SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 10 , 1997
NEW ENGLAND TELEPHONE AND TELEGRAPH COMPANY
-------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
New York
--------
(State or Other Jurisdiction of Incorporation)
No. 1-1150 No. 04-1664340
- ----------------------- ------------------------------
(Commission File Number) I.R.S. Employer Identification
125 High Street, Boston, Massachusetts 02110
--------------------------------------------
(Address of Principal Executive Offices)
(617) 743-9800
--------------
(Registrant's Telephone Number, Including Area Code)
<PAGE>
- 2 -
Form 8-K NEW ENGLAND TELEPHONE AND TELEGRAPH COMPANY
December 10, 1997
Item 7. Financial Statements and Exhibits.
(c) Exhibits:
The exhibits listed in the accompanying Index to Exhibits relate
to the Registration Statements (Nos. 33-49533 and 33-50631) on
Form S-3 of New England Telephone and Telegraph Company (the
"Company"), and are filed herewith for incorporation by
reference in such Registration Statements.
<PAGE>
- 3 -
Form 8-K NEW ENGLAND TELEPHONE AND TELEGRAPH COMPANY
December 10, 1997
Index to Exhibits
-----------------
Exhibit Number
Per Item 601
of Regulation S-K Description of Document
- ----------------- -----------------------
1 Underwriting Agreement, dated December 10, 1997,
between the Company and Merrill Lynch, Pierce, Fenner & Smith
Incorporated
4-a Certificate, dated as of December 10, 1997,
pursuant to Section 2.02(b) of the Indenture,
dated as of October 1, 1992, between the Company and State
Street Bank and Trust Company, as successor Trustee
4-b Form of the Company's 6.30% MandatOry Par Put Remarked
Securities* ("MOPPRS*") due December 16, 2012 (contained in
Exhibit 4-a).
4-c Form of Remarketing Agreement between the Company
and Merrill Lynch, Pierce, Fenner & Smith Incorporated
*MandatOry Par Put Remarketed Securities" and "MOPPRS" are service marks owned
by Merrill Lynch & Co., Inc.
<PAGE>
- 4 -
Form 8-K NEW ENGLAND TELPHONE AND TELEGRAPH COMPANY
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NEW ENGLAND TELEPHONE AND TELEGRAPH COMPANY
By /s/ Neil D. Olson
----------------------------------------
Neil D. Olson
Treasurer
Dated: December 12, 1997
CONFORMED COPY
NEW ENGLAND TELEPHONE AND TELEGRAPH COMPANY
DEBT SECURITIES
UNDERWRITING AGREEMENT
New York, New York
December 10, 1997
To the Representatives
named in Schedule I
hereto of the Underwriters
named in Schedule II hereto
Dear Sirs:
New England Telephone and Telegraph Company, a New York corporation
("Company"), may issue and sell from time to time series of its debt securities
registered under the registration statements referred to in Paragraph 1(a)
hereof ("Securities" and individually "Security"). The Company proposes to sell
to the underwriters named in Schedule II hereto ("Underwriters"), for whom you
are acting as representatives ("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"). If the firm or firms listed in Schedule II hereto include only the
firm or firms listed in Schedule I hereto, then the terms "Underwriters" and
"Representative" shall each be deemed to refer to such firm or firms.
1. The Company represents, warrants and agrees that:
(a) A registration statement (No. 33-49533) and a registration
statement (No. 33- 50631), including a prospectus, with respect to the
Securities have been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended ("Act"), and the
rules and regulations ("Rules and Regulations") of the Securities and
Exchange Commission ("Commission") thereunder and have become
effective. As used in this Agreement, (i) such registration statement
(No. 33-49533) and such registration statement (No. 33-50631), each as
amended and supplemented to the date hereof, are referred to as the
"Initial Registration Statement" and the "Last Registration Statement",
respectively, and singly as a "Registration Statement" and collectively
as the "Registration Statements"; (ii) "Preliminary Prospectus" means
each prospectus (including all documents incorporated therein by
reference) included in the Last Registration Statement, or amendments
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; and (iii) "Prospectus" means the
prospectus included in the Last Registration Statement, including any
preliminary or final prospectus amendment or supplement (including in
each case all documents incorporated therein by reference) specifically
relating to the Underwritten Securities, as filed with the Commission
pursuant to paragraph (b) of Rule 424 of the Rules and
<PAGE>
2
Regulations. The Commission has not issued any order preventing or
suspending the use of any Prospectus, and no proceedings for such
purposes have been instituted or are pending or, to the knowledge of
the Company, are contemplated by the Commission, and any request on the
part of the Commission for additional information has been complied
with.
(b) The Registration Statements 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 7(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 ("Indenture") will
conform with the requirements of the Trust Indenture Act and the rules
and regulations of the Commission thereunder; and the Registration
Statements and each 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
7(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 any Registration Statement or any Prospectus in reliance
and based upon information furnished to the Company through the
Representative by or on behalf of any Underwriter, 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
by-laws or in default under any agreement, indenture or instrument,
except for such defaults that would not result in a material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company, whether or not
arising in the ordinary course of business (a "Material Adverse
Effect"); and the execution, delivery and performance of this
Agreement, the Indenture, the Underwritten Securities, the Remarketing
Agreement, to be dated as of December 15, 1997 (the "Remarketing
Agreement"), between the Company and Merrill Lynch, Pierce, Fenner &
Smith Incorporated, as remarketing dealer, and any Delayed Delivery
Contracts (as defined in Paragraph 3 hereof) and the consummation of
the transactions contemplated herein, in the Remarketing Agreement and
in the Prospectus (including the issuance and sale of the Underwritten
Securities and the use of the proceeds from the sale thereof as
described in the Prospectus under the caption "Use of Proceeds") have
been duly authorized by all necessary corporate action and do not and
will not conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company pursuant to, any material
agreement, indenture or instrument to which the
<PAGE>
3
Company is a party or by which it is bound or to which any of its
property or assets is subject, nor will such action result in a
material violation of the charter or by-laws of the Company or any
order, rule or regulation of any court or governmental agency having
jurisdiction over the Company or its property; and except as required
by the Act, the Trust Indenture Act, the Exchange Act and applicable
state securities laws and except as set forth in Paragraph 1(m) hereof,
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
Contracts, the Indenture and the Remarketing Agreement or the
consummation of the transactions contemplated hereby and thereby.
(d) Except as described in or contemplated by the Registration
Statements and each Prospectus, there has been no Material Adverse
Effect from the dates as of which information is given in the
Registration Statements and each Prospectus.
(e) Coopers & Lybrand, whose report appears in the Company's most
recent Annual Report on Form 10-K which is incorporated by reference in
each Prospectus, are independent accountants as required by the Act and
the Rules and Regulations.
(f) On the Delivery Date (as defined in Paragraph 6 hereof) (i)
the Indenture will have been validly authorized, executed and delivered
by the Company and duly qualified under the Trust Indenture Act and
will constitute the legally binding obligation of the Company, (ii) the
Underwritten Securities will have been validly authorized and executed
and, upon payment therefor as provided in this Agreement, will be
validly issued and outstanding, and will constitute legally binding
obligations of the Company entitled to the benefits of the Indenture,
(iii) the Remarketing Agreement will have been validly authorized,
executed and delivered by the Company and will constitute the legally
binding obligation of the Company and (iv) the Underwritten Securities
and the Indenture will conform to the descriptions thereof contained in
the Prospectus.
(g) This Agreement has been validly authorized, executed and
delivered by the Company.
(h) The Company has been duly incorporated and is validly existing
and in good standing under the laws of the State of New York; and the
Company is duly qualified to do business and in good standing as a
foreign corporation in each jurisdiction in which its ownership of
property or conduct of its business requires such qualification, except
where the failure to so qualify would not have a Material Adverse
Effect, and has power and authority necessary to own or hold its
properties, to conduct the business in which it is engaged and to enter
into and perform its obligations under this Agreement.
(i) There is no material action, suit or proceeding before any
court or governmental agency or body, domestic or foreign, now pending,
or, to the knowledge of the Company, threatened, against or affecting
the Company, which is required to be
<PAGE>
4
disclosed in any Prospectus (other than as disclosed therein), or which
might reasonably be expected to result in a Material Adverse Effect, or
which might reasonably be expected to materially and adversely affect
the properties or assets thereof or the consummation of the
transactions contemplated in this Agreement or the performance by the
Company of its obligations hereunder.
(j) The financial statements filed as part of the Registration
Statements or included in any Preliminary Prospectus present, or (in
the case of any amendment or supplement to any such document, or any
material incorporated by reference in any such document, filed with the
Commission after the date as of which this representation is being
made) will present at all times during the period specified in
Paragraph 7(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 7(c) hereof, prepared in conformity with
generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved. The supporting
schedules incorporated by reference in any Prospectus present fairly in
accordance with GAAP the information required to be stated therein. The
pro forma financial statements and the related notes thereto
incorporated by reference in the Registration Statements and any
Prospectus present fairly the information shown therein, have been
prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and have been properly
compiled on the bases described therein, and the assumptions used in
the preparation thereof are reasonable and the adjustments used therein
are appropriate to give effect to the transactions and circumstances
referred to therein.
(k) The documents incorporated by reference into any Preliminary
Prospectus or 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 7(c) hereof, prepared by
the Company in conformity with the applicable requirements of the Act
and 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
7(c) hereof, timely filed as required thereby.
(l) There are no contracts or other documents which are required
to be filed as exhibits to the Registration Statements 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 any Prospectus by
the Exchange Act or the rules and regulations of the Commission
thereunder, which have not been filed as exhibits to the Registration
Statements or to
<PAGE>
5
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.
(m) The Company has filed a petition or petitions with the New
Hampshire Public Utilities Commission ("PUC") with respect to the issue
and sale of securities, including the Underwritten Securities. The PUC
has authorized the issue and sale thereof but upon the express
condition that the Company shall have fulfilled certain obligations.
(n) The Company has good and valid title to all or substantially
all of its property, except as otherwise indicated in the Prospectus.
(o) The Company is not, and upon the issuance and sale of the
Underwritten Securities as herein contemplated and the application of
the net proceeds therefrom as described in the Prospectus will not be,
an "investment company" or an entity "controlled" by an "investment
company" as such terms are defined in the Investment Company Act of
1940, as amended (the "1940 Act").
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 purposes 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
<PAGE>
6
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 there 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. 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. If any Underwriter defaults in the performance of its obligations
under this Agreement, the remaining non-defaulting Underwriters, if any, 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 7(k) hereof.
Nothing contained in this Paragraph 5 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 counsel for the Company or counsel for the Underwriters may be
necessary in the Registration Statements, any Prospectus or in any other
document or arrangement.
<PAGE>
7
6. Delivery of and payment for the Immediate Delivery Underwritten
Securities shall be made at such address, date and time as may be 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 Depository Trust Company, on behalf of the
Representative, for the account of each Underwriter against payment to the
Company by wire transfer of immediately available funds to a bank account
designated by the Company. 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 registered form and in such
denominations as may be set forth on Schedule I hereto. The certificates
representing the Immediate Delivery Underwritten Securities shall be registered
in the name of Cede & Co. and shall be made 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.
7. The Company agrees:
(a) To furnish promptly to the Representative and to counsel for
the Underwriters a conformed copy of each Registration Statement as
originally filed and each amendment or supplement thereto filed prior
to the date hereof or relating to or covering the Underwritten
Securities, and a copy of each Prospectus filed with the Commission,
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 Statements (excluding exhibits
other than the computation of the ratio of earnings to fixed charges,
the Indenture and this Agreement), (ii) each Prospectus and (iii) any
documents incorporated by reference in the Prospectus;
(c) During such period following the date hereof as, in the
opinion of counsel for the Underwriters, any Prospectus is required by
law to be delivered, to comply with the Act, the Exchange Act, the
Trust Indenture Act and the rules and regulations under each thereof,
so as to permit the completion of the distribution of the Underwritten
Securities as contemplated in this Agreement and in each Prospectus. If
at any time when a prospectus is required by the Act to be delivered in
connection with sales of the Underwritten Securities, any event shall
occur or condition shall exist as a result of which it is necessary, in
the reasonable opinion of counsel for the Underwriters or for the
Company, to amend any Registration Statement or amend or supplement any
Prospectus in order that such Prospectus will not include any untrue
statements of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the
light of the circumstances existing at the time it is delivered to a
purchaser, or if it shall be necessary, in the opinion of such counsel,
at any such time to amend any Registration Statement or amend or
supplement any Prospectus in order to comply with the requirements of
the Act or the Rules and Regulations, the Company will promptly prepare
and file with the
<PAGE>
8
Commission, subject to Paragraph (d) below, such amendment or
supplement as may be necessary to correct such statement or omission or
to make any such Registration Statement or any such Prospectus comply
with such requirements, and the Company will furnish to the
Underwriters such number of copies of such amendment or supplement as
the Underwriters may reasonably request.
(d) Prior to filing with the Commission during the period referred
to in (c) above (i) any amendment or supplement to any Registration
Statement, (ii) any 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 and not to file any document that shall have been
disapproved by the Representative;
(e) To advise the Representative promptly (i) when any
post-effective amendment to any Registration Statement relating to or
covering the Underwritten Securities becomes effective or any
supplement to any Prospectus shall have been filed, (ii) of any
comments from the Commission or any request or proposed request by the
Commission for an amendment or supplement to any Registration Statement
(insofar as the amendment or supplement relates to or covers the
Underwritten Securities), to any Prospectus, to any document
incorporated by reference in any of the foregoing or for any additional
information, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of any Registration Statement or any order
directed to any Prospectus or any document incorporated therein by
reference or the initiation or threat of any stop order proceeding or
of any challenge to the accuracy or adequacy of any document
incorporated by reference in any Prospectus, (iv) 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 (v) of the happening of any event which makes untrue any
statement of a material fact made in any Registration Statement
(insofar as such Registration Statement relates to or covers the
Underwritten Securities) or any Prospectus or which requires the making
of a change in any Registration Statement or any Prospectus in order to
make any material statement therein not misleading;
(f) If, during the period referred to in (c) above, the Commission
shall issue a stop order suspending the effectiveness of any
Registration Statement, to make every reasonable effort to obtain the
lifting of that order at the earliest possible time;
(g) As soon as practicable, to make generally available to its
security holders and to deliver to the Representative an earnings
statement, conforming with the requirements of Section 11(a) of the
Act, covering a period of at least twelve months beginning after the
latest of (i) the most recent effective date of the registration
statement relating to part of the Underwritten Securities, (ii) the
effective date of the most recent post-effective amendment to the Last
Registration Statement that became effective prior to the date of this
Agreement and (iii) the date of the Company's most
<PAGE>
9
recent Annual Report on Form 10-K filed with the Commission prior to
the date of this Agreement.
(h) So long as any of the Underwritten Securities are outstanding,
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;
(i) To endeavor to qualify the Underwritten Securities for offer
and sale under the securities laws of such jurisdictions as the
Representative may reasonably request and to maintain such
qualifications in effect for as long as may be required for the
distribution of the Underwritten Securities; provided, however, that
the Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a
dealer in securities in any jurisdiction in which it is not so
qualified or to subject itself to taxation in respect of doing business
in any jurisdiction in which it is not otherwise so subject;
(j) To use its best efforts to obtain the listing of the
Underwritten Securities on the securities exchange, if any, set forth
on Schedule I ("Stock Exchange") on or prior to the Delivery Date and
to cause such listing to be continued so long as any amount of the
Securities remains outstanding; to furnish from time to time any and
all documents, instruments, information and undertakings that may be
necessary in order to effect such listing; and to maintain the same
until none of the Underwritten Securities is outstanding or until such
time as payment of principal of and premium, if any, and interest on
all the Underwritten Securities has been duly provided for, whichever
is earlier; provided that if the Company can no longer reasonably
maintain such listing, the Company shall use its best efforts to obtain
and maintain the quotation for, or listing of, the Underwritten
Securities on such other securities exchange or exchanges as the
Company may, with the approval of the Representative, determine;
(k) To pay the costs incident to the authorization, issuance, sale
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 Statements and any amendments,
supplements and exhibits thereto; the costs incident to the
preparation, printing 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 distributing the Registration Statements as
originally filed and each amendment and post-effective amendment
thereof (including exhibits), any Preliminary Prospectus, each
Prospectus and any documents incorporated by reference in any of the
foregoing documents; the costs of printing this Agreement and the
Delayed Delivery Contracts, if any; the fees and disbursements of the
Company's counsel, accountants and other advisors; the fees and
expenses of the Trustee, including the fees and disbursements of
counsel for the Trustee in connection with the Indenture and
<PAGE>
10
the Underwritten Securities, to the extent the Trustee or its counsel,
as the case may be, requires reimbursement thereof; the costs of any
filings with the National Association of Securities Dealers, Inc.; 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 (including fees of counsel
to the Underwriters); the cost of listing the Underwritten Securities
on the Stock Exchange; 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 11 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) 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; and
(m) During the period beginning on the date hereof and continuing
to the Delivery Date, without the consent of the Representative, not to
offer, sell, contract to sell or otherwise dispose of any debt
securities of the Company with maturities longer than one year, other
than the Underwritten Securities to the Underwriters.
8. (a) The Company agrees to 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 as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Registration
Statement (or any amendment thereto) or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out
of any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus or Prospectus (or any amendment
or supplement thereto), or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided
that (subject to
<PAGE>
11
Paragraph 8(d) below) any such settlement is effected with the written
consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of outside counsel chosen by the
Representative), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through the Representative expressly for use in any Registration
Statement (or any amendment thereto) or any Preliminary Prospectus or Prospectus
(or any amendment or supplement thereto).
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, its directors, each of its officers who signed any Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Paragraph 8, as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions, made
in any Registration Statement (or any amendment thereto) or any Preliminary
Prospectus or Prospectus (or any amendment or supplement thereto) in reliance
upon and in conformity with written information furnished to the Company by such
Underwriter through the Representative expressly for use in any Registration
Statement (or any amendment thereto) or such Preliminary Prospectus or
Prospectus (or any amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudiced as a result thereof and
in any event shall not relieve it from any liability which it may have otherwise
than on account of this indemnity agreement. In the case of parties indemnified
pursuant to Paragraph 8(a) above, counsel to the indemnified parties shall be
selected by the Representative, and, in the case of parties indemnified pursuant
to Paragraph 8(b) above, counsel to the indemnified parties shall be selected by
the Company. An indemnifying party may participate at its own expense in the
defense of any such action; provided, however, that counsel to the indemnifying
party shall not (except with the consent of the indemnified party) also be
counsel to the indemnified party. In no event shall the indemnifying parties be
liable for fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties 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.
No indemnifying party shall, without the prior written consent
<PAGE>
12
of the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Paragraph 8 (whether or not the indemnified parties are actual or
potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 6(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
(e) If the indemnification provided for in this Paragraph 8 is for any
reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
of such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, (i) 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 hand from the offering of the Underwritten Securities
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and of the Underwriters on the
other hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, 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 in connection with the offering of the
Underwritten Securities pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of the
Underwritten Securities pursuant to this Agreement (before deducting expenses)
received by the Company and the total underwriting discount received by the
Underwriters, bear to the aggregate initial offering price of the Underwritten
Securities.
The relative fault of the Company on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether any such 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 by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
<PAGE>
13
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Paragraph 8(e) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Paragraph 8(e). The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Paragraph 8(e) shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Paragraph 8(e), 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 been required to pay by reason of
any such 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.
For purposes of this Paragraph 8(e), each person, if any, who controls
an Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed any
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Paragraph 8(e) are several
in proportion to the principal amount of Underwritten Securities set forth
opposite their respective names in Schedule II hereto and not joint.
(f) The indemnity agreements contained in this Paragraph and the
representations, warranties and agreements of the Company in Paragraph 1 and
Paragraph 7 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.
9. (a) The Representative may terminate this Agreement, by notice to
the Company, at any time at or prior to the delivery of and payment for the
Immediate Delivery Underwritten Securities, (i) if there has been, since the
time of execution of this Agreement or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company, whether or not arising in the ordinary course
of business, the effect of which is such as to make it, in the judgment of the
Representative, impracticable
<PAGE>
14
to market the Underwritten Securities or to enforce contracts for the sale of
the Underwritten Securities, or (ii) if there has occurred any material adverse
change in the financial markets in the United States, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Representative, impracticable to
market the Underwritten Securities or to enforce contracts for the sale of the
Underwritten Securities, or (iii) if trading in any securities of the Company or
Bell Atlantic Corporation has been suspended or materially limited by the
Commission, or if trading generally on the American Stock Exchange or the New
York Stock Exchange or in the Nasdaq National Market has been suspended or
materially limited, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices have been required, by any of said exchanges or by
such system or by order of the Commission, the National Association of
Securities Dealers, Inc. or any other governmental authority, or (iv) if a
banking moratorium has been declared by either Federal or New York authorities.
(b) If this Agreement is terminated pursuant to this Paragraph 9, such
termination shall be without liability of any party to any other party except as
provided in Paragraph 11 hereof, and provided further that Paragraphs 1 and 8
shall survive such termination and remain in full force and effect.
10. 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 any Registration Statement nor any order directed to
any document incorporated by reference in any 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 to the accuracy or adequacy of any document incorporated
by reference in any Prospectus; any request of the Commission for
inclusion of additional information in any Registration Statement or
any 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 any Registration Statement or any
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 any Registration
Statement or any Prospectus contains an untrue statement of a fact
which, in the opinion of counsel for the Underwriters, is material or
omits to state a fact which, in the opinion of such counsel, is
material and is required to be stated therein or is necessary to make
the statements therein not misleading.
<PAGE>
15
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the
Underwritten Securities, the Indenture and the Remarketing Agreement
and the form of the Registration Statements, each 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 Simpson Thacher &
Bartlett, counsel for the Underwriters, and the Company shall have
furnished to such counsel all documents and information that such
counsel may reasonably request to enable it to pass upon such matters.
(d) The General Counsel of the Company shall have furnished to the
Representative his opinion addressed to the Underwriters and dated the
Delivery Date, as General Counsel of the Company, 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 New York;
(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 the conduct of
its business requires such qualification (except where the failure
to so qualify would not have a Material Adverse Effect), 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 Indenture has been duly authorized,
executed and delivered by the Company and duly qualified under the
Trust Indenture Act and, assuming due authentication, execution
and delivery by the Trustee, constitutes a valid and legally
binding instrument of the Company enforceable in accordance with
its terms; and the Remarketing Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and
legally binding instrument of the Company enforceable in
accordance with its terms;
(iv) The Immediate Delivery Underwritten
Securities have been duly authorized, executed and issued by the
Company and, assuming due authentication thereof by the Trustee
and upon payment and delivery in accordance with this Agreement,
will constitute valid and legally binding obligations of the
Company enforceable in accordance with their terms and entitled to
the benefits of the Indenture;
(v) The Delayed Delivery Underwritten
Securities, if any, have been duly authorized and, when duly
executed and issued by the Company and, assuming due
authentication thereof by the Trustee and upon payment and
delivery by the respective purchasers thereof in accordance with
the terms of the related Delayed Delivery Contracts, will
constitute valid and legally binding obligations of the Company,
enforceable in accordance with their terms and entitled to the
benefits of the Indenture;
<PAGE>
16
(vi) The Delayed Delivery Contracts, if any,
have been duly authorized, executed and delivered by the Company
and, assuming due authorization, execution and delivery by the
purchasers thereunder, are valid and legally binding obligations
of the parties thereto;
(vii) The statements made in each Prospectus
under the caption "Description of Securities" (or a comparable
caption), insofar as they purport to constitute summaries of the
documents referred to therein, constitute accurate summaries of
the terms of such documents in all material respects;
(viii) Each Registration Statement is effective
under the Act and, to the knowledge of such counsel, no stop order
suspending its effectiveness has been issued and no proceeding for
that purpose is pending or threatened by the Commission;
(ix) No order issued by the Commission directed
to any document incorporated by reference in any Prospectus has
been issued and, to the knowledge of such counsel, no challenge
has been made by the Commission to the accuracy or adequacy of any
such document;
(x) Such counsel does not know of any
litigation or any governmental proceeding pending or threatened
against the Company which would affect the subject matter of this
Agreement or is required to be disclosed in any Prospectus
(including the documents incorporated by reference therein) which
is not disclosed and correctly summarized therein;
(xi) To the best of such counsel's knowledge,
the Company is not in violation of its corporate charter or
by-laws, or in default under any material agreement, indenture or
instrument;
(xii) This Agreement has been duly authorized,
executed and delivered by the Company;
(xiii) The execution, delivery and performance of
this Agreement and the Delayed Delivery Contracts, if any, and
compliance by the Company with the provisions of the Underwritten
Securities and the Indenture will not conflict with, or result in
the creation or imposition of any lien, charge or encumbrance upon
any of the assets of the Company pursuant to the terms of, or
constitute a default under, any agreement, indenture or instrument
known to such counsel, or result in a violation of the corporate
charter or by-laws of the Company or, to the best of such
counsel's knowledge, any order, rule or regulation of any court or
governmental agency having jurisdiction over the Company or its
property;
<PAGE>
17
(xiv) All legally required proceedings in
connection with the authorization, issue and validity of the
Underwritten Securities and the sale of the Underwritten
Securities by the Company in accordance with this Agreement have
been taken, and all legally required orders, consents or other
authorizations or approvals of the PUC and of any other public
boards or bodies have been obtained; and
(xv) The Company is not an "investment company"
or an entity "controlled" by an "investment company," as such
terms are defined in the 1940 Act.
In giving such opinion, such counsel may rely on the opinion of local
counsel satisfactory to counsel for the Underwriters as to matters of Maine, New
Hampshire, Rhode Island and Vermont law. In giving such opinion, such counsel
need not express any opinion regarding any order, consent or other authorization
or approval which may be legally required pursuant to any state securities law.
Such counsel may state that the opinions set forth in paragraphs (iii),
(iv), (v) and (vi) above are subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors, rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
Such opinion shall also state that the Registration Statements and each
Prospectus as of their respective effective and 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 data contained herein) and each document incorporated by
reference in each 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 data contained therein).
Such opinion shall also contain a statement that such counsel has no
reason to believe that (i) any Registration Statement, on the date it became
effective (or, with respect to such Registration Statement, if the Company has
filed an Annual Report on Form 10-K since its effective date, the date of the
Company's most recent Annual Report on Form 10-K), 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) the Prospectus, as of its date and as of the Delivery Date, contains an
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(e) At the Delivery Date, there shall not have been, since the date
hereof or since the respective dates as of which information is given in the
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business
<PAGE>
18
prospects of the Company, whether or not arising in the ordinary course of
business, and the Representative shall have received a certificate of the
Chairman of the Board, the President, the Chief Financial Officer or a Vice
President of the Company, and the Treasurer or an Assistant Treasurer of the
Company, dated the Delivery Date, to the effect that (i) there has been no such
material adverse change, (ii) the representations and warranties in Paragraph 1
hereof are true and correct with the same force and effect as though expressly
made at and as of the Delivery Date, (iii) the Company has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the Delivery Date, and (iv) no stop order suspending the
effectiveness of any Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or are contemplated by the
Commission.
(f) Simpson Thacher & Bartlett shall have furnished to the
Representative its opinion, addressed to the Underwriters and dated the Delivery
Date, to the effect that, subject to the qualifications and limitations stated
therein and in the Prospectus, the statements set forth in the Prospectus under
the caption "Certain United States Federal Income Tax Considerations," insofar
as they purport to constitute summaries of matters of United States federal tax
law and regulations or legal conclusions with respect thereto, constitute
accurate summaries of the matters described therein in all material respects.
(g) If Underwritten Securities in bearer form are being delivered by
the Company on the Delivery Date in a jurisdiction other than the United States,
the Company shall have furnished to the Representative such legal opinion or
opinions as the Representative may reasonably request addressed to the
Underwriters and dated the Delivery Date, with respect to matters relating to
the offering, sale and delivery of the Underwritten Securities in such
jurisdiction.
(h) The Company shall have furnished to the Representative (i) a letter
of Coopers & Lybrand, addressed to the Underwriters and dated the date hereof of
the type described in the American Institute of Certified Public Accountants'
Statement on Auditing Standards No. 72 and covering such specified financial
statement items as counsel for the Underwriters may reasonably have requested
and (ii) a letter of Coopers & Lybrand, 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, confirming in
all material respects the conclusions and findings set forth in such prior
letter.
(i) Simpson Thacher & Bartlett shall have furnished to the
Representative its opinion addressed to the Underwriters and dated the Delivery
Date, as counsel for the Underwriters, covering the matters set forth in
Paragraph 10(d), except clauses (ii), (viii), (ix), (x), (xi) and (xiii)
thereof.
(j) The PUC shall have granted authorization, and on the Delivery Date
such authorization shall be in full force and effect, permitting the issuance
and sale of the
<PAGE>
19
Underwritten Securities upon the terms and conditions hereunder set forth or
contemplated and containing no provision unacceptable to the Underwriters.
(k) The Underwritten Securities shall have been accepted for listing on
the Stock Exchange (if any), subject to official notice of issuance.
(l) At the Delivery Date, the Underwritten Securities shall be rated at
least "Aa2" by Moody's Investor's Service Inc., "AA" by Standard & Poor's
Ratings Group, a division of McGraw-Hill, Inc., and "AA" by Duff & Phelps Credit
Rating Co., and the Company shall have delivered to the Representative a letter
dated the Delivery Date, from each such rating agency, or other evidence
satisfactory to the Representative, confirming that the Underwritten Securities
have such ratings; and since the date of this Agreement, there shall not have
occurred a downgrading in the rating assigned to the Underwritten Securities or
any of the Company's other debt securities by any such rating agency, and no
such rating agency shall have publicly announced that it has withdrawn or has
put under surveillance or review with negative implications, including putting
on what is commonly termed a "watch list," its rating of the Underwritten
Securities or any of the Company's other debt securities.
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 counsel
for the Underwriters.
11. 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 5 hereof). the Company shall
reimburse the Underwriters for reasonable fees and expenses of their counsel and
for such other out-of-pocket expenses as shall have been incurred by them in
connection with this Agreement and the proposed purchase of 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 5 hereof by reason of the default of one or more Underwriters, the
Company shall not be obligated to reimburse any defaulting Underwriter on
account of those expenses.
12. 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
telegraph 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 telegraph addressed to the Company at 125 High Street,
Boston, Massachusetts 02110, Attention of the Treasurer.
13. 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
<PAGE>
20
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 8 hereof shall be deemed to be for the
benefit of directors of the Company, officers of the Company who have signed any
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, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
14. For purposes of this Agreement, "business day" means any day on
which the New York Stock Exchange, Inc. is open for trading.
15. This Agreement shall be governed by and construed in accordance
with the laws of New York.
<PAGE>
21
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 among the Company and the
several Underwriters.
Very truly yours,
NEW ENGLAND TELEPHONE AND
TELEGRAPH COMPANY
By /s/ Neil D. Olson
-----------------
Title: Treasurer
The foregoing Agreement is hereby confirmed
and accepted as of the date first
above written.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By /s/ Julie Richardson
--------------------
Authorized Signatory
For itself and as Representative of the other Underwriters named in Schedule II
to the foregoing Agreement.
<PAGE>
SCHEDULE I
Underwriting Agreement dated December 10, 1997.
Registration Statement Nos. 33-49533 and 33-50631.
Representatives and Addresses: Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209.
Underwritten Securities
Designation: 6.30% MandatOry Par Put Remarketed
Securities(sm)
("MOPPRS(sm)") due
December 16, 2012.
Principal amount: $175,000,000.
Indenture: Indenture dated as of October 1, 1992, from
New England Telephone and Telegraph
Company to State Street Bank and Trust
Company, as successor Trustee.
Date of Maturity: December 16, 2012.
Interest Rate: 6.30% per annum to December 16, 2002 (and
thereafter the rate determined in accordance
with the procedures set forth in the
Prospectus under the caption headed
"Description of the MOPPRS-Tender of
MOPPRS; Remarketing"), payable June 16
and December 16 of each year, commencing
June 16, 1998, to holders of record at the
close of business on June 1 or December 1
prior to the payment date.
Purchase Price: 102.88% of the principal amount thereof.
Redemption Provisions: As set forth in the Prospectus under the
caption headed "Description of the MOPPRS-
Redemption."
Authorized Denominations: $1,000 and integral multiples thereof.
<PAGE>
2
Stock Exchange Listing: None.
Delivery Date, Time and Location: December 15, 1997 at 10 a.m. at the offices
of Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, NY 10017.
<PAGE>
SCHEDULE II
Principal
Amount of
Underwritten
Name of Underwriter Securities
- ------------------- ----------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated .................................................. $175,000,000
175,000,000
------------
Total $175,000,000
============
OFFICERS' CERTIFICATE PURSUANT TO SECTION
2.02(b) OF THE INDENTURE IDENTIFIED BELOW
-----------------------------------------
The undersigned, Edwin F. Hall, Chief Financial Officer and Controller,
and Neil D. Olson, Treasurer, of New England Telephone and Telegraph Company
(the "Company"), acting pursuant to authorizations contained in Board
Resolutions, copies of which are delivered herewith, duly adopted on March 16,
1993 and September 21, 1993, by the Board of Directors of the Company, do hereby
authorize, adopt and approve the following terms for a series (the "Series") of
the Company's debt securities to be issued under an Indenture, dated as of
October 1, 1992 (the "Indenture"), from the Company to State Street Bank and
Trust Company, as successor Trustee (the "Trustee"), pursuant to the
Registration Statements on Form S-3 (Nos. 33-49533 and 33-50631) under the
Securities Act of 1933, as amended. (As used herein, the term "Prospectus" shall
mean the Prospectus dated December 8, 1997, as supplemented by the Prospectus
Supplement dated December 10, 1997, filed with the Securities and Exchange
Commission with respect to the Series.)
<TABLE>
<S> <C> <C>
(1) Title of Securities of the Series: 6.30% MandatOry Par Put
Remarketed Securities
due December 16, 2012
(2) Limit, if any, on the aggregate $175,000,000
principal amount of Securities
of the Series:
(3) Date or dates, or manner of determining the same, December 16, 2012
on which the principal of Securities of the Series
is payable:
(4) With respect to interest on Securities of the Series:
(a) The rate or method of 6.30% per annum to December 16, 2002 (and
calculation: thereafter the rate determined in
accordance with the procedures set forth
in the Prospectus under the caption headed
"Description of the MOPPRS-Tender of
MOPPRS; Remarketing").
(b) The date or dates from which December 15, 1997
such interest shall accrue:
<PAGE>
(c) The dates on which interest June 16 and December 16, commencing June 16, 1998
shall be payable or the
manner of determining the
same:
(d) Record dates for interest payable To holders of record at the
on any interest payment date: close of business on June
1 and December 1 prior
to the interest payment date.
(5) Place or places where Securities At the office or agency of the Company in
of the Series shall be payable: New York, New York. At its option, the
Company may pay interest by check mailed to
the holder's address as it appears on the
register.
(6) With respect to redemption, in whole or in part, As set forth in the Prospectus under the
of Securities of the Series at the option of caption headed "Description of the
the Company: MOPPRS-Redemption"
(7) With respect to the mandatory As set forth in the Prospectus under the
redemption or purchase of caption headed "Description of the
Securities of the Series: MOPPRS-Tender of MOPPRS; Remarketing"
(8) Denominations in which Securities of the Series $1,000 and integral multiples thereof
are issuable, if other than $1,000 and any integral
multiples thereof:
(9) If other than the principal amount thereof, the portion of Not applicable
the principal amount of Securities of the Series payable on
declaration of acceleration:
2
<PAGE>
(10) (a) Whether Securities of the Series are issuable as Registered Securities
Registered Securities, Unregistered Securities (with or
without interest coupons), or any combination thereof:
(b) Whether, and the terms upon which, Unregistered Not applicable
Securities of the Series may be exchanged for Registered
Securities of the same Series and vice versa:
(11) Any provisions for payment of additional amounts for taxes Not applicable
and for redemption, in the event the Company must comply
with the reporting requirements or must pay additional
amounts in respect of any Securities of the Series:
(12) With respect to the issuance of any Global Securities of To be issued wholly in permanent form for deposit with The
the Series: Depository Trust Company, as Depositary.
(13) Any other covenants and terms of Securities None
of the Series, including any additional restrictive
covenants not described above and any terms required
by United States laws or regulations:
(14) Issue price to public of Securities of the Series: 100%
(15) Underwriter's commission or discount as a percentage 0.60%
of the principal amount of Securities of the Series
to be issued:
(16) Agency fees as a percentage of the principal amount of Not applicable
Securities of the Series to be issued:
</TABLE>
Annexed hereto is the form of the Securities of the Series.
The capitalized terms used in this Certificate (unless otherwise
defined herein) have the meanings as defined in the Indenture.
3
<PAGE>
IN WITNESS WHEREOF, we have executed this Certificate on behalf of the
Company.
NEW ENGLAND TELEPHONE AND TELEGRAPH COMPANY
/s/ Edwin F. Hall
------------------------------------------
Edwin F. Hall
Chief Financial Officer and Controller
/s/ Neil D. Olson
------------------------------------------
Neil D. Olson
Treasurer
Dated: As of December 10, 1997
<PAGE>
EXHIBIT A
$
NEW ENGLAND TELEPHONE AND TELEGRAPH COMPANY
DEBT SECURITIES
DELAYED DELIVERY CONTRACT
[DATE]
NEW ENGLAND TELEPHONE AND TELEGRAPH COMPANY
125 High Street
Boston, Massachusetts 02110
Dear Sirs:
The undersigned hereby agrees to purchase from New England Telephone
and Telegraph Company, a New York corporation ("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 . Payment will be certified or official bank check payable in next-day funds
settled through the New York Clearing House 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.
This Contract will terminate and be of no further force and effect
after , 199 , unless (i) on or before such date it shall have been
executed and delivered by both parties
<PAGE>
2
hereto or (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) and the Company shall have
mailed or delivered 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 10(d) of the Underwriting Agreement.
The obligation of the undersigned to accept delivery 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.
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 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 , 19 .
NEW ENGLAND TELEPHONE AND TELEGRAPH
COMPANY
By
---------------------------------
Title
<PAGE>
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the issuer
or its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
NEW ENGLAND TELEPHONE AND TELEGRAPH COMPANY
6.30% MandatOry Par Put Remarketed Securities(SM)*("MOPPRS(SM)")
due December 16, 2012
No. ___ $___________ Cusip: _________
NEW ENGLAND TELEPHONE AND TELEGRAPH COMPANY, a New York corporation
(hereinafter called the "Company"), for value received, hereby promises to pay
to CEDE & CO. or registered assigns, the principal sum of ___________ DOLLARS on
December 16, 2012, at the office or agency of the Company in the Borough of
Manhattan, The City of New York, State of New York, in such coin or currency of
the United States of America as at the time of payment shall be legal tender for
the payment of public and private debts, and to pay interest, semi-annually on
June 16 and December 16 of each year (each, an "Interest Payment Date"), on said
principal sum at the rate per annum specified below, at such office or agency,
in like coin or currency, from the sixteenth day of June or December, as the
case may be, to which interest on Securities has been paid preceding the date
hereof (unless the date hereof is a June 16 or a December 16 to which interest
has been paid, in which case from the date hereof, or unless the date hereof is
prior to the first payment of interest, in which case from December 15, 1997)
until payment of said principal sum has been made or duly provided for.
Notwithstanding the foregoing, unless this Security shall be authenticated at a
time when there is an existing default in the payment of interest on the
Securities, if the date hereof is after June 1 and before the next following
June 16 or is after December 1 and before the next following December 16, this
Security shall bear interest from such June 16 or December 16; provided,
however, that if the Company shall default in the payment of interest when due
on such June 16 or December 16, then this Security shall bear interest from the
next preceding date to which interest has been paid.
- ----------
* (sm) "MandatOry Par Put Remarketed Securities" and "MOPPRS" are service
marks of Merrill Lynch & Co., Inc.
<PAGE>
-2-
The interest so payable on any June 16 or December 16 shall be paid to the
person in whose name this Security shall be registered at the close of business
on the fifteenth calendar day (whether or not a Business Day) immediately
preceding the related Interest Payment Date (each, a "Regular Record Date"). For
purposes of this Security, "Business Day" means any day other than a Saturday, a
Sunday or a day on which banking institutions in The City of New York are
authorized or obligated by law, executive order or governmental decree to be
closed.
If and to the extent the Company shall default in the payment of the
interest due on any interest payment date, such defaulted interest shall be paid
to the person in whose name this Security is registered at the close of business
on a record date established for such payment by notice by or on behalf of the
Company to the holders of the Securities mailed by first-class mail not less
than fifteen days prior to such record date to their last address as they shall
appear upon the Security register, such record date to be not less than five
days preceding the date of payment of such defaulted interest. The Company may
pay interest by check mailed to the holder's address as it appears on the
Security register.
The rate of interest on this Security shall be 6.30% per annum to December
16, 2002 (the "Remarketing Date"). If, pursuant to the Remarketing Agreement,
dated as of the date hereof (the "Remarketing Agreement"), between Merrill
Lynch, Pierce, Fenner & Smith Incorporated, as Remarketing Dealer (the
"Remarketing Dealer"), and the Company, the Remarketing Dealer elects to
remarket the Securities, then, except as otherwise set forth on the reverse
hereof, (i) this Security shall be subject to mandatory tender to the
Remarketing Dealer for remarketing on the Remarketing Date, on the terms and
subject to the conditions set forth on the reverse hereof, and (ii) on and after
the Remarketing Date, this Security shall bear interest at the rate determined
by the Remarketing Dealer in accordance with the procedures set forth in Section
4 on the reverse hereof (the "Interest Rate to Maturity").
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof and such further provisions shall for all purposes
have the same effect as though fully set forth at this place.
This Security shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been executed by the
Trustee under the Indenture referred to on the reverse hereof.
<PAGE>
-3-
IN WITNESS WHEREOF, New England Telephone and Telegraph Company has caused
this Security to be signed by its duly authorized officers and has caused its
corporate seal to be affixed hereunto.
NEW ENGLAND TELEPHONE AND TELEGRAPH
COMPANY
(SEAL) By
----------------------------------
Title:
By
----------------------------------
Title:
Dated: December 15, 1997
Certificate of Authentication
This is one of the Securities of the series designated therein and described in
the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY,
AS TRUSTEE
By
----------------------------------
Authorized Signatory
<PAGE>
NEW ENGLAND TELEPHONE AND TELEGRAPH COMPANY
6.30% MandatOry Par Put Remarketed Securities(SM) ("MOPPRS(SM)")
due December 16, 2012
1. Indenture. (a) This Security is one of the duly authorized issue of
debt securities of the Company (herein referred to as the "Debt Securities") of
the series hereinafter specified, all issued or to be issued under and pursuant
to an indenture dated as of October 1, 1992 (herein referred to as the
"Indenture"), duly executed and delivered by the Company to State Street Bank
and Trust Company, as successor Trustee (herein referred to as the "Trustee"),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a description of the rights, limitations of rights, obligations, duties
and immunities thereunder of the Trustee, the Company and the holders (the words
"holders", "holder", "Securityholders" or "Securityholder" meaning the
registered holders or registered holder) of the Debt Securities.
(b) The Debt Securities may be issued in one or more series, which
different series may be issued in various aggregate principal amounts, may
mature at different times, may bear interest, if any, at different rates, may be
subject to different redemption provisions, if any, may be subject to different
sinking funds, if any, may be subject to additional covenants and Events of
Default and may otherwise vary as provided in the Indenture. This Security is
one of the series designated as the 6.30% MandatOry Par Put Remarketed
Securities(SM) ("MOPPRS(SM)") due December 16, 2012 of the Company and such
series is limited in aggregate principal amount to $175,000,000. References
herein to "Securities" shall mean the Securities of said series.
(c) All capitalized terms used in this Security which are defined in the
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.
2. Mandatory Tender on Remarketing Date; Purchase and Settlement. (a)
Provided that the Remarketing Dealer gives notice to the Company and the Trustee
on a Business Day not later than five Business Days prior to the Remarketing
Date of its intention to purchase the Securities for remarketing (the
"Notification Date"), each Security shall be automatically tendered, or deemed
tendered, to the Remarketing Dealer for purchase on the Remarketing Date in
accordance with Section 2(b) below, except as set forth in Sections 5 and 6
below. The purchase price of such tendered Securities shall be equal to 100% of
the principal amount thereof. Upon such tender, the Remarketing Dealer shall
have the option, in its sole discretion, to elect to remarket the Securities in
accordance with the Remarketing Agreement for its own account at varying prices
to be determined by the Remarketing Dealer at the time of each sale. If the
Remarketing Dealer makes such election, the obligation of the Remarketing Dealer
to purchase the Securities on the Remarketing Date shall be subject to the
conditions set forth in the Remarketing Agreement. No Beneficial Owner of any
Securities shall have any rights or claims under the Remarketing Agreement or
against the Company or the Remarketing Dealer as a result of the Remarketing
Dealer not purchasing such Securities.
<PAGE>
-2-
(b) Following the Notification Date, the tender and purchase of the
Securities provided for in Section 2(a) above shall be effected as follows,
subject to Sections 5 and 6 below:
(i) All of the tendered Securities shall be automatically
delivered to the account of the Trustee, by book-entry through The
Depository Trust Company or any successor thereto ("DTC") pending payment
of the purchase price therefor, on the Remarketing Date.
(ii) The Remarketing Dealer shall make or cause the Trustee to make
payment to the DTC participant (each, a "Participant") of each tendering
Beneficial Owner of Securities, by book entry through DTC in accordance
with the procedures of DTC, by the close of business on the Remarketing
Date against delivery through DTC of such Beneficial Owner's tendered
Securities, of the purchase price for tendered Securities that have been
purchased for remarketing by the Remarketing Dealer. The Company shall
make or cause the Trustee to make payment of interest to each Beneficial
Owner of Securities due on the Remarketing Date by book entry through DTC
by the close of business on the Remarketing Date.
3. Maintenance of Book-Entry System. (a) The tender and settlement
procedures set forth in Section 2(b) above, including provisions for payment by
purchasers of Securities in the remarketing or for payment to selling Beneficial
Owners of tendered Securities, shall be subject to modification, notwithstanding
any provision to the contrary set forth in Article 9 of the Indenture, to the
extent required by DTC or, if the book-entry system is no longer available for
the Securities at the time of the remarketing, to the extent required to
facilitate the tendering and remarketing of Securities in certificated form. In
addition, the Remarketing Dealer may, notwithstanding any provision to the
contrary set forth in Article 9 of the Indenture, modify the settlement
procedures set forth herein in order to facilitate the settlement process.
(b) The Company hereby agrees with the Trustee and the holders of
Securities that at all times, notwithstanding any provision to the contrary set
forth in the Indenture, (i) it will use its best efforts to maintain the
Securities in book-entry form with DTC or any successor thereto and to appoint a
successor depository to the extent necessary to maintain the Securities in
book-entry form and (ii) it will waive any discretionary right that it otherwise
may have under the Indenture to cause the Securities to be issued in
certificated form.
4. Determination of Interest Rate to Maturity; Notification Thereof.
Subject to the Remarketing Dealer's election to remarket the MOPPRS as provided
in Section 2(a), by 3:30 p.m., New York City time, on the third Business Day
immediately preceding the Remarketing Date (the "Determination Date"), the
Remarketing Dealer shall determine the Interest Rate to Maturity to the nearest
one hundred-thousandth (0.00001) of one percent per annum. The Interest Rate to
Maturity shall be equal to the sum of 5.905% (the "Base Rate") and the
Applicable Spread (as defined below), which will be based on the Dollar Price
(as defined below) of the MOPPRS.
The "Applicable Spread" shall be the lowest bid indication, expressed as a
spread (in the form of a percentage or in basis points) above the Base Rate,
obtained by the Remarketing Dealer
<PAGE>
-3-
on the Determination Date from the bids quoted by five Reference Corporate
Dealers (as defined below) for the full aggregate principal amount of the MOPPRS
at the Dollar Price, but assuming (i) an issue date that is the Remarketing
Date, with settlement on such date without accrued interest, (ii) a maturity
date that is the Stated Maturity Date of the MOPPRS and (iii) a stated annual
interest rate equal to the Base Rate plus the spread bid by the applicable
Reference Corporate Dealer. If fewer than five Reference Corporate Dealers bid
as described above, then the Applicable Spread shall be the lowest of such bid
indications obtained as described above. The Interest Rate to Maturity announced
by the Remarketing Dealer, absent manifest error, shall be binding and
conclusive upon the actual purchasers of the MOPPRS ("Beneficial Owners") and
Holders of the MOPPRS, the Company and the Trustee.
"Dollar Price" means, with respect to the MOPPRS, the present value, as of
the Remarketing Date, of the Remaining Scheduled Payments (as defined below)
discounted to the Remarketing Date on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months) at the Treasury Rate (as defined
below).
"Reference Corporate Dealers" means each of CS First Boston Corporation,
Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan
Stanley & Co. Incorporated and Salomon Brothers Inc and their respective
successors; provided, however, that if any of the foregoing or their affiliates
shall cease to be a leading dealer of publicly traded debt securities of the
Company in The City of New York (a "Primary Corporate Dealer"), the Remarketing
Dealer shall substitute therefor another Primary Corporate Dealer.
"Remaining Scheduled Payments" means, with respect to the Securities, the
remaining scheduled payments of the principal thereof and interest thereon,
calculated at the Base Rate only, that would be due after the Remarketing Date
to and including the Stated Maturity Date; provided, however, that if the
Remarketing Date is not an Interest Payment Date with respect to the Securities,
the amount of the next succeeding scheduled interest payment thereon, calculated
at the Base Rate only, will be reduced by the amount of interest accrued
thereon, calculated at the Base Rate only, to the Remarketing Date.
"Treasury Rate" means, with respect to the Remarketing Date, the rate per
annum equal to the semi-annual equivalent yield to maturity or interpolated (on
a day count basis) yield to maturity of the Comparable Treasury Issues (as
defined below), assuming a price for the Comparable Treasury Issues (expressed
as a percentage of its principal amount), equal to the Comparable Treasury Price
(as defined below) for such Remarketing Date.
"Comparable Treasury Issues" means the United States Treasury security or
securities selected by the Remarketing Dealer as having an actual or
interpolated maturity or maturities comparable to the remaining term of the
Securities being purchased.
"Comparable Treasury Price" means, with respect to the Remarketing Date,
(a) the offer prices for the Comparable Treasury Issues (expressed in each case
as a percentage of its principal amount) on the Determination Date, as set forth
on "Telerate Page 500" (or such other page as may replace Telerate Page 500) or
(b) if such page (or any successor page) is not displayed or does not contain
such offer prices on such Business Day, (i) the average of the Reference
<PAGE>
-4-
Treasury Dealer Quotations for such Remarketing Date, after excluding the
highest and lowest of such Reference Treasury Dealer Quotations, or (ii) if the
Remarketing Dealer obtains fewer than four such Reference Treasury Dealer
Quotations, the average of all such Reference Treasury Dealer Quotations.
"Telerate Page 500" means the display designated as "Telerate Page 500" on Dow
Jones Markets Limited (or such other page as may replace Telerate Page 500 on
such service) or such other service displaying the offer prices specified in (a)
above as may replace Dow Jones Markets Limited. "Reference Treasury Dealer
Quotations" means, with respect to each Reference Treasury Dealer and the
Remarketing Date, the offer prices for the Comparable Treasury Issues (expressed
in each case as a percentage of its principal amount) quoted in writing to the
Remarketing Dealer by such Reference Treasury Dealer by 3:30 p.m., on the
Determination Date.
"Reference Treasury Dealer" means each of CS First Boston Corporation,
Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan
Stanley & Co. Incorporated and Salomon Brothers Inc and their respective
successors; provided, however, that if any of the foregoing or their affiliates
shall cease to be a primary U.S. Government securities dealer in The City of New
York (a "Primary Treasury Dealer"), the Remarketing Dealer shall substitute
therefor another Primary Treasury Dealer.
5. Repurchase. If (a) the Remarketing Dealer for any reason does not
notify the Company of the Interest Rate to Maturity by 4:00 p.m., New York City
time, on the Determination Date, or (b) prior to the Remarketing Date, the
Remarketing Dealer has resigned and no successor has been appointed on or before
the Determination Date, or (c) since the Notification Date, a material adverse
change in the condition of the Company and its subsidiaries, considered as one
enterprise, shall have occurred or an Event of Default, or any event which, with
the giving of notice or passage of time, or both, would constitute an Event of
Default, with respect to the Securities shall have occurred and be continuing,
or any other event constituting a termination event under the Remarketing
Agreement shall have occurred, or (d) the Remarketing Dealer elects not to
remarket the Securities, or (e) the Remarketing Dealer for any reason does not
purchase all tendered Securities on the Remarketing Date, then, in any such
case, the Company shall repurchase the Securities as a whole on the Remarketing
Date at a price equal to 100% of the principal amount thereof plus all accrued
and unpaid interest, if any, on the Securities to the Remarketing Date. In any
such case, payment shall be made by the Company to the Participant of each
tendering Beneficial Owner of Securities, by book-entry through DTC, by the
close of business on the Remarketing Date against delivery through DTC of such
Beneficial Owner's tendered Securities.
6. Redemption. (a) Notwithstanding any election by the Remarketing
Dealer to remarket the Securities on the Remarketing Date, the tendering of the
Securities for purchase by the Remarketing Dealer on such date as set forth in
Section 2(b) above shall be subject to the right of the Company to redeem the
Securities from the Remarketing Dealer as provided in Section 6(b) below.
(b) The Company, in its sole and absolute discretion, shall have the
right, upon notice to the Remarketing Dealer and the Trustee not later than the
Business Day immediately preceding the Determination Date, to irrevocably elect
to redeem the Securities, in whole but not in part,
<PAGE>
-5-
from the Remarketing Dealer on the Remarketing Date at the Optional Redemption
Price. The "Optional Redemption Price" shall be the greater of (i) 100% of the
principal amount of the Securities and (ii) the sum of the present values of the
Remaining Scheduled Payments thereon, as determined by the Remarketing Dealer,
discounted to the Remarketing Date on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months) at the Treasury Rate, plus in either
case accrued and unpaid interest from the Remarketing Date on the principal
amount being redeemed to the date of redemption. If the Company elects to redeem
the Securities, it shall pay the redemption price therefor in same-day funds by
wire transfer to an account designated by the Remarketing Dealer on the
Remarketing Date.
7. Effect of Event of Default. In the event that an Event of Default
shall have occurred and be continuing, the principal hereof may be declared, and
upon such declaration shall become, due and payable, in the manner, with the
effect and subject to the conditions provided in the Indenture.
8. Amendments and Waivers. The Indenture contains provisions permitting
the Company and the Trustee, with the written consent of the holders of a
majority in principal amount of the outstanding Debt Securities of each series
affected by a supplemental indenture (with each series voting as a class), to
enter into a supplemental indenture to add any provisions to or to change or
eliminate any provisions of the Indenture or of any supplemental indenture or to
modify, in each case in any manner not covered by provisions in the Indenture
relating to amendments and waivers without the consent of holders, the rights of
the Securityholders of each such series. The holders of a majority in principal
amount of the outstanding Debt Securities of each series affected by such waiver
(with each series voting as a class), by notice to the Trustee, may waive
compliance by the Company with any provision of the Indenture, any supplemental
indenture or the Debt Securities of any such series except a default in the
payment of the principal of or interest on any Debt Security. However, without
the consent of each Securityholder affected, an amendment or waiver may not: (1)
reduce the amount of Debt Securities whose holders must consent to an amendment
or waiver; (2) change the rate of or change the time for payment of interest on
any Debt Security; (3) change the principal of or change the fixed maturity of
any Debt Security; (4) waive a default in the payment of the principal of or
interest on any Debt Security; (5) make any Debt Security payable in money other
than that stated in the Debt Security; or (6) make any change in the provisions
of the Indenture (a) with respect to the right of the holders of a majority in
principal amount of any series of Debt Securities by notice to the Trustee to
waive an existing default with respect to that series and its consequences
except a default in the payment of the principal of or interest on any Debt
Security; (b) with respect to the right of any holder of a Debt Security to
receive payment of principal and interest on the Debt Security, on or after the
respective due dates expressed in the Debt Security, the right of any holder of
a coupon to receive payment of interest due as provided in such coupon, or to
bring suit for the enforcement of any such payment on or after such respective
dates; and (c) contained in this sentence.
9. Denominations, Transfer and Exchange. (a) The Securities are
issuable in registered form without coupons in denominations of $1,000 and any
integral multiple thereof.
<PAGE>
-6-
(b) Where certificated Securities are presented to the registrar with a
request to register their transfer or to exchange them for an equal principal
amount of Securities of other authorized denominations, the registrar shall
register the transfer or make the exchange if its requirements for such
transactions are met. The Company will not make any charge for any registration
of transfer or exchange but may require the payment by the party requesting such
registration of transfer or exchange of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.
(c) Ownership of Securities shall be provided by the register for the
Securities kept by the registrar. The Company, the Trustee and any agent of the
Company may treat the person in whose name a Security is registered as the
absolute owner thereof for all purposes.
10. No Liability of Certain Persons. No director, officer, employee or
stockholder, as such, of the Company shall have any liability for any
obligations of the Company under this Security or the Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. Each
holder by accepting this Security waives and releases all such liability. The
waiver and release are part of the consideration for the issue of the Security.
11. Governing Law. The laws of the State of New York shall govern the
Indenture and this Security.
<PAGE>
- --------------------------------------------------------------------------------
THE FOLLOWING ABBREVIATIONS SHALL BE CONSTRUED AS THOUGH THE WORDS SET FORTH
BELOW OPPOSITE EACH ABBREVIATION WERE WRITTEN OUT IN FULL WHERE SUCH
ABBREVIATION APPEARS:
TEN COM--as tenants in common (Name) CUST (Name) UNIF--(Name) as Custodian
TEN ENT--as tenants by the GIFT MIN ACT (state) for (Name) Under the (State)
entirety Uniform Gifts
JT TEN --as joint tenants with to Minors Act
right of survivorship
and not as tenants
in common
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED THOUGH NOT IN THE ABOVE LIST.
- --------------------------------------------------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT TAXPAYER
IDENTIFICATION NUMBER OF ASSIGNEE
- -----------------------------------------
- -----------------------------------------
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
the within Security of New England Telephone and Telegraph Company and all
rights thereunder and hereby irrevocably constitutes and appoints
_______________________ attorney to transfer said Security on the books of the
Company, with full power of substitution in the premises
Dated: ----------------------------------------
Signature
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE WITHIN INSTRUMENT IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. THE
SIGNATURE(S) SHOULD BE GUARANTEED BY A COMMERCIAL BANK OR TRUST
COMPANY, A MEMBER ORGANIZATION OF A NATIONAL STOCK EXCHANGE OR BY
SUCH OTHER ENTITY WHOSE SIGNATURE IS ON FILE WITH AND ACCEPTABLE TO
THE TRANSFER AGENT.
FORM OF REMARKETING AGREEMENT
-----------------------------
REMARKETING AGREEMENT, dated as of December __, 1997 (the "Remarketing
Agreement"), between New England Telephone and Telegraph Company, a New York
corporation (the "Company"), and Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch" and, in its capacity as the remarketing dealer
hereunder, the "Remarketing Dealer").
WHEREAS, the Company has issued $175,000,000 aggregate principal amount of
its 6.30% MandatOry Par Put Remarketed Securities(SM)* ("MOPPRS(SM)") pursuant
to an indenture, dated as of October 1, 1992 (the "Indenture"), from the Company
to State Street Bank and Trust Company, as successor trustee (the "Trustee");
and
WHEREAS, the MOPPRS are being sold initially pursuant to a purchase
agreement, dated December 10, 1997 (the "Purchase Agreement"), between the
Company and Merrill Lynch; and
WHEREAS, the Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement (No. 33-49533) and a registration
statement (No. 33- 50631) under the Securities Act of 1933, as amended (the
"1933 Act"), in connection with the offering of Debt Securities, including the
MOPPRS, each of which registration statements was declared effective by order of
the Commission, and has filed such amendments thereto and such amended
prospectuses as may have been required to the date hereof, and will file such
additional amendments thereto and such additional amended prospectuses as may
hereafter be required (such registration statement (No. 33-49533) and such
registration statement (No. 33-50631), each including any amendments and
supplements thereto, and (in the case of such latter registration statement)
including any preliminary or final prospectus relating to the offering of MOPPRS
by the Company constituting a part thereof, and all documents incorporated
therein by reference, as from time to time amended or supplemented pursuant to
the Securities Exchange Act of 1934, as amended (the "1934 Act"), the 1933 Act,
or otherwise, are referred to herein as the "Initial Registration Statement,"
the "Last Registration Statement" and the "Prospectus," respectively, except
that if any revised prospectus shall be provided to the Remarketing Dealer by
the Company for use in connection with the remarketing of the MOPPRS which
differs from the Prospectus on file at the Commission at the time the Last
Registration Statement became effective (whether or not such revised prospectus
is required to be filed by the Company pursuant to Rule 424(b) of the rules and
regulations under the 1933 Act (the "1933 Act Regulations")), the term
"Prospectus" shall refer to such revised prospectus from and after the time it
is first provided to the Remarketing Dealer for such use, and the Initial
Registration Statement and the
- ----------
* (sm) "MandatOry Par Put Remarketed Securities" and "MOPPRS" are service
marks of Merrill Lynch & Co., Inc.
<PAGE>
Last Registration Statement are referred to herein each singly as a
"Registration Statement" and collectively as the "Registration Statements"); and
WHEREAS, Merrill Lynch is prepared to act as the Remarketing Dealer with
respect to the remarketing of the MOPPRS on December 16, 2002 (the "Remarketing
Date") pursuant to the terms of, but subject to the conditions set forth in,
this Agreement;
NOW, THEREFORE, for and in consideration of the covenants herein made, and
subject to the conditions herein set forth, the parties hereto agree as follows:
Section 1. Definitions. Capitalized terms used and not defined in this
Agreement shall have the meanings assigned to them in the Indenture (including
the form of the MOPPRS).
Section 2. Representations and Warranties. (a) The Company represents and
warrants to the Remarketing Dealer as of the date hereof, the Notification Date
(as defined below), the Determination Date (as defined below), the Remarketing
Date and each date thereafter, if any, of delivery of MOPPRS by the Remarketing
Dealer (each of the foregoing dates being hereinafter referred to as a
"Representation Date"), that (i) it has made all the filings with the Commission
that it is required to make under the 1934 Act and the rules and regulations
thereunder (the "1934 Act Regulations") (collectively, the "1934 Act
Documents"), (ii) each 1934 Act Document complies in all material respects with
the requirements of the 1934 Act and 1934 Act Regulations, and each 1934 Act
Document did not at the time of filing with the Commission, and as of each
Representation Date will not, include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, (iii) the applicable Remarketing Materials
(as defined herein) will not, as of the Remarketing Date and each date
thereafter, if any, of delivery of MOPPRS by the Remarketing Dealer, include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, (iv) no
consent, approval, authorization, order or decree of any court or governmental
agency or body, including as to an effective registration statement under the
1933 Act with respect to the MOPPRS, is required for the consummation by the
Company of the transactions contemplated by this Agreement or in connection with
the remarketing of MOPPRS pursuant hereto, except such as have been or shall
have been obtained or rendered, as the case may be, and (v) the representations
and warranties contained in the Purchase Agreement are true and correct with the
same force and effect as though expressly made at and as of the date hereof.
(b) The Company further represents and warrants to the Remarketing
Dealer as of each Representation Date as follows:
2
<PAGE>
(i) The accountants who certified the financial statements and
supporting schedules included or incorporated by reference in the 1934 Act
Documents are independent public accountants as required by the 1933 Act
and the 1933 Act Regulations.
(ii) The financial statements included or incorporated by reference
in the 1934 Act Documents, together with the related schedules and notes,
present fairly the financial condition and results of operations of the
Company and its consolidated subsidiaries, if any, at the dates and for
the periods indicated; said financial statements have been prepared in
conformity with generally accepted accounting principles ("GAAP") applied
on a consistent basis throughout the periods involved. The supporting
schedules included or incorporated by reference in the 1934 Act Documents
present fairly in accordance with GAAP the information required to be
stated therein. The pro forma financial statements and the related notes
thereto included or incorporated by reference in the 1934 Act Documents
present fairly the information shown therein, have been prepared in
accordance with the Commission's rules and guidelines with respect to pro
forma financial statements and have been properly compiled on the bases
described therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give effect
to the transactions and circumstances referred to therein.
(iii) Since the respective dates as of which information is given in
the 1934 Act Documents, except as otherwise stated therein, there has been
no material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company and
its subsidiaries, if any, considered as one enterprise, whether or not
arising in the ordinary course of business (a "Material Adverse Effect").
(iv) The Company has been duly incorporated and is validly existing
and in good standing under the laws of the State of New York; and the
Company is duly qualified to do business and in good standing as a foreign
corporation in each jurisdiction in which its ownership of property or
conduct of its business requires such qualification, except where the
failure to so qualify would not have a Material Adverse Effect, and has
power and authority necessary to own or hold its properties, to conduct
the business in which it is engaged and to enter into and perform its
obligations under this Agreement.
(v) Each "significant subsidiary" of the Company (as such term is
defined in Rule 1-02 of Regulation S-X), if any (each a "Subsidiary" and,
collectively, the "Subsidiaries"), has been duly incorporated, is validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, is duly qualified to do business and in good standing as a
foreign corporation in each jurisdiction in which its ownership of
property or conduct of its business requires such qualification, and has
power and authority necessary to own or hold its properties, to conduct
the business in which it is engaged; except as otherwise disclosed in the
1934 Act Documents, all of the issued and
3
<PAGE>
outstanding capital stock of each such Subsidiary has been duly authorized
and validly issued, is fully paid and non-assessable and is owned by the
Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; none of
the outstanding shares of capital stock of any Subsidiary was issued in
violation of the preemptive or similar rights of any securityholder of
such Subsidiary.
(vi) This Agreement has been duly authorized, executed and
delivered by the Company.
(vii) The Indenture has been validly authorized, executed and
delivered by the Company and duly qualified under the Trust Indenture Act
of 1939, as amended (the "1939 Act"), and, assuming it has been duly
executed and delivered by the Trustee, constitutes the legally binding
obligation of the Company.
(viii) The MOPPRS have been validly authorized and executed by the
Company and authenticated, issued and delivered in the manner provided for
in the Indenture and delivered against payment of the purchase price
therefor as provided in the Purchase Agreement, and constitute legally
binding obligations of the Company entitled to the benefits of the
Indenture.
(ix) Neither the Company nor any of its subsidiaries (if any) is in
violation of its corporate charter or by-laws or in default under any
agreement, indenture or instrument, except for such defaults that would
not result in a Material Adverse Effect; and the execution, delivery and
performance of this Agreement, the Indenture and the MOPPRS and the
consummation of the transactions contemplated herein and in the Prospectus
(including the issuance and sale of the MOPPRS and the use of the proceeds
from the sale thereof as described in the Prospectus under the caption
"Use of Proceeds") have been duly authorized by all necessary corporate
action and do not and will not conflict with or constitute a breach of, or
default under, or result in the creation or imposition of any lien, charge
or encumbrance upon any property or assets of the Company or any such
subsidiary pursuant to, any material agreement, indenture or instrument to
which the Company or any such subsidiary is a party or by which it is
bound or to which any of its property or assets is subject, nor will such
action result in a material violation of the charter or by-laws of the
Company or any such subsidiary or any order, rule or regulation of any
court or governmental agency having jurisdiction over the Company or any
such subsidiary or its property.
(x) There is no material action, suit or proceeding before any
court or governmental agency or body, domestic or foreign, now pending,
or, to the knowledge of the Company, threatened, against or affecting the
Company or any subsidiary, which is required to be disclosed in the 1934
Act Documents (other than as disclosed therein), or which might reasonably
be expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the properties
or assets
4
<PAGE>
thereof or the consummation of the transactions contemplated in this
Agreement or the performance by the Company of its obligations hereunder.
(xi) No consent, authorization or order of, or filing or
registration with, any court or governmental agency is required for the
execution, delivery and performance by the Company of this Agreement and
the Indenture or the consummation of the transactions contemplated hereby
and thereby, except such as have been already obtained.
(xii) The Company is not an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
(xiii) The MOPPRS are rated at least "Aa2" by Moody's Investor's
Service Inc., at least "AA" by Standard & Poor's Ratings Group, a division
of McGraw-Hill, Inc., and at least "AA" by Duff & Phelps Credit Rating
Co., or, in each case, such other rating as to which the Company shall
have most recently notified the Remarketing Dealer pursuant to Section
3(a) hereof.
(c) Additional Certifications. Any certificate signed by any director or
officer of the Company and delivered to the Remarketing Dealer or to counsel for
the Remarketing Dealer in connection with the remarketing of the MOPPRS shall be
deemed a representation and warranty by the Company to the Remarketing Dealer as
to the matters covered thereby.
Section 3. Covenants of the Company. The Company covenants with the
Remarketing Dealer as follows:
(a) The Company will provide prompt notice by telephone, confirmed in
writing (which may include facsimile or other electronic transmission), to the
Remarketing Dealer of (i) any notification or announcement by a "nationally
recognized statistical rating agency" (as defined by the Commission for purposes
of Rule 436(g)(2) under the 1933 Act) with regard to the ratings of any
securities of the Company, including, without limitation, notification or
announcement of a downgrade in or withdrawal of the rating of any security of
the Company or notification or announcement of the placement of any rating of
any securities of the Company under surveillance or review, including placement
on CreditWatch or on Watch List with negative implications, or (ii) the
occurrence at any time of any event set forth in Section 9(c) of this Agreement.
(b) The Company will furnish to the Remarketing Dealer:
(i) each Registration Statement and the Prospectus relating to the
MOPPRS (including in each case any amendment or supplement thereto and
each document incorporated therein by reference);
(ii) each 1934 Act Document filed after the date hereof; and
5
<PAGE>
(iii) in connection with the remarketing of MOPPRS, such other
information as the Remarketing Dealer may reasonably request from time to
time.
The Company agrees to provide the Remarketing Dealer with as many copies
of the foregoing written materials and other Company-approved information as the
Remarketing Dealer may reasonably request for use in connection with the
remarketing of MOPPRS and consents to the use thereof for such purpose.
(c) If, at any time during which the Remarketing Dealer would be
obligated to take any action under this Agreement, any event or condition known
to the Company relating to or affecting the Company, any subsidiary thereof or
the MOPPRS shall occur which could reasonably be expected to cause any of the
reports, documents, materials or information referred to in paragraph (b) above
or any document incorporated therein by reference (collectively, the
"Remarketing Materials") to contain an untrue statement of a material fact or
omit to state a material fact, the Company shall promptly notify the Remarketing
Dealer in writing of the circumstances and details of such event or condition.
(d) So long as the MOPPRS are outstanding, the Company will file all
documents required to be filed with the Commission pursuant to the 1934 Act
within the time periods required by the 1934 Act and the 1934 Act Regulations.
(e) The Company will comply with the 1933 Act and the 1933 Act
Regulations, the 1934 Act and the 1934 Act Regulations and the 1939 Act and the
rules and regulations of the Commission thereunder so as to permit the
completion of the remarketing of the MOPPRS as contemplated in this Agreement
and in each Prospectus. If at any time when a prospectus is required by the 1933
Act to be delivered in connection with sales of the MOPPRS, any event shall
occur or condition shall exist as a result of which it is necessary, in the
reasonable opinion of counsel for the Remarketing Dealer or for the Company, to
amend any Registration Statement or amend or supplement any Prospectus in order
that such Prospectus will not include any untrue statements of a material fact
or omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing at the time it
is delivered to a purchaser, or if it shall be necessary, in the opinion of such
counsel, at any such time to amend any Registration Statement or file a new
registration statement or amend or supplement any Prospectus or issue a new
prospectus in order to comply with the requirements of the 1933 Act or the 1933
Act Regulations and the Commission's interpretations of the 1933 Act and the
1933 Act Regulations, the Company, at its expense, will promptly (i) prepare and
file with the Commission such amendment or supplement as may be necessary to
correct such statement or omission or to make any such Registration Statement or
any such Prospectus comply with such requirements, or prepare and file any such
new registration statement and prospectus as may be necessary for such purpose,
(ii) furnish to the Remarketing Dealer such number of copies of such amendment,
supplement or other document as the Remarketing Dealer may reasonably request
and (iii) furnish to the Remarketing Dealer an officers' certificate, an
opinion, including a statement as to the absence of material misstatements in or
omissions from each Registration Statement and each Prospectus, as amended or
supplemented, of counsel for the
6
<PAGE>
Company satisfactory to the Remarketing Dealer and a "comfort letter" from the
Company's independent accountants, in each case in form and substance
satisfactory to the Remarketing Dealer, of the same tenor as the officers'
certificate, opinion and comfort letter, respectively, delivered pursuant to the
Purchase Agreement, but modified to relate to the Registration Statements and
each Prospectus as amended or supplemented to the date thereof or such new
registration statement and prospectus.
(f) The Company agrees that neither it nor any of its subsidiaries or
affiliates shall purchase or otherwise acquire, or enter into any agreement to
purchase or otherwise acquire, any of the MOPPRS prior to the remarketing
thereof by the Remarketing Dealer, other than pursuant to Section 4(g) or 4(h)
of this Agreement.
(g) The Company will comply with each of the covenants set forth in the
Purchase Agreement.
Section 4. Appointment and Obligations of the Remarketing Dealer. (a)
Unless this Agreement is otherwise terminated in accordance with Section 12
hereof, in accordance with the terms, but subject to the conditions, of this
Agreement, the Company hereby appoints Merrill Lynch, and Merrill Lynch hereby
accepts such appointment, as the exclusive Remarketing Dealer with respect to
$175,000,000 aggregate principal amount of MOPPRS, subject further to repurchase
of the MOPPRS in accordance with clause (g) of this Section 4 or redemption of
the MOPPRS in accordance with clause (h) of this Section 4.
(b) It is expressly understood and agreed by the parties hereto that the
obligations of the Remarketing Dealer hereunder with respect to the MOPPRS to be
remarketed on the Remarketing Date are conditioned on (i) the issuance and
delivery of such MOPPRS pursuant to the terms and conditions of the Purchase
Agreement and (ii) the Remarketing Dealer's election on the Notification Date to
purchase the MOPPRS for remarketing on the Remarketing Date. It is further
expressly understood and agreed by and between the parties hereto that, if the
Remarketing Dealer has elected to remarket the MOPPRS pursuant to clause (c)
below, the Remarketing Dealer shall not be obligated to set the Interest Rate to
Maturity (as defined below) on any MOPPRS, to remarket any MOPPRS or to perform
any of the other duties set forth herein at any time after the Notification Date
that (i) any of the conditions set forth in clause (a) or (b) of Section 9
hereof shall not have been fully and completely met to the satisfaction of the
Remarketing Dealer, or (ii) any of the events set forth in clause (c) of Section
9 hereof shall have occurred.
(c) On a Business Day not later than five Business Days prior to the
Remarketing Date, the Remarketing Dealer will notify the Company and the Trustee
as to whether it elects to purchase the MOPPRS on the Remarketing Date (the
"Notification Date"). If, and only if, the Remarketing Dealer so elects, the
MOPPRS shall be subject to mandatory tender to the Remarketing Dealer for
purchase and remarketing on the Remarketing Date, upon the terms and subject to
the conditions described herein. The purchase price of such tendered MOPPRS
shall be equal to 100% of the principal amount thereof.
7
<PAGE>
(d) Subject to the Remarketing Dealer's election to remarket the MOPPRS
as provided in clause (c) above, by 3:30 p.m., New York City time, on the third
Business Day immediately preceding the Remarketing Date (the "Determination
Date"), the Remarketing Dealer shall determine the Interest Rate to Maturity to
the nearest one hundred-thousandth (0.00001) of one percent per annum. The
"Interest Rate to Maturity" shall be equal to the sum of 5.905% (the "Base
Rate") and the Applicable Spread (as defined below), which will be based on the
Dollar Price (as defined below) of the MOPPRS.
The "Applicable Spread" shall be the lowest bid indication, expressed as a
spread (in the form of a percentage or in basis points) above the Base Rate,
obtained by the Remarketing Dealer on the Determination Date from the bids
quoted by five Reference Corporate Dealers (as defined below) for the full
aggregate principal amount of the MOPPRS at the Dollar Price, but assuming (i)
an issue date that is the Remarketing Date, with settlement on such date without
accrued interest, (ii) a maturity date that is the Stated Maturity Date and
(iii) a stated annual interest rate equal to the Base Rate plus the spread bid
by the applicable Reference Corporate Dealer. If fewer than five Reference
Corporate Dealers bid as described above, then the Applicable Spread shall be
the lowest of such bid indications obtained as described above. The Interest
Rate to Maturity announced by the Remarketing Dealer, absent manifest error,
shall be binding and conclusive upon the actual purchasers of the MOPPRS
("Beneficial Owners") and Holders of the MOPPRS, the Company and the Trustee.
"Dollar Price" means, with respect to the MOPPRS, the present value, as of
the Remarketing Date, of the Remaining Scheduled Payments (as defined below)
discounted to the Remarketing Date on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months) at the Treasury Rate (as defined
below).
"Reference Corporate Dealers" means each of CS First Boston Corporation,
Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan
Stanley & Co. Incorporated and Salomon Brothers Inc and their respective
successors; provided, however, that if any of the foregoing or their affiliates
shall cease to be a leading dealer of publicly traded debt securities of the
Company in The City of New York (a "Primary Corporate Dealer"), the Remarketing
Dealer shall substitute therefor another Primary Corporate Dealer.
"Remaining Scheduled Payments" means, with respect to the MOPPRS, the
remaining scheduled payments of the principal thereof and interest thereon,
calculated at the Base Rate only, that would be due after the Remarketing Date
to and including the Stated Maturity Date; provided, however, that if the
Remarketing Date is not an Interest Payment Date with respect to the MOPPRS, the
amount of the next succeeding scheduled interest payment thereon, calculated at
the Base Rate only, will be reduced by the amount of interest accrued thereon,
calculated at the Base Rate only, to the Remarketing Date.
8
<PAGE>
"Treasury Rate" means, with respect to the Remarketing Date, the rate per
annum equal to the semi-annual equivalent yield to maturity or interpolated (on
a day count basis) yield to maturity of the Comparable Treasury Issues (as
defined below), assuming a price for the Comparable Treasury Issues (expressed
as a percentage of its principal amount), equal to the Comparable Treasury Price
(as defined below) for the Remarketing Date.
"Comparable Treasury Issues" means the United States Treasury security or
securities selected by the Remarketing Dealer as having an actual or
interpolated maturity or maturities comparable to the remaining term of the
MOPPRS being remarketed.
"Comparable Treasury Price" means, with respect to the Remarketing Date,
(a) the offer prices for the Comparable Treasury Issues (expressed in each case
as a percentage of its principal amount) on the Determination Date, as set forth
on "Telerate Page 500" (or such other page as may replace Telerate Page 500), or
(b) if such page (or any successor page) is not displayed or does not contain
such offer prices on the Determination Date, (i) the average of the Reference
Treasury Dealer Quotations for the Remarketing Date, after excluding the highest
and lowest such Reference Treasury Dealer Quotations, or (ii) if the Remarketing
Dealer obtains fewer than four such Reference Treasury Dealer Quotations, the
average of all such Reference Treasury Dealer Quotations. "Telerate Page 500"
means the display designated as "Telerate Page 500" on Dow Jones Markets Limited
(or such other page as may replace Telerate Page 500 on such service) or such
other service displaying the offer prices specified in (a) above as may replace
Dow Jones Markets Limited.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and the Remarketing Date, the offer prices for the
Comparable Treasury Issues (expressed in each case as a percentage of its
principal amount) quoted in writing to the Remarketing Dealer by such Reference
Treasury Dealer by 3:30 p.m., on the Determination Date.
"Reference Treasury Dealer" means each of Credit Suisse First Boston
Corporation, Lehman Brothers Inc., Merrill Lynch, Morgan Stanley & Co.
Incorporated and Salomon Brothers Inc and their respective successors; provided,
however, that if any of the foregoing or their affiliates shall cease to be a
primary U.S. Government securities dealer in The City of New York (a "Primary
Treasury Dealer"), the Remarketing Dealer shall substitute therefor another
Primary Treasury Dealer.
(e) Subject to the Remarketing Dealer's election to remarket the MOPPRS
as provided in clause (c) above, the Remarketing Dealer shall notify the
Company, the Trustee and The Depository Trust Company ("DTC") by telephone,
confirmed in writing (which may include facsimile or other electronic
transmission), by 4:00 p.m., New York City time, on the Determination Date of
the Interest Rate to Maturity applicable to the MOPPRS effective from and
including the Remarketing Date.
(f) In the event that the MOPPRS are remarketed as provided herein, the
Remarketing Dealer shall make, or cause the Trustee to make, payment to the DTC
participant of each
9
<PAGE>
tendering Beneficial Owner of MOPPRS subject to remarketing, by book entry
through DTC by the close of business on the Remarketing Date against delivery
through DTC of such Beneficial Owner's tendered MOPPRS, of the purchase price
for such tendered MOPPRS that have been purchased for remarketing by the
Remarketing Dealer. The purchase price of such tendered MOPPRS shall be equal to
100% of the principal amount thereof. The Company shall make, or cause the
Trustee to make, payment of interest to each Beneficial Owner of MOPPRS due on
the Remarketing Date by book entry through DTC by the close of business on the
Remarketing Date.
(g) Subject to Section 12(c) of this Agreement, in the event that (i)
the Remarketing Dealer for any reason does not notify the Company of the
Interest Rate to Maturity by 4:00 p.m., New York City time, on the Determination
Date, or (ii) prior to the Remarketing Date, the Remarketing Dealer has resigned
and no successor has been appointed on or before the Determination Date, or
(iii) at any time after the Remarketing Dealer elects on the Notification Date
to remarket the MOPPRS, any event as set forth in Section 9 or Section 12 of
this Agreement shall have occurred, or (iv) the Remarketing Dealer for any
reason does not elect, by notice to the Company and the Trustee not later than
the Notification Date, to purchase the MOPPRS for remarketing on the Remarketing
Date, or (v) the Remarketing Dealer for any reason does not purchase all
tendered MOPPRS on the Remarketing Date, the Company shall repurchase the MOPPRS
as a whole on the Remarketing Date at a price equal to 100% of the principal
amount of the MOPPRS plus all accrued and unpaid interest, if any, on the MOPPRS
to the Remarketing Date. In any such case, payment will be made by the Company
through the Trustee to the DTC participant of each tendering Beneficial Owner of
MOPPRS, by book-entry through DTC by the close of business on the Remarketing
Date against delivery through DTC of such Beneficial Owner's tendered MOPPRS.
(h) If the Remarketing Dealer elects to remarket the MOPPRS as provided
in clause (c) above, then not later than the Business Day immediately preceding
the Determination Date, the Company shall notify the Remarketing Dealer and the
Trustee if the Company irrevocably elects to exercise its right to redeem the
MOPPRS, in whole but not in part, from the Remarketing Dealer on the Remarketing
Date at the Optional Redemption Price. The "Optional Redemption Price" shall be
the greater of (i) 100% of the principal amount of the MOPPRS and (ii) the sum
of the present values of the Remaining Scheduled Payments thereon, as determined
by the Remarketing Dealer, discounted to the Remarketing Date on a semi-annual
basis (assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Rate, plus in either case accrued and unpaid interest from the
Remarketing Date on the principal amount being redeemed to the date of
redemption. If the Company elects to redeem the MOPPRS, it shall pay the
redemption price therefor in same-day funds by wire transfer to an account
designated by the Remarketing Dealer on the Remarketing Date.
(i) In accordance with the terms and provisions of the MOPPRS, the
tender and settlement procedures set forth in this Section 4, including
provisions for payment by purchasers of MOPPRS in the remarketing or for payment
to selling Beneficial Owners of tendered MOPPRS, shall be subject to
modification, notwithstanding any provision to the contrary set forth in the
Indenture, to the extent required by DTC or, if the book-entry system is no
longer
10
<PAGE>
available for the MOPPRS at the time of the remarketing, to the extent required
to facilitate the tendering and remarketing of MOPPRS in certificated form. In
addition, the Remarketing Dealer may, notwithstanding anything to the contrary
contained in the Indenture, modify the settlement procedures set forth in the
Indenture and/or the MOPPRS in order to facilitate the settlement process.
(j) In accordance with the terms and provisions of the MOPPRS, the
Company hereby agrees that at all times, notwithstanding any provision to the
contrary set forth in the Indenture, (i) it will use its best efforts to
maintain the MOPPRS in book-entry form with DTC or any successor thereto and to
appoint a successor depository to the extent necessary to maintain the MOPPRS in
book-entry form and (ii) it will waive any discretionary right it otherwise may
have under the Indenture to cause the MOPPRS to be issued in certificated form.
Section 5. Fees and Expenses. Subject to Section 12 of this Agreement, for
its services in performing its duties set forth herein, the Remarketing Dealer
will not receive any fees or reimbursement of expenses from the Company.
Section 6. Resignation of the Remarketing Dealer. The Remarketing Dealer
may resign and be discharged from its duties and obligations hereunder at any
time, such resignation to be effective 10 business days after delivery of a
written notice to the Company and the Trustee of such resignation. The
Remarketing Dealer also may resign and be discharged from its duties and
obligations hereunder at any time, such resignation to be effective immediately,
upon termination of this Agreement in accordance with Section 12(b) hereof. It
shall be the sole obligation of the Company to appoint a successor Remarketing
Dealer.
Section 7. Dealing in the MOPPRS; Purchase of MOPPRS by the Company. (a)
Merrill Lynch, when acting as the Remarketing Dealer or in its individual or any
other capacity, may, to the extent permitted by law, buy, sell, hold and deal in
any of the MOPPRS. Merrill Lynch, as Holder or Beneficial Owner of the MOPPRS,
may exercise any vote or join as a Holder or Beneficial Owner, as the case may
be, in any action which any Holder or Beneficial Owner of MOPPRS may be entitled
to exercise or take pursuant to the Indenture with like effect as if it did not
act in any capacity hereunder. The Remarketing Dealer, in its capacity either as
principal or agent, may also engage in or have an interest in any financial or
other transaction with the Company as freely as if it did not act in any
capacity hereunder.
(b) The Company may purchase MOPPRS in the remarketing, provided that
the Interest Rate to Maturity established with respect to MOPPRS in the
remarketing is not different from the Interest Rate to Maturity that would have
been established if the Company had not purchased such MOPPRS.
Section 8. Information. (a) The Company agrees to furnish to the
Remarketing Dealer: (i) copies of each report or other document mailed or filed
by the Company with the Commission, including each Registration Statement and
any Prospectus relating to the MOPPRS (including in each case any documents
incorporated therein by reference), (ii) notice of the
11
<PAGE>
occurrence of any of the events set forth in clause (c) of Section 9 hereof, and
(iii) in connection with the remarketing, such other information as the
Remarketing Dealer may reasonably request from time to time, in such form as the
Remarketing Dealer may reasonably request, including, but not limited to, the
financial condition of the Company or any material subsidiary thereof. The
Company agrees to provide the Remarketing Dealer with as many copies of the
foregoing materials and information as the Remarketing Dealer may reasonably
request for use in connection with the remarketing and consents to the use
thereof for such purpose.
(b) If, at any time during the term of this Agreement, any event or
condition known to the Company relating to or affecting the Company, any
subsidiary thereof or the MOPPRS shall occur which might cause any of the
reports, documents, materials or information referred to in clause (i) of
paragraph (a) above or any document incorporated therein by reference
(collectively, the "Remarketing Materials") to include an untrue statement of a
material fact or omit to state a material fact, the Company shall promptly
notify the Remarketing Dealer in writing of the circumstances and details of
such event or condition.
Section 9. Conditions to Remarketing Dealer's Obligations. The obligations
of the Remarketing Dealer under this Agreement have been undertaken in reliance
on, and shall be subject to, (a) the due performance in all material respects by
the Company of its obligations and agreements as set forth in this Agreement and
the accuracy of the representations and warranties in this Agreement and any
certificate delivered pursuant hereto, (b) the due performance in all material
respects by the Company of its obligations and agreements set forth in, and the
accuracy in all material respects as of the dates specified therein of the
representations and warranties contained in, the Purchase Agreement, and (c) the
further condition that none of the following events shall have occurred after
the Remarketing Dealer elects on the Notification Date to remarket the MOPPRS:
(i) the rating of any securities of the Company shall have been
down-graded or put under surveillance or review with negative
implications, including being put on what is commonly termed a "watch
list," or withdrawn by a nationally recognized statistical rating agency;
(ii) without the prior written consent of the Remarketing Dealer,
the Indenture (including the MOPPRS) shall have been amended in any
manner, or otherwise contain any provision not contained therein as of the
date hereof, that in either case in the judgment of the Remarketing Dealer
materially changes the nature of the MOPPRS or the remarketing procedures
(it being understood that, notwithstanding the provisions of this clause
(ii), the Company shall not be prohibited from amending the Indenture);
(iii) trading in any securities of the Company or Bell Atlantic
Corporation shall have been suspended or materially limited by the
Commission, or if trading generally on the American Stock Exchange or the
New York Stock Exchange or in the Nasdaq National Market shall have been
suspended or materially limited, or minimum or maximum prices for trading
shall have been fixed, or maximum ranges for prices shall
12
<PAGE>
have been required, by any of said exchanges or by such system or by order
of the Commission, the National Association of Securities Dealers, Inc. or
any other governmental authority, or if a banking moratorium shall have
been declared by either Federal or New York authorities;
(iv) there shall have occurred any material adverse change in the
financial markets in the United States, any outbreak of hostilities or
escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of
which is such as to make it, in the judgment of the Remarketing Dealer,
impracticable to remarket the MOPPRS or to enforce contracts for the sale
of the MOPPRS;
(v) an Event of Default, or any event which, with the giving of
notice or passage of time, or both, would constitute an Event of Default,
with respect to the MOPPRS shall have occurred and be continuing;
(vi) a material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of
the Company and its subsidiaries, if any, considered as one enterprise,
whether or not arising in the ordinary course of business, the effect of
which is such as to make it, in the judgment of the Remarketing Dealer,
impracticable to remarket the MOPPRS or to enforce contracts for the sale
of the MOPPRS, shall have occurred since the Notification Date or since
the respective dates as of which information is given in the 1934 Act
Documents; or
(vii) if a prospectus is required under the 1933 Act to be delivered
in connection with the remarketing of the MOPPRS, the Company shall fail
to furnish to the Remarketing Dealer on the Remarketing Date the officers'
certificate, opinion and comfort letter referred to in Section 3(e) of
this Agreement and such other documents and opinions as counsel for the
Remarketing Dealer may reasonably require for the purpose of enabling such
counsel to pass upon the sale of MOPPRS in the remarketing as herein
contemplated and related proceedings, or in order to evidence the accuracy
and completeness of any of the representations and warranties, or the
fulfillment of any of the conditions, herein contained;
and the Remarketing Dealer shall have received on the Remarketing Date a
certificate of the Chairman of the Board, the President, the Chief Financial
Officer or a Vice President of the Company, and the Treasurer or an Assistant
Treasurer of the Company, dated as of the Remarketing Date, to the effect that
(i) the representations and warranties in this Agreement are true and correct
with the same force and effect as though expressly made at and as of the
Remarketing Date, (ii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or prior to
the Remarketing Date and (iii) none of the events specified in the preceding
clause (c) has occurred.
13
<PAGE>
(d) In furtherance of the foregoing, the effectiveness of the
Remarketing Dealer's election on the Notification Date to remarket the MOPPRS
shall be subject to the condition that the Remarketing Dealer shall have
received a certificate of the Chairman of the Board, the President, the Chief
Financial Officer or a Vice President of the Company, and the Treasurer or an
Assistant Treasurer of the Company, dated as of the Notification Date, to the
effect that (i) the Company has, prior to the Remarketing Dealer's election on
the Notification Date to remarket the MOPPRS, provided the Remarketing Dealer
with notice of all events as required under Section 3(a) of this Agreement, (ii)
the representations and warranties in this Agreement are true and correct at and
as of the Notification Date and (iii) the Company has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the Notification Date. Such certificate shall be delivered by the
Company to the Remarketing Dealer as soon as practicable following notification
by the Remarketing Dealer to the Company on the Notification Date of its
election to remarket the MOPPRS and in any event prior to the Determination
Date.
In the event of the failure of any of the foregoing conditions, the
Remarketing Dealer may terminate its obligations under this Agreement or
redetermine the Interest Rate to Maturity as provided in Section 12.
Section 10. Indemnification. (a) The Company agrees to indemnify and hold
harmless the Remarketing Dealer and its officers, directors and employees and
each person, if any, who controls the Remarketing Dealer within the meaning of
Section 20 of the 1934 Act as follows:
(i) against any loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of (A) the failure to have an
effective registration statement under the 1933 Act relating to the
MOPPRS, if required, or the failure to satisfy the prospectus delivery
requirements of the 1933 Act because the Company failed to notify the
Remarketing Dealer of such delivery requirement or failed to provide the
Remarketing Dealer with an updated Prospectus for delivery, or (B) any
untrue statement or alleged untrue statement of a material fact contained
in any of the Remarketing Materials (including any incorporated
documents), or (C) the omission or alleged omission therefrom of a
material fact necessary to make the statements therein, in the light of
the circumstances in which they were made, not misleading, or (D) any
violation by the Company of, or any failure by the Company to perform any
of its obligations under, this Agreement, or (E) the acts or omissions of
the Remarketing Dealer in connection with its duties and obligations
hereunder except to the extent finally judicially determined to be due to
its gross negligence or willful misconduct;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever arising out of, or based upon, any of items (A) through (E) in
clause (i) above; provided that (subject to clause (d) below) such settle-
14
<PAGE>
ment is effected with the written consent of the Company, which consent
shall not be unreasonably withheld; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by the Remarketing Dealer),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever arising out of,
or based upon, any of items (A) through (E) in clause (i) above to the
extent that any such expense is not paid under (i) or (ii) above;
provided, however, that the foregoing indemnity shall not apply to any losses,
liabilities, claims, damages and expenses to the extent arising out of any
untrue statement or omission made in reliance upon and in conformity with
written information furnished to the Company by the Remarketing Dealer expressly
for use in the Remarketing Materials.
(b) The Remarketing Dealer agrees to indemnify and hold harmless the
Company, its directors and each of its officers who signed any Registration
Statement from and against any loss, liability, claim, damage and expense, as
incurred, but only with respect to untrue statements or omissions made in the
Remarketing Materials in reliance upon and in conformity with information
furnished to the Company in writing by the Remarketing Dealer expressly for use
in such Remarketing Materials. The indemnity agreement in this clause (b) shall
extend upon the same terms and conditions to each person, if any, who controls
the Company within the meaning of Section 20 of the 1934 Act.
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudiced as a result thereof and
in any event shall not relieve it from any liability which it may have otherwise
than on account of this indemnity agreement. In the case of parties indemnified
pursuant to clause (a) above, counsel to the indemnified parties shall be
selected by Merrill Lynch, and, in the case of parties indemnified pursuant to
clause (b) above, counsel to the indemnified parties shall be selected by the
Company. An indemnifying party may participate at its own expense in the defense
of any such action; provided, however, that counsel to the indemnifying party
shall not (except with the consent of the indemnified party) also be counsel to
the indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties 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. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 10 or Section 11 hereof (whether or not the indemnified parties are
15
<PAGE>
actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission or fault, culpability or
a failure to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by clause (a) (ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
(e) The indemnity agreements contained in this Section 10 shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of the Remarketing Dealer, and shall survive the termination or
cancellation of this Agreement and the remarketing of any MOPPRS hereunder.
Section 11. Contribution. If the indemnification provided for in Section
10 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Remarketing Dealer on the other hand from the remarketing of the
MOPPRS pursuant to this Agreement or (ii) if the allocation provided by clause
(i) is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company on the one hand and of the Remarketing Dealer
on the other hand in connection with the acts, failures to act, statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Remarketing Dealer on the other hand in connection with the remarketing of the
MOPPRS pursuant to this Agreement shall be deemed to be in the same respective
proportions as (i) the aggregate principal amount of the MOPPRS, and (iii) the
aggregate positive difference, if any, between the price paid by the Remarketing
Dealer for the MOPPRS tendered on the Remarketing Date and the price at which
the MOPPRS are sold by the Remarketing Dealer in the remarketing.
The relative fault of the Company on the one hand and the Remarketing
Dealer on the other hand shall be determined by reference to, among other
things, the responsibility hereunder of the applicable party for any act or
failure to act relating to the losses, liabilities, claims, damages or expenses
incurred or, in the case of any losses, liabilities, claims, damages or expenses
arising out of any untrue or alleged untrue statement of a material fact
contained in any
16
<PAGE>
of the Remarketing Materials or the omission or alleged omission to state a
material fact therefrom, whether any such 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 by the Remarketing Dealer and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company and the Remarketing Dealer agree that it would not be just and
equitable if contribution pursuant to this Section 11 were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 11. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 11 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such act or failure to act or
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 11, the Remarketing Dealer
shall not be required to contribute any amount in excess of the amount by which
the total price at which the MOPPRS remarketed by it and resold to the public
were sold to the public exceeds the amount of any damages which the Remarketing
Dealer has otherwise been required to pay by reason of any act or failure to act
for which it is responsible hereunder or 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 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 11, each person, if any, who controls the
Remarketing Dealer within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as the Remarketing
Dealer, and each director of the Company, each officer of the Company who signed
the Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as the Company.
Section 12. Termination of Remarketing Agreement or Redetermination of
Interest Rate to Maturity. (a) This Agreement shall terminate as to the
Remarketing Dealer on the effective date of the resignation of the Remarketing
Dealer pursuant to Section 6 hereof or the repurchase of the MOPPRS by the
Company pursuant to Section 4(g) hereof or the redemption of the MOPPRS by the
Company pursuant to Section 4(h) hereof.
(b) In addition, the Remarketing Dealer may terminate all of its
obligations under this Agreement immediately by notifying the Company and the
Trustee of its election to do so, at any time on or before the Remarketing Date,
in the event that: (i) any of the conditions referred to
17
<PAGE>
or set forth in Section 9(a) or (b) hereof have not been met or satisfied in
full, (ii) any of the events set forth in Section 9(c) shall have occurred after
the Remarketing Dealer elects on the Notification Date to remarket the MOPPRS or
(iii) the Remarketing Dealer determines, in its sole discretion, after
consultation with the Company, that it shall not have received all of the
information, whether or not specifically referenced herein, necessary to fulfill
its obligations under this Agreement.
(c) Notwithstanding any provision herein to the contrary, in lieu of
terminating this Agreement pursuant to Section 12(b) above, upon the occurrence
of any of the events set forth therein, the Remarketing Dealer, in its sole
discretion at any time between the Determination Date and 3:30 p.m., New York
City time, on the Business Day immediately preceding the Remarketing Date, may
elect to purchase the MOPPRS for remarketing and determine a new Interest Rate
to Maturity in the manner provided in Section 4(d) of this Agreement, except
that for purposes of determining the new Interest Rate to Maturity pursuant to
this paragraph the Determination Date referred to therein shall be the date of
such election and redetermination. The Remarketing Dealer shall notify the
Company, the Trustee and DTC by telephone, confirmed in writing (which may
include facsimile or other electronic transmission), by 4:00 p.m., New York City
time, on the date of such election, of the new Interest Rate to Maturity
applicable to the MOPPRS. Thereupon, such new Interest Rate to Maturity shall
supersede and replace any Interest Rate to Maturity previously determined by the
Remarketing Dealer and, absent manifest error, shall be binding and conclusive
upon the Beneficial Owners and Holders of the MOPPRS on and after the
Remarketing Date, the Company and the Trustee; provided, however, that the
Remarketing Dealer, by redetermining the Interest Rate to Maturity upon the
occurrence of any event set forth in Section 12(b) as set forth above, shall not
thereby be deemed to have waived its right to determine a new Interest Rate to
Maturity or terminate this Agreement upon the occurrence of any other event set
forth in Section 12(b).
(d) If this Agreement is terminated pursuant to this Section 12, such
termination shall be without liability of any party to any other party, except
that, in the case of termination pursuant to Section 12(b) of this Agreement,
the Company shall reimburse the Remarketing Dealer for all of its reasonable
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Remarketing Dealer, and except further as set forth in Section
12(e) below. Sections 1, 10, 11, 12(d) and 12(e) shall survive such termination
and remain in full force and effect.
(e) In the case of either (i) termination of this Agreement pursuant to
Section 12(b) or (ii) the occurrence, prior to the Remarketing Dealer's election
on the Notification Date to remarket the MOPPRS, of any event set forth in
Section 9(c)(ii) or (v), upon the request of the Remarketing Dealer, the Company
shall immediately following the Call Price Determination Date (as defined below)
pay the Remarketing Dealer, in same-day funds by wire transfer to an account
designated by the Remarketing Dealer, the fair market value, calculated as set
forth below, of the Remarketing Dealer's right to purchase and remarket the
MOPPRS pursuant to this Agreement (the "Call Price").
18
<PAGE>
In the case of termination of this Agreement pursuant to Section 12(b),
the Call Price shall be equal to the excess of (i) the present value of the
Remaining Scheduled Payments determined as provided in Section 4 over (ii) the
aggregate principal amount of the MOPPRS.
In the case of the occurrence, prior to the Remarketing Dealer's election
on the Notification Date to remarket the MOPPRS, of any event set forth in
Section 9(c)(ii) or (v), the Call Price shall be determined in good faith by the
Remarketing Dealer on a commercially reasonable basis by reference to, among
other factors, the formulation set forth in the preceding paragraph.
The Remarketing Dealer shall determine the applicable Call Price on the
Business Day immediately following the date of termination or notification of
the occurrence, prior to the Remarketing Dealer's election on the Notification
Date to remarket the MOPPRS, of any event set forth in Section 9(c)(ii) or (v),
as the case may be, or as soon as practicable thereafter (the "Call Price
Determination Date"). The Remarketing Dealer shall promptly notify the Company
of the Call Price Determination Date and the Call Price by telephone, confirmed
in writing (which may include facsimile or other electronic transmission). The
Call Price, absent manifest error, shall be binding and conclusive upon the
parties hereto.
(f) This Agreement shall not be subject to termination by the Company.
Section 13. Remarketing Dealer's Performance; Duty of Care. The duties and
obligations of the Remarketing Dealer shall be determined solely by the express
provisions of this Agreement and the Indenture. No implied covenants or
obligations of or against the Remarketing Dealer shall be read into this
Agreement or the Indenture. In the absence of bad faith on the part of the
Remarketing Dealer, the Remarketing Dealer may conclusively rely upon any
document furnished to it, which purports to conform to the requirements of this
Agreement and the Indenture, as to the truth of the statements expressed in any
of such documents. The Remarketing Dealer shall be protected in acting upon any
document or communication reasonably believed by it to have been signed,
presented or made by the proper party or parties. The Remarketing Dealer shall
incur no liability to the Company or to any Beneficial Owner or Holder of MOPPRS
in its individual capacity or as Remarketing Dealer for any action or failure to
act in connection with the remarketing or otherwise, except as a result of gross
negligence or willful misconduct on its part.
Section 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED IN SUCH STATE.
Section 15. Term of Agreement. Unless otherwise terminated in accordance
with the provisions hereof, this Agreement shall remain in full force and effect
from the date hereof until the earlier of the first day thereafter on which no
MOPPRS are outstanding or the completion of the remarketing of the MOPPRS.
Regardless of any termination of this Agreement pursuant to
19
<PAGE>
any of the provisions hereof, the obligations of the Company pursuant to
Sections 10, 11 and 12 hereof shall remain operative and in full force and
effect until fully satisfied.
Section 16. Successors and Assigns. The rights and obligations of the
Company hereunder may not be assigned or delegated to any other person without
the prior written consent of the Remarketing Dealer. The rights and obligations
of the Remarketing Dealer hereunder may not be assigned or delegated to any
other person without the prior written consent of the Company. This Agreement
shall inure to the benefit of and be binding upon the Company and the
Remarketing Dealer and their respective successors and assigns, and will not
confer any benefit upon any other person, partnership, association or
corporation other than persons, if any, controlling the Remarketing Dealer
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act,
or any indemnified party to the extent provided in Section 10 hereof, or any
person entitled to contribution to the extent provided in Section 11 hereof. The
terms "successors" and "assigns" shall not include any purchaser of any MOPPRS
merely because of such purchase.
Section 17. Headings. Section headings have been inserted in this
Agreement as a matter of convenience of reference only, and it is agreed that
such section headings are not a part of this Agreement and will not be used in
the interpretation of any provisions of this Agreement.
Section 18. Severability. If any provision of this Agreement shall be held
or deemed to be or shall, in fact, be invalid, inoperative or unenforceable as
applied in any particular case in any or all jurisdictions because it conflicts
with any provision of any constitution, statute, rule or public policy or for
any other reason, such circumstances shall not have the effect of rendering the
provision in question invalid, inoperative or unenforceable in any other case,
circumstance or jurisdiction, or of rendering any other provision or provisions
of this Agreement invalid, inoperative or unenforceable to any extent
whatsoever.
Section 19. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be regarded as an original and all of which
shall constitute one and the same document.
Section 20. Amendments. This Agreement may be amended by any instrument in
writing signed by each of the parties hereto so long as this Agreement as
amended is not inconsistent with the Indenture in effect as of the date of any
such amendment.
20
<PAGE>
Section 21. Notices. Unless otherwise specified, any notices, requests,
consents or other communications given or made hereunder or pursuant hereto
shall be made in writing (which may include facsimile or other electronic
transmission) and shall be deemed to have been validly given or made when
delivered or mailed, registered or certified mail, return receipt requested and
postage prepaid, addressed as follows:
(a) to the Company:
New England Telephone and Telegraph Company
c/o Bell Atlantic Corporation
1717 Arch Street, 49th Floor
Philadelphia, PA 19103
Attention: Neil Olson
Facsimile No.: (215) 569-8207
(b) to Merrill Lynch:
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower
World Financial Center
New York, New York 10281-1201
Attention: Dollar Options Desk
Facsimile No.: (212) 449-8920
and
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower
World Financial Center
New York, New York 10281-1201
Attention: Transaction Management Group
Facsimile No.: (212) 449-2234
or to such other address as the Company or the Remarketing Dealer shall specify
in writing.
21
<PAGE>
IN WITNESS WHEREOF, each of the Company and the Remarketing Dealer has
caused this Remarketing Agreement to be executed in its name and on its behalf
by one of its duly authorized officers as of the date first above written.
NEW ENGLAND TELEPHONE AND TELEGRAPH
COMPANY
By
-----------------------------------
Name:
Title:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By
-----------------------------------
Authorized Signatory
