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EXHIBIT 1.2
EL PASO CORPORATION
Medium Term Notes
Due Nine Months or More
from Date Issued
DISTRIBUTION AGREEMENT
July 24, 2001
Banc of America Securities LLC
NC1-007-07-01
Bank of America Corporate Center
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ABN AMRO Incorporated
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇ Securities Inc.
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Dear Sirs and Mesdames:
El Paso Corporation, a Delaware corporation (the "Company"),
confirms its agreement with each of you (each an "Agent" and collectively the
"Agents") with respect to the issue and sale by the Company of its Medium Term
Notes (the "Notes") having an aggregate initial offering price of up to
$900,000,000 (or the equivalent thereof if any of the Notes are denominated in
one or more foreign currencies or foreign composite currency units). The Notes
will constitute a part of a series of senior debt securities, unlimited as to
aggregate principal amount, to be issued under the Indenture, dated as of May
10, 1999 (the "Indenture"), between the Company and The Chase Manhattan Bank, as
trustee (the "Trustee"), relating to the Notes, as supplemented from time to
time. It is understood, however, that the Company may from time to time
authorize the issuance of additional Notes and that such additional Notes may be
sold to or
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through the Agents pursuant to the terms of this Agreement, all as though the
issuance of such Notes were authorized as of the date hereof.
Subject to the terms and conditions stated herein and subject
to the reservation by the Company of the right to sell Notes, directly or
through an affiliated entity, on its own behalf at any time and to any person,
the Company hereby (i) appoints each of you as an agent of the Company for the
purpose of soliciting purchases of the Notes from the Company by others and (ii)
agrees that whenever the Company determines to sell Notes directly to any Agent
as principal for resale to others, it will enter into a separate agreement with
such agent (each a "Terms Agreement"). Each such Terms Agreement, whether oral
(and confirmed in writing, which may be by facsimile transmission) or in
writing, shall be with respect to such information (as applicable) as specified
in Exhibit A hereto, relating to such sale in accordance with the provisions of
Section 2(b) hereof.
Notwithstanding anything to the contrary contained herein, the
Company may accept offers to purchase Notes through an agent other than an
Agent, provided that (i) the Company shall not have solicited such offers, (ii)
the Company and such agent shall have executed an agreement with respect to such
purchases having terms and conditions (including, without limitation, commission
rates) substantially the same as the terms and conditions that would apply to
such purchases under this Agreement if such agent were an Agent (which may be
accomplished by incorporating by reference in such agreement the terms and
conditions of this Agreement) and (iii) the Company shall notify the Agents
prior to the execution of any such agreement and shall provide the Agents with a
copy of such agreement promptly following the execution thereof. Notwithstanding
anything to the contrary in this Agreement, the Company shall not be prohibited
from (i) soliciting offers to purchase Notes directly from potential investors,
or (ii) offering or selling Notes directly to investors, provided that, in each
case any such solicitation, offer or sale is made without the use of an agent,
broker or underwriter.
1. Representations of the Company. The Company represents and warrants
to, and agrees with, each Agent as of the Closing Time, as of the date of each
acceptance by the Company of an offer for the purchase of Notes, as of the date
of each delivery of Notes (whether through an Agent as agent or to an Agent as
principal) (the date of delivery to an Agent as principal being hereinafter
referred to as a "Settlement Date"), and as of the times referred to in Sections
6(a) and 6(b) hereof (each such time being referred to herein as the
"Representation Date"), as follows:
(a) The Company meets the requirements for the use of Form S-3
under the Securities Act of 1933, as amended (the "Securities Act"). A
registration statement on Form S-3 (Registration No. 333-59704) in respect of
the Notes has been filed with the Securities and Exchange Commission (the "SEC")
in the form heretofore delivered to you and such registration statement in such
form has been declared effective by the SEC and no stop order suspending the
effectiveness of such registration statement has been issued and no proceeding
for that purpose has been initiated or, to the Company's knowledge, threatened
by the SEC (such registration
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statement, including all exhibits thereto but excluding any Form T-1 thereto, as
amended at the time such registration statement or any part thereof became
effective, being hereinafter called the "Registration Statement;" the base
prospectus relating to the Notes constituting a part of such registration
statement as supplemented by that certain prospectus supplement, dated as of
July 24, 2001 relating to the Notes, including in each case any documents
incorporated by reference therein as of such filing, being hereinafter called
the "Prospectus;" any reference herein to the Registration Statement or the
Prospectus shall be deemed to include the documents incorporated by reference
therein pursuant to the applicable form under the Securities Act, as of the date
of the Registration Statement or the Prospectus; any reference to any amendment
or supplement to the Registration Statement or the Prospectus shall be deemed to
refer to and include any documents filed after the date of the Registration
Statement or the Prospectus under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and so incorporated by reference; any reference to
the Prospectus as amended or supplemented shall be deemed to refer to the
Prospectus relating to the Notes as each time amended or supplemented in the
form in which it is filed with the SEC pursuant to Rule 424 of Regulation C
under the Securities Act, including any pricing supplement thereto and documents
incorporated by reference therein as aforesaid as of the date of such filing).
(b) The documents incorporated by reference in the
Registration Statement or the Prospectus, when they became effective or were
filed with the SEC, as the case may be, conformed in all material respects to
the requirements of the Securities Act or the Exchange Act, as applicable, and
the rules and regulations of the SEC thereunder, and none of such documents
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading; and any further documents so filed and incorporated by reference
in the Registration Statement or the Prospectus and any amendments or
supplements thereto, when they become effective or are filed with the SEC, as
the case may be, will conform in all material respects to the requirements of
the Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the SEC thereunder and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
this representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in writing to
the Company by any Agent expressly for use in the Prospectus as amended or
supplemented to relate to a particular issuance of Notes.
(c) The Registration Statement and the Prospectus conform, and
any amendments or supplements thereto will conform, when they become effective
or are filed with the SEC, as the case may be, and as of each subsequent
Representation Date will conform, in all material respects to the requirements
of the Securities Act and the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"), and the rules and regulations of the SEC thereunder and
do not and will not as of its effective date as to the Registration Statement
and as of its filing date and as of each Representation Date as to the
Prospectus contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
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statements therein not misleading; provided, however, that this representation
and warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company by
any Agent expressly for use in the Prospectus as amended or supplemented to
relate to a particular issuance of Notes. The Prospectus delivered to the Agents
for use in connection with the offering of the Notes was identical to the
electronically transmitted copies thereof filed with the SEC pursuant to Rule
424 of the Securities Act in ▇▇▇▇▇ format, except to the extent permitted by
Regulation S-T.
(d) Each of the Company and its significant subsidiaries (as
set forth on Schedule II hereto) has been duly formed or incorporated, is
validly existing as a corporation, limited partnership, general partnership or
limited liability company in good standing under the laws of the jurisdiction in
which it is chartered or organized and has the entity power and authority to
carry on its business as described in the Prospectus and to own, lease and
operate its properties, and each is duly qualified and is in good standing as a
foreign corporation, limited partnership, general partnership or limited
liability company authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the business, prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole.
(e) All the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid, non-assessable
and not subject to any preemptive or similar rights.
(f) All of the outstanding shares of capital stock, limited
partner interests, general partner interests or limited liability company
interests of each of the Company's significant subsidiaries have been duly
authorized and validly issued and, in the case of capital stock, are fully paid
and non-assessable (other than the shares of Series A Preferred Stock of El Paso
Tennessee Pipeline Co. that are listed for trading on the New York Stock
Exchange, Inc.) are owned by the Company, directly or indirectly through one or
more subsidiaries, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature (each, a "Lien").
(g) There are no legal or governmental proceedings pending,
other than those referred to or incorporated by reference in the Prospectus, to
which the Company or any of its subsidiaries is a party or of which any property
of the Company or any of its subsidiaries is the subject, other than proceedings
which are not reasonably expected, individually or in the aggregate, to have a
material adverse effect on the consolidated financial position, stockholders'
equity or results of operations of the Company and its subsidiaries taken as a
whole; and, to the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
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(h) The Notes have been duly authorized, and, when issued and
delivered pursuant to this Agreement and any Terms Agreement and the Indenture,
will have been duly executed, authenticated, issued and delivered and will
constitute valid and legally binding obligations of the Company entitled to the
benefits provided by the Indenture; the Indenture has been duly qualified under
the Trust Indenture Act and has been duly authorized, executed and delivered by
the Company and the Trustee and constitutes a valid and legally binding
instrument enforceable in accordance with its terms except as the same may be
limited by bankruptcy, insolvency, reorganization or other laws relating to or
affecting the enforcement of creditors' rights or by general principles of
equity; and the Indenture conforms in all material respects to the description
thereof in the Prospectus as originally filed with the Commission, and the Notes
of any series that may be sold by the Company pursuant to this Agreement will
conform in all material respects to the description thereof in the Prospectus as
same is amended or supplemented in connection with such sale.
(i) Neither the Company nor any significant subsidiary is (i)
in violation of its respective charter or By-laws or (ii) in default in the
performance of any obligation, agreement, covenant or condition contained in any
indenture, loan agreement, mortgage, deed of trust, lease or other agreement or
instrument that is material to the Company and its significant subsidiaries,
taken as a whole, to which the Company or any significant subsidiary is a party
or by which the Company or any significant subsidiary or its respective property
is bound.
(j) The issue and sale of the Notes and the compliance by the
Company with all of the provisions of the Notes, the Indenture, this Agreement
and any Terms Agreement will not result in a breach of any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the property or assets
of the Company or any of its subsidiaries pursuant to the terms of any
indenture, loan agreement, mortgage, deed of trust, lease or other agreement or
instrument to which the Company or any of its significant subsidiaries is a
party or by which the Company or any of its significant subsidiaries may be
bound or to which any of the property or assets of the Company or any of its
significant subsidiaries is subject (except for breaches and defaults which
would not, individually or in the aggregate, be materially adverse to the
Company and its subsidiaries taken as a whole or materially adverse to the
transactions contemplated by this Agreement), nor will such action result in any
violation of the provisions of the Restated Certificate of Incorporation, as
amended, or the By-Laws, as amended, of the Company or the governing documents
of any of its subsidiaries or any statute or order, rule or regulation
applicable to it, of any court or any federal, state or other regulatory
authority or any other governmental body having jurisdiction over it; and no
consent, approval, authorization, order, registration or qualification of or
with any court or other such regulatory authority or other governmental body is
required for the issue and sale of the Notes or the consummation of the other
transactions contemplated in this Agreement or any Terms Agreement except such
consents, approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the purchase
and distribution of the Notes by the Agents.
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(k) This Agreement has been duly authorized, executed and
delivered by the Company.
(l) The consolidated financial statements included or
incorporated by reference in the Registration Statement and the Prospectus (and
any amendment or supplement thereto), together with related schedules and notes,
present fairly in accordance with generally accepted accounting principles
consistently applied the consolidated financial position, results of operations
and cash flows of the Company and its subsidiaries on the basis stated therein
at the respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, except as disclosed therein; the supporting schedules, if any,
included or incorporated by reference in the Registration Statement present
fairly in accordance with generally accepted accounting principles the
information required to be stated therein; and the other financial and
statistical information and data set forth or incorporated by reference in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto) are, in all material respects, accurately presented and prepared on a
basis consistent with such financial statements and the books and records of the
Company.
(m) If applicable, the pro forma financial information set
forth or incorporated by reference in the Registration Statement and the
Prospectus (and any supplement or amendment thereto) are, in all material
respects, fairly presented and prepared on a basis consistent with the
historical financial statements of the Company and its subsidiaries, and give
effect to assumptions used in the preparation thereof which have been made on a
reasonable basis and in good faith.
(n) The Company is not and, after giving effect to the
offering and sale of the Notes and the application of the proceeds thereof as
described in the Prospectus, will not be (i) an "investment company" as such
term is defined in the Investment Company Act of 1940, as amended, or (ii) a
"holding company" within the meaning of, or subject to regulation under, the
Public Utility Holding Company Act of 1935, as amended, and the rules and
regulations promulgated by the Commission thereunder.
(o) No "nationally recognized statistical rating organization"
as such term is defined for purposes of Rule 436(g)(2) under the Securities Act
has indicated to the Company that it is considering (i) the downgrading,
suspension or withdrawal of, or any review for a possible change that does not
indicate the direction of the possible change in, any rating assigned to the
Company or any securities of the Company or (ii) any adverse change in the
outlook for any rating assigned to the Company or any securities of the Company.
(p) None of the Company or any of its subsidiaries has
sustained since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus as amended or supplemented any loss
or interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor
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dispute or court or governmental action, order or decree that is material to the
Company and its subsidiaries taken as a whole; and since the date of the latest
audited financial statements included or incorporated by reference in the
Prospectus as it may be amended or supplemented there has not been any material
change in the capital stock or long-term debt of the Company or any material
adverse change in the general affairs or management, or the consolidated
financial position, stockholders' equity or results of operations of the Company
and its subsidiaries taken as a whole, otherwise than as set forth or
contemplated in the Prospectus as amended or supplemented.
(q) PricewaterhouseCoopers LLP are independent public
accountants with respect to the Company and its subsidiaries, and, to the
Company's knowledge, Deloitte & Touche LLP are independent public accountants
with respect to El Paso CGP Corporation (formerly The Coastal Corporation), as
required by the Securities Act.
(r) Neither the Company nor any of its subsidiaries has taken
or will take, directly or indirectly, any action designed to, or that might be
reasonably expected to, cause or result in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Notes.
(s) None of the Company or any of its subsidiaries or any of
their respective affiliates does business with the government of Cuba or with
any person or affiliate located in Cuba.
Any certificate signed by any officer of the Company and
delivered to any Agent or to counsel for such Agent in connection with an
offering of Notes shall be deemed a representation and warranty by the Company
to you as to the matters covered thereby.
2. (a) Solicitations as Agent. On the basis of the
representations and warranties herein contained, and subject to the terms and
conditions herein set forth, each Agent agrees, as agent of the Company, to use
its reasonable efforts to solicit offers to purchase the Notes upon the terms
and conditions set forth in the Prospectus as it may be amended or supplemented.
The Company reserves the right, in its sole discretion, to
suspend, at any time, the solicitation of purchases of the Notes. Upon receipt
of instructions from the Company, each Agent will forthwith suspend solicitation
of purchases from the Company until such time as the Company has advised it that
such solicitation may be resumed.
The Company agrees to pay each Agent a commission, in the form
of a discount, equal to the percentage of the principal amount of each Note sold
by the Company as a result of a solicitation made by such Agent as set forth in
Schedule I hereto.
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As Agent, unless otherwise provided in the Prospectus, each of
you is authorized to solicit orders for the Notes only in denominations of
$1,000 or any amount in excess thereof which is an integral multiple of $1,000
at a purchase price equal to 100% of their principal amount. Each Agent shall
communicate to the Company, orally or in writing, each reasonable offer to
purchase Notes received by such Agent. The Company shall have the sole right to
accept offers to purchase the Notes and may reject any such offer in whole or in
part. Each Agent shall have the right to reject any offer to purchase the Notes
received by it in whole or in part, and any such rejection shall not be deemed a
breach of its agreement contained herein.
(b) Purchases as Principal. Each sale of Notes to any Agent as
principal shall be made in accordance with the terms of this Agreement and
pursuant to a separate agreement which will provide for the sale of such Notes
to, and the purchase and re-offering thereof by, such Agent. Each such separate
agreement, which may be an oral agreement between such Agent and the Company,
confirmed in writing (which may take the form of an exchange of any standard
form of written telecommunications between you and the Company) and which shall
be with respect to such information (as applicable) as is specified in Exhibit A
hereto, is herein referred to as a "Terms Agreement." Each Agent is authorized
to utilize a selling or dealer group in connection with the resale of the Notes
purchased. An Agent's commitment to purchase Notes pursuant to any Terms
Agreement shall be deemed to have been made on the basis of the representations
and warranties of the Company herein contained and shall be subject to the terms
and conditions herein set forth.
(c) Procedures. The terms applicable to any Notes to be sold
pursuant to this Agreement shall be set forth in a pricing supplement to the
Prospectus to be prepared by the Company in connection with such sale.
Administrative procedures respecting the sale of Notes shall be agreed upon from
time to time by each Agent, the Company and the Trustee (the "Procedures"). Each
Agent, on the one hand, and the Company, on the other hand, agree to perform the
respective duties and obligations specifically provided to be performed herein
and in the Procedures set forth in Exhibit D hereto.
(d) Delivery. The documents required to be delivered by
Section 5 hereof shall be delivered at the office of the Company, El Paso
Building, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ on the date hereof, or at
such other place and time as the Agents and the Company may agree upon in
writing (the "Closing Time").
3. Company Covenants. The Company covenants and agrees with
each Agent:
(a) Except to the extent required under the Securities Act or
the Exchange Act or the rules and regulations of the SEC promulgated thereunder,
to make no further amendment or any supplement to the Registration Statement or
Prospectus relating to the Notes which shall be disapproved by you promptly
after reasonable notice thereof; to advise you, promptly after the Company
receives notice thereof, of the receipt of any comments from the SEC to the
Registration Statement or the Prospectus; to advise you, promptly after the
Company receives
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notice thereof, of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any prospectus, or of the suspension of the qualification
of the Notes for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes; to give you advance
notice of the Company's intention to file or prepare any additional registration
statements with respect to the registration of additional Notes; to furnish you
with copies of any such amendment or supplement; to file promptly and to furnish
you simultaneously with copies of all reports and any definitive proxy or
information statements required to be filed by the Company with the SEC pursuant
to Section 13, 14 or 15(d) of the Exchange Act subsequent to the date hereof and
for so long as the delivery of a prospectus is required in connection with the
offering or sale of the Notes; to advise you, promptly after the Company
receives notice thereof, of the time when any amendment to the Registration
Statement, or any amended Registration Statement becomes effective.
(b) Prior to any public offering of the Notes, to cooperate
with you and counsel for the Agents in connection with the registration or
qualification of the Notes for offer and sale by the several Agents and by
dealers under the state securities or Blue Sky laws of such jurisdictions as you
may request, to continue such registration or qualification in effect so long as
required for distribution of the Notes and to file such consents to service of
process or other documents as may be necessary in order to effect such
registration or qualification; provided, however, that the Company shall not be
required in connection therewith to qualify as a foreign corporation in any
jurisdiction in which it is not now so qualified or to take any action that
would subject it to general consent to service of process or taxation other than
as to matters and transactions taken by the Company as contemplated herein that
relates to the Prospectus, the Registration Statement, or the offering or sale
of the Notes, in any jurisdiction in which it is not now so subject.
(c) To furnish you with copies of each amendment and
supplement to the Registration Statement and of each Prospectus as amended or
supplemented, as filed pursuant to Rule 424 under the Securities Act, in such
quantities as you may from time to time reasonably request, and, if the delivery
of a Prospectus is required at any time in connection with the offering or sale
of any of the Notes and if at such time any event shall have occurred as a
result of which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, or if
for any other reason it shall be necessary to amend or supplement the Prospectus
or to file under the Exchange Act any document to be incorporated by reference
in the Registration Statement or the Prospectus in order to comply with the
Securities Act, the Exchange Act or the Trust Indenture Act, to immediately
notify you and instruct you to cease the solicitation of offers to purchase the
Notes in your capacity as Agent of the Company and to cease sales of any Notes
you may then own as principal, and, as soon as practicable, to prepare and
furnish without charge to you as many copies as you may from time to time
reasonably request of an amended Prospectus or a supplement to the Prospectus
which will correct such
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statement or omission or effect such compliance; provided, however, that if on
such date you shall have suspended solicitation of purchases of the Notes in
your capacity as Agent pursuant to a request from the Company, and shall not
then hold any Notes as principal, the Company shall not be obligated so to amend
or supplement the Prospectus until such time as the Company shall determine that
solicitation of purchases of the Notes should be resumed or shall subsequently
enter into a new Terms Agreement with you.
(d) With respect to each sale of Notes, the Company will make
generally available to the holders of the Note as promptly as practicable, but
not later than 90 days after the close of the period covered thereby, earnings
statements of the Company and its subsidiaries (in form complying with the
provisions of Rule 158 under the Securities Act) covering a 12-month period
beginning, in each case, not later than the first day of the Company's fiscal
quarter next following the Closing Time, each Settlement Date and each
Representation Date.
(e) During the period beginning on the date of any Terms
Agreement stating that the restrictions of this Section 3(e) shall be applicable
and continuing to and including the earlier of (i) the termination of trading
restrictions on the Notes purchased in accordance with such Terms Agreement, as
notified to the Company by you, and (ii) the Settlement Date with respect to
such Terms Agreement, not to offer, sell, contract to sell or otherwise dispose
of any debt securities of the Company, other than Notes offered or sold as
contemplated herein, which mature more than nine months after the Settlement
Date with respect to such Terms Agreement (except for commercial paper with a
term of nine months or less in the ordinary course of business), without your
prior written consent.
(f) On or prior to the date on which there shall be released
to the general public preliminary or definitive interim financial statement
information related to the Company with respect to each of the first three
quarters of each fiscal year or preliminary financial statement information with
respect to any fiscal year, to furnish such information to you, confirmed in
writing, and to cause the Prospectus to be amended or supplemented to include or
incorporate by reference capsule consolidated financial information with respect
to the results of operations of the Company and its subsidiaries for the period
between the end of the preceding fiscal year and the end of such quarter or for
such fiscal year, as the case may be, and corresponding information for the
comparable period of the preceding fiscal year, as well as such other
information and explanations as shall be necessary for an understanding of such
amounts or as shall be required by the Securities Act or the rules and
regulations of the Commission thereunder; provided, however, that if on the date
of such release you shall have suspended solicitation of purchases of the Notes
in your capacity as Agent pursuant to a request from the Company, and shall not
then hold any Notes as principal, the Company shall not be obligated so to amend
or supplement the Prospectus until such time as the Company shall determine that
solicitations of purchases of the Notes should be resumed or shall subsequently
enter into a new Terms Agreement with you.
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(g) On or prior to the date on which there shall be released
to the general public financial information included in or derived from the
audited consolidated financial statements of the Company and its subsidiaries
for the preceding fiscal year, to cause the Registration Statement and the
Prospectus to be amended, whether by the filing of documents pursuant to the
Exchange Act, the Securities Act or otherwise, to include or incorporate by
reference such audited financial statements and the report or reports, and
consent or consents to such inclusion or incorporation by reference, of the
independent accountants with respect thereto, as well as such other information
and explanations as shall be necessary for an understanding of such financial
statements or as shall be required by the Securities Act or the rules and
regulations of the SEC promulgated thereunder; provided, however, that if on the
date of such release you shall have suspended solicitation of purchases of the
Notes in your capacity as Agent pursuant to a request from the Company, and
shall not then hold any Notes as principal, the Company shall not be obligated
so to amend or supplement the Prospectus until such time as the Company shall
determine that solicitation of purchases of the Notes should be resumed or shall
subsequently enter into a new Terms Agreement with you.
4. Expenses. The Company will pay or cause to be paid all
expenses incident to the performance of its obligations under this Agreement,
including: (i) the cost of preparing and filing the Registration Statement
referred to in Section 1(a) hereof and all amendments thereto, (ii) the cost of
preparation, issuance and delivery of the Notes, (iii) the fees, disbursements
and expenses of the Company's independent public accountants and counsel and of
the Trustee and its counsel, (iv) the costs of qualification of the Notes under
state securities laws in accordance with the provisions of Section 3(b) hereof,
including filing fees and the fees and disbursements of counsel for the Agents
in connection therewith and in connection with the preparation of any Blue Sky
Memorandum, (v) the cost of printing and delivering to each Agent in quantities
as hereinabove stated copies of the Registration Statement referred to in
Section 1(a) hereof and all amendments thereto, the Prospectus, any amendment or
supplement to the Prospectus, and the Prospectus as amended or supplemented,
(vi) the cost of printing and delivering to each Agent copies of the Indenture
and any Blue Sky Memorandum, (vii) any fees charged by rating agencies for the
rating of the Notes, (viii) the fees and expenses, if any, incurred with respect
to any filing with the National Association of Securities Dealers, Inc., (ix)
the cost of the printing or reproducing of this Agreement and any Terms
Agreement and the cost of printing certificates representing the Notes, (x) the
costs and charges of any transfer agent, registrar, calculation agent,
depositary (including the Depository Trust Company), (xi) in the event of an
offering of Notes in an aggregate principal amount of less than $100,000,000,
the reasonable fees and disbursements of counsel to the Agents incurred in such
offering, and (xii) any reasonable advertising and other reasonable
out-of-pocket expenses of the Agents incurred with the approval of the Company.
5. Conditions of Agents' Obligations. Each Agent's obligations
to solicit offers to purchase the Notes as Agent of the Company and to purchase
Notes pursuant to any Terms Agreement, and the obligation of any person who has
agreed to purchase Notes, to make payment for and take delivery of Notes, shall
be subject to the condition that all representations
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12
and warranties and other statements of the Company herein are, at the date
hereof, at the Closing Time and at each Settlement Date and at each other
Representation Date, true and correct in all material respects, the condition
that the Company shall have performed all of its obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Registration Statement shall be effective under the
Securities Act and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceeding for that purpose
shall have been initiated or threatened by the SEC; and all requests for
additional information on the part of the SEC shall have been complied with to
your reasonable satisfaction.
(b) ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the Agents, shall
have furnished to you at the Closing Time and at each Settlement Date with
respect to any Terms Agreement such opinion or opinions, dated the Closing Time
and such Settlement Date, respectively, with respect to the incorporation of the
Company, the validity of the Indenture, the Notes, the Registration Statement,
the Prospectus as amended or supplemented, and other related matters as you may
reasonably request, and such counsel shall have received such documents,
certificates and information as they may reasonably request to enable them to
pass upon such matters.
(c) You shall have received at the Closing Time and at each
Settlement Date with respect to any Terms Agreement (i) an opinion (satisfactory
to you and your counsel), dated the Closing Time and such Settlement Date,
respectively, of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., counsel for the Company, addressing the
matters set forth on Exhibit B attached hereto, and (ii) an opinion
(satisfactory to you and your counsel), dated the Closing Time and such
Settlement Date, respectively, of the general, or associate or senior counsel of
the Company, addressing the matters set forth on Exhibit C attached hereto.
(d) At the Closing Time and at the date of each delivery of
the Notes (whether to an Agent as agent or to an Agent as principal) there shall
not have been, since the respective dates as of which information is given in
the Registration Statement and the Prospectus as amended or supplemented or
since the date of any Terms Agreement, any material adverse change in the
financial condition of the Company and its subsidiaries, taken as a whole, or in
the earnings, affairs or business prospects of the Company and its subsidiaries,
taken as a whole, whether or not arising in the ordinary course of business,
otherwise than as set forth, contemplated or incorporated by reference in the
Registration Statement and the Prospectus as amended or supplemented to the date
of any Terms Agreement or the acceptance by the Company of the applicable offer
for the purchase of Notes, and you shall have received a certificate of the
President or a Vice President of the Company dated the Closing Time or
Settlement Date with respect to any Terms Agreement so requiring, to the effect
(i) that there has been no such material adverse change, (ii) that the other
representations and warranties of the Company contained in Section 1 are in all
material respects true and correct with the same force and effect as though
expressly made at and as of the date of such certificate, (iii) that the Company
has complied with all agreements and satisfied all conditions on its part to be
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13
performed or satisfied at or prior to the date of such certificate, and (iv)
that no stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been initiated or, to
such person's knowledge, threatened by the Commission.
(e) At the Closing Time and at each Settlement Date with
respect to any Terms Agreement so requiring, the independent accountants of the
Company who have certified the financial statements of the Company and its
subsidiaries included or incorporated by reference in the Registration Statement
shall have furnished to you a letter or letters, dated the Closing Time or the
Settlement Date, as the case may be, in form and substance satisfactory to you,
containing the information and statements of the type ordinarily included in
accountants' "comfort letters" with respect to such financial information
contained or incorporated by reference in the Registration Statement and the
Prospectus as you may reasonably request.
(f) Your obligations to purchase Notes pursuant to any Terms
Agreement, and the obligation of any person who has agreed to purchase notes, to
make payment for and take delivery of Notes, will be subject to the following
further conditions: (i) the rating assigned by any "nationally recognized
statistical rating organization", as that term is defined by the Commission for
purpose of Rule 436(g) promulgated under the Securities Act, to any senior debt
securities of the Company as of the date of such Terms Agreement shall not have
been lowered since that date nor shall there have been any public announcement
of any review by any such rating organization of its ratings of any debt
securities of the Company (other than an announcement with positive implications
of a possible upgrading), (ii) there shall not have come to your attention any
facts that would cause you to believe that the Prospectus, as amended or
supplemented at the time it was required to be delivered to a purchaser of the
Notes, contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in light of the
circumstances existing at such time, not misleading and (iii) the Company shall
not have failed on or prior to the Closing Time or the applicable Settlement
Date to perform or comply with any of the agreements herein contained and
required to be performed or complied with by the Company on or prior to such
date.
(g) If any condition specified in this Section 5 shall not
have been fulfilled, this Agreement and any Terms Agreement or any other
agreement to purchase may be terminated by such Agent or purchaser by notice to
the Company at any time at or prior to the Closing Time or applicable Settlement
Date, and such termination shall be without liability of any party to any other
party, except that the covenants set forth in Section 3(c) hereof, the
provisions of Section 4 hereof, the indemnity and contribution agreements set
forth in Section 7 hereof, and the provisions of Sections 8 and 12 hereof shall
remain in effect.
(h) Each certificate signed by an officer of the Company and
delivered to the Agents or counsel for the Agents shall be deemed to be a
representation and warranty by the Company to the Agents as to the matters
covered thereby.
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14
6. Additional Covenants of the Company. The Company covenants
and agrees with each Agent that:
(a) Each acceptance by the Company of any offer for the
purchase of Notes (whether through an Agent as agent or to one or more Agents as
principal), and each sale of Notes to you pursuant to a Terms Agreement, shall
be deemed to be an affirmation that the representations and warranties of the
Company contained in this Agreement and in any certificate theretofore delivered
to you pursuant hereto are true and correct in all material respects at the time
of such acceptance or sale, as the case may be, and an undertaking that such
representations and warranties will be true and correct in all material respects
at the time of delivery to the purchaser or his agent, or you, of the Notes
relating to such acceptance or sale, as the case may be, as though made at and
as of each such time (and it is understood that such representations and
warranties shall relate to the Registration Statement and the Prospectus as
amended and supplemented to each such time).
(b) Each time that the Registration Statement or the
Prospectus shall be amended or supplemented or there is filed with the SEC any
document to be incorporated by reference into the Prospectus (other than by (i)
a pricing supplement or by an amendment or supplement providing solely for a
change in the interest rates of the Notes or a change in the principal amount of
Notes remaining to be sold or similar changes, or (ii) a Current Report on Form
8-K relating to an event disclosed pursuant to Item 5 of Form 8-K, unless the
Agents shall otherwise so specify) or, if so indicated in the applicable Terms
Agreement, the Company sells Notes to you pursuant to a Terms Agreement, the
Company shall furnish or cause to be furnished to you forthwith a certificate in
form satisfactory to you to the effect that the statements contained in the
certificates referred to in Section 5(d) hereof which were last furnished to you
are true and correct at the time of such amendment or supplement or filing or
sale, as the case may be, as though made at and as of such time (except that
such statements shall be deemed to relate to the Registration Statement and the
Prospectus as amended and supplemented to such time) or, in lieu of such
certificate, certificates of the same tenor as the certificates referred to in
said Section 5(d), modified as necessary to relate to the Registration Statement
and the Prospectus as amended and supplemented to the time of delivery of such
certificates.
(c) Each time that the Registration Statement or the
Prospectus shall be amended or supplemented or there is filed with the SEC any
document to be incorporated by reference into the Prospectus (other than by (i)
an amendment or supplement solely providing for a change in the interest rates
of the Notes or a change in the principal amount of Notes remaining to be sold
or similar changes, (ii) a Current Report on Form 8-K relating to an event
disclosed pursuant to Item 5 of Form 8-K, unless the Agents shall otherwise so
specify), or (iii) setting forth or incorporating by reference financial
statements or other financial information as of and for a fiscal quarter or
fiscal year) or, if so indicated in the applicable Terms Agreement, the Company
sells Notes to you pursuant to a Terms Agreement, the Company shall furnish or
cause to be furnished forthwith to you and your counsel a written opinion of
counsel for the Company, or other counsel satisfactory to you, dated the date of
delivery of such opinion, in form
- 14 -
15
satisfactory to you, of the same tenor as the opinions referred to in Section
5(c) hereof but modified, as necessary, to relate to the Registration Statement
and the Prospectus as amended and supplemented to the time of delivery of such
opinion or, in lieu of such opinion, counsel last furnishing such opinion to you
shall furnish you with a letter to the effect that you may rely on such last
opinion to the same extent as though it were dated the date of such letter
authorizing reliance (except that statements in such last opinion shall be
deemed to relate to the Registration Statement and the Prospectus as amended and
supplemented to the time of delivery of such letter authorizing reliance).
(d) Each time that the Registration Statement or the
Prospectus shall be amended or supplemented to include additional financial
information (other than preliminary financial statement information) relating to
the Company or any of its subsidiaries or there is filed with the SEC any
document incorporated by reference into the Prospectus which contains additional
financial information or, if so indicated in the applicable Terms Agreement, the
Company sells Notes to you pursuant to a Terms Agreement, the Company shall
cause the independent public accountants of the Company to furnish you a letter,
dated the date of filing of such amendment, supplement or document with the
Commission, or the date of such sale, as the case may be, in form satisfactory
to you, of the same tenor as the letter referred to in Section 5(e) hereof but
modified to relate to the Registration Statement and Prospectus, as amended and
supplemented to the date of such letter. If, following the close of a fiscal
year, audited financial statements and other additional financial information
are contained in a Current Report on Form 8-K and the same information is
subsequently contained in a timely filed Annual Report on Form 10-K, then such
letter need only be furnished at the time such Annual Report on Form 10-K is
filed.
7. Indemnification. (a) The Company will indemnify and hold
each Agent harmless against any losses, claims, damages, liabilities or
judgments (collectively, "Damages"), joint or several, to which such Agent may
become subject, under the Securities Act or otherwise, insofar as such Damages
(or actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, the Prospectus or the Prospectus as amended or
supplemented, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse such Agent for any legal or other expenses
reasonably incurred by such Agent in connection with investigating or defending
any such action or claim, as such expenses are incurred; provided, however, that
the Company shall not be liable to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in the Registration
Statement, the Prospectus or the Prospectus as amended or supplemented or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Agent expressly for use therein.
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16
(b) Each Agent will indemnify and hold harmless the Company,
its directors, its officers who sign the Registration Statement and each person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act against any Damages to which
the Company or any of such other persons may become subject, under the
Securities Act or otherwise, insofar as such Damages (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, the
Prospectus or the Prospectus as amended or supplemented, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, the Prospectus or the Prospectus as amended or supplemented, or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Agent expressly for use therein;
and will reimburse the Company and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act for any legal or other expenses reasonably incurred by such person
in connection with investigating or defending any such action or claim, as such
expenses are incurred.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the failure so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not, except as provided below, be liable to such indemnified party under such
subsection for any legal expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. Any indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the indemnified
party unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by counsel that there may be one or more legal defenses available to it
which are different from or additional to those available to the indemnifying
party (in which case the
- 16 -
17
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party). In any such case, the indemnifying party
shall not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by the Agent(s), in
the case of parties indemnified pursuant to Section 7(a), and by the Company, in
the case of parties indemnified pursuant to Section 7(b). The indemnifying party
shall indemnify and hold harmless the indemnified party from and against any and
all Damages by reason of any settlement of any action (i) effected with its
written consent or (ii) effected without its written consent if the settlement
is entered into more than 30 business days after the indemnifying party shall
have received a request from the indemnified party for reimbursement for the
fees and expenses of counsel (in any case where such fees and expenses are at
the expense of the indemnifying party) and, prior to the date of such
settlement, the indemnifying party shall have failed to comply with such
reimbursement request. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement or compromise of, or
consent to the entry of judgment with respect to, any pending or threatened
action in respect of which the indemnified party is or could have been a party
and indemnity or contribution may be or could have been sought hereunder by the
indemnified party, unless such settlement, compromise or judgment (i) includes
an unconditional release of the indemnified party from all liability on claims
that are or could have been the subject matter of such action 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 the indemnified party.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section 7 is for
any reason held to be unavailable to or insufficient to hold harmless an
indemnified party, although applicable in accordance with its terms, in respect
of any Damages referred to herein, then each indemnifying party shall contribute
to the aggregate amount of such Damages of the nature contemplated by said
indemnification incurred by such indemnified party, as incurred, (A) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the applicable Agent(s), on the other hand, from
the offering of the Notes that were the subject of the claim for indemnification
or (B) if the allocation provided by clause (A) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (A) above but also the relative fault of the
Company on the one hand and the applicable Agent(s) on the other hand in
connection with the statements or omissions which resulted in such Damages, as
well as any other relevant equitable considerations.
(ii) The relative benefits received by the Company on
the one hand and the applicable Agent(s) on the other hand in connection with
the offering of the Notes that were the subject of the claim for indemnification
shall be deemed to be in the same respective proportions as the total net
proceeds (after deducting discounts and commissions but before deducting
expenses) received by the Company from the sale of the Notes that were the
subject of
- 17 -
18
the claim for indemnification, and the total discounts or commissions received
by each applicable Agent in connection with the sale of such Notes, as the case
may be, bears to the aggregate total sale prices of such Notes.
(iii) The relative fault of the Company, on the one
hand, and the applicable Agent(s), on the other hand, shall be determined by
reference to, among other things, whether any 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 applicable Agent(s) and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
(iv) The Company and the Agents agree that it would
not be just and equitable if contribution pursuant to this Section 7(d) were
determined by pro rata allocation (even if the applicable Agent(s) 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
Section 7(d). The aggregate amount of Damages incurred by an indemnified party
and referred to above in this Section 7(d) shall be deemed to include, subject
to the limitations set forth above, 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 that could have given rise
to such Damages.
(v) Notwithstanding the provisions of this Section
7(d), no Agent shall be required to contribute any amount in excess of (x) the
amount by which the total price at which the Notes sold through such Agent were
offered to the public in the offering of the Notes that were the subject of the
claim for indemnification exceeds (y) the amount of any Damages which such Agent
has otherwise been required to pay by reason of any applicable untrue or alleged
untrue statement or omission or alleged omission.
(vi) No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(vii) For purposes of this Section 7(d), each person,
if any, who controls an Agent within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act shall have the same rights to contribution
as such Agent, 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 Securities Act or Section 20 of
the Exchange Act shall have the same rights to contribution as the Company.
(viii) In connection with an offering of Notes
purchased from the Company by two or more Agents as principal, the respective
obligations of such Agents to
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19
contribute pursuant to this Section 7(d) are several in proportion to the
aggregate principal amount of Notes that each such Agent has purchased from the
Company and not joint.
(e) The obligations of the Company under this Section 7 shall
be in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
an Agent within the meaning of the Securities Act; and each Agent's obligations
under this Section 7 shall be in addition to any liability which such Agent may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company and to each person, if any, who controls the
Company within the meaning of the Securities Act.
8. Agent as Agent, Not Principal. In soliciting purchases of
the Notes from the Company, each Agent is acting solely as agent for the Company
and not as principal. Each Agent will make reasonable efforts to assist the
Company in obtaining performance by each purchaser whose offer to purchase Notes
from the Company has been solicited by such Agent and accepted by the Company
but such Agent shall not have any liability to the Company in the event any such
purchase is not consummated for any reason. If the Company shall default in its
obligation to deliver Notes to a purchaser whose offer it has accepted, the
Company (i) shall hold the Agent harmless against any loss, claim, or damage
arising from or as a result of such default by the Company, and (ii) shall pay
to the Agent any commission to which it would have been entitled in connection
with such sale.
9. Effect of Investigation. The respective indemnities,
agreements, representations, warranties and other statements of the Company and
each Agent, as set forth in this Agreement or any Terms Agreement or made by the
Company and each Agent, respectively, pursuant to this Agreement or any terms
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of each Agent or any controlling person of such Agent, or the Company, or any
officer or director or controlling person of the Company and shall survive
delivery of and payment for any of the Notes.
10. Termination of this Agreement or Terms Agreement. This
Agreement may be terminated for any reason, at any time by the Company as to any
Agent or by any Agent as to such Agent upon the giving of 30 days' written
notice of such termination to such Agent or the Company, as the case may be.
Each Agent may also terminate any Terms Agreement to which it is a party,
immediately upon notice to the Company, at any time prior to the Settlement Date
relating thereto (i) if there has been, since the respective dates as of which
information is given in the Registration Statement, any material adverse change
in the financial condition of the Company and its subsidiaries, taken as a
whole, or in the earnings, affairs or business prospects of the Company and its
subsidiaries, taken as a whole, whether or not arising in the ordinary course of
business, which change was not reported by the Company in a filing made under
the Exchange Act and disclosed to such Agent by the Company prior to the
execution and delivery of such Terms Agreement or (ii) if, since the execution
and delivery of such Terms Agreement,
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20
there has occurred any outbreak or escalation of hostilities or other calamity
or crisis the effect of which on the financial markets of the United States is
such as to make it, in such Agent's judgment, impracticable to market the Notes
or enforce contracts for the sale of the Notes, or (iii) if, since the execution
and delivery of such Terms Agreement, trading in any debt securities of the
Company has been suspended by the SEC or a national securities exchange, or if,
since the execution and delivery of such Terms Agreement, trading generally on
either the American Stock Exchange or the New York Stock Exchange has been
suspended, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices for securities have been required, by either of said exchanges
or by order of the SEC or any other governmental authority, or if, since the
execution and delivery of such Terms Agreement, a banking moratorium has been
declared by either Federal or New York authorities. If any such termination
occurs, neither party will have any liability to the other party thereto, except
that (i) such Agent shall be entitled to any commissions earned in accordance
with the third paragraph of Section 2(a) hereof, (ii) if at the time of
termination (A) such Agent shall own any of the Notes or (B) an offer to
purchase any of the Notes has been accepted by the Company but the time of
delivery to the purchaser or his agent of the Notes relating thereto has not
occurred, the covenants set forth in Sections 3 and 6 hereof shall remain in
effect until such Notes are so resold or delivered, as the case may be, and
(iii) the covenant set forth in Section 3(d) hereof, the provisions of Section 4
hereof, the indemnity and contribution agreements set forth in Section 7 hereof,
and the provisions of Sections 9, 12 and 14 hereof shall remain in effect.
11. Notices. All statements, requests, notices and agreements
hereunder shall be in writing or by telecopy if promptly confirmed in writing,
and if to you shall be sufficient in all respects if delivered or sent by
registered mail to Banc of America Securities LLC, NC1-007-07-01, Bank of
America Corporate Center, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇; ABN AMRO Incorporated; ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇; 10th Floor; New York, New York 10104; Attention: ▇▇▇▇ ▇▇▇▇▇; and ▇.▇.
▇▇▇▇▇▇ Securities Inc.; ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇; ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇;
Attention: Transaction Execution Group; facsimile (▇▇▇) ▇▇▇-▇▇▇▇ and if to the
Company shall be sufficient in all respects if delivered or sent by registered
mail to the address of the Company set forth in the Registration Statement,
Attention: Secretary, or to such other address as may be specified by the
Company or any Agent by notice given to the other parties hereto in accordance
with this Section 11.
12. Benefits of the Agreement. This Agreement and any Terms
Agreement shall inure to the benefit of and be binding upon the respective
Agents and the Company and their respective successors. Nothing expressed or
mentioned in this Agreement or any Terms Agreement is intended or shall be
construed to give any person, firm or corporation, other than the parties hereto
and their respective successors and the controlling persons and officers and
directors referred to in Section 7 and their heirs and legal representatives,
any legal or equitable right, remedy or claim under or in respect of this
Agreement or any Terms Agreement or any provision herein or therein contained.
This Agreement and any Terms Agreement and all conditions and provisions hereof
and thereof are intended to be for the sole and exclusive benefit
- 20 -
21
of the parties hereto and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Notes shall be deemed to be a successor by reason merely of such
purchase.
13. Time of Essence. Time shall be of the essence of this
Agreement.
14. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York.
15. Counterparts. This agreement may be executed by any one or
more of the parties hereto in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
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22
If the foregoing is in accordance with your understanding,
please sign and return to us five counterparts hereof, and upon the acceptance
hereof by each Agent, this letter and such acceptance hereof shall constitute a
binding agreement between each Agent and the Company.
Very truly yours,
EL PASO CORPORATION
By: /s/▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
------------------------------
Title: Vice President
--------------------------------
Accepted as of the date hereof
BANC OF AMERICA SECURITIES LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
---------------------------
Title: Associate
--------------------------
ABN AMRO INCORPORATED
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
---------------------------
Title: Managing Director
--------------------------
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Title: Vice President
--------------------------
23
SCHEDULE I
TERM COMMISSION RATES
From 9 months to less than 1 year................................................... 0.125%
From 1 year to less than 18 months.................................................. 0.150%
From 18 months to less than 2 years................................................. 0.200%
From 2 years to less than 3 years................................................... 0.250%
From 3 years to less than 4 years................................................... 0.350%
From 4 years to less than 5 years................................................... 0.450%
From 5 years to less than 6 years................................................... 0.500%
From 6 years to less than 7 years................................................... 0.550%
From 7 years to less than 8 years................................................... 0.600%
From 8 years to less than 9 years................................................... 0.600%
From 9 years to less than 10 years.................................................. 0.600%
From 10 years to less than 15 years................................................. 0.625%
From 15 years to less than 20 years................................................. 0.675%
From 20 years to less than 30 years................................................. 0.750%
From 30 years to 40 years........................................................... *
* As agreed to by the Company and the applicable Agent at the time of sale.
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SCHEDULE II
El Paso Natural Gas Company
El Paso Tennessee Pipelines Co.
Southern Natural Gas Company
El Paso Field Services, LP
El Paso Production Holding Company
El Paso Merchant Energy Holding Company
El Paso CGP Company
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EXHIBIT A
EL PASO CORPORATION
Medium-Term Notes
FORM OF TERMS AGREEMENT
_____________, _____
Banc of America Securities LLC
NC1-007-07-01
Bank of America Corporate Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ABN AMRO Incorporated
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
El Paso Corporation, a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein and in the
Distribution
Agreement, dated July 24, 2001 (the "
Distribution Agreement"), between the
Company on the one hand and Banc of America Securities LLC, ABN AMRO
Incorporated and ▇.▇. ▇▇▇▇▇▇ Securities Inc. (together, the "Agents") on the
other, to issue and sell to the Agents the securities specified in the Schedule
hereto (the "Purchased Securities"). Each of the provisions of the
Distribution
Agreement not specifically related to the solicitation by the Agents, as agents
of the Company, of offers to purchase the Securities is incorporated herein by
reference in its entirety, and shall be deemed to be part of this Terms
Agreement to the same extent as if such provision had been set forth in full
herein. Nothing contained herein or in the
Distribution Agreement shall make any
party hereto an agent of the Company or make such party subject to the
provisions therein relating to the solicitation of offers to purchase securities
from the Company, solely by virtue of its execution of this Terms Agreement.
Each of the representations and warranties set forth therein shall be deemed to
have been made at and as of the date of this Terms Agreement, except that each
representation and warranty in
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Section 1 of the
Distribution Agreement which makes reference to the Prospectus
shall be deemed to be a representation and warranty as of the date of the
Distribution Agreement in relation to the Prospectus (as therein defined), and
also a representation and warranty as of the date of this Terms Agreement in
relation to the Prospectus as amended and supplemented to relate to the
Purchased Securities.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Purchased Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the
Distribution Agreement incorporated herein by reference, the Company agrees to
issue and sell to the Agents, and the Agents agree to purchase from the Company
the Purchased Securities, at the time and place, in the principal amount and at
the purchase price set forth in the Schedule hereto.
If the foregoing is in accordance with your understanding, please sign
and return to us a counterpart hereof, and upon acceptance hereof by you, this
letter and such acceptance hereof, including those provisions of the
Distribution Agreement incorporated herein by reference, shall constitute a
binding agreement between you and the Company.
EL PASO CORPORATION
By:
------------------------------------
Name:
-----------------------------------
Title:
---------------------------------
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Accepted:
BANC OF AMERICA SECURITIES LLC
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
ABN AMRO INCORPORATED
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
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Schedule to Exhibit A
Title of Purchased Securities:
___% Medium Term Senior Notes
Aggregate Principal Amount:
$__________
Price to the Public:
$__________
Purchase Price by Agent[s]:
___% of the principal amount of the Purchased Securities, plus accrued
interest from ____________ to ____________ and accrued amortization, if
any, from ___________ to __________.
Method of, and Specified Funds for, Payment of Purchase Price:
[By certified or official bank check or checks, payable to the order of
the Company, in [
New York Clearing House or similar next-day] [Fed
Funds or similar immediately available] funds]
[By wire transfer to a bank account specified by the Company in [
New
York Clearing House or similar next-day] [Fed Funds or similar
immediately available] funds]
Senior Indenture:
Indenture, dated as of May 10, 1999, between the Company and The Chase
Manhattan Bank, as Trustee
Time of Delivery:
Closing Location for Delivery of Securities:
Maturity:
Interest Rate: ______%
Interest Payment Dates:
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Documents to be Delivered:
The following documents referred to in the
Distribution Agreement shall
be delivered as a condition to the Closing:
(1) The opinion of counsel to the Agents referred to in Section
5(b).
(2) The opinion of counsel to the Company referred to in Section
5(c).
(3) The officers' certificate referred to in Section 5(d).
(4) The accountants' letter referred to in Section 5(e).
Other Provisions (including Syndicate Provisions, if applicable):
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EXHIBIT B
OPINION OF ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.
COUNSEL FOR THE COMPANY
The opinion of counsel for the Company pursuant to Section
5(c) of the Distribution Agreement shall be to the effect that:
1. The Registration Statement has become effective under the
Securities Act and no stop order suspending the effectiveness
of the Registration Statement is in effect, and no proceedings
for such purpose are pending before or, to such counsel's
knowledge, threatened by the Commission.
2. (A) Each document, if any, filed pursuant to the Exchange Act
and incorporated by reference in the Registration Statement or
the Prospectus (except for financial statements and schedules
and other financial or statistical data included or
incorporated by reference therein or omitted therefrom as to
which such counsel need not express any opinion) appeared on
its face to be appropriately responsive in all material
respects with the requirements of the Exchange Act and (B) the
Registration Statement and Prospectus (except for financial
statements and schedules and other financial or statistical
data included or incorporated by reference therein or omitted
therefrom as to which such counsel need not express any
opinion) appeared on their face to be appropriately responsive
in all material respects with the requirements of the
Securities Act.
3. The Distribution Agreement and any Terms Agreement with
respect to the Notes have been duly authorized, executed and
delivered by the Company.
4. The Company is not and, after giving effect to the offering
and sale of the Securities and the application of the proceeds
thereof as described in the Prospectus, will not be, (i) an
"investment company" as such term is defined in the Investment
Company Act of 1940, as amended or (ii) a "holding company"
within the meaning of, or subject to regulation under, the
Public Utility Holding Company Act of 1935, as amended, and
the rules and regulations promulgated by the commission
thereunder.
5. The Indenture has been duly qualified under the Trust
Indenture Act and has been authorized, executed and delivered
by the Company and constitutes a valid and legally binding
obligation of the Company, enforceable in accordance with its
terms, except as (a) the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or transfer or other similar laws relating to or
affecting creditors' rights generally and (b) rights of
acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability.
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6. The Notes have been duly authorized, and when the Notes have
been executed and authenticated in accordance with the
provisions of the Indenture and issued and delivered to and
paid for in accordance with the terms of the applicable Terms
Agreement, will be entitled to the benefits of the Indenture
and will be valid and binding obligations of the Company,
enforceable in accordance with their terms, except as (a) the
enforcement thereof may be limited by bankruptcy, insolvency,
or similar laws affecting creditors' rights generally and (b)
rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general
applicability.
7. The execution and delivery by the Company of, and the
performance by the Company of its obligations under, the
Distribution Agreement and any applicable Terms Agreement will
not violate any provision of applicable United States federal
law,
New York law or the Delaware General Corporation Law, or
the Restated Certificate of Incorporation, as amended, or
By-Laws, as amended, of the Company on the certificate of
incorporation or bylaws of any significant subsidiary.
8. No consent, approval, authorization or order of or
qualification with any United States federal,
New York or
(with respect to matters arising under the Delaware General
Corporation Law) Delaware body or agency is required for the
performance by the Company of its obligations under the
Distribution Agreement or applicable Terms Agreement, except
such (i) which have been obtained, or (ii) as may be required
under the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Securities, as to
which such counsel need not express any opinion, or except
where failure to obtain such consent, approval, authorization,
order or qualification would not have a material adverse
effect on the business, financial condition or results of
operations of the Company and its subsidiaries, taken as a
whole.
9. The statements (A) in the Prospectus under the captions
"Description of the Medium Term Notes" and "Description of the
Senior Debt Securities" and (B) in the Registration Statement
under Item 15, insofar as such statements constitute a summary
of the legal matters referred to therein, fairly present the
information disclosed therein in all material respects.
10. The Registration Statement and the Prospectus as amended or
supplemented and any further amendments and supplements
thereto made by the Company prior to the Closing Time or
Settlement Date at which such opinion is delivered (other than
the financial statements and related schedules and other
financial or statistical data included therein, as to which
such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Securities Act
and the Trust Indenture Act and the rules and regulations
promulgated thereunder.
In addition, such counsel shall state that, in the course of
the preparation by the
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32
Company of the Registration Statement, the Prospectus and the applicable Pricing
Supplement (including the documents incorporated by reference therein), such
counsel participated in conferences with certain of the officers and
representatives of the Company, the Company's independent accountants, the
Agents and counsel for the Agents at which the Registration Statement, the
Prospectus and such Pricing Supplement were discussed. Such counsel shall state
that, between the date of effectiveness of the Registration Statement and the
time of delivery of such counsel's opinion letter, such counsel participated in
additional conferences with certain officers and representatives of the Company
and the Company's independent accountants at which portions of the Registration
Statement, the Prospectus and such Pricing Supplement were discussed. Given the
limitations inherent in the independent verification of factual matters and the
character of determinations involved in the registration process, such counsel
does not pass upon and need not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement, the Prospectus or the Prospectus Supplement, except as specifically
described in the opinion in paragraphs 2 and 9 above. Subject to the foregoing
and on the basis of the information such counsel gained in the performance of
the services referred to above, including information obtained from officers and
other representatives of the Company and the Company's independent accountants,
such counsel shall state that no facts have come to such counsel's attention
that have caused it to believe that the Registration Statement, at the time it
became effective, contained any 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 that the Prospectus and the
Pricing Supplement, as of their respective dates, contained any 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, in light of the
circumstances under which they were made, not misleading. Also, subject to the
foregoing, such counsel shall state that no facts have come to its attention in
the course of the proceedings described in the first and second sentences of
this paragraph that caused such counsel to believe that the Prospectus or the
Pricing Supplement as of the date and time of delivery of such counsel's opinion
letter contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
With respect to the preceding paragraph, counsel may state
that (A) their opinion and belief is based upon their participation in the
preparation of the Registration Statement and Prospectus and any amendments or
supplements thereto and review and discussion of the contents thereof, but are
without independent check or certification, except as specified and (B) for
purposes of paragraphs 7 and 8, such counsel may state (i) that it has reviewed
only those statutes, rules and regulations that in its experience are applicable
to transactions of the type contemplated by the Distribution Agreement and (ii)
that it does not hold itself out as experts in the regulation of the generation,
transportation, distribution or delivery of electricity or electrical services,
or the import or export of electricity or electrical services.
Such counsel need express no view, opinion or belief, however,
with respect to financial statements or notes thereto or other financial or
statistical data included or incorporated by reference in or omitted from the
Registration Statement or Prospectus.
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Such counsel may state that the opinions expressed above are
limited to the federal laws of the United States, the laws of the State of New
York, and the General Corporation Law of the State of Delaware.
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EXHIBIT C
IN-HOUSE LEGAL OPINION
COUNSEL FOR THE COMPANY
The Opinion of the [General/Associate/Senior] Counsel for the
Company pursuant to Section 5(c) of the Distribution Agreement shall be to the
effect that:
1. Each of the Company and its significant subsidiaries has been
duly formed or incorporated, is validly existing as a
corporation, limited partnership, general partnership or
limited liability company in good standing under the laws of
its jurisdiction of formation or incorporation and has the
entity power and authority to own, lease and operate its
properties and to conduct its business as described in the
Prospectus, and each is duly qualified as a foreign
corporation, limited partnership, general partnership or
limited liability company to transact business and is in good
standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified or
to be in good standing would not have a material adverse
effect on the business, financial condition or results of
operations of the Company and its subsidiaries, taken as a
whole.
2. The execution, delivery and performance of the Distribution
Agreement, the Indenture, including the Directors' Resolution
applicable to the Notes and the Notes by the Company, the
compliance by the Company with all the provisions thereof and
the consummation of the transactions contemplated thereby will
not, to such counsel's knowledge, (i) violate any indenture,
loan agreement, mortgage, deed of trust, lease or other
agreement or instrument to which the Company or any
significant subsidiary is a party or by which the Company or
any significant subsidiary or their respective property is
bound or (ii) violate or conflict with any judgment, order or
decree of any court or any governmental body or agency having
jurisdiction over the Company, any significant subsidiary or
their respective property, except in each case, for such
violations as would not have a material adverse effect on the
business, financial condition or results of operation of the
Company and its subsidiaries, taken as a whole.
3. To such counsel's knowledge after due inquiry, there are no
legal or governmental proceedings pending or threatened to
which the Company or any Subsidiary is or is threatened to be
a party or to which any of their respective property is or is
threatened to be subject that are required to be described in
the Registration Statement or the Prospectus and are not so
described; nor does such counsel know of any statutes,
regulations, contracts or other documents that are required to
be described in the Registration Statement or the Prospectus
or to be filed as exhibits to the Registration Statement that
are not so described or filed as required.
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4. (A) Each document if any, filed pursuant to the Exchange Act
and incorporated by reference in the Registration Statement
and the Prospectus (except for financial statements and
schedules and other financial or statistical data included or
incorporated by reference therein or omitted therefrom as to
which such counsel need not express any opinion) appeared on
its face to be appropriately responsive in all material
respects with the Exchange Act and (B) the Registration
Statement and Prospectus (except for financial statements and
schedules and other financial or statistical data included or
incorporated by reference therein or omitted therefrom as to
which such counsel need not express any opinion) appeared on
their face to be appropriately responsive in all material
respects with the requirements of the Securities Act.
5. The statements under (A) the caption "Item 3 -- Legal
Proceedings" of the Company's most recent annual report on
Form 10-K incorporated by reference into the Prospectus and
(B) the caption "Item 1 -- Legal Proceedings" of Part II of
the Company's quarterly reports on Form 10-Q filed since such
annual report, if any, in each case insofar as such statements
constitute summaries of the legal matters, documents or
proceedings referred to therein, fairly present as of the date
of the applicable report the information disclosed therein in
all material respects.
6. (A) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, the
Distribution Agreement will not violate any provisions of any
applicable laws and regulations specifically governing the
generation, transportation, distribution or delivery of
natural gas, oil, electricity or other related commodities or
services, including pipelines, transmission lines, storage
facilities and related facilities and equipment, or the import
or export of such commodities or services (collectively, the
"Energy Industry") and (B) no consent, approval, authorization
or order of or qualification with any United States federal
body or agency specifically regulating the Energy Industry is
required for the performance by the Company of its obligations
under the Distribution Agreement, except in each of the
foregoing cases for such violations or failures to obtain such
consent, approval, authorization, order or qualification as
would not have a material adverse effect on the business,
financial condition or results of operation of the Company and
its subsidiaries, taken as a whole.
In addition, such counsel shall state that in the course of
the preparation by the Company of the Registration Statement, the Prospectus and
the Pricing Supplement, such counsel participated in conferences with certain of
the officers and representatives of the Company, counsel to the Company, the
Company's independent accountants, the Agents and counsel for the Agents at
which the Registration Statement, the Prospectus and the Pricing Supplement were
discussed. Such counsel shall state that, between the date of effectiveness of
the Registration Statement and the time of delivery of such counsel's letter,
such counsel participated in additional conferences with certain officers and
representatives of the Company, counsel to the Company and the Company's
independent accountants at which portions of the Registration Statement, the
Prospectus and the
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Pricing Supplement were discussed. Given the limitations inherent in the
independent verification of factual matters and the character of determinations
involved in the registration process, such counsel does not pass upon and need
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement, the Prospectus or the
Pricing Supplement, except as specifically described in paragraphs 4 and 5
above. Subject to the foregoing and on the basis of the information such counsel
gained in the performance of the services referred to above and in the
performance of his duties as General Counsel of the Company, as well as
information obtained from officers and other representatives of the Company and
the Company's independent accountants, such counsel shall state that no facts
have come to such counsel's attention that have caused him to believe that the
Registration Statement, at the time it became effective, contained any 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 that the Prospectus and the Prospectus Supplement, as of their
respective dates, contained any 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, in light of the circumstances under which they were
made, not misleading. Also, subject to the foregoing, no facts have come to such
counsel's attention in the course of the proceedings described in the first and
second sentences of this paragraph that caused him to believe that the
Prospectus or the Prospectus Supplement as of the date and time of delivery of
such counsel's letter contains any untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
Such counsel need express no view, opinion or belief, however,
with respect to financial statements, schedules or notes thereto or other
financial or statistical data included or incorporated by reference in or
omitted from the Registration Statement or Prospectus.
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EXHIBIT D
EL PASO CORPORATION
MEDIUM-TERM NOTES
ADMINISTRATIVE PROCEDURES
Medium-Term Notes with maturities of nine months or more from
date of issue (the "Medium-Term Notes") are to be offered on a continuing basis
by El Paso Corporation, a Delaware corporation (the "Company"). Banc of America
Securities LLC, ABN AMRO Incorporated and ▇.▇. ▇▇▇▇▇▇ Securities, Inc., as
agents (each an "Agent" and, collectively, the "Agents"), have agreed to use
their best efforts to solicit offers to purchase the Medium-Term Notes. The
Medium-Term Notes are being sold pursuant to a Distribution Agreement between
the Company and the Agents dated July 24, 2001 (as it may be supplemented or
amended from time to time, the "Distribution Agreement"), to which these
administrative procedures are attached as an exhibit. The Company has also
reserved the right to sell Medium-Term Notes directly on its own behalf. The
Medium-Term Notes will be issued pursuant to an Indenture, dated as of May 10,
1999 (as supplemented or amended from time to time, the "Indenture"), between
the Company and The Chase Manhattan Bank ("Chase"), as trustee (the "Trustee").
The Medium-Term Notes will rank equally with all other senior unsecured and
unsubordinated indebtedness of the Company and will have been registered with
the Securities and Exchange Commission (the "SEC"). Unless otherwise defined
herein, terms defined in the Distribution Agreement or Indenture shall have the
same meaning when used in this exhibit.
Each Medium-Term Note will be represented by either a Global
Security (as defined hereinafter) delivered to Chase as agent for The Depository
Trust Company ("DTC"), and recorded in the book-entry system maintained by DTC
(a "Book-Entry Note") or a certificate delivered to the Holder thereof or a
Person designated by such Holder (a "Certificated Note"). Only Medium-Term Notes
denominated and payable in U.S. dollars may be issued as Book-Entry Notes.
Owners of beneficial interests in Book-Entry Notes will be entitled to delivery
of Certificated Notes only under the limited circumstances described in the
Indenture.
Administrative responsibilities, document control and
record-keeping functions to be performed by the Company will be performed by its
Treasurer, its Chief Financial Officer or any Assistant Treasurer.
Administrative procedures for the offering are explained below.
Book-Entry Notes will be issued in accordance with the
administrative procedures set forth in Part II and Part III hereof and the
Letter of Representations of the Company and Chase to DTC dated September 28,
2000, as amended or supplemented from time to time (the "Letter of
Representations"), and Certificated Notes will be issued in accordance with the
administrative procedures set forth in Part I and Part III hereof. Medium-Term
Notes for which interest is calculated on the basis of a fixed interest rate,
which may be zero, are referred to herein as "Fixed Rate Notes." Medium-Term
Notes for which interest is calculated on the basis of a floating interest rate
are referred to herein as "Floating Rate Medium-Term Notes." To the extent the
procedures set forth below conflict with the provisions of the Notes, the
Indenture, the Letter of Representations or the
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Distribution Agreement, the relevant provisions of the Medium-Term Notes, the
Indenture, the Letter of Representations and the Distribution Agreement shall
control.
PART I
Administrative Procedures for Certificated Notes
Price to Public
Each Certificated Note will be issued at 100% of principal
amount, unless otherwise determined by the Company.
Date of Issuance
Each Certificated Note will be dated and issued as of the date
of its authentication by Chase.
Maturities
Each Certificated Note will mature on a Business Day (as
defined in Part III below) selected by the purchaser and agreed upon by the
Company, with maturities of nine months or more from the date of issuance.
Registration
The Certificated Notes will be issued only in fully registered
form. Chase (the "Paying Agent") will serve as registrar and transfer agent in
connection with the Certificated Notes.
Denominations
The Certificated Notes will be issued and payable in U.S.
dollars in the denomination of $1,000 or any integral multiple thereof unless
otherwise determined by the Company.
The Company may determine, upon agreement with a purchaser of
Certificated Notes, that such Certificated Notes will be denominated and payable
in a foreign currency or currency unit to be specified in a pricing supplement
to the Prospectus ("Specified Currency"). In such case, unless otherwise
specified in such pricing supplement, the authorized denominations of such
Certificated Notes will be the equivalent, as determined by the 11:00 a.m. (New
York City time) buying rate for such Specified Currency for cable transfers
quoted in New York City as certified for customs purposes by the Federal Reserve
Bank of New York (the "Market Exchange Rate") on the Business Day immediately
preceding the Settlement Date (as defined below) for such Certificated Notes, of
U.S. $1,000 (rounded down to an integral multiple of units of specified
denominations of such Specified Currency). If such rates are not available for
any reason, the Market Exchange Rate will be determined in accordance with the
alternative provision for determining the Market Exchange
D-2
39
Rate pursuant to the description therefor set forth under the caption
"Description of the Medium Term Notes -- Denominations; Currency; Varying
Interest Rates" in the Company's Prospectus Supplement, dated July 24, 2001.
Interest Payments
Each Fixed Rate Certificated Note will bear interest from its
issue date (the "Original Issue Date") at the annual rate stated on the face
thereof, payable on January 15 and July 15 of each year (the "Interest Payment
Dates"), commencing (unless otherwise specified in the applicable supplement to
the Prospectus) on the first Interest Payment Date after issuance, and at Stated
Maturity or upon redemption, if applicable. Interest on each Certificated Note
will be calculated and paid on the basis of a 360-day year of twelve 30-day
months (unless otherwise specified in the applicable pricing supplement).
Interest will be payable to the Person in whose name such Certificated Note is
registered at the close of business on the January 1 or July 1 (the "Regular
Record Dates") next preceding the respective Interest Payment Date; provided,
however, that (i) if an Original Issue Date falls between a Regular Record Date
and an Interest Payment Date, the first payment of interest will occur on the
Interest Payment Date following the next Regular Record Date and (ii) interest
payable at Maturity will be payable to the Person to whom principal shall be
payable (whether or not such Maturity is an Interest Payment Date). Any payment
of principal and interest on such Certificated Note required to be paid on an
Interest Payment Date or at Stated Maturity or upon redemption, if applicable,
which is not a Business Day shall be postponed to the next day which is a
Business Day, and no interest on such payment will accrue for the period from
and after such Interest Payment Date or Stated Maturity or redemption date, as
the case may be, to the date of the payment on the next succeeding Business Day.
All interest payments (excluding interest payments made at Stated Maturity or
upon redemption, if applicable) will be made by check mailed, first class,
postage prepaid, to the Person entitled thereto as provided above or otherwise
in accordance with the Indenture, or by wire transfer of immediately available
funds to an account designated by such Person if appropriate wire transfer
instructions have been received in writing by the Paying Agent not less than 10
days before such Interest Payment Date.
On the fifth Business Day immediately preceding each Interest
Payment Date, Chase will notify the Company of the total amount (to the extent
known to Chase on such date) of the interest payments to be made on such
Interest Payment Date. Chase(or any duly selected paying agent) will provide
monthly to the Company's finance department a list of the principal and interest
(to the extent known to Chase or such paying agent at that time) to be paid on
Certificated Notes maturing in the next succeeding month. To the extent provided
in the Indenture, the Company will provide to the Paying Agent not later than
the payment date sufficient moneys to pay in full all principal and interest
payments due on such payment date. The Paying Agent will assume responsibility
for withholding taxes on interest paid as required by law.
For special provisions relating to the Floating Rate Notes,
see Appendix A hereto. Special provisions relating to Certificated Notes
denominated in a Specified Currency may be agreed upon by the Company and the
Agents at a later time (the "Specified Currency Provisions").
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Settlement
The receipt of immediately available funds in U.S. dollars by
the Company in payment for a Certificated Note (less the applicable commission)
and the authentication and issuance of such Certificated Note shall, with
respect to such Certificated Note, constitute "Settlement" and the date thereof
shall be referred to as the "Settlement Date." All offers to purchase
Certificated Notes accepted by the Company will be settled from one to three
Business Days from the date of acceptance by the Company pursuant to the
timetable for Settlement set forth below unless the Company and the purchaser
agree to Settlement on a different date; provided, however, that the Company
will so notify Chase (which notice with respect to a Certificated Note
denominated in a Specified Currency will not be less than five Business Days
prior to the Settlement Date) of any such different date on or before the
Business Day immediately prior to the Settlement Date.
Settlement Procedures
In the event of a purchase of Certificated Notes by an Agent,
as principal, appropriate Settlement details will be set forth in the applicable
Terms Agreement to be entered into between such Agent and the Company pursuant
to the Distribution Agreement.
Settlement procedures with regard to each Certificated Note
sold through an Agent, as agent (the "Presenting Agent"), shall be as follows:
A. The Presenting Agent will advise the Company and, after the
Company has accepted the offer, Chase, in writing by facsimile or other
electronic transmission, of the following Settlement information:
1. Exact name in which Certificated Note is to be
registered ("Registered Owner").
2. Exact address of the Registered Owner and address for
payment of principal and interest, if any.
3. Taxpayer identification number of the Registered
Owner.
4. Principal amount of the Certificated Note (and, if
multiple Certificated Notes are to be issued,
denominations thereof).
5. If the Certificated Notes are to be denominated in a
Specified Currency, whether principal and interest is
to be paid in U.S. dollars or the Specified Currency.
6. Settlement Date.
7. Date of Maturity.
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8. Interest rate:
(a) Fixed Rate Notes:
o Interest Rate
o Interest Reset Dates
(b) Floating Rate Notes:
o Interest Rate Basis (or so called Base
Rate)
o Initial Interest Rate
o Spread or Spread Multiplier, if any
o Interest Reset Periods and Interest Reset
Dates
o Index Maturity
o Maximum and Minimum Interest Rates, if any
o Calculation Agent
o Calculation Date
o Interest Determination Dates
(c) Interest Payment Periods and Interest Payment
Dates
(d) Regular Record Date
9. If applicable, the date on or after which the
Certificated Notes are redeemable at the option of
the Company.
10. Wire transfer information (including overseas bank
account of the country of the Specified Currency, if
any).
11. Presenting Agent's commission (to be paid in the form
of a discount from the proceeds remitted to the
Company upon Settlement).
12. Trade Date.
13. Net Proceeds to the Company.
14. Extension of Maturity Option (including the basis or
formula, if any, for the setting of the Interest Rate
or Spread and/or Spread Multiplier, as applicable).
15. Renewal of Note Provisions.
16. Any other information pertinent to the Certificated
Note.
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B. The Company will confirm to Chase (i) by facsimile or other
electronic transmission, the above Settlement information and (ii) by
facsimile, that the terms of the Notes have been approved by the
President, the Chief Financial Officer or the Treasurer of the Company,
and Chase will assign a Certificated Note number to the transaction. If
the Company rejects an offer, the Company will promptly notify the
Presenting Agent by telephone, facsimile or other electronic
transmission.
C. The exchange rate agent, if any, appointed by the Company
will notify the Company, Chase and the Presenting Agent of the Market
Exchange Rate and the denominations of Certificated Notes which are to
be denominated and payable in a Specified Currency.
D. The Trustee will complete the Certificated Note in the form
previously approved by the Company, the Agents and Chase.
E. The Trustee will authenticate and deliver the Certificated
Note (with the attached WHITE confirmation) and the YELLOW and BLUE
stubs to the Presenting Agent. The Presenting Agent will acknowledge
receipt of the Certificated Note by completing the YELLOW stub and
returning it to the Trustee.
F. The Presenting Agent will cause to be wire transferred to a
bank account designated by the Company immediately available funds in
U.S. dollars in the amount of the principal amount of the Certificated
Note, less the applicable commission.
G. The Presenting Agent will deliver the Certificated Note
(with the attached WHITE confirmation) to the purchaser against payment
in immediately available funds in the amount of the principal amount of
the Certificated Note. The Presenting Agent will deliver to the
purchaser a copy of the most recent Prospectus with the appropriate
pricing supplement applicable to the Certificated Note with or prior to
delivery of the Certificated Note and the confirmation and payment by
the purchaser for the Certificated Note. If instructed by the purchaser
to deliver the Certificated Note and confirmation to different
locations, the Certificated Note and the confirmation will each be
accompanied or preceded by the Prospectus applicable to the
Certificated Note being delivered.
H. The Presenting Agent will obtain the acknowledgment of
receipt for the Certificated Note and Prospectus by the purchaser
through the purchaser's completion of the BLUE stub.
I. The Trustee will mail the PINK stub to the Company's Chief
Financial Officer, Treasurer or other appropriate official.
Settlement Procedure Timetable
For offers accepted by the Company, Settlement procedures "A"
through "I" set forth above shall be completed on or before the
respective times set forth below:
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Settlement
Procedure Time (New York)
---------- -----------
A 4:00 p.m. on date of order (2:00 p.m. on date of order in
the case of Certificated Notes with a
Settlement Date on the Business Day after the
date of order)
B 5:00 p.m. on date of order (3:00 p.m. on date of order in
the case of Certificated Notes with a
Settlement Date on the Business Day after the
date of order)
C 10:00 a.m. on the Settlement Date
D-E 12:30 p.m. on the Settlement Date (1:00 p.m. on the
Settlement Date in the case of Certificated
Notes denominated in a Specified Currency)
F 2:00 p.m. on the Settlement Date
G-H 3:00 p.m. on the Settlement Date
I 5:00 p.m. on the Business Day after the Settlement Date
Fails
If a purchaser of a Certificated Note shall either fail to
accept delivery of or make payment for Certificated Note on the date fixed by
the Company for Settlement, the Presenting Agent will immediately notify the
Trustee and the Company's Chief Financial Officer, Treasurer or other
appropriate official by telephone, confirmed in writing, of such failure and
return the Certificated Note to the Trustee. Upon the Trustee's receipt of the
Certificated Note from the Presenting Agent, the Company will promptly return to
the Presenting Agent an amount of immediately available funds in U.S. dollars
equal to any amount previously transferred to the Company in respect of the
Certificated Note pursuant to advances made by such Agent. Such returns will be
made on the Settlement Date, if possible, and in any event not later than 12
noon (New York City time) on the Business Day following the Settlement Date. The
Company will reimburse the Presenting Agent on an equitable basis for its loss
of the use of the funds during the period when the funds were credited to the
account of the Company. Upon receipt of the Certificated Note in respect of
which the default occurred, the Trustee will mark the Certificated Note
"cancelled," make appropriate entries in its records and deliver the
Certificated Note to the Company with an appropriate debit advice. The
Presenting Agent will not be entitled to any commission with respect to any
Certificated Note which the purchaser does not accept or make payment for.
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Redemption
Except as otherwise specified in an applicable pricing
supplement to the Prospectus and on the Certificated Notes, the Certificated
Notes will not be redeemable prior to their Stated Maturity. If so specified in
such a pricing supplement and on the Certificated Note, such Certificated Note
will be subject to redemption by the Company, at one or more redemption prices
(expressed as a percentage of the principal amount of such Certificated Note)
applicable during one or more redemption periods, together with interest accrued
thereon on the date fixed for redemption.
Notice of redemption shall be given in accordance with Section
1104 of the Indenture. If redemption of any Certificated Note is made in part, a
new Certificated Note for the amount of the unredeemed portion shall be issued
in the name of the Holder upon cancellation of the redeemed Certificated Note.
Maturity
Upon presentation of each Certificated Note at Stated Maturity
(unless the Company has exercised its option to extend the Stated Maturity of a
Certificated Note) or upon redemption the Trustee (or any duly appointed Paying
Agent) will pay the principal amount or redemption price thereof, together with
accrued interest due at Stated Maturity or the date of redemption. Such payment
shall be made in immediately available funds in U.S. dollars (except as provided
in any Specified Currency Provisions), provided that the Certificated Note is
presented to the Trustee (or any such Paying Agent) in time for the Trustee (or
such Paying Agent) to make payments in such funds in accordance with its normal
procedures. To the extent provided in the Indenture, the Company will provide
the Trustee (and any such Paying Agent) with funds available for immediate use
for such purpose. Certificated Notes presented at Stated Maturity or upon
redemption will be canceled by the Trustee as provided in the Indenture.
PART II
Administrative Procedures for
Book-Entry Notes
In connection with the qualification of the Book-Entry Notes
for eligibility in the book-entry system maintained by DTC, Chase will perform
the custodial, document control and administrative functions described below, in
accordance with its obligations under the Letter of Representations and a Medium
Term Note Certificate Agreement between Chase and DTC dated as of December 2,
1988 (the "Medium Term Note Certificate Agreement"), a copy of which is attached
hereto, and its obligations as a participant in DTC, including DTC's Same-Day
Funds Settlement System ("SDFS").
D-8
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Price to Public
Each Book-Entry Note will be issued at 100% of principal
amount, unless otherwise determined by the Company.
Date of Issuance
On any Settlement Date (as defined under "Settlement" below)
for one or more Book-Entry Notes, the Company will issue a single global
security in fully registered form without coupons (a "Global Security")
representing up to $500,000,000 principal amount of all such Book-Entry Notes
that have the same terms. Each Global Security will be dated and issued as of
the date of its authentication by the Trustee. Each Global Security will bear an
original issue date, which will be (i) with respect to an original Global
Security (or any portion thereof), the original issue date specified in such
Global Security and (ii) following a consolidation of Global Securities, with
respect to the Global Security resulting from such consolidation, the most
recent Interest Payment Date (as defined in the Indenture) to which interest has
been paid or duly provided for on the predecessor Global Securities regardless
of the date of authentication of such resulting Global Security. No Global
Security will represent (i) both Fixed Rate Book-Entry Notes and Floating Rate
Book-Entry Notes or (ii) any Certificated Note.
Identification Numbers
The Company has arranged with the CUSIP Service Bureau of
Standard & Poor's Corporation (the "CUSIP Service Bureau") for the reservation
of a series of CUSIP numbers, which series consists of approximately 900 CUSIP
numbers and relates to Global Securities representing Book-Entry Notes and
book-entry Medium-Term Notes issued by the Company with other series
designations. The Company has obtained from the CUSIP Service Bureau a written
list of such reserved CUSIP numbers and has provided a copy of such list to DTC
and Chase. The Company will assign CUSIP numbers to Global Securities as
described below under Settlement Procedure "B." DTC will notify the CUSIP
Service Bureau periodically of the CUSIP numbers that the Company has assigned
to Global Securities. Chase will notify the Company at any time when fewer than
50 of the reserved CUSIP numbers remain unassigned to Global Securities, and, if
it deems necessary, the Company will reserve additional CUSIP numbers for
assignment to Global Securities. Upon obtaining such additional CUSIP numbers,
the Company shall deliver a list of such additional CUSIP numbers to Chase and
DTC.
Registration
Global Securities will be issued only in fully registered form
without coupons. Each Global Security will be registered in the name of CEDE &
CO., as nominee for DTC, on the securities register for the Notes maintained
under the Indenture. The beneficial owner of a Book-Entry Note (or one or more
indirect participants in DTC designated by such owner) will designate one or
more participants in DTC (with respect to such Book-Entry Note, the
"Participants") to act as agent or agents for such owner in connection with the
book-entry system maintained by DTC, and DTC will record in book-entry form, in
accordance with instructions provided by such Participants, a credit balance
with respect to such beneficial owner in such
D-9
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Book-Entry Note in the account of such Participants. The ownership interest of
such beneficial owner (or such indirect participant in DTC) in such Book-Entry
Note will be recorded through the records of such Participants or through the
separate records of such Participants and one or more indirect participants in
DTC.
Transfers
Transfers of a Book-Entry Note will be accomplished by book
entries made by DTC and, in turn, by Participants (and in certain cases, one or
more indirect participants in DTC) acting on behalf of beneficial transferors
and transferees of such Book-Entry Note.
Exchanges
Chase may deliver to DTC and the CUSIP Service Bureau at any
time a written notice of consolidation specifying (i) the CUSIP numbers of two
or more outstanding Global Securities that represent (A) Fixed Rate Book-Entry
Notes having the same terms and for which interest has been paid to the same
date or (B) Floating Rate Book-Entry Notes having the same terms and for which
interest has been paid to the same date, (ii) a date, occurring at least 30 days
after such written notice is delivered and at least 30 days before the next
Interest Payment Date for such Book-Entry Notes, on which such Global Securities
shall be exchanged for a single replacement Global Security and (iii) a new
CUSIP number, obtained from the Company, to be assigned to such replacement
Global Security. Upon receipt of such a notice, DTC will send to its
participants (including Chase) a written reorganization notice to the effect
that such exchange will occur on such date. Prior to the specified exchange
date, Chase will deliver to the CUSIP Service Bureau a written notice setting
forth such exchange date and such new CUSIP number and stating that, as of such
exchange date, the CUSIP numbers of the Global Securities to be exchanged will
no longer be valid. On the specified exchange date, Chase will exchange such
Global Securities for a single Global Security bearing the new CUSIP number and
the CUSIP Numbers of the exchanged Global Securities will, in accordance with
CUSIP Service Bureau procedures, be canceled and not immediately reassigned.
Notwithstanding the foregoing, if the Global Securities to be exchanged exceed
$500,000,000 in aggregate principal amount, one Global Security will be
authenticated and issued to represent each $500,000,000 of principal amount of
the exchanged Global Securities and an additional Global Security will be
authenticated and issued to represent any remaining principal amount of such
Global Securities (see "Denominations" below).
Maturity
Each Book-Entry Note will mature on a date nine months or more
after the Settlement Date for such Book-Entry Note.
D-10
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Denominations
Book-Entry Notes will be issued in principal amounts of $1,000
or any integral multiple thereof. Global Securities will be denominated in
principal amounts not in excess of $500,000,000. If one or more Book-Entry Notes
having an aggregate principal amount in excess of $500,000,000 would, but for
the preceding sentence, be represented by a single Global Security, then one
Global Security will be authenticated and issued to represent each $500,000,000
principal amount of such Book-Entry Note or Notes and an additional Global
Security will be authenticated and issued to represent any remaining principal
amount of such Book-Entry Note or Notes. In such a case, each of the Global
Securities representing such Book-Entry Note or Notes shall be assigned the same
CUSIP number.
Interest
Interest, if any, on each Fixed Rate Book-Entry Note will
accrue from the original issue date for the first interest period or the last
date to which interest has been paid, if any, for each subsequent interest
period, on the Global Security representing such Book-Entry Note, and will be
calculated and paid in the manner described in such Book-Entry Note. Unless
otherwise specified therein, each payment of interest on a Fixed Rate Book-Entry
Note will include interest accrued to but excluding the Interest Payment Date or
to but excluding the date of Maturity. Interest on Fixed Rate Book-Entry Notes
(including interest for partial periods) will be calculated on the basis of a
360-day year of twelve 30-day months.
Interest payable at the date of Maturity of a Book-Entry Note
will be payable to the Person to whom the principal of such Book-Entry Note is
payable. Standard & Poor's Ratings Group may use the information received in the
pending deposit message described under Settlement Procedure "C" below in order
to include the amount of any interest payable and certain other information
regarding the related Global Security in the appropriate (daily or weekly) bond
report published by Standard & Poor's Ratings Group.
For special provisions relating to the Floating Rate Notes,
see Appendix A hereto.
Payments of Interest
Promptly after each Regular Record Date, the Paying Agent will
deliver to the Company and DTC a written notice setting forth, by CUSIP number,
the amount of interest (to the extent then ascertainable) to be paid on each
Global Security on such Interest Payment Date (other than an Interest Payment
Date coinciding with Maturity) and the total of such amounts. DTC will confirm
the amount payable on each Global Security on such Interest Payment Date by
reference to the appropriate (daily or weekly) bond reports published by
Standard & Poor's Corporation. The Company will pay to the Paying Agent the
total amount of interest due on such Interest Payment Date (other than at
Maturity), and the Paying Agent will pay such amount to DTC, at the times and in
the manner set forth below under "Manner of Payment." If any Interest Payment
Date for a Fixed Rate Book-Entry Note is not a Business Day, the payment due on
such day shall be made on the next succeeding Business Day and no interest shall
accrue on such payment for the period from and after such Interest Payment Date.
D-11
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Payment at Maturity
On or about the first Business Day of each month, the Paying
Agent will deliver to the Company and DTC a written list of principal and
interest (to the extent then ascertainable) to be paid on each Global Security
maturing in the following month (excluding principal on a Book-Entry Note where
the Company has exercised its option to extend the Stated Maturity). The Company
and DTC will confirm the amounts of such principal and interest payments with
respect to each such Global Security on or about the fifth Business Day
preceding the Maturity of such Global Security. On or before Maturity, the
Company will pay to the Paying Agent the principal amount of such Global
Security, together with interest due at such Maturity. The Paying Agent will pay
such amount to DTC at the times and in the manner set forth below under "Manner
of Payment." If any Maturity of a Global Security representing Book-Entry Notes
is not a Business Day, the payment due on such day shall be made on the next
succeeding Business Day and no interest shall accrue on such payment for the
period from and after such Maturity. Promptly after payment to DTC of the
principal and interest due at Maturity of such Global Security, the Trustee will
cancel such Global Security in accordance with the Indenture and so advise the
Company.
Manner of Payment
The total amount of any principal and interest due on Global
Securities on any Interest Payment Date or at Maturity shall be paid by the
Company to the Paying Agent in immediately available funds no later than 9:30
a.m. (New York City time) on such date. The Company will make such payment on
such Global Securities by instructing the Paying Agent to withdraw funds from an
account maintained by the Company at the Paying Agent or by wire transfer to the
Paying Agent. The Company will confirm any such instructions in writing to the
Paying Agent. Prior to 10:00 a.m. (New York City time) on the date of Maturity
or as soon as possible thereafter, the Paying Agent will pay by separate wire
transfer (using Fedwire message entry instructions in a form previously
specified by DTC) to an account at the Federal Reserve Bank of New York
previously specified by DTC, in funds available for immediate use by DTC, each
payment of principal (together with interest thereon) due on a Global Security
on such date. On each Interest Payment Date (other than at Maturity), interest
payments shall be made to DTC, in funds available for immediate use by DTC, in
accordance with existing arrangements between the Paying Agent and DTC. On each
such date, DTC will pay, in accordance with its SDFS operating procedures then
in effect, such amounts in funds available for immediate use to the respective
Participants in whose names the Book-Entry Notes represented by such Global
Securities are recorded in the book-entry system maintained by DTC. Neither the
Company (as issuer) nor the Paying Agent (as trustee, security registrar or
paying agent) shall have any direct responsibility or liability for the payment
by DTC to such Participants of the principal of and interest on the Book- Entry
Notes.
Withholding Taxes
The amount of any taxes required under applicable law to be
withheld from any
D-12
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interest payment on a Book-Entry Note will be determined and withheld by the
Participant, indirect participant in DTC or other Person responsible for
forwarding payments and materials directly to the beneficial owner of such
Book-Entry Note.
Settlement
The receipt by the Company of immediately available funds in
payment for a Book-Entry Note and the authentication and issuance of the Global
Security representing such Book-Entry Note shall constitute "Settlement" with
respect to such Book-Entry Note and the date thereof shall be referred to as the
"Settlement Date." All orders for Book-Entry Notes accepted by the Company will
be settled on the third Business Day following the date of acceptance by the
Company pursuant to the timetable for Settlement set forth below unless the
Company and the purchaser agree to Settlement on another day which shall be no
earlier than the next Business Day following the date of acceptance.
Settlement Procedures
In the event of a purchase of Book-Entry Notes by an Agent, as
principal, appropriate Settlement details will be set forth in the applicable
Purchase Agreement to be entered into between such Agent and the Company
pursuant to the Agency Agreement.
Settlement Procedures with regard to each Book-Entry Note sold
by the Company through an Agent, as agent (the "Presenting Agent"), shall be as
follows:
A. The Presenting Agent will advise the Company by telephone
of the following Settlement information:
1. Principal amount.
2. Settlement Date.
3. Date of Maturity.
4. Interest rate:
(a) Fixed Rate Notes:
o Interest Rate
o Interest Reset Dates
(b) Floating Rate Notes:
o Interest Rate Basis (or so called Base
Rate)
o Initial Interest Rate
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o Spread or Spread Multiplier, if any
o Interest Reset Periods and Interest Reset
Dates
o Index Maturity
o Maximum and Minimum Interest Rates, if
any
o Calculation Agent
o Calculation Date
o Interest Determination Dates
(c) Interest Payment Periods and Interest Payment
Dates
(d) Regular Record Date
5. If applicable, the date on or after which the
Book-Entry Notes are redeemable at the option of the
Company.
6. Presenting Agent's commission (to be paid in the form
of a discount from the proceeds remitted to the
Company upon Settlement).
7. Trade Date.
8. Net Proceeds to Company.
9. Extension of Maturity Option (including the basis or
formula, if any, for the setting of the Interest
Rate, or the Spread and/or Spread Multiplier, as
applicable).
10. Renewal of Note Provisions.
11. Any other information pertinent to the Book-Entry
Note.
B. The Company will assign a CUSIP number to the Global
Security representing such Book-Entry Note and then advise Chase by
facsimile or electronic transmission of the information set forth in
Settlement Procedure "A" above, such CUSIP number and the name of the
Presenting Agent. The Company will confirm to Chase, by facsimile, that
the terms of the Book-Entry Notes have been approved by the President,
the Chief Financial Officer or the Treasurer of the Company. The
Company will also notify the Presenting Agent by telephone of such
CUSIP number as soon as practicable.
▇. ▇▇▇▇▇ will enter a pending deposit message through DTC's
Participant Terminal System providing the following Settlement
information to DTC (which shall route such information to Standard &
Poor's Ratings Group and Interactive Data Corporation) and the
Presenting Agent:
1. The information set forth in Settlement Procedure "A."
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2. Identification as a Fixed Rate Book-Entry Note or a
Floating Rate Book-Entry Note.
3. Initial Interest Payment Date for such Book-Entry
Note, number of days by which such date succeeds the
related Regular Record Date (which, in the case of
Floating Rate Book-Entry Notes that reset weekly,
shall be the DTC Record Date, which is the date five
calendar days immediately preceding the applicable
Interest Payment Date and, in the case of all other
Book-Entry Notes, shall be the Regular Record Date as
defined in the Indenture) and amount of interest
payable on such Interest Payment Date.
4. The interest payment period.
5. CUSIP number of the Global Security representing such
Book-Entry Note.
6. Whether such Global Security will represent any other
Book-Entry Note (to the extent known at such time).
7. Numbers of the participant accounts maintained by DTC
on behalf of Chase and the Presenting Agent.
D. To the extent the Company has not already done so, the
Company will deliver to the Trustee a Global Security in a form that
has been approved by the Company, the Agents and the Trustee.
E. The Trustee will complete such Book-Entry Note, stamp the
appropriate legend, as instructed by DTC, if not already set forth
thereon, and authenticate the Global Security representing such
Book-Entry Note.
F. DTC will credit such Book-Entry Note to ▇▇▇▇▇'▇ participant
account at DTC.
▇. ▇▇▇▇▇ will enter an SDFS deliver order through DTC's
Participant Terminal System instructing DTC to (i) debit such
Book-Entry Note to ▇▇▇▇▇'▇ participant account and credit such
Book-Entry Note to the Presenting Agent's participant account and (ii)
debit the Presenting Agent's Settlement account and credit ▇▇▇▇▇'▇
Settlement account for an amount equal to the principal amount of such
Book-Entry Note less the Presenting Agent's commission. The entry of
such a deliver order shall constitute a representation and warranty by
Chase to DTC that (i) the Global Security representing such Book-Entry
Note has been issued and authenticated and (ii) Chase is holding such
Global Security pursuant to the Medium Term Note Certificate Agreement.
H. The Presenting Agent will enter an SDFS deliver order
through DTC's
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Participant Terminal System instructing DTC (i) to debit such
Book-Entry Note to the Presenting Agent's participant account and
credit such Book-Entry Note to the participant accounts of the
Participants with respect to such Book-Entry Note and (ii) to debit the
Settlement accounts of such Participants and credit the Settlement
account of the Presenting Agent for an amount equal to the principal
amount of such Book-Entry Note.
I. Transfers of funds in accordance with SDFS deliver orders
described in Settlement Procedures "G" and "H" will be settled in
accordance with SDFS operating procedures in effect on the Settlement
Date.
▇. ▇▇▇▇▇ will, upon receipt of funds from the Agent in
accordance with Settlement Procedure "G," credit to an account of the
Company maintained at Chase funds available for immediate use in the
amount transferred to Chase in accordance with Settlement Procedure
"G."
▇. ▇▇▇▇▇ will send a copy of the Book-Entry Note by
first-class mail to the Company.
L. The Presenting Agent will confirm the purchase of such
Book-Entry Note to the purchaser either by transmitting to the
Participants with respect to such Book-Entry Note a confirmation order
or orders through DTC's institutional delivery system or by mailing a
written confirmation to such purchaser.
Settlement Procedures Timetable
For orders of Book-Entry Notes solicited by any Agent and
accepted by the Company for Settlement on the first Business Day after such
acceptance, Settlement Procedures "A" through "K"set forth above shall be
completed as soon as possible but not later than the respective times set forth
below:
Settlement
Procedure Time (New York)
---------- ----
A 11:00 a.m. on date of order
B 12:00 p.m. on date of order
C 2:00 p.m. on date of order
D 3:00 p.m. on date of order
E 9:00 a.m. on Settlement Date
F 10:00 a.m. on Settlement Date
G-H 2:00 p.m. on Settlement Date
I 4:45 p.m. on Settlement Date
J-K 5:00 p.m. on Settlement Date
If an order is to be settled more than one Business Day after
acceptance by the
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Company, Settlement Procedures "A," "B" and "C" may be completed not later than
11:00a.m., 12:00 Noon and 2:00 p.m., respectively, on the Business Day after the
date of acceptance. If the initial interest rate for a Floating Rate Book-Entry
Note has not been determined at the time that Settlement Procedure "A" is
completed, Settlement Procedures "B" and "C" shall be completed as soon as such
rate has been determined but not later than 12:00 Noon and 2:00 p.m.,
respectively, on the Business Day after the date of acceptance. Settlement
Procedure "I" is subject to extension in accordance with any extension of
Fedwire closing deadlines and in the other events specified in SDFS operating
procedures in effect on the Settlement Date.
If Settlement of a Book-Entry Note is rescheduled or canceled,
the Company will advise Chase and Chase will deliver to DTC, through DTC's
Participant Terminal System, a cancellation message to such effect by no later
than 2:00 p.m. on the Business Day immediately preceding the scheduled
Settlement Date.
Failure to Settle
If Chase fails to enter an SDFS deliver order with respect to
a Book-Entry Note pursuant to Settlement Procedure "G," Chase may deliver to
DTC, through DTC's Participant Terminal System, as soon as practicable, a
withdrawal message instructing DTC to debit such Book-Entry Note to ▇▇▇▇▇'▇
participant account. DTC will process the withdrawal message, provided that
▇▇▇▇▇'▇ participant account contains a principal amount of the Global Security
representing such Book-Entry Note that is at least equal to the principal amount
to be debited. If a withdrawal message is processed with respect to all the
Book-Entry Notes represented by a Global Security, the Trustee will cancel such
Global Security in accordance with the Indenture and so advise the Company. The
CUSIP number assigned to such Global Security shall, in accordance with CUSIP
Service Bureau procedures, be canceled and not immediately reassigned. If a
withdrawal message is processed with respect to one or more, but not all, of the
Book-Entry Notes represented by a Global Security, Chase will exchange such
Book-Entry Note for two Global Securities, one of which shall represent such
Book-Entry Notes and shall be canceled immediately after issuance and the other
of which shall represent the other Book-Entry Notes previously represented by
the surrendered Global Security and shall bear the CUSIP number of the
surrendered Global Security.
If the purchase price for any Book-Entry Note is not timely
paid to the Participants with respect to such Book-Entry Note by the beneficial
purchaser thereof (or a Person, including an indirect participant in DTC, acting
on behalf of such purchaser), such Participants and, in turn, the Presenting
Agent may enter SDFS deliver orders through DTC's Participant Terminal System
reversing the orders entered pursuant to Settlement Procedures "H" and "G,"
respectively. Thereafter, Chase will deliver the withdrawal message and take the
related actions described in the preceding paragraph. The Company will reimburse
the Presenting Agent and Chase, as applicable, on an equitable basis for their
loss of the use of the funds during the period when the funds were credited to
the account of the Company (except that the Company shall not be required to
reimburse a party if such party's default hereunder or under the Agency
Agreement shall have caused such failure by the beneficial purchaser to make
timely payment of the purchase price).
D-17
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Notwithstanding the foregoing, upon any failure to settle with
respect to a Book-Entry Note, DTC may take any actions in accordance with its
SDFS operating procedures then in effect. In the event of a failure to settle
with respect to one or more, but not all, of the Book-Entry Notes to have been
represented by a Global Security, the Trustee will provide, in accordance with
Settlement Procedure "E," for the authentication and issuance of a Global
Security representing the other Book-Entry Notes to have been represented by
such Global Security and will make appropriate entries in its records.
Trustee Not to Risk Funds
Nothing herein shall be deemed to require Chase to risk or
expend its own funds in connection with any payment to the Company, DTC, the
Agents or the purchaser, it being understood by all parties that payments made
by Chase to the Company, DTC, the Agents or the purchaser shall be made only to
the extent that funds are provided to Chase for such purpose.
PART III
Administrative Procedures for Book-Entry Notes
and Certificated Notes
Procedures for Establishing the Terms of the Notes
The Company and the Agents will discuss from time to time the
rates to be borne by the Notes that may be sold as a result of the solicitation
of offers by the Agents. Once an Agent has recorded any indication of interest
in Notes upon certain terms, and communicated with the Company, if the Company
plans to accept an offer to purchase Notes upon such terms, it will prepare a
pricing supplement reflecting the terms of such Notes (if the interest rate,
Stated Maturity or other terms have changed) and, after approval from such
Agent, will arrange to have such pricing supplement (together with the
Prospectus if amended or supplemented), electronically filed or transmitted by a
means reasonably calculated to result in filing with the SEC by the second
Business Day after the Company has accepted such offer (or by the Business Day
prior to the Settlement Date in the event the Settlement Date is the first or
second Business Day after such acceptance) and pursuant to Rule 424(b) of the
Rules and Regulations, and will supply an appropriate number of copies of the
Prospectus, as then amended or supplemented, and including such pricing
supplement, to the Agent that presented such offer. No Settlements with respect
to Notes upon such terms may occur prior to such filing or such transmission and
the Agents will not, prior to such filing or such transmission, mail
confirmations to customers who have offered to purchase Notes upon such terms.
After such filing or such transmission, sales, mailing of confirmations and
Settlements may occur with respect to Notes upon such terms, subject to the
provisions of "Delivery of Prospectus" below.
If the Company decides to post rates and a decision has been
reached to change interest rates, the Company will promptly so notify each
Agent. Each Agent will forthwith suspend solicitation of purchases. At that
time, the Agents will recommend and the Company will establish rates to be so
posted. Following establishment of posted rates and prior to the filing or
transmission
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described in the following sentence, the Agents may record indications of
interest in purchasing Notes only at the posted rates. Once an Agent has
recorded any indication of interest in Notes at the posted rates and
communicated with the Company, if the Company plans to accept an offer at the
posted rate, it will prepare a pricing supplement reflecting such posted rates
and, after approval from such Agent, will arrange to have such pricing
supplement (together with the Prospectus if amended or supplemented),
electronically filed or transmitted by a means reasonably calculated to result
in filing with the SEC by the second Business Day after the Company has accepted
such offer (or by the Business Day prior to the Settlement Date in the event the
Settlement Date is the first or second Business Day after such acceptance) and
pursuant to Rule 424(b) of the Rules and Regulations, and will supply an
appropriate number of copies of the Prospectus, as then amended or supplemented,
and including such pricing supplement to the Agent who presented such offer. No
Settlements at the posted rates may occur prior to such filing or such
transmission and the Agents will not, prior to such filing or such transmission,
mail confirmations to customers who have offered to purchase Notes at the posted
rates. After such filing or such transmission, sales, mailing of confirmations
and Settlements may resume, subject to the provisions of "Delivery of
Prospectus" below.
Acceptance and Rejection of Offers
The Company shall have the sole right to accept offers to
purchase Notes from the Company and may reject any such offer in whole or in
part. Each Agent shall promptly communicate to the appropriate official of the
Company, orally or in writing, each reasonable offer to purchase Notes from the
Company received by it other than those rejected by such Agent. Each Agent shall
have the right, in its discretion reasonably exercised without advising the
Company, to reject any offers in whole or in part.
Suspension of Solicitation; Amendment or Supplement
If, during any period in which, in the opinion of counsel for
the Agents (provided, if the Agents are no longer soliciting (or have been
instructed not to solicit) purchases of Securities from the Company such opinion
is known to the Company), a prospectus relating to the Notes is required to be
delivered under the Act, any event known to the Company occurs as a result of
which the Prospectus would include an untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or if it
is necessary at any time to amend the Prospectus to comply with the Act or the
Rules and Regulations, the Company will notify the Agents promptly to suspend
solicitation of purchases of the Notes and the Agents shall suspend their
solicitations of purchases of Notes; and if the Company shall decide to amend or
supplement the Registration Statement or the Prospectus for purposes of offering
the Securities, it will promptly advise the Agents by telephone (with
confirmation in writing) and, except as otherwise provided in any relevant
Purchase Agreement, will promptly prepare and file with the SEC an amendment or
supplement which will correct such statement or omission or an amendment,
whether by filing such documents pursuant to the Act or the Exchange Act, as may
be necessary to correct such untrue statement or omission or to make the
Registration Statement or the Prospectus comply with such requirements and to
prepare and furnish to the Agents at its own expense such amendment or
supplement to the Registration
D-19
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Statement or the Prospectus as will correct such Registration Statement or
Prospectus; provided, however, that the Company shall in any event promptly
prepare, file and furnish an Agent with such an amendment or supplement if such
Agent shall then hold any Securities acquired from the Company as principal
(other than such Securities as such Agent shall have held for a period of six
months or more). Upon the Agents' receipt of such amendment or supplement and
advice from the Company that solicitations may be resumed, the Agents will
resume solicitations of purchases of the Notes.
In addition, the Company may instruct the Agents to suspend
solicitation of offers to purchase at any time. Upon receipt of such
instructions the Agents will forthwith (but in any event within one Business
Day) suspend solicitation of offers to purchase from the Company until such time
as the Company has advised it that solicitation of offers to purchase may be
resumed and the Company has complied with Section 6 of the Distribution
Agreement to the extent then required. If the Company decides to amend or
supplement the Registration Statement or the Prospectus relating to the Notes
(other than to change interest rates or maturities or similar changes and except
in all cases by filing a report on Form 8-K, pursuant to the Exchange Act,
solely to add exhibits to documents previously filed), it will promptly advise
the Agents and the Trustee and will furnish the Agents and the Trustee with
copies of the proposed amendment or supplement.
In the event that at the time the Agents, at the direction of
the Company, suspend solicitation of offers to purchase from the Company there
shall be any orders outstanding which have not been settled, the Company will
promptly advise the Agents and the Trustee whether such orders may be settled
and whether copies of the Prospectus as theretofore amended or supplemented as
in effect at the time of the suspension may be delivered in connection with the
Settlement of such orders. The Company will have the sole responsibility for
such decision and for any arrangements which may be made in the event that the
Company determines that such orders may not be settled or that copies of such
Prospectus may not be so delivered.
Delivery of Prospectus
A copy of the Prospectus as most recently amended or
supplemented on the date of delivery thereof must be delivered to a purchaser
prior to or together with the earliest of (i) any written offer of such Note,
(ii) confirmation of the purchase of such Note and (iii) payment for such Note
by its purchaser. The Company shall ensure that an Agent receives copies of the
Prospectus and each amendment or supplement thereto (including appropriate
pricing supplements as described in the section entitled "Procedures for
Establishing the Terms of the Notes" above) in such quantities and within such
time limits as will enable such Agent to deliver such confirmation or Note to a
purchaser as contemplated by these procedures and in compliance with the
preceding sentence. If, since the date of acceptance of a purchaser's offer, the
Prospectus shall have been supplemented solely to reflect any sale of Notes on
terms different from those agreed to between the Company and such purchaser or a
change in posted rates not applicable to such purchaser, such purchaser shall
not receive the Prospectus as supplemented by such new supplement, but shall
receive the Prospectus as supplemented to reflect the terms of the Notes being
purchased by such purchaser and otherwise as most recently amended or
supplemented on the date of delivery of the Prospectus. The Trustee
D-20
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will make all such deliveries with respect to all Notes sold directly by the
Company.
Confirmation
For each order to purchase a Note solicited by any Agent and
accepted by the Company, the Presenting Agent will issue a confirmation to the
purchaser (with a copy to the Company), including delivery and payment
instructions.
Advertising Costs
The Company will determine with the Agents the amount and
nature of advertising that may be appropriate in offering the Notes. The
"tombstone" advertisement and such other expenses agreed to by the Company and
Agents in connection with solicitation of offers to purchase Notes from the
Company will be paid by the Company.
Business Day
"Business Day" shall mean, for all purposes of these
Administrative Procedures, any day which is not a Saturday or Sunday and which
is not a day on which banking institutions are generally authorized or obligated
by law or executive order to close (i) in New York City or in any other place
where the principal and interest on the Medium Term Notes is payable, (ii) in
the case of Notes denominated in a Specified Currency, including LIBOR Notes (as
defined in Appendix A), in the city designated in an applicable supplement to
the Prospectus as the principal financial center of the country of such
Specified Currency and (iii) in the case of LIBOR Notes, any such date on which
dealings in deposits in U.S. dollars are transacted in the London interbank
market.
D-21
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APPENDIX A to EXHIBIT D
APPENDIX A TO ADMINISTRATIVE PROCEDURES
SPECIAL PROVISIONS RELATING
TO FLOATING RATE NOTES
Interest Rate: Interest on Floating Rate Notes will be determined by
reference to an "Interest Rate Basis", which shall be
the "Commercial Paper Rate" ("Commercial Paper Rate
Notes"), "LIBOR" ("LIBOR Notes"), the "CD Rate" ("CD
Rate Notes"), the "Treasury Rate" ("Treasury Rate
Notes"), the "CMT Rate" ("CMT Rate Notes"), the
"Eleventh District Cost of Funds Rate" ("Eleventh
District Cost of Funds Rate Notes"), the "Federal
Funds Effective Rate" ("Federal Funds Notes"), the
"Prime Rate" ("Prime Rate Notes") or such other
interest rate formula as may be designated by the
Company, based upon the Index Maturity and adjusted
by a Spread or Spread Multiplier, if any, as
specified in the applicable pricing supplement to the
Prospectus setting forth the terms of each issuance
of Floating Rate Notes (the "Pricing Supplement").
The "Index Maturity" is the particular maturity of
the type of instrument or obligation from which the
Interest Rate Basis is calculated (e.g., in the case
of commercial paper, 30-day rather than 90-day
commercial paper). The "Spread" is the number of
basis points (100 basis points equals one percent)
above or below the Interest Rate Basis applicable to
the particular Floating Rate Note, and the "Spread
Multiplier" is the percentage of the Interest Rate
Basis applicable to the interest rate for the
particular Floating Rate Note. The Spread, Spread
Multiplier, Index Maturity and other variable terms
as described below are subject to change by the
Company from time to time, but no such change will
affect any Floating Rate Note previously issued or as
to which an offer has been accepted by the Company. A
Floating Rate Note may also have either or both of
the following: (i) a maximum limit, or ceiling
("Maximum Interest Rate"), on the rate of interest
which may accrue during any Interest Period (as
defined below); and (ii) a minimum limit, or floor
("Minimum Interest Rate"), on the rate of interest
which may accrue during any Interest Period. In
addition to any Maximum Interest Rate which may be
applicable to any Floating Rate Note pursuant to the
above provisions, the interest rate on the Floating
Rate Notes will in no event be higher than the
maximum rate permitted by New York law, as the same
may be modified by United States law of general
application. Under present New York law, the maximum
rate of interest is 25% per annum on a simple
interest basis. The limit may not apply to Floating
Rate Notes in which $2,500,000 or more has been
invested.
D-22
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The Calculation Agent appointed by the Company (the
"Calculation Agent") (initially The Chase Manhattan
Bank) will, upon request of a holder of Floating Rate
Notes, provide the interest rate then in effect and,
if determined, the interest rate which will become
effective as a result of a determination made with
respect to the most recent Interest Determination
Date (as defined below) with respect to such Floating
Rate Notes. The applicable Pricing Supplement will
specify for each Floating Rate Note the following
terms: Interest Rate Basis, rate of interest for the
initial Interest Period (the "Initial Interest
Rate"), date of original issue, Interest
Determination Dates, Interest Reset Dates (as defined
below), Interest Payment Dates (as defined below),
Regular Record Date (as defined below), Index
Maturity, maturity date, redemption date, if any,
repayment date, if any, Maximum Interest Rate and
Minimum Interest Rate, if any, and the Spread or
Spread Multiplier, if any.
Interest Payment Except as set forth in the applicable Pricing
Dates: Supplement and except as provided below, interest
will be payable in the case of Floating Rate Notes
with a daily, weekly or monthly Interest Reset Date,
on the third Wednesday of each month or on the third
Wednesday of March, June, September and December of
each year, as specified in the applicable Pricing
Supplement; in the case of Floating Rate Notes with a
quarterly Interest Reset Date, on the third Wednesday
of March, June, September and December of each year;
in the case of Floating Rate Notes with a semi-annual
Interest Reset Date, on the third Wednesday of two
months of each year specified in the applicable
Pricing Supplement; in the case of Floating Rate
Notes with an annual Interest Reset Date, on the
third Wednesday of the month of each year specified
in the applicable Pricing Supplement; and, in each
case at the stated maturity (or on the redemption
date or repayment date, if applicable) of the
Floating Rate Note. If any Interest Payment Date for
any Floating Rate Note would otherwise be a day that
is not a Business Day (as defined below) for such
Floating Rate Note, the Interest Payment Date for
such Floating Rate Note shall be postponed to the
next succeeding day that is a Business Day for such
Floating Rate Note, except that (i) in the case of a
LIBOR Note, if such day falls in the next calendar
month, such Interest Payment Date will be the
immediately preceding day that is a London Business
Day (as defined below) with respect to such Note, and
(ii) with respect to an Interest Payment Date that is
also the maturity date of a Floating Rate Note, the
Interest Payment Date will remain the date specified
in the applicable Pricing Supplement, payment due at
maturity will be made on the next succeeding day that
is a Business Day and no interest shall accrue on the
amount so payable for the period from and after such
maturity date. Each date on which interest is payable
on a Floating Rate
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Note is referred to herein as an "Interest Payment
Date."
Interest Reset The rate of interest on each Floating Rate Note will
Dates: be reset daily, weekly, monthly, quarterly,
semi-annually or annually (each an "Interest Reset
Date"), as specified in the applicable Pricing
Supplement. Except as set forth in the applicable
Pricing Supplement, the Interest Reset Date will be,
in the case of Floating Rate Notes which reset:
daily, each Business Day; weekly (other than Treasury
Rate Notes), the Wednesday of each week (in the case
of weekly reset Treasury Rate Notes, the Tuesday of
each week); monthly (other than Eleventh District
Cost of Funds Rate Notes), the third Wednesday of
each month; quarterly, the third Wednesday of March,
June, September and December of each year;
semiannually, the third Wednesday of two months of
each year specified in the applicable Pricing
Supplement; and annually, the third Wednesday of the
month of each year specified in the applicable
Pricing Supplement. For monthly reset Eleventh
District Cost of Funds Rate Notes, the Interest Reset
Dates will be the first calendar day of each month.
Notwithstanding the two immediately preceding
sentences, (i) the interest rate in effect from the
date of original issue to the first Interest Reset
Date with respect to a Floating Rate Note will be the
Initial Interest Rate set forth in the applicable
Pricing Supplement and (ii) unless otherwise
specified in the applicable Pricing Supplement, the
interest rate in effect for the 10 calendar days
immediately prior to maturity, redemption or
repayment, if applicable, will be that in effect on
the tenth calendar day preceding such maturity,
redemption or repayment. If any Interest Reset Date
for any Floating Rate Note would otherwise be a day
that is not a Business Day for such Floating Rate
Note, the Interest Reset Date will be postponed to
the next day that is a Business Day for such Floating
Rate Note, except that in the case of a LIBOR Note,
if such next succeeding Business Day is in the next
succeeding calendar month, such Interest Reset Date
will be the immediately preceding Business Day.
Interest Determination The interest rate applicable to an Interest Reset
Dates: Period that commences on the related Interest Reset
Date will be the rate determined as of the applicable
interest determination date ("Interest Determination
Date") on or prior to the Calculation Date. Except as
set forth in the applicable Pricing Supplement, the
Interest Determination Date pertaining to an Interest
Reset Date for a Commercial Paper Rate Note (the
"Commercial Paper Interest Determination Date"), a
Federal Funds Note (the "Federal Funds Interest
Determination Date"), a CD Rate Note (the "CD
Interest Determination Date"), a CMT Rate Note (the
"CMT Interest Determination Date") or a Prime Rate
Note (the "Prime Interest Determination Date") will
be the second Business Day preceding the
D-24
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applicable Interest Reset Date. The Interest
Determination Date for an Eleventh District Cost of
Funds Rate Note will be the last working day of the
month immediately preceding the applicable Interest
Reset Date on which the Federal Home Loan Bank of San
Francisco publishes the "FHLB Index" (as defined
below). The Interest Determination Date pertaining to
an Interest Reset Date for a LIBOR Note (the "LIBOR
Interest Determination Date") will be the second
London Business Day immediately preceding such
Interest Reset Date. The Interest Determination Date
pertaining to an Interest Reset Date for a Treasury
Rate Note (the "Treasury Interest Determination
Date") will be the day in the week in which the
applicable Interest Reset Date falls on which
Treasury bills would normally be auctioned. Treasury
bills are normally sold at auction on Monday of each
week, unless that day is a legal holiday, in which
case the auction is usually held on the following
Tuesday, except that such auction may be held on the
preceding Friday. If, as the result of a legal
holiday, an auction is so held on the preceding
Friday, such Friday will be the Treasury Interest
Determination Date pertaining to the Interest Reset
Date occurring in the next succeeding week. If an
auction date for Treasury bills falls on any Interest
Reset Date for a Treasury Rate Note, then such
Interest Reset Date shall instead be the first
Business Day immediately following such auction date.
The Interest Determination Date pertaining to a
Floating Rate Note the interest rate of which is
determined by reference to more than one Interest
Rate Basis will be the second Business Day prior to
the applicable Interest Reset Date for such Floating
Rate Note on which each such Interest Rate Basis is
determinable.
Calculation Dates: The Calculation Date, where applicable, pertaining to
any Interest Determination Date will be the earlier
of (i) the tenth calendar day after such Interest
Determination Date or if any such day is not a
Business Day, the next succeeding Business Day and
(ii) the Business Day preceding the applicable
Interest Payment Date, the stated maturity, the
redemption date (if any) or the optional repayment
date (if any), as the case may be.
All percentages resulting from any calculation on
Floating Rate Notes will be rounded to the nearest
one hundred-thousandth of a percentage point, with
five one millionths of a percentage point rounded
upwards (e.g., 9.876545% (or .09876545), would be
rounded to 9.87655% (or .0987655), and all dollar
amounts used in or resulting from such calculation on
Floating Rate Notes will be rounded to the nearest
cent or, in the case of Notes denominated other than
in United States dollars, the nearest unit (with
one-half cent or unit being rounded upward).
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62
Commercial Paper Rate Unless otherwise indicated in the applicable Pricing
Notes: Supplement, the "Commercial Paper Rate" for each such
Interest Reset Date will be determined as of the
Commercial Paper Interest Determination Date and will
be the Money Market Yield (as defined below) on such
date of the rate for commercial paper having the
Index Maturity specified in the applicable Pricing
Supplement as published by the Board of Governors of
the Federal Reserve System in "Statistical Release
H.15(519), Selected Interest Rates" or any successor
publication selected by the Calculation Agent
("H.15(519)") under the heading "Commercial
Paper--Nonfinancial." If such rate is not published
prior to 3:00 p.m., New York City time, on the
Calculation Date pertaining to such Commercial Paper
Interest Determination Date, then the Commercial
Paper Rate shall be the Money Market Yield on such
Commercial Paper Interest Determination Date of the
rate for commercial paper of the specified Index
Maturity as published in the daily update of
H.15(519) available through the world wide web site
of the Board of Governors of the Federal Reserve
System at ▇▇▇▇://▇▇▇.▇▇▇.▇▇▇.▇▇▇.▇▇/▇▇▇▇▇▇▇▇/▇▇▇/
update (the "H.15 Daily Update") under the heading
"Commercial Paper--Nonfinancial" (with an Index
Maturity of one month or three months being deemed to
be equivalent to an Index Maturity of 30 days or 90
days respectively), or any other recognized
electronic source used for the purpose of displaying
the applicable rate selected by the Calculation Agent
under the heading "Commercial Paper." If by 3:00
p.m., New York City time, on such Calculation Date
such rate is not published in either H.15(519) or
H.15 Daily Update, the Commercial Paper Rate for that
Commercial Paper Interest Determination Date shall be
calculated by the Calculation Agent and shall be the
Money Market Yield of the arithmetic mean of the
offered rates as of 11:00 a.m., New York City time,
on that Commercial Paper Interest Determination Date,
of three leading dealers of commercial paper in The
City of New York selected by the Calculation Agent
(after consultation with the Company) for commercial
paper of the specified Index Maturity placed for an
industrial issuer whose bond rating is "AA," or the
equivalent, from a nationally recognized securities
rating agency; provided, however, that if the dealers
selected as described above by the Calculation Agent
are not quoting as mentioned in this sentence, the
Commercial Paper Rate with respect to such Commercial
Paper Interest Determination Date will be the
Commercial Paper Rate in effect on such Commercial
Paper Interest Determination Date or, if no such rate
is in effect, the interest rate on the Commercial
Paper Rate Notes will be the Initial Interest Rate.
Money Market Yield: The term "Money Market Yield" means a yield
(expressed as a percentage rounded upwards, if
necessary, to the next higher one
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63
hundred-thousandth of a percentage point) calculated
in accordance with the following formula:
Money Market Yield = D x 360 x 100
---------
360-(DxM)
where "D" means the applicable per annum rate for
commercial paper quoted on a bank discount basis and
expressed as a decimal; and "M" refers to the actual
number of days in the interest period for which
interest is being calculated.
LIBOR Notes: Each LIBOR Note will bear interest at the interest
rate (calculated with reference to LIBOR and, if any,
the Spread and/or Spread Multiplier) specified in
such LIBOR Note and in the applicable Pricing
Supplement.
Unless otherwise indicated in the applicable Pricing
Supplement, "LIBOR" will he determined by the
Calculation Agent in accordance with the following
provisions:
(i) With respect to a LIBOR Interest Determination
Date, LIBOR will be, as specified in the applicable
Pricing Supplement, either:
(a) the arithmetic mean of the offered
rates for deposits in U.S. dollars
having the Index Maturity
designated in the applicable
Pricing Supplement, commencing on
the second day on which dealings in
deposits in U.S. dollars are
transacted in the London interbank
market ("London Business Day")
immediately following that LIBOR
Interest Determination Date, that
appear on the Reuters Screen LIBO
Page an of 11:00 a.m., London time,
on that LIBOR Interest
Determination Date, if at least two
such offered rates appear on the
Reuters Screen LIBO Page ("LIBOR
Reuters"), or
(b) the rate for deposits in U.S.
dollars having the Index Maturity
designated in the applicable
Pricing Supplement, commencing on
the second London Business Day
immediately following such LIBOR
Interest Determination Date, that
appears on Telerate Page 3750 as of
11:00 a.m., London Time, on that
LIBOR Interest Determination Date
("LIBOR Telerate"). "Reuters Screen
LIBO Page" means the display
designated as page "LIBO" on the
Reuters Monitor Money Rates Service
(or such other page as may replace
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the LIBO page on that service for the
purpose of displaying London interbank
offered rates of major banks). "Telerate
Page 3750" means the display designated as
page "3750" on the Bridge Telerate Inc. (or
such other page as may replace the 3750 page
on that service or such other service or
services as may be nominated by the British
Bankers' Association for the purpose of
displaying London interbank offered rates
for U.S. dollar deposits). If neither LIBOR
Reuters nor LIBOR Telerate is specified in
the applicable Pricing Supplement, LIBOR
will be determined as if LIBOR Telerate had
been specified. If fewer than two offered
rates appear on the Reuters Screen LIBO
Page, or if no rate appears on Telerate Page
3750, as applicable, LIBOR in respect of
that LIBOR Interest Determination Date will
be determined as if the parties had
specified the rate described in (ii) below.
(ii) With respect to a LIBOR Interest Determination
Date on which fewer than two offered rates appear on
the Reuters Screen LIBO Page as specified in (i) (a)
above, or on which no rate appears on Telerate Page
3750 as specified in (i) (b) above, as applicable,
LIBOR will be determined on the basis of the rates at
which deposits in U.S. dollars having the Index
Maturity designated in the applicable Pricing
Supplement are offered at approximately 11:00 a.m.,
London time, on such LIBOR Interest Determination
Date by four major banks in the London interbank
market selected by the Calculation Agent (after
consultation with the Company, collectively, the
"Reference Banks") to prime banks in the London
interbank market, commencing on the second London
Business Day immediately following such LIBOR
Interest Determination Date and in a principal amount
of not less than $1,000,000 that is representative
for a single transaction in such market at such time.
The Calculation Agent will request the principal
London office of each of the Reference Banks to
provide a quotation of its rate. If at least two such
quotations are provided, LIBOR for such LIBOR
Interest Determination Date will be the arithmetic
mean of such quotations. If fewer than two quotations
are provided, LIBOR for such LIBOR Interest
Determination Date will be the arithmetic mean of the
rates quoted at approximately 11:00 a.m., New York
City time, on such LIBOR Interest Determination Date
by three major banks in The City of New York selected
by the Calculation Agent (after consultation with the
Company) for loans in U.S. dollars to leading
European banks having the Index Maturity designated
in the applicable Pricing Supplement, commencing on
the second London Business Day immediately
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following such LIBOR Interest Determination Date and
in a principal amount equal to an amount of not less
than $1,000,000 that is representative for a single
transaction in such market at such time; provided,
however, that if the banks selected as aforesaid by
the Calculation Agent are not quoting as mentioned in
this sentence, LIBOR with respect to such LIBOR
Interest Determination Date will be the interest rate
otherwise in effect on such LIBOR Interest
Determination Date or, if no such rate is in effect,
the interest rate on LIBOR Rate Notes will be the
Initial Interest Rate.
CD Rate Notes: Unless otherwise indicated in the applicable Pricing
Supplement, the "CD Rate" for each such Interest
Reset Date will be determined as of the CD Rate
Interest Determination Date and will be the rate on
such date for negotiable certificates of deposit
having the Index Maturity designated in the
applicable Pricing Supplement as published in
H.15(519) under the heading "CDs (Secondary Market)"
or any successor publication or, if not so published
by 3:00 p.m., New York City time, on the Calculation
Date pertaining to such CD Rate Interest
Determination Date, the CD Rate will be the rate on
such CD Rate Interest Determination Date for
negotiable certificates of deposit of the Index
Maturity designated in the applicable Pricing
Supplement as published in H.15 Daily Update under
the heading "CDs (Secondary Market)." If such rate is
not published in H.15 (519) or the H.15 Daily Update
by 3:00 p.m., New York City time, on such Calculation
Date, then the CD Rate on such CD Rate Interest
Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean of
the secondary market offered rates as of 10:00 a.m.,
New York City time, on such CD Rate Interest
Determination Date, of three leading nonbank dealers
in negotiable U.S. dollar certificates of deposit in
The City of New York (which may include one or more
Agents or their affiliates) selected by the
Calculation Agent for negotiable certificates of
deposit of major United States money market banks (in
the market for negotiable certificates of deposit)
with a remaining maturity closest to the Index
Maturity designated in the Pricing Supplement in an
amount that is representative for a single
transaction in the relevant market at the time;
provided, however, that if the dealers selected an
aforesaid by the Calculation Agent are not quoting an
mentioned in this sentence, the CD Rate with respect
to such CD Rate Interest Determination Date will be
the CD Rate in effect on such CD Rate Interest
Determination Date or, if no such rate is in effect,
the interest rate on CD Rate Notes will be the
Initial Interest Rate.
Treasury Rate Notes: Unless otherwise indicated in the applicable Pricing
Supplement, the "Treasury Rate" for each such
Interest Reset Date will be determined
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as of the Treasury Interest Determination Date and
will be the rate applicable to the most recent
auction of direct obligations of the United States
("Treasury bills") having the Index Maturity
specified in the applicable Pricing Supplement under
the caption "INVESTMENT RATE" on the display on
Bridge Telerate, Inc. (or any successor service) on
page 56 or 57 (or any other page as may replace page
56 or page 57 on that service) or, if not so
published by 3:00 p.m., New York City time, on the
Calculation Date pertaining to such Treasury Interest
Determination Date, the Bond Equivalent Yield, as
defined below, of the rate for the applicable
Treasury Bills as published in H.15 Daily Update, or
other recognized electronic source used for the
purpose of displaying the applicable rate, under the
caption "U.S. Government Securities/Treasury
Bills/Auction High," or, if not so published by 3:00
p.m., New York City time, on the Calculation Date
pertaining to such Treasury Interest Determination
Date, the Bond Equivalent Yield of the auction rate
of the applicable Treasury Bills announced by the
United States Department of the Treasury, or if not
announced by the States Department of the Treasury,
or if the auction is not held, the Bond Equivalent
Yield of the rate on such date of the applicable
Treasury Bills published in H.15(519) under the
caption "U.S. Government Securities/Treasury
Bills/Secondary Market." If on the Calculation Date
pertaining to such Treasury Interest Determination
Date, such rate for such period is not published by
3:00 p.m., New York City time, then the rate will be
calculated by the Calculation Agent as the Bond
Equivalent Yield of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30
p.m., New York City time, on such Treasury Interest
Determination Date, of three leading primary United
States government securities dealers, selected by the
Calculation Agent (after consultation with the
Company), for the issue of Treasury bills with a
remaining maturity closest to the applicable Index
Maturity; provided, however, that if the dealers
selected as aforesaid by the Calculation Agent are
not quoting as mentioned in this sentence, the
Treasury Rate with respect to such Treasury Interest
Determination Date will be the Treasury Rate in
effect on such Treasury Rate Determination Date or,
if no such rate is in effect, the interest rate on
Treasury Rate Notes will be the Initial Interest
Rate.
"Bond Equivalent Yield" means a yield calculated in
accordance with the following formula and expressed
as a percentage:
Bond Equivalent Yield = D x N x 100
------------
360-(▇-▇)
where "D" refers to the applicable per annum rate for
Treasury Bills
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quoted on a bank discount basis and expressed as a
decimal, "N" refers to 365 or 366, as the case may
be, and "M" refers to the actual number of days in
the interest period for which interest is being
calculated.
CMT Rate Notes: Unless otherwise specified in the applicable Pricing
Supplement, "CMT Rate" means, for any CMT Rate
Interest Determination Date, the rate displayed on
the Designated CMT Telerate Page under the caption
"...Treasury Constant Maturities...Federal Reserve
Board Release H.15...Mondays Approximately 3:45
p.m.," under the column for the Designated CMT
Maturity Index for (i) if the Designated CMT Telerate
Page is 7051, the rate on such CMT Rate Interest
Determination Date and (ii) if the Designated CMT
Telerate Page is 7052, the week or the month, as
applicable, ended immediately preceding the week in
which the related CMT Rate Interest Determination
Date occurs. If that rate is no longer displayed on
the relevant page or is not displayed by 3:00 p.m.,
New York City time, on the related Calculation Date,
then the CMT Rate for such CMT Rate Interest
Determination Date will be such treasury constant
maturity rate for the Designated CMT Maturity Index
as published in the relevant H.15 (519). If that rate
is no longer published or is not published by 3:00
p.m., New York City time, on the related Calculation
Date, then the CMT Rate on such CMT Rate Interest
Determination Date will be that treasury constant
maturity rate for the Designated CMT Maturity Index
(or other United States Treasury Rate for the
Designated CMT Maturity Index) for the CMT Rate
Interest Determination Date with respect to that
Interest Reset Date as may then be published by
either the Board of Governors of the Federal Reserve
System or the United States Department of the
Treasury that the Calculation Agent determines to be
comparable to the rate formerly displayed on the
Designated CMT Telerate Page and published in the
relevant H.15 (519).
If such information is not provided by 3:00 p.m., New
York City time, on the related Calculation Date, then
the CMT Rate on the CMT Rate Interest Determination
Date will be calculated by the Calculation Agent and
will be a yield to maturity, based on the arithmetic
mean of the secondary market closing offer side
prices as of approximately 3:30 p.m., New York City
time, on such CMT Rate Interest Determination Date
reported, according to the written records by three
leading primary United States government securities
dealers (each, a "Reference Dealer") in The City of
New York (which may include any of the Agents or
their affiliates selected by the Calculation Agent
(from five such Reference Dealers selected by the
Calculation Agent and eliminating the highest
quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event
of equality, one of
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the lowest), for the most recently issued direct
noncallable fixed rate obligations of the United
States ("Treasury Notes") with an original maturity
of approximately the Designated CMT Maturity Index
and a remaining term to maturity of not less than
such Designated CMT Maturity Index minus one year. If
the Calculation Agent is unable to obtain three such
Treasury Note quotations, the CMT Rate for such CMT
Rate Interest Determination Date will be calculated
by the Calculation Agent (after consultation with the
Company) and will be a yield to maturity based on the
arithmetic mean of the secondary market offer side
prices as of approximately 3:30 p.m., New York City
time, on such CMT Rate Interest Determination Date of
three Reference Dealers in The City of New York (from
five such Reference Dealers selected by the
Calculation Agent and eliminating the highest
quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event
of equality, one of the lowest)), for Treasury Notes
with an original maturity of the number of years that
is the next highest to the Designated CMT Maturity
Index and a remaining term to maturity closes to the
Designated CMT Maturity Index and in an amount of at
least $100 million. If three or four (and not five)
of such Reference Dealers are quoting as described
above, then the CMT Rate will be based on the
arithmetic mean of the offer prices obtained and
neither the highest nor the lowest of such quotes
will be eliminated; provided, however, that if fewer
than three Reference Dealers to selected by the
Calculation Agent are quoting as mentioned herein,
the CMT Rate determined as of such CMT Rate Interest
Determination Date will be the CMT Rate in effect on
such CMT Rate Interest Determination Date or, if no
such rate is in effect, the interest rate on CMT Rate
Notes will be the Initial Interest Rate. If two
Treasury Notes with an original maturity as described
in the second preceding sentence have remaining terms
to maturity equally close to the Designated CMT
Maturity Index, the Calculation Agent will use the
quotations for the Treasury Note with the shorter
remaining term to maturity.
The term "Designated CMT Telerate Page" means the
display on Dow ▇▇▇▇▇ Markets Limited on the page
specified in the applicable Pricing Supplement (or
any other page as may replace such page on that
service for the purpose of displaying Treasury
Constant Maturities as reported in H.15 (519)) for
the purpose of displaying Treasury Constant
Maturities as reported in H.15 (519). If no such page
is specified in the applicable pricing supplement,
the Designated CMT Telerate Page will be 7052 for the
most recent week.
The term "Designated CMT Maturity Index" means the
original period to maturity of the U.S. Treasury
securities (either 1, 2, 3, 5, 7, 10, 20 or
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30 years) specified in the applicable Pricing
Supplement with respect to which the CMT Rate will be
calculated. If no such maturity is specified in the
applicable Pricing Supplement, the Designated CMT
Maturity Index will be two years.
Eleventh District Cost of Unless otherwise specified in the applicable Pricing
Funds Rate Notes: Supplement, "Eleventh District Cost of Funds Rate"
means for any Eleventh District Cost of Funds Rate
Interest Determination the rate of interest equal to
the monthly weighted average cost of funds for the
calendar month immediately preceding the month in
which such Eleventh District Cost of Funds Rate
Interest Determination Date falls, as set forth under
the caption "11th District" on Telerate Page 7058 as
of 11:00 a.m., San Francisco time, on such Eleventh
District Cost of Funds Rate Interest Determination
Date. If such rate does not appear on Telerate Page
7058 on any related Eleventh District Cost of Funds
Rate Interest Determination Date, then the Eleventh
District Cost of Funds Rate for such Eleventh
District Cost of Funds Rate Interest Determination
Date will be the monthly weighted average costs of
funds paid by member institutions of the Eleventh
Federal Home Loan Bank District that was most
recently announced (the "FHLB Index") by the Federal
Home Loan Bank of San Francisco as such cost of funds
for the calendar month immediately preceding the date
of such announcement. If the Federal Home Loan Bank
of San Francisco fails to announce such rate for the
calendar month immediately preceding such Eleventh
District Cost of Funds Rate Interest Determination
Date, then the Eleventh District Cost of Funds Rate
determined as of such Eleventh District Cost of Funds
Rate Interest Determination Date will be the Eleventh
District Cost of Funds Rate in effect on such
Eleventh District Cost of Funds Rate Interest
Determination Date or, if no such rate is in effect,
the interest rate on Eleventh District Cost of Funds
Rate Notes will be the Initial Interest Rate.
Federal Funds Rate: Unless otherwise indicated in the applicable Pricing
Supplement, "Federal Funds Rate" means, for any
Federal Funds Interest Determination Date, the rate
of interest on such date for Federal Funds as such
rate shall be published in H.15(519) under the
caption "Federal Funds (Effective)", as such rate is
displayed on Telerate Page 120 (or any other page as
may replace such page on such service) ("Telerate
Page 120"), or, if not so published by 3:00 p.m., New
York City time, on the Calculation Date pertaining to
such Federal Funds Interest Determination Date, the
Federal Funds Rate will be the rate on such Federal
Funds Interest Determination Date as published in
H.15 Daily Update, or other electronic source used to
display the applicable rate, under the caption
"Federal Funds/Effective Rate." If such rate does not
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appear on Telerate Page 120 or is not published in
H.15(519) or H.15 Daily Update (or other electronic
source) by 3:00 p.m., New York City time, on such
Calculation Date, then the Federal Funds Rate on such
Federal Funds Interest Determination Date will be
calculated by the Calculation Agent (after
consultation with the Company) and will be the
average of the rates as of 9:00 a.m., New York City
time, on such Federal Funds Interest Determination
Date for the last transaction in overnight Federal
Funds arranged by three leading brokers of Federal
Funds transactions in The City of New York selected
by the Calculation Agent (after consultation with the
Company); provided, however, that if fewer than three
brokers selected as described above by the
Calculation Agent are quoting as mentioned in this
sentence, the Federal Funds Rate with respect to such
Federal Funds Interest Determination Date will be the
Federal Funds Rate in effect on such Federal Funds
Interest Determination Date or, if no such rate is in
effect, the interest rate on Federal Funds Notes will
be the Initial Interest Rate.
Prime Rate Notes: Unless otherwise indicated in the applicable Pricing
Supplement, "Prime Rate" means, for any Prime
Interest Determination Date, the rate published in
H.15(519) for such date opposite the caption "Bank
Prime Loan", or, if not so published by 3:00 p.m.,
New York City time, on the Calculation Date
pertaining to such Prime Interest Determination Date,
the Prime Rate will be calculated by the Calculation
Agent and will be the arithmetic mean of the rates of
interest publicly announced by each bank that appears
on the Reuters Screen US Prime 1 as such bank's prime
rate or base lending rate as in effect for such Prime
Interest Determination Date as quoted on the Reuters
Screen US Prime 1 on such Prime Interest
Determination Date, or, if fewer than four such rates
appear on the Reuters Screen US Prime 1 for such
Prime Interest Determination Date, the rate shall be
the arithmetic mean of the prime rates quoted on the
basis of the actual number of days in the year
divided by 360 as of the close of business on such
Prime Interest Determination Date by three major
money center banks in The City of New York selected
by the Calculation Agent (after consultation with the
Company) from which quotations are requested;
provided, however, that if the Prime Rate is not
published in H.15(519) or H.15 Daily Update and the
banks selected as aforesaid are not quoting as
mentioned in this sentence, the Prime Rate with
respect to such Prime Interest Determination Date
will be the interest rate otherwise in effect on such
Prime Interest Determination Date or, if no such rate
is in effect, the interest rate on Prime Rate Notes
will be the Initial Interest Rate.
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The term "Reuters Screen US Prime 1" means the
display designated as page "US Prime" on the Reuters
Monitor Money Rates Service (or such other page as
may replace page US Prime on that service for the
purpose of displaying prime rates or base lending
rates of major United States banks).
Record Dates: Interest payments on Floating Rate Notes will be made
on each Interest Payment Date to the registered
owners at the close of business on the date 15
calendar days (whether or not a Business Day) prior
to such Interest Payment Date (the "Regular Record
Date"). Unless otherwise specified in the applicable
Pricing Supplement, if a Note is issued between a
Regular Record Date and an Interest Payment Date, the
first payment of Interest will be made on the
Interest Payment Date following the next succeeding
Regular Record Date to the registered holder on such
next succeeding Regular Record Date. Interest payable
at Maturity or upon redemption or repayment (whether
or not such maturity, redemption or repayment date is
an Interest Payment Date) will be paid to the same
person to whom principal is payable. Interest will
begin to accrue on the original issue date of a Note
for the first interest period and from and including
the most recent Interest Payment Date to which
interest has been paid for all subsequent interest
periods. Each payment of interest shall include
interest accrued from and including the most recent
date in respect of which interest has been paid or
duly provided for, or from and including the date of
original issue, through the day before, but
excluding, the Interest Payment Date (the maturity
date, the redemption date or the repayment date, as
applicable) (an "Interest Period"). In the case of
Floating Rate Notes on which the interest rate is
reset daily or weekly, the interest payments shall
include interest accrued from but excluding the most
recent Regular Record Date in respect of which
interest has been paid or duly provided for, or from
and including the date of issue, to and including the
Regular Record Date next preceding the applicable
Interest Payment Date, except that the interest
payment at the maturity date, redemption date or
repayment date will include interest accrued to, but
excluding, such date.
Accrued Interest: Unless otherwise indicated in the applicable Pricing
Supplement, interest payments for Floating Rate Notes
will include interest accrued from and including the
most recent date in respect of which interest has
been paid or duly provided for, or from and including
the date of issuance to but excluding the next
Interest Payment Date (or maturity date, redemption
date or repayment date). Accrued interest from the
date of original issue or from the last date to which
interest has been paid is calculated by multiplying
the face amount of a Note by an
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accrued interest factor. This accrued interest factor
is computed by adding the interest factors calculated
for each day in the period for which accrued interest
is being calculated. The interest factor for each
such day is computed by dividing the interest rate
applicable to such date by 360, in the case of
Commercial Paper Rate Notes, LIBOR Notes, Federal
Funds Notes, CD Rate Notes, Eleventh District Cost of
Funds Rate Notes and Prime Rate Notes, or by the
actual number of days in the year, in the case of CMT
Rate Notes or Treasury Rate Notes.
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