriate phraseology; and such bonds are to have inserted therein such provi- sions as to exchangeability, and are to bear such legends or indorsements as may be required by the rules of the New York Stock Exchange or to conform to usage; (Form of Coupon Bond) No Series % No UNITED STATES OF AMERICA State of New York. THE BELL TELEPHONE COMPANY OF PENNSYLVANIA. First and Refunding Mortgage Gold Bond, Due The Bell Telephone Company of Pennsyl- vania, (hereinafter called the “Telephone Com- pany”) a corporation of the State of Pennsylvania, for value received, hereby promises to pay to bearer, or, if this bond be registered, to the regis- tered holder hereof, on the day of , at the office or agency of the Tele- phone Company in the Borough of Manhattan, City of New York, Dollars in gold coin of the United States of Amer- ica of or equivalent to the standard of weight and fineness existing on October 1, 1920, and to pay interest thereon from the date hereof at the rate of per cent ( %) per annum, such interest to be payable at such office or agency, in like gold coin, semi-annually, on the day of , and the day of in each year until the payment of said principal sum, but only upon the presenta- tion and surrender of the interest coupons hereto annexed as they severally mature. This bond is one of a duly authorized issue of First and Refunding Mortgage Gold Bonds of the 3 Telephone Company, issued and to be issued under, and all equally secured by an indenture of trust, dated October 1, 1920, duly executed and delivered by the Telephone Company to Bankers Trust Com- pany, a corporation of the State of New York, as Trustee, to which indenture reference is hereby made for a description of the properties and franchises mortgaged, the nature and extent of the security, the rights of the holders of said bonds and of the Trustee in respect of such security, and the terms and conditions under which the bonds are issued and secured. As pro- vided in said indenture, said bonds may be for various principal sums and are issuable in series, which different series may mature at different times, may bear interest at different rates and may otherwise vary as in said indenture provided. Series bonds, of which this is one, are known as the First and Refunding Mortgage Gold Bonds Series of the Telephone Company and are limited in the aggregate principal amount of $ , at any one time outstanding. In case an event of default, as defined in the said indenture, shall occur, the principal of this bond may become and be declared due and payable in the manner and with the effect provided in said indenture. This bond shall pass by delivery unless regis- tered as to the principal thereof in the holder’s name at the office or agency of the Telephone Com- pany in the Borough of Manhattan, City of New York, such registry being noted on the bond by the agent for such purpose of the Telephone Com- pany, after which no transfer shall be valid unless made at said office or agency by the registered holder in person or by his attorney duly author- ized in writing, and similarly noted on the bond; but thereafter it may be discharged from registry by being transferred in like manner to bearer, and thereupon transferability by delivery shall be re- stored, and may again, from time to time, be reg- istered or transferred to bearer as before. Such registration, however, shall not affect the nego- tiability of the coupons hereto annexed, which shall continue to be payable to bearer and trans- Form of coupon bonds 4 Form of coupon bonds ferable by delivery merely, and the payment there- of to bearer shall fully discharge the Telephone Company in respect of the interest therein men- tioned, whether or not this bond be registered. No recourse shall be had for the payment of the principal of or the interest upon this bond, or for any claim based thereon, or in respect thereof, or of said indenture, against any incorporator, stockholder, officer or director of the Telephone Company, either directly or through the Tele- phone Company or through a receiver or trustee, whether by virtue of any statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the ac- ceptance hereof and as part of the consideration for the issue hereof, expressly released. This bond shall not become valid or obligatory for any purpose until it shall have been authenti- cated by the execution of the certificate, hereon in- dorsed, by the Trustee under said indenture. This bond and the indenture securing the same, herein referred to, have been executed and deliv- ered by The Bell Telephone Company of Pennsyl- vania at its office or agency in the City of New York, State of New York, and are to be construed and governed according to the laws of the State of New York. In Witness Whereof, The Bell Telephone Company of Pennsylvania has caused these pres- ents to be signed by its President or Vice Presi- dent and its corporate seal to be hereunto affixed and attested by its Secretary or Assistant Secre- tary, and coupons for said interest bearing the en- graved facsimile signature of its Treasurer to be attached hereto in the City of New York. Dated the day of The Bell Telephone Company of Pennsylvania, Attest : By Vice President. Secretary. 5 No (Form of Interest Coupon) $. On the day of , , The Bell Telephone Company of Pennsylvania will pay to bearer at its office or agency in the Bor- ough of Manhattan, City of New York, Dollars in gold coin of the United States, being six months’ interest then due on its First and Refunding Mortgage Gold Bond No. , Series Treasurer. (Form of Registered Bond Without Coupons) No Series % No UNITED STATES OF AMERICA State of New York. THE BELL TELEPHONE COMPANY OF PENNSYLVANIA. Ftrst and Refunding Mortgage Gold Bond, Due The Bell Telephone Company of Pennsyl- vania, (hereinafter called the “Telephone Com- pany”) a corporation of the State of Pennsyl- vania, for value received, hereby promises to pay to or registered assigns, on the day of , at the office or agency of the Telephone Company in the Borough of Manhat- tan, City of New York, dollars in gold coin of the United States of America of or equivalent to the standard of weight and fineness existing on October 1, 1920, and to pay interest thereon at the rate of per cent. ( %) per annum from the day of Form of coupon Form of registered bond with- out coupons G Form of registered bond with- out coupons , 19 ; such interest to be payable to the registered holder hereof at such office or agency in like gold coin semi-annually on the day of and on the day of in each year until the payment of said principal sum. This bond is one of a duly authorized issue of First and Refunding Mortgage Gold Bonds of the Telephone Company issued and to be issued under, and all equally secured by, an indenture of trust, dated October 1, 1920, duly executed and delivered by the Telephone Company to Bankers Trust Com- pany, a corporation of the State of New York, as Trustee, to which indenture reference is hereby made for a description of the properties and fran- chises mortgaged, the nature and extent of the se- curity, the rights of the holders of said bonds and of the Trustee in respect of such security, and the terms and conditions under which the bonds are is- sued and secured. As provided in said indenture, said bonds may be for various principal sums and are issuable in series, which different series may mature at different times, may bear interest at dif- ferent rates, and may otherwise vary as in said indenture provided. Series bonds, of which this is one, are known as the First and Refunding Mortgage Gold Bonds Series of the Tele- phone Company and are limited in the aggregate principal amount of $ at any one time out- standing. In case an event of default, as defined in the said indenture, shall occur, the principal of this bond may become and be declared due and payable in the manner and with the effect provided in said indenture. This bond is transferable by the registered holder hereof in person or by attorney duly au- thorized in writing, at the office or agency of the Telephone Company in the Borough of Manhat- tan, City of New York, upon surrender and can- cellation of this bond, and upon any such trans- fer a new registered bond without coupons, of the same series, for the same aggregate principal amount, will be issued to the transferee in ex- change therefor. 7 No recourse shall be had for the payment of the principal of or the interest upon this bond, or for any claim based thereon, or in respect there- of, or of said indenture, against any incorporator, stockholder, officer or director of the Telephone Company, either directly or through the Tele- phone Company or through a receiver or trustee, whether by virtue of any statute or rule of law, or by the enforcement of any assessment or pen- alty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly released. This bond shall not become valid or obligatory for any purpose until it shall have been authenti- cated by the execution of the certificate hereon in- dorsed, by the Trustee under said indenture. This bond and the indenture securing the same, herein referred to, have been executed and deliv- ered by The Bell Telephone Company of Pennsyl- vania at its office or agency in the City of New York, State of New York, and are to be construed and governed according to the laws of the State of New York. In witness whereof, The Bell Telephone Com- pany of Pennsylvania has caused these presents to be signed by its President or Vice President and its corporate seal to be hereunto affixed and attested by its Secretary or Assistant Secretary in the City of New York. Dated the day of The Bell Telephone Company of Pennsylvania. By Vice President. Attest : Secretary. And Whereas, on each of said coupon bonds and on each of said registered bonds without ^coupons, there is to be indorsed a certificate of the Trustee in the follow- ing form, to wit : Form of registered bond with- out coupons 8 Form of Trustee’s certificate Compliance with laws Granting clause (Form of Trustee’s Certificate) This bond is one of the bonds, of the series designated therein, described in the within men- tioned indenture. Bankers Trust Company, Trustee, By Vice President. Asst. Secretary. And Whereas, all acts and things necessary to make said bonds when executed by the Telephone Company and authenticated by the Trustee, as in this indenture pro- vided, valid, binding and legal obligations of the Tele- phone Company and this indenture a valid mortgage or deed of trust to secure the payment of said bonds, have been performed, and the execution of this indenture has been in all respects duly authorized: Now, therefore, in order to secure the payment of the principal and interest of all bonds issued and to be issued under this indenture, according to their tenor and effect and the terms of this indenture, and the perform- ance of the covenants and obligations herein contained, and in consideration of the acceptance by the Trustee of the trusts hereby created, of the purchase and acceptance of the said bonds by the holders thereof, and of one dol- lar in hand paid by the Trustee to the Telephone Com- pany, upon the execution and delivery of this indenture, receipt whereof is hereby acknowledged, the Telephone Company has granted, bargained, sold, conveyed, re- leased, confirmed, pledged, assigned, transferred and set over, and by these presents does grant, bargain, sell, convey, release, confirm, pledge, assign, transfer and set over unto Bankers Trust Company, as Trustee, and to its successors in said Trust and its and their assigns forever, subject to the terms of this indenture, all and singular the following described property, rights, privi- leges and franchises of the Telephone Company, viz.: 9 Any and all real estate which the Telephone Com- pany now owns, or in which it has any interest, to be more fully described in a supplemental indenture to be executed by the Telephone Company to the Trustee, or which it may hereafter acquire, in the Commonwealth of Pennsylvania. Together with all plants, buildings, structures, im- provements and machinery located upon said real estate or any portion thereof, and all rights, privileges and easements of every kind and nature appurtenant thereto, and all and singular the tenements, hereditaments and appurtenances belonging to the real estate or any part thereof hereinbefore described or referred to or intended so to be, or in any wise appertaining thereto, and the reversions, remainders, rents, issues and profits thereof; also all the estate, right, title, interest, property, pos- session, claim and demand whatsoever, as well in law as in equity of the Telephone Company, of, in and to the same and any and every part thereof, with the appurte- nances. Also all buildings, plants, systems, works, improve- ments, structures, fixtures, appliances, machinery, mate- rials, supplies, tools, implements, office furniture, tele- phone and telegraph lines, switchboards, wires, cables, poles, conductors, subways, conduits, stations, sub-sta- tions, equipment (central office, subscribers’ stations and general), instruments, house wiring connections, and all appliances, apparatus, fixtures, fittings and equipment of every nature and kind whatsoever, appertaining to or useful in the transaction of the telephone or telegraph business in the Commonwealth of Pennsylvania, which the Telephone Company now owns or in which it has any interest, or which it may hereafter acquire, in said Com- monwealth. Also all rights of way, franchises, ordinances, privi- leges, immunities, consents, permissions, leases, patents, patent-rights, licenses, license agreements and other rights, privileges, contracts and agreements appertain- ing to or useful in the transaction of the telephone or 10 telegraph business in the Commonwealth of Pennsyl- vania, which the Telephone Company now owns or in which it has any interest, or which it may hereafter ac- quire, in said Commonwealth. Also any stocks, bonds, or other obligations of other corporations which the Telephone Company may here- after deposit with the Trustee (accompanied in the case of certificates of stock and of bonds if registered, by irrevocable powers of attorney sufficient to enable the Trustee to make transfers thereof), as provided in Article Third of this indenture. Also all other property, real and personal, which the Telephone Company now owns or in which it has any interest, or which it may hereafter acquire, in the Commonwealth of Pennsylvania, of whatever kind or description appertaining to or useful in the transaction of the telephone or telegraph business in said Common- wealth. Also all tolls, incomes, rents, issues, profits, benefits and advantages to be derived, received or had, of and from the property hereby mortgaged or pledged or in- tended so to be, which the Telephone Company now owns, or in which it has any interest, or which it may hereafter acquire, in the Commonwealth of Pennsylvania. It is the intention and it is hereby agreed that all prop- erty of the kind hereinbefore described, in the Common- wealth of Pennsylvania, acquired by the Telephone Com- pany after the date hereof, shall be as fully embraced within the provisions of this indenture, and subject to the lien hereby created, as if the said property were now owned by the Telephone Company, and were specifically described herein and conveyed hereby : Provided, never- theless, that no stocks, bonds, or other obligations of other corporations, shall be or become sub ject to the lien of this indenture, unless the same shall be deposited with the Trustee by the Telephone Company as provided in this indenture. Certain of said property, rights, privileges, and fran- chises, are conveyed subject to the lien of the following mortgage : 11 The Central District Telephone Company to Fidel- ity" Title & Trust Company, Trustee, dated November 29, 1913, under which First Mortgage 5% Gold Bonds, due December 1, 1943, of an aggregate face value of $9,543,000 are outstanding. To have and to hold all and singular the property, rights, privileges and franchises hereby conveyed and assigned, or intended so to be, together with all and singu- lar the reversions, remainders, revenues, incomes, is- sues and profits, privileges and appurtenances, now or hereafter belonging or in anywise appertaining thereto, unto the Trustee and its successors in the trust hereby created and its and their assigns, forever. But in trust nevertheless for the equal pro-rata benefit and security of each and every the persons and corporations who may be or become the holders of the bonds and coupons hereby secured, without preference, priority or distinction, except as provided in Section 1 of Article Ninth hereof, as to the lien or otherwise of one bond over or from the others by reason of priority in the issue or negotiation thereof, or by reason of the date of maturity thereof; so that each and all of said bonds shall have the same right, lien and privilege under this indenture and shall be equally secured hereby, with the same effect as if the same had all been made, issued and negotiated simultaneously on the date hereof ; provided, nevertheless, and these presents are upon the express condition, that, if the Telephone Company, its successors or assigns, shall well and truly pay or cause to be paid the principal of said bonds, with interest and premium if any, according to the true intent and meaning of the said bonds and each of them, or shall provide for the payment of such bonds and interest and premium if any, by depositing with the Trustee the entire amount due thereon, and shall also pay or cause to be paid all other sums payable hereunder by the Telephone Com- pany, then this grant and mortgage shall become void, and Habendum Grant in trust Proviso for defeasance If money deposited to pay bonds is not claimed within six years, same shall be paid to the Telephone Company Bonds issu- able in series \2 the Trustee or its successors in the trust, on payment of all lawful charges and disbursements then unpaid, on de- mand of the Telephone Company shall execute, acknowl- edge and deliver to the Telephone Company such instru- ment of satisfaction or other deed of release or convey- ance as may be necessary or proper to discharge this indenture of record, and shall grant, reassign and deliver to the Telephone Company, its successors or assigns, ull and singular the property, rights, privileges and fran- chises hereby granted, conveyed and assigned and not previously disposed of as herein provided, otherwise this grant and mortgage shall be and remain in full force. In case the owner of any outstanding bonds and un- paid coupons shall not, within six years after such de- posit, claim the amount deposited as above stated for payment thereof, the Trustee shall, upon demand, pay over to the Telephone Company such amount so depos- ited and the Trustee shall thereupon be relieved from all responsibility to the holder or holders of any such bonds. This indenture, further witnesseth, that the Tele- phone Company has agreed and covenanted, and hereby does agree and covenant with the Trustee and with the respective holders from time to time of said bonds or coupons, or any thereof, as follows, that is to say: ARTICLE FIRST Form, Execution, Delivery, Registry and Exchange of Bonds. Section 1. Bonds may be issued in series. Bonds of each series shall be designated by a distinctive letter. All bonds of the same series shall be identical in tenor, ex- cept as to the denominations thereof, and except, in the case of registered bonds without coupons, as to the date specified therein from which interest is to accrue. All of the bonds of a particular series shall bear the same 13 date. All bonds issued under this indenture shall mature not before October 1, 1945, and not later than October 1, 2020 . The bonds of Series A shall be designated “Twenty- Five Year First and Refunding Mortgage 7% Sinking Fund Gold Bonds Series A”. All coupon bonds of Series A shall be dated October 1, 1920, and all bonds of Series A shall bear interest payable on April 1 and October 1 in each year at the rate of 7 per cent, per annum from such date, without deduction on account of any and all taxes imposed by the Commonwealth of Pennsylvania upon any such bond or upon the holder as a resident thereof, not in excess of four mills per annum on each dollar of the principal amount of such bond, and shall mature on October 1, 1945. They shall be redeemable at the option of the Telephone Company, upon the terms stated in Article Fifth hereof, and shall be secured by a sinking fund, as provided in Article Fourth hereof. Section 2. The bonds of each series, other than Series A, shall be designated in such appropriate manner as shall be determined by vote of the Board of Directors of the Telephone Company. The terms of the bonds of each series, other than Series A, including the maximum principal amount of bonds which may be issued in the series, date of the bonds, date of maturity, rate of inter- est, semi-annual interest payment dates, exchangeability, provisions relating to conversion into the capital stock of the Telephone Company, or of a successor corporation, to a sinking fund, to redemption and to payment with- out deduction for certain taxes shall be such, not incon- sistent with the terms of this indenture, as may be fixed by the Board of Directors of the Telephone Company and as shall be expressed in said bonds. Section 3. Bonds of all series, and the coupons to be attached to coupon bonds, shall be substantially in the forms hereinbefore set forth, with such omissions, varia- Designation and terms of bonds of Series A Designation and terms of bonds of other series Forms of bonds and coupons 14 Execution, authentica- tion and de- livery of bonds Effect of Trustee’s certificate Signatures of former officers to continue valid Signature on coupons tions or insertions as may be necessary or appropriate to make them conform to provisions authorized in respect of the bonds of any series by the Board of Directors of tlie Telephone Company and permitted by this indenture. All bonds issued under this indenture shall, from time to time, be executed on behalf of the Telephone Com- pany by its President, or a Vice President, under its cor- porate seal attested by its Secretary or an Assistant Sec- retary, and shall be delivered to the Trustee for authen- tication by it; and thereupon, as provided in this in- denture and not otherwise, the Trustee shall authenticate and shall deliver the same. Only such bonds as shall bear thereon indorsed a certificate of authentication substantially in the form hereinbefore recited, exe- cuted by the Trustee, shall be secured by this indenture or be entitled to any right or benefit hereunder, and such authentication by the Trustee upon any such bond shall be conclusive evidence that the bond so au- thenticated, when issued by the Telephone Company, has been duly issued hereunder and that the holder thereof is entitled to the benefit of the trusts hereby created. In case any of the officers of the Telephone Company who shall have signed and sealed any of the bonds issu- able under this indenture shall have ceased to be officers of the Telephone Company before the bonds so signed and sealed shall have been actually authenticated and delivered by the Trustee, such bonds, nevertheless, may be authenticated and delivered and issued as though the persons who signed and sealed such bonds had not ceased to be officers of the Telephone Company; and also any of such bonds may be signed and sealed in behalf of the Telephone Company by such persons as at the actual date of the execution of such bonds shall be the proper officers of the Telephone Company, although at the date of such bond any such person shall not have been an offi- cer of the Telephone Company. The coupons to be at- tached to coupon bonds shall be authenticated by the en- graved facsimile signature of the present Treasurer or 15 of any future Treasurer of the Telephone Company, and the Telephone Company may adopt and use for that pur- pose the facsimile signature of any person who shall have been such Treasurer, notwithstanding the fact that he may have ceased to be such Treasurer at the time when such bonds shall be actually authenticated and de- livered. Before bonds of any series shall be authenticated or delivered by the Trustee, a copy of the resolution of the Board of Directors of the Telephone Company, certified under its corporate seal by its Secretary or Assistant Secretary, authorizing or creating such series, shall be delivered to the Trustee, and the bonds of such series shall conform to the terms expressed in such resolution. Coupon bonds shall bear interest from their date. Registered bonds without coupons shall bear in- terest from the interest payment date next preceding the date of authentication, unless such date of authentica- tion be an interest payment date, in which case such bonds shall bear interest from such interest payment date. Bonds may be issued originally either as coupon bonds or as registered bonds without coupons. The Trus- tee shall not authenticate or deliver any coupon bond un- less all coupons thereon then matured shall have been detached and cancelled. Section 4. Coupon bonds of Series A shall be of the denominations of $1,000, $500', and $100. Coupon bonds of each other series shall be of such denominations as the Board of Directors of the Telephone Company may de- termine. Coupon bonds of the several denominations shall each be identified by a distinctive number and let- ter or letters, in accordance with such plan as may be adopted by the Telephone Company with the approval of the Trustee. Registered bonds without coupons of Series A shall be of the denominations of $1,000, $5,000, and $10,000, and of other series, of such denominations as the Board of Directors of the Telephone Company shall determine. Trustee to receive copy of resolution creating any series Date from which inter- est is to accrue Bonds may be with or without coupons Denomina- tions, etc., of coupon bonds Denomina- tions of bonds with- out coupons 16 Registration and transfer books Registration of coupon bonds Transfer of registered coupon bonds Negotiabili- ty of cou- pons Exchange of coupon bonds for coupon bonds of other denomi- nations Section 5. The Telephone Company shall keep at an office or agency to be maintained by it in the Borough of Manhattan, City of New York, books for the registry and transfer, as in this indenture provided, of bonds issued hereunder. Any coupon bond may be registered as to principal only on the said books of the Telephone Company at its said office or agency and after such registra- tion no transfer shall be valid unless made on said books by the registered holder in person, or by his attorney duly authorized, and similarly noted on the bond. Upon presentation to the Telephone Company at such office or agency of any such coupon bond registered as to prin- cipal, accompanied by a written instrument of transfer, in a form approved by the Telephone Company, executed by the registered holder, such bond shall be transferred upon such books. The registered holder of any such coupon bond, registered as to principal, shall also have the right to cause the same to be registered as payable to bearer, in which case transferability by delivery shall be restored, and thereafter the principal of such bond when due shall be payable to the person presenting the bond ; but any such bond registered as payable to bearer may be registered again in the name of the holder with the same effect as the first registration thereof. Suc- cessive registrations and transfers as aforesaid may be made from time to time as desired. Each registration of a bond shall be noted thereon by the agent for such purpose of the Telephone Company. Registration of any of the coupon bonds as to principal, however, shall not affect the negotiability of the coupons appertaining to such bond, but every such coupon shall continue to pass by delivery merely and shall remain payable to bearer. Whenever any coupon bond or bonds of the same series, by the terms thereof exchangeable for coupon bonds of the same series of other denominations, together with all unmatured coupons thereto* appertaining, shall be surrendered to the Telephone Company for exchange 17 for a like principal amount of coupon bonds of other de- nominations of the same series, the Telephone Company shall execute, and the Trustee shall authenticate, and it or the Telephone Company shall deliver in exchange therefor a like aggregate principal amount of coupon bonds of the same series of such other denominations as shall be designated in the bonds so surrendered, bearing all unmatured coupons. Whenever the registered holder of any registered bond without coupons shall surrender the same to the Telephone Company for transfer, together with a writ- ten instrument of transfer in form approved by the Tele- phone Company duly executed by such registered holder, the Telephone Company shall execute, and the Trustee shall authenticate, and it or the Telephone Company shall deliver in exchange therefor a new registered bond with- out coupons, or new registered bonds without coupons, of the same series, for the same aggregate principal amount. Whenever any registered bond without coupons, by the terms thereof exchangeable for a coupon bond or coupon bonds of the same series, together with a written instru- ment of transfer in form approved by the Telephone Com- pany duly executed by the registered holder, shall be sur- rendered to the Telephone Company for exchange for one or more coupon bonds of the same series, the Telephone Company shall execute, and the Trustee shall authenti- cate, and it or the Telephone Company shall deliver in ex- change therefor a like aggregate principal amount of cou- pon bonds of the same series as the surrendered bond, of such denominations as shall be designated in the bond so surrendered, bearing all miniatured coupons. W1 lenever any coupon bond or bonds of the same series, by the terms thereof exchangeable for a registered bond or registered bonds without coupons, together with all miniatured coupons thereto appertaining, shall be sur- rendered for exchange for a registered bond or regis- tered bonds without coupons, the Telephone Company Transfer of registered bonds without coupons Exchange of registered bonds without coupons for coupon bonds Exchange of coupon bonds for registered bonds without coupons 18 Legends on and pro- visions in coupon and registered bonds Charges for transfers and exchanges Cancellation of surren- dered bonds Who to be deemed owners of coupon bonds -of coupons — of bonds without coupons shall execute, and the Trustee shall authenticate, and it or the Telephone Company shall deliver in exchange therefor a registered bond without coupons, or regis- tered bonds without coupons, of the same series, for the same aggregate principal amount. Each coupon bond, and each registered bond without coupons, shall contain such provisions and bear such legends relating to exchangeability as may be required to comply with the rules of the New York Stock Exchange or to conform to usage. For any exchange of bonds for bonds of another de- nomination; or of coupon bonds for registered bonds without coupons, or of registered bonds without coupons for coupon bonds, and for any transfer of registered bonds without coupons, the Telephone Company, at its option, may require the payment of a sum sufficient to reimburse it for any stamp tax or other governmental charge, and in addition thereto of a further sum of not exceeding two dollars for each new bond, if any, issued upon such transfer or exchange. In every case of such transfer or exchange the Trustee forthwith shall cancel the surrendered bond or bonds and coupons, and upon demand shall deliver the same to the Telephone Com- pany. Section 6. The Telephone Company and the Trustee may deem and treat the bearer of any coupon bond here- by secured which shall not at the time be registered as hereinbefore provided, and the bearer of any coupons for interest on any bond, whether or not such bond shall be registered, as the absolute owner of such bond or coupons, as the case may be, for the purpose of receiving payment thereof and for all other purposes, and neither the Telephone Company nor the Trustee shall be affected by any notice to the contrary. The Telephone Company and the Trustee shall deem and treat the person in whose name any registered bond 19 without coupons issued hereunder shall be registered as hereinbefore provided, as the absolute owner of such bond for the purpose of receiving payment of or on ac- count of the principal and interest on such bond and for all other purposes, and shall deem and treat the person in whose name any coupon bonds shall be so registered as the absolute owner thereof for the purpose of receiv- ing payment of or on account of the principal thereof, and for all other purposes except to receive payment of interest represented by outstanding coupons. Section 7. In case any bond issued under this inden- ture shall become mutilated or be destroyed or lost, the Telephone Company in its discretion may issue, and thereupon the Trustee shall authenticate and deliver, a new bond of like tenor, date and series bearing in the case of a coupon bond, the same serial number and the same coupons as the one mutilated, destroyed or lost, and in the case of a registered bond without coupons, having in- dorsed thereon the same serial number or numbers of coupon bonds as were indorsed upon the bond so mutil- ated, destroyed or lost. The applicant for such substi- tute bond shall furnish to the Telephone Company and to the Trustee evidence to their satisfaction, respective- ly, of the mutilation, destruction or loss of such bond, and said applicant also shall furnish such indemnity to both the Company and the Trustee, respectively, as in their discretion they may require. The Telephone Com- pany may require the payment of a sum not exceeding two dollars for each new bond issued under this Section. Section 8. Until definitive bonds shall be prepared the Telephone Company may execute and upon the re- quest of the Telephone Company the Trustee shall au- thenticate and deliver in lieu of such definitive bonds and subject to the same provisions, limitations and con- ditions, temporary printed bonds of any denomination substantially of the tenor of the bonds hereinbefore re- — of regis- tered coupon bonds Replacing bonds mutilated, destroyed or lost Charges for issuing substitute bonds Temporary bonds 20 Exchange of temporary bonds for definitive bonds Bonds may be authenti- cated before recording of mortgage cited, with or without coupons and with appropriate omissions, insertions and variations as may be required. Pending the preparation of the definitive bonds, such temporary bonds shall be exchangeable for other tempo- rary bonds of like aggregate principal amount, whether of the same or different denominations, in accordance with the provisions of this Article First. Upon surrender of such temporary bonds, or any of them in exchange for definitive bonds, the Telephone Company, at its own expense, shall prepare and execute and, upon cancellation of such surrendered bonds, the Trustee shall authenticate and deliver in exchange there- for, definitive bonds for the same aggregate principal amount as the temporary bonds surrendered, and other- wise in accordance with said temporary bonds. Until so exchanged, the temporary bonds in all respects shall be entitled to the same lien and security of this inden- ture as the definitive bonds issued and authenticated hereunder, and interest, when and as payable, shall be paid and such payment noted thereon, if such temporary bonds shall have been issued without coupons, or, if such temporary bonds shall have been issued with coupons, shall be paid on presentation and surrender of such cou- pons as they mature. On request of the Telephone Company bonds shall be authenticated and shall be delivered hereunder in ad- vance of the recording of this indenture, but the Tele- phone Company with all convenient speed shall cause this indenture to be recorded as a mortgage in every county of the Commonwealth of Pennsylvania. 21 ARTICLE SECOND. Issue of Bonds. Section 1. The Telephone Company may from time to time, subject only to the conditions prescribed in this Article Second, issue bonds secured by this indenture without limit as to principal amount; provided that no bonds shall be issued under this indenture which will make the total bonded debt of the Telephone Company then outstanding (including in the term “total bonded debt” bonds, if any, of The Central District Telephone Company and bonds created by others than the Telephone Company secured by lien upon the property of the Tele- phone Company, at the time outstanding, but excluding all bonds to be refunded, paid, redeemed, retired, pur- chased or otherwise acquired by the issue of bonds under this indenture,) exceed (a) the sum of the aggregate par value of the fully paid capital stock of the Telephone Company then outstanding, plus the amount of its sur- plus not specifically appropriated for any special purpose by vote of its Board of Directors or Executive Commit- tee, or (b) the authorized indebtedness of the Telephone Company at the time. Such power to issue bonds shall not be exhausted by any issue, but may be exercised from time to time whenever the amount of bonds outstanding hereunder does not exceed the limits prescribed in this Article Second; and this indenture shall be a continuing lien to secure the payment of the principal and interest of all bonds which may from time to time be outstanding hereunder. Whenever requesting the authentication of any bonds, except those of Series A, under this indenture, the Tele- phone Company shall furnish to the Trustee, in addition to other papers required by this Article Second, (a) an opinion of its counsel as to whether the consent or ap- proval of any public service or public utility commission or other public authority is required by law for the issue General power to is- sue bonds from time to time Immediate issue of Series A Issue of bonds to re- fund, etc., bonds of other series of such bonds, (b) a certified copy of the order or other writing evidencing each such consent or approval as may be shown by said opinion to be required by law, (c) a certificate signed by its President or a Vice President and its Treasurer or an Assistant Treasurer that by the issue of said bonds the limits prescribed by this Section 1 of Article Second will not be exceeded, and setting forth in reasonable detail the amount of such capital stock, surplus and total bonded indebtedness, and (d) as long as any bonds of Series A are outstanding, a certificate signed by its President or a Vice President and its Treasurer or chief accounting officer, that the net earnings of the Telephone Company have been suf- ficient to comply with the terms of paragraph (2) of Section 5 of this Article Second; provided that for the purpose of determining whether such net earnings have been so sufficient, interest payable upon any bonds to be refunded, paid, redeemed, retired, purchased or other- wise acquired shall be excluded. Section 2. The initial issue of bonds hereunder, des- ignated as “Twenty-Five Year First and Refunding Mortgage 7% Sinking Fund Cold Bonds Series A,” shall be limited to the aggregate principal amount of twenty- five million dollars ($25,000,000). The bonds of said Series A shall be forthwith executed by the Telephone Company and delivered to the Trustee, and the Trustee shall thereupon authenticate and deliver said bonds to, or upon the written order of, the Telephone Company, and said bonds, or their proceeds, may be used by the Telephone Company without restriction imposed by this indenture. Section 3. . Additional bonds secured by this indenture may from time to time be issued hereunder, to refund, or retire, or replace, either before, at or after maturity, any bonds of Series A or any other bonds issued here- 23 under, upon compliance with the conditions prescribed in either paragraph (1) or (2) of this Section 3 of Article Second. (1) Upon (a) delivery to the Trustee of any bonds issued hereunder, whether of the same or different series, cancelled or uncancelled, with all unmatured coupons, if any, thereto appertaining, either in bearer form or ac- companied by proper instruments of assignment and transfer, and/or (b) upon proof furnished to the Trustee, satisfactory to the Trustee, that any such bonds have been paid and satisfied in full, and/or (c) upon acquisi- tion by the Trustee of any such bonds as a part of the sinking fund established therefor, except ‘bonds of Series A or of any other series in respect of which the sinking fund provisions prohibit it, the Trustee shall, upon re- quest of the Telephone Company, at any time or times thereafter, authenticate and deliver to, or upon the writ- ten order of, the Telephone Company, bonds of such other series as may be requested by the Telephone Company, equal in principal amount to the principal amount of the bonds so delivered to the Trustee, and/or of the bonds so proved to have been paid and satisfied, and/or of the bonds so acquired for sinking fund purposes, as the case may be; provided that the Trustee shall have been fur- nished with a certified copy of a resolution of the Board of Directors of the Telephone Company, requesting the authentication and delivery of such bonds. (2) Upon delivery to the Trustee (a) of a certified copy of a resolution of the Board of Directors of the Telephone Company, requesting the Trustee to authenti- cate and deliver to, or upon the written order of, the Tele- phone Company, bonds of a particular series, secured by this indenture, for the purpose of refunding at maturity any bonds, whether of the same or different series, issued hereunder, and/or for the purpose of redeeming any such bonds that shall have been called for redemption accord- Conditions of issue without de- posit of cash Conditions of issue with deposit of cash 24 Cancellation and return of bonds and coupons Issue of bonds to re- tire under- lying bonds ing to their terms, and (b) in the case of bonds called for redemption, also a certified copy of the resolution author- izing such call, the Trustee shall authenticate and deliver to, or upon the written order, of, the Telephone Company, bonds of such other series as may he requested by it, equal in principal amount to the aggregate principal amount of the bonds to be refunded and/or redeemed; provided that cash equal to the principal amount of the bonds so authenticated and delivered shall simultane- ously he deposited with the Trustee in exchange therefor. On the written order of the Telephone Company, and upon delivery to the Trustee from time to time of bonds so matured or maturing or so called for redemption (other than bonds in exchange for which the Trustee shall have authenticated and delivered bonds under para- graph (1) of this Section 3 of Article Second), cancelled or uncancelled, with all unmatured coupons, if any, there- to appertaining, either in bearer form or accompanied by proper instruments of assignment and transfer, the Trus- tee, out of the cash so deposited with it, shall pay to the Telephone Company a sum equal to the principal amount of the bonds' so delivered to the Trustee. All bonds and coupons delivered to the Trustee under the provisions of this Section 3 of Article Second shall, if uncancelled, thereupon be cancelled, and shall be stamped by the Trustee with a notation that the same have been refunded under this indenture, and re- turned to the Telephone Company. No bonds shall be subsequently issued hereunder in place of bonds that shall have been so refunded, stamped and returned. Section 4. Additional bonds secured by this inden- ture may from time to time be issued hereunder either (a) to refund, pay, redeem, retire, purchase or otherwise acquire, before, at or after maturity, (1) any bonds of The Central District Telephone Company referred to in the granting clause of this indenture, and (2) any bonds or other obligations secured by mortgage or other lien 25 upon any property which may hereafter be acquired by the Telephone Company and become subject to the lien of this indenture and which mortgage or other lien is prior to the lieu of the bonds issued hereunder, or (b) to reimburse the Telephone Company for money expended for any of said purposes. All such bonds or other obli- gations are hereinafter referred to collectively as under- lying bonds. (1) Whenever, from time to time, the Telephone Com- pany shall deposit with the Trustee before, at or after maturity, any of said underlying bonds, cancelled or un- cancelled, with all unmatured coupons, if any, thereto appertaining, either in bearer form or accompanied by proper instruments of assignment and transfer, or shall furnish to the Trustee evidence satisfactory to the Trus- tee that any such bonds, including those acquired for sinking fund purposes, have been paid and satisfied in full, the Trustee, upon request of the Telephone Com- pany, evidenced by a certified copy of a resolution of its Board of Directors, shall authenticate and deliver to, or upon the written order of, the Telephone Company, bonds secured by this indenture of any series requested by it, of a principal amount equal to the principal amount of such bonds so delivered to the Trustee or/and of such bonds so proved to have been paid and satisfied. (2) From time to time, before, at or after, the ma- turity of any of said underlying bonds, the Telephone Company may sell or otherwise dispose of bonds of any series secured by this indenture, in order to provide, in whole or in part, the means to pay, redeem, purchase or otherwise acquire any part of such bonds then outstand- ing, and the Trustee shall thereupon authenticate and deliver to, or upon the written order of, the Telephone Company bonds of any series requested by it secured by this indenture of an aggregate principal amount equal to the aggregate principal amount of the bonds to be so paid, redeemed, purchased or otherwise acquired, pro- conditions of issue of bonds to re- tire under- lying bonds Issue of bonds against cash to retire underlying bonds Resolutions, etc., to be delivered to Trustee Disposition of underly- ing bonds upon retirement 26 vided that, in each case- an amount of money equal to the aggregate principal amount of the bonds so to be paid, redeemed, purchased or otherwise acquired shall simul- taneously with the delivery of said bonds secured hereby be deposited with the Trustee. Out of the money so de- posited with the Trustee, it shall, upon demand of the Telephone Company, and upon the delivery to the Trus- tee, in bearer form, or accompanied by proper instru- ments of assignment and transfer, of any one or more of the bonds so paid, redeemed, purchased or otherwise ac- quired by the Telephone Company, pay to it or upon its written order, a sum equal to the principal amount of the bonds so delivered to the Trustee. Whenever the Telephone Company shall request the authentication of bonds for any of such purposes, it shall deliver to the Trustee, in addition to said bonds or cash, a certified copy of a resolution of its Board of Direc- tors, requesting the Trustee to authenticate and deliver to, or upon the written order of, the Telephone Company, a stated amount of said bonds to be sold or otherwise dis- posed of, for or in respect of the payment, purchase, re- demption or acquisition of a stated number of underlying bonds, specifying such underlying bonds, and stating that said amount of bonds to be issued hereunder is required for such purpose. (3) Every underlying bond which shall be deposited with the Trustee under the provisions of this Section 4 of Article Second shall be stamped by the Trustee sub- stantially as follows: “Not negotiable. Held in trust for the purposes declared in the First and Refunding Mortgage of The Bell Telephone Company of Pennsyl- vania dated October 1, 1920,” and shall be held by the Trustee as purchaser, without merger or extinguishment or impairment of lien, and if not previously canceled, then in uncanceled form, as part of the security for the bonds issued and to be issued under this indenture, unless and until disposed of as hereinafter in this paragraph (3) authorized and directed. 27 Until default of the character described in Section 2 of Article Ninth hereof, and its continuance for the period therein specified, neither the principal nor the interest of any underlying bonds at any time held by the Trustee shall be collected or shall be required to be paid, and the coupons thereto appertaining, as they mature, shall be canceled by the Trustee and delivered to the Telephone Company, except that if default be made in the payment of the interest and principal of any of the underlying bonds not held by the Trustee hereunder, the coupons appertaining to any such bonds of the same issue, held subject to the lien of this indenture, shall not after such default be canceled, and the Trustee may demand and enforce any sums due, whether for interest or as prin- cipal, on any such bonds or uncanceled coupons, or may take such other action as shall, in its judgment, be desir- able or necessary, and in all respects such bonds so held by the Trustee shall be enforceable equally and ratably with all other like bonds not so held by the Trustee. The Trustee shall be reimbursed by the Telephone Company, or from the trust estate, for all expenses by it properly incurred by reason of any such action taken, with in- terest, and the amount of such expenses and interest shall, until repaid, constitute a lien upon the mortgaged property prior to the lien of tliis indenture. If at any time all of the underlying bonds of any issue shall be de- posited with the Trustee, or shall have been proved to the satisfaction of the Trustee to have been paid and satisfied in full, and there shall not be outstanding any mortgage or other lien, which is junior to the mortgage securing such deposited bonds and prior to the lien of this indenture, upon any part of the mortgaged prop- erty, then, the bonds of such issue then held by the Trustee shall be canceled by the Trustee and sur- rendered to the Telephone Company, and, in such case, the Telephone Company shall procure the satisfaction and discharge of the mortgage securing said canceled bonds. In case the Telephone Company shall fail or neg- Until de- fault no in- terest to be paid Upon pay- ment of all underlying bonds of any issue, mortgage securing the same shall be discharged 28 Future is- sues of bonds on account of additional property Issue of bonds upon deposit of cash lect to take such steps as may be necessary to procure the satisfaction and discharge of record of the mortgage se- curing said canceled bonds, the Trustee may take or cause to be taken, at the expense of the Telephone Company, such steps as in its opinion may be necessary to procure the satisfaction and discharge of record of the said mort- gage. Section 5. Additional bonds secured by this indenture may from time to time, within the limit prescribed by Section 1 of this Article Second, be issued hereunder, subject only to the following conditions: (1) The aggregate principal amount of bonds which the Telephone Company shall be entitled to have authen- ticated under the provisions of this Section 5 of Article Second may equal, but shall not exceed seventy-five per cent, of the actual cash cost to the Telephone Company of additions to, or extensions of, or betterments and im- provements of, the telephone plant and system hereby mortgaged made or acquired by the Telephone Company subsequent to the date of this indenture and subject to the lien hereof, plus seventy-five per cent, of the actual cash cost to it of stock, bonds and other securities acquired by the Telephone Company subsequent to the date of this indenture, which represent interests in telephone prop- erties and which shall be pledged with the Trustee subject to the lien of this indenture; provided that bonds shall not be authenticated under this Section 5 of Article Sec- ond on account of stock, bonds or other securities, if there- upon more than 10 per cent, of the reasonable value of the property subject to the lien of this indenture would consist of stock, bonds or other corporate obligations. Such bonds may also be authenticated and delivered in advance of the acquisition of such property or securities, or the doing of such work, if, simultaneously with the delivery of such bonds, the Telephone Company shall deposit with the Trustee the cash proceeds of the bonds so authenticated and delivered. The moneys so depos- 29 ited with the Trustee (hereinafter referred to as “de- posited moneys”) shall be held by the Trustee as a trust fund, subject to the lien of this indenture and as part of the trust estate, until they shall have been paid out from time to time as hereinafter provided in this Sec- tion 5 of Article Second. (2) Bonds shall not be authenticated under the provi- sions of this Section 5 of Article Second if the net earn- ings of the Telephone Company, after providing for the payment of taxes, available for interest purposes, dur- ing the period of twelve consecutive calendar months ending not more than sixty days prior to such request for authentication, shall have been less than one and three- quarters times the interest on the bonded indebtedness of the Telephone Company, including the interest on the outstanding bonds, if any, of The Central District Tele- phone Company and all other underlying bonds, and on the bonds proposed to be issued, but not including the in- terest payable by the Telephone Company on any bonds in any sinking fund. (3) Whenever requesting the authentication of any bonds under the provisions of this Section 5 of Article Second, the Telephone Company shall furnish to the Trustee (a) a certified copy of a resolution of the Board of Directors of the Telephone Company, setting forth (1) the aggregate amount of bonds issued hereunder at the time outstanding, (2) the purpose of the issue of the bonds of which authentication is requested, and (3) the amount, series and denominations of such bonds; and (b) a certificate showing that the net earnings of the Tele- phone Company have been sufficient to comply with the terms of paragraph 2 of this Section 5 of Article Second. (4) Whenever requesting the payment of deposited moneys, or the authentication of any bonds under the provisions of this Section 5 of Article Second (except in case the cash proceeds thereof are deposited with the Trustee as hereinbefore provided), the Telephone Corn- Net earnings in excess of interest require- ments Copies of resolutions to be furnished to Trustee Certificates to be furnished to Trustee 30 pany shall furnish to the Trustee a certificate or certifi- cates describing in reasonable detail the property or se- curities or work on account of which the authentication of bonds, or the payment of cash is requested, and stating (a) the actual cash cost thereof to the Telephone Com- pany and that such property or securities were acquired or the work done subsequent to the date of this indenture ; (b) that no part of the expenditures has been included in any certificate previously furnished to the Trustee under any of the provisions of this Article Second or has been made the basis of the withdrawal of any moneys or the re- lease of property or securities under any other provision of this indenture, or has been made or incurred for re- pairs, maintenance or renewals; (c) that the Telephone Company, to the knowledge of the officers making such cer- tificates, is not in default in the performance of the pro- visions of this indenture; (d) whether any property so acquired is subject to any lien or charge, which shall be particularly described, excepting undetermined liens and charges incident to construction and taxes for the cur- rent year, and setting forth the amount of every such lien or charge; and (e) such certificate may also state any other fact pertaining to the issue and authentication of bonds or the payment of deposited moneys under this Article Second. In case such certificate or certificates shall apply to any shares of stock, bonds or other obli- gations of other corporations, of the nature and charac- ter in this Section 5 of Article Second specified, such cer- tificate or certificates shall also state the amount of the capital stock of each such corporation outstanding, the amount thereof then owned or to be acquired by the Tele- phone Company, the reasonable value of the property then subject to the lien of this indenture, and the propor- tion of such reasonable value represented by stock, bonds or other corporate obligations, and such certificate or certificates shall be accompanied by an opinion of coun- sel satisfactory to the Trustee (who may be counsel for the Telephone Company), that such shares of stock, 31 bonds or other obligations have been legally issued, that the acquisition thereof by the Telephone Company is authorized by law, and that any shares of stock so ac- quired are fully paid and non-assessable. In every case, where additional real estate is acquired, there shall be furnished to the Trustee an opinion of coun- sel satisfactory to it (who may be counsel for the Tele- phone Company) to the effect that the Telephone Com- pany has good title thereto, together with all such deeds, conveyances or instruments of further assurance which may be necessary for the purpose of subjecting the same to the lien and operation of this indenture as a first lien thereon (except the liens, if any, specified in paragraph (d) of the certificate hereinbefore referred to), unless, in the opinion of such counsel, no such deeds, convey- ances or instruments of further assurance are necessary for such purpose; and all such additional real estate shall forthwith and ipso facto become subject to the lien of this indenture. Every certificate furnished under this Section 5 of Article Second shall be signed by the President or a Vice President, and also by the Treasurer or chief account- ing officer, or an Engineer of the Telephone Company. The same person need not certify to all the facts required to be certified, but different persons may certify to dif- ferent facts respectively. Upon receipt of such certificate or certificates, and a certified copy of such resolution or resolutions and other writings, the Trustee shall authenticate and deliver to, or upon the written order of, the Telephone Company, an amount of bonds secured hereby of the description called for in such resolution, of the aggregate principal amount requested by the Telephone Company but not exceeding seventy-five per cent, of the expenditures, as set forth in such certificate or certificates, or pay to the Telephone Company from the deposited moneys the cash proceeds of the sale of a face amount of bonds equal to seventy-five per cent, of such expenditures. Provided, Provisions as to real estate By whom certificates shall be signed Authentica- tion of bonds upon receipt of certifi- cates, etc. 32 No bonds authenti- cated if Telephone Company is in default Trustee (may rely on resolutions, certificates, etc. — -may make an inde- pendent in- vestigation However, that if it shall appear in the certificate to be fur- nished hereunder that any property, on account whereof request is made for the payment of deposited moneys or the authentication of any bonds, is subject to any lien or charge required to be stated in such certificate, the face amount of such lien or charge as so certified shall be added to the cost stated in said certificate, for the pur- pose of ascertaining the total cost of such property, and thereupon the Trustee shall reserve from the aggregate face amount of bonds which the Telephone Company would otherwise be entitled to have certified and deliv- ered a face amount equal to the amount of such lien and incumbrance and the balance remaining shall be the face amount of bonds which the Trustee shall certify and deliver or the proceeds of the sale of which the Trustee shall pay, in the first instance. Section 6. No bond shall be authenticated or deliv- ered by the Trustee in case the Telephone Company shall at the time be in default in the payment of interest or principal of any of the bonds secured hereby, or in de- fault in the observance of any of the covenants on its part to be performed under the provisions of this inden- ture and such default shall be known to the Trustee. Section 7. The resolutions, certificates and other in- struments provided for in this Article Second may be ac- cepted by the Trustee as satisfactory and conclusive evidence as to the statements therein contained and shall be full authority to the Trustee for the authenti- cation and delivery of bonds or for the payment of the proceeds thereof, but before authenticating and delivering any bonds under this Article Second or before making any payment of the proceeds thereof, the Trustee may, in its discretion, and shall, if requested in writing so to do by the holders of not less than 25% in amount of bonds then outstanding hereunder and furnished with indemnity satisfactory to it, cause to be made such 33 independent investigation as it may see fit, and in that event, may decline to authenticate and deliver such bonds or to make any payment of the proceeds thereof, unless and until satisfied by such investigation of the substantial accuracy of such resolutions, certificates and other instruments. The reasonable expense of any such investigation shall be paid by the Telephone Company, or, if paid by the Trustee, shall be repaid by the Tele- phone Company upon demand, and until repaid, shall be a first charge upon the trust estate. ARTICLE THIRD. Concerning Securities of other Corporations. Section 1. If the Telephone Company shall request the Trustee to certify any bonds under the provisions of Section 5 of Article Second hereof, on account of the acquisition by the Telephone Company of stock, bonds or other obligations of other corporations, the Telephone Company shall, simultaneously with the delivery to it of such bonds by the Trustee, deposit with the Trustee certificates for all such shares of stock and such bonds or other corporate obligations, which stock, bonds and other obligations shall thereupon become subject to the lien of this indenture. Such certificates of stock, and such bonds, if registered, shall be accompanied by irre- vocable powers of attorney sufficient to enable the Trus- tee to make such transfers thereof as it may be author- ized by this indenture to make. Until default, such shares of stock and registered bonds shall not be transferred into the name of the Trustee or any other person. The Trustee, at the request of the Telephone Com- pany, may do whatever may be necessary for the purpose of maintaining, preserving, renewing or extending the corporate existence of any company all or a part of whose capital stock shall be held by the Trustee here- under, and for such purpose, from time to time and when- — at the expense of the Tele- phone Company Securities subject to lien of in- denture to be deposited with Trustee Trustee may preserve existence of company whose stock is pledged 34 — may qualify directors Until default Telephone Company to receive dividends and interest Telephone Company not entitled to principal of pledged securities — nor to capital dis- tributions ever requested in writing by the Telephone Company, the Trustee shall sell; assign, transfer and deliver (for a nominal consideration if the Telephone Company shall so desire) a sufficient number of any shares of stock that then shall be held by the Trustee hereunder, to qualify persons to act as directors of, or in any official relation to the several companies which shall have issued such shares; and in every such case the Trustee may make such arrangements as it shall deem necessary for the protection of the trusts hereunder. Section 2. So long as there shall be no continuing default of the character hereinafter in Section 2 of Ar- ticle Ninth specified, the Telephone Company shall have the right to receive, hold and dispose of, free from all the trusts hereof, the dividends or other income which may be paid upon any stocks, bonds or other corporate obli- gations which may, at any time be owned by it and pledged with the Trustee, and the Trustee shall from time to time deliver to the Telephone Company all such suitable orders in the premises as are necessary and proper to enable the Telephone Company to collect and receive the same, and the Trustee at once shall pay over to the Telephone Com- pany any such dividend or income which may be collected or received by it. Provided, however, and hereby it is declared and agreed, except as in this indenture otherwise expressly provided, that (1) the Telephone Company shall not be entitled to receive and the Trustee shall not pay over to the Telephone Company the principal of any bond or other corporate obligation subject to the lien of this indenture; (2) the Telephone Company shall not be entitled to receive and the Trustee shall not pay over to the Telephone Company any interest on any such bond or corporate obligation which shall have been collected or paid out of the proceeds of any sale or condemnation of the property cov- ered by a mortgage securing such bonds or corporate obligations, or out of the proceeds of sale of any other 35 property of the company liable upon such bonds or ob- ligations in case of the dissolution or liquidation of such company, it being the intention that tile Telephone Com- pany shall be entitled to receive only payment made out of the rents, revenues, income or proceeds of operation of such properties; (3) the Telephone Company shall not collect any such coupons or interest by legal proceedings or by enforcement of any security therefor except with the assent of the Trustee nor in any manner which the Trustee shall deem prejudicial to the trusts hereunder; (4) the Telephone Company shall not be entitled to col- lect any stock dividends that may be declared on any shares of the capital stock of other corporations that shall be subject to the lien of this indenture, and in case any stock dividends are so declared the certificates therefor shall by the Telephone Company be indorsed and delivered to the Trustee; (5) the Telephone Company shall not be entitled to collect any cash dividends on any such shares that may become payable upon or in the course of the dissolution, liquidation or winding up of any such company or in any way shall be chargeable to or payable out of capital; and that (6) until actually paid, released or discharged, every coupon or right to interest or dividends and all such other claims and in- debtedness shall remain subject to this indenture. The Trustee shall be entitled to assume that any interest re- ceived by the Trustee on any bond or other obligation or any dividend received in money on any shares of stock is paid out of rents, revenues, income or proceeds of operation, until the Trustee shall be notified in writ- ing to the contrary; and, in the absence of such written notification, it shall be presumed, as between the Trustee and the bondholders, that the Trustee in making any payment thereof to the Telephone Company acted in good faith. If any such coupons or interest obligations delivered to the Telephone Company shall not forthwith be paid or canceled, the Telephone Company shall re- turn the same to the Trustee. — nor to stock divi- dends — nor to cash divi- dends on liquidation All coupons and indebt- edness to be subject to mortgage until paid 36 Any such moneys to be paid to Trustee Application of moneys paid to Trustee Until default Co. may vote pledged stock — trustee to give proxies — limitations on voting power In case (1) any sum shall be paid on account of the principal of any bonds or (except as herein otherwise expressly provided) of any obligation or indebtedness subject to the lien of this indenture, or in case (2) any sum on account of the interest on any such bonds or obligations shall be paid out of the proceeds of any sale or condemnation of property covered by mortgage or trust deed securing such bonds, obligations or in- debtedness, or in case (3) upon the dissolution or liquidation of any company any sum shall be paid upon any bonds or any shares of stock or any claims against or indebtedness of such company, subject to the lien of this indenture, then, in any such case, any such sum, unless received by a trustee under some indenture which is a prior lien thereon upon the trusts of such indenture, or unless applied on account of the purchase price of property purchased pursuant to Section 4 of this Article Third, shall be paid over to the Trustee and by it shall be held to be disposed of as provided in Section 3 of Article Eighth hereof. Section 3. While the Telephone Company shall not be in default as aforesaid it shall have the right to vote upon all shares of stock subject to the lien of this indenture, for all purposes not inconsistent with the provisions or purposes of this indenture, and from time to time upon demand of the Telephone Com- pany the Trustee forthwith will cause to be executed and delivered to the Telephone Company, or its nominee or nominees, suitable powers of attorney or proxies for such purpose; provided, however, that such voting power shall not at any time be exercised for the purpose of authorizing any increase in the stock, or, ex- cept as hereinafter expressly authorized, any lien, secur- ity or charge to be created or imposed upon the prop- erty or franchises of any corporation two-thirds or more of whose outstanding capital stock is pledged hereunder, unless effective provision be made by the pledge of ad- ditional stock so that the ratio of the stock of such cor- 37 poration pledged hereunder to its entire outstanding stock shall not he decreased, or unless the bonds or other obligations evidencing any such lien, security or charge, immediately upon their creation and issue shall be ac- quired by the Telephone Company and pledged subject to all the terms and conditions of this indenture, and for the purpose of such acquisition bonds secured here- by may be issued in accordance with the terms of Article Second hereof. Nothing in this Article Third contained shall require the assignment or pledge under this indenture, or pre- vent the creation, issue or disposition by any company, all or part of whose outstanding capital stock may at the time be pledged hereunder, free from the lien thereon of this indenture, of any of the following: (a) any promissory obligations or other evidences of indebtedness which may be issued in the current oper- ation of its property by such company ; or (b) a purchase money mortgage or purchase money lien upon any property which may hereafter be acquired by such company and which purchase money mortgage or lien shall apply to and be a charge upon only such property so acquired; or (c) the refunding, renewal or extension of bonds or other obligations (other than underlying bonds) of such a company at any time validly outstanding. So long as there shall be no continuing default of the character hereinafter in Section 2 of Article Ninth specified, the Telephone Company at any time and from time to time may consent to the refunding, renewal or ex- tension by any other company of any issue of its bonds or obligations (other than underlying bonds) the whole or part of which shall be subject to the lien of this indenture. Unless there shall be such continu- ing default and the Trustee shall have been notified thereof, the Trustee, if requested in writing by the Telephone Company, shall consent to any such refund- — exceptions — current obligations — purchase money mortgage Pledged bonds may be refunded 38 Refunding bonds to be pledged hereunder Trustee may purchase at sale property of corpora- tions whose securities are pledged ing, renewal or extension. In case such a default shall have occurred and shall be continuing, the Trustee may, in its discretion, consent to such refunding, renewal or ex- tension by any company of any issue of its bonds as above provided, without the consent or request of the Telephone Company. In case any bonds or obligations subject to the lien of this indenture shall be refunded, the refunding bonds or obligations acquired by the Telephone Company in lieu thereof shall forthwith be pledged subject to the lien of this indenture and shall be held in the same manner as those for which they are substituted. In case any bonds or obligations subject to the lien of this indenture shall be so renewed or extended such bonds or obligations as so renewed or extended shall continue to be secured as before, and shall remain subject to the lien of this inden- ture in the same manner as theretofore. Section 4. In case at any time all or any of the prop- erty of any corporation all or part of whose outstanding capital stock and/or bonds and/or other obligations are pledged hereunder shall be sold at any judicial or other involuntary sale, the Trustee in its discretion may, and if requested in writing by the Telephone Company or by the holders of a majority in amount of the bonds hereby secured and then outstanding, and if supplied with the amount of money necessary therefor, shall purchase or cause to be purchased such property and shall use such stocks, bonds and other obligations so far as may be to make payment for such property; and in case of such purchase the Trustee shall take such steps as it may deem proper to cause such prop- erty to be vested in the Telephone Company and become subject to the lien hereof or to be vested in some other corporation organized or to be or- ganized, with power to acquire and manage such prop- erty, provided that all the bonds and other indebtedness (except such, if any, as the property was acquired sub- 39 ject to) and all the outstanding capital stock thereof (ex- cepting the number of shares required to qualify direc- tors), shall be deposited with the Trustee, and shall be held for the benefit of the Telephone Company or its as- signs, subject to this indenture. Section 5. The Trustee at any time may and, if re- quested by the Telephone Company, shall take such steps as in its discretion it may deem advisable to pro- tect its interests and the interests of the bond- holders in respect of any stock, bonds, or other corporate obligations subject to the lien hereof, and for that purpose it may join in any plan of reorganization in respect of any such stock, bonds or other corporate obligations, subject to the lien hereof and may accept in lieu of any securities subject to the lien hereof, new securities issued in exchange therefor under such plan. Section 6. The Telephone Company covenants that on demand of the Trustee it forthwith will pay or will satisfactorily provide for all expenditures incurred by the Trustee under any of the provisions of Sections 4 and 5 of this Article, including all sums required to ob- tain and perfect the ownership and title to any property which the Trustee shall purchase or cause to be pur- chased pursuant to the provisions thereof, and in case the Telephone Company shall fail so to do, then without impairment of, or prejudice to, any of its rights here- under by reason of the default of the Telephone Com- pany, the Trustee in its discretion may advance all such expenses and other moneys required, or may procure such advances to be made by others, and for such ad- vances made by the Trustee or by others, at its request, with interest thereon, the Trustee shall have a lien prior to the lien hereof upon all the bonds or stock in respect of which such advances have been made and the pro- ceeds thereof and upon any property acquired by means thereof. Trustee may join in reor- ganization of corpora- tion whose securities are pledged Telephone Company will pay Trustee’s expenses under §§4 and 5 40 Sinking fund for Series A ARTICLE FOURTH. Sinking Fund. Section 1. The Telephone Company covenants that, as and for a sinking fund for the benefit, and security of the bonds of Series A issued hereunder, it will pay to the Trustee, on the first day of April, and on the first day of October in each year beginning with the year 1921, the sum of two hundred and five thousand dollars ($205,000). The moneys so paid to the Trustee shall be applied by it to the purchase of bonds of said Senes A at the lowest price at which they can be obtained readily, but not exceeding 10 7y 2 per cent, of the prin- cipal amount thereof and accrued interest. The Trustee may advertise publicly for proposals to sell such bonds to the sinking fund or may purchase the same either at public or private sale, as to it may seem most advisable. If and whenever bonds are not offered to the sinking- fund at a price not exceeding 107 y 2 per cent, of the prin- cipal amount thereof and accrued interest in amounts sufficient to exhaust such fund, the Trustee shall forth- with, and in any case on or before the interest payment date next succeeding the sinking fund payment, call such additional bonds as may be necessary to ex- haust such fund. Such additional bonds shall be so called by lot by the Trustee on any date at 107 y 2 per cent, of the principal amount thereof with accrued inter- est thereon, upon the notice and in the manner provided in Article Fifth hereof in respect of the redemption of bonds by the Telephone Company. Each and every holder of the bonds hereby agrees, upon any such call for acquisition of such bonds for the sinking fund, to accept payment thereof when called in accordance with the terms of this indenture, and interest on such bonds shall cease after the date of call except as hereinafter provided. Bonds acquired for the sinking fund as pro- 41 vided in this Article Fourth shall not be cancelled but shall be stamped by the Trustee “Held for sinking fund for Series A bonds under First and Refunding Mortgage of The Bell Telephone Company of Pennsylvania, dated October 1, 1920”; and the Trustee shall collect, and the Telephone Company covenants to pay to the Trustee, the interest from time to time maturing on the bonds held in the sinking fund. All such interest moneys shall be in- cluded in the sinking fund as additional payments thereto by the Telephone Company, to he applied as in this Article Fourth provided in respect of other sinking fund moneys for the acquisition of Series A bonds. Except for the purpose of such collection of interest by the Trustee, bonds held in the sinking fund shall not be deemed out- standing for any purpose of this indenture. Section 2. In the creation of any other series of bonds hereunder the Telephone Company may by vote of its Board of Directors establish a sinking fund and fix the amount and other terms thereof. Such terms shall be appropriately expressed in each of the bonds of such series. ARTICLE FIFTH. Redemption of Bonds. Section 1. The Telephone Company may, at its op- tion, on any interest-payment date, redeem all or any of the bonds of Series A then outstanding hereunder, at 107 per cent, of the face value thereof, with accrued interest thereon, upon sixty days’ notice as hereinafter provided, and each of the bonds of said Series shall contain a provision to that effect. In the creation of any other series of bonds here- under the Telephone Company may reserve the right to redeem, before maturity, all or any part of Sinking funds for other series Redemption of Series A Redemption provisions to be ex- pressed in bonds 42 Redemption dates Publication of notice — stating numbers of bonds to be redeemed Notice to be mailed to holders of registered bonds the bonds of sncli series at such time or times and on such terms as the Board of Directors of the Telephone Company may determine and as shall be appropriately expressed in each of the bonds of such series, the day of redemption being in every case an interest payment date. In case the Telephone Company shall desire to exer- cise such right to redeem and to pay off all, or, as the case may be, any part of the bonds of a particular series in accordance with the right reserved so to do, it will publish in two daily newspapers of general circulation published in the Borough of Manhattan, in the City of New York, the first sucli publication to be at least sixty and not more than eighty days prior to the date fixed for payment, and thereafter publication to be made at least once during each week until said redemption date, a no- tice to the effect that the Telephone Company has elected to redeem and pay off all the bonds of such seiies or a part thereof, as the case may be, on such date, specifying in case of partial redemption the serial numbers of the coupon bonds to be redeemed and the serial numbers of the coupon bonds indorsed on the registered bonds with- out coupons to be redeemed, and in every case stating that on said date there will become due and payable upon each of the bonds or, in case of partial redemption, upon each coupon bond and upon each registered bond with- out coupons or portion thereof, so to be redeemed, at the office or agency of the Telephone Company at which the principal of the bonds is payable, the principal thereof with such premium, if any, as is specified in such bonds, together with the accrued interest to such date, and that from and after said date interest thereon will cease to accrue. Similar notice shall be sent by the Telephone Company through the mails, postage prepaid, at least sixty and not more than eighty days prior to such re- demption date, to the holders of registered bonds with- out coupons and to the registered holders of coupon bonds so to be redeemed to the addresses that shall appear upon the transfer register.- In case the Tele- 43 phone Company shall have elected to redeem and pay off less than all the outstanding- bonds of any series it shall, in each such instance, at least ten days before the date upon which the first publication of the notice of redemption hereinbefore mentioned is required to be made, notify in writing the Trustee of its said elec- tion and of the aggregate principal amount of bonds of such series to be redeemed, and thereupon the Trus- tee shall draw by lot, in any manner by it deemed proper, from the serial numbers of coupon bonds of said series outstanding and the serial numbers of coupon bonds indorsed upon registered bonds without coupons of said series outstanding, the distinguishing numbers of an amount of bonds of such series equal to such aggregate principal amount, and shall within five days after receiving the notice aforesaid notify the Tele- phone Company in writing what bonds shall have been so drawn. If any numbers so drawn shall be the num- bers of coupon bonds indorsed on outstanding registered bonds without coupons, the notice of redemption herein- before mentioned shall specify the respective numbers of such registered bonds as well as the serial numbers of the coupon bonds so drawn, and in the case of any registered bonds without coupons which are to be redeemed in part only (by reason of the fact that the serial numbers of all of the coupon bonds indorsed on such registered bonds shall not have been drawn), said notice shall specify the respective portions of the principal amount thereof to be redeemed, and state that upon presentation of such registered bonds for redemption new bonds of the same series of an aggregate principal amount equal to the unredeemed portions of such registered bonds will be issued in lieu thereof. In case, there shall have been drawn for redemption as aforesaid one or more but less than all of the coupon bonds with serial numbers indorsed upon a registered bond without cou- pons, the Telephone Company shall execute and the Trustee shall authenticate and deliver to the registered Bonds drawn by lot if only part of a series redeemed Holder of bond without coupons to receive a 44 new bond for the amount unredeemed No interest to accrue after re- demption date Trust to terminate on deposit of cash necessary to redeem all bonds holder thereof or on his order and at the expense of the Telephone Company, a new bond or new bonds for the amount of the surrendered registered bond less the principal amount paid on surrender and partial pay- ment of the bond so partially redeemed. From and after the redemption date specified in the notice above provided for (unless the Telephone Com- pany shall fail to pay upon demand the bonds to be re- deemed as herein provided) no further interest shall accrue upon any of the bonds so to be redeemed (or, in the case of registered bonds, only a portion of the face amount of which is to be redeemed, on such portion thereof), and anything in said bonds or in such coupons or in this indenture to the contrary notwithstanding, any coupons for interest pertaining to any such bonds and maturing after said date shall become and be null and void. Section 2. On the deposit with the Trustee of the amount necessary so to redeem all the outstanding bonds secured by this indenture (if they shall be re- deemable and shall all have been duly called for re- demption) together with proof by affidavit that said no- tice or notices of redemption have been given as herein- before provided for, and on payment to the Trustee of all its costs, charges and expenses in relation thereto or otherwise under this indenture, the Trustee shall can- cel and satisfy this indenture and cause the same, at the expense of the Telephone Company, to be discharged of record, and shall assign or cause to be assigned and shall deliver to the Telephone Company or upon its order all securities and moneys then held by the Trustee under the provisions hereof other than the moneys deposited under this Section 2 of Article Fifth. The moneys so deposited with the Trustee shall be applied by it to the payment of the bonds issued under this indenture at the redemption rate or rates with accrued interest to the interest day or days designated for redemption. 45 Section 3. All bonds redeemed and paid under this Article Fifth shall be cancelled and, on demand, sur- rendered to the Telephone Company. ARTICLE SIXTH. Particular Covenants of the Telephone Company. The Telephone Company hereby covenants and agrees as hereinafter in this Article set forth : Section 1. That it will duly and punctually pay the principal and interest of every bond authenticated and delivered by the Trustee under this indenture, at the dates, place and in the manner mentioned in such bonds or any coupons thereto belonging, according to the true intent and meaning thereof. The interest on the coupon bonds until maturity shall be payable only upon the pre- sentation and surrender of the several coupons for such interest as they respectively mature, and when paid, such coupons shall forthwith be cancelled. The interest on the registered bonds without coupons shall be payable only to the registered holders thereof. That it will not directly or indirectly, extend, or as- sent to the extension of, the time for payment of any coupon or claim for interest on any bond secured here- by, and that it will not, directly or indirectly, be a party to any arrangement therefor by purchasing or funding- said coupons or claims for interest or in any other manner. Section 2. That at all times, until the payment of the bonds issued hereunder, it will cause an office or agency to be maintained by it in the Borough of Man- hattan, City of New York, where the bonds and coupons may be presented for payment, and notices and demands in respect of the bonds and coupons under this indenture may be served, and will, by written notice, designate Redeemed bonds to be cancelled Covenant, to pay principal and interest Covenant not to ex- tend or refund coupons Covenant to keep Manhattan office Covenant to give further assurances Covenant as to title such office or agency to the Trustee. In default of any such office or agency, presentation for payment may be made and notice and demand served at the principal office in said Borough of Manhattan of the Trustee or any suc- cessor to it in the trust. Section 3. The Telephone Company will, within thirty days after the execution of this indenture, execute and deliver to the Trustee an instrument or instruments sup- plemental hereto conveying to the Trustee upon the trusts and conditions hereby created all the real estate hereby mortgaged, or intended to be, by appropriate and detailed description. At any and all times it will do, execute, acknowledge and deliver, or will cause to be done, exe- cuted, acknowledged and delivered by any other corpora- tion or person obligated to the Telephone Company so to do, all and every such further acts, deeds, conveyances, mortgages and transfers and assurances as the Trustee shall reasonably require for the better assuring, convey- ing, mortgaging, assigning and confirming unto the Trus- tee all and singular the hereditaments, the premises, es- tates and property hereby conveyed or assigned, or in- tended so to be, or which the Telephone Company may hereafter become bound to convey, or assign to the Trustee. Section 4. That it has good title to and is possessed of the lands and other property described in the granting clauses hereof and thereby granted, and the Telephone Company will warrant and defend the title to said lands and other property as well as to any lands and other property hereafter made subject to the lien of this inden- ture, to the Trustee, its successors in the trust and its and their assigns for the benefit of the holders of bonds issued hereunder against claims and demands of all persons whomsoever; subject, however, in so far as affected thereby, to the lien described or referred to in the grant- ing clauses hereof and in the case of any such lands and other property hereafter subjected to the lien of this in- 47 denture to the liens and incumbrances thereon, if any, at the time they shall become subject to the lien of this in- denture. Section 5. That it will not voluntarily create, or suffer to be created, any debt, lien or charge having pri- ority to the lien of this indenture, upon the trust estate, but it shall not be required to pay any such debt, lien or charge so long as it shall, in good faith and by appropri- ate proceedings, contest the validity thereof, unless thereby, in the judgment of the Trustee, the security af- forded by this indenture will be materially endangered. That it will not increase the outstanding issue of bonds under any underlying mortgage, now or hereafter a lien upon the mortgaged premises or any part thereof. That it will not extend or consent to the extension of the time of payment of the principal of any bonds secured by any such underlying mortgage, and before or at the maturity thereof will pay or cause to be paid the principal of, or will acquire and pledge hereunder, all such bonds and, until paid or discharged at maturity, or otherwise, will, except as provided in paragraph (3) of Section 4 of Article Second hereof, pay the interest thereon or cause it to be paid at the times and at the place or places therein, or in the coupons attached thereto set forth. Section G. That it will from time to time pay or cause to be paid, in respect of the bonds of Series “A”, any and all taxes imposed by the Commonwealth of Penn- sylvania upon any such bond or upon the holder as a resident thereof, not in excess of four mills per annum on each dollar of the principal amount of such bonds, and also all taxes and assessments lawfully levied or assessed upon the property and franchises hereby mort- gaged or pledged or intended so to be or upon any part thereof, and upon all other property, income and profits of the Telephone Company, when the same shall become lawfully due and payable, and will not suffer any mechan- Covenant not to create prior liens — not to issue more underlying bonds — not to extend underlying bonds — to pay interest thereon when due Covenant to pay taxes, etc. 48 ics’, laborers’, statutory or other similar liens to remain outstanding- upon the mortgaged premises and pledged property, or any part thereof, the lien whereof might or could be held to be prior to the lien of this indenture ; and if any corporation at any time while two-thirds or more of its capital stock shall be subject to this indenture shall fail to pay all such taxes and assessments lawfully im- posed upon the property of such corporation or upon the income and profits thereof, then the Telephone Company itself will pay the same or make adequate provision for the satisfaction and discharge thereof ; provided how- ever, that the Telephone Company or any such corpora- tion shall have the right to contest by legal proceedings any taxes, assessments or liens not hereby created and pending such contest may delay or defer the payment thereof. Covenant not to per- mit lien hereof to be impaired — to keep mortgaged property in good order — to make renewals Section 7. That it will not, except as herein allowed, do or suffer to be done any act or thing whereby the lien hereof might or could be impaired and that it will at all times maintain, preserve and keep the mortgaged prem- ises and every part thereof, with the fixtures and appur- tenances thereof, in thorough repair, working order and condition ; and that it will from time to time make all needful and proper repairs, renewals, replacements, ad- ditions, betterments and improvements, so that the oper- ations and business thereof and every part thereof shall at all times be conducted with safety and expedition ; and whenever any portion of the mortgaged premises or said fixtures or appurtenances shall be worn out or destroyed or shall have become obsolete, inefficient or otherwise un- fit for use it will procure substitutes of at least equal value and capacity so that at all times the value and ca- pacity of said mortgaged premises and the fixtures and appurtenances thereof shall be fully kept up ; and at all times it will set apart, use and apply for that purpose so much of the revenue of the property mortgaged as may be required for such maintenance. 49 Section 8. That it will at all times keep such parts of the said mortgaged premises or property as are lia- ble to be destroyed or injured by fire insured against loss or damage to the extent that such property is usually insured, or in lieu of or supplementing such insurance, it will adopt such other plan or method of protection against loss or damage by fire, whether by the establish- ment of an insurance fund or otherwise, as may be de- termined by the Board of Directors of the Telephone Company. The proceeds of any such insurance, if ex- ceeding in any case of loss the amount of $25,000, shall, if not required to be deposited with the Trustee under any mortgage to which said property may be subject prior to the lien of this indenture, be paid to the Trustee which shall, at the request of the Telephone Company and under its direction, pay over the same to the Tele- phone Company from time to time for any of the pur- poses and in the manner in Section 3 of Article Eighth hereof set forth. Section 9. That it will keep full and complete rec- ords and accounts showing the sale of each series of bonds issued hereunder, and the price or prices received therefor, and the several purposes for which the pro- ceeds thereof were expended, and the amounts of such several expenditures. Such records and accounts shall be open at all times to the inspection of the Trustee. Section 10. That it will not issue, negotiate, sell or dispose of any bonds hereby secured in any manner other than in accordance with the provisions of this indenture and the agreements in that behalf herein contained, and in issuing, selling, negotiating or otherwise disposing of such bonds, from time to time, it will well and truly apply the same or the proceeds thereof, or will cause the same to be applied, to and for the purposes herein prescribed and to and for no other or different purposes. Covenant to insure prop- erty or adopt other method of protection — to pay proceeds to Trustee Covenant to keep records of sales, etc. of bonds Covenant not to issue bonds except in accordance with mortgage 50 Covenant to pay fees, etc. Consolida- tion etc. not prohibited — provided successor assumes payment of bonds Section 11. That it will pay any mortgage recording tax legally due upon the recording hereof and will fur- ther record every indenture supplemental hereto, which may be recorded as a mortgage of real or per- sonal property, and will comply with the requirements of any and every mortgage recording tax law or similar law affecting the due recording of this indenture or any in- denture supplemental hereto, and will do whatever else may be necessary in order to perfect and continue the lien of this indenture upon the mortgaged premises. ARTICLE SEVENTH. Consolidation, Merger and Purchase. Section 1. Nothing contained in this indenture shall prevent any consolidation or merger of the Telephone Company with or into any other corporation or corpora- tions, or any conveyance, or transfer, or lease, subject to the continuing lien of this indenture, of all, or any part, of the mortgaged property to any corporation lawfully entitled to acquire or lease and operate the same; provided, however, that such consolidation, mer- ger, conveyance, transfer or lease shall be upon such terms as fully to preserve and in no respect to impair the lien and security of this indenture, or any of the rights or powers of the Trustee or of the bondholders hereunder; and provided, further, that any such lease shall be made expressly subject to immediate termina- tion by the Telephone Company or by the Trustee at any time during the continuation of a default hereunder, and also by the purchaser of the property so leased at any sale thereof, whether such sale be made under the power of sale hereby conferred or under judicial proceedings ; and provided, further, that upon any such consolidation, merger, conveyance or transfer the due and punctual payment of the principal and interest of all of said bonds according to their tenor, and the due and punctual per- 51 formance and observance of all of the covenants and con- ditions of this indenture to be kept or performed by the Telephone Company, shall be expressly assumed by the corporation formed by any such consolidation or into which such merger shall have been made, or acquiring by conveyance or transfer all the property subject to this indenture. Section 2. In case the Telephone Company, pursu- ant to Section 1 of this Article, shall be consolidated with or merged into any other corporation, or shall convey or transfer, subject to the lien of this indenture, all the mortgaged property as an entirety, the successor cor- poration formed by such consolidation or into which the Telephone Company shall have been merged, or which shall have received a conveyance or transfer as afore- said, and any successor to such consolidated or merging corporation whether by successive consolidations, merg- ers or otherwise, upon executing and causing to be re- corded an indenture with the Trustee satisfactory to the Trustee, whereby said successor corporation shall assume and agree to pay, duly and punctually, the prin- cipal and interest of the bonds hereby secured in accord- ance with the provisions of said bonds and coupons and this indenture, and shall agree to perform and fulfill all the covenants and conditions of this indenture binding upon the Telephone Company, shall succeed to and be sub- stituted for the Telephone Company, with the same effect as if it had been named herein as the mortgagor com- pany; and such successor corporation thereupon may cause to be signed, issued and delivered in its own name any or all of such bonds which shall not theretofore have been signed by the Telephone Company and authenti- cated by the Trustee, and upon the order of such succes- sor corporation in lieu of the Telephone Company, and subject to all the terms, conditions and limitations in this indenture prescribed, the Trustee shall authenticate and deliver any of such bonds which shall have been previ- ously signed and delivered by the Telephone Company Successor, upon exe- cuting an indenture —may issue bonds here- under Appropriate changes in phraseology of bonds to be made Trustee inay rely on opinion of counsel Consolida- tion, etc., of company whose stock is pledged to the Trustee for authentication, and any of such bonds which such successor corporation shall thereafter, in ac- cordance with the provisions of this indenture, cause to be signed and delivered to the Trustee for such purpose. All the bonds so issued shall in all respects have the same legal right and security as the bonds theretofore or thereafter issued in accordance with the terms of this indenture as though all of said bonds had been issued at the date of the execution hereof. In case of such con- solidation or merger or conveyance and transfer such changes in phraseology and form (but not in substance) may be made in the bonds hereby secured, thereafter to be issued, as consequent upon such consolidation or merger, or conveyance and transfer, may be appropriate. The Trustee may receive the opinion of any counsel selected by it (who may be the counsel of the Telephone Company) as conclusive evidence that any such inden- ture complies with the foregoing conditions and provi- sions of this Section. Section 3. Any corporation, all or any part of whose outstanding capital stock is pledged hereunder, may be consolidated or merged with, or all or any part of the property of any such corporation may be sold or con- veyed to, the Telephone Company or any other corporation, provided, however, that in case of the consolidation or merger with or sale and conveyance to any other corporation than the Telephone Company, there shall continue to be or shall be made subject to the lien of this indenture, all stock issued in respect of the previously pledged stock; and provided further that, in case more than a majority of the outstanding capital stock of any such corporation is pledged under the lien of this indenture, upon any such merger, consolidation, sale or conveyance, a majority or more of the outstand- ing capital stock of such other corporation resulting from such merger or consolidation or to which such sale or conveyance shall be made, shall simultaneously be pledged under the lien of this indenture. In case of the consolidation of the Telephone Com- pany with or the merger into it of a corporation, any of the capital stock of which shall he pledged under this indenture, or in case of the conveyance and transfer to the Telephone Company of all of the property of such corporation, and by such merger, consolidation, convey- ance or transfer the property of such corporation is made subject to the lien of this indenture, the lien of this in- denture upon such stock shall terminate upon such con- solidation or merger, or conveyance or transfer becom- ing effective, and any such capital stock, if then in the possession of the Trustee, shall be surrendered by it to the Telephone Company or . to the successor corporation, upon the delivery to the Trustee of an opinion of coun- sel satisfactory to it (who may be counsel for the Tele- phone Company) that the property of such corporation acquired by the Telephone Company by such merger, consolidation, conveyance or transfer has become sub- ject to the lien of this indenture. In case of the consolidation of the Telephone Com- pany with or the merger into it of a corporation, any of the bonds or other evidences of indebtedness of which shall be pledged under this indenture, or in case of the conveyance and transfer to the Telephone Company of all of the property of such a corporation, the lien of this indenture thereon shall terminate upon such consolida- tion or merger or conveyance and transfer becoming ef- fective, and such bonds or other evidences of indebted- edness, if then in the possession of the Trustee, shall be surrendered by it to the Telephone Company or to the successor corporation; provided, however, that such lien shall not terminate, and such bonds or other evidences of indebtedness shall not be surrendered, unless or until the property of the corporation so consolidated with or merged into the Telephone Company or so conveyed and transferred to it shall have been subjected to the lien of this indenture, nor unless or until there are no outstand- ing bonds or other indebtedness secured by lien upon said property which lien is junior to the lien securing such — if with Telephone Company, stock to be surrendered by Trustee —also the bonds of such company 54 bonds or other evidences of indebtedness held by the Trustee, and prior to the lien of this indenture. Term “Telephone Company” includes any successor Section 4. For every purpose of this indenture, in- cluding- the execution, issue and use of any and all bonds hereby secured, the term “Telephone Company” in- cludes and means not only the party of the first part hereto but also any successor corporation. ARTICLE EIGHTH. Concerning the Property Mortgaged. Telephone Company to possess and operate mortgaged property until default Section 1. Until default shall be made by the Tele- phone Company in the payment of the principal of or the interest upon the bonds issued hereunder, or any of them or some part thereof, according to the tenor and effect thereof; or until default shall be made in respect of some other act or thing in said bonds or herein re- quired to be done, the Telephone Company shall be en- titled to possess, manage, operate, use and enjoy, and be suffered and permitted to remain in the actual and un- disturbed possession of all and singular the property hereby mortgaged (other than bonds, certificates of stock, cash and other indebtedness pledged or to be pledged hereunder with the Trustee), and to receive, take and use the rents, income and profits thereof as if this indenture had not been made, with power in the ordinary course of business to use and consume the supplies and deal with the contracts and choses in action, and to alter, repair, change and add to its buildings, structures and any or all of its plant and equipment, and the appliances appertaining to or used in connection with its telephone system, constructed or owned or hereafter constructed or acquired by the Telephone Company, and conveyed or intended to be conveyed hereby to the Trustee. Section 2. As long as the Telephone Company shall remain in possession of the mortgaged premises and there shall be no continuing default under this mortgage, it may alter, remove, sell, exchange or otherwise dispose of such materials, appliances, instruments and other movable property as may become worn out or no longer be necessary or profitable for the use of the Telephone Company; provided it shall immediately renew the same or substitute other property therefor which in its judg- ment may be of the same or greater utility or value, so that such alteration, removal or disposition will not im- pair the security of the bonds issued hereunder; and it may also alter or remove any improvements, buildings or other structures upon or under the surface of any lands, tenements or hereditaments constituting a part of the mortgaged premises, if such alteration or removal will, in its opinion, enable it to use its property to better advantage in the judicious and most profitable opera- tion and management of its business ; and the Telephone Company covenants that it will keep its system and prop- erty up to as high efficiency for practical and profitable operation in every respect as before such alteration or removal. As long as the Telephone Company shall remain in possession of the mortgaged premises and there shall be no continuing default under this mortgage, the Telephone Company may without any release by the Trustee sell, free from the lien of this indenture any physical real or personal property of any kind whatsoever, constituting a part of the mortgaged premises, which shall no longer be necessary or profitable for the use of the Telephone Company; provided that the total amount of the prop- erty which may be disposed of under the provisions of this paragraph during any calendar year shall not ex- ceed in value $200,000; and provided further that any money realized from the sale of any such property shall be forthwith reinvested in property such as will upon its acquisition become subject to the lien of this mortgage. Disposal, etc., of mortgaged property Releases of real estate 56 Section 3. As long as the Telephone Company shall remain in possession of the mortgaged premises and there shall be no continuing default under this mortgage, the Trustee shall, upon request of the Telephone Com- pany, evidenced by a certified copy of a resolution of its Board of Directors, convey by a release or otherwise to any person or corporation designated by the Telephone ( Company in such resolution, such lands, tenements and hereditaments as in the judgment of the Telephone Com- pany, as determined by said resolution, shall no longer be necessary, useful or profitable in the operation and maintenance of the telephone system and business of the Telephone Company; provided that in each such case other lands, tenements or hereditaments of equal or greater value, in the judgment of the Telephone Com- pany as determined by said resolution, be substituted for the property released and be subjected to the lien of this mortgage, so that such release will not injure the secur- ity provided by this mortgage. Nevertheless, instead of substituting other property for the property so released, the Telephone Company may sell the same for cash, or partly for cash and partly on time, the deferred pay- ments to be secured by a first lien on the property sold. But such proceeds of sale shall be paid and delivered to the Trustee and shall be held by it as a part of the se- curity provided by this mortgage. Such proceeds shall, upon request of the Telephone Company evidenced by a certified copy of a resolution of its Board of Directors, be paid out by the Trustee only for the actual cash cost of additions to, or extensions of, or betterments and im- provements of the telephone plant and system hereby mortgaged, upon a certificate or certificates to he fur- nished to the Trustee setting forth the facts referred to in clauses (a) to (e), both inclusive, of paragraph (4) of Section 5 of Article Second hereof, and where real estate is acquired, an opinion of counsel as required in connection with the acquisition of real estate as provided in said paragraph; provided that the basis for payment 57 shall be the full amount of such cost instead of only seventy-five per cent, thereof. If the Telephone Com- pany shall not within one year after the receipt of the cash proceeds of any such sale, request the Trus- tee to apply the same as above authorized, the Trus- tee may invest such cash proceeds, or any part thereof, in the purchase, on the best terms obtainable, but not ex- ceeding the redemption price, of outstanding bonds of any series hereby secured, and upon such purchase shall cancel such bonds and all coupons thereto attached and deliver them to the Telephone Company, or may so in- vest such cash proceeds, or any part thereof, in other first mortgage bonds approved by the Telephone Com- pany, and shall hold such bonds so purchased, subject to be sold with the consent of the Telephone Company from time to time and their proceeds reinvested as aforesaid. Any income collected on such bonds so purchased shall from time to time, as long as there shall be no default hereunder, be paid to the Telephone Company on de- mand by it. Section 4. As long as the Telephone Company shall Releases of remain in possession of the mortgaged premises and °*^ rty there shall be no continuing default under this mortgage, the Trustee shall release from the lien of this mortgage any telephone exchange or exchanges, or any telephone line or lines, or plant, or any bond or bonds, or any stock or other securities, or any other property of any kind not • coming under the provisions of Sections 2 and 3 of this Article Eighth, but constituting a part of the mortgaged premises, at any time upon the request of the Telephone Company evidenced by a certified copy of a resolution of its Board of Directors setting forth that the property, re- lease of which is asked, is in the judgment of the Tele- phone Company no longer requisite or necessary or profitable in the operation and maintenance of the tele- phone system and business of the Telephone Company, and that the Telephone Company has sold, assigned and 58 Prior mortgages conveyed the same for a fair and adequate consideration, which shall be named in the resolution. The proceeds of such sale shall be paid to the Trustee and held by it as a part of the security of this mortgage. In case the con- sideration of such sale shall be in whole or in part other property, such property shall become subject to the lien of this mortgage. There shall also be presented and filed with the Trustee an affidavit of the President or a Vice President and the Treasurer or an Assistant Treasurer of the Telephone Company, setting forth the amount of the purchase price or consideration and that in their judgment the same was fair and adequate, and also a sworn certificate of a competent engineer, to be selected by the Telephone Company and approved by the Trustee, setting forth that in the judgment of such engineer the consideration agreed upon and received was fair and adequate. The cash proceeds of any such sale shall be held and disposed of by the Trustee in the manner provided in Section 3 of this Article Eighth. Section 5. If under the provisions of any mortgage or deed of trust under which underlying bonds are issued, in case of a release of any portion of the mort- gaged premises, there is required to be made with the trustees under such mortgage or deed of trust, a de- posit of cash or pledge of securities received in payment for said property released, the Telephone Company shall not be required to deposit with the Trustee hereun- der such cash or securities to the extent that they may be required to be deposited with the trustees under said prior mortgages or deeds of trust; provided that any such deposits remaining with any of said trustees, upon the discharge and cancellation of said mortgages or deeds of trust, shall be redeposited with the Trustee hereunder and shall be held subject to the lien of this mortgage, or disposed of by the Trustee in the manner provided in Section 3 of this Article Eighth. 59 Section 6. As long as the Telephone Company shall remain in possession of the mortgaged premises and there shall be no continuing default under this mortgage, the Telephone Company may from time to time deliver to the Trustee shares of the capital stock and/or bonds and/or notes of other corporations which represent in- terests in telephone properties, in exchange for any of the stock, bonds and/or notes then pledged with the Trustee hereunder, provided the securities given and re- ceived shall be exchanged at the value thereof at the time of such exchange, which value shall be determined by two arbitrators, one selected by the President, or a Vice Pres- ident, or the Directors or Executive Committee of the Telephone Company, and one by the President, or a Vice President, or the Directors or Executive Committee of the Trustee, and in case such arbitrators disagree, such value shall be so determined by a member of the New York Stock Exchange selected by said two arbitrators. In ascertaining such value the average market value of such securities for the six months preceding such valua- tion may be regarded by said arbitrators as a controlling fact in all cases in which such securities are sold freely upon the market. Such arbitrators may be officers, direc- tors or stockholders of the Telephone Company or the Trustee, or persons having no connection therewith. Section 7. In no case shall the franchise of the Tele- phone Company to be a corporation be granted, sold, assigned or exchanged except as in this indenture pro- vided. No purchaser, grantee, assignee or vendee of any property under the provisions of this Article Eighth, and no one with whom any exchange as herein authorized shall be made, shall be or be held to be liable or responsi- ble for the proper investment, whether by the Telephone Company or by the Trustee, of the moneys or other pro- ceeds of any such grant, assignment, sale, exchange or other proceeding hereby authorized. Exchange of stock, bonds, etc. Transfer of franchise. Liabilities of purchasers. 60 Exercise of powers by receiver or Trustee Subordina- tion of lien of coupons or claims for interest funded or extended Events of default Section 8. In case the mortgaged premises or any part thereof shall be in the possession of a receiver law- fully appointed, the powers in and by Ibis Article Eighth conferred upon the Telephone Company may be exer- cised by such receiver with the approval of the Trustee in respect to the property in the possession of such re- ceiver, and if the Trustee shall be in possession of the mortgaged premises under any provisions of this inden- ture, then all the powers of this Article Eighth conferred upon the Telephone Company may be exercised by the Trustee in its discretion. ARTICLE NINTH. Remedies of the Trustee and Bondholders. Section 1. In case any coupon or claim for interest on any of the bonds hereby secured shall have been funded or extended by or with the consent of the Tele- phone Company, such coupon or claim for interest so funded or extended shall not be entitled, in case of de- fault hereunder, to the benefit or security of this inden- ture, except subject to the prior payment in full of the principal of all of said bonds that shall be outstanding and of all coupons and claims for interest thereon that shall not have been so funded or extended. If any cou- pons or claims for interest on any of said bonds at or after maturity shall be owned by the Telephone Com- pany, then such matured coupons or claims for interest shall not be entitled to the benefit or security of this in- denture; and the Telephone Company covenants that all such coupons and claims for interest so owned by it at or after their maturity shall promptly be cancelled. Section 2. If one or more of the following events herein called “events of default” shall happen, that is to say: (a) default shall be made in the payment of any installment of interest on any bond or bonds 61 issued hereunder when and as the same shall be- come payable as therein and herein expressed and such default shall continue for the period of ninety days ; or (b) default shall be made in the payment of the principal of any bond or bonds issued here- under when the same shall become due and pay- able either by the terms thereof or otherwise as herein provided; or (c) default shall be made in the observance or performance of any other of the covenants and conditions on the part of the Telephone Company in the bonds hereby secured or in this indenture contained and such default shall continue for the period of ninety days after written notice speci- fying such default shall have been given to the Telephone Company by the Trustee, which notice may be given by the Trustee in its discretion and shall be given on the written request of the holders of 25% in amount of the bonds hereby secured at the time outstanding; or (d) default shall be made in the payment of the interest on any bond or obligation outstand- ing and secured by any lien prior to that of this indenture on the trust estate or any part thereof and such default shall continue for the period of ninety days, or the Telephone Company shall fail at the maturity, whether by declaration or other- wise, of such bonds or obligations and on presen- tation thereof in accordance with the terms there- of, either to pay said bonds or obligations or to cause them to be taken up and delivered to the Trustee to be held under this indenture, or de- fault shall be made in the performance of any covenant contained in any mortgage or other in- strument of trust constituting a lien on any part of the trust estate in priority to this indenture, and by reason of such default any right of entry or right of action for the enforcement of the se- curity afforded thereby shall accrue; or (e) a decree by a court having jurisdiction of the premises shall have been entered adjudging the Telephone Company a bankrupt and such de- cree shall have continued undischarged and un- stayed for a period of ninety days; or an order of Upon default Trustee maj enter — and operate 62 a court having jurisdiction in the premises for the appointment of a receiver of the property of the Telephone Company, or for the winding up or liq- uidation of its business or affairs, shall have been entered and such order shall have remained in force undischarged and unstayed for a period of ninety days; or tile Telephone Company shall institute proceedings to be adjudicated a voluntary bank- rupt or shall make an assignment for the benefit of creditors; then and in each and every such case the Trustee per- sonally or by its agents or attorneys may enter into and upon all or any part of the trust estate, and may exclude the Telephone Company, its agents and servants wholly therefrom, and having and holding the same, may use, operate, manage and control the trust estate or any part thereof, and conduct the business thereof, either person- ally or by its superintendent, managers, receivers, agents and servants or attorneys, to the best advantage of the holders of the bonds hereby secured, and upon every such entry the Trustee, at the expense of the trust estate, from time to time may make all necessary or proper repairs, renewals, replacements and useful or required altera- tions, additions, betterments and improvements to and on the trust estate as to it may seem judicious, and may pay and satisfy all liens and charges thereon prior to the lien of this indenture, and may insure and keep insured any property subject to the lien of this indenture, and in such case the Trustee shall have the right to manage the trust estate and to carry on the business and exercise all rights and powers of the Telephone Company, either in the name of the Telephone Company, or otherwise, as the Trustee shall deem best; and it shall be entitled to collect and receive all earnings, income, rents, issues and profits of the same and every part thereof. After deducting the expenses of operating said trust estate and of conducting the business thereof, and of all repairs, maintenance, renewals, replacements, alterations, addi- tions, betterments, improvements and all payments G3 which it may be required or may elect to make for taxes, assessments, insurance or prior or other proper charges on said trust estate, or any part thereof, as well as just and reasonable compensation for its own services, and for all agents, clerks and other employees, and for all at- torneys and counsel by it properly engaged and em- ployed, it shall apply the moneys arising as aforesaid as follows: In case the principal of the bonds hereby se- cured shall not have become due and be unpaid, to the payment of the interest in default, in the order of the maturity of the installments of such inter- est, with interest thereon at the same rate as is borne by the bonds upon which such interest is due ; such payments to be made ratably to the per- sons entitled thereto without discrimination or preference. In case the principal of any of the bonds here- by secured shall have become due, by declaration or otherwise, and shall be unpaid, first to the pay- ment of the accrued interest (with the interest on the overdue installments thereon at the same rate as is borne by the bonds on which such interest is due), in the order of the maturity of the install- ments of such' interest, and then to the payment of the principal of all bonds hereby secured then due; in every instance such payments to be made ratably to the persons entitled to such payments without any discrimination or preference. These provisions are, however, subject to the provisions of Section 1 of this Article Ninth. Upon payment in full of whatever may be due for principal or interest, or both, as the case may be, and the expenses of the Trustee, and in case all other defaults have been made good and se- cured to the satisfaction of the Trustee, posses- sion of the mortgaged property shall be returned to the Telephone Company or to whosoever shall be entitled thereto. Application of income — if principal not due —if principal due Upon default Trustee may vote pledged stock and collect dividends and interest Upon default principal may be declared due G4 Section 3. In case one or more of the events of de- fault shall happen and be continuing or if a receiver or the Trustee shall have entered into possession of the trust estate, the Trustee shall be entitled to vote on all shares of stock then subject to the lien of this indenture, and, for the benefit of the holders of the bonds hereby secured, shall be entitled to collect and receive all divi- dends on all such shares of stock and all sums payable for principal, interest or otherwise upon any bonds or obligations that shall then be subject to this indenture and to apply, as hereinbefore in Section 2 of this Arti- cle Ninth provided, the net moneys received from in- come; and as holder of any such shares of stock and of any such bonds, to perform any and all acts or to make and execute any and all transfers, requests, requisitions or other instruments for the purpose of carrying out the provisions of this Section. In the event that a re- ceiver of the property hereby mortgaged or conveyed or pledged, or any part thereof, shall have been appointed and shall be in possession thereof, the Trustee from time to time in its discretion may turn over any part or all of the moneys so collected and remaining in the hands of the Trustee to sucli receiver and may co-operate with such receiver in managing and operating the mortgaged properties in such manner as the Trustee shall deem for the best interest of the holders of the bonds secured by this indenture. Section 4. In case one or more of the events of de- fault shall happen and shall be continuing, then during the continuance of such default, the Trustee may, and upon the written request of the holders of not less than 25% in amount of the bonds hereby secured then out- standing, the Trustee shall, by notice in writing delivered to the Telephone Company, declare the principal of all bonds hereby secured then outstanding to be due and payable immediately, anything in this indenture or in said bonds contained to the contrary notwithstanding. G5 This provision, however, is subject to the condition that if, at any time after the principal of said bonds shall have been so declared due and payable, all arrears of interest upon all such bonds with interest on overdue installments of interest at the same rate or rates as the bonds upon which such interest is in default bear, and the principal of any bonds which shall have become due by their terms, and the expenses of the Trustee, shall either be paid by the Telephone Company, or lie collected out of the trust estate before any sale of the trust estate shall have been made, and all other defaults made good or secured to the satisfaction of the Trustee, then and in every such case the holders of a majority in amount of the bonds hereby secured then outstanding, by written notice to the Tele- phone Company and to the Trustee, may waive such de- fault and its consequences ; but no such waiver shall ex- tend to or affect any subsequent default or impair any right consequent thereto. In case the Trustee shall have proceeded to enforce any right under this indenture by foreclosure, entry or otherwise and such proceedings shall have been discon- tinued or abandoned because of such waiver or for any other reason or shall have been determined adversely to the Trustee, then and in every such case the Telephone Company and the Trustee shall be restored to* their for- mer position and rights hereunder in respect of the trust estate, and all rights, remedies and powers of the Trus- tee shall continue as though no such proceedings had been taken. Section 5. If one or more of the events of default shall happen and shall be continuing, the Trustee may, and upon the written request of the holders of not less than 25% in amount of the bonds hereby secured, and upon being indemnified as hereinafter provided, shall, with or without entry, personally or by attorney, in its discretion, sell to the highest bidder all and singular the trust estate, property and premises, rights, franchises Bondholders maj waive default Restoration of parties to former position Upon default Trustee may sell mortgaged property GG — or may commence judicial proceedings and interest and appurtenances and either real and per- sonal property of every kind, and all right, title, interest, claim and demand therein, and right of redemption thereof, in one lot and as an entirety, unless a sale in par- cels shall have been requested by the holders of a major- ity in amount of the bonds hereby secured, then outstand- ing, in which case the sale shall be made in such parcels as shall be specified in such request, or unless such sale as an entirety is impracticable by reason of some statute or some other cause, which sale or sales shall be made at public auction, at such place in the City of New York in the- State of New York, or at such other place as may be required by law, at such time and upon such terms as the Trustee may fix and briefly specify in the notice of sale to be given as herein provided; or proceed to protect and enforce its rights and the rights of the holders of bonds secured by this indenture, by a suit or suits at law or in equity, whether for the specific performance of any covenant or agreement contained herein, or in aid of the execution of any power herein granted, or for the fore- closure of this indenture, or for the enforcement of any other proper legal or equitable remedy, as the Trustee, being advised by counsel learned in the law, shall deem most expedient in the interests of the holders of the bonds hereby secured. In case the Trustee shall proceed by suit or suits at law or in equity for the foreclosure of this indenture, as above provided, the said Trustee shall be entitled to have the mortgaged and pledged property, rights and franchises, of every description hereby mort- gaged and pledged or intended so to be, sold at judicial sale under the order of any court or courts of competent jurisdiction, for or toward the satisfaction of the prin- cipal or interest or both due and owing to the holders of the bonds and coupons then outstanding, issued under or entitled to the benefit of the security of this indenture, and for the enforcement of the rights, liens and securi- ties of the Trustee and the holders of such bonds and coupons, and shall be entitled, pending any such suit or 67 proceeding, to a receivership of all the property, rights and franchises subject to the lien hereof, and all the tolls, earnings, revenues, issues, profits and income thereof. Upon the happening of one or more of the events of default and the commencement thereafter of judicial pro- ceedings to enforce any legal or equitable remedy under this indenture, all moneys held by the Trustee hereunder shall be deemed to be held without distinction as between any of the amounts constituting such moneys, for the sole purpose of paying the principal of and interest upon the bonds secured by this indenture, and upon any sale, whether under the power of sale herein contained or pur- suant to judicial proceedings, shall be applied as pro- vided in Section 10 of this Article Ninth. Section 6. Notice of any such sale pursuant to any provisions of this indenture, shall state the time when, and the place where, the same is to be made, and shall contain a brief general description of the property to be sold, and shall be sufficiently given if published once in each week for four successive weeks prior to such sale, in a newspaper published in the Borough of Manhattan, City of New York, and in a newspaper published in the City of Philadelphia, Pennsylvania, and in such other manner as may be required by law. Section 7. From time to time the Trustee may ad- journ any sale to be made by it under the provisions of this indenture, by announcement at the time and place appointed for such sale, or for such adjourned sale or sales; and without further notice or publication, the Trustee may make such sale at the time and place to which the same shall be so adjourned. Section 8. Upon the completion of any sale or sales under this indenture, the Trustee shall execute and de- liver to the accepted purchaser or purchasers a good and sufficient deed or deeds of conveyance of the property and franchises sold; and the Trustee and its successors Notice of sale Adjourn- ment of sale Vesting title in purchaser 68 Sale to divest all interest of Telephone Company Purchaser’s acquittance on payment are hereby appointed the true and lawful attorney and attorneys, irrevocable, of the Telephone Company, in its name and stead, to make all necessary deeds and con- veyances of the property thus sold ; and for that purpose it and they may execute all necessary deeds and instru- ments of assignment and transfer, the Telephone Com- pany hereby ratifying and confirming all that its said attorney or attorneys shall lawfully do by virtue here- of. Nevertheless, the Telephone Company shall, if so requested by the Trustee, ratify such sale by executing and delivering to the Trustee or to such purchaser or purchasers as may be designated in such request, any such instruments as, in the judgment of the Trustee, may be advisable. Any such sale or sales made under or by virtue of this indenture, whether under the power of sale herein granted, or pursuant to judicial proceedings, shall oper- ate to divest all right, title, interest, claim and demand whatsoever, either at law or in equity, of the Telephone Company, in and to the premises and property so sold, and shall be a perpetual bar both at law and in equity against the Telephone Company, its successors and as- signs, and against any and all persons claiming or to claim the premises and property sold, or any part there- of, from, through or under the Telephone Company, its successors or assigns. The receipt of the Trustee or of the Court officer con- ducting any such sale shall be full and sufficient dis- charge to any purchaser of the property or any part thereof sold as aforesaid for the purchase money; and no such purchaser or his representatives, grantees or as- signs, after paying such purchase money and receiving such receipt, shall be bound to see to the application of such purchase money upon or for any trust or purpose of this indenture, or in any manner whatsoever be an- swerable for any loss, mis-application or non-application of any such purchase money or any part thereof, or be bound to inquire as to the authorization, necessity, ex- pediency or regularity of any such sale. 69 Section 9. In case of any such sale, whether made under the power of sale hereby granted or pursuant to judicial proceedings, the whole of the principal sums of the bonds hereby secured, if not previously due, shall at once become due and payable, anything in said bonds or in this indenture to the contrary notwithstanding. Section 10. The purchase money, proceeds and avails of any such sale, whether made under the power of sale hereby granted or pursuant to judicial proceed- ings, together with any other sums which then may be held by the Trustee as part of the trust estate, shall be applied as follows : First, to the payment of the costs and expenses of such sale, including a reasonable compensation to the Trustee, its agents, attorneys and counsel, and of all expenses, liabilities and advances made or incurred by the Trustee in managing and maintaining the property hereby conveyed, and to the payment of all taxes, assess- ments or liens prior to the lien of this indenture, except any taxes, assessments or other superior liens to which said sale shall have been made subject. Second, to the payment of the whole amount then owing or unpaid upon the bonds and coupons hereby se- cured for principal and interest, with interest on the principal and the overdue installments of interest at the same rate or rates respectively as were borne by the respective bonds ; and in case such proceeds shall be in- sufficient to pay in full the whole amount so due and un- paid upon the said bonds, then to the payment of such principal and interest, without preference or priority of principal over interest, or of interest over principal, or of any installment of interest over any other installment of interest, ratably to the aggregate of such principal and the accrued and unpaid interest, subject, however, to the provisions of Section 1 of this Article Ninth. Such pay- ments shall be made on the date fixed therefor by the Trustee, upon presentation of the several bonds and cou- Principal due on sale Application of proceeds of sale — to pay- ment of costs, ex- penses, etc. — to payment of principal and interest — surplus to Telephone Company Purchaser may apply bonds and matured coupons on purchase price Waiver of stay or extension laws pons and stamping thereon the amount paid, if such bonds and coupons be only partly paid, and upon surrender thereof if fully paid. Third, the payment over of the surplus, if any, to the Telephone Company, its successors or assigns, or to who- soever may be lawfully entitled to receive the same. Section 11. Upon any sale as aforesaid, any pur- chaser, for the purpose of making settlement or payment for the property purchased, shall be entitled to use and apply any bonds issued hereunder and then outstanding, and any matured and unpaid interest obligations thereon, by presenting the same so that there may be credited, as paid thereon, the sums payable out of the net proceeds of such sale to the holders of such bonds and such inter- est obligations, as his ratable share of such net proceeds, after allowing for the proportion of the total purchase price required to pay the costs and expenses of the sale, compensations and other charges; and thereupon such purchaser shall be credited on account of such purchase price payable by him, with the portion of such net pro- ceeds that, shall be applicable to the payment of, and that shall have been credited upon, the bonds and coupons so turned in, and at any such sale the Trustee or any bond- holders may bid for and purchase such property, may make payment on account thereof as aforesaid, and upon compliance with the terms of sale, may hold, retain and dispose of such property without further accountability therefor. Section 12. The Telephone Company will not at any time insist upon or plead, or in any manner whatever claim or take the benefit or advantage of, any stay or extension law now or at any time hereafter in force; nor will it claim, take or insist on any benefit or advantage from any law now or hereafter in force providing for the valuation or appraisement of the property hereby mort- gaged or conveyed or pledged, or any part thereof, prior to any sale or sales thereof to be made pursuant to any 71 provision herein contained or to the decree of any court of competent jurisdiction ; nor after any such sale or sales will it claim or exercise any right conferred by any stat- ute to redeem the property so sold, or any part thereof, nor will it after such sale, if at the time of such sale it shall be in possession of the property so sold, claim or exercise any right under any law whatever to retain pos- session thereof, or to collect, receive or have the benefit of any rent, issues or profits thereof, for or during any subsequent period of redemption provided for by any law; and it hereby expressly waives all benefit and advan- tage of such law or laws and covenants that it will not hinder, delay or impede the execution of any power herein granted and delegated to the Trustee, but that it will suffer and permit the execution of every such power as though no such law or laws had been made or enacted. Section 13. The Telephone Company covenants that (1) in case default shall be made in the payment of any interest on any bond or bonds at any time outstanding and secured by this indenture, and such default shall have continued for the period of ninety days, or (2) in case default shall be made in the payment of the principal of any such bond or bonds when the same shall become pay- able, whether upon the maturity of said bonds, or upon declaration or otherwise, then, upon demand of the Trus- tee, the Telephone Company will pay to the Trustee, for the benefit of the holders of the bonds and coupons hereby secured, then outstanding, the whole amount that then shall have become due and payable on all such bonds and coupons then outstanding, for interest or principal, or both, as the case may be, with interest upon the overdue principal and installments of interest at the same rates respectively as were borne by the respective bonds where- of the principal or installments of interest shall be over- due; and in case the Telephone Company shall fail to pay the same forthwith upon such demand, the Trustee, in its own name and as the trustee of an express trust, shall Covenant to pay principal and interest on default 72 Upon failure to pay, Trustee entitled to judgment Application of moneys collected by Trustee be entitled to recover judgment against the Telephone Company for the whole amount so due and unpaid. The Trustee shall be entitled to recover judgment as aforesaid, either before or after or during the pendency of any proceedings for the enforcement of the lien of this indenture, and the right of the Trustee to recover such judgment shall not be affected by any entry or sale here- under, or by the exercise of any other right, power or remedy for the enforcement of the provisions of this in- denture or the foreclosure of the lien hereof ; and in case of a sale of the mortgaged or pledged property or any part thereof, the Trustee, in its own name and as trustee of an express trust, shall be entitled to enforce payment of, and to receive, all amounts then remaining due and unpaid upon any and all of the bonds and coupons then outstanding hereunder for the benefit of the holders (hereof, and shall be entitled to sue for and recover judg- ment for any portion of the said debt remaining unpaid, with interest. No recovery of any such judgment by the Trustee, and no levy of any execution upon property sub- ject to the lien of this indenture, or upon any other prop- erty, shall in any manner, or to any extent, affect the lien of this indenture upon the property, or any part thereof, subject to this indenture, or any lien, rights, powers or remedies of the Trustee hereunder, or any lien, rights, powers or remedies of the holders of the bonds, but such lien, rights, powers and remedies shall continue unim- paired as before. Any moneys thus collected by the Trustee under this Section shall be applied by the Trustee, first, to the pay- ment of the expenses, disbursements and compensation of the Trustee, its agents and attorneys, and, second, toward the payment of the amounts then due and unpaid upon such bonds and coupons, in respect of or for the benefit of which such moneys shall have been collected ratably, and without any preference or priority of any kind, except as provided in Section 1 of this Article Ninth, according to the amounts due and payable upon such bonds and coupons, respectively, at the date fixed bv the 73 Trustee for the distribution of such moneys, upon pre- sentation of the several bonds and coupons and stamping thereon such payment, if only partially paid, and upon surrender thereof, if fully paid. Section 14. Upon filing a bill in equity or upon other commencement of judicial proceedings by the Trustee to enforce any right under this indenture, the Trustee shall be entitled to exercise the right of entry, and also any and all rights and powers herein conferred and pro- vided to be exercised by the Trustee upon the occurrence and continuance of any default as hereinbefore in Section 2 of this Article Ninth provided; and as a matter of right, the Trustee shall be entitled to the appointment of a receiver of the premises hereby mortgaged, and of the earnings, revenue, rents, issues, profits and other income thereof and therefrom, with all such powers as the court or courts making such appointment shall confer; but not- withstanding the appointment of any receiver the Trus- tee shall be entitled, as pledgee, to continue to retain possession and control of any stocks, bonds, cash and indebtedness pledged or deposited or provided to be pledged or deposited with the Trustee hereunder. Section 15. No holder of any bond or coupon issued hereunder shall have any right to institute any suit, action or proceeding in equity or at law for the fore- closure of this indenture, or for the appointment of a re- ceiver, or for the execution of any trust hereunder, or for any other remedy hereunder, unless the holders of not less than 25% in amount of t lie bonds hereby secured and then outstanding shall have requested the Trustee in writ- ing to take action in respect of the matter complained of, and shall have afforded to it a reasonable opportunity to exercise the powers hereinbefore granted, or to institute such action, suit or proceeding in its own name; nor un- less also they shall have offered to the Trustee security and indemnity satisfactory to it against the costs, ex- penses and liabilities to be incurred therein or thereby; Upon institution of judicial proceedings Trustee may enter — -and may have receiver appointed Bond- holders not to sue until application made to Trustee — nor until Trustee is indemnified 74 Trustee to act for equal benefit of all bond- holders Remedies are cumula- tive No rights impaired by Trustee’s delay nor unless the Trustee shall have refused or neglected to act on such notice, request and indemnity, and such notification, request and offer of indemnity are hereby declared, in every such case at the option of the Trus- tee, to be conditions precedent to the execution of the powers and trusts of this indenture and to any action or causes of action for foreclosure or for the appointment of a receiver, or for any other remedy hereunder; it be- ing understood and intended that no one or more holders of bonds and coupons shall have any right, in any man- ner whatever, by his or their action, to affect, disturb or prejudice the lien of this indenture, or to enforce any right hereunder except in the manner herein provided; and that all proceedings at law or in equity shall be in- stituted, had and maintained in the manner herein pro- vided, and for the equal benefit of all holders of such outstanding bonds and coupons. Any rights of action under this indenture may be en- forced by the Trustee without the possession of any of the bonds or coupons hereby secured or the production thereof on the trial or other proceedings relative there- to, and any such suit or proceedings instituted by the Trustee shall be brought in its own name, and any re- covery of judgment shall be for the ratable benefit of the holders of said bonds and coupons. Section 1G. Except as herein expressly provided to the contrary, no remedy herein conferred upon or re- served to the Trustee or to the holders of bonds issued hereunder is intended to be exclusive of any other rem- edy, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder, or now or hereafter existing at law or in equity or by statute. Section 17. No delay or omission of the Trustee, or of any holder of bonds issued hereunder, to exercise any right or power accruing upon any default continu- ing as aforesaid, shall impair any such right or power, 75 or shall be construed to be a waiver of any such default or an acquiescence therein, and every power and rem- edy given by this Article Ninth to the Trustee or to the bondholders, subject to the provisions of Section 15 of this Article Ninth, may be exercised from time to time and as often as may be deemed expedient by the Trustee or by the bondholders. Section 18. The Trustee shall have power to insti- tute and to maintain such suits and proceedings as it may be advised shall be necessary or expedient to pre- vent any impairment of the security hereunder by any acts of the Telephone Company, or of others, in viola- tion of this indenture, or unlawful or as the Trustee may be advised shall be necessary or expedient to preserve and to protect its interests and the interests of the bond- holders in respect of the property subject to this inden- ture, and in respect of the income, earnings, issues and profits arising therefrom; including power to institute and to maintain suits or proceedings to restrain the en- forcement of, or compliance with, or the observance of, any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise in- valid, if the enforcement of, compliance with or observ- ance of such enactment, rule or order would impair the security hereunder or be prejudicial to the interests of the bondholders or of the Trustee. Section 19. Anything in this indenture to the con- trary notwithstanding, in case several series of bonds be outstanding under this indenture and an event of de- fault shall have happened because of any default in the payment of the principal or interest or any sinking fund installment in respect of the bonds of any one. or more of such series and not in respect of the bonds of one or more others, then whatever action in this Article Ninth of this indenture it is provided may or shall be taken upon such default (continuing as in this indenture provided) Trustee may institute suits to prevent im- pairment of lien Majority of any series may take action on default 76 l>y or upon the request of the holders of a specified per- centage of bonds outstanding, may be or shall be taken, in respect of the bonds of the series in respect of which such default shall have been made, by or upon the request of the holders of a majority in amount of the outstanding bonds of such scries upon which such default shall have occurred. No liability of stock- holders, etc. Obligations of Telephone Company only Section 20. No recourse under or upon any obliga- tion, covenant or agreement contained in this indenture or under or upon any indebtedness hereby secured or because of the creation thereof, shall be had against any incorporator, stockholder, officer or director of the Tele- phone Company or of any successor corporation, directly or through the Telephone Company or through a receiver or a trustee in bankruptcy, by the enforcement of any assessment or penalty, or by any legal or equitable pro- ceedings, by virtue of any constitution, rule of law or otherwise; it being expressly agreed and understood that this indenture and all the bonds and obligations hereby secured are solely corporate obligations, and that no personal liability whatever does, or shall attach to or be incurred by the incorporators, stockholders, officers or directors of the Telephone Company or of any succes- sor corporation or any of them, because of the incur- ring of the indebtedness hereby authorized, or under or by reason of any of the obligations, covenants or agreements contained in this indenture or in any of the bonds or coupons hereby secured or implied therefrom; and any and all personal liability of every name and na- ture, either at common law or in equity, or created by statute or constitution, of every such incorporator, stock- holder, officer or director on this indenture and on such bonds and coupons, is hereby expressly released and waived, as a condition of, and as part of the considera- tion for, the execution of this indenture and the issue of the bonds and coupons hereby secured. 77 ARTICLE TENTH. Evidence of Rights of Bondholders. Section 1. Any request or other instrument required by this indenture to be signed and executed by bond- holders, may be in any number of concurrent instruments of similar tenor and may be signed or executed by such bondholders in person or by agent appointed in writing. Proof of execution of any such request or other instru- ment, or of a writing appointing any such agent, and of the holding by any person of coupon bonds transferable by delivery, shall be sufficient for any purpose of this indenture, and may be received by the Trustee as con- clusive if made in the manner provided in this Article Tenth. Section 2. The fact and date of the execution by any person of such request, instrument or other writing may be proved by the certificate of any notary public, or other officer of any jurisdiction authorized by the laws there- of to take acknowledgments of deeds to be recorded in any state within the United States, certifying that the person signing such request or other instrument ac- knowledged to him the execution thereof, or by the affi- davit of a witness to such execution. Section 3. The aggregate amount of coupon bonds transferable by delivery held by any person executing any such request or other instrument as a bondholder, and the distinctive numbers of such bonds and the date of his holding the same, may be proved 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 had on deposit with such depository, or exhibited to it, the bonds therein described, or such facts may be proved by 9 Instruments may be executed in concurrent writings Proof of execution Proof of ownership of unregis- tered bonds 78 — of regis- tered bonds Trustee accents trusts on conditions — not required to record mortgage — entitled to compensa- tion and prior lien therefor the certificate or affidavit of the person executing such request or other instrument as a bondholder, if any such certificate or instrument shall he deemed by the Trus- tee to be satisfactory. The fact and date of execution of any request or other instrument, and the amount and numbers of coupon bonds held by the person so execut- ing such request or other instrument, may also be proved in any other manner which the Trustee may deem suffi- cient. The ownership of registered coupon bonds or of reg- istered bonds without coupons shall be proved by the registers of such bonds. ARTICLE ELEVENTH. Concerning the Trustee. Section 1. The Trustee, for itself and its successors, accepts the trusts of this indenture and agrees to execute them, but only upon the following additional terms and conditions, to which the Telephone Company and the holders of the bonds hereby secured agree, to wit: (a) The Trustee shall be under no obligation to see to the recording, registry or filing of this indenture, but the Telephone Company covenants that it will with all convenient speed cause this indenture to be duly recorded as a mortgage and will do all other things requisite to preserve, protect and continue the lien hereof ; and the Trustee may authenticate and deliver bonds before any such recording, registry or filing. (b) The Trustee shall be entitled to reasonable com- pensation (which shall not be limited to the compensa- tion of trustees of any express trust as provided by law) for all services rendered by it in the case of the trusts hereby created, and shall have a lien upon the trust es- tate under this indenture, prior to the rights of the hold- 79 ers of the bonds secured hereby, for such compensation and for its reasonable expenses and counsel fees. The Telephone Company agrees to pay such compensation, as well as all expenses necessarily incurred or disbursed by the Trustee hereunder, from time to time on request of the Trustee, and to indemnify the Trustee against any liability or damages incurred or sustained by it un- der this indenture; and the Trustee shall have a lien upon the trust estate under this indenture prior to the rights and claims of the holders of the bonds secured hereby, for any such liability or damage and the reim- bursement thereof. (c) The Trustee shall be protected in acting upon any notice, request, consent, certificate, bond or other paper or document believed by it to be genuine and to have been signed by the proper party or parties, and any action taken by the Trustee pursuant to this indenture upon any notice, request, authority or consent of any person who, at the time of making such request or giving such authority or consent is the owner of any bonds secured hereby, shall be conclusive and binding upon all future owners of the same bond and all bonds issued in exchange therefor or in place thereof. (d) The Trustee shall not be answerable for the de- fault or misconduct of any agent or attorney appointed by it in pursuance hereof, if such agent or attorney shall have been selected with reasonable care; nor for the ex- ercise of any discretion or power hereunder, nor for any- thing whatever in connection with this trust, except wil- ful misconduct or gross negligence; nor shall the Trus- tee be accountable for the use of any bonds authenticated or delivered by the Trustee hereunder or any of the pro- ceeds of such bonds. The Trustee shall not be under any obligation to take any action towards the execution or enforcement of the trusts hereby created, which, in its opinion, shall be likely to involve it in expense or lia- bility unless one or more of the holders of the bonds here- — protected in acting upon instrument believed genuine — not answerable for acts of agents 80 — not re- quired to act on default until noti- fied and in- demnified — may require submission of bonds — may take opinion of counsel — may employ agents, at- torneys, etc. by secured shall, as often as required by the Trustee, furnish it indemnity satisfactory to it against such ex- pense or liability. The Trustee shall not be required to take notice of any default under this indenture and for all purposes it conclusively may assume that there has been no default under this indenture, unless and until notified in writing of such default by the holders of at least 25% in amount of the bonds hereby secured then outstanding, nor shall the Trustee be required to take any action in respect of any default unless requested to take such action in respect thereof by a writing signed by the holders of not less than 25% in amount of the bonds hereby secured then outstanding, and tendered in- demnity satisfactory to it as aforesaid; but the foregoing- provisions are intended only for the protection of the Trustee, and shall not affect any discretion or power by any provision of this indenture given to the Trustee to take action in respect of any default, without such notice or request from the bondholders. Except as herein ex- pressly otherwise provided, the Trustee shall not be bound to recognize any person as a bondholder unless or until his bonds are submitted to the Trustee for inspec- tion, if required, and his title, if disputed, established to the satisfaction of the Trustee. (e) The Trustee may, at the expense of the Telephone Company, advise with counsel, and any action under this indenture taken or suffered in good faith by it in accord- ance with the opinion of such counsel shall constitute full protection to the Trustee. (f) The Trustee may perform its powers and duties by or through, and may select and employ in and about the execution of this trust, attorneys, agents and servants whose reasonable compensation shall be paid by the Tele- phone Company, and in default of such payment shall be a charge upon the trust estate and the proceeds thereof, paramount to the rights and claims of the holders of the bonds hereby secured. 81 (g) It shall bo no part of the duty of the Trustee to see to the insurance of any property hereby conveyed or assigned, or to effect such an insurance, or to see to the payment of any tax, assessment or other govern- mental charge which may he levied upon or imposed against it or against the Telephone Company, or against the property hereby mortgaged, or against the owners of the said bonds, or, except as in this indenture provided, to see to the performance or observance of any of the cove- nants or agreements hereof on the part of the Telephone Company. (h) On any moneys held by the Trustee under any provision of this indenture, including any moneys in the sinking fund, the Trustee shall, until it is required to pay out the same under the provisions of this indenture, allow the Telephone Company interest at the rate allowed during such period to its depositors on accounts not subject to check. So long as there shall exist no default in the payment of the principal or interest of the bonds outstanding hereunder, all interest allowed on any such moneys shall be paid from time to time to the Telephone Company, or upon its order, signed by its president or any vice president or treasurer. (i) The recitals of facts and the covenants and agree- ments in this indenture and in said bonds contained shall be taken as made by the Telephone Company alone, and shall not be construed as made by or as imposing any obligation or liability upon the Trustee. (j) The Trustee shall not be responsible for the exe- cution or validity hereof, or of the bonds issued here- under or intended to be secured hereby, nor for the suf- ficiency of the security provided herein. (k) The Trustee may become the owner of bonds and coupons secured hereby with the same rights it would have if it were not Trustee. — need not see to insur- ance of mortgaged property — moneys received to bear interest — recitals made by Telephone Company alone — not responsible for validity or sufficiency of security — may be bondholder 82 — not resf'onsible for debts, etc. — may rely on certificate of officers of Telephone Company Trustee may resign — may be removed by bondholders Appointment of successor (l) The Trustee shall not be individually liable for any debt contracted by it or for the expenses of operat- ing’ the business of the Telephone Company or for dam- ages to person or property or for salaries or for non- fulfillment of contracts or for any other torts, obligations and liabilities arising during any period wherein the Trustee shall manage the trust property, or any part thereof, upon entry, as aforesaid or otherwise, and the trust estate is hereby charged with a first and paramount lien in favor of the Trustee for its security and indemni- fication against any such liability. (m) In all cases where this indenture does not make other express provision as to the evidence upon which the Trustee may act or refrain from acting, the Trustee shall he protected in acting or refraining from acting under any provision of this indenture, in reliance upon a certificate as to the existence or non-existence of any fact or facts, signed by the President or a Vice President of the Telephone Company and by its Treasurer or Secre- tary or Assistant Secretary, and sealed with its corporate seal. Section 2. The Trustee may resign and be discharged of the trusts created by this indenture by giving written notice thereof to the Telephone Company, specifying the date when such resignation shall take effect, and by pub- lishing such notice at least once a. week for four succes- sive weeks in two newspapers published in the Borough of Manhattan, City of New York; and such resignation shall take effect on the date specified in such notice. The Trustee may be removed at any time by an in- strument in writing under the hands of the holders of three-fourths in amount of the bonds hereby secured then outstanding. Section 3. In case at any time the Trustee, or any trustee hereafter appointed, shall resign or be removed or otherwise become incapable of acting, a successor may be appointed by the holders of a majority in amount of 83 the bonds hereby secured and then outstanding, by an instrument or concurrent instruments signed by such bondholders or their attorneys in fact duly authorized; provided, nevertheless, that in case at any time there shall be a vacancy in the office of trustee hereunder the Telephone Company by an instrument executed by order of its Board of Directors may appoint a trustee which shall act until a successor trustee shall be appointed by the bondholders as herein authorized. After any such appointment by the Telephone Company it shall publish notice thereof at least once a week for four successive weeks in two newspapers published in the Borough of Manhattan, City of New York, and any trustee so ap- pointed by the Telephone Company shall immediately and without further act be superseded by the trustee, ap- pointed in the manner above provided by the holders of a majority in amount of the bonds then outstanding here- under, if such appointment by such bondholders be made prior to the expiration of one year after the completion of such publication of notice. Any new trustee appointed hereunder shall execute an instrument accepting such appointment hereunder and deliver one counterpart thereof to the Telephone Company and one counterpart thereof to the trustee last in office, and thereupon such new trustee without further act, deed or conveyance shall become vested with all the estates, properties, powers and trusts of its predecessors in the trusts hereunder, with like effect as if originally named as trustee herein ; but nevertheless, upon the written request of the suc- cessor trustee or of the Telephone Company, the trustee ceasing to act shall execute and deliver an instrument transferring to such successor trustee, upon the trusts herein expressed, all the estates, properties, rights, powers and trusts of the trustee so resigning or removed, and shall duly assign, transfer and deliver any other property and money held by such trustee to the successor trustee so appointed in its place. Should any deed, con- veyance or instrument in writing from the Telephone — by bond- holders —by Telephone Company — publica- tion of notice of appointment 84 Successor to be a trust company Successor by merger or consoli- dation Company be required by any new trustee for more fully and certainly vesting 1 in and confirming to it such estates, rights, powers and duties, then, any and all such deeds, conveyances and instruments in writing, shall, on request of said new trustee, be made, executed, acknowledged and delivered by the Telephone Company. Every such successor trustee appointed in place of the party of the second part hereto or its successor in the trust, shall be a trust company having an office in the Borough of Manhattan, City of New York, in good standing and having a capital and surplus aggregating $5,000,000 if there be such a trust company qualified, able and willing to accept the trusts upon reasonable or cus- tomary terms. Section 4. Any company into which the Trustee may lie merged or with which it may be consolidated, or any company resulting from any merger or consolidation to which the Trustee shall be a party, shall be the successor of the Trustee hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwith- standing, provided such company shall be a corporation organized under the laws of the State of New York and shall maintain an office in the Borough of Manhattan in the City of New York. In case any of the bonds issuable under this indenture shall have been authenticated but not delivered, any such successor trustee may adopt the certificate of authentication of Bankers Trust Com- pany of New York or of any successor to it as trustee hereunder, and deliver the same so authenticated, and in case any of the bonds issuable hereunder shall not have been authenticated any successor trustee may authenti- cate such bonds in the name of such successor trustee and in all such cases such authentication shall have the full force and effect which anywhere in said bonds or in this indenture it is provided that authentication of the Trustee shall have. 85 ARTICLE TWELFTH. Supplemental Indent lives. Section 1. The Telephone Company, when author- ized by resolution of its Board of Directors, and the Trus- tee, from time to time and at any time, may enter into an indenture or indentures supplemental hereto and which thereafter shall form a part hereof, for any one or more of the following purposes : (a) to convey, transfer and assign to the Trustee and to subject to the lien of this indenture, with the same force and effect as though specifically mentioned in the granting clause hereof, additional property then owned by the Telephone Company, acquired by it through con- solidation, merger, by purchase, or otherwise: (b) to specify and state the mortgage indebtedness, and the amount thereof of any company which hereafter shall be consolidated with or merged into, or whose prop- erty hereafter shall be acquired by, the Telephone Com- pany, which indebtedness, if secured by mortgage on property made subject to the lien of this indenture, and if prior to the lien of the bonds issued hereunder, is to be regarded as forming a part of the underlying bonds of the Telephone Company, to retire which, at or before maturity, bonds may be issued as provided in Section 4 of Article Second hereof : (c) to add to the limitations on the authorized amount, date of maturity, issue and purposes of issue of bonds hereunder or of any series of bonds hereunder, other limitations to be thereafter observed: (d) to evidence the succession of another corporation to the Telephone Company, or successive successions, and the assumption by a successor corporation of the cove- nants and obligations of the Telephone Company under this indenture : Provision for supple- mental indentures — to convey additional property — to state indebtedness of companies hereafter merged — to add limitations — to evidence succession to T clephone Company 86 — to make provision as to questions arising hereunder Trustee authorized to join in execution All covenants inure to successors of Telephone Company No rights hereunder except to Telephone Company Trustee and bondholders Execution in counter- parts (e) to make such provision in regard to matters or questions arising under this indenture as may be neces- sary or desirable and not inconsistent with this indenture. Section 2. The Trustee is hereby authorized to join with the Telephone Company in the execution of any such supplemental indenture, to make the further agreements and stipulations which may be therein contained, and to accept the conveyance, transfer and assignment of any such property thereunder. ARTICLE THIRTEENTH. Miscellaneous Provisions. Section 1. All the covenants, stipulations, promises and agreements in this indenture contained, by or in be- half of the Telephone Company, shall bind, and inure to the benefit of, its successors and assigns, whether so expressed or not. Section 2. Nothing in this indenture expressed or implied is intended or shall be construed to give to any person or corporation other than the Telephone Com- pany, the Trustee and the holders of the bonds and inter- est obligations hereby secured, any legal or equitable right, remedy or claim under or in respect of this inden- ture or any covenant condition or provision herein con- tained. All its covenants, conditions and provisions are and shall be held to he for the sole and exclusive benefit of the Telephone Company, the Trustee and the holders of the bonds hereby secured. Section 3. For the purpose of facilitating the record hereof, this indenture may be executed in any number of counterparts, each of which shall be and shall be taken to be an original and all collectively but one instrument. 87 Section 4. Any marginal notes hereon are no part of this indenture and shall not be deemed to affect the meaning or construction of any of its provisions. Section 5. The Telephone Company does hereby con- stitute and appoint Winfield S. Peirsol to be its attorney, for it and in its name, and as and for its corporate act and deed, to acknowledge this indenture before any per- son having authority by the laws of the Commonwealth of Pennsylvania to take such acknowledgment, to the in- tent that the same may he duly recorded. Section 6. The Trustee does hereby constitute and appoint Clarence W. Campbell to he its attorney, for it and in its name, and as and for its corporate act and deed, to acknowledge this indenture, before any person having authority by the laws of the Commonwealth of Pennsyl- vania to take such acknowledgment, to the intent that the same may be duly recorded. This indenture and the bonds issued hereunder have been executed and delivered by The Bell Telephone Com- pany of Pennsylvania at its office or agency in the City of New York, State of New York, and are to be construed and governed according to the laws of the State of New York. In witness whereof the parties hereto have caused their corporate seals to be hereunto affixed and their Presidents or Vice-Presidents, under and by the author- ity vested in them, have hereto affixed their signatures, and their Secretaries or Assistant Secretaries have duly Marginal notes Attorney to acknowledge indenture for Telephone Company Attorney to acknowledge indenture for Trustee Testi- monium 88 attested the execution hereof, in the City of New York, the 10th day of December, 1920. The Bell. Telephone Company of Pennsylvania, By (Sd.) L. H. Kinnard, President. [ Seal] Attest : (Sd.) Winfield S. Peirsol, Secretary. Sealed and delivered by The Bell Telephone Com- pany of Pennsylvania in the presence of (Sd.) John H. Peck. ( Sd. ) Robert V. Marye. [Seal] Bankers Trust Company, By (Sd.) H. F. Wilson, Jr., Vice-President. Attest: ( Sd. ) Clarence. W. Campbell, Assistant Secretary. Sealed and delivered by Bankers Trust Company in the presence of (Sd.) H. A. Wheeler. (Sd.) P. II. Dolsen. 89 CERTIFICATE OF RESIDENCE. Bankers Trust Company, Mortgagee and Trustee within named, hereby certifies that its precise residence is No. 14 Wall Street, in the Borough of Manhattan, the City of New York, State of New York. Bankebs Trust Company, By (Sd.) H. F. Wilson, Jr., Vice-President. State of New York, ) County of New York, \ bS ’ ' I hereby certify that on this 10th day of December, 1920, before me, the subscriber, a notary public, within and for the County of New York, State of New York, duly appointed and commissioned under and by virtue of the laws of said State and residing in said county of New York, personally appeared Winfield S. Peirsol, the attorney named in the foregoing Mortgage, and by virtue and in pursuance of the authority therein conferred upon him, acknowledged the said Mortgage to be the act and deed of the said The Bell Telephone Company of Penn- sylvania. Witness my hand and notarial seal the day and year aforesaid. I hereby certify that I am not a stockholder, officer or director of said The Bell Telephone Company of Penn- sylvania. (Sd.) M. L. Metcalfe, [Seal] Notary Public, New York County No. 121. My commission expires March 30, 1921. 90 State of New York, ) County of New York,^ y °" 1 hereby certify that oil this 10th day of December, 1920, before me, the subscriber, a notary public, within and for the County of New York, State of New York, duly appointed and commissioned under and by virtue of the laws of said State and residing in said county of New York, personally appeared Clarence W. Campbell, the attorney named in the foregoing Mortgage, and by virtue and in pursuance of the authority therein con- ferred upon him, acknowledged the said Mortgage to he the act and deed of the said Bankers Trust Company. Witness my hand and notarial seal the day and year aforesaid. I hereby certify that I am not a stockholder, officer or director of said Bankers Trust Company of New York. (Sd.) Geo. H. Corey, [Seal] Notary Public, N. Y. Co. 183. My commission expires March 30, 1921. State of New York, } County of New York,^ 0 " I, M. L. Metcalfe, a notary public within and for the County of New York, State of New York, duly ap- pointed and commissioned under and by virtue of the laws of said State and residing in said county of New York, -do certify that Winfield S. Peirsol personally ap- peared before me in my said county, and being by me duly sworn, did depose and say that he is the Secretary of The Bell Telephone Company of Pennsylvania, the corporation of that name described in the writing hereto 91 annexed bearing date the 1st day . of October, 1920, au- thorized by said corporation to execute and acknowl- edge deeds and other writings of said corporation, and that the seal affixed to said writing is the corporate seal of said corporation, and that said writing was signed and sealed by him in behalf of said corporation by its author- ity duly given; and the said Winfield S. Peirsol acknowl- edged the said writing to be the act and deed of said corporation. Given under my hand and official notarial seal this 10th day of December, 1920. I hereby certify that I am not a stockholder, officer or director of said The Bell Telephone Company of Penn- sylvania. (Sd.) M. L. Metcalfe, [Seal] Notary Public, New York County No. 121 My commission expires March 30, 1921. State of New York, } County of New York,^°" I, George H. Corey, a notary public within and for the County of New York, State of New York, duly ap- pointed and commissioned under and by virtue of the laws of said State and residing in said county of New York, do certify that Clarence W. Campbell personally appeared before me in my said county, and being by me duly sworn,, did depose and say that he is the assistant secretary of Bankers Trust Company, the corporation of that name described in the writing hereto annexed bearing date the first day of October, 1920, authorized by said corporation to execute and acknowledge deeds and other writings of said corporation, and that the seal affixed to said writing is the corporate seal of said corpo- ration, and that said writing was signed and sealed by him in behalf of said corporation by its authority duly given ; and the said Clarence W. Campbell acknowledged the said writing to be the act and deed of said corpo- ration. Given under my hand this 10th day of December, 1920. I hereby certify that I am not a stockholder, officer or director of said Bankers Trust Company of New York. (Sd.) Geo. H. Corev, [Seae] Notary Public, N. Y. Co. 183. My commission expires March 30, 1921. Executed in Counterparts. [6899]