EXHIBIT 1
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FORM OF UNDERWRITING AGREEMENT
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____________, 199_
Pacific Telesis Financing ____
c/o Pacific Telesis Group
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Pacific Telesis Group
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
We (the "Manager") are acting on behalf of the underwriters (including
ourselves) named in Schedule I hereto (such underwriter or underwriters being
herein called the "Underwriters") and we understand that Pacific Telesis
Financing ____ (the "Trust"), a statutory business trust organized under the
Business Trust Act (the "Delaware Act") of the State of Delaware (Chapter 38,
Title 12, of the Delaware Code, 12 Del. C. Section 3801 et seq.) proposes to
issue and sell ________ shares of its ____% Trust Originated Preferred
Securities (the "Preferred Securities").
It is understood that substantially contemporaneously with the offering and
sale of the Preferred Securities to the Underwriters contemplated hereby, (i)
the Trust, its trustees (the "Trustees") and Pacific Telesis Group, a Nevada
corporation, the sponsor of the Trust (the "Company") shall take all necessary
action to adopt an Amended and Restated Declaration of Trust in substantially
the form of the Form of Amended and Restated Declaration of Trust attached as
Exhibit 4-D-2 to the Registration Statement (as defined herein), (as so
amended and restated, the "Declaration") pursuant to which the Trust shall (x)
issue and sell the Preferred Securities to the Underwriters pursuant hereto
and (y) issue _____ shares of its ____% _____ Common Securities (the "Common
Securities" and, together with the Preferred Securities, the "Trust
Securities") to the Company, in each case with such rights and obligations as
shall be set forth in such Declaration, (ii) the Company and The First
National Bank of Chicago, as Trustee, acting pursuant to an indenture dated as
of _____________, 1995 shall enter into a supplemental indenture in
substantially the form of the Form of Supplemental Indenture attached as
Exhibit 4-H to the Registration Statement (the "Supplemental Indenture", and
the Indenture, as so supplemented, the "Indenture") providing for the issuance
of $________ in aggregate principal amount of the Company's Subordinated
Deferrable Interest Debentures, due 2025 (the "Debentures"), (iii) the Company
shall sell such Debentures to the Trust in conjunction with the consummation
of the sale of the Preferred Securities to the Underwriters contemplated
hereby and (iv) the Company and The First National Bank of Chicago, as
Guarantee Trustee, shall enter into a guarantee agreement in substantially the
form of the Form of the Preferred Securities Guarantee attached as Exhibit 4-K
to the Registration Statement (the "Guarantee") for the benefit of holders
from time to time of the Preferred Securities.
Subject to the terms and conditions set forth or incorporated by reference
herein, the Trust hereby agrees to sell and the Underwriters listed on
Schedule I hereto agree to purchase, severally and not jointly, the respective
number of Preferred Securities set forth opposite their names at a purchase
price per share of $______.
The Preferred Securities will be offered, in part, directly to the public
at a price equal to the initial public offering price of $_______ per
Preferred Security, and in part to certain securities dealers at such price
less a concession of $______ per Preferred Security, provided that such
concession for sales of 10,000 or more Preferred Securities to a single
purchaser will be $_____ per Preferred Security. The Underwriters may allow,
and such dealers may reallow, a concession not in excess of $_____ per
Preferred Security to certain brokers and dealers.
The Company will pay as compensation to the Underwriters arranging the
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investment of the proceeds of the offering of the Preferred Securities in the
Debentures, an amount in San Francisco Clearing House (next day) funds of $___
per Preferred Security (or $______ in the aggregate) for the accounts of the
several Underwriters; provided that, such compensation for sales of 10,000 or
more Preferred Securities to any single purchaser will be $____ per Preferred
Security.
The Underwriters will pay for the Preferred Securities upon delivery
thereof at the office of ___________ at _____ a.m. (New York time) on
_________, 199_, or at such other time, not later than 5:00 p.m. (New York
time) on ____________, 199_, as shall be designated by the Manager. The time
and date of such payment and delivery are hereinafter referred to as the
"Closing Date".
The Preferred Securities shall have the terms set forth in the Prospectus
dated ____________, 199_, and the Prospectus Supplement dated ____________,
199_, including the following:
Terms of Preferred Securities
Aggregate Number of
Preferred Securities:
Purchase Price:
Closing Date:
Form:
Distribution, Liquidation Refer to Exhibit 4-D-2
and Redemption Provisions: of the Registration
Statement
Guarantee Provisions: Refer to Exhibit 4-K of the
Registration Statement
Lock-Up Securities:
Lock-Up Period:
All provisions contained in the document entitled "Pacific Telesis
Financing I, Pacific Telesis Financing II, Pacific Telesis Financing III and
Pacific Telesis Group, Trust Originated Preferred Securities ("TOPrS"), Form
of Underwriting Agreement Standard Provisions" filed on __________, 1995 as
Exhibit 1 to the Registration Statement on Form S-3 (No. 33-63647) of the
Trust and the Company (the "Registration Statement"), a copy of which is
attached hereto, are herein incorporated by reference in their entirety and
shall be deemed to be a part of this agreement to the same extent as if such
provisions had been set forth in full herein, except that (i) if any term
defined in such document is otherwise defined herein, the definition set forth
herein shall control and (ii) all references in such document to, and all
provisions in such document relating to, a type of agreement that has not been
entered into in connection with the transactions contemplated hereby shall not
be deemed to be a part of this agreement.
Please confirm your agreement by having an authorized officer sign a copy
of this agreement in the space set forth below and return the signed copy to
the undersigned.
This agreement may be signed in any number of counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.
Very truly yours,
__________________________________
__________________________________
__________________________________
Acting severally on behalf of
themselves and the several
Underwriters named herein
By:
_____________________________
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By:
______________________________
Name:
Title:
The foregoing Agreement is hereby confirmed and accepted:
PACIFIC TELESIS FINANCING ___
By: PACIFIC TELESIS GROUP,
Sponsor
By:
_________________________________
Name:
Title:
PACIFIC TELESIS GROUP
By
_______________________________
Name:
Title:
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SCHEDULE I
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Number of Shares
________________
Underwriter of Firm Securities
___________ __________________
[insert Syndicate List]
Total ________________
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PACIFIC TELESIS FINANCING I
PACIFIC TELESIS FINANCING II
PACIFIC TELESIS FINANCING III
AND
PACIFIC TELESIS GROUP
TRUST ORIGINATED PREFERRED SECURITIES ("TOPrS")*
FORM OF UNDERWRITING AGREEMENT STANDARD PROVISIONS
From time to time, each of Pacific Telesis Financing I, Pacific Telesis
Financing II and Pacific Telesis Financing III, each a statutory business
trust organized under the Business Trust Act (the "Delaware Act") of the
State of Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C.
Section 3801, et seq.) (the "Trusts" and each individually a "Trust"), and
Pacific Telesis Group, a Nevada corporation (the "Company"), may enter into
one or more underwriting agreements that provide for the sale of certain
Trust Originated Preferred Securities ("TOPrS") of the Trust (the "Preferred
Securities"), to the purchaser or purchasers named therein (the
"Underwriters"). The Preferred Securities will be guaranteed by the Company
(the "Preferred Securities Guarantee") pursuant to the Preferred Securities
Guarantee Agreement (the "Preferred Securities Guarantee Agreement"), to the
extent described in the Prospectus (as defined in Paragraph 2(a)), with
respect to distributions and payments upon liquidation, redemption and
otherwise. The Preferred Securities and the related Preferred Securities
Guarantee are referred to herein as the "Securities". The standard
provisions set forth herein may be incorporated by reference in any such
underwriting agreement (the "Underwriting Agreement"). The Underwriting
Agreement, including the provisions incorporated therein by reference, is
herein referred to as "this Agreement." Unless otherwise defined herein,
terms defined in the Underwriting Agreement are used herein as therein
defined.
The terms governing the issuance of Securities shall be as provided in the
applicable Underwriting Agreement (with respect to each Underwriting
Agreement, the "Underwritten Securities").
1. ISSUANCE OF UNDERWRITTEN SECURITIES. Sales of the Underwritten
Securities may be made from time to time by the Company and the Trust to the
Underwriters of the Underwritten Securities. The firm or firms designated
as the representative or representatives, as the case may be, of the
Underwriters of the Underwritten Securities in the Underwriting Agreement
relating thereto will act as the representative or representatives (the
"Representative"). The obligation of the Company and the Trust to issue and
sell any of the Underwritten Securities and the obligation of any
Underwriters to purchase any of the Underwritten Securities shall be
evidenced by the Underwriting Agreement with respect to the Underwritten
Securities specified therein. Each Underwriting Agreement shall specify the
aggregate principal amount of the Underwritten Securities, the public
offering price of the Underwritten Securities, the purchase price to the
Underwriters of the Underwritten Securities, the names of the Underwriters
of the Underwritten Securities, the name of the Representative of such
Underwriters and the principal amount of the Underwritten Securities to be
purchased by each Underwriter, and shall set forth the date, time and manner
of delivery of the Underwritten Securities and payment therefor. The
Underwriting Agreement shall also specify (to the extent not set forth in
the Registration Statement (as defined in Paragraph 2(a)) or the Prospectus
the general terms of the Underwritten Securities. The Underwriting
Agreement may also specify other matters and provisions regarding the
Underwritten Securities and the sale thereof. An Underwriting Agreement
shall be in writing (which may be in counterparts), and may be evidenced by
an exchange of telegraphic communications, facsimile, or any other rapid
transmission device designed to produce a written record of communications
transmitted. The obligations of the Underwriters under each Underwriting
Agreement shall be several and not joint.
The Company and the Trust shall not be obligated to deliver any
Underwritten Securities except upon payment for all Underwritten Securities
to be purchased pursuant to this Agreement as hereinafter provided.
____________________
* "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Xxxxxxx Xxxxx & Co., Inc.
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The entire proceeds from the sale of the Securities will be combined with
the entire proceeds from the sale by the Trust to the Company of its common
securities ( the "Common Securities"), as guaranteed by the Company, to the
extent set forth in the Prospectus, with respect to distributions and
payments upon liquidation and redemption (the "Common Securities Guarantee"
and together with the Preferred Securities Guarantee, the "Guarantees")
pursuant to the Common Securities Guarantee Agreement (the "Common
Securities Guarantee Agreement," and together with the Preferred Securities
Guarantee Agreement, the "Guarantee Agreements") and will be used by the
Trust to purchase the Company's Subordinated Deferrable Interest Debentures
due 2025 (the "Debentures") as set forth in the Prospectus.
The Preferred Securities and the Common Securities will be issued
pursuant to the Trust's Amended and Restated Declaration of Trust (the
"Declaration"). The Debentures will be issued pursuant to an indenture (the
"Base Indenture") between the Company and the Indenture Trustee (as defined
below) and a supplement to the Base Indenture (the "Supplemental Indenture"
and together with the Base Indenture and any amendments or supplements
thereto, the "Indenture").
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE TRUST. Each of the
Company and the Trust jointly and severally represents and warrants to, and
agrees with, the several Underwriters that:
(a) A registration statement on Form S-3 including a basic
prospectus with respect to the Preferred Securities, the Preferred
Securities Guarantee and the Debentures has been prepared by the Company
and the Trust in conformity with the requirements of the Securities Act
of 1933, as amended (the "Act"), and the rules and regulations of the
Securities and Exchange Commission (the "Commission") thereunder (the
"Rules and Regulations") and has become effective. The Commission has
not issued any order preventing or suspending the use of the Prospectus
in connection with the offering or sale of the Underwritten Securities.
As used in this Agreement, (i) "Registration Statement" means that
registration statement described above, as amended to the date hereof;
and (ii) "Prospectus" means the basic prospectus (including all documents
incorporated therein by reference) included in the Registration
Statement, together with any prospectus amendment or supplement
(including in each case all documents incorporated therein by reference)
specifically relating to the Underwritten Securities, as filed with, or
mailed for filing to, the Commission pursuant to Rule 424 or Rule 430A of
the Rules and Regulations and all documents that constitute a final
prospectus under Rule 434 of the Rules and Regulations.
(b) The Registration Statement and the 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 Paragraph 5(c)
hereof, all statements which are required by the Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the
rules and regulations of the Commission under such Acts; the Declaration,
the Indenture, and the Preferred Securities Guarantee, including any
amendments and supplements thereto, pursuant to which the Underwritten
Securities will be issued, conformed, on the date on which the
Registration Statement originally became effective, 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
Paragraph 5(c) 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
neither the Company nor the Trust make any representation or warranty as
to information contained in or omitted from the Registration Statement or
the Prospectus in reliance and based upon and in conformity with
information furnished in writing to the Company or the Trust through the
Representative by or on behalf of any Underwriter specifically for
inclusion therein, or as to any statements in or omissions from that part
of the Registration Statement that constitutes the Statements of
Eligibility and Qualification on Form T-1 (the "Forms T-1") under the
Trust Indenture Act of The First National Bank of Chicago as trustee (the
"Indenture Trustee") under the Indenture, as property trustee (the
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"Property Trustee") under the Declaration and as trustee ("Guarantee
Trustee") under the Guarantees.
(c) The Company 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 the Company;
the Trust is not in violation of its declaration of trust or in default
under any agreement, indenture or instrument, the effect of which
violation would be material to the Trust; the execution and delivery by
the Company and the Trust and performance by the Company and the Trust of
their obligations under this Agreement and compliance by the Company with
the provisions of the Underwritten Securities, the Declaration, the
Indenture and the Guarantees and the issuance and delivery by the Trust
of the Preferred Securities will not conflict with, result in the
creation or imposition of any lien, charge or encumbrance upon any of the
assets of the Company or the Trust 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 the Company
or the declaration of trust of the Trust or any order, rule or regulation
of any court or governmental agency having jurisdiction over the Company
or the Trust the effect of which conflict, lien, charge, encumbrance,
default or violation would be material to the Company or the Trust and,
except as required by the Act, the Trust Indenture Act, the Exchange Act
and applicable state or foreign 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, the Declaration, the Indenture and the
Guarantees by the Company and the Trust.
(d) Except as described in or contemplated by the Prospectus, as
of the date hereof, there has not been any material adverse change in, or
any adverse development which materially affects, the business,
properties, financial condition, results of operations or prospects of
the Company, and its subsidiaries taken as a whole, since the dates as of
which information is given in the Prospectus.
(e) The Company has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement, the
Declaration, the Indenture and the Guarantees; and this Agreement has
been duly authorized, executed and delivered by the Company. The Trust
has the business trust power and authority to execute, deliver and
perform its obligations under this Agreement; and this Agreement has been
duly authorized, executed and delivered by the Trust.
(f) The Preferred Securities to be issued will be duly
authorized by the Declaration and, when issued, will be validly issued
and (subject to the terms of the Declaration) fully paid and
nonassessable undivided beneficial interests in the assets of the Trust,
not subject to any preemptive or similar rights, and will conform to all
statements relating thereto contained in the Prospectus. Holders of
Preferred Securities will be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit
organized under the Delaware General Corporation Law.
(g) The Common Securities have been duly authorized by the Declaration
and, when issued and delivered by the Trust to the Company against
payment therefor as described in the Registration Statement and
Prospectus, will be validly issued and (subject to the terms of the
Declaration) fully paid and non-assessable undivided beneficial interests
in the assets of the Trust and will conform to the description thereof
contained in the Prospectus; the issuance of the Common Securities is not
subject to preemptive or other similar rights; and at the Delivery Date
all of the issued and outstanding Common Securities of the Trust will be
directly owned by the Company free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity.
(h) The Declaration and the Guarantees have been duly authorized
by the Company and, as of the Delivery Date, will have been duly executed
and delivered by the Company. Assuming due authorization, execution and
delivery of the Declaration by the Trustees, the Declaration will, as of
the Delivery Date, be a valid and binding obligation of the Company and
the Trustees, enforceable against the Company and the Trustees in
accordance with its terms, subject to applicable bankruptcy, insolvency
and similar laws affecting creditors' rights and remedies generally and
to general principles of equity (regardless of whether enforcement is
sought in a proceeding at law or in equity) and at the Delivery Date, the
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Declaration will have been duly qualified under the Trust Indenture Act.
As of the Delivery Date, the Guarantees will be valid and binding
obligations of the Company, enforceable against the Company in accordance
with their terms, subject to the effect of bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar laws affecting
the rights and remedies of creditors generally and of general principles
of equity and at the Delivery Date, the Preferred Securities Guarantee
Agreement will have been duly qualified under the Trust Indenture Act.
(i) The Indenture will be duly qualified under the Trust
Indenture Act and, assuming due authorization, execution and delivery of
the Indenture by the Indenture Trustee and upon execution and delivery by
the Company, will be enforceable against the Company in accordance with
its terms, subject to the effect of bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar laws affecting
the rights and remedies of creditors generally and of general principles
of equity.
(j) The Debentures to be deposited in the Trust as trust assets
have been duly and validly authorized, and assuming due authorization,
execution and delivery of the Indenture by the Indenture Trustee, when
executed and authenticated in accordance with the provisions of the
Indenture and delivered to the Trust against payment therefore as
described in the Prospectus will be entitled to the benefits of the
Indenture and will be valid and binding obligations of the Company
enforceable against the Company in accordance with its terms, subject to
the effect of bankruptcy, insolvency, reorganization, receivership,
moratorium and other similar laws affecting the rights and remedies of
creditors generally and of general principles of equity.
(k) The Company has been duly incorporated, is validly existing
and in good standing under the laws of the State of Nevada and is duly
qualified to do business and in good standing as a foreign corporation in
each jurisdiction in which its ownership of property or the conduct of
its business requires such qualification (except where the failure so to
qualify would not have a material adverse effect upon the Company), and
has all power and authority necessary to own or hold its properties and
to conduct the business in which it is engaged.
(l) The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Act with the
business trust power and authority to conduct its business as presently
conducted and as described in the Prospectus and to enter into and
perform its obligations under this Agreement, the Preferred Securities,
the Common Securities and the Declaration and the Trust is duly qualified
to transact business as a foreign company and is in good standing in any
other jurisdiction in which such qualification is necessary, except to
the extent that the failure to so qualify or be in good standing would
not have a material adverse effect on the Trust; the Trust is and will be
treated as a "grantor trust" for Federal income tax purposes under
existing law; and the Trust will be treated as a consolidated subsidiary
of the Company pursuant to generally accepted accounting principles.
(m) Except as described in or contemplated by statements in the
Prospectus, there is no litigation or governmental proceeding pending or
to the knowledge of the Company, threatened against the Company or the
Trust which is likely to result in any material adverse change in the
financial condition, results of operations, business or prospects of the
Company or the Trust or which is required to be disclosed in the
Registration Statement.
(n) The financial statements filed as part of the Registration
Statement or included in 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 fairly, at all times during the period specified in paragraph
5(c) hereof, the financial condition and results of operations of the
Company on a consolidated basis, 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 Paragraph 5(c) hereof, prepared in conformity with generally
accepted accounting principles.
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(o) The documents incorporated by reference into 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
Paragraph 5(c) hereof, prepared by the Company in conformity with the
applicable requirements of the Act and the Rules and Regulations and 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 the Commission after the date
as of which this representation is being made) will be at all times
during the period specified in Paragraph 5(c) hereof, timely filed as
required thereby.
(p) Neither the Company nor the Trust is, or will be, and
neither the Company nor the Trust is directly or indirectly controlled
by, or acting on behalf of any person which is, an investment company
within the meaning of the Investment Company Act of 1940, as amended.
(q) Each of the Company and the Trust has complied with all
provisions of Section 517.075 Florida Statutes (Chapter 92-198, Laws of
Florida), an act relating to disclosure of doing business with Cuba.
3. DEFAULT BY UNDERWRITERS. If any Underwriter defaults in the performance
of its obligations under this Agreement, the remaining nondefaulting
Underwriters shall be obligated to purchase the Underwritten Securities
which the defaulting Underwriter agreed but failed to purchase in the
respective proportions which the principal amount of Underwritten Securities
set forth in the Underwriting Agreement to be purchased by each remaining
nondefaulting Underwriter set forth therein bears to the aggregate principal
amount of Underwritten Securities set forth therein to be purchased by all
the remaining nondefaulting Underwriters; provided that the remaining
nondefaulting Underwriters shall not be obligated hereby to purchase any
Underwritten Securities if the aggregate principal amount of Underwritten
Securities which the defaulting Underwriter or Underwriters agreed but
failed to purchase exceeds 9.09% of the total principal amount of
Underwritten Securities, and any remaining nondefaulting Underwriter shall
not be obligated to purchase more than 110% of the principal amount of
Underwritten Securities set forth in the Underwriting Agreement to be
purchased by it. If the foregoing maximums are exceeded, the remaining
nondefaulting 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 Underwritten Securities. If the foregoing maximums are exceeded and
the remaining Underwriters or other underwriters satisfactory to the
Representative do not elect to purchase the Underwritten Securities which
the defaulting Underwriter or Underwriters agreed but failed to purchase,
this Agreement shall terminate without liability on the part of any
nondefaulting Underwriter or the Company.
Nothing contained in this Paragraph 3 shall relieve a defaulting Underwriter
of any liability it may have to the Company for damages caused by its
default. If the remaining Underwriters or other underwriters satisfactory
to the Representative are obligated or agree to purchase the Underwritten
Securities of a defaulting or withdrawing Underwriter, either the
Representative or the Company may postpone the Delivery Date for up to seven
full business days in order to effect any changes that in the opinion of the
Company or the Representative may be necessary in the Registration
Statement, the Prospectus or in any other document or arrangement.
4. DELIVERY OF UNDERWRITTEN SECURITIES. Delivery of and payment for the
Underwritten Securities shall be made at such address, date and time as may
be specified in the Underwriting Agreement. This date and time are
sometimes referred to as the "Delivery Date." On the Delivery Date, the
Trust shall deliver the Underwritten Securities to The Depository Trust
Company ("DTC") for the account of each Underwriter against payment to or
upon the order of the Trust of the purchase price by certified or official
bank check or checks payable in next-day funds settled through the San
Francisco Clearing House or such other Clearing House as is named in the
Underwriting Agreement. The Underwritten Securities will be issued as
fully-registered securities registered in the name of Cede & Co., the
nominee of DTC. One or more fully-registered global Preferred Securities
certificates representing the aggregate number of Preferred Securities, will
be issued and delivered to DTC. Time shall be of the essence: except as
otherwise provided herein, delivery of the Underwritten Securities at the
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time and place specified pursuant to this Agreement is a further condition
of the obligation of each Underwriter hereunder, and, except as otherwise
provided herein, delivery of payment at the time and place specified
pursuant to this Agreement is a further condition of the obligation of the
Company hereunder. For the purpose of expediting the checking and packaging
of the Underwritten Securities, the Company shall make the Underwritten
Securities available for inspection by the Representative in New York, New
York or at another location acceptable to the Representative, in either case
not later than 2:00 P.M., local time, on the business day prior to the
Delivery Date. As used herein, "business day" means any day on which the
New York Stock Exchange, Inc. is open for trading.
5. COVENANTS OF THE TRUST AND THE COMPANY. Each of the Trust and the
Company jointly and severally agrees with the several Underwriters:
(a) To furnish promptly to the Representative and to counsel for
the Underwriters one signed copy of the Registration Statement as
originally filed and each amendment thereto filed prior to the date
hereof and relating to or covering the Underwritten Securities, and a
copy of the Prospectus, including all documents incorporated therein by
reference and all consents and exhibits filed therewith.
(b) To deliver promptly to the Representative such reasonable
number of the following documents as the Representative may request:
(i) conformed copies of the Registration Statement (including exhibits)
and of this Agreement, (ii) the Prospectus, and (iii) any documents
incorporated by reference in the Prospectus.
(c) To file with the Commission, during such period following
the date hereof as the Prospectus is required by law to be delivered, any
amendment or supplement to the Registration Statement or the Prospectus
that may, in the judgment of the Company, be required by the Act or
requested by the Commission.
(d) Prior to filing with the Commission during the period
referred to in (c) above, (i) any amendment to the Registration
Statement, (ii) the Prospectus or any amendment or supplement thereto, or
(iii) any document incorporated by reference in any of the foregoing or
any amendment or supplement to such incorporated document, to furnish a
copy thereof to the Representative and to counsel for the Underwriters a
reasonable amount of time prior to such proposed filing and not file any
such amendment or supplement to which the Representative or counsel for
the Underwriters shall reasonably object unless the Company shall
conclude that such amendment or supplement must be filed in accordance
with applicable law; and to file the Prospectus as so supplemented
pursuant to Rule 424(b) under the Act not later than the Commission's
close of business on the second business day following the execution and
delivery of this Agreement, or, if applicable, such earlier time as may
be required by Rule 430A(a)(3) under the Act.
(e) To advise the Representative promptly (i) when any
post-effective amendment to the Registration Statement relating to or
covering the Underwritten Securities becomes effective, (ii) during the
period referred to in (c) above, of the mailing or the delivery or XXXXX
transmission to the Commission for filing of any supplement to the
Prospectus or any document to be filed pursuant to the Exchange Act,
(iii) of the receipt of any comments from the Commission, (iv) of any
request or proposed request by the Commission for an amendment or
supplement to the Registration Statement (insofar as the amendment or
supplement relates to or covers the Underwritten Securities), to the
Prospectus, to any document incorporated by reference in any of the
foregoing or for any additional information, (v) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or any reference to or the initiation or threat of
any stop order proceeding or of any challenge by the Commission to the
accuracy or adequacy of any document incorporated by reference in the
Prospectus, (vi) of receipt by the Company of any notification with
respect to the suspension of the qualification of the Underwritten
Securities for sale in any jurisdiction or the initiation or threat of
any proceeding for that purpose, and (vii) of the happening of any event
which makes untrue any statement of a material fact made in the
Registration Statement (insofar as the Registration Statement relates to
or covers the Underwritten Securities) or the Prospectus or which
requires the making of a change in the Registration Statement or the
Prospectus in order to make any material statement therein not
misleading.
10
(f) If, during the period referred to in (c) above, the
Commission shall issue a stop order suspending the effectiveness of the
Registration Statement, to make every reasonable effort to obtain the
lifting of that order at the earliest possible time.
(g) If any event shall occur as a result of which it is
necessary to amend or supplement the Prospectus in order to make the
Prospectus not misleading in the light of the circumstances existing at
the time it is delivered to a purchaser, to forthwith amend or supplement
the Prospectus in accordance with paragraph (d) above so that, as so
amended or supplemented, the Prospectus will not include an 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 existing at the time it is delivered to a purchaser, not
misleading, and furnish to the Underwriters a reasonable number of copies
of such amendment or supplement.
(h) As soon as practicable, to make generally available to its
security holders and to deliver to the Representative an earnings
statement of the Company, conforming with the requirements of
Section 11(a) of the Act, covering a period of at least twelve months
beginning after the effective date of the Registration Statement, as
defined in Rule 158(c) under the Act.
(i) During a period of five years after the date hereof, to
furnish to the Representative copies of all reports and financial
statements furnished by the Company to each securities exchange on which
securities issued by the Company 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.
(j) To endeavor to qualify the Underwritten Securities for offer
and sale and to determine their eligibility for investment under the
securities laws of such jurisdictions as the Representative may
reasonably request and to continue such qualifications in effect so long
as reasonably required for distribution; provided, however, that neither
the Company nor the Trust shall be required to qualify to do business in
any jurisdiction where it is not now qualified nor to take any other
action which would subject it to general or unlimited service of process
in any jurisdiction where it is not now so subject.
(k) To pay the costs incident to the authorization, issuance,
and delivery of the Underwritten Securities; the costs incident to the
preparation and filing under the Act of the Registration Statement and
any amendments and exhibits thereto and the Prospectus and any amendments
or supplements thereto; the costs incident to the preparation and filing
of any document and any amendments and exhibits thereto required to be
filed by the Company under the Exchange Act; the costs of printing or
reproducing and distributing the Registration Statement as originally
filed and each amendment and post-effective amendment thereof (including
exhibits), the Prospectus and any documents incorporated by reference in
any of the foregoing documents; the costs of reproducing this Agreement;
fees paid to rating agencies in connection with the rating of the
Securities, including the Underwritten Securities; the fees and expenses
of qualifying the Securities, including the Underwritten Securities,
under the securities laws of the several jurisdictions as provided in
this Paragraph and of preparing and printing a Blue Sky Memorandum and a
memorandum concerning the legality of the Securities, including the
Underwritten Securities, as an investment (including reasonable fees of
counsel to the Underwriters in connection therewith) and all other
reasonable costs and expenses incident to the performance of the
Company's and the Trust's obligations under this Agreement; provided
that, except as provided in this Paragraph 5(k) and in Paragraph 10
hereof, the Underwriters shall pay their own costs and expenses,
including the fees and expenses of their counsel, any transfer taxes on
the Underwritten Securities which they may sell and the expenses of
advertising any offering of the Underwritten Securities made by the
Underwriters.
(l) To use its best efforts to obtain the listing of the
Underwritten Securities on the securities exchange(s), if any, set forth
in the Underwriting Agreement (the "Stock Exchange") and to cause such
listing to be continued so long as such listing remains commercially
practicable in the reasonable judgment of the Company and to furnish from
time to time any and all documents, instruments, information and
undertakings that may be necessary in order to effect such listing; if
11
the Securities are exchanged for the Debentures, the Company will use its
reasonable efforts to effect the listing of the Debentures on the
exchange on which the Securities were then listed.
(m) Until the termination of the offering of the Underwritten
Securities, to timely file all documents, and any amendments to
previously filed documents, required to be filed by the Company pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act.
(n) During the period beginning on the date hereof and
continuing to the Delivery Date, not to offer, sell, contract to sell or
otherwise dispose of any Preferred Securities, any security convertible
into or exchangeable into or exercisable for securities or any equity
securities substantially similar to the Preferred Securities other than
the Underwritten Securities to the Underwriters.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company and the Trust shall jointly and severally
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act from and against any loss, claim, damage
or liability and expense whatsoever, as incurred, joint or several, and
any action in respect thereof, to which that Underwriter or controlling
person may become subject, under the Act or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon,
any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus, or arises out
of, or is 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 shall reimburse each Underwriter
and such controlling person for any reasonable out-of-pocket legal and
other expenses, as incurred, reasonably incurred by that Underwriter or
controlling person in investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action, as such
expenses are incurred; provided, however, that neither the Company nor
the Trust shall be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of, or is based upon,
any untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement or the Prospectus in reliance
and based upon information furnished in writing to the Company or the
Trust through the Representative by or on behalf of any Underwriter
expressly for use in the Registration Statement; and provided further
that as to the Prospectus, this indemnity agreement shall not inure to
the benefit of any Underwriter or any person controlling that Underwriter
on account of any loss, claim, damage, liability or action arising from
the sale of Underwritten Securities to any person by that Underwriter if
that Underwriter failed to send or give a copy of the Prospectus to that
person within the time required by the Act and the untrue statement or
alleged untrue statement of a material fact or omission or alleged
omission to state a material fact was corrected in the Prospectus, unless
such failure resulted from noncompliance by the Company or the Trust with
Paragraph 5(b) hereof. For purposes of the second proviso to the
immediately preceding sentence, the term "Prospectus" shall not be deemed
to include the documents incorporated therein by reference, and no
Underwriter shall be obligated to send or give any supplement or
amendment to any document incorporated by reference in the Prospectus to
any person other than a person to whom such Underwriter has delivered
such incorporated documents in response to a written request therefor.
The foregoing indemnity agreement is in addition to any liability which
the Company or the Trust may otherwise have to any Underwriter or
controlling person.
(b) Each Underwriter shall indemnify and hold harmless the
Company and the Trust, each of their trustees, each of their directors,
each of their officers who signed the Registration Statement and any
person who controls the Company or the Trust within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act from and against
any loss, claim, damage or liability and expense whatsoever, as incurred,
joint or several, and any action in respect thereof, to which the Company
or the Trust or any such trustee, director, officer or controlling person
may become subject, under the Act or otherwise, insofar as such loss,
claim, damage, liability or action, arises out of, or is based upon, any
untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or the Prospectus, or arises out of, or is
based upon the omission or alleged omission to state therein a material
12
fact required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that the
untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance and based upon information furnished in
writing to the Company or the Trust through the Representative by or on
behalf of that Underwriter expressly for use in the Registration
Statement, and shall reimburse the Company or the Trust for any
reasonable out-of-pocket legal and other expenses, as incurred,
reasonably incurred by the Company or any such trustee, director, officer
or controlling person in investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action, as such
expenses are incurred. The foregoing indemnity agreement is in addition
to any liability which any Underwriter may otherwise have to the Company
or the Trust or any of their trustees, directors, officers or controlling
persons.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity is applicable pursuant to either of the two preceding
subparagraphs, such person (the "indemnified party") shall promptly
notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon request
of the indemnified party, shall retain counsel reasonably satisfactory to
the indemnified party to represent the indemnified party, and any others
the indemnifying party may designate in such proceeding, and shall pay
the reasonable fees and disbursements of such counsel related to such
proceeding, but the omission so to notify such indemnifying party of any
such action shall not relieve such indemnifying party from any liability
which it may have to the indemnified party otherwise than on account of
the indemnity agreement provided for in the two preceding subparagraphs.
In any such proceeding, any indemnified party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the indemnifying
party and the indemnified party shall have mutually agreed to the
retention of such counsel, or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actually or
potentially differing interests between them. It is understood that the
indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm in addition
to any local counsel for all such indemnified parties and that all such
fees and expenses shall be reimbursed as they are incurred. Such one
firm shall be designated in writing by the Representative in the case of
parties indemnified pursuant to Paragraph 6(a) and by the Company and the
Trust in the case of parties indemnified pursuant to Paragraph 6(b). The
indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
(d) If the indemnification provided for under Paragraphs 6(a) or
6(b) shall for any reason be unavailable to an indemnified party in
respect of any loss, claim, damage or liability, or any action in respect
thereof, referred to therein, then each indemnifying party shall, in lieu
of indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage
or liability, or action in respect thereof, in such proportion as is
appropriate to reflect the relative benefits received by the Company on
the one hand and the Underwriters on the other from the offering of the
Underwritten Securities. If, however, this allocation is not permitted
by applicable law, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of such
loss, claim, damage or liability, or action in respect thereof, in such
proportion as shall be appropriate to reflect the relative benefits
received by the Company or the Trust on the one hand and the Underwriters
on the other from the offering of the Underwritten Securities and the
relative fault of the Company or the Trust on the one hand and the
Underwriters on the other with respect to the statements or omissions
which resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations.
The relative benefits received by the Company or the Trust on the one
hand and the Underwriters on the other with respect to such offering
shall be deemed to be in the same proportion as the total net proceeds
13
from the offering of the Underwritten Securities (after deducting
expenses) received by the Company or the Trust bear to the total
underwriting discounts and commissions received by the Underwriters with
respect to such offering. The relative fault shall be determined by
reference to whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Company or the Trust or the Underwriters, the
intent of the parties, and their relative knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by an indemnified party as a result
of the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Paragraph 6(d) shall be deemed to include, for
purposes of this Paragraph 6(d), any reasonable out-of-pocket legal or
other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Paragraph 6(d), no Underwriter
shall be required to contribute any amount in excess of the amount by
which the total price at which the Underwritten Securities underwritten
by it and distributed to the public were offered to the public exceeds
the amount of any damages which such Underwriter has otherwise paid or
become liable to pay by reason of any untrue or alleged untrue statement
or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to
contribute as provided in this Paragraph 6(d) are several in proportion
to their respective underwriting obligations and not joint.
(e) The agreements contained in this Paragraph 6 and the
representations, warranties and agreements of the Company and the Trust
in Paragraph 2 and Paragraph 5 hereof shall survive the delivery of the
Underwritten Securities and shall remain in full force and effect,
regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of any indemnified party.
Notwithstanding the preceding sentence, in the event of any termination
or cancellation of this Agreement or any failure to consummate the sale
of the Underwritten Securities within the scope of Paragraph 3 hereof,
such Paragraph shall control the Company's and the Trust's obligations
and liabilities instead of Paragraph 5(k).
7. TERMINATION BY THE REPRESENTATIVE. This Agreement may be terminated by
the Representative, in the absolute discretion of the Representative, by
written notice given to and received by the Company prior to the delivery of
and any payment for the Underwritten Securities if, during the period
beginning on the date hereof to and including the Delivery Date, (i) trading
in the Preferred Securities shall have been suspended by the Commission or a
national securities exchange or trading in securities generally on the New
York Stock Exchange shall have been suspended or materially limited, and, in
the reasonable judgment of a majority in interest of the Underwriters,
including the Representative, such suspension or limitation in trading in
the Preferred Securities or in securities generally is material and would
make it impracticable to market the Underwritten Securities, (ii) a general
moratorium on commercial banking activities shall have been declared by
either Federal, New York, or California authorities, (iii) there shall have
occurred any material outbreak or escalation of hostilities or other
calamity or crisis the effect of which on the financial markets of the
United States, or, if the Underwritten Securities are to be offered or sold
in any financial market outside of the United States, such foreign financial
market, is such as to make it, in the reasonable judgment of the
Representative, impracticable to market the Underwritten Securities, or
(iv) there shall have occurred any material adverse change, or any
development involving a prospective material adverse change, in or affecting
particularly the business or properties of the Company which materially
impairs the investment quality of the Underwritten Securities.
8. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The respective
obligations of the Underwriters under the Agreement with respect to the
Underwritten Securities are subject to the accuracy, on the date hereof and
on the Delivery Date, of the representations and warranties of the Company
and the Trust contained herein, to the performance by the Company and the
Trust of its obligations hereunder, and to each of the following additional
terms and conditions applicable to the Underwritten Securities:
(a) At or before the Delivery Date, no stop order suspending the
effectiveness of the Registration Statement nor any order directed to any
document incorporated by reference in the Prospectus shall have been
14
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 to the accuracy or adequacy of any document
incorporated by reference in the Prospectus; any request of the
Commission for inclusion of additional information in the Registration
Statement or the Prospectus or otherwise shall have been complied with;
and after the date hereof, neither the Company nor the Trust shall have
filed with the Commission any amendment or supplement to the Registration
Statement or the Prospectus (or any document incorporated by reference
therein) in violation of Paragraph 5(d) hereof.
(b) No Underwriter shall have discovered and disclosed to the
Company or the Trust on or prior to the Delivery Date that the
Registration Statement or the Prospectus contains an untrue statement of
a fact which is material or omits to state a fact which is material and
is required to be stated therein or is necessary to make the statements
therein not misleading.
(c) The General Counsel of the Company shall have furnished to
the Representative his opinion addressed to the Underwriters and dated
the Delivery Date to the effect that:
(i) The Company has been duly incorporated and is validly existing
and in good standing under the laws of the State of Nevada.
(ii) The Company is duly qualified to do business and is in good
standing as a foreign corporation in all jurisdictions in which its
ownership of property or its conduct of business requires such
qualification (except where the failure so to qualify would not have
a material adverse effect upon the Company), and has all power and
authority necessary to own its properties and conduct the business in
which it is engaged as described in the Prospectus.
(iii) The Trust is duly qualified and in good standing as a foreign
company in any jurisdiction in which such qualification is necessary,
except to the extent that the failure to so qualify or be in good
standing would not have a material adverse effect on the Trust.
(iv) All of the issued and outstanding Common Securities of the
Trust are owned of record by the Company free and clear, to the best
of said counsel's knowledge, of any security interest, mortgage,
pledge, lien, encumbrance, claim or equitable right.
(v) The Declaration has been duly qualified under the Trust
Indenture Act.
(vi) The Indenture has been duly qualified under the Trust Indenture
Act and, assuming due authorization, execution and delivery of the
Indenture by the Company and the Indenture Trustee, the Indenture
will be enforceable against the Company in accordance with its terms.
(vii) Assuming due authorization, execution and delivery of the
Debentures by the Company and due authorization, execution and
delivery of the Indenture by the Company and the Indenture Trustee,
the Debentures when executed and authenticated in accordance with the
provisions of the Indenture and delivered against payment therefor,
as described in the Prospectus, will be entitled to the benefits of
the Indenture and will be valid and binding obligations of the
Company enforceable against the Company in accordance with its terms.
(viii) Each of the Guarantee Agreements has been duly authorized,
executed and delivered by the Company; the Preferred Securities
Guarantee Agreement, assuming it is duly authorized, executed and
delivered by the Guarantee Trustee and assuming the Preferred
Securities are issued, delivered and paid for in accordance with the
Underwriting Agreement and the Prospectus, constitutes a valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms; and the Preferred Securities Guarantee
Agreement has been duly qualified under the Trust Indenture Act.
(ix) The statements made in the Prospectus under the captions "Risk
Factors," "Description of the Pacific Telesis Trusts' Preferred
Securities," "Description of the Pacific Telesis Subordinated Debt
Securities," and "Description of the Guarantees," and "Effect of
Obligations Under the Subordinated Debentures and the Guarantee"
insofar as such statements constitute summaries of the legal matters
15
or documents referred to therein are accurate in all material
respects; and the Declaration, the Indenture and the Preferred
Securities Guarantee Agreement filed with the Commission as part of
the Registration Statement complied as to form in all material
respects with the requirements of the Trust Indenture Act and the
rules and regulations of the Commission thereunder.
(x) Neither the Company nor the Trust is, or will be, and neither
the Company nor the Trust is directly or indirectly controlled by, or
acting on behalf of any person which is, an investment company within
the meaning of the Investment Company Act of 1940, as amended.
(xi) The Underwritten Securities have been duly authorized,
executed, authenticated, issued and delivered and are valid and
binding obligations of the Trust entitled to the benefits of the
Declaration and are enforceable in accordance with their terms.
(xii) This Agreement has been duly authorized, executed and
delivered by the Company and, assuming due authorization, execution
and delivery by the other parties hereto, is a valid and binding
obligation of the Company.
(xiii) The Underwritten Securities, the Common Securities, the
Debentures, the Declaration, the Indenture and each of the Guarantee
Agreements conform as to legal matters to the statements concerning
them in the Registration Statement and the Prospectus under the
following (or comparable) captions: "Description of Securities" and
"Plan of Distribution."
(xiv) The Registration Statement is effective under the Act, no stop
order suspending its effectiveness has been issued and, to the best
of such counsel's knowledge, no proceeding for that purpose is
pending or threatened by the Commission.
(xv) No order directed to any document incorporated by reference in
the Prospectus has been issued by the Commission and, to the best of
such counsel's knowledge, no challenge has been made by the
Commission to the accuracy or adequacy of any such document.
(xvi) Such counsel does not know of any litigation or any
governmental proceeding pending or threatened against the Company or
the Trust which is likely to materially adversely affect the subject
matter of this Agreement or is required to be disclosed in the
Prospectus which is not disclosed and correctly summarized therein.
(xvii) The execution, delivery and performance of this Agreement and
compliance by the Company and the Trust with the provisions of the
Underwritten Securities and the Declaration, the Indenture or the
Guarantees will not result in a material conflict with, or result in
the creation or imposition of any lien, charge or encumbrance of a
material amount upon the assets of the Company or the Trust pursuant
to the terms of, or constitute a material default under, any material
agreement, indenture or instrument known to such counsel, or result
in a violation of the corporate charter or bylaws of the Company, or
result in a material violation of any order, rule or regulation of
any court or governmental agency having jurisdiction over the Company
or its property.
(xviii) The issue and sale of the Debentures and the execution and
delivery of the Guarantees by the Company in accordance with the
terms of this Agreement, the Company's purchase of the Common
Securities from the Trust and the Company's participation in the
transactions otherwise contemplated by this Agreement have been duly
and validly authorized by the necessary corporate action of the
Company; and no authorization, approval, consent, certificate or
order of any other state commission or regulatory authority (other
than under any applicable state securities or blue sky laws, as to
which said counsel need express no opinion) or of any federal
commission or regulatory authority is required in respect of such
issue and sale, such purchase or such participation, except (A) such
as may be required under the Act or the Rules and Regulations and
(B) the qualification of the Declaration, the Preferred Securities
Guarantee Agreement and the Indenture under the Trust Indenture Act
and rules and regulations of the Commission thereunder.
(xix) The Declaration has been duly authorized, executed and
16
delivered by the Company, as sponsor, and has been duly executed and
delivered by the Trustees.
In giving such opinion, such counsel may rely, as to the authorization,
execution and delivery of the Indenture and authentication of the
Underwritten Securities by the Indenture Trustee, upon a certificate of
the Indenture Trustee setting forth the facts as to such authorization,
execution, delivery and authentications and such counsel may assume the
due authorization execution and delivery of this Agreement by or on
behalf of the Underwriters. Such counsel need not express an opinion
with respect to any state or foreign securities or blue sky laws. Such
counsel may limit the scope of his opinion to the law of the State of
California, the general corporation law of the State of Nevada and the
federal law of the United States of America.
In connection with the opinions expressed by such counsel in response to
subparagraphs (vi), (vii), (viii), (xi) and (xii) above, such counsel's
opinion as to enforceability may be qualified to the extent that
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, liquidation, conservatorship, readjustment of debt,
moratorium or other similar laws generally affecting the enforcement of
the rights of creditors, and insofar as indemnification provisions may be
limited by applicable law, and that such opinion is subject to
limitations imposed by applicable law or equitable principles upon the
specific enforceability of any of the remedies, covenants or other
provisions of the documents referred to in such subparagraphs whether
considered in a proceeding in equity or at law and upon the availability
of injunctive relief or other equitable remedies. Such counsel's opinion
in response to subparagraph (viii) above is further subject, as to
enforceability, to the effect of applicable court decisions, invoking
statutes or principles of equity, which have held that certain covenants
and provisions of agreements are unenforceable where the breach of such
covenants or provisions imposes restrictions or burdens upon a borrower,
and it cannot be demonstrated that the enforcement of such restrictions
or burdens is necessary for the protection of the creditor, or which have
held that the creditor's enforcement of such covenants or provisions
under the circumstances would violate the creditor's covenants of good
faith and fair dealing implied under California law; the effect of
California statutes and rules of law that cannot be waived prospectively
by a borrower; and the effect of California statutes and cases to the
effect that a surety may be exonerated if the creditor alters the
original obligation of the principal without the surety's consent, elects
remedies for default that may impair the surety's subrogation rights
against the principal, proceeds against the surety without first
exhausting its remedies against the principal or otherwise takes action
which prejudices the surety, without notification of and consent of the
surety, unless such rights of the surety are validly waived.
Such opinion shall also state that the Registration Statement and the
Prospectus, as of their respective effective or issue dates, complied as
to form in all material respects with the requirements of the Act and the
Trust Indenture Act and the rules and regulations of the Commission under
said Acts (except that no opinion need be expressed as to the financial
statements and other financial and statistical data contained therein)
and each document incorporated by reference in the Prospectus as filed
under the Exchange Act complied, when so filed, as to form in all
material respects with the applicable requirements of the Exchange Act
and the rules and regulations of the Commission thereunder (except that
no opinion need be expressed as to the financial statements and other
financial and statistical data contained therein)
Such opinion shall also contain a statement that such counsel has no
reason to believe that (except for financial statements and other
financial and statistical data contained therein as to which no opinion
need be expressed) (i) the Registration Statement, when it became
effective, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order
to make the statements therein not misleading, or (ii) either the
Registration Statement or the Prospectus contains an untrue statement of
a material fact or omits to state a material fact necessary in order to
make the statements therein (and in the case of the Prospectus, in light
of the circumstances under which they were made) not misleading on the
date of this Agreement or on the Delivery Date.
(d) Skadden, Arps, Slate, Xxxxxxx & Xxxx, special Delaware
counsel for the Company, shall have furnished to the Representative their
17
opinion addressed to the Underwriters and dated as of the Delivery Date,
to the effect that:
(i) The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Act; all filings
required under the laws of the State of Deleware with respect to the
creation and valid existence of the Trust as a business trust have
been made; under the Delaware Act and the Declaration, the Trust has
all necessary power and authority to own property and to conduct its
business as described in the Prospectus.
(ii) The Declaration is a valid and binding obligation of the
Company and the Regular Trustees enforceable against the Company and
the Regular Trustees in accordance with its terms, except to the
extent that enforcement thereof may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (b)
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
(iii) The Preferred Securities have been duly authorized for
issuance and, subject to the qualification set forth below, when
issued, delivered and paid for in accordance with the Underwriting
Agreement, will be validly issued, fully paid and non-assessable
undivided beneficial interests in the assets of the Trust; the
holders of the Preferred Securities will be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law
of the State of Delaware and the issuance of the Preferred Securities
is not subject to preemptive or other similar rights under the
Delaware Act or the Declaration. We bring to your attention that the
holders of Preferred Securities may be obligated, pursuant to the
Declaration, to (a) provide indemnity and/or security in connection
with and pay taxes or governmental charges arising from transfers of
Preferred Securities and the issuance of replacement Preferred
Securities, and (b) provide security and indemnity in connection with
requests of or directions to the Property Trustee to exercise its
rights and powers under the Declaration.
(iv) The execution, delivery and performance by the Trust of the
Underwriting Agreement have been duly authorized by all necessary
actions of the Trust.
(e) The Company shall have furnished to the Representative on
the Delivery Date (i) certificates, dated the Delivery Date, of its
Chairman of the Board, Vice Chairman, President, an Executive Vice
President or a Vice President and its respective Treasurer or an
Assistant Treasurer and (ii) a certificate, dated the Delivery Date, of a
Trustee of the Trust, in each case in which such officers shall state
that, to the best of their knowledge after reasonable investigation, the
representations and warranties of the Company and the Trust, as the case
may be, in Paragraph 2 hereof are true and correct as of the Delivery
Date with the same effect as if made on the Delivery Date, the Company
and the Trust, as the case may be, have complied with all agreements and
satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Delivery Date, that no stop order suspending
the effectiveness of the Registration Statement is in effect and no
proceedings for that purpose are pending or are threatened by the
Commission and that, subsequent to the date of the most recent financial
statements in the Prospectus, there has been no material adverse change
in the financial position or results of operations of the Company and any
of its subsidiaries, taken as a whole, except as set forth in or
contemplated by the Prospectus.
(f) At the Delivery Date, counsel for the Underwriters shall
have been furnished with such documents and opinions as they may
reasonably require for the purpose of enabling them to pass upon the
issuance and sale of the Preferred Securities as herein contemplated and
related proceedings, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company
and the Trust, in connection with the issuance and sale of the Preferred
Securities as herein contemplated shall be reasonably satisfactory in
form and substance to the Representative and counsel for the
Underwriters.
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(g) The Company shall have furnished to the Representative a
letter of Coopers & Xxxxxxx, L.L.P., addressed to the Board of Directors
of the Company and the Underwriters and dated the Delivery Date, to the
effect that:
(i) they are independent public accountants with respect to the
Company and its consolidated subsidiaries within the meaning of the
Act and the Rules and Regulations; and the Trust is and will be
treated as a consolidated subsidiary of the Company pursuant to
generally accepted accounting principles;
(ii) in their opinion, the consolidated financial statements and any
supplementary financial information and schedules audited (and, if
applicable, prospective financial statements and/or pro forma
financial information examined) by them and included or incorporated
by reference in the Registration Statement or the Prospectus comply
as to form in all material respects with the applicable accounting
requirements of the Act or the Exchange Act and the related published
rules and regulations thereunder; and if applicable, they have made a
review in accordance with standards established by the American
Institute of Certified Public Accountants of the condensed
consolidated interim financial statements of the Company for the
periods specified in such letter, as indicated in their reports
thereon, copies of which have been furnished to the Representative;
(iii) based upon limited procedures set forth in detail in such
letter, nothing has come to their attention which causes them to
believe that:
(A) the unaudited consolidated financial statements and
supporting schedules of the Company included in the Registration
Statement do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the Rules and
Regulations or are not presented in conformity with generally
accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in
the Registration Statement;
(B) the unaudited amounts of revenues, net income and net income
per share set forth under "Pacific Telesis Group Summary Financial
Information" in the Prospectus were not determined on a basis
substantially consistent with that used in determining the
corresponding amounts in the audited financial statements included in
the Registration Statement; or
(C) at a specified date not more than five days prior to
Delivery Date, there has been any change in the capital stock of the
Company or any increase in the consolidated long-term debt of the
Company or any decrease in consolidated net current assets or net
assets as compared with the amounts shown on the date of the most
recent consolidated balance sheet included in or incorporated by
reference in the Registration Statement and the Prospectus during the
period from the date of the most recent consolidated balance sheet
included in or incorporated by reference in the Registration
Statement and the Prospectus to a specified date not more than five
days prior to the Delivery Date, there were any decreases, as
compared with the corresponding period in the preceding year, in
consolidated revenues, net income or net income per share of the
Company and its subsidiaries except in all instances for changes,
increases or decreases which the Registration Statement and the
Prospectus disclose have occurred or may occur; and
(iv) in addition to the examination referred to in their opinions
and the limited procedures referred to in clause (iii) above, they
have carried out certain specified procedures, not constituting an
audit, with respect to certain amounts, percentages and financial
information which are included in the Registration Statement and
Prospectus, or incorporated therein by reference, and which are
specified by the Representative, and have found such amounts,
percentages and financial information to be in agreement with the
relevant accounting, financial and other records of the Company and
its subsidiaries identified in such letter.
(h) Pillsbury Madison & Sutro, as counsel for the Underwriters,
shall have furnished to the Representative on the Delivery Date such
opinions with respect to the validity of the Underwritten Securities and
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with respect to the Registration Statement, the Prospectus, and other,
related matters as the Representative may reasonably require. In giving
such opinion such counsel may rely, as to all materials governed by the
laws of jurisdictions other than the law of the State of California, the
Federal law of the United States and Delaware General Corporation Law
upon the opinions of counsel reasonably satisfactory to the Underwriters.
(i) Pepper, Xxxxxxxx & Xxxxxxx, as counsel for The First National Bank
of Chicago, as Property Trustee under the Declaration, Guarantee Trustee
under the Preferred Securities Guarantee Agreement, shall have furnished
to the Representative their opinion addressed to the Underwriters and
dated the Delivery Date, to the effect that:
(i) The First National Bank of Chicago is a national banking
association duly organized and validly existing in good standing
under the laws of the United States of America.
(ii) the Property Trustee has full power, authority and legal right
to execute, deliver and perform its obligations under the terms of
the Declaration and the Preferred Securities Guarantee Agreement;
(iii) the execution, delivery and performance by the Property
Trustee of the Declaration and the execution, delivery and
performance by the Guarantee Trustee of the Preferred Securities
Guarantee Agreement have been duly authorized by all necessary
corporate action on the part of the Property Trustee and the
Guarantee Trustee, respectively. The Declaration and the Preferred
Securities Guarantee Agreement have been duly executed and delivered
by the Property Trustee and the Guarantee Trustee, respectively, and
constitute the legal, valid and binding obligations of the Property
Trustee and the Guarantee Trustee, respectively, enforceable against
the Property Trustee and the Guarantee Trustee, respectively, in
accordance with their terms, subject to the effect of bankruptcy,
insolvency, reorganization, receivership, fraudulent conveyance,
moratorium and other similar laws affecting the rights of creditors
generally as from time to time in effect, general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law), and considerations of public policy
or the effect of applicable law relating to fiduciary duties;
(iv) the execution, delivery and performance of the Declaration and
the Preferred Securities Guarantee Agreement by the Property Trustee
and the Guarantee Trustee, respectively, does not conflict with or
constitute a breach of the charter or by-laws of the Property Trustee
and the Guarantee Trustee, respectively; and
(v) no consent, approval or authorization of, or registration with
or notice to, any governmental authority or agency of the State of
Illinois or the United States of America governing the banking or
trust powers of The First National Bank of Chicago is required for
the execution, delivery or performance by the Property Trustee and
the Guarantee Trustee of the Declaration and the Preferred Securities
Guarantee Agreement.
(j) The Underwritten Securities shall have been accepted for
listing on the Stock Exchange, if the Prospectus states that the
Underwritten Securities will be so listed, subject to official notice of
issuance.
(k) If the Prospectus contains a discussion of federal taxation
issues with respect to the Underwritten Securities, the Company shall
have furnished to the Representative a letter of United States tax
counsel addressed to the Underwriters and dated the Delivery Date to the
effect that (i) the Underwriters may rely on the opinion of such counsel
filed as an exhibit to the Registration Statement to the same extent as
though it were dated the date of such letter authorizing reliance;
(ii) such counsel has reviewed the other statements in the Prospectus
under the caption "United States Federal Income Tax Matters" and, insofar
as they are, or refer to, statements of United States law or legal
conclusions, such statements are accurate in all material respects; (iii)
for federal income tax purposes (A) the Debentures will constitute
indebtedness of the Company and (B) the Debentures will be treated as
issued with "original issue discount" ("OID") and such OID on the
Debentures will be deductible by the Company on an economic accrual basis
in accordance with section 163(e)(1) of the Internal Revenue Code of
1986, as amended, and Treasury Regulation section 1.163-4(a)(1); and (iv)
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under current law, the Trust will be classified for United States federal
income tax purposes as a grantor trust and not as an association taxable
as a corporation; accordingly, for United States federal income tax
purposes, each holder of Preferred Securities generally will be
considered the owner of an undivided interest in the Debentures, and each
holder will be required to include in its gross income any original issue
discount accrued with respect to its allocable share of the Debentures.
(l) (i) Between the date hereof and the Delivery Date, there shall have
been no decrease in the prevailing ratings of any of the outstanding debt
securities issued or guaranteed by the Company or of the Preferred
Securities by any "nationally recognized statistical rating organization"
(as defined for purposes of Rule 436(g) under the Act) and (ii) such
organization shall have not publicly announced between the date hereof
and the Delivery Date that it has under surveillance or review, with
possible negative implications that constitute a worsening of the status
prevailing at the date hereof, its rating of any of the debt securities
issued or guaranteed by the Company or of the Preferred Securities, where
such public announcement is such as to make it, in the reasonable
judgment of the Representative, impracticable to market the Underwritten
Securities.
In case any of the conditions specified above in this Paragraph 8 shall not
have been fulfilled on the Delivery Date, this Agreement may be terminated
by the Representative by delivering written notice of termination to the
Company. Any such termination shall be without liability of any party to
any other party except to the extent provided in Paragraphs 5, 6 and 10
hereof.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably
satisfactory to the Representative.
9. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND THE TRUST. The
obligations of the Company and the Trust to sell and deliver the
Underwritten Securities are subject to the following conditions precedent:
at or before the Delivery Date, no stop order suspending the effectiveness
of the Registration Statement nor any order directed to any document
incorporated by reference in the 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 to the accuracy or adequacy of any document incorporated by
reference in the Prospectus; any request of the Commission for inclusion of
additional information in the Registration Statement or the Prospectus or
otherwise shall have been complied with.
In case any of the conditions specified above in this Paragraph 9 shall not
have been fulfilled on the Delivery Date, this Agreement may be terminated
by the Company by delivering written notice of termination to the
Representative. Any such termination shall be without liability of any
party to any other party except to the extent provided in Paragraphs 5, 6
and 10 hereof.
10. THE COMPANY'S OR THE TRUST'S FAILURE TO CONSUMMATE SALE. If the sale
of the Underwritten Securities provided for in this Agreement is not
consummated by reason of any failure, refusal or inability on the part of
the Company or the Trust to perform any agreement on its part to be
performed (except for any failure so to perform on the part of the Company
or the Trust engendered by a failure, refusal or inability on the part of
any Underwriter to perform any agreement on their part to be performed) or
the failure of any condition set forth in Paragraph 8 (except for any such
failure engendered by any Underwriter), the Company will reimburse the
Underwriters (a) such reasonable out-of-pocket disbursements not exceeding
$45,000 (or such other amount as may be specified in the Underwriting
Agreement) as shall have been reasonably incurred by the Underwriters in
connection with their investigation, marketing and preparing to market the
Underwritten Securities, and (b) for the reasonable fees and expenses of
their counsel, and, upon such reimbursement, the Company shall have no
further liability to the Underwriters except as provided in Paragraph 6.
11. NOTICES. The Company and the Trust shall be entitled to act and rely
upon any request, consent, notice or agreement by, or on behalf of, the
Representative. Any notice by the Company and the Trust to the Underwriters
shall be sufficient if given in writing or by telegraph addressed to the
Representative at its address set forth in the Underwriting Agreement and
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any notice by the Underwriters to the Company and the Trust shall be
sufficient if given in writing or by telegraph addressed to the Company or
the Trust at 000 Xxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention:
Executive Vice President and CFO, Pacific Telesis Group.
12. SUCCESSORS. This Agreement shall be binding upon the Underwriters,
the Company, the Trust 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 the Company and the Trust 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 Act or
Section 20 of the Exchange Act, and (b) the indemnity agreement of the
Underwriters contained in Paragraph 6 hereof shall be deemed to be for the
benefit of trustees, directors and officers of the Company and the Trust,
who have signed the Registration Statement and any person controlling the
Company or the Trust. Nothing in this Agreement is intended or shall be
construed to give any person, other than the persons referred to in this
Paragraph 12, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein. The term
"successors" shall not include any purchaser of the Underwritten Securities
merely because of such purchase.
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
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