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Exhibit 1
SBC Communications Inc.
9,000,000 DECSSM (Debt Exchangeable for Common Stock SM)*
7 3/4% Exchangeable Notes Due March 15, 2001
(Subject to Exchange into American Depositary Shares, each representing twenty
Series L Shares, without par value, of Telefonos de Mexico, S.A. de C.V.)
UNDERWRITING AGREEMENT
New York, New York
March 20, 1997
SALOMON BROTHERS INC
As Representative for the several Underwriters
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
SBC Communications Inc., a Delaware corporation ("SBC"), proposes to
sell to the underwriters named in Schedule I hereto (the "Underwriters"), for
whom you (the "Representative") are acting as representative, an aggregate of
9,000,000 DECSSM (Debt Exchangeable for Common StockSM) consisting of its 7 3/4%
Exchangeable Notes Due March 15, 2001 (the "Firm DECS"), to be issued under an
indenture, dated as of November 1, 1994, as supplemented by the First
Supplemental Indenture, dated as of the Firm Delivery Date (as defined below)
(as may be further supplemented from time to time, the "Indenture"), between SBC
and The Bank of New York, as trustee (the "Trustee"). SBC also proposes to grant
to the Underwriters an option to purchase up to an additional 1,000,000 DECS
(the "Option DECS"; the Option DECS, together with the Firm DECS, being
hereinafter called the "DECS") to cover over-allotments, if any. At maturity
(including as a result of acceleration or otherwise) the principal amount of
each DECS will be exchanged by SBC into a number of American Depositary Shares
("Telmex ADSs"), each representing the right to receive twenty Series L Shares,
without par value ("L Shares"), of Telefonos de Mexico, S.A. de C.V., a
corporation organized under the laws of Mexico ("Telmex") (or, at SBC's option,
the cash
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* Plus an option to purchase from SBC Communications Inc. up to 1,000,000
additional DECS to cover over-allotments. "DECS" and "Debt Exchangeable for
Common Stock" are service marks of Salomon Brothers Inc.
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equivalent and/or such other consideration as permitted or required by the terms
of the DECS) at the exchange rate specified in the Prospectus.
In connection with the foregoing, Telmex has filed with the
Commission (as defined below) registration statements with respect to
200,000,000 L Shares represented by 9,000,000 Telmex ADSs (the "Firm ADSs") in
respect of the Firm DECS, plus an additional 1,000,000 Telmex ADSs (the "Option
ADSs"; the Option ADSs, together with the Firm ADSs, being hereinafter called
the "ADSs") in respect of the Option DECS, for delivery by SBC pursuant to the
DECS, which registration statements are referred to in Sections 1(b)(i) and
1(b)(iii) of this Agreement. The L Shares represented by the Firm ADSs are
hereinafter called the "Firm Shares"; the L Shares represented by the Option
ADSs are hereinafter called the "Option Shares"; and the Firm Shares and the
Option Shares are hereinafter collectively called the "Shares."
1. Representations and Warranties.
(a) Representation and Warranties of SBC. SBC represents and
warrants to, and agrees with, the several Underwriters and Telmex that:
(i) A registration statement on Form S-3 (File No. 33-56909)
with respect to the DECS has been prepared by SBC in conformity with
the requirements of the Securities Act of 1933, as amended
("Securities Act"), and the rules and regulations ("Rules and
Regulations") of the Securities and Exchange Commission
("Commission") thereunder and has become effective. SBC meets the
requirements for use of Form S-3 under the Securities Act. As used
in this Agreement, (A) "Registration Statement" means that
registration statement, as amended or supplemented to the date
hereof (including all documents incorporated therein by reference);
(B) "Preliminary Prospectus" means each prospectus (including all
documents incorporated therein by reference) included in that
Registration Statement, or amendments thereto or supplements
thereof, before it became effective under the Securities Act,
including any prospectus filed with the Commission pursuant to Rule
424(a) of the Rules and Regulations; (C) "Basic Prospectus" means
the prospectus (including all documents incorporated therein by
reference) included in the Registration Statement; and (D)
"Prospectus" means the Basic Prospectus, together with any
prospectus amendment or supplement (including in each case all
documents incorporated therein by reference) specifically relating
to the DECS, as filed with, or mailed for filing to, the Commission
pursuant to paragraph (b) or (c) of Rule 424 of the Rules and
Regulations. The Commission has not issued any order preventing or
suspending the use of the Prospectus.
(ii) The Registration Statement and each Prospectus contain,
and (in the case of any amendment or supplement to any such
document, or any material incorporated by reference in any such
document, filed with the
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Commission after the date as of which this representation is being
made) will contain at all times during the period specified in
Section 6(a)(iii) hereof, all statements which are required by the
Securities Act, the Securities Exchange Act of 1934, as amended
("Exchange Act"), the Trust Indenture Act of 1939, as amended
("Trust Indenture Act"), and the rules and regulations of the
Commission under such Acts; the Indenture, including any amendments
and supplements thereto, pursuant to which the DECS will be issued
will conform with the requirements of the Trust Indenture Act and
the rules and regulations of the Commission thereunder, and the
Registration Statement and the Prospectus do not, and (in the case
of any amendment or supplement to any such document, or any material
incorporated by reference in any such document, filed with the
Commission after the date as of which this representation is being
made) will not at any time during the period specified in Section
6(a)(iii) hereof, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; provided
that SBC makes no representation or warranty (A) as to information
contained in or omitted from the Registration Statement or the
Prospectus in reliance upon and in conformity with information
furnished in writing to SBC through the Representative by or on
behalf of any Underwriter specifically for use therein, or (B) as to
any statements in or omissions from the Statement of Eligibility and
Qualification of the Trustee under the Indenture.
(iii) SBC is not in violation of its corporate charter or
bylaws or in default under any agreement, indenture or instrument,
the effect of which violation or default would be material to SBC;
the execution, delivery and performance of this Agreement and
compliance by SBC with the provisions of the DECS and the Indenture
will not conflict with, result in the creation or imposition of any
lien, charge or encumbrance upon any of the assets of SBC or any of
its material subsidiaries pursuant to the terms of, or constitute a
default under, any agreement, indenture or instrument, or result in
a violation of the corporate charter or bylaws of SBC or any order,
rule or regulation of any court or governmental agency having
jurisdiction over SBC; and except as required by the Securities Act,
the Trust Indenture Act and applicable state securities laws, no
consent, authorization or order of, or filing or registration with,
any court or governmental agency is required for the execution,
delivery and performance of this Agreement and the Indenture.
(iv) There has not occurred any material adverse change, or
any development involving a prospective material adverse change, in
the condition, financial or otherwise, or in the earnings, business
or operations of SBC and its subsidiaries, taken as a whole, from
that set forth in the Prospectus.
(v) On each Delivery Date (as defined in Section 5 hereof)
(i) the Indenture will have been duly authorized, executed and
delivered by SBC and will constitute the legally binding obligation
of SBC, enforceable in accordance
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with its terms, (ii) the DECS will have been duly authorized and,
upon payment therefor as provided in this Agreement, will constitute
legally binding obligations of SBC entitled to the benefits of the
Indenture, and (iii) the DECS and the Indenture will conform to the
descriptions thereof contained in the Prospectus.
(vi) Each of SBC and its subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, with full
corporate power and authority to own its properties and conduct its
business as described in the Prospectus, and is duly qualified to do
business as a foreign corporation and is in good standing under the
laws of each jurisdiction which requires such qualification wherein
it owns or leases properties or conducts business, except where the
failure to so qualify would not have a material adverse effect on
SBC and its subsidiaries taken as a whole.
(vii) Except as described in the Prospectus, there is no legal
or governmental proceeding pending or, to the knowledge of SBC,
threatened against SBC or any of its subsidiaries which is
reasonably expected to result in any material adverse change in the
financial condition, results of operations, business or prospects of
SBC and its subsidiaries taken as a whole or which is required to be
disclosed in the Registration Statement.
(viii) The financial statements filed as part of the
Registration Statement or included in any Preliminary Prospectus or
the Prospectus present, or (in the case of any amendment or
supplement to any such document, or any material incorporated by
reference in any such document, filed with the Commission after the
date as of which this representation is being made) will present at
all times during the period specified in Section 6(a)(iii) hereof,
fairly, the consolidated financial condition and results of
operations of SBC and its subsidiaries, at the dates and for the
periods indicated, and have been, and (in the case of any amendment
or supplement to any such document, or any material incorporated by
reference in any such document, filed with the Commission after the
date as of which this representation is being made) will be at all
times during the period specified in Section 6(a)(iii) hereof,
prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved
(except as described in the notes thereto).
(ix) The documents incorporated by reference into any
Preliminary Prospectus or the Prospectus have been, and (in the case
of any amendment or supplement to any such document, or any material
incorporated by reference in any such document, filed with the
Commission after the date as of which this representation is being
made) will be, at all times during the period specified in Section
6(a)(iii) hereof, prepared by SBC in conformity with the applicable
requirements of the Securities Act and the Rules and Regulations and
the
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Exchange Act and the rules and regulations of the Commission
thereunder and such documents have been, or (in the case of any
amendment or supplement to any such document, or any material
incorporated by reference in any such document, filed with the
Commission after the date as of which this representation is being
made) will be at all times during the period specified in Section
6(a)(iii) hereof, timely filed as required thereby.
(x) There are no contracts or other documents which are
required to be filed as exhibits to the Registration Statement by
the Securities Act or by the Rules and Regulations, or which were
required to be filed as exhibits to any document incorporated by
reference in the Prospectus by the Exchange Act or the rules and
regulations of the Commission thereunder, which have not been filed
as exhibits to the Registration Statement or to such document or
incorporated therein by reference as permitted by the Rules and
Regulations or the rules and regulations of the Commission under the
Exchange Act as required.
(xi) SBC has not taken and will not take, directly or
indirectly, any action designed to or which has constituted or which
might reasonably be expected to cause or result, under the Exchange
Act or otherwise, in stabilization or manipulation of the price of
any security of Telmex to facilitate the sale or resale of the DECS,
the Shares or the ADSs.
(xii) No stamp or other issuance or transfer taxes or duties
and no capital gains, income, withholding or other taxes are payable
by or on behalf of SBC or the Underwriters to Mexico or any
political subdivision or taxing authority thereof or therein in
connection with (A) the deposit with the Depositary of Shares by or
on behalf of SBC against the issuance of ADRs evidencing ADSs or (B)
the delivery by or on behalf of SBC of the ADSs and the Shares to or
for the respective accounts of the holders of the DECS.
(xiii) No facts have come to the attention of SBC which lead SBC
to believe, or should lead SBC to believe, that (i) on the date each
became effective, and on the date any post-effective amendments
thereto became or become effective, the Telmex Registration
Statement or the ADS Registration Statement did not or will not
contain any untrue statement of a material fact or omit to state a
fact required to be stated therein or necessary in order to make the
statements therein not misleading and (ii) the Telmex Prospectus
(together with any supplement thereto) did not or will not include
any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(b) Representations and Warranties of Telmex. Telmex represents
and warrants to, and agrees with, SBC and the several Underwriters that:
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(i) A registration statement on Form F-3 (File No. 333-6614)
with respect to the Shares has been prepared by Telmex in conformity
with the requirements of the Securities Act and the Rules and
Regulations of the Commission thereunder and has become effective in
the form delivered to the Underwriters. Telmex meets the
requirements for use of Form F-3 under the Securities Act. As used
in this Agreement, (A) "Telmex Registration Statement" means that
registration statement (including all documents incorporated therein
by reference); (B) "Telmex Preliminary Prospectus" means each
prospectus (including all documents incorporated therein by
reference) included in the Telmex Registration Statement, or
amendments thereto, before it became effective under the Securities
Act, including any prospectus filed with the Commission pursuant to
Rule 424(a) of the Rules and Regulations; and (C) "Telmex
Prospectus" means the prospectus (including all documents
incorporated therein by reference) included in the Telmex
Registration Statement as filed with, or mailed for filing to, the
Commission pursuant to Rule 424(b) of the Rules and Regulations and
in the form attached to the SBC Prospectus. The Commission has not
issued any order preventing or suspending the use of the Telmex
Prospectus.
(ii) The Telmex Registration Statement and the Telmex
Prospectus contain, and (in the case of any amendment or supplement
to any such document, or any material incorporated by reference in
any such document, filed with the Commission after the date as of
which this representation is being made) will contain at all times
during the period specified in Section 6(b)(iii) hereof, all
statements which are required by the Securities Act, the Exchange
Act and the rules and regulations of the Commission under such Acts;
and the Telmex Registration Statement and the Telmex Prospectus do
not, and (in the case of any amendment or supplement to any such
document, or any material incorporated by reference in any such
document, filed with the Commission after the date as of which this
representation is being made) will not at any time during the period
specified in Section 6(b)(iii) hereof, contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading; provided that Telmex makes no representation or warranty
as to information contained in or omitted from the Telmex
Registration Statement or the Telmex Prospectus made in reliance
upon and in conformity with information furnished in writing to
Telmex through the Representative by or on behalf of any Underwriter
specifically for use therein.
(iii) Registration statements on Form F-6 (File No. 33-39894
and File No. 33-47506) with respect to the ADSs have been filed with
the Commission and have become effective in the form delivered to
the Representative and, excluding exhibits, to the Representative
for each of the other Underwriters. "ADS Registration Statements"
means those registration statements. The Commission has not issued
any stop order suspending the effectiveness of such registration
statements, and no proceeding for the purpose
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has been initiated or threatened by the Commission. The ADS
Registration Statements conform, and any further amendments thereto
will conform, in all material respects to the requirements of the
Securities Act and the rules and regulations of the Commission
thereunder, and do not and will not, as of the applicable effective
date, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading.
(iv) There has not occurred any material adverse change, or
any development involving a prospective material adverse change, in
the condition, financial or otherwise, or in the earnings, business
or operations of Telmex and its subsidiaries, taken as a whole, from
that set forth in the Telmex Prospectus.
(v) Each of Telmex and its subsidiaries has been duly
incorporated and is validly existing as a corporation (sociedad
anonima de capital variable) with full power and authority
(corporate and other) to own its properties and conduct its business
as described in the Telmex Prospectus, and is duly qualified to do
business as a corporation under the laws of each jurisdiction which
requires such qualification wherein it owns or leases properties or
conducts business, except where the failure to so qualify would not
have a material adverse effect on Telmex and its subsidiaries taken
as a whole.
(vi) Except as described in the Telmex Prospectus, there is no
legal or governmental proceeding pending or, to the knowledge of
Telmex, threatened against Telmex or any of its subsidiaries which
is reasonably expected to result in any material adverse change in
the financial condition, results of operations, business or
prospectus of Telmex and its subsidiaries taken as a whole or which
is required to be disclosed in the Telmex Registration Statement.
(vii) The financial statements filed as part of the Telmex
Registration Statement or included in any Telmex Preliminary
Prospectus or the Telmex Prospectus present, or (in the case of any
amendment or supplement to any such document, or any material
incorporated by reference in any such document, filed with the
Commission after the date as of which this representation is being
made) will, at all times during the period specified in Section
6(b)(iii) hereof, present fairly the consolidated financial
condition and results of operations of Telmex and its subsidiaries,
at the dates and for the periods indicated, and have been, and (in
the case of any amendment or supplement to any such document, or any
material incorporated by reference in any such document, filed with
the Commission after the date as of which this representation is
being made) will be at all times during the period specified in
Section 6(b)(iii) hereof, prepared in conformity with generally
accepted accounting principles applied on a consistent basis
throughout the periods involved (except as described in the notes
thereto).
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(viii) The documents incorporated by reference into any Telmex
Preliminary Prospectus or the Telmex Prospectus have been, and (in
the case of any amendment or supplement to any such document, or any
material incorporated by reference in any such document, filed with
or furnished to the Commission after the date as of which this
representation is being made) will be, at all times during the
period specified in Section 6(b)(iii) hereof, prepared by Telmex in
conformity with the applicable requirements of the Exchange Act and
the rules and regulations of the Commission thereunder and such
documents have been, or (in the case of any amendment or supplement
to any such document, or any material incorporated by reference in
any such document, filed with or furnished to the Commission after
the date as of which this representation is being made) will be at
all times during the period specified in Section 6(b)(iii) hereof,
timely filed with or furnished to the Commission as required
thereby.
(ix) Telmex has not taken and will not take, directly or
indirectly, any action designed to or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of Telmex
to facilitate the sale or resale of the DECS, the Shares or the
ADSs.
(x) There are no contracts or other documents which are
required to be filed as exhibits to the Telmex Registration
Statement by the Securities Act or by the Rules and Regulations, or
which were required to be filed as exhibits to any document
incorporated by reference in the Telmex Prospectus by the Exchange
Act or the rules and regulations of the Commission thereunder, which
have not been filed as exhibits to the Telmex Registration Statement
or to such document or incorporated therein by reference as
permitted by the Rules and Regulations or the rules and regulations
of the Commission under the Exchange Act as required.
(xi) Telmex has an authorized capitalization as set forth in
the Telmex Prospectus, and all of the issued shares of capital stock
of Telmex (including the Shares) have been duly and validly
authorized and issued and are fully paid and non-assessable, except
for Shares repurchased by Telmex under its buy-back program; the L
Shares (including the Shares), the Series A Shares, without par
value, of Telmex (the "A Shares") and the Series AA Shares, without
par value, of Telmex (the "AA Shares"), conform to, and entitle the
holders thereof to the rights set forth in, the description of the L
Shares, the A Shares and the AA Shares, respectively, contained in
the Telmex Prospectus; all of the A Shares and L Shares (including
the Shares) have been duly registered with the Securities and
Special Sections of the National Registry of Securities and
Intermediaries maintained by the Mexican National Banking and
Securities Commission and have been duly listed and admitted for
trading on the Bolsa Mexicana de Valores, S.A. de C.V. (the "Mexican
Stock Exchange") and the ADSs have been duly listed on the New York
Stock
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Exchange; except with respect to voting rights (to the extent
described in the Telmex Prospectus), each L Share is entitled to the
same rights as each AA Share and A Share; the holders of outstanding
shares of capital stock of Telmex are not entitled to preemptive or
other rights to acquire the ADSs or the Shares; and there are no
limitations or restrictions under Mexican law, the Estatutos of
Telmex or any agreement to which Telmex is a party with respect to
the deposit by SBC of Shares with the Depositary (as defined herein)
against issuance of ADRs (as defined herein) evidencing ADSs or the
transfer at SBC's election of the ADSs and the Shares (in accordance
with the terms of the DECS) to or for the account of the holders of
the DECS;
(xii) The Deposit Agreement, dated as of May 1, 1991 (as
amended, the "Deposit Agreement"), among Telmex, Xxxxxx Guaranty
Trust Company of New York, as depositary (the "Depositary") and the
holders from time to time of the American Depositary Receipts
("ADRs") evidencing ADSs, has been duly authorized and constitutes a
valid and legally binding agreement of Telmex, enforceable in
accordance with its terms, subject, as to enforcement, to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors' rights
and to general equity principles; upon issuance by the Depositary of
ADRs evidencing ADSs against the deposit of Shares in respect
thereof in accordance with the provisions of the Deposit Agreement,
such ADRs will be duly and validly issued and the persons in whose
names the ADRs are registered will be entitled to the rights
specified therein and in the Deposit Agreement; and the Deposit
Agreement and the ADRs conform in all material respects to the
descriptions thereof contained in the Telmex Prospectus.
(xiii) No governmental authorization is required to effect
dividend payments on any shares of capital stock of Telmex or for
the Depositary to convert such payments into U.S. dollars for
distribution to holders of ADRs.
(xiv) The deposit of the Shares by or on behalf of SBC with the
Depositary against issuance of ADRs evidencing the ADSs to be
delivered upon exchange for the DECS and the performance of this
Agreement and the Deposit Agreement and the consummation of the
transactions herein and therein contemplated, will not conflict with
or result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which
Telmex or any of its subsidiaries is a party or by which Telmex or
any of its subsidiaries is bound or to which any of the property or
assets of Telmex or any of its subsidiaries is subject, which
conflict, breach, violation or default is material to the
transactions contemplated by this Agreement or the Deposit Agreement
or to Telmex and its subsidiaries taken as a whole, nor will such
action result in any violation of the provisions of the Estatutos of
Telmex, any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over Telmex or any
of its subsidiaries or any of their
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properties, and no governmental authorization or filing is required
for the consummation by Telmex of the transactions contemplated by
this Agreement and the Deposit Agreement, except (A) the
registration under the Securities Act and the Exchange Act of Shares
and ADSs, (B) such governmental authorizations as have been duly
obtained and are in full force and effect and (C) such governmental
authorizations as may be required under state securities or Blue Sky
laws or any laws of jurisdictions outside Mexico and the United
States in connection with the exchange of ADSs for DECS.
(xv) Telmex and each of its subsidiaries have all licenses,
franchises, permits, concessions, authorizations, approvals and
orders of and from all governmental regulatory officials and bodies
that are necessary to own or lease their properties and conduct
their businesses as described in the Telmex Prospectus and are
material in relation to the business of Telmex and its subsidiaries
taken as a whole.
(xvi) Telmex and its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable to
all personal property owned by them that are material to Telmex and
its subsidiaries taken as a whole, in each case free and clear of
all liens, encumbrances and defects except such as are described in
the Telmex Prospectus or such as do not materially affect the value
of such property and do not interfere in any material respect with
the use made and proposed to be made of such property by Telmex and
its subsidiaries; and any real property and buildings held under
lease by Telmex and its subsidiaries that are material to Telmex and
its subsidiaries taken as a whole are held by them under valid,
subsisting and enforceable leases with such exceptions are not
material in relation to Telmex and its subsidiaries taken as a whole
and do not interfere in any material respect with the use made and
proposed to be made of such property and buildings by Telmex and its
subsidiaries taken as a whole.
2. Purchase and Sale.
(a) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, SBC agrees to sell to
each Underwriter, and each Underwriter agrees, severally and not jointly,
to purchase from SBC, at a purchase price of $38.445 per DECS, plus
accrued interest, if any, on the DECS from the issue date of the DECS to
the Firm Delivery Date (as defined below), the number of DECS set forth
opposite such Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, SBC hereby grants an
option to the several Underwriters to purchase up to 1,000,000 Option DECS
at the same purchase price per DECS, plus accrued interest, if any, from
the issue date of the DECS to the Option Delivery Date (as defined below),
as the Underwriters shall pay for the Firm DECS. Said option may be
exercised only to cover over-allotments in the sale of the
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Firm DECS by the Underwriters. Said option may be exercised in whole or in
part at any time (but not more than once) on or before the 30th day after
the date of the Prospectus upon written or telegraphic notice by the
Underwriters to SBC setting forth the number of Option DECS as to which
the Underwriters are exercising the option and the Option Delivery Date
(as defined below). Delivery of certificates for the Option DECS, and
payment therefor, shall be made as provided in Section 5 hereof. The
number of Option DECS to be purchased by each Underwriter shall be the
same percentage of the total number of Option DECS to be purchased by the
several Underwriters as such Underwriter is purchasing of the Firm DECS,
subject to such adjustments as the Representative in its sole discretion
shall make to eliminate any fractional shares.
3. SBC shall not be obligated to deliver any DECS except upon
payment for all DECS to be purchased pursuant to this Agreement as hereinafter
provided.
4. Default by an Underwriter. If any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Underwriters shall be obligated to purchase the DECS which the
defaulting Underwriter agreed but failed to purchase in the respective
proportions which the number of DECS set forth in Schedule I hereto to be
purchased by each remaining non-defaulting Underwriter set forth therein bears
to the aggregate number of DECS set forth therein to be purchased by all the
remaining non-defaulting Underwriters; provided that the remaining
non-defaulting Underwriters shall not be obligated to purchase any DECS if the
aggregate number of DECS which the defaulting Underwriting or Underwriters
agreed but failed to purchase exceeds 9.09% of the total number of DECS, and any
remaining non-defaulting Underwriter shall not be obligated to purchase more
than 110% of the number of DECS set forth in Schedule I hereto to be purchased
by it. If the foregoing maximums are exceeded, the remaining non-defaulting
Underwriters, or those other underwriters satisfactory to the Representative who
so agree, shall have the right, but shall not be obligated, to purchase, in such
proportion as may be agreed upon among them, all the DECS. If the remaining
Underwriters or other underwriters satisfactory to the Representative do not
elect to purchase the DECS which the defaulting Underwriter or Underwriters
agreed but failed to purchase, this Agreement shall terminate without liability
on the part of any non-defaulting Underwriter, or SBC, except that SBC will
continue to be liable for the payment of expenses as set forth in Section
6(a)(viii) hereof.
Nothing contained in this Section 4 shall relieve a defaulting
Underwriter of any liability it may have to SBC for damages caused by its
default. If other Underwriters are obligated or agree to purchase the DECS of a
defaulting or withdrawing Underwriter, either the Representative or SBC may
postpone each Delivery Date for up to seven full business days in order to
effect any changes that in the opinion of SBC or the Representative may be
necessary in the Registration Statement, the Prospectus or in any other document
or arrangement.
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5. Delivery and Payment. Delivery of and payment for Firm DECS (and
the Option DECS (if and to the extent the option provided for in Section 2(b)
hereof shall have been exercised on or before the first business day prior to
the Firm Delivery Date)) shall be made at 10:00 AM, New York City time, on March
26, 1997, or such later date (not later than April 2, 1997) as the
Representative shall designate, which date and time may be postponed by
agreement between the Representative and SBC (such date and time of delivery and
payment for the Firm DECS being herein called the "Firm Delivery Date"), at the
offices of the Representative, Seven World Trade Center, New York, New York.
Delivery of the DECS shall be made on the instructions of the Representative for
the account of each Underwriter against payment by the Representative of the
purchase price thereof to or upon the order of SBC in immediately available
funds. Delivery of, and payment for, the DECS shall be made through the
facilities of The Depository Trust Company. Certificates for the DECS shall be
registered in such names and in such denominations as the Representative shall
request not less than one full business day in advance of the Firm Delivery
Date.
SBC agrees to have the DECS available for inspection, checking and
packaging by the Representative in New York, New York, not later than 1:00 PM on
the business day prior to the Firm Delivery Date.
If the option provided for in Section 2(b) hereof is exercised after
the first full business day prior to the Firm Delivery Date, SBC will deliver to
the Representative, at Seven World Trade Center, New York, New York, on the date
specified by the Representative in the notice described in Section 2(b), or such
later date (not later than April 19, 1997) specified by the Representative (such
date and time of delivery and payment for the Option DECS being herein called
the "Option Delivery Date"; the Firm Delivery Date and the Option Delivery Date,
collectively, the "Delivery Dates"), certificates for the Option DECS in such
names and denominations as the Representative shall have requested against
payment of the purchase price thereof to or upon the order of SBC in immediately
available funds. If settlement for the Option DECS occurs after the Delivery
Date, SBC will deliver to the Representative on the Option Delivery Date, and
the obligation of the Underwriters to purchase the Option DECS shall be
conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date the opinions, certificates and letters delivered on
the Firm Delivery Date pursuant to Section 9 hereof.
6. Agreements.
(a) Agreements of SBC. SBC agrees with the several Underwriters
and Telmex that:
(i) SBC will furnish promptly to the Representative and to
counsel for the Underwriters a copy of the Registration Statement as
originally filed and each amendment and supplement thereto filed
prior to the date hereof and relating to or covering the DECS, and a
copy of the Prospectus filed with the Commission, including all
documents incorporated therein by reference and all consents and
exhibits filed therewith.
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(ii) During any period when a Prospectus relating to the DECS
is required by law to be delivered, SBC will deliver promptly to the
Representative such reasonable number of the following documents as
the Representative may request: (A) conformed copies of the
Registration Statement (excluding exhibits other than the
computation of the ratio of earnings to fixed charges, the Indenture
and this Agreement), (B) the Prospectus and (C) any documents
incorporated by reference in the Prospectus.
(iii) During any period when a Prospectus relating to the DECS
is required by law to be delivered, SBC will not file any amendment
of the Registration Statement nor will SBC file any amendment or
supplement to the Prospectus (except for (A) an amendment or
supplement consisting solely of the filing of a document under the
Exchange Act or (B) a supplement relating to an offering of
securities other than the DECS), unless SBC has furnished the
Representative a copy of such proposed amendment or supplement for
its review prior to filing and will not file any such proposed
amendment or supplement to which the Representative reasonably
objects. Subject to the foregoing sentence, SBC will cause the
Prospectus and any amendment or supplement thereto to be filed with
the Commission as required pursuant to Rule 424 under the Securities
Act. SBC will promptly advise the Representative (A) when the
Prospectus or any amendment or supplement thereto shall have been
filed with the Commission pursuant to Rule 424 under the Securities
Act, (B) when any amendment of the Registration Statement shall have
become effective, (C) of any request by the Commission for any
amendment of the Registration Statement or amendment of or
supplement to the Prospectus or for any additional information, (D)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (E) of the
receipt by SBC of any notification with respect to the suspension of
the qualification of the DECS or the ADSs for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose. SBC will promptly (upon filing thereof) furnish the
Representative a copy of any amendment or supplement to the
Prospectus or Registration Statement not furnished to the
Representative for prior review pursuant to exceptions (A) or (B) of
the first sentence of this subsection (iii). SBC will use its best
efforts to prevent the issuance of any such stop order and, if
issued, to obtain as soon as possible the withdrawal thereof.
(iv) If, at any time when a Prospectus relating to the DECS is
required by law to be delivered, in the reasonable opinion of the
Representative, any event occurs as a result of which the
Registration Statement, as then amended, or the Prospectus, as then
supplemented, would include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading, or if it shall be necessary to amend the
Registration Statement or to supplement the Prospectus to comply
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with the Securities Act or the Exchange Act or the respective rules
thereunder, SBC promptly will (A) notify the Representative of the
happening of such event, (B) prepare and file with the Commission,
subject to the first sentence of subsection (iii) of this Section
6(a), an amendment or supplement which will correct such statement
or omission or an amendment or supplement which will effect such
compliance and (C) supply any such amended or supplemented
Prospectus to the Representative in such quantities as the
Representative may reasonably request.
(v) As soon as practicable, SBC will make generally available
to its security holders and to the Representative an earnings
statement or statements of SBC which will satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 under the
Securities Act.
(vi) During a period of five years after the date hereof, SBC
will furnish to the Representative copies of all reports and
financial statements furnished by SBC to each securities exchange on
which securities issued by SBC may be listed pursuant to
requirements of or agreements with such exchange or to the
Commission pursuant to the Exchange Act or any rule or regulation of
the Commission thereunder.
(vii) SBC hereby agrees to cooperate with Telmex to effect
compliance with the covenants and agreements of SBC and Telmex
hereunder.
(viii) Until the termination of the offering of the DECS, SBC
will timely file all documents, and any amendments to previously
filed documents, required to be filed by SBC pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act.
(ix) Without the prior written consent of the Representative
on behalf of the Underwriters, SBC will not (and will not permit any
subsidiary to), during the period ending 90 days after the date of
the Prospectus, (A) offer, pledge, sell contract to sell, sell any
option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of, directly or indirectly, or announce the
offering of, any L Shares, Telmex ADSs or any securities convertible
into or exercisable or exchangeable for L Shares or Telmex ADSs
(whether such L Shares or Telmex ADSs or any such securities are now
owned by SBC or are hereafter acquired) or (B) enter into any swap
or other arrangement that transfers to another, in whole or in part,
any of the economic consequences of ownership of the L Shares or
Telmex ADSs, whether any such transaction described in clause (A) or
(B) above is to be settled by delivery of L Shares or Telmex ADSs or
such other securities, in cash or otherwise. In addition, SBC agrees
that, without the prior written consent of the Representative on
behalf of the Underwriters, it will not, during the period ending 90
days after the date of the Prospectus, make any demand for, or
exercise any right with respect to,
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the registration of any L Shares or Telmex ADSs or any security
convertible into or exercisable or exchangeable for L Shares or
Telmex ADSs.
(x) During the period beginning on the date hereof and
continuing to the latest Delivery Date, SBC will not offer, sell,
contract to sell or otherwise dispose of any debt securities of SBC
or any guarantees or support obligations of debt securities of
others, in any case with maturities longer than one year, other than
DECS to the Underwriters.
(b) Agreements of Telmex. Telmex agrees with SBC and the several
Underwriters that:
(i) Telmex will furnish promptly to the Representative and to
counsel for the Underwriters a copy of the Telmex Registration
Statement, as originally filed and each amendment and supplement
thereto filed prior to the date hereof and relating to or covering
the Shares, and a copy of the Telmex Prospectus filed with the
Commission, including all documents incorporated therein by
reference and all consents and exhibits filed therewith.
(ii) During any period when a Prospectus relating to the DECS
is required by law to be delivered prior to the expiration of nine
months after the time of issue of the Telmex Prospectus in
connection with the offered DECS, Telmex will deliver to the
Representative such reasonable number of the following documents as
the Representative may reasonably request: (A) conformed copies of
the Telmex Registration Statement (excluding exhibits other than
this Agreement), (B) the Telmex Prospectus and (C) any documents
incorporated by reference in the Telmex Prospectus.
(iii) During any period when a Prospectus relating to the DECS
is required by law to be delivered, Telmex will not file any
amendment of the Telmex Registration Statement or the ADS
Registration Statement nor will Telmex file any amendment or
supplement to the Telmex Prospectus (except for an amendment or
supplement consisting solely of the filing of a document under the
Exchange Act) unless Telmex has furnished the Representative a copy
of such proposed amendment or supplement for its review prior to
filing and will not file any such proposed amendment or supplement
to which the Representative reasonably objects, unless Telmex shall
conclude in good faith that such filing is required by applicable
law. Subject to the foregoing sentence, Telmex will cause the Telmex
Prospectus and any amendment or supplement thereto to be filed with
the Commission as required pursuant to Rule 424 under the Securities
Act. Telmex will promptly advise the Representative (A) when the
Telmex Prospectus or any amendment or supplement thereto shall have
been filed with the Commission pursuant to Rule 424 under the
Securities Act, (B) when any amendment of the Telmex Registration
Statement shall have become effective, (C) of any request by the
Commission for any amendment of the Telmex Registration Statement or
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amendment of or supplement to the Telmex Prospectus or for any
additional information, (D) of the issuance by the Commission of any
stop order suspending the effectiveness of the Telmex Registration
Statement, the ADS Registration Statement or the institution or
threatening of any proceeding for that purpose and (E) of the
receipt by Telmex of any notification with respect to the suspension
of the qualification of the ADSs or the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose. Telmex will promptly (upon filing thereof) furnish the
Representative a copy of any amendment or supplement to the Telmex
Prospectus or Telmex Registration Statement not furnished to the
Representative for prior review pursuant to exceptions (A) or (B) of
the first sentence of this subsection (iii). Telmex will advise the
Representative promptly after it receives notice thereof, of the
issuance by the Commission of any such stop order and, if issued, to
use promptly its reasonable best efforts to obtain as soon as
possible the withdrawal thereof.
(iv) If, at any time when a Telmex Prospectus relating to the
ADSs or the L Shares is required by law to be delivered prior to the
expiration of nine months after the time of issue of the Telmex
Prospectus in connection with the offering of DECS (including in
respect of the offering and sale of the DECS), any event occurs as a
result of which the Telmex Registration Statement, as then amended,
or the Telmex Prospectus, as then supplemented, would include any
untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it
shall be necessary to amend the Telmex Registration Statement or the
ADS Registration Statement or to supplement the Telmex Prospectus to
comply with the Securities Act or the Exchange Act or the respective
rules thereunder, Telmex promptly will (i) notify the Representative
of the happening of such event, (ii) prepare and file with the
Commission, subject to the first sentence of subsection (iii) of
this Section 6(b), an amendment or supplement which will correct
such statement or omission or an amendment or supplement which will
effect such compliance and (iii) will supply any such amended or
supplemented Telmex Prospectus to the Representative in such
quantities as the Representative may reasonably request.
(v) As soon as practicable, Telmex will make generally
available to its security holders and to the Representative an
earnings statement or statements of Telmex which will satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 under
the Securities Act.
(vi) During a period of five years after the date hereof,
Telmex will furnish to the Representative copies of all reports and
financial statements furnished by Telmex to each securities exchange
on which securities issued by Telmex may be listed pursuant to
requirements of or agreements with such
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exchange or to the Commission pursuant to the Exchange Act or any
rule or regulation of the Commission thereunder.
(vii) Telmex hereby agrees to cooperate with SBC to effect
compliance with the covenants and agreements of SBC set forth in
Section 6(a)(iii).
(viii) Until the termination of the offering of the DECS, the
ADSs and the Shares, Telmex will timely file all documents, and any
amendments to previously filed documents, required to be filed by
Telmex pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Exchange Act.
(ix) Without the prior written consent of the Representative
on behalf of the Underwriters, Telmex will not (and will not permit
any subsidiary to), during the period ending 90 calendar days after
the date of the Prospectus, (A) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase,
or otherwise transfer or dispose of, directly or indirectly, or
announce the offering of, any L Shares or Telmex ADSs or any
securities convertible into or exercisable or exchangeable for L
Shares or Telmex ADSs (whether such L Shares or Telmex ADSs or any
such securities are now owned by Telmex or are hereafter acquired)
or (B) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of
ownership of L Shares or Telmex ADSs, whether any such transaction
described in clause (A) or (B) above is to be settled by delivery of
L Shares or Telmex ADSs or such other securities, in cash or
otherwise; provided, however, that Telmex may issue L Shares upon
conversion of outstanding A Shares or AA Shares and Telmex may sell
L Shares pursuant to any employee stock option plan of Telmex in
effect on the date hereof.
(x) Telmex will take such actions as may be reasonably
necessary to comply with the rules and regulations of the NYSE in
respect of the offering and listing of the ADSs in connection with
the DECS.
(xi) Telmex will comply with the Deposit Agreement so that
ADRs evidencing ADSs will be executed by the Depositary and
delivered to the holders of the DECS at the election of SBC (in
accordance with the terms of the DECS).
7. Indemnification.
(a) SBC agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of
either the Securities Act or the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which that
Underwriter or any such person may become subject under the Securities
Act, the Exchange Act or other Federal or state statutory
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law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration
Statement as originally filed or in any amendment thereof, or in the Basic
Prospectus, any Preliminary Prospectus or the Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending or any such loss, claim,
damage, liability or action; provided, however, that SBC will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to SBC
by or on behalf of any Underwriter through the Representative specifically
for inclusion therein. This indemnity agreement will be in addition to any
liability which SBC may otherwise have.
(b) SBC agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of
either the Securities Act or the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which that
Underwriter or any such person may become subject under the Securities
Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a material
fact contained in the Telmex Registration Statement or the ADS
Registration Statement, as originally filed or in any amendment thereof,
or in any Telmex Preliminary Prospectus or the Telmex Prospectus, or in
any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein above or necessary to make the statements
therein not misleading, and agrees to reimburse each such indemnified
party, as incurred, for any legal or other expenses reasonably incurred by
them in connection with investigating or defending against any such loss,
claim, damage, liability or action; provided, however, that SBC shall not
be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to
Telmex by or on behalf of any Underwriter through the Representative
specifically for inclusion therein. This indemnity agreement will be in
addition to any liability which SBC may otherwise have.
(c) Each Underwriter agrees to indemnify and hold harmless SBC, each
of its directors, each of its officers who signs the Registration
Statement and each person who controls SBC within the meaning of either
the Securities Act or the Exchange Act, to the same extent as the
foregoing indemnities in paragraphs (a) and (b) from SBC to
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the Underwriters, but only with reference to written information relating
to the Underwriters furnished to SBC by or on behalf of any Underwriter
through the Representative specifically for inclusion in the documents
referred to in the foregoing indemnities. This indemnity agreement will be
in addition to any liability which the Underwriters may otherwise have.
SBC acknowledges that the statements set forth in the last paragraph of
the cover page, in the first paragraph of the inside cover page and under
the heading "Plan of Distribution" in any Preliminary Prospectus or the
Prospectus constitute the only information furnished in writing by or on
behalf of any Underwriter through the Representative for inclusion in any
Preliminary Prospectus or the Prospectus.
(d) Each Underwriter agrees to indemnify and hold harmless Telmex,
each of its directors, each of its officers who signs the Telmex
Registration Statement or the ADS Registration Statement and each person
who controls Telmex within the meaning of either the Securities Act or the
Exchange Act, to the same extent as the foregoing indemnity in paragraph
(b) from SBC to the Underwriters, but only with reference to written
information furnished to Telmex by or on behalf of any Underwriter through
the Representative specifically for inclusion in the documents referred to
in the foregoing indemnity. This indemnity agreement will be in addition
to any liability which any Underwriter may otherwise have. Telmex
acknowledges that the statements set forth in the last paragraph of the
cover page, in the first paragraph of the inside cover page and under the
heading "Plan of Distribution" in any Telmex Preliminary Prospectus or the
Telmex Prospectus constitute the only information furnished in writing by
or on behalf of any Underwriter through the Representative for inclusion
in any Telmex Preliminary Prospectus or the Telmex Prospectus, and each
Underwriter confirms that such statements are correct.
(e) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify the indemnifying party in
writing of the claim or the commencement of that action; but the failure
so to notify the indemnifying party (i) will not relieve it from any
liability under paragraph (a), (b), (c) or (d) above unless and to the
extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and
defenses and (ii) will not, in any event, relieve the indemnifying party
from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a), (b), (c) or (d)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to
represent the indemnified party in any action for which indemnification is
sought (in which case the indemnifying party shall not thereafter be
responsible for the fees and expenses of any separate counsel retained by
the indemnified party or parties except as set forth below); provided,
however, that such counsel shall be satisfactory to the indemnified party.
Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall
have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees,
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costs and expenses of such separate counsel if (i) the use of counsel
chosen by the indemnifying party to represent the indemnified party would
present such counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be legal defenses available
to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable
time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ
separate counsel at the expense of the indemnifying party. An indemnifying
party will not, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any pending or threatened claim, action, suit or proceeding in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified parties are actual or potential parties to
such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(f) In the event that the indemnity provided in paragraph (a), (b),
(c) or (d) of this Section 7 is unavailable to or insufficient to hold
harmless an indemnified party for any reason, SBC and the Underwriters
agree to contribute to the aggregate loses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) (collectively "Losses")
to which SBC and the Underwriters may be subject in such proportion as is
appropriate to reflect the relative benefits received by SBC and the
Underwriters from the offering of the DECS; provided, however, that in no
case shall any Underwriter be responsible for any amount in excess of the
underwriting discount or commission applicable to the DECS purchased by
such Underwriter hereunder. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, SBC and the Underwriters
shall contribute in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of SBC and the
Underwriters in connection with the statements or omissions which resulted
in such Losses as well as any other relevant equitable considerations.
Benefits received by SBC shall be deemed to be equal to the total net
proceeds from the offering (before deducting expenses) received by SBC,
and benefits received by the Underwriters shall be deemed to be equal to
the total underwriting discounts and commissions, in each case as set
forth on the cover page of the Prospectus. Relative fault shall be
determined by reference to whether any alleged untrue statement or
omission relates to information provided by SBC and the Underwriters. SBC
and the Underwriters agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this paragraph (f),
no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person who controls any Underwriter
within the meaning of either the Securities Act or the Exchange Act and
each director, officer, employee and agent of such Underwriter shall have
the same rights to contribution as such Underwriter; each person who
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controls SBC within the meaning of either the Securities Act or the
Exchange Act, each officer of SBC who shall have signed the Registration
Statement and each director of SBC shall have the same rights to
contribution as SBC.
(g) The respective agreements, representations, warranties,
indemnities and other statements of SBC, Telmex or their officers and of
the Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by
or on behalf of any Underwriter through the Representative, SBC or Telmex
or any of the officers, directors or controlling persons referred to in
this Section 7, and will survive delivery of and payment for the DECS. The
provisions of this Section 7 and Section 10 hereof shall survive the
termination or cancellation of this Agreement.
8. Termination.
This Agreement shall be subject to termination in the absolute
discretion of the Representative, by notice given to SBC and Telmex prior to the
delivery of and payment for the DECS, if prior to such time (a) trading in any
securities of SBC or Telmex shall have been suspended by the Commission or on
any exchange or over-the-counter market or trading in any securities generally
on the NYSE or the Mexican Stock Exchange shall have been suspended or minimum
prices shall have been established on either such Exchange or (b) a banking
moratorium shall have been declared by either U.S. Federal or New York State
authorities or by Mexican banking authorities, or (c) there shall have occurred
any outbreak or material escalation of hostilities, declaration by the United
States or Mexico of a national emergency or war or other calamity or crisis the
effect of which on the financial markets is such as to make it, in the judgment
of the Representative, impracticable or inadvisable to proceed with the offering
or delivery of the DECS as contemplated by the Prospectus (exclusive of any
supplement thereto).
9. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Firm DECS and the Option DECS,
as the case may be, shall be subject to the accuracy of the representations and
warranties on the part of each of SBC and Telmex contained herein as of the date
hereof and each Delivery Date, to the accuracy of the statements of SBC and
Telmex made in any certificates pursuant to the provisions hereof, to the
performance by each of SBC and Telmex of its obligations hereunder, and to the
following additional terms and conditions:
(a) At or before such Delivery Date, no stop order suspending the
effectiveness of the Registration Statement, the Telmex Registration
Statement or the ADS Registration Statement nor any order directed to any
document incorporated by reference in the Prospectus or the Telmex
Prospectus shall have been issued and prior to that time no stop order
proceeding shall have been initiated or threatened by the Commission and
no challenge shall have been made by the Commission or its staff as
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to the accuracy or adequacy of any document incorporated by reference in
the Prospectus or the Telmex Prospectus; any request of the Commission for
inclusion of additional information in the Registration Statement, the ADS
Registration Statement or the Telmex Registration Statement or the
Prospectus or the Telmex Prospectus or otherwise shall have been complied
with; and after the date hereof neither SBC nor Telmex shall have filed
with the Commission any amendment or supplement to the Registration
Statement, the ADS Registration Statement or the Telmex Registration
Statement or the Prospectus or the Telmex Prospectus (or any document
incorporated by reference therein) that shall have been disapproved by the
Representative.
(b) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the DECS and the
Indenture, the Shares, the ADSs and the form of the Registration
Statement, the ADS Registration Statement and the Telmex Registration
Statement, the Prospectus and the Telmex Prospectus (other than financial
statements and other financial data) and all other legal matters relating
to this Agreement and the transactions contemplated hereby shall be
satisfactory in all respects to Xxxxxxxx & Xxxxxxxx and Xxxxx, Xxxxxxx x
Xxxxxxx, S.C., counsel for the Underwriters, and SBC shall have furnished
to such counsel all documents and information that they may reasonably
request to enable them to pass upon such matters.
(c) The Senior Executive Vice President and General Counsel to SBC
shall have furnished to the Representative his opinion addressed to the
Underwriters and dated such Delivery Date, as counsel, to the effect that:
(i) SBC has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of
Delaware; each material subsidiary of SBC has been duly incorporated
and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation; and each of SBC and
its material subsidiaries has full corporate power and authority to
own its properties and conduct its business as described in the
Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each
jurisdiction which requires such qualification wherein it owns or
leases properties or conducts business, except where the failure to
so qualify would not have a material adverse effect on SBC and its
subsidiaries taken as a whole;
(ii) the Indenture has been duly authorized, executed and
delivered, has been duly qualified under the Trust Indenture Act,
and constitutes a legal, valid and binding instrument enforceable
against SBC in accordance with its terms (subject, as to enforcement
of remedies, to applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium or other similar laws of
general applicability relating to or affecting creditors' rights
generally from time to time in effect and to general principles of
equity);
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(iii) to the best knowledge of such counsel, there is no
pending or threatened action, suit or proceeding before any court or
governmental agency, authority, body or any arbitrator involving SBC
or any of its subsidiaries of a character required to be disclosed
in the Registration Statement which is not adequately disclosed in
the Prospectus, and there is no franchise, contract or other
document of a character required to be described in the Registration
Statement or Prospectus, or to be filed as an exhibit, which is not
described or filed as required; and the statements included or
incorporated by reference in the Prospectus describing any legal
proceedings or material contracts or agree ments relating to SBC or
any of its subsidiaries fairly summarize such matters; the DECS and
the Indenture conform to the descriptions thereof contained under
the following captions of the Prospectus: "Description of the DECS"
and "Plan of Distribution";
(iv) the DECS have been duly authorized, executed,
authenticated, issued and delivered and are valid and legally
binding obligations of SBC entitled to the benefits of the
Indenture;
(v) the Registration Statement and any amendments thereto
have become effective under the Securities Act; to the best
knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued, no
proceedings for that purpose have been instituted or threatened, and
the Registration Statement, the Prospectus and each amendment
thereof or supplement thereto as of their respective effective or
issue dates (other than the financial statements and other financial
and statistical information contained therein as to which such
counsel need express no opinion) complied as to form in all material
respects with the applicable requirements of the Securities Act, the
Exchange Act and the Trust Indenture Act and the respective rules
and regulations thereunder; and such counsel has no reason to
believe that the Registration Statement, or any amendment thereof,
at the time it became effective or at the date of this Agreement or
at such Delivery Date, contained any untrue statement of a material
fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading
or that the Prospectus, at the date of this Agreement or at such
Delivery Date, included any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading;
(vi) this Agreement has been duly authorized, executed and
delivered by SBC;
(vii) no order, consent, approval, authorization, registration
or qualification of or with any governmental agency or body having
jurisdiction over SBC or any of its properties is required for the
issue and sale of the DECS or the consummation by SBC of the
transactions contemplated by this
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Agreement or the Indenture, except such as have been obtained under
the Securities Act and the Trust Indenture Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with
the sale and distribution of the DECS; and
(viii) neither the execution and delivery of the Indenture or
this Agreement, the issue and sale of the DECS, nor the consummation
of any other of the transactions herein or therein contemplated nor
the fulfillment of the terms hereof or thereof will conflict with,
result in a breach of, or constitute a default under, the charter or
by-laws of SBC or the terms of any indenture or other agreement or
instrument known to such counsel and to which SBC or any of its
material subsidiaries is a party or by which SBC, any such
subsidiary or any of their assets is bound, or any order or
regulation known to such counsel to be applicable to SBC or any such
subsidiary of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over SBC or any
such subsidiary.
In rendering such opinion, such counsel may rely, as to the execution of
the Indenture by the Trustee, upon a certificate of the Trustee setting
forth the facts as to such execution.
In rendering such opinion, such counsel may also rely (A) as to matters
involving the application of laws of any jurisdiction other than the State
of Delaware, upon the opinion of other counsel of good standing believed
to be reliable, provided that such counsel states in such opinion that
such counsel and the Representative are justified in relying upon the
opinion of such other counsel, and (B) as to matters or fact, to the
extent deemed proper, on certificates of responsible officers of SBC and
public officials.
In rendering such opinion with respect to clause (vii) above, insofar as
it relates to regulatory authorities in the states in which SBC or any
material subsidiary operates, such counsel may rely on the opinions of
local counsel satisfactory to such counsel.
(d) The Representative shall have received from Xxxxxxxx & Xxxxxxxx,
counsel for the Underwriters, such opinion or opinions, dated such
Delivery Date, with respect to the issuance and sale of the DECS, the
Indenture, the Registration Statement, the Prospectus, the ADSs, the ADS
Registration Statement, the Telmex Registration Statement, the Telmex
Prospectus and other related matters as the Representative may reasonably
require, and SBC shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass upon such matters.
(e) The Representative shall have received from Xxxxx, Xxxxxxx x
Xxxxxxx, S.C., Mexican counsel for the Underwriters, such opinion or
opinions, dated such Delivery Date, with respect to such matters as the
Representative may reasonably
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require, and Telmex shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass upon such matters.
(f) SBC shall have furnished to the Representative a certificate,
dated such Delivery Date, signed by its Chairman of the Board or its
President or a Senior Vice President and its Treasurer or an Assistant
Treasurer stating that the signers of such certificate have carefully
examined the Registration Statement, the Prospectus (and any supplement
thereto) and this Agreement and that:
(i) the representations and warranties of SBC in this Agreement
are true and correct in all material respects on and as of such
Delivery Date with the same effect as if made on such Delivery Date;
SBC has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied as a condition
to the obligation of the Underwriters to purchase the DECS
hereunder; the conditions set forth in Sections 9(a) and 9(q) have
been fulfilled; and no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for
that purpose have been instituted or, to SBC's knowledge,
threatened;
(ii) as of the date of the Prospectus, the Registration Statement
and the Prospectus did not include any untrue statement of a
material fact and did not omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading; and
(iii) since the date of the most recent financial statements
included or incorporated by reference in the Prospectus, there has
been no material adverse change in the condition (financial or
other), earnings, business, operations or properties of SBC or its
subsidiaries, whether or not arising from transactions in the
ordinary course of business, except as set forth in or contemplated
in the Prospectus.
(g) SBC shall have furnished to the Representative (i) a letter of
Ernst & Young LLP, addressed to the Board of Directors of SBC and the
Underwriters and dated the later of the effective date of the Registration
Statement or the date of the filing of SBC's latest Annual Report on Form
10-K, of the type described in the American Institute of Certified Public
Accountants' Statement on Auditing Standards No. 72 and covering such
financial statement items as counsel for the Underwriters may reasonably
have requested and (ii) a letter of Ernst & Young LLP, addressed to the
Underwriters and dated such Delivery Date, stating, as of the date of such
letter (or, with respect to matters involving changes or developments
since the respective dates as of which specified financial information is
given in the Prospectus, as of a date not more than five days prior to the
date of such letter), the conclusions and findings of such firm with
respect to the financial information and other matters covered by its
letter referred to in subclause (i) above and confirming in all material
respects the conclusions and findings set forth in such prior letter.
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(h) Subsequent to the date hereof or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement
thereto), there shall not have been (i) any change or decrease specified
in the letter or letters referred to in paragraph (g) of this Section 9 or
(ii) any change, or any development involving a prospective change, in or
affecting the condition (financial or other), earnings, business,
operations or properties of SBC and its subsidiaries the effect of which,
in any case referred to in clause (i) or (ii) above, is, in the judgment
of the Representative, so material and adverse as to make it impractical
or inadvisable to proceed with the offering or delivery of the DECS as
contemplated by the Registration Statement (exclusive of any amendment
thereof) and the Prospectus (exclusive of any supplement thereto).
(i) Subsequent to the date hereof, there shall not have been any
decrease in the ratings of any of SBC's debt securities by any "nationally
recognized statistical rating organization" (as defined for purposes of
Rule 436(g) under the Securities Act) or any notice given of any intended
or potential decrease in any such rating or of a possible change in any
such rating that does not indicate the direction of the possible change.
(j) SBC shall have furnished to the Representative on behalf of
Pacific Telesis Group a letter of Coopers & Xxxxxxx LLP, addressed to the
Underwriters and dated such Delivery Date, of the type described in the
American Institute of Certified Public Accountants' Statement on Auditing
Standards No. 72 and covering such financial statements and financial
statement items of Pacific Telesis Group as counsel for the Underwriters
may reasonably have requested.
(k) Cleary, Gottlieb, Xxxxx & Xxxxxxxx, United States special
counsel for Telmex, shall have furnished to the Representative their
written opinion, dated such Delivery Date in form and substance
satisfactory to the Representative, to the effect that:
(i) The Underwriting Agreement has been duly executed and
delivered by Telmex under the law of New York;
(ii) The Deposit Agreement has been duly executed and delivered
by Telmex under the law of New York and is a legal, valid, binding
and enforceable agreement of Telmex, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights
generally and to general principles of equity.
(iii) Upon due issuance by the Depositary of ADRs evidencing ADSs
against the deposit of Shares in respect thereof in accordance with
the provisions of the Depositary Agreement, such ADRs will be duly
and validly issued and the persons in whose names the ADRs are
registered will be entitled to the rights specified therein and in
the Depositary Agreement.
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(iv) Under the laws of the State of New York relating to
submission to jurisdiction, Telmex has validly and irrevocably
submitted to the jurisdiction of any state or federal court located
in the Borough of Manhattan, The City of New York, New York (each a
"New York court"), has validly and irrevocably waived any objection
to the venue of a proceeding in any such court, and has validly and
irrevocably appointed CT Corporation System as its authorized agent
for the purpose described in Section 14 hereof; service of process
effected in the manner set forth in Section 14 hereof will be
effective to confer valid personal jurisdiction over Telmex;
(v) In addition to the foregoing opinions, such counsel shall
additionally confirm that (based solely upon a telephonic
confirmation from a representative of the Commission) the Telmex
Registration Statement has become effective under the Act, and to
the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Telmex Registration Statement has been issued
and no proceeding for that purpose has been instituted or
threatened, and shall additionally state that they have participated
in the preparation of the Telmex Registration Statement and the
Telmex Prospectus and discussions with officers and other
representatives of Telmex, representatives of the independent public
accountants for Telmex and the Underwriter's representatives at
which the contents of the Telmex Registration Statement and the
Telmex Prospectus and related matters were discussed, and, on the
basis of the foregoing, the Telmex Registration Statement (except
the financial statements and schedules and other financial and
statistical data included therein, as to which no view is
expressed), at the time it became effective, and the Telmex
Prospectus (except as aforesaid), as of the date thereof, appeared
on their face to be appropriately responsive in all material
respects to the requirements of the Securities Act and the rules and
regulations thereunder; no information has come to their attention
that causes them to believe that the Telmex Registration Statement
(except for the financial statements and other financial and
statistical data included therein, as to which no view is
expressed), at the time it became effective or at the Delivery Date,
contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Telmex Prospectus
(except for the financial statements and other financial and
statistical data included therein, as to which no view is
expressed), at the date hereof or at the Delivery Date, contained or
contains an untrue statement of a material fact or omitted or omits
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; and they do not know of any contracts or other
documents of a character required to be filed as exhibits to the
Telmex Registration Statement or required to be described in the
Telmex Registration Statement or the Prospectus which are not filed
or described as required.
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In giving such opinions, such counsel may state that (x) such opinions are
limited to matters of the federal law of the United States of American and
the law of the State of New York and (y) insofar as the foregoing opinions
relate to the legality, validity, binding effect or enforceability of any
agreement or obligation of Telmex, that they have assumed that Telmex and
each other party to such agreement or obligation has satisfied those legal
requirements that are applicable to it to the extent necessary to make
such agreement or obligation enforceable against it (except that no such
assumption shall be made as to Telmex regarding matters of the law of the
State of New York). Such counsel need express no opinion as to any
provision of the Deposit Agreement to the extent such provisions provides
indemnity in respect of liabilities arising under federal or state
securities laws. Such counsel need express no opinion as to whether the
United States federal courts would exercise jurisdiction over any action
brought against Telmex by any party not a United States natural or
juridical person.
(l) Franck, Galicia, Duclaud y Xxxxxx, S.C., special Mexican counsel
for Telmex, shall have furnished to the Representative their written
opinion, dated such Delivery Date, in form and substance satisfactory to
the Representative, to the effect that:
(i) Telmex has been duly incorporated and is validly existing as
a corporation (sociedad anonima de capital variable) under the laws
of Mexico, with power and authority (corporate and other) to own or
lease its properties and conduct its business as described in the
Telmex Prospectus, and, insofar as matters governed by Mexican law,
is duly qualified for the transaction of business under the laws of
each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, except
where the failure to so qualify would not have a material adverse
effect on Telmex and its subsidiaries taken as a whole.
(ii) Telmex has an authorized capitalization as set forth in the
Telmex Prospectus, and all of the issued shares of capital stock of
Telmex (including the Shares) have been duly and validly authorized
and issued and are fully paid and non-assessable, except for shares
repurchased by Telmex under its buy-back program; the AA Shares, the
A Shares and the Shares conform to, and entitle the holders thereof
to the rights set forth in, the descriptions thereof contained in
the Telmex Prospectus; all of the A Shares and L Shares (including
the Shares) have been duly listed and admitted for trading on the
Mexican Stock Exchange; except with respect to voting rights (to the
extent described in the Telmex Prospectus), each L Share is entitled
to the same rights as each AA Share and A Share; based upon Mexican
law and the Estatutos of Telmex and agreements to which Telmex is a
party and known to such counsel: (a) the holders of outstanding
shares of capital stock of Telmex are not entitled to preemptive or
other rights to acquire the ADSs or the Shares, (b) the Shares may
be freely deposited by SBC with the Depositary against issuance of
ADRs evidencing ADSs, (c) the ADSs and the Shares are freely
transferable by SBC to or for the account of the Underwriters and
(d) there are no restrictions on
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subsequent transfers of the ADSs or the Shares except as described
in the Telmex Prospectus under "Description of Capital Stock",
"Description of American Depositary Receipts" and "Regulation".
(iii) The Deposit Agreement has been duly authorized, executed and
delivered by Telmex and, assuming that the Deposit Agreement
constitutes a valid and legally binding agreement under New York
law, constitutes a valid and legally binding agreement of Telmex,
enforceable in accordance with its terms.
(iv) The deposit of the Shares being deposited with the
Depositary against issuance of ADRs evidencing the ADSs to be
delivered at SBC's election to the holder of the DECS in accordance
with the terms of the DECS, the delivery of the ADSs to be delivered
at such time and the performance of this Agreement, and the Deposit
Agreement and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to such counsel to
which Telmex or any of its subsidiaries is a party or by which
Telmex or any of its subsidiaries is bound or to which any of the
property or assets of Telmex or any of its subsidiaries is subject,
nor will such action result in any violation of the provisions of
the charter and Estatutos of Telmex or the Mexican Constitution, any
statute or order, rule or regulation known to such counsel of any
court or governmental agency or body having jurisdiction over Telmex
or any of its subsidiaries or any of their properties.
(v) In connection with the offering of the DECS, no governmental
authorization in Mexico is required for the deposit of the Shares
being deposited with the Depositary against issuance of ADRs
evidencing the ADSs to be delivered at SBC's election to the holders
of the DECS in accordance with the terms of the DECS or the delivery
of the ADS and the Shares to be delivered at such time or the
consummation of the transactions contemplated by this Agreement and
the Deposit Agreement, except such governmental authorizations as
have been duly obtained and are in full force and effect.
(vi) No holder of securities of Telmex has or will have rights,
pursuant to any agreement with Telmex known to such counsel, to
include the registration of such securities under the Telmex
Registration Statement or the ADS Registration Statement.
(vii) The Telmex Registration Statement and the ADS Registration
Statement and the filing of such documents with the Commission have
been duly authorized by and on behalf of Telmex; and the Telmex
Registration Statement and the ADS Registration Statement have been
duly executed pursuant to such authorization by and on behalf of
Telmex.
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(viii) The statements in the Telmex Prospectus under "Exchange
Rates" and "Recent Developments", to the extent such statements
relate to matters of Mexican law or regulation or to the provisions
of documents therein described, are true and accurate in all
material respects, and nothing has been omitted from such statements
which would make the same misleading in any material respect.
(ix) The opinions of such counsel set forth in the Telmex
Prospectus under "Enforceability of Civil Liabilities" and
"Description of Capital Stock" are confirmed as of such Delivery
Date.
(x) Telmex's agreement to the choice of law provisions set
forth in Section 17 hereof will be recognized by the Mexican courts;
Telmex can xxx and be sued in its own name; under the laws of
Mexico, the provisions of Section 14 and 17 hereof (i.e., the
irrevocable submission of Telmex to the exclusive jurisdiction of a
New York court, the waiver by Telmex of any objection to the venue
of a proceeding in a New York court and the agreement of Telmex that
this Agreement shall be governed by and construed in accordance with
the laws of New York) are legal, valid and binding; service of
process effected in the manner set forth in Section 14 hereof,
assuming its validity under New York law, will be effective, insofar
as Mexican law is concerned, to confer valid personal jurisdiction
over Telmex; and judgment obtained in a New York court arising out
of or in relation to the obligations of Telmex under this Agreement
would be enforceable against Telmex in the courts of Mexico pursuant
to Articles 569 and 571 of the Federal Civil Procedure Code and
Article 1347A of the Commerce Code, which provide, inter alia, that
any judgment rendered outside Mexico may be enforced by Mexican
courts, provided that:
(A) such judgment is obtained in compliance with legal
requirements of the jurisdiction of the court rendering such
judgment and in compliance with all legal requirements of this
Agreement;
(B) such judgment is strictly for the payment of a certain
sum of money, provided that, under Mexican monetary law,
payments which should be made in Mexico in the foreign
currency, whether by agreement or upon a judgment of a Mexican
court, may be discharged in Mexican currency at a rate of
exchange for such currency prevailing at the time of payment;
(C) service of process was made personally on Telmex or on
the appropriate process agent (service of process effected in
the manner set forth in Section 14 hereof, assuming its
validity under New York law, will be effective, insofar as
Mexican law is concerned, to confer valid personal
jurisdiction over Telmex);
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(D) such judgment does not contravene Mexican public policy
or laws;
(E) the applicable procedure under the law of Mexico with
respect to the enforcement of foreign judgments (including the
issuance of a letter rogatory by the competent authority of
such jurisdiction requesting enforcement of such judgment and
the certification of such judgment as authentic by the
corresponding authorities of such jurisdiction in accordance
with the laws thereof), is complied with; and
(F) the courts of such jurisdiction recognize the
principles of reciprocity in connection with the enforcement
of Mexican judgments in such jurisdiction;
(xi) All dividends and other distributions declared and
payable on the shares of capital stock of Telmex may under current
Mexican laws and regulations be paid to the Depositary in Mexican
pesos that may be converted into foreign currency that may be freely
transferred out of Mexico, and all such dividends and other
distributions will not be subject to Mexican withholding tax under
Mexican laws and regulations and are otherwise free and clear of any
other tax, duty, withholding or deduction in Mexico and without the
necessity of obtaining any governmental authorization in Mexico.
(xii) Pension and retirement funds that are organized for the
benefit of employees of states, municipalities, counties or other
political entities (or agencies or departments thereof) located in
the United States or any other country (including, without
limitation, of such funds that are managed or directed, directly or
indirectly, by officials or employee of such political entities or
agencies or departments thereof) and state-owned companies organized
as separate entities with their own assets (including, without
limitation, state owned banks and telecommunications companies) that
agree to be treated as Mexican with respect to the shares of capital
stock of Telmex that they acquire and not request or accept
diplomatic intervention from their country of origin, from any other
foreign country, or from any international public or private
organization and that acquire any A Shares, A Share ADSs, ADSs or L
Shares will not be considered to be foreign states or governments,
directly or indirectly, owning shares of capital stock of Telmex in
contravention of the Estatutos, the Concession or the Communications
Law.
(xiii) To the best of such counsel's knowledge, Telmex and
each of its subsidiaries have all licenses, franchises, permits,
authorizations, approvals and orders of and from all governmental
regulatory officials and bodies that are necessary to own or lease
their properties and conduct their businesses as described in the
Telmex Prospectus and are material in relation to the business of
Telmex and its subsidiaries taken as a whole.
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(xiv) To the best of such counsel's knowledge (after
reasonable inquiry) and other than as set forth in the Telmex
Prospectus there are no legal or governmental proceedings pending to
which Telmex or any of its subsidiaries is a party or of which any
property of Telmex or any of its subsidiaries is the subject which,
if determined adversely to Telmex or any of its subsidiaries, would
individually or in the aggregate have a material adverse effect on
the consolidated financial position, stockholders' equity or results
of operations of Telmex and its subsidiaries taken as a whole; and,
to the best of their knowledge (after reasonable inquiry), no such
proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(xv) Such counsel have no reason to believe that, as of its
effective date, the Telmex Registration Statement or any further
amendment thereto made by Telmex prior to such Delivery Date (other
than the financial statements and related schedules therein, as to
which such counsel need express no opinion) contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading or that, as of its date, the Telmex
Prospectus or any further amendment or supplement thereto made by
Telmex prior to such Delivery Date (other than the financial
statements and related schedules therein, as to which such counsel
need express no opinion) contained an untrue statement of a material
fact or omitted to state a material fact necessary to make the
statements therein, in light of the circumstances in which they were
made, not misleading or that, as of such Delivery Date, either the
Registration Statement or the Telmex Prospectus or any further
amendment or supplement thereto made by Telmex prior to such
Delivery Date (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion)
contains an untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
In giving such opinion, among other assumptions and qualifications
customary for this type of transaction, such counsel may state that with
respect to all matters of United States federal and New York law they have
relied upon the opinion of United States counsel for Telmex delivered
pursuant to paragraph (k) of this Section 9.
(m) Telmex shall have furnished to the Representative a certificate
signed by its Chairman of the Board, its Chief Executive Officer or Chief
Financial Officer stating that the signers of such certificate have
carefully examined the Telmex Registration Statement, the ADS Registration
Statement, the Telmex Prospectus (and any supplement thereto) and this
Agreement and that:
(i) the representations and warranties of Telmex in this
Agreement are true and correct in all material respects on and as of
such Delivery Date with the same effect as if made on such Delivery
Date; Telmex has complied with all the agreements and satisfied all
the conditions on its part to be performed or
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satisfied as a condition to the obligation of the Underwriters to
purchase the DECS hereunder; and the conditions set forth in
Sections 9(a) and 9(q) have been fulfilled; and no stop order
suspending the effectiveness of the Telmex Registration Statement or
the ADS Registration Statement has been issued and no proceedings
for that purpose have been instituted or, to Telmex's knowledge,
threatened;
(ii) as of the date of the Telmex Prospectus, the Telmex
Registration Statement, the ADS Registration Statement and the
Telmex Prospectus did not include any untrue statement of a material
fact and did not omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
and
(iii) since the date of the most recent financial statements
included or incorporated by reference in the Telmex Prospectus,
there has been no material adverse change in the condition
(financial or other), earnings, business, operations or properties
of Telmex or its subsidiaries, whether or not arising from
transactions in the ordinary course of business, except as set forth
in or contemplated in the Telmex Prospectus.
(n) Telmex shall have furnished to the Representative (i) a letter
of Xxxxxxx, S.C., addressed to the Board of Directors of Telmex and the
Underwriters and dated the later of the effective date of the Registration
Statement or the date of the filing of Telmex's latest Annual Report on
Form 20-F, of the type described in the American Institute of Certified
Public Accountants' Statement on Auditing Standards No. 49 and covering
such financial statement items as counsel for the Underwriters may
reasonably have requested and (ii) a letter of Xxxxxxx, S.C., addressed to
the Underwriters and dated such Delivery Date, stating, as of the date of
such letter (or, with respect to matters involving changes or developments
since the respective dates as of which specified financial information is
given in the Telmex Prospectus, as of a date not more than five days prior
to the date of such letter), the conclusions and findings of such firm
with respect to the financial information and other matters covered by its
letter referred to in subclause (i) above and confirming in all material
respects the conclusions and findings set forth in such prior letter.
(o) Subsequent to the date hereof or, if earlier, the dates as of
which information is given in the Telmex Registration Statement (exclusive
of any amendment thereof) and the Telmex Prospectus (exclusive of any
supplement thereto), there shall not have been (i) any change or decrease
specified in the letter or letters referred to in paragraph (n) of this
Section 9 or (ii) any change, or any development involving a prospective
change, in or affecting the condition (financial or other), earnings,
business, operations or properties of Telmex and its subsidiaries the
effect of which, in any case referred to in clause (i) or (ii) above, is,
in the judgment of the Representative, so material and adverse as to make
it impractical or inadvisable to proceed with the offering or delivery of
the DECS as contemplated by the Registration
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Statement (exclusive of any amendment thereof) and the Prospectus
(exclusive of any supplement thereto).
(p) Subsequent to the date hereof, there shall not have been any
decrease in the ratings of any of Telmex's debt securities by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Securities Act) or any notice given of
any intended or potential decrease in any such rating or of a possible
change in any such rating that does not indicate the direction of the
possible change.
(q) No order, consent, approval, authorization, registration or
qualification of or with any governmental agency or body having
jurisdiction over SBC or any of its properties is required for the issue
and sale of the DECS or the consummation by SBC of the transactions
contemplated by this Agreement or the Indenture, except such as have been,
or will have been prior to such Delivery Date, obtained under the
Securities Act and the Trust Indenture Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under
state securities or Blue Sky laws in connection with the purchase and
distribution of the DECS by the Underwriters.
(r) The DECS to be sold by SBC at such Delivery Date shall have been
duly listed, subject to notice of issuance, on the New York Stock
Exchange.
(s) All of the issued L Shares (including the Shares) and A Shares
shall have been duly registered with the Securities and Special Sections
of the National Registry of Securities and Intermediaries maintained by
the Mexican National Banking and Securities Commission and have duly
registered and listed on the Mexican Stock Exchange, the Shares and the A
Shares shall have been duly admitted for trading on the Mexican Stock
Exchange and all of the issued L Shares (including the Shares) and the
Telmex ADSs (including the ADSs) shall have been duly listed, subject to
notice of issuance, on the New York Stock Exchange.
(t) On or prior to such Delivery Date, each of SBC and Telmex shall
have furnished to the Representative such further information,
certificates and documents as the Representative may reasonably request.
If any of the conditions specified in this Section 9 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all respects satisfactory in form and substance to the
Representative and counsel for the Underwriters, this Agreement and all
obligations of the Underwriters hereunder may be cancelled at, or any time prior
to, such Delivery Date by the Underwriters. Notice of such cancellation shall be
given to SBC and Telmex in writing or by telephone confirmed in writing.
10. Expenses.
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(a) In the event that the sale and purchase of the DECS as
contemplated in Section 2 herein is not consummated, SBC agrees to pay or
cause to be paid all expenses incident to the performance of its
obligations and the obligations of Telmex under this Agreement, including:
(i) the fees, disbursements and expenses of counsel and accountants of SBC
and Telmex in connection with the registration and delivery of the DECS
under the Securities Act and all other fees or expenses in connection with
the preparation and filing of the Registration Statement, each Preliminary
Prospectus, the Prospectus, the Telmex Registration Statement, the ADS
Registration Statement, each Telmex Preliminary Prospectus, the Telmex
Prospectus, and amendments, post-effective amendments and supplements to
any of the foregoing (including exhibits), including all registration fees
and printing costs associated therewith, and the mailing and delivering of
copies thereof to the Underwriters and dealers, in the quantities
hereinabove specified, (ii) all costs and expenses related to the
authorization, issuance, transfer and delivery of the DECS to the
Underwriters, including any transfer or other taxes payable thereon, (iii)
the cost of printing or producing any Blue Sky or Legal Investment
memorandum in connection with the offer and sale of the DECS under state
securities laws and all expenses in connection with the qualification of
the DECS for offer and sale under state securities laws as provided
herein, including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection with such qualification and in
connection with the Blue Sky or Legal Investment memorandum, (iv) all
filing fees and disbursements of counsel to the Underwriters incurred in
connection with the review and qualification of the offering, of the DECS
by the National Association of Securities Dealers, Inc., if any, (v) all
costs and expenses incident to listing the DECS on the NYSE, (vi) the cost
of printing certificates representing the DECS, (vii) the costs and
charges of any transfer agent, registrar or depositary, (viii) the costs
and expenses of SBC and of Telmex relating to investor presentations on
any "road show" undertaken in connection with the marketing of the
offering of the DECS, including, without limitation, expenses associated
with the production of road show slides and graphics, fees and expenses of
any consultants engaged in connection with the road show presentations
with the prior approval of SBC and of Telmex, travel and lodging expenses
of the Underwriters and officers of SBC and of Telmex and any such
consultants, and the cost of any aircraft chartered in connection with the
road show, (ix) all costs and fees paid to rating agencies in connection
with the rating of the DECS, and (x) all other costs and expenses incident
to the performance of the obligations of SBC and Telmex hereunder for
which provision is not otherwise made in this Section 10.
(b) In the event that the purchase and sale of DECS as contemplated
in Section 2 hereof is consummated, the Underwriters agree to pay or cause to be
paid all expenses referred to in Section 10(a) hereof to the extent that such
expenses are incurred in connection with the initial offering and issuance of
the DECS and notice of the incurrence of such costs or expenses shall have been
given to the Representative within 30 days of the Firm Delivery Date (or the
Option Delivery Date, in the event that the Underwriters exercise the option
referred to in Section 2(b) hereof).
11. If SBC shall fail to tender the DECS for delivery to the
Underwriters for any reason permitted under this Agreement, or if the
Underwriters shall decline to purchase the DECS for any reason permitted under
this Agreement (other than pursuant to Section 8(a)-(c) hereof), SBC shall
reimburse the Underwriters for the reasonable fees and
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expenses of their counsel and for such other out-of-pocket expenses as shall
have been incurred by them in connection with this Agreement and the proposed
purchase of DECS, and upon demand SBC shall pay the full amount thereof to the
Representative. If this Agreement is terminated or pursuant to Section 8(a)-(c)
hereof, SBC shall not be obligated to reimburse any Underwriter on account of
those expenses.
12. Notices. Any notice by SBC or Telmex or the Underwriters (except
for service of process upon Telmex, which shall be made pursuant to Section 14
hereof) shall be sufficient if given in writing or by facsimile transmission
confirmed promptly in writing addressed to (i) the Representative at Salomon
Brothers Inc., Xxxxx Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Telecopy
Number (000) 000-0000, Attention of Legal Department, and any notice by the
Underwriters to SBC or Telmex shall be sufficient if given in writing or by
facsimile transmission confirmed promptly in writing addressed (ii) to SBC at
SBC Communications Inc., 000 X. Xxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxxxxx, Xxxxx
00000-0000, Telecopy Number: (000) 000-0000, Attention of the Senior Vice
President, Treasurer, and Chief Financial Officer with a copy to the Senior
Executive Vice President and General Counsel, SBC Communications Inc., 000 X.
Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxxxxx, Xxxxx 00000-0000, Telecopy Number:
(000) 000-0000 and (iii) to Telmex at Telefonos de Mexico, S.A. de C.V., Parque
Xxx 000, Xxxxxxx Xxxxxxxxxx, 00000 Xxxxxx, X.X., Xxxxxx, Telecopy Number:
000-000-000-0000 Attention: Ing. Xxxxxx Xxxxxx Xxxxx.
13. This Agreement shall be binding upon the Underwriters, SBC,
Telmex and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
(a) the representations, warranties, indemnities and agreements of SBC and
Telmex contained in this Agreement shall also be deemed to be for the benefit of
the person or persons, if any, who control any Underwriter within the meaning of
Section 15 of the Securities Act, and (b) the indemnity agreement of the
Underwriters con tained in Section 7 hereof shall be deemed to be for the
benefit of (i) directors of SBC, officers of SBC who have signed the
Registration Statement and any person controlling SBC and (ii) directors of
Telmex, officers of Telmex who have signed the Telmex Registration Statement or
the ADS Registration Statement and any person controlling Telmex. Nothing in
this Agreement is intended or shall be construed to give any person, other than
the persons referred to in this Section 13, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision contained
herein.
14. Each of the parties hereto irrevocably agrees that any legal
suit, action or proceeding arising out of or based upon this Agreement or the
transactions contemplated hereby may be instituted in any New York court,
irrevocably waives, to the fullest extent it may effectively do so, any
objection which it may now or hereafter have to the laying of venue of any such
proceeding and waives any right to which it may be entitled on account of place
of residence or domicile and irrevocably submits to the exclusive jurisdiction
of such courts in any such suit, action or proceeding. Telmex has appointed CT
Corporation System as its authorized agent (the "Authorized Agent") upon whom
process may be served in any such action arising out of or based on this
Agreement or the transactions contemplated hereby which may be instituted in any
New York court by any Underwriter or by any person who controls any Underwriter,
designates CT Corporation System's address in New York City as its
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designated address to receive such process, expressly consents to the
jurisdiction of any such court in respect of any such action, and waives any
other requirements of or objections to personal jurisdiction with respect
thereto. Such appointment shall be irrevocable. Telmex represents and warrants
that the Authorized Agent has agreed to act as said agent for service of
process, and Telmex agrees to take any and all action, including the filing of
any and all documents and instruments, that may be necessary to continue such
appointment in full force and effect as aforesaid. Personal service of process
upon the Authorized Agent in a manner permitted by applicable law and written
notice of such service to Telmex shall be deemed, in every respect, effective
service of process upon Telmex.
15. For purposes of this Agreement, "business day" means any day
on the New York Stock Exchange, Inc. is open for trading.
16. This Agreement may be executed by the parties hereto in any
number of counterparts, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same instrument.
17. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this Agreement and your acceptance shall represent a binding agreement among
SBC, Telmex and the Several Underwriters.
Very truly yours,
SBC COMMUNICATIONS INC.
By: /s/ X.X. Xxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President,
Treasurer and Chief Financial
Officer
TELEFONOS DE MEXICO, S.A. DE C.V.
By: /s/ Xxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
Salomon Brothers Inc
By: /s/ Xxx Xxxxxx
-------------------------------------
Name: Xxx Xxxxxx
Title: Vice President
For itself and as Representative of the several Underwriters named in Schedule I
to the foregoing Agreement.
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SCHEDULE I
Number of DECS
Underwriters to be Purchased
Salomon Brothers Inc...................................... 8,500,000
Credit Suisse First Boston Corporation.................... 200,000
Bear Xxxxxxx & Co. Inc. ................................. 100,000
X.X. Xxxxxx Securities Inc. .............................. 100,000
Xxxxxx Xxxxxxx & Co. Incorporated......................... 100,000
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Total............................................... 9,000,000
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