1
EXHIBIT 1
PACIFIC BELL
DEBT SECURITIES
UNDERWRITING AGREEMENT
February 10, 1998
To the Representative
named in Schedule I
hereto of the Underwriters
named in Schedule II hereto
Dear Sirs:
Pacific Bell, a California corporation (the "Company"), may issue and
sell from time to time series of its debt securities registered under the
registration statement referred to in Paragraph 1(a) hereof ("Securities" and,
individually, "Security"). The Securities will be issued under an Indenture,
dated as of October 7, 1997 (the "Indenture"), from the Company to The Bank of
New York, as Trustee, in one or more series, which series may vary as to
interest rates, maturities, redemption provisions and selling prices, with all
such terms for any particular series being determined at the time of sale. The
Company proposes to sell to the underwriters named in Schedule II hereto
("Underwriters") for whom you are acting as representative ("Representative") a
series of Securities, of the designation, with the terms and in the aggregate
principal amount specified in Schedule I hereto ("Underwritten Securities" and,
individually, "Underwritten Security").
1. The Company represents and warrants to, and agrees with, the
several Underwriters that:
(a) A registration statement on Form S-3 with respect to the
Securities has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended ("Act" or
"Securities Act"), and the rules and regulations ("Rules and
Regulations") of the Securities and Exchange Commission ("Commission" or
"SEC") thereunder and has become effective. As used in this Agreement,
(i) "Registration Statement" means the registration statement (File No.
333-37513), as amended or supplemented to the date hereof (including all
documents incorporated therein by reference); (ii) "Preliminary
Prospectus" means
2
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 Act,
including any prospectus filed with the Commission pursuant to Rule
424(a) of the Rules and Regulations; (ii) "Basic Prospectus" means the
prospectus (including all documents incorporated therein by reference)
included in the Registration Statement; and (iv) "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 Underwritten Securities, 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.
(b) 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
Commission after the date as of which this representation is being made)
will contain at all times during the period specified in Paragraph 8(c)
hereof, all statements which are required by the 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
Underwritten Securities 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 Paragraph 8(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 the Company makes no representation or warranty 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 the Company through the Representative by or on
behalf of any Underwriter specifically for use therein, or as to any
statements in or omissions from the Statement of Eligibility of the
Trustee under the Indenture.
(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 execution, delivery and performance of this Agreement and any Delayed
Delivery Contracts (as defined in Paragraph 3 hereof) and compliance by
the Company with the provisions of the Underwritten Securities and the
Indenture will not conflict with, result in the
-2-
3
creation or imposition of any lien, charge or encumbrance upon any of the
assets of Company 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 any order, rule or
regulation of any court or governmental agency having jurisdiction over
the Company; and except as required by the 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,
the Delayed Delivery Contract, if any, and the Indenture.
(d) Except as described in or contemplated by the Registration
Statement and the Prospectus, there shall have not occurred any changes
or any development involving a prospective change, or affecting
particularly the business or properties of the Company or its
subsidiaries, which materially impairs the investment quality of the
Underwritten Securities since the dates as of which information is given
in the Registration Statement and the Prospectus.
(e) On the Delivery Date (as defined in Paragraph 7 hereof), (i)
the Indenture will have been duly authorized, executed and delivered by
the Company and will constitute the legally binding obligation of the
Company, enforceable in accordance with its terms, (ii) the Underwritten
Securities will have been duly authorized and, upon payment therefor as
provided in this Agreement, will constitute legally binding obligations
of the Company entitled to the benefits of the Indenture and (iii) the
Underwritten Securities and the Indenture will conform to the
descriptions thereof contained in the Prospectus.
(f) The Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the State of
California, 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 the
Company.
(g) Except as described in the Prospectus, there is no material
litigation or governmental proceeding pending or, to the knowledge of the
Company, threatened against the Company which is reasonably expected to
result in any material adverse change in the financial condition, results
of operations, business or prospects of the Company or which is required
to be disclosed in the Registration Statement.
(h) 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
-3-
4
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 Paragraph 8(c)
hereof, fairly, the financial condition and results of operations of the
Company, 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 8(c)
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).
(i) 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 Paragraph 8(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 8(c) hereof, timely
filed as required thereby.
(j) There are no contracts or other documents which are required
to be filed as exhibits to the Registration Statement by the 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.
(k) No order, consent, approval, authorization, registration or
qualification of or with any governmental agency or body having
jurisdiction over the Company or any of its properties is required for
the issue and sale of the Underwritten Securities or the consummation by
the Company of the transactions contemplated by this Agreement or the
Indenture, except such as have been, or will have been prior to the
Delivery Date, obtained under the 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 Underwritten Securities by the
Underwriters.
-4-
5
2. Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company agrees to
sell to each Underwriter, severally and not jointly, and each Underwriter
agrees, severally and not jointly, to purchase from the Company, at the
purchase price and on the other terms set forth in Schedule I hereto, the
principal amount of the Underwritten Securities set forth opposite its
name in Schedule II hereto.
3. Any offer to purchase Underwritten Securities by institutional
investors solicited by the Underwriters for delayed delivery shall be
made pursuant to contracts substantially in the form of Exhibit A
attached hereto, with such changes therein as the Company and the
Representative may approve ("Delayed Delivery Contracts"). The Company
shall have the right, in its sole discretion, to approve or disapprove
each such institutional investor. Underwritten Securities which are
subject to Delayed Delivery Contracts are herein sometimes called
"Delayed Delivery Underwritten Securities" and Underwritten Securities
which are not subject to Delayed Delivery Contracts are herein sometimes
called "Immediate Delivery Underwritten Securities."
Contemporaneously with the purchase on the Delivery Date by the
Underwriters of the Immediate Delivery Underwritten Securities pursuant to this
Agreement, the Company will pay to the Representative, for the account of the
Underwriters, the compensation specified in Schedule I hereto for arranging the
sale of Delayed Delivery Underwritten Securities. The Underwriters shall have no
responsibility with respect to the validity or performance of any Delayed
Delivery Contracts.
For the purpose of determining the principal amount of Immediate Delivery
Underwritten Securities to be purchased by each Underwriter, there shall be
deducted from the principal amount of Underwritten Securities to be purchased by
such Underwriter as set forth in Schedule II hereto that portion of the
aggregate principal amount of Delayed Delivery Underwritten Securities that the
principal amount of Underwritten Securities to be purchased by such Underwriter
as set forth in Schedule II hereto bears to the aggregate principal amount of
Underwritten Securities set forth therein to be purchased by all of the
Underwriters (in each case as adjusted by the Representative to avoid fractions
of the minimum principal amount in which the Underwritten Securities may be
issued), except to the extent that the Representative determines, in its
discretion, that such deduction shall be otherwise than in such proportion and
so advises the Company.
4. [Reserved]
5. The Company shall not be obligated to deliver any Underwritten
Securities except upon payment for all Immediate Delivery Underwritten
Securities to be purchased pursuant to this Agreement as hereinafter
provided.
-5-
6
6. If any Underwriter defaults in the performance of its obligations
under this Agreement, the remaining non-defaulting Underwriters shall be
obligated to purchase the Immediate Delivery 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 Schedule II hereto to be purchased by each
remaining non-defaulting Underwriter set forth therein bears to the
aggregate principal amount of Underwritten Securities 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 Immediate Delivery Underwritten Securities if
the aggregate principal amount of Immediate Delivery 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 non-defaulting Underwriter
shall not be obligated to purchase more than 110% of the principal amount
of Underwritten Securities set forth in Schedule II 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 Immediate Delivery Underwritten Securities. If the
remaining Underwriters or other underwriters satisfactory to the
Representative do not elect to purchase the Immediate Delivery
Underwritten Securities 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 the Company,
except that the Company will continue to be liable for the payment of
expenses as set forth in Paragraph 8(i) hereof.
Nothing contained in this Paragraph 6 shall relieve a defaulting
Underwriter of any liability it may have to the Company for damages caused by
its default. If other Underwriters are obligated or agree to purchase the
Immediate Delivery 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.
7. Delivery of and payment for the Immediate Delivery Underwritten
Securities shall be made at such address, date and time as specified in
Schedule I hereto. This date and time are sometimes referred to as the
"Delivery Date." On the Delivery Date, the Company shall deliver the
Immediate Delivery Underwritten Securities to the Representative for the
account of each Underwriter against payment to or upon the order of the
Company of the purchase price by wire transfer of immediately available
funds settled through the New York Clearing House or such other
-6-
7
Clearing House as is named in Schedule I. Time shall be of the essence,
and delivery at the time and place specified pursuant to this Agreement
is a further condition of the obligation of each Underwriter hereunder.
Upon delivery, the Immediate Delivery Underwritten Securities shall be in
such form or forms and in such denominations as may be set forth in
Schedule I. Immediate Delivery Underwritten Securities in registered form
shall be in such authorized denominations and registered in such names as
the Representative shall request in writing not less than two full
business days prior to the Delivery Date. For the purpose of expediting
the checking and packaging of the Immediate Delivery Underwritten
Securities, the Company shall make the Immediate Delivery Underwritten
Securities available for inspection by the Representative in New York,
New York not later than 2:00 P.M., local time, on the business day prior
to the Delivery Date. For purposes of Rule 15c6-1 under the Exchange Act,
the Delivery Date (if later than the otherwise applicable settlement
date) shall be the date for payment of funds and delivery of securities
for all the Immediate Delivery Underwritten Securities sold pursuant to
the offering, other than Delayed Delivery Underwritten Securities for
which payment of funds and delivery of securities shall be as hereinafter
provided.
8. The Company agrees with the several Underwriters:
(a) The Company will furnish promptly to the Representative and
to counsel for the Underwriters signed copies 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
Underwritten Securities, and a copy of the Prospectus filed with the
Commission, including all documents incorporated therein by reference and
all consents and exhibits filed therewith;
(b) The Company will deliver promptly to the Representative such
reasonable number of the following documents as the Representative may
request: (i) 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), (ii) the Prospectus and (iii)
any documents incorporated by reference in the Prospectus;
(c) During any period when a Prospectus relating to the
Underwritten Securities is required by law to be delivered, the Company
will not file any amendment of the Registration Statement nor will the
Company file any amendment or supplement to the Prospectus (except for
(i) an amendment or supplement consisting solely of the filing of a
document under the Exchange Act or (ii) a supplement relating to an
offering of securities other than the Underwritten Securities), unless
the Company has furnished you a copy of such proposed amendment or
supplement for your review prior to filing and will not file any such
-7-
8
proposed amendment or supplement to which you reasonably object. Subject
to the foregoing sentence, the Company will cause the Prospectus and any
amendment or supplement thereto to be filed with the SEC as required
pursuant to Rule 424 under the Securities Act. The Company will promptly
advise you (i) when the Prospectus or any amendment or supplement thereto
shall have been filed with the SEC pursuant to Rule 424 under the
Securities act, (ii) when any amendment of the Registration Statement
shall have become effective, (iii) of any request by the SEC for any
amendment of the Registration Statement or amendment of or supplement to
the Prospectus or for any additional information, (iv) of the issuance by
the SEC of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any
proceeding for that purpose and (v) of the 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
threatening of any proceeding for such purpose. The Company will promptly
(upon filing thereof) furnish you a copy of any amendment or supplement
to the Prospectus or Registration Statement not furnished to the
Representative for prior review pursuant to exception (i) or (ii) of the
first sentence of this paragraph 8(c). The Company 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;
(d) If, at any time when a prospectus relating to the
Underwritten Securities is required to be delivered under the Securities
Act, 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 with the Securities Act or the Exchange Act or the
respective rules thereunder, the Company promptly will (i) notify you of
the happening of such event, (ii) prepare and file with the SEC, subject
to the first sentence of paragraph (c) of this Section 8, 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 Prospectus to you in such quantities as the
Representative may reasonably request;
(e) As soon as practicable, the Company will make generally
available to its security holders and to the Representative an earnings
statement or statements of the Company which will satisfy the provisions
of Section 11(a) of the Securities Act and Rule 158 under the Securities
Act;
(f) During a period of five years after the date hereof, the
Company will 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
-8-
9
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;
(g) The Company will endeavor to qualify the Underwritten
Securities for sale under the laws of such jurisdiction as you may
designate and will maintain such qualifications in effect so long as
required for the distribution of the Underwritten Securities, provided
that in connection therewith the Company shall not be required to qualify
as a foreign corporation or take any action which would subject it to
general or unlimited service of process in any jurisdiction where it is
not now so subject;
(h) The Company will pay the costs incident to the authorization,
issuance and delivery of the Underwritten Securities and any taxes
payable in that connection; the costs incident to the preparation,
printing and filing under the Act of the Registration Statement and any
amendments, supplements and exhibits thereto; the costs of distributing
the Registration Statement as originally filed and each amendment and
post-effective amendment thereof (including exhibits), any Preliminary
Prospectus, the Prospectus and any documents incorporated by reference in
any of the foregoing documents; the costs of producing this Agreement,
the Delayed Delivery Contracts, if any, and the Indenture; fees paid to
rating agencies in connection with the rating of the Securities,
including the Underwritten Securities; the fees and expenses of
qualifying 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; and all other costs and expenses incident to the performance
of the Company's obligations under this Agreement; provided that, except
as provided in this Paragraph and in Paragraph 12 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; and
(i) 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 Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act.
9. (a) The Company shall indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within
the meaning of the Act from and against any loss, claim, damage or
liability, joint or several, and any action in respect thereof, to which
that Underwriter or controlling person may
-9-
10
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 any
Preliminary Prospectus, 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 legal and other expenses
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 (but no
more frequently than annually); provided, however, that the Company shall
not 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 any Preliminary Prospectus, the Registration Statement or the
Prospectus in reliance upon and in conformity with written information
furnished to the Company through the Representative by or on behalf of
any Underwriter specifically for use therein. The foregoing indemnity
agreement is in addition to any liability which the Company may otherwise
have to any Underwriter or controlling person.
(b) Each Underwriter shall indemnify and hold harmless the
Company, each of their directors, each of their officers who signed the
Registration Statement and any person who controls the Company, within
the meaning of the Act from and against any loss, claim, damage or
liability, joint or several, and any action in respect thereof, to which
the Company, or any such 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 any
Preliminary Prospectus, 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, 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 upon and in conformity
with information furnished in writing to the Company through the
Representative by or on behalf of that Underwriter specifically for use
therein, and shall reimburse the Company for any legal and other expenses
reasonably incurred by the Company or any such 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 (but no more frequently that annually). The
foregoing indemnity agreement is in addition to any liability which any
Underwriter may otherwise have to the Company or any of its directors,
officers or controlling persons.
-10-
11
(c) Promptly after receipt by an indemnified party under this
Paragraph 9 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under this Paragraph 9, notify the
indemnifying party in writing of the claim or the commencement of that
action, provided that the failure to notify the indemnifying party shall
not relieve it from any liability which it may have to an indemnified
party otherwise than under Paragraph 9(a) or 9(b). If any such claim or
action shall be brought against an indemnified party, and it shall notify
the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein, and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense
thereof with counsel satisfactory to the indemnified party. After notice
from the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, the indemnifying party shall
not be liable to the indemnified party under this Paragraph 9 for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation. If the indemnifying party shall not elect to assume the
defense of such action, such indemnifying party will reimburse such
indemnified party for the reasonable fees and expenses of any counsel
retained by them. In the event that the parties to any such action
(including impleaded parties) include both the Company and one or more
Underwriters and either (i) the indemnifying party or parties and
indemnified party or parties mutually agree or (ii) representation of
both the indemnifying party or parties and the indemnified party or
parties by the same counsel is inappropriate under applicable standards
of professional conduct or in the opinion of such counsel due to actual
or potential differing interests between them, then the indemnifying
party shall not have the right to assume the defense of such action on
behalf of such indemnified party and will reimburse such indemnified
party for the reasonable fees and expenses of any counsel retained by
them and satisfactory to the indemnifying party, it being understood that
the indemnifying party shall not, in connection with any one action or
separate but similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys
for all such indemnified parties, which firm shall be designated in
writing by the Representative in the case of an action in which one or
more Underwriters or controlling persons are indemnified parties and by
the Company in the case of an action in which the Company or any of its
directors, officers or controlling persons are indemnified parties. The
indemnifying party or parties shall not be liable under this Agreement
with respect to any settlement made by any indemnified party or parties
without prior written consent by the indemnifying party or parties to
such settlement.
(d) If the indemnification provided for in this Paragraph 9 shall
for any reason be unavailable to an indemnified party under Paragraph
9(a) or 9(b) hereof
-11-
12
in respect of any loss, claim, damage, 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 by the Company, on the one
hand, and the Underwriters, on the other hand, 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, on the one hand, and the Underwriters, on the
other hand, from the offering of the Underwritten Securities and the
relative fault of the Company, on the one hand, and the Underwriters, on
the other hand, 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, on the one hand, and the
Underwriters, on the other hand, with respect to such offering shall be
deemed to be in the same proportion as the total net proceeds from the
offering of the Underwritten Securities (before deducting expenses)
received by the Company 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 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 9(d) shall be deemed
to include, for purposes of this Paragraph 9(d), any 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 9(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
9(d) are several in proportion to their respective underwriting
obligations and not joint.
-12-
13
(e) The agreements contained in this Paragraph 9 and the
representations, warranties and agreements of the Company in Paragraph 1
and Paragraph 8 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.
10. The obligations of the Underwriters under this Agreement may be
terminated by the Representative, in its absolute discretion, by notice
given to and received by the Company prior to the delivery of and payment
for the Immediate Delivery Underwritten Securities, if, during the period
beginning on the date hereof to and including the Delivery Date, (a)
trading in securities generally on the New York Stock Exchange, Inc. is
suspended or materially limited, or (b) a banking morato rium is declared
by either Federal or New York State authorities, or (c) there shall have
occurred any outbreak or material escalation of hostilities or other
calamity or crisis or the declaration by the United States of war or a
national emergency the effect of which on the financial markets of the
United States is material and adverse and is such as to make it, in the
reasonable judgment of the Representative, impracticable or inadvisable
to market such Underwritten Securities on the terms and in the manner
contemplated by the Prospectus, or (d) the Company shall have received
notice that any rating of any of the Company's unsecured senior debt
securities shall have been lowered by any nationally recognized
statistical rating organization (as defined in Rule 15c3-1 under the
Exchange Act) or any such organization has publicly announced that it has
under surveillance or review, with possible negative implications, the
ratings of any of the Company's unsecured senior debt securities, or (e)
there shall have occurred any change, or any development involving a
prospective change, in or affecting particularly the business or
properties of the Company or its subsidiaries which, in the
Representative's reasonable judgment, materially impairs the investment
quality of the Underwritten Securities.
11. 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 contained herein, to
performance by the Company 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
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 to the accuracy or adequacy
of any document incorporated by reference in the
-13-
14
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 the Company
shall not have filed with the Commission any amendment or supplement to
the Registration Statement or the Prospectus (or any document
incorporated by reference therein) that shall have been disapproved by
the Representative.
(b) No Underwriter shall have discovered and disclosed to the
Company 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) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the Underwritten
Securities and the Indenture and the form of the Registration Statement,
the Prospectus (other than financial statements and other financial data)
and all other legal matters relating to this Agreement and the
transactions contemplated hereby shall be satisfactory in all respects to
Sullivan & Cromwell, counsel for the Underwriters, and the Company shall
have furnished to such counsel all documents and information that they
may reasonably request to enable them to pass upon such matters.
(d) The Vice President and Counsel to the Company shall have
furnished to the Representative his opinion addressed to the Underwriters
and dated the Delivery Date, as counsel, to the effect that:
(i) the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the State of California, 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
the Company;
(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 the Company 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
-14-
15
applicability relating to or affecting creditors' rights
generally from time to time in effect and to general principles
of equity);
(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 the Company 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 agreements relating to the Company fairly summarize such
matters; and the Underwritten Securities, the Indenture and any
Delayed Delivery Contracts conform to the descriptions thereof
contained under the following (or comparable) captions of the
Prospectus: "Description of Debt Securities" and "Plan of
Distribution";
(iv) the Immediate Delivery Underwritten Securities
have been duly authorized, executed, authenticated, issued and
delivered and are valid and legally binding obligations of the
Company entitled to the benefits of the Indenture;
(v) the Delayed Delivery Underwritten Securities, if
any, have been duly authorized and, when executed, authenticated,
issued and delivered to, and paid for by, the respective
purchasers thereof in accordance with the Indenture and the
related Delayed Delivery Contracts, will be valid and legally
binding obligations of the Company entitled to the benefits of
the Indenture;
(vi) 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
-15-
16
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 the 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 the 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;
(vii) this Agreement and the Delayed Delivery
Contracts, if any, have been duly authorized, executed and
delivered by the Company;
(viii) no order, consent, approval, authorization,
registration or qualification of or with any governmental agency
or body having jurisdiction over the Company or any of its
properties is required for the issue and sale of the Underwritten
Securities or the consummation by the Company of the transactions
contemplated by this 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 Underwritten Securities; and
(ix) neither the execution and delivery of the
Indenture, this Agreement or any Delayed Delivery Contracts, the
issue and sale of the Underwritten Securities, 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 the Company or the terms
of any indenture or other agreement or instrument known to such
counsel and to which the Company is a party or by which the
Company or any of its assets is bound, or any order or regulation
known to such counsel to be applicable to the Company of any
court, regulatory body, administrative agency, governmental body
or arbitrator having jurisdiction over the Company.
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
California upon the opinion
-16-
17
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 of fact, to the extent deemed proper, on certificates of responsible
officers of the Company and public officials.
In rendering such opinion with respect to clause (viii) above, insofar as it
relates to regulatory authorities in the states in which the Company operates,
such counsel may rely on the opinions of local counsel satisfactory to such
counsel.
(e) The Representative shall have received from Sullivan &
Cromwell, counsel for the Underwriters, such opinion or opinions, dated
the date hereof, with respect to the issuance and sale of the
Underwritten Securities, the Indenture, the Registration Statement, the
Prospectus and other related matters as the Representative may
reasonably require, and the Company shall have furnished to such counsel
such documents as they request for the purpose of enabling them to pass
upon such matters.
(f) The Company shall have furnished to the Representative a
certificate signed by its Chairman of the Board or its President or a
Vice President and its Treasurer or an Assistant Treasurer stating that
after reasonable investigation and to the best of their knowledge:
(i) the representations and warranties of the Company
in this Agreement are true and correct in all material respects
on and as of the Delivery Date with the same effect as if made on
the Delivery Date; the Company 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 Underwritten Securities hereunder;
and the conditions set forth in Paragraphs 11(a) and 11(h) have
been fulfilled;
(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 or properties
of the Company and its subsidiaries,
-17-
18
whether or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated in the
Prospectus.
(g) The Company shall have furnished to the Representative (i) a
letter of Coopers & Lybrand LLP, addressed to the Board of Directors of
the Company and the Underwriters and dated the later of the effective
date of the Registration Statement or the date of the filing of the
Company'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; (ii) a letter of
Ernst & Young LLP, addressed to the Underwriters and dated the 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; and (iii) a
letter, dated the Delivery Date, of any other accountants that have
audited financial statements included or incorporated by reference in the
Registration Statement and Prospectus, addressed to the Underwriters, of
the type described in SAS 72 and covering such financial statement items
as the Underwriters may reasonably request.
(h) No order, consent, approval, authorization, registration or
qualification of or with any governmental agency or body having
jurisdiction over the Company or any of its properties is required for
the issue and sale of the Underwritten Securities or the consummation by
the Company of the transactions contemplated by this Agreement or the
Indenture, except such as have been, or will have been prior to the
Delivery Date, obtained under the 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 Underwritten Securities by the
Underwriters.
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 satisfactory to the
Representative.
12. If the Company shall fail to tender the Immediate Delivery
Underwritten Securities for delivery to the Underwriters for any reason
permitted under this Agreement, or if the Underwriters shall decline to
purchase the Immediate Delivery Underwritten Securities for any reason
permitted under this Agreement (other than pursuant to Paragraph 6 or
Paragraphs 10(a) - (d) hereof), the Company shall reimburse the
Underwriters for the reasonable fees and expenses of their counsel
-18-
19
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
Immediate Delivery Underwritten Securities and the solicitation of any
purchases of the Delayed Delivery Underwritten Securities, and upon
demand the Company shall pay the full amount thereof to the
Representative. If this Agreement is terminated pursuant to Paragraph 6
hereof by reason of the default of one or more Underwriters or pursuant
to Paragraphs 10(a) - (d) hereof, the Company shall not be obligated to
reimburse any Underwriter on account of those expenses.
13. The Company 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 to the Underwriters shall be sufficient if given in
writing or by facsimile transmission confirmed promptly in writing
addressed to the Representative at its address set forth in Schedule I
hereto, and any notice by the Underwriters to the Company shall be
sufficient if given in writing or by facsimile transmission confirmed
promptly in writing addressed to the Company at 175 E. Houston St., 7th
Floor, San Antonio, Texas 78205, Telecopy Number: (210) 351-3849,
Attention of the Treasurer, with a copy to the Corporate/SEC Attorney,
175 E. Houston St., 7th Floor, San Antonio, Texas 78205, Telecopy Number:
(210) 351-3467.
14. This Agreement shall be binding upon the Underwriters, the
Company 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 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 and (b) the indemnity
agreement of the Underwriters contained in Paragraph 9 hereof shall be
deemed to be for the benefit of directors of the Company, officers of the
Company who have signed the Registration Statement and any person
controlling the Company. Nothing in this Agreement is intended or shall
be construed to give any person, other than the persons referred to in
this Paragraph 14, any legal or equitable right, remedy or claim under or
in respect of this Agreement or any provision contained herein.
15. For purposes of this Agreement, "business day" means any day on
which 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.
-19-
20
17. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF NEW YORK.
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 shall represent a binding agreement between the Company and the
several Underwriters.
Very truly yours,
PACIFIC BELL
By: /s/ Donald E. Kiernan
----------------------------
Name: Donald E. Kiernan
Title: Vice President
-20-
21
The foregoing Agreement is hereby
confirmed and accepted as of the date
first above written.
Bear, Stearns & Co. Inc.
/s/ Tim O'Neill
---------------------------------
Name: Tim O'Neill
Title: Senior Managing Director
For itself and as Representative of the
several Underwriters named in
Schedule II to the foregoing Agreement.
-21-
22
SCHEDULE I
Underwriting Agreement dated February 10, 1998
Registration Statement No. 333-37513
Representative and Address:
Bear, Stearns & Co. Inc.,
245 Park Ave.,
New York, NY 10167.
Underwritten Securities:
Indenture, dated as of October 7, 1997, from Pacific Bell to The Bank of
New York, as Trustee (the "Indenture").
As used in this Underwriting Agreement, references to "Underwritten
Securities" shall be deemed to be references to the 6 1/8% Notes (as
hereinafter defined), which constitute a series of Securities under the
Indenture.
Designations: 6 1/8% Notes due February 15, 2008
("6 1/8% Notes")
Principal Amount: 6 1/8% Notes: $200,000,000
Date of Maturity: 6 1/8% Notes: February 15, 2008
Interest Rate: 6 1/8% Notes: 6 1/8% per annum, payable semi-annually
on each February 15 and August 15, commencing August
15 1998, to holders of record at the close of business
on the preceding February 1 or August 1.
Purchase Price: 6 1/8% Notes: 98.767% of the principal amount, plus
accrued interest, if any, from February 13, 1998 to
the date of delivery.
Redemption Provisions: The 6 1/8% Notes are not redeemable prior to maturity.
23
Form and Authorized The 6 1/8% Notes will be issued only in registered,
Demonination: book-entry form in denominations of $1,000 and
integral multiples thereof. The 6 1/8% Notes will be
represented by a global security or securities
deposited with, or on behalf of, The Depository Trust
Company, and registered in the name of Cede & Co., as
nominee for The Depository Trust Company.
Delivery Date, Time 10:00 a.m. (New York time)
and Location: February 13, 1998, at the offices of
Sullivan & Cromwell, 125 Broad Street,
New York, New York 10004.
Specified Funds for Immediately available funds.
Payment of Purchase Price:
The Delayed Delivery There are no Delayed Delivery Contracts.
Contracts shall have
the following terms:
-2-
24
SCHEDULE II
6 1/8% Notes
Underwriter Principal
----------- -------------
Bear, Stearns & Co. Inc........................ 50,000,000
Goldman, Sachs & Co............................ 50,000,000
Merrill Lynch, Pierce, Fenner &
Smith Incorporated............................. 50,000,000
Morgan Stanley & Co.
Incorporated................................ 50,000,000
-------------
Total................................... $ 200,000,000
=============
-3-
25
EXHIBIT A
PACIFIC BELL
DELAYED DELIVERY CONTRACT
, 199
Pacific Bell
175 E. Houston
San Antonio, Texas 78205
Dear Sirs:
The undersigned hereby agrees to purchase from Pacific Bell, a
California corporation (the "Company"), and the Company hereby agrees to sell to
the undersigned, $__________ principal amount of the Company's above-captioned
securities ("Securities"), offered by the Company's prospectus dated
, 199 , as supplemented by the prospectus supplement dated , 199
(collectively, the "Prospectus"), receipt of a copy of which is hereby
acknowledged, at a purchase price of % of the principal amount thereof plus
accrued interest from , 199 to the Delivery Date (as defined in the
next paragraph) and on the further terms and conditions set forth in this
Contract.
Payment for and delivery of the Securities to be purchased by the
undersigned shall be made on , 199 , herein called the "Delivery
Date."
At 10:00 A.M., New York time, on the Delivery Date, the
Securities to be purchased by the undersigned hereunder will be delivered by the
Company to the undersigned, and the undersigned will accept delivery of such
Securities and will make payment to the Company of the purchase price therefor
at the office of The Bank of New York. Payment will be by certified or official
bank check payable in next-day funds settled through the New York Clearing
House, or such other Clearing House as the Company may designate, to or upon the
order of the Company. The Securities will be delivered in such authorized forms
and denominations and registered in such names as the undersigned may designate
by written or telegraphic communication addressed to the Company not less than
two full business days prior to the Delivery Date or, if the undersigned fails
to make a timely designation in the foregoing manner, in the form of one
definitive fully registered certificate representing the Securities in the above
principal amount, registered in the name of the undersigned.
26
If any of the Securities are to be delivered to the undersigned
in bearer form, (i) the undersigned hereby represents that it is not a U.S.
person (or if it is a U.S. person it is a qualified financial institution) and
agrees that it will not offer to sell such Securities, directly or indirectly,
to any U.S. person other than a qualified financial institution and (ii) if the
undersigned is a dealer, that the undersigned also (A) represents that it has
not offered or sold and agrees that it will not offer, sell, or deliver any such
Securities within the United States or, directly or indirectly, to any U.S.
person other than a qualified financial institution and is not purchasing any of
such Securities for the account of any such U.S. person and (B) will deliver to
all purchasers of such Securities from it a written confirmation, containing a
statement to the effect set forth in clauses (i) and (ii) above. As used herein,
"United States" means the United States of America (including the States and the
District of Columbia), its territories, its possessions and all other areas
subject to its jurisdiction; "U.S. person" means a citizen or resident of the
United States, a corporation, partnership or other entity created or organized
in or under the laws of the United States or a political subdivision thereof, or
an estate or trust the income of which is subject to United States Federal
income taxation regardless of its source; and "qualified financial institution"
means a financial institution (as defined in Section 1.165-12(c)(1)(v) of the
Treasury Department regulations) that provides a written statement that it will
comply with Section 165(j)(3)(A), (B), or (C) of the Code and the regulations
thereunder. Delivery of Securities in bearer form shall be made only upon
receipt of a certificate manually signed by the undersigned, containing
substantially the following:
"This is to certify that as of the date hereof (the date of
delivery of the Securities in bearer form), the above-captioned
Securities which are to be delivered to the undersigned in bearer form
are not being acquired by or on behalf of a U.S. person, or for offer to
resell or for resale to a U.S. person or, if any beneficial owner of the
Securities is a U.S. person, such U.S. person is a financial institution
(as defined in Treasury Department Regulations Section 1.165-12(c)(1)(v))
or acquiring through a financial institution and that the Securities are
held by a financial institution that has agreed to comply with the
requirements of Section 165(j)(3)(A), (B), or (C) of the Internal Revenue
Code of 1986, and the regulations thereunder. If the undersigned is a
clearing organization, the undersigned represents that the certificate is
based on statements provided to it by its member organizations. As used
herein, "United States" means the United States of America (including the
States and the District of Columbia), its territories, its possessions
and all other areas subject to its jurisdiction; "U.S. person" means a
citizen or resident of the United States, a corporation, partnership or
other entity created or organized in or under the laws of the United
States or a political subdivision thereof, or an estate or trust the
income of which is subject to United States Federal income taxation
regardless of its source; and a "clearing organization" means an entity
which is in the business of holding obligations for member organizations
and transferring obligations among such members by credit or
-2-
27
debit to the account of a member without the necessity of physical
delivery of the obligation. If the undersigned is a dealer, the
undersigned agrees to obtain a similar certificate from each person
entitled to delivery of any of the above-captioned Securities in bearer
form purchased from it. However, if the undersigned has actual knowledge
that the information contained in such certificate is false, the
undersigned will not deliver a Security in temporary or definitive bearer
form to the person who signed such certificate notwithstanding the
delivery of such certificate to the undersigned. The undersigned will be
deemed to have actual knowledge that the beneficial owner is a U.S.
person for this purpose if the undersigned has a U.S. address for the
beneficial owner of the Security."
This Contract will terminate and be of no further force and
effect after , unless (i) on or before such date it shall have been
executed and delivered by both parties hereto and (ii) the Company shall have
sold to the Underwriters named in the Prospectus the Immediate Delivery
Underwritten Securities (as defined in the Underwriting Agreement referred to in
the Prospectus). The Company will mail or deliver to the undersigned at its
address set forth below a notice to that effect, stating the date of the
occurrence thereof, accompanied by copies of the opinion of counsel for the
Company delivered to such Underwriters pursuant to Paragraph 11(d) of the
Underwriting Agreement.
The obligation of the undersigned to accept delivery of and make
payment for the Securities on the Delivery Date will be subject to the condition
that the Securities shall not, on the Delivery Date, be an investment prohibited
by the laws of the jurisdiction to which the undersigned is subject, the
undersigned hereby representing that such an investment is not so prohibited on
the date hereof.
This Contract will inure to the benefit of and be binding upon
the parties hereto and their respective successors but will not be assignable by
either party hereto without the written consent of the other.
This Contract may be executed by any of 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.
It is understood that acceptance of any Delayed Delivery Contract
(as defined in said Underwriting Agreement) is in the Company's sole discretion
and, without limiting the foregoing, need not be on a first-come, first-served
basis. If this Contract is acceptable to the Company, it is requested that the
Company sign the form of acceptance
-3-
28
below and mail or deliver one of the counterparts hereof to the undersigned at
its address set forth below. This will become a binding contract between the
Company and the undersigned when such counterpart is so mailed or delivered.
Very truly yours,
By
----------------------------------
------------------------------------
Title
------------------------------------
------------------------------------
Address
Accepted as of , 199
PACIFIC BELL
By
-------------------------------
Title:
-4-