EXHIBIT 1.1
[Medium-Term Notes, Series I]
▇▇▇▇▇▇ ▇▇▇▇▇▇ Corporation
$1,325,000,000
Medium-Term Notes, Series I
DISTRIBUTION AGREEMENT
April 15, 1999
▇▇▇▇▇▇▇, Sachs & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
World Financial Center, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
Seven ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
▇▇▇▇▇▇ ▇▇▇▇▇▇ Corporation, a Minnesota corporation (the "Company"),
proposes to issue and sell from time to time its Medium-Term Notes, Series I
(the "Securities") in an aggregate amount up to $1,325,000,000 and agrees with
each of you (individually, an "Agent", and collectively, the "Agents") as set
forth in this Agreement.
Subject to the terms and conditions stated herein and to the reservation by
the Company of the right to sell Securities directly on its own behalf or
indirectly through other agents, the Company hereby (i) appoints each Agent as
an agent of the Company for the purpose of soliciting and receiving offers to
purchase Securities from the Company pursuant to Section 2(a) hereof and (ii)
agrees that, except as otherwise contemplated herein, whenever it determines to
sell Securities directly to any Agent as principal, it will enter into a
separate agreement (each a "Terms Agreement"), substantially in the form of
Annex I hereto, relating to such sale in accordance with Section 2(b) hereof.
This Distribution Agreement
shall not be construed to create either an obligation on the part of the Company
to sell any Securities or an obligation of any of the Agents to purchase
Securities as principal.
The Securities will be issued pursuant to the Indenture, dated as of
October 3, 1996, as amended or supplemented from time to time (the "Indenture"),
between the Company and The First National Bank of Chicago, as Trustee (the
"Trustee"). The Securities shall have the maturity ranges, interest rates and
other terms set forth in the Prospectus referred to below as it may be amended
or supplemented from time to time. The Securities will be issued, and the terms
thereof established, from time to time by the Company in accordance with the
Indenture.
1. The Company represents and warrants to, and agrees with, each Agent
that:
(a) Two registration statements on Form S-3 (File Nos. 333-65347 and
33-42364) in respect of the Securities have been filed with the Securities and
Exchange Commission (the "Commission"); such registration statements and any
post-effective amendment thereto, each in the form heretofore delivered or to be
delivered to such Agent, excluding exhibits to such registration statements, but
including all documents incorporated by reference in the prospectus included in
the latest registration statement, have been declared effective by the
Commission in such form; no other document with respect to such registration
statements or document incorporated by reference therein has heretofore been
filed or transmitted for filing with the Commission (other than the prospectuses
filed pursuant to Rule 424(b) of the rules and regulations of the Commission
under the Securities Act of 1933, as amended (the "Act") each in the form
heretofore delivered to the Agents); and no stop order suspending the
effectiveness of any such registration statements has been issued and no
proceeding for that purpose has been initiated or threatened by the Commission
(any preliminary prospectus included in such registration statements or filed
with the Commission pursuant to Rule 424(a) of the rules and regulations of the
Commission under the Act, are hereinafter called a "Preliminary Prospectus"; the
various parts of such registration statements, including all exhibits thereto
and the documents incorporated by reference in the prospectus contained in the
registration statements at the time such part of the registration statement
became effective but excluding Form T-1, each as amended at the time such part
of the registration statements became effective, is hereinafter collectively
called the "Registration Statement"; the prospectus (including, if applicable,
any prospectus supplement) relating to the Securities, in the form in which it
has most recently been filed, or transmitted for filing, with the Commission on
or prior to the date of this Agreement, is hereinafter called the "Prospectus";
any reference herein to any Preliminary Prospectus or the Prospectus shall be
deemed to refer to the documents incorporated by reference therein pursuant to
the applicable form under the Act; any reference to any amendment or supplement
to any Preliminary Prospectus or the Prospectus, including any supplement to the
Prospectus that sets forth only the terms of a particular issue of the
Securities (a "Pricing Supplement"), shall be deemed to include, without
limitation, any documents filed after the date of such Preliminary Prospectus or
Prospectus, as the case may be, under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and incorporated in such Preliminary Prospectus or
Prospectus by reference; any reference to any amendment to the
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Registration Statement shall be deemed to refer to and include any annual report
of the Company filed pursuant to Section 13(a) or 15(d) of the Exchange Act
after the effective date of the Registration Statement that is incorporated by
reference in the Registration Statement; and any reference to the Prospectus as
amended or supplemented shall be deemed to refer to and include the Prospectus
as amended or supplemented (including by the applicable Pricing Supplement filed
in accordance with Section 4(a) hereof) in relation to Securities to be sold
pursuant to this Agreement, in the form filed or transmitted for filing with the
Commission pursuant to Rule 424(b) under the Act and in accordance with Section
4(a) hereof, including any documents incorporated by reference therein as of the
date of such filing);
(b) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of the Commission
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 Prospectus, or any
further amendment or supplement thereto, when such documents become effective or
are filed with the Commission, as the case may be, will conform in all material
respects to the requirements of the Act or the Exchange Act, as applicable, and
the rules and regulations of the Commission 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
statement or omission 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
Securities;
(c) The Registration Statement, as of the applicable effective date,
and the Prospectus as of the applicable filing date, conformed, and any further
amendments or supplements to the Registration Statement or the Prospectus, when
they become effective or are filed with the Commission, as the case may be, will
conform, in all material respects to the requirements of the Act and the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the rules and
regulations of the Commission thereunder, and did not and will not, as of the
applicable effective date of the Registration Statement and any amendment
thereto and as of the applicable filing date of the Prospectus or any amendment
or supplement thereto, 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 statement or omission 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 Securities;
(d) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any material loss or interference
with its business from fire, explosion, flood or
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other calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since the respective dates as of which
information is given in the Registration Statement and in the Prospectus, there
has not been any change in the capital stock (other than issuances of common
stock pursuant to stock option and other compensatory plans and arrangements
adopted by the Board of Directors of the Company, issuances of common stock upon
conversions of convertible preferred stock and repurchases by the Company under
its publicly announced common stock buy back program authorized by the Company's
Board of Directors on January 13, 1999) or any increases in the long-term debt
(excluding capital leases and commercial paper backed by long-term credit
facilities) of the Company or any of its subsidiaries or any material adverse
change, or any development involving a prospective material adverse change, in
or affecting the general affairs, management, financial position, shareholders'
investment or results of operations of the Company and its subsidiaries,
otherwise than as set forth or contemplated in the Prospectus;
(e) The Company and its subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all personal
property owned by them, in each case free and clear of all liens, encumbrances
and defects except such as are described in the Prospectus or such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and its subsidiaries;
(f) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Minnesota, with
power and authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified as a
foreign corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction where, in light of the nature of the
business transacted or the property owned by it, such qualification is necessary
and the failure so to qualify might permanently impair title to property
material to its operations or its right to enforce a material contract against
others or expose it to substantial liabilities in such jurisdiction; and each
subsidiary of the Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of its jurisdiction of
incorporation and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each other
jurisdiction where, in light of the nature of the business transacted or the
property owned by it, such qualification is necessary and the failure so to
qualify might permanently impair title to property material to its operations or
its right to enforce a material contract against others or expose it to
substantial liabilities in such jurisdiction;
(g) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and issued and are fully paid and
non-assessable; and all of the issued
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shares of capital stock of each subsidiary of the Company have been duly and
validly authorized and issued, are fully paid and non-assessable, and (except
for directors' qualifying shares, certain outstanding shares of non-voting
common stock of The Associated Merchandising Corporation and certain outstanding
shares of preferred stock of Dayton Development Company) are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances, equities
or claims;
(h) The establishment of the Medium-Term Note Program, Series I, of
the Company has been duly authorized. When the terms of a particular issuance
of the Securities have been established in accordance with the Indenture, and
such Securities are issued and delivered pursuant to this Agreement and any
Terms Agreement, such Securities will have been duly authorized, 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 authorized, executed and delivered and
constitutes a valid and legally binding instrument, enforceable in accordance
with its terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and the Indenture conforms
and the Securities of any particular issuance of Securities will conform to the
descriptions thereof contained in the Prospectus as amended or supplemented to
relate to such issuance of Securities;
(i) The issue and sale of the Securities, the compliance by the
Company with all of the provisions of the Securities, the Indenture, this
Agreement and any Terms Agreement, and the consummation of the transactions
herein and therein contemplated will not conflict with or 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, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of its subsidiaries is
subject, nor will such action result in any violation of the provisions of the
Restated Articles of Incorporation or the By-Laws of the Company or any statute
or any order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any of their
properties; and no consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body is required
for the solicitation of offers to purchase Securities, the issue and sale of the
Securities or the consummation by the Company of the other transactions
contemplated by this Agreement, any Terms Agreement or the Indenture, except
such as have been obtained, or will have been obtained prior to the Commencement
Date (as defined in Section 3 hereof), under the Act or the Trust Indenture Act
and such consents, approvals, authorizations, registrations or qualifications as
may be required under state securities or Blue Sky laws in connection with the
solicitation by the Agents of offers to purchase the Securities from the Company
and with purchases of the Securities by the Agents as principals, as the case
may be, in each case in the manner conteplated hereby;
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(j) There are no legal or governmental proceedings pending to which
the Company or any of its subsidiaries is a party or to which any property of
the Company or any of its subsidiaries is the subject, other than as set forth
in the Prospectus and other than litigation or governmental proceedings which
individually and in the aggregate do not have a material adverse effect on the
financial position, shareholders' investment or results of operations of the
Company and its subsidiaries; and, to the best of the Company's knowledge, no
such proceedings are threatened or contemplated by governmental authorities or
threatened by others;
(k) Ernst & Young LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder;
(l) The discussion of the Year 2000 Problem in the Prospectus is, as
of the applicable filing date, and will be, as of the date of any amendment or
supplement thereto, accurate and complete in all material respects. The "Year
2000 Problem" as used herein means any significant risk that computer hardware
or software used in the receipt, transmission, processing, manipulation,
storage, retrieval, retransmission or other utilization of data or the operation
of mechanical or electrical systems of any kind will not, in the case of dates
or time periods occurring after December 31, 1999, function at least as
effectively as in the case of dates or time periods occurring prior to
January 1, 2000.
2. (a) On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, each of the
Agents hereby severally and not jointly agrees to use its reasonable efforts, as
agent of the Company, to solicit and receive offers to purchase the Securities
from the Company upon the terms and conditions set forth in the Prospectus as
amended or supplemented from time to time. The Company may from time to time
sell Securities otherwise than through an Agent and may engage another agent
with respect to a specific purchase, provided that the Agents are given notice
of such purchase promptly after it is consummated. The Company reserves the
right to add another agent as a party to this Agreement. The Company also
reserves the right to sell, and may solicit and accept offers to purchase,
Securities directly on its own behalf. In the case of any such sale not
resulting from a solicitation made by any Agent, no commission will be payable
under this Agreement with respect to such sale. These provisions shall not
limit Section 4(f) hereof or any similar provision included in any Terms
Agreement.
Procedural details relating to the issue and delivery of Securities,
the solicitation of offers to purchase Securities and the payment in each case
therefor shall be as set forth in the Administrative Procedure attached hereto
as Annex II as it may be amended from time to time by written agreement between
the Agents and the Company (the "Administrative Procedure"). The provisions of
the Administrative Procedure shall apply to all transactions contemplated
hereunder other than those made pursuant to a Terms Agreement (unless such Terms
Agreement specifically provides that such provisions shall apply). Each Agent
and the Company agree to perform the respective duties and obligations
specifically provided to be performed by each of them in the Administrative
Procedure. The
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Company will furnish to the Trustee a copy of the Administrative Procedure as
from time to time in effect.
The Company reserves the right, in its sole discretion, to instruct
the Agents to suspend at any time, for any period of time or permanently, the
solicitation of offers to purchase the Securities. As soon as practicable, but
in any event not later than one business day in New York City, after receipt of
notice from the Company, the Agents will forthwith suspend solicitation of
offers to purchase Securities from the Company until such time as the Company
has advised the Agents that such solicitation may be resumed. During such
period, the Company shall not be required to comply with the provisions of
Sections 4(h), 4(i), 4(j) and 4(k). Upon advising the Agents that such
solicitation may be resumed, however, the Company shall, upon request of the
Agents (unless the Company has accepted an offer to purchase Securities, in
which case no such request shall be necessary), simultaneously provide the
documents required to be delivered by Sections 4(h), 4(i), 4(j) and 4(k), and
the Agents shall have no obligation to solicit offers to purchase the Securities
until such documents, if so requested, have been received by the Agents. In
addition, any failure by the Company to comply with its obligations hereunder,
including without limitation its obligation to deliver the documents required by
Sections 4(h), 4(i), 4(j) and 4(k), shall automatically terminate the Agents'
obligations hereunder to solicit offers to purchase the Securities hereunder as
agent.
The Company agrees to pay to each Agent (or jointly to two or more of
the Agents if such solicitation is jointly made) a commission, at the time of
settlement of any sale of a Security by the Company as a result of a
solicitation made by such Agent, in an amount equal to the following percentage
of the principal amount of such Security sold:
Commission (percentage of
aggregate principal
Range of Maturities amount of Securities sold)
-----------------------------------------------------------------
From 9 months to less than 1 year .125%
From 1 year to less than 18 months .150%
From 18 months to less than 2 years .200%
From 2 years to less than 3 years .250%
From 3 years to less than 4 years .350%
From 4 years to less than 5 years .450%
From 5 years to less than 6 years .500%
From 6 years to less than 7 years .550%
From 7 years to less than 10 years .600%
From 10 years to less than 15 years .625%
From 15 years to less than 20 years .675%
From 20 years to less than 30 years .700%
30 years and more *
_________
*To be negotiated at the time of sale.
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Each Agent shall communicate to the Company, orally or in writing,
each offer to purchase Securities other than those rejected by such Agent. The
Company shall have the sole right to accept offers to purchase Securities and
may reject any proposed purchase of Securities as a whole or in part. Each
Agent shall have the right, in its discretion reasonably exercised, to reject
any offer received by it to purchase Securities, as a whole or in part, and any
such rejection by such Agent shall not be deemed a breach of its agreements
contained herein.
(b) Each sale of Securities to any Agent as principal shall be made
in accordance with the terms of this Agreement and (unless the Company and such
Agent shall otherwise agree) a Terms Agreement which will provide for the sale
of such Securities to, and the purchase thereof by, such Agent. A Terms
Agreement may also specify certain provisions relating to the reoffering of such
Securities by such Agent. Any Agent's commitment to purchase Securities as
principal pursuant to any Terms Agreement or otherwise 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. Each Terms Agreement shall specify the principal amount of Securities to
be purchased by any Agent pursuant thereto, the price to be paid to the Company
for such Securities, any provisions relating to rights of, and default by,
underwriters acting together with such Agent in the reoffering of the
Securities, and the time, date and place of delivery of and payment for such
Securities. Such Terms Agreement shall also specify the procedural details
relating to the issue and delivery of such Securities and any requirements for
officers' certificates, opinions of counsel and accountants' letters pursuant to
Section 4 hereof. Each Agent proposes to offer Securities purchased by it as
principal for sale at prevailing market prices or prices related thereto at the
time of sale, which may be equal to, greater than or less than the price at
which such Securities are purchased by such Agent from the Company.
For each sale of Securities to an Agent as principal that is not made
pursuant to a Terms Agreement, the procedural details relating to the issue and
delivery of such Securities and payment therefor shall be as set forth in the
Administrative Procedure. For each such sale of Securities to an Agent as
principal that is not made pursuant to a Terms Agreement, the Company agrees to
pay such Agent a commission (or grant an equivalent discount) as provided in
Section 2(a) hereof and in accordance with the schedule set forth therein.
Each time and date of delivery of and payment for Securities to be
purchased by any Agent as principal, whether set forth in a Terms Agreement or
in accordance with the Administrative Procedure, is referred to herein as a
"Time of Delivery".
(c) Each Agent agrees, with respect to any Security denominated in a
currency other than U.S. dollars, as agent, directly or indirectly, not to
solicit offers to purchase, and as principal under any Terms Agreement or
otherwise, directly or indirectly, not to offer, sell or deliver, such Security
in, or to residents of, the country issuing such currency, except as permitted
by applicable law.
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3. The documents required to be delivered pursuant to Section 6 hereof on
the Commencement Date (as defined below) shall be delivered to the Agents at the
offices of King & ▇▇▇▇▇▇▇▇, ▇▇▇▇ Avenue of the Americas, New York, New York at
11:00 a.m., New York City time, on April 15, 1999 (the "Commencement Date").
4. The Company covenants and agrees with each Agent:
(a) (i) To make no amendment or supplement to the Registration
Statement or the Prospectus after the date of any Terms Agreement or other
agreement by an Agent to purchase Securities as principal and prior to the
related Time of Delivery which shall be disapproved by any Agent party to
such Terms Agreement or so purchasing as principal promptly after
reasonable notice thereof unless in the opinion of counsel to the Company
such amendment or supplement is required by law, PROVIDED, HOWEVER, that
the Company shall only be required to provide the Company's periodic
filings to be filed with the Commission pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act to King & Spalding, counsel to the Agents,
on behalf of the Agents, on the business day prior to the date on which
such filings are to be transmitted for filing with the Commission;
(ii) to prepare, with respect to any Securities to be sold
through or to such Agent pursuant to this Agreement, a Pricing Supplement
with respect to such Securities in a form previously approved by such Agent
and to file such Pricing Supplement pursuant to the applicable subparagraph
of Rule 424(b) under the Act not later than the time period specified
therein;
(iii) to make no amendment or supplement at any time to the
Registration Statement or Prospectus, other than any Pricing Supplement,
prior to having afforded each Agent a reasonable opportunity to review and
comment thereon, PROVIDED, HOWEVER, that the foregoing requirement shall
not apply to any of the Company's periodic filings with the Commission
required to be filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act, except that the Company will give the Agents two days' notice
that such filings are to be made with the Commission and will cause copies
of such filings to be delivered to the Agents promptly after being
transmitted for filing with the Commission; PROVIDED, FURTHER, HOWEVER,
that to the extent any Agent shall disapprove of any of the Company's
periodic filings with the Commission required to be so filed pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, such Agent shall
have the right, in its sole discretion, to suspend solicitation of offers
to purchase Securities from the Company until such time as the Company
amends such filing or takes such other action as is satisfactory to such
Agent with respect to such filing;
(iv) to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act for so long as the delivery of a prospectus is required in connection
with the offering or sale of the
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Securities, and during such same period to advise such Agent, promptly
after the Company receives notice thereof, of the time when any amendment
to the Registration Statement has been filed or has become effective or any
supplement to the Prospectus or any amended Prospectus (other than any
Pricing Supplement that relates to Securities not purchased through or by
such Agent and other than documents incorporated by reference in the
Prospectus) has been filed with the Commission, of the issuance by the
Commission of any stop order or of any order preventing or suspending the
use of any prospectus relating to the Securities, of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction,
of the initiation or threatening of any proceeding for any such purpose, or
of any request by the Commission for the amendment or supplement of the
Registration Statement or Prospectus or for additional information; and
(v) in the event of the issuance of any such stop order or of
any such order preventing or suspending the use of any such prospectus or
suspending any such qualification, to use promptly its best efforts to
obtain its withdrawal;
(b) Promptly from time to time to take such action as such Agent may
reasonably request to qualify the Securities for offering and sale under the
securities laws of such jurisdictions as such Agent may request and to comply
with such laws so as to permit the continuance of sales and dealings therein for
as long as may be necessary to complete the distribution or sale of the
Securities; PROVIDED, HOWEVER, that in connection therewith the Company shall
not be required to qualify as a foreign corporation or to file a general consent
to service of process in any jurisdiction;
(c) To furnish such Agent with copies of the Registration Statement
and each amendment thereto, with copies of the Prospectus as each time amended
or supplemented, other than any Pricing Supplement (except as provided in the
Administrative Procedure), in the form in which it is filed with the Commission
pursuant to Rule 424 under the Act, both in such quantities as such Agent may
reasonably request from time to time; and, if the delivery of a prospectus is
required at any time in connection with the offering or sale of the Securities
(including Securities purchased from the Company by such Agent as principal) 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 during such same period to amend or supplement the
Prospectus or to file under the Exchange Act any document incorporated by
reference in the Prospectus in order to comply with the Act, the Exchange Act or
the Trust Indenture Act, to notify such Agent and request such Agent, in its
capacity as agent of the Company, to suspend solicitation of offers to purchase
Securities from the Company (and, if so notified, such Agent shall cease such
solicitations as soon as practicable, but in any event not later than one
business day later); and if the Company shall decide to amend or supplement the
Registration Statement or the Prospectus as then amended or supplemented, to so
advise such Agent promptly by telephone (with confirmation in
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writing) and to prepare and cause to be filed promptly with the Commission an
amendment or supplement to the Registration Statement or such Prospectus that
will correct such statement or omission or effect such compliance; PROVIDED,
HOWEVER, that if during such same period such Agent continues to own Securities
purchased from the Company by such Agent as principal or such Agent is otherwise
required to deliver a prospectus in respect of transactions in the Securities,
the Company shall promptly prepare and file with the Commission such an
amendment or supplement;
(d) To make generally available to its security holders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the Registration Statement (as defined in Rule 158 under the Act), an
earnings statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Act (including, at the option of
the Company, Rule 158);
(e) During the period when this Agreement is in effect, to furnish to
such Agent copies of all reports or other communications (financial or other)
furnished to shareholders, and deliver to such Agent as soon as they are
available, copies of any reports and financial statements furnished to or filed
with the Commission or any national securities exchange on which any class of
securities of the Company is listed, and, after termination of this Agreement
but during such time as any Securities are outstanding, furnish to any Agent
such reports, other communications and financial statements upon the request of
such Agent;
(f) That, from the date of any Terms Agreement with such Agent or
other agreement by such Agent to purchase Securities as principal and continuing
to and including the later of (i) the termination of any trading restrictions
for the Securities purchased thereunder as specified in the Terms Agreement
(such Agent to notify the Company of such termination), and (ii) the related
Time of Delivery, not to offer, sell, contract to sell or otherwise dispose of
any debt securities of the Company which both mature more than nine months after
such Time of Delivery and are substantially similar to the Securities, without
the prior written consent of such Agent;
(g) That each acceptance by the Company of an offer to purchase
Securities hereunder (including any purchase by such Agent as principal not
pursuant to a Terms Agreement), and each execution and delivery by the Company
of a Terms Agreement with such Agent, shall be deemed to be an affirmation to
such Agent that the representations and warranties of the Company contained in
or made pursuant to this Agreement are true and correct as of the date of such
acceptance or of such Terms Agreement, as the case may be, as though made at and
as of such date, and an undertaking that such representations and warranties
will be true and correct as of the settlement date for the Securities relating
to such acceptance or as of the Time of Delivery relating to such sale, as the
case may be, as though made at and as of such date (except that such
representations and warranties shall be deemed to relate to the Registration
Statement and the Prospectus as amended and supplemented relating to such
Securities);
11
(h) That, if so requested by such Agent (unless the Company has
accepted an offer to purchase Securities, in which case no such request shall be
necessary), each time the Registration Statement or the Prospectus shall be
amended or supplemented (other than by a Pricing Supplement to the Prospectus or
any other amendment or supplement relating solely to a change in the terms of
the Securities), including, without limitation, each time a document filed under
the Act or the Exchange Act is incorporated by reference into the Prospectus,
and each time the Company sells Securities to such Agent as principal pursuant
to a Terms Agreement and such Terms Agreement specifies that King & Spalding,
counsel to the Agents, is required to deliver an opinion or opinions as a
condition to the purchase of Securities pursuant to such Terms Agreement, the
Company shall furnish to such counsel, reasonably in advance of the date on
which such opinion is required, such papers and information as they may
reasonably request to enable them to furnish to such Agent the opinion or
opinions referred to in Section 6(b) hereof;
(i) That, if so requested by such Agent (unless the Company has
accepted an offer to purchase Securities, in which case no such request shall be
necessary), each time the Registration Statement or the Prospectus shall be
amended or supplemented (other than by a Pricing Supplement to the Prospectus or
any other amendment or supplement relating solely to a change in the terms of
the Securities), including, without limitation, each time a document filed under
the Act or the Exchange Act is incorporated by reference into the Prospectus,
and each time the Company sells Securities to such Agent as principal pursuant
to a Terms Agreement and such Terms Agreement specifies that the delivery of an
opinion under this Section 4(i) as a condition to the purchase of Securities
pursuant to such Terms Agreement, the Company shall furnish or cause to be
furnished forthwith to such Agent written opinions of the Company's General
Counsel and Faegre & ▇▇▇▇▇▇ LLP, or other counsel satisfactory to such Agent in
its reasonable judgment, dated the date of such amendment, supplement,
incorporation or Time of Delivery relating to such sale, as the case may be, in
form satisfactory to such Agent in its reasonable judgment to the effect that
such Agent may rely on the opinions referred to in Sections 6(c) and 6(d) hereof
which were last furnished to such Agent to the same extent as though they were
dated the date of such letter authorizing reliance (except that statements in
such last opinions shall be deemed to relate to the Registration Statement and
the Prospectus as amended and supplemented to such date) or, in lieu of such
opinions, opinions of the same tenor as the opinions referred to in Sections
6(c) and 6(d) hereof but modified to relate to the Registration Statement and
the Prospectus as amended and supplemented to such date;
(j) That, if so requested by such Agent (unless the Company has
accepted an offer to purchase Securities, in which case no such request shall be
necessary), each time the Registration Statement or the Prospectus shall be
amended or supplemented, including, without limitation, each time that a
document filed under the Act or the Exchange Act is incorporated by reference
into the Prospectus, in any case to set forth financial information included in
or derived from the Company's consolidated financial statements or accounting
records, and, each time the Company sells Securities to such Agent as principal
pursuant to a Terms Agreement and such Terms Agreement specifies the delivery of
a letter under this Section 4(j) as a condition to the purchase of Securities
pursuant to such Terms Agreement,
12
the Company shall cause the independent certified public accountants who have
certified the financial statements of the Company and its subsidiaries included
or incorporated by reference in the Registration Statement forthwith to furnish
such Agent a letter, dated the date of such amendment, supplement, incorporation
or Time of Delivery relating to such sale, as the case may be, in form
satisfactory to such Agent in its reasonable judgment, of the same tenor as the
letter referred to in Section 6(e) hereof but modified to relate to the
Registration Statement and the Prospectus as amended or supplemented to the date
of such letter, with such changes as may be necessary to reflect changes in the
financial statements and other information derived from the accounting records
of the Company, to the extent such financial statements and other information
are available as of a date not more than five business days prior to the date of
such letter; PROVIDED, HOWEVER, that with respect to any financial information
or other matter, such letter may reconfirm as true and correct at such date as
though made at and as of such date, rather than repeat, statements with respect
to such financial information or other matter made in the letter referred to in
Section 6(e) hereof which was last furnished to such Agent; and
(k) That, if so requested by such Agent (unless the Company has
accepted an offer to purchase Securities, in which case no such request shall be
necessary), each time the Registration Statement or the Prospectus shall be
amended or supplemented (other than by a Pricing Supplement to the Prospectus as
amended or supplemented or any other amendment or supplement relating solely to
a change in the terms of the Securities), including, without limitation, each
time a document filed under the Act or the Exchange Act is incorporated by
reference into the Prospectus, and each time the Company sells Securities to
such Agent as principal pursuant to a Terms Agreement and such Terms Agreement
specifies the delivery of a certificate under this Section 4(k) as a condition
to the purchase of Securities pursuant to such Terms Agreement, the Company
shall furnish or cause to be furnished forthwith to such Agent a certificate
executed by officers of the Company satisfactory to such Agent, dated the date
of such supplement, amendment, incorporation or Time of Delivery related to such
sale, as the case may be, in such form as shall be satisfactory to such Agent in
its reasonable judgment, to the effect that the statements contained in the
certificates referred to in Section 6(j) hereof which were last furnished to
such Agent are true and correct at such date, as though made at and as of such
date (except that such statements shall be deemed to relate to the Registration
Statement and the Prospectus as amended and supplemented to such date) or, in
lieu of such certificate, certificates of the same tenor as the certificates
referred to in said Section 6(j) but modified to relate to the Registration
Statement and the Prospectus as amended and supplemented to such date.
5. The Company covenants and agrees with each Agent that the Company will
pay or cause to be paid the following: (i) the fees and expenses of the
Company's counsel and accountants in connection with the registration of the
Securities under the Act and all other expenses in connection with the
preparation, printing and filing of the Registration Statement, any Preliminary
Prospectus, the Prospectus and any Pricing Supplement and all other amendments
and supplements thereto and the mailing and delivering of copies thereof to such
Agent; (ii) the fees and expenses of counsel for the Agents in connection with
the
13
establishment of the program contemplated hereby and, except as otherwise
provided in the following clause (iii), the transactions contemplated hereunder,
including rendering any opinions hereunder; (iii) unless otherwise specified in
a Terms Agreement or otherwise, the fees and expenses of counsel for the Agents
in connection with the transactions contemplated by such Terms Agreement,
including rendering any opinions thereunder; (iv) the cost of printing or
reproducing this Agreement, any Terms Agreement, the Indenture, any Blue Sky and
Legal Investment Memoranda, initial closing documents (including any
compilations thereof) and any other documents in connection with the offering,
purchase, sale and delivery of the Securities; (v) all expenses in connection
with the qualification of the Securities for offering and sale under state
securities laws as provided in Section 4(b) hereof, including the fees and
disbursements of counsel for the Agents in connection with such qualification
and in connection with the Blue Sky and legal investment surveys; (vi) any fees
charged by securities rating services for rating the Securities; (vii) the cost
of preparing the Securities; (viii) the fees and expenses of any Trustee and any
agent of any Trustee and the fees and disbursements of counsel for any Trustee
in connection with the Indenture and the Securities; (ix) any advertising
expenses connected with the solicitation of offers to purchase and the sale of
Securities so long as such advertising expenses have been approved by the
Company; and (x) all other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in this
Section. Except as provided in Sections 7 and 8 hereof, each Agent shall pay
all other expenses it incurs.
6. The obligation of any Agent, as agent of the Company, to solicit
offers to purchase the Securities at any time (the "Solicitation Time"), and the
obligation of any Agent to purchase Securities as principal, pursuant to any
Terms Agreement or otherwise, shall in each case be subject, in such Agent's
reasonable discretion, to the condition that all representations and warranties
and other statements of the Company herein (and, in the case of an obligation of
any Agent under a Terms Agreement, in or incorporated by reference in such Terms
Agreement) are true and correct at and as of the Commencement Date and, if and
to the extent requested by such Agent, at and as of any applicable date referred
to in Section 4(k) hereof, the condition that the Company shall have performed
all of its obligations hereunder theretofore in each case to be performed and
the following additional conditions:
(a) (i) With respect to any Securities sold pursuant to this
Agreement, any Terms Agreement or otherwise, the Prospectus as amended or
supplemented (including the Pricing Supplement) with respect to such Securities
shall have been filed with the Commission pursuant to Rule 424(b) under the Act
within the applicable time period prescribed for such filing by the rules and
regulations under the Act and in accordance with Section 4(a) hereof; (ii) 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 Commission; and (iii) all requests for additional information
on the part of the Commission shall have been complied with to the reasonable
satisfaction of such Agent;
14
(b) King & Spalding, counsel to the Agents, shall have furnished to
such Agent (i) such opinion or opinions, dated the Commencement Date, with
respect to the matters covered in the first clause of paragraph (i) and
paragraphs (iv), (v), (vii) and (x) of subsection (d) below, as well as such
other related matters as such Agent may reasonably request, and (ii) if and to
the extent requested by such Agent, on each applicable date referred to in
Section 4(h), an opinion or opinions, dated such applicable date, to the effect
that such Agent may rely on the opinion or opinions which were last furnished to
such Agent pursuant to this Section 6(b) to the same extent as though it or they
were dated the date of such letter authorizing reliance (except that the
statements in such last opinion or opinions shall be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented to such
date) or, in any case, in lieu of such an opinion or opinions, an opinion or
opinions of the same tenor as the opinion or opinions referred to in clause (i)
but modified to relate to the Registration Statement and the Prospectus as
amended and supplemented to such date; and in each case such counsel shall have
received such papers and information as they may reasonably request to enable
them to pass upon such matters;
(c) ▇▇▇▇▇ ▇. ▇▇▇▇, Esq., Senior Vice President and Secretary of the
Company, or another of the Company's lawyers satisfactory to the Agents, shall
have furnished to such Agent his or her written opinion, dated the Commencement
Date and, if and to the extent requested by such Agent, any applicable date
referred to in Section 4(i), as the case may be, in form and substance
satisfactory to such Agent, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Minnesota, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus;
(ii) The Company has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws of
each other jurisdiction where, in light of the nature of the business
transacted or the property owned by it, such qualification is necessary and
the failure so to qualify might in such counsel's opinion permanently
impair title to property material to its operations or its right to enforce
a material contract against others or expose it to substantial liabilities
in such jurisdiction (such counsel being entitled to rely in respect of the
opinion in this clause upon opinions of local counsel and in respect of
matters of fact upon certificates of officers of the Company, provided that
such counsel shall state that such counsel believes that both such Agent
and such counsel are justified in relying upon such opinions and
certificates);
(iii) Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, and has been duly
qualified as a foreign corporation for the transaction of business and is
in good standing under the laws of each other jurisdiction where, in light
of the nature of the business transacted or the property owned by it, such
qualification is necessary and the failure so to qualify might in such
15
counsel's opinion permanently impair title to property material to its
operations or its right to enforce a material contract against others or
expose it to substantial liabilities in such jurisdiction;
(iv) All of the issued shares of capital stock of each subsidiary
of the Company have been duly and validly authorized and issued and are
fully paid and non-assessable; and all of the outstanding shares of capital
stock of each such subsidiary (except for directors' qualifying shares,
certain outstanding shares of non-voting common stock of The Associated
Merchandising Corporation and certain outstanding shares of preferred stock
of Dayton Development Company) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims
(such counsel being entitled to rely in respect of the opinion in this
clause upon opinions of local counsel and in respect of matters of fact
upon certificates of officers of the Company or its subsidiaries, provided
that such counsel shall state that such counsel believes that both such
Agent and such counsel are justified in relying upon such opinions and
certificates);
(v) To the best of such counsel's knowledge there are no legal
or governmental proceedings pending 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 as set forth in the Prospectus
and other than litigation or governmental proceedings which individually
and in the aggregate are not material to the Company and its subsidiaries;
and to the best of such counsel's knowledge no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others;
(vi) The issue and sale of the Securities and the compliance by
the Company with all of the provisions of the Securities, the Indenture,
this Agreement, any applicable Terms Agreement, the Interest Calculation
Agency Agreement, dated as of April 15, 1999 (the "Interest Calculation
Agency Agreement"), between the Company and the First National Bank of
Chicago, as Calculation Agent, and the Letter of Representations, dated as
of April 15, 1999 (the "Letter of Representations"), among the Company, the
Trustee and The Depository Trust Company and the consummation of the
transactions herein and therein contemplated will not conflict with or
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, mortgage, deed of
trust, loan agreement or other agreement or instrument known to such
counsel to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which any of
the property or assets of the Company or any of its subsidiaries is
subject; and
(vii) The documents incorporated by reference in the
Prospectus (other than the financial statements and related schedules
therein, as to which such
16
counsel need express no opinion), when they became effective or were filed
with the Commission, as the case may be, complied as to form in all
material respects with the requirements of the Act or the Exchange Act and
the rules and regulations of the Commission thereunder; and such counsel
has no reason to believe that any of such documents, when they became
effective or were so filed, 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, in the light of the circumstances
under which they were made when such documents were so filed, not
misleading; and such counsel does not know of any contracts or other
documents of a character required to be filed as an exhibit to the
Registration Statement or required to be incorporated by reference into the
Prospectus or required to be described in the Registration Statement or the
Prospectus which are not filed or incorporated by reference or described as
required.
(d) Faegre & ▇▇▇▇▇▇ LLP, counsel for the Company, shall have
furnished to such Agent their written opinion, dated the Commencement Date and,
if and to the extent requested by an Agent, any applicable date referred to in
Section 4(i), as the case may be, in form and substance satisfactory to such
Agent, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Minnesota, with corporate power and authority to own its properties and
conduct its business as described in the Prospectus;
(ii) The Company has an authorized capitalization as set
forth in the Prospectus;
(iii) To the best of such counsel's knowledge there are no
legal or governmental proceedings pending to which the Company or any of
its subsidiaries is a party or to which any property of the Company or any
of its subsidiaries is the subject, other than as set forth in the
Prospectus and other than litigation or governmental proceedings which
individually and in the aggregate are not material to the Company and its
subsidiaries; and to the best of such counsel's knowledge no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others;
(iv) Each of this Agreement (and any applicable Terms
Agreement), the Interest Calculation Agency Agreement and the Letter of
Representations has been duly authorized, executed and delivered by
the Company;
(v) The Medium-Term Note Program, Series I, of the Company
has been duly authorized by the Company. When the terms of a particular
issuance of the Securities have been established in accordance with the
Indenture and such Securities are issued and delivered by the Company in
accordance with the terms of this Agreement and any Terms Agreement, such
Securities will have been duly authorized, executed, authenticated, issued
and delivered by the Company and will
17
constitute valid and legally binding obligations of the Company entitled to
the benefits provided by the Indenture, subject to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles; and the
Indenture conforms and the Securities will conform to the descriptions
thereof in the Prospectus as amended or supplemented;
(vi) Each of the Indenture, the Interest Calculation Agency
Agreement and the Letter of Representations has been duly authorized,
executed and delivered by the Company, and constitutes a valid and legally
binding instrument, enforceable against the Company in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles; and the
Indenture has been duly qualified under the Trust Indenture Act;
(vii) The issue and sale of the Securities, the compliance by
the Company with all of the provisions of the Securities, the Indenture,
this Agreement and any applicable Terms Agreement, the Interest Calculation
Agency Agreement and the Letter of Representations and the consummation of
the transactions herein and therein contemplated will not conflict with or
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 document filed or
incorporated by reference by the Company as an exhibit to its most recent
Annual Report on Form 10-K or any subsequent Quarterly Report on Form 10-Q
or Current Report on Form 8-K or any other material contract known to such
counsel, nor will such action result in any violation of the provisions of
the Restated Articles of Incorporation or the By-Laws of the Company or any
statute or any order, rule or regulation applicable to the Company and
known to such counsel of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties;
(viii) No consent, approval, authorization, order,
registration or qualification of or with any court or governmental agency
or body is required for the issue and sale of the Securities or the
consummation of the other transactions contemplated by this Agreement, any
applicable Terms Agreement, the Indenture, the Interest Calculation Agency
Agreement or the Letter of Representations, except such as have been
obtained under the Act and the Trust Indenture Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the
solicitation by the Agents of offers to purchase Securities from the
Company and with purchases of Securities by an Agent as principal, as the
case may be, in each case as contemplated by this Agreement; and
(ix) The statements set forth in the Prospectus under the
caption "United States Federal Taxation" insofar as they purport to
describe the provisions of
18
the laws referred to therein, are accurate and fairly present the
information called for with respect to such matters of law; and
(x) The Registration Statement and the Prospectus (other than
the financial statements therein and documents incorporated by reference
therein, as to which such counsel need express no opinion) comply as to
form in all material respects with the requirements of the Act and the
Trust Indenture Act and the rules and regulations thereunder; although such
counsel does not assume any responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration Statement or
the Prospectus (except as otherwise provided in subsection (ix) of this
Section 6(d)), such counsel has no reason to believe that the Registration
Statement contained, as of its effective date, or that the Prospectus as
amended or supplemented contained as of the date of such amendment or
supplement, or that either the Registration Statement or the Prospectus
contains as of the date of such opinion, an untrue statement of material
fact or that the Registration Statement omitted as of such effective date,
or that the Prospectus omits as of the date of such opinion, to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and
(e) Not later than 10:00 a.m., New York City time, on the
Commencement Date, and, if and to the extent requested by an Agent, on each
applicable date referred to in Section 4(j), the independent accountants 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 such Agent a letter, dated the Closing Date, in form and substance
satisfactory to such Agent, to the effect set forth in Annex III hereto.
(f) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus prior to the Solicitation Time or
the date of the Pricing Supplement relating to the Securities to be delivered at
the relevant Time of Delivery, as the case may be, any loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, other than as set forth or contemplated in the Prospectus prior
to the Solicitation Time or the date of the Pricing Supplement relating to the
Securities to be delivered at the relevant Time of Delivery, as the case may be;
and (ii) since the respective dates as of which information is given in the
Prospectus prior to the Solicitation Time or the date of the Pricing Supplement
relating to the Securities to be delivered at the relevant Time of Delivery, as
the case may be, there shall not have been any change in the capital stock
(other than issuances of common stock pursuant to stock option and other
compensatory plans and arrangements adopted by the Board of Directors of the
Company, issuances of common stock upon conversions of convertible preferred
stock and repurchases by the Company under its publicly announced common stock
buy back program authorized by the Company's Board of Directors on January 13,
1999) or any increase in the long-term debt (excluding capital leases and
commercial paper backed by long term credit facilities) of the Company or any of
its subsidiaries or any change, or any development
19
involving a prospective change, in or affecting the general affairs, management,
financial position, shareholders' investment or results of operations of the
Company and its subsidiaries, otherwise than as set forth or contemplated in the
Prospectus prior to the Solicitation Time or the date of the Pricing Supplement
relating to the Securities to be delivered at the relevant Time of Delivery, as
the case may be, the effect of which, in any such case described in clause (i)
or (ii), is in the judgment of such Agent so material and adverse as to make it
impracticable or inadvisable to proceed with the solicitation of offers to
purchase Securities or the purchase by such Agent of Securities from the Company
as principal pursuant to the applicable Terms Agreement or otherwise, as the
case may be, on the terms and in the manner contemplated in the Prospectus prior
to the Solicitation Time or the date of the Pricing Supplement relating to the
Securities to be delivered at the relevant Time of Delivery, as the case may be.
(g) During the period in which the Agents are soliciting offers to
purchase Securities or during the period between the date of any Terms Agreement
and the related Time of Delivery, as applicable, (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities by any "nationally
recognized statistical rating organization", as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the Act, and (ii) no such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the Company's
debt securities, the effect of which, in any such case described in clause (i)
or (ii), in the judgment of such Agent makes it impracticable or inadvisable to
proceed with the solicitation of offers to purchase Securities or the purchase
by such Agent of Securities from the Company as principal pursuant to the
applicable Terms Agreement or otherwise, as the case may be, on the terms and in
the manner contemplated in the Prospectus as amended or supplemented.
(h) During the period in which the Agents are soliciting offers to
purchase Securities or during the period between the date of any Terms Agreement
and the related Time of Delivery, there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange; (ii) a suspension or material
limitation in trading in any securities issued by the Company; (iii) a general
moratorium on commercial banking activities in New York declared by either
Federal or New York State authorities; or (iv) an outbreak or escalation of
hostilities involving the United States or the declaration by the United States
of a national emergency or war, if the effect of any such event specified in
this clause (iv) in the judgment of such Agent makes it impracticable or
inadvisable to proceed with the solicitation of offers to purchase Securities or
the purchase by such Agent of Securities from the Company as principal pursuant
to the applicable Terms Agreement or otherwise, as the case may be, on the terms
and in the manner contemplated in the Prospectus as amended or supplemented.
(i) During the period in which the Agents are soliciting offers to
purchase Securities or during the period between the date of any Terms Agreement
and the related Time of Delivery, with respect to any Security denominated in a
currency other than the U.S. dollar, more than one currency or a composite
currency or any Security the principal or
20
interest of which is indexed to such currency, currencies or composite currency,
there shall not have occurred a suspension or limitation in foreign exchange
trading in such currency, currencies or composite currency by a major
international bank, a general moratorium on commercial banking activities in the
country or countries issuing such currency, currencies or composite currency,
the outbreak or escalation of hostilities involving, the occurrence of any
change in the existing financial, political or economic conditions of, or the
declaration of war or a national emergency by, the country or countries issuing
such currency, currencies or composite currency or the imposition or proposal of
exchange controls by any governmental authority in the country or countries
issuing such currency, currencies or composite currency, the effect of which, in
any such case described in this Section 6(i), in the judgment of such Agent
makes it impracticable or inadvisable to proceed with the solicitation by such
Agent of offers to purchase Securities or the purchase by such Agent of
Securities from the Company as principal pursuant to the applicable Terms
Agreement or otherwise, as the case may be, on the terms and in the manner
contemplated in the Prospectus as amended or supplemented.
(j) The Company shall have furnished or caused to be furnished to
such Agent certificates of officers of the Company dated the Commencement Date
and, if and to the extent requested by such Agent, any applicable date referred
to in Section 4(k) hereof that is on or prior to such Solicitation Time or Time
of Delivery, as the case may be, in such form and executed by such officers of
the Company as shall be satisfactory to such Agent, as to the accuracy of the
representations and warranties of the Company herein at and as of the
Commencement Date or such applicable date, as the case may be, as to the
performance by the Company of all of its obligations hereunder to be performed
at or prior to the Commencement Date or such applicable date, as the case may
be, as to the matters set forth in subsections (a), (f) and (g) of this Section
6, and as to such other matters as such Agent may reasonably request.
7. (a) The Company will indemnify and hold harmless each Agent against
any losses, claims, damages or liabilities, joint or several, to which such
Agent may become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (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 any Preliminary Prospectus, the Registration Statement, the
Prospectus, the Prospectus as amended or supplemented, or any other prospectus
relating to the Securities 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 in any such case 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 any Preliminary Prospectus, the Registration Statement, the Prospectus,
the Prospectus as amended or supplemented or any other prospectus relating to
the Securities, 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.
21
(b) Each Agent will indemnify and hold harmless the Company against
any losses, claims, damages or liabilities to which the Company may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (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 any
Preliminary Prospectus, the Registration Statement, the Prospectus, the
Prospectus as amended or supplemented or any other prospectus relating to the
Securities, 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 any
Preliminary Prospectus, the Registration Statement, the Prospectus, the
Prospectus as amended or supplemented or any other prospectus relating to the
Securities, 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 for any legal or other
expenses reasonably incurred by the Company 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 omission 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 be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without
the written consent of the indemnified party, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to, any
pending or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified party is an
actual or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability arising out of such action or claim and (ii) does not
include a statement as to, or an admission of, fault, culpability or a failure
to act, by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in
22
respect of any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof), in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and each Agent on the other from the offering of the
Securities to which such loss, claim, damage or liability (or action in respect
thereof) relates. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required under subsection (c) above, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
each Agent on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and each Agent on the other
shall be deemed to be in the same proportion as the total net proceeds from the
sale of Securities (before deducting expenses) received by the Company bear to
the total commissions or discounts received by such Agent in respect thereof.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading
relates to information suplied by the Company on the one hand or by any Agent on
the other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
each Agent agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation (even if
all Agents 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 subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), an Agent shall
not be required to contribute any amount in excess of the amount by which the
total public offering price at which the Securities purchased by or through it
were sold exceeds the amount of any damages which such Agent has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
obligations of each of the Agents under this subsection (d) to contribute are
several in proportion to the respective purchases made by or through it to which
such loss, claim, damage or liability (or action in respect thereof) relates and
are 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 any
Agent within the
23
meaning of the Act; and the obligations of each Agent 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 Act.
8. Each Agent, in soliciting offers to purchase Securities from the
Company and in performing the other obligations of such Agent hereunder (other
than in respect of any purchase by an Agent as principal, pursuant to a Terms
Agreement or otherwise), is acting solely as an 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 Securities from
the Company has been accepted by the Company, but such Agent shall not have any
liability to the Company in the event such purchase for any reason is not
consummated. If the Company shall default on its obligation to deliver
Securities to a purchaser whose offer it has accepted, the Company shall hold
each Agent harmless against any loss, claim or damage arising from or as a
result of such default by the Company.
9. The respective indemnities, agreements, representations, warranties
and other statements by any Agent and the Company set forth in or pursuant to
this 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 any Agent or the Company or any of its officers, directors or controlling
persons, and shall survive each delivery of and payment for any of the
Securities.
10. The provisions of this Agreement relating to the solicitation of
offers to purchase Securities may be suspended or terminated at any time by the
Company as to any or all Agents or by any Agent as to such Agent upon the giving
of written notice of such suspension or termination to such Agent or the
Company, as the case may be. In addition, this Agreement may be terminated at
any time by the Company as to any or all Agents or by any Agent as to such Agent
upon the giving of written notice of such suspension or termination to such
Agent or the Company, as the case may be. In the event of such suspension or
termination with respect to any Agent, (X) this Agreement shall remain in full
force and effect with respect to any Agent as to which such suspension or
termination has not occurred, (Y) this Agreement shall remain in full force and
effect with respect to rights and obligations of any party which have previously
accrued and which relate to Securities already issued or agreed to be issued (as
a result of the acceptance by the Company of any offer to purchase Securities)
at the time of such suspension or termination, and (Z) in any event, this
Agreement shall remain in full force and effect insofar as the fourth paragraph
of Section 2(a), and Sections 4(d), 4(e), 5, 7, 8 and 9 hereof are concerned.
11. Except as otherwise specifically provided herein or in the
Administrative Procedure, all statements, requests, notices and advices
hereunder shall be in writing, or by telephone if promptly confirmed in writing,
and if to ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. shall be sufficient in all respects when
delivered or sent by facsimile transmission or registered mail to ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Fax No. (▇▇▇)▇▇▇-▇▇▇▇, Attention:
Credit Department, if to ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
shall be sufficient in
24
all respects when delivered or sent by facsimile transmission or registered
mail to World Financial Center, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention: MTN Product Management,if to ▇.▇. ▇▇▇▇▇▇
Securities Inc. shall be sufficient in all respect when delivered or sent by
facsimile transmission or registered mail to ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Fax No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention: Medium-Term Notes
Desk, if to ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. shall be sufficient in all respects when
delivered or sent by facsimile transmission or registered mail to ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Fax No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention:
Medium-Term Note Department; and if to the Company shall be sufficient in all
respects when delivered or sent by facsimile transmission or registered mail to
▇▇▇▇▇▇ ▇▇▇▇▇▇ Corporation, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇, Attention: Treasurer.
12. This Agreement and any Terms Agreement shall be binding upon, and
inure solely to the benefit of, each Agent and the Company, and to the extent
provided in Sections 7, 8 and 9 hereof, the officers and directors of the
Company and any person who controls any Agent or the Company, and their
respective personal representatives, successors and assigns, and no other person
shall acquire or have any right under or by virtue of this Agreement or any
Terms Agreement. No purchaser of any of the Securities through or from any
Agent hereunder shall be deemed a successor or assign by reason of such
purchase.
13. This Agreement and any Terms Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
14. Time shall be of the essence in this Agreement and any Terms
Agreement. As used herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
15. This Agreement and any Terms Agreement may be executed by any one or
more of the parties hereto and thereto in any number of counterparts, each of
which shall be an original, but all of such respective counterparts shall
together constitute one and the same instrument.
25
If the foregoing is in accordance with each of the Agents' understanding,
please sign and return to us five counterparts hereof, whereupon this letter and
the acceptance by each of the Agents thereof shall constitute a binding
agreement between the Company and each of the Agents in accordance with its
terms.
Very truly yours,
▇▇▇▇▇▇ ▇▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President and Treasurer
Accepted in New York, New York, as of the
date hereof:
▇▇▇▇▇▇▇, SACHS & CO.
By: /s/ ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
--------------------------------------
(▇▇▇▇▇▇▇, Sachs & Co.)
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ &
▇▇▇▇▇ INCORPORATED
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
26
ANNEX I
▇▇▇▇▇▇ ▇▇▇▇▇▇ Corporation
$1,325,000,000 Medium-Term Notes, Series I
TERMS AGREEMENT
______________, 199_
[▇▇▇▇▇▇▇, Sachs & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇]
[▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
World Financial Center, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇]
[▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇]
[▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
Seven ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇]
Dear Sirs:
▇▇▇▇▇▇ ▇▇▇▇▇▇ Corporation (the "Company") proposes, subject to the terms
and conditions stated herein and in the Distribution Agreement, dated April 15,
1999 (the "Distribution Agreement"), between the Company on the one hand and
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated, ▇.▇. ▇▇▇▇▇▇ Securities Inc. and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. on the
other hand (the "Agents"), to issue and sell to [NAME(S) OF AGENT(S)] 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
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
provisions 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 with
respect to the Prospectus in Section 1 of the Distribution Agreement shall be
deemed to be a representation and warranty as of the date of the
I-1
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 you and you 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 for any reason the Purchased Securities are not delivered by or on
behalf of the Company, the Company will reimburse you for all out-of-pocket
expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by you in making preparations for the purchase,
sale and delivery of the Purchased Securities but then the Company shall be
under no further liability to you except as provided in Sections 5 and 7 of the
Distribution Agreement.
I-2
If the foregoing is in accordance with the understanding of the parties
hereto, please sign and return to us five counterparts hereof, and upon
acceptance hereof by the parties hereto, this letter and such acceptance hereof,
including those provisions of the Distribution Agreement incorporated herein by
reference, shall constitute a binding agreement between the parties hereto and
the Company.
▇▇▇▇▇▇ ▇▇▇▇▇▇ CORPORATION
By:
-----------------------------
Authorized Officer
Accepted:
[▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.
By:
--------------------------------------]
[▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ &
▇▇▇▇▇ INCORPORATED
By:
--------------------------------------]
[▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
By:
--------------------------------------]
[▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
By:
--------------------------------------]
I-3
Schedule to Annex I
Title of Purchased Securities:
% Medium-Term Notes, Series I
------
Aggregate Principal Amount:
$ or units of other Specified Currency
-------------
Price to Public:
Purchase Price by [Name(s) of Agent(s)]:
__% of the principal amount of the Purchased Securities, plus accrued
interest from ________________ to _________________ [and accrued
amortization, if any, from _____________ to _____________].
Method of Specified Funds for Payment of Purchase Price: Same Day Funds
Payment of Expenses:
Indenture:
Indenture, dated as of October 3, 1996, as amended or supplemented from
time to time between the Company and The First National Bank of Chicago, as
Trustee.
Time of Delivery:
Closing Location for Delivery of Securities:
Maturity:
Interest Rate:
[_____________%]
I-4
Interest Payment Dates:
[months and dates]
Other Terms:
Documents to be Delivered:
The following documents referred to in the Distribution Agreement shall be
delivered as a condition to the Closing:
[(l) The officers' certificate referred to in Section 4(k).]
[(2) The opinions of counsel to the Company referred to in Section
4(i).]
[(3) The opinion of counsel to the Agents referred to in Section
4(h).]
[(4) The accountants' letters referred to in Section 4(j).]
Syndicate Provisions:
[Set forth any syndicate terms, including any restrictions on sales of
securities similar to the Purchased Securities.]
Procedures Relating to Settlement:
I-5
ANNEX II
▇▇▇▇▇▇ ▇▇▇▇▇▇ CORPORATION
ADMINISTRATIVE PROCEDURE
This Administrative Procedure relates to the Securities defined in the
Distribution Agreement, dated April 15, 1999 (the "Distribution Agreement"),
among ▇▇▇▇▇▇ ▇▇▇▇▇▇ Corporation (the "Company"), ▇▇▇▇▇▇▇, Sachs & Co., ▇▇▇▇▇▇▇
▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, ▇.▇. ▇▇▇▇▇▇
Securities Inc. and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. (together, the "Agents"), to which
this Administrative Procedure is attached as Annex II. Defined terms used
herein and not defined herein shall have the meanings given such terms in the
Distribution Agreement, the Prospectus as amended or supplemented or the
Indenture. To the extent any procedure set forth below conflicts with the
provisions of the Securities, the Indenture or the Distribution Agreement, the
relevant provisions of the Securities, the Indenture and the Distribution
Agreement shall control.
The procedures to be followed with respect to the settlement of sales of
Securities directly by the Company to purchasers solicited by an Agent, as
agent, are set forth below. The terms and settlement details related to a
purchase of Securities by an Agent, as principal, from the Company will be set
forth in a Terms Agreement pursuant to the Distribution Agreement, unless the
Company and such Agent otherwise agree as provided in Section 2(b) of the
Distribution Agreement, in which case the procedures to be followed in respect
of the settlement of such sale will be as set forth below. An Agent, in relation
to a purchase of a Security by a purchaser solicited by such Agent, is referred
to herein as the "Selling Agent" and, in relation to a purchase of a Security by
such Agent as principal other than pursuant to a Terms Agreement, as the
"Purchasing Agent".
The Company will advise each Agent in writing of those persons with whom
such Agent is to communicate regarding offers to purchase Securities and the
related settlement details.
The Trustee will be the initial Registrar, Calculation Agent,
Authenticating Agent and Paying Agent for the Securities and will perform the
duties specified herein. Each Security will be issued only in fully registered
form and will be represented by either a global security (a "Global Security")
delivered to the Trustee, as agent for The Depository Trust Company ("DTC"), and
recorded in the book-entry system maintained by DTC (a "Book-Entry Security") or
a certificate issued in definitive form (a "Certificated Security") delivered to
a person designated by an Agent, as set forth in the applicable Pricing
Supplement. An owner of a Book-Entry Security will not be entitled to receive a
certificate representing such a Security, except as provided in the Indenture.
Book-Entry Securities, which may be payable only in U.S. dollars, will be
issued in accordance with the Administrative Procedure set forth in Part I
hereof as they may
II-1
subsequently be amended as the result of changes in DTC's operating procedures
and Certificated Securities will be issued in accordance with the Administrative
Procedure set forth in Part II hereof.
PART I: ADMINISTRATIVE PROCEDURE FOR BOOK-ENTRY SECURITIES
In connection with the qualification of the Book-Entry Securities for
eligibility in the book-entry system maintained by DTC, the Trustee will perform
the custodial, document control and administrative functions described below, in
accordance with its respective obligations under a Letter of Representations
from the Company and the Trustee to DTC, dated the date hereof, and a
Medium-Term Note Certificate Agreement between the Trustee and DTC dated as of
May 26, 1989 (the "Certificate Agreement"), and its obligations as a participant
in DTC, including DTC's Same-Day Funds Settlement System ("SDFS").
POSTING RATES BY THE COMPANY:
The Company and the Agents will discuss from time to time the rates of
interest per annum to be borne by and the maturity of Book-Entry Securities that
may be sold as a result of the solicitation of offers by an Agent. The Company
may establish a fixed set of interest rates and maturities for an offering
period ("posting"). If the Company decides to change already posted rates, it
will promptly advise the Agents to suspend solicitation of offers until the new
posted rates have been established with the Agents.
ACCEPTANCE OF OFFERS BY THE COMPANY:
Each Agent will promptly advise the Company by telephone or other
appropriate means of all reasonable offers to purchase Book-Entry Securities,
other than those rejected by such Agent. Each Agent may, in its discretion
reasonably exercised, reject any offer received by it in whole or in part. Each
Agent also may make offers to the Company to purchase Book-Entry Securities as a
Purchasing Agent. The Company will have the sole right to accept offers to
purchase Book-Entry Securities and may reject any such offer in whole or in
part.
The Company will promptly notify the Selling Agent or Purchasing Agent, as
the case may be, of its acceptance or rejection of an offer to purchase
Book-Entry Securities. If the Company accepts an offer to purchase Book-Entry
Securities, it will confirm such acceptance in writing to the Selling Agent or
Purchasing Agent, as the case may be, and the Trustee.
COMMUNICATION OF SALE INFORMATION TO THE COMPANY BY SELLING AGENT AND SETTLEMENT
PROCEDURES:
A. After the acceptance of an offer by the Company, the Selling Agent or
Purchasing Agent, as the case may be, will communicate promptly, but in no event
later than the time set forth under "Settlement Procedure Timetable" below, the
following details of the
II-2
terms of such offer (the "Sale Information") to the Company by telephone
(confirmed in writing) or by facsimile transmission or other acceptable written
means:
(1) Principal Amount of Book-Entry Securities to be purchased;
(2) If a Fixed Rate Book-Entry Security, the interest rate, the
Interest Payment Dates, the initial Interest Payment Date and
whether such Security is an Amortizing Security, and if so, the
amortization schedule;
(3) Trade Date;
(4) Settlement Date;
(5) Maturity Date;
(6) If denominated or payable in a currency other than U.S. dollars,
the relevant provisions relating thereto;
(7) If payments thereon are to be determined by reference to an
index, the relevant provisions relating thereto;
(8) Issue Price;
(9) Selling Agent's commission or Purchasing Agent's discount, as the
case may be;
(10) Net Proceeds to the Company;
(11) If a redeemable or repayable Book-Entry Security, provisions
relating to such redemption or repayment;
(12) If a Floating Rate Book-Entry Security, such of the following as
are applicable:
(i) Interest Rate Basis,
(ii) Index Maturity,
(iii) Spread or Spread Multiplier,
(iv) Maximum Rate,
(v) Minimum Rate,
(vi) Initial Interest Rate,
(vii) Interest Reset Dates,
II-3
(viii) Calculation Dates,
(ix) Interest Determination Dates,
(x) Interest Payment Dates,
(xi) Regular Record Dates, and
(xii) Calculation Agent;
(13) Name, address and taxpayer identification number of the
registered owner(s);
(14) Denomination of certificates to be delivered at settlement;
(15) Selling Agent or Purchasing Agent;
(16) Original Issue Discount provisions, if any; and
(17) Any other applicable terms.
B. After receiving the Sale Information from the Selling Agent or
Purchasing Agent, as the case may be, the Company will communicate such Sale
Information to the Trustee by facsimile transmission or other acceptable written
means. The Trustee will assign a CUSIP number to the Global Security from a
list of CUSIP numbers previously delivered to the Trustee by the Company
representing such Book-Entry Security and then advise the Company and the
Selling Agent or Purchasing Agent, as the case may be, of such CUSIP number.
C. The Trustee will enter a pending deposit message through DTC's
Participant Terminal System, providing the following settlement information to
DTC, and DTC shall forward such information to such Agent and Standard & Poor's
Corporation:
(1) The applicable Sale Information;
(2) CUSIP number of the Global Security representing such Book-Entry
Security;
(3) Whether such Global Security will represent any other Book-Entry
Security (to the extent known at such time);
(4) Number of the participant account maintained by DTC on behalf of
the Selling Agent or Purchasing Agent, as the case may be;
(5) Whether such Security is an Amortizing Security (by an
appropriate notation in the comments field of DTC's Participant
Terminal System);
II-4
(6) The interest payment period; and
(7) Initial Interest Payment Date for such Book-Entry Security.
D. The Trustee will complete the Global Security, in the form previously
approved by the Company, the Agents and the Trustee.
E. The Trustee will authenticate the Global Security representing such
Book-Entry Security.
F. DTC will credit such Book-Entry Security to the Trustee's participant
account at DTC.
G. The Trustee will enter an SDFS deliver order through DTC's Participant
Terminal System instructing DTC to (i) debit such Book-Entry Security to the
Trustee's participant account and credit such Book-Entry Security to such
Agent's participant account at DTC, and (ii) debit such Agent's settlement
account and credit the Trustee's settlement account for an amount equal to the
price of such Book-Entry Security less such Agent's commission. The entry of
such a deliver order shall constitute a representation and warranty by the
Trustee to DTC that (a) the Global Security representing such Book-Entry
Security has been issued and authenticated and (b) the Trustee is holding such
Global Security pursuant to the Certificate Agreement.
H. Unless the relevant Agent is the end purchaser of such security, such
Selling or Purchasing Agent, as the case may be, will enter an SDFS deliver
order through DTC's Participant Terminal System instructing DTC (i) to debit
such Book-Entry Security to such Agent's participant account and credit such
Book-Entry Security to the participant accounts of the participants with respect
to such Book-Entry Security and (ii) to debit the settlement accounts of such
participants and credit the settlement account of such Agent for an amount equal
to the price of such Book-Entry Security.
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.
J. Upon confirmation of receipt of funds, the Trustee will transfer to
the Company's account, account number ▇▇▇▇▇▇▇▇▇▇▇▇, maintained at US Bank,
Minneapolis, Minnesota, or such other account as the Company may have previously
specified to the Trustee, in funds available for immediate use in the amount
transferred to the Trustee in accordance with Settlement Procedure "G".
K. Upon request, the Trustee will send to the Company a statement setting
forth the principal amount of Book-Entry Securities outstanding as of that date
under the Indenture.
II-5
L. Unless the relevant Agent is the end purchaser of such security, such
Selling or Purchasing Agent, as the case may be, will confirm the purchase of
such Book-Entry Security to the purchaser either by transmitting to the
participants with respect to such Book-Entry Security a confirmation order or
orders through DTC's institutional delivery system or by mailing a written
confirmation to such purchaser.
M. DTC will, at any time, upon request of the Company or the Trustee,
promptly furnish to the Company or the Trustee a list of the names and addresses
of the participants for whom DTC has credited Book-Entry Securities.
PREPARATION OF PRICING SUPPLEMENT BY COMPANY:
If the Company accepts an offer to purchase a Book-Entry Security, it will
prepare a Pricing Supplement reflecting the terms of such Security and arrange
to have delivered to the Selling Agent or Purchasing Agent, as the case may be,
at least ten copies of such Pricing Supplement, not later than 11:00 a.m., New
York City time, on the Business Day following the Trade Date (as defined below).
The Company will arrange to file a copy of the Pricing Supplement with the
Commission not later than the close of business of the Commission on the fifth
Business Day following the date on which such Pricing Supplement is first used.
Deliveries of Pricing Supplements made in accordance with this section, if
sent to ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, shall be sufficient
when delivered to TriTech Services, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Fax No. (▇▇▇) ▇▇▇-▇▇▇▇, Phone No. (732)
▇▇▇-▇▇▇▇, and if sent to ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., shall be sufficient when
delivered to Brooklyn Army Terminal, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Fax No. (▇▇▇) ▇▇▇-▇▇▇▇, Phone No. (718)
▇▇▇-▇▇▇▇.
In each instance that a Pricing Supplement is prepared, the relevant Agent
will provide a copy of such Pricing Supplement to each investor or purchaser of
the relevant Book-Entry Security or its agent. Pursuant to Rule 434 under the
Securities Act, the Pricing Supplement may be delivered separately from the
Prospectus. Outdated Pricing Supplements (other than those retained for files)
will be destroyed.
DELIVERY OF CONFIRMATION AND PROSPECTUS TO PURCHASER BY SELLING AGENT:
The Selling Agent will deliver to the purchaser of a Book-Entry Security a
written confirmation of the sale and delivery and payment instructions. In
addition, the Selling Agent will deliver to such purchaser or its agent the
Prospectus as amended or supplemented (including the Pricing Supplement) in
relation to such Book-Entry Security prior to or together with the earlier of
the delivery to such purchaser or its agent of (a) the confirmation of sale or
(b) the Book-Entry Security.
II-6
DATE OF SETTLEMENT:
The receipt by the Company of immediately available funds in payment for a
Book-Entry Security and the authentication and issuance of the Global Security
representing such Book-Entry Security shall constitute "settlement" with respect
to such Book-Entry Security. All orders of Book-Entry Securities solicited by a
Selling Agent or made by a Purchasing Agent and accepted by the Company on a
particular date (the "Trade Date") will be settled on a date (the "Settlement
Date") which is on or before the third Business Day after the Trade Date
pursuant to the "Settlement Procedure Timetable" 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 after the Trade Date.
SETTLEMENT PROCEDURE TIMETABLE:
For offers to purchase Book-Entry Securities solicited by a Selling Agent
and accepted by the Company for settlement on the first Business Day after the
Trade Date, Settlement Procedures "A" through "J" set forth above shall be
completed as soon as possible but not later than the respective times (New York
City time) set forth below:
Settlement
Procedure Time
-------------- -------------------------------------
A-B 11:00 a.m. on the Trade Date
C 2:00 p.m. on the Trade Date
D 3:00 p.m. on the day before the Settlement Date
E 9:00 a.m. on the Settlement Date
F 10:00 a.m. on the Settlement Date
G 2:00 p.m. on the Settlement Date
I 4:45 p.m. on the Settlement Date
▇-▇ 5:00 p.m. on the Settlement Date
If a sale is to be settled more than one Business Day after the Trade Date,
Settlement Procedures A, B and C shall be completed as soon as practicable but
in no event later that 11:00 a.m. and 2:00 p.m., as the case may be, on the
first Business Day after the Trade Date. If the initial interest rate for a
Floating Rate Book-Entry Security has not been determined at the time that
Settlement Procedure "A" is completed and the Settlement Date is at least three
Business Days after the Trade Date, Settlement Procedures "B" and "C" shall be
completed as soon as such rate has been determined but no later than 11:00 a.m.
and 12:00 noon, respectively, on the second Business Day immediately preceding
the Settlement Date. Settlement Procedure "I" is subject to extension in
accordance with any extension of Fedwire closing deadlines and in the other
events specified in the SDFS operating procedures in effect on the Settlement
Date.
II-7
If settlement of a Book-Entry Security is rescheduled or cancelled, the
Trustee, upon obtaining knowledge thereof, 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 the Trustee fails to enter an SDFS deliver order with respect to a
Book-Entry Security pursuant to Settlement Procedure "G", the Trustee may
deliver to DTC, through DTC's Participant Terminal System, as soon as
practicable a withdrawal message instructing DTC to debit such Book-Entry
Security to the Trustee's participant account, provided that the Trustee's
participant account contains a principal amount of the Global Security
representing such Book-Entry Security 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 Securities represented by a Global Security, the Trustee will
▇▇▇▇ such Global Security "cancelled", make appropriate entries in the Trustee's
records and send such cancelled Global Security to the Company. The CUSIP
number assigned to such Global Security shall, in accordance with the procedures
of the CUSIP Service Bureau of Standard & Poor's Corporation, be cancelled and
not immediately reassigned. If a withdrawal message is processed with respect
to one or more, but not all, of the Book-Entry Securities represented by a
Global Security, the Trustee will exchange such Global Security for two Global
Securities, one of which shall represent such Book-Entry Security or Securities
and shall be cancelled immediately after issuance and the other of which shall
represent the remaining Book-Entry Securities 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 Security is not timely paid to the
participants with respect to such Book-Entry Security 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 Agent for such
Book-Entry Security may enter delivery orders through DTC's Participant Terminal
System debiting such Book-Entry Security to such participant's account and
crediting such Book-Entry Security to such Agent's account and then debiting
such Book-Entry Security to such Agent's participant account and crediting such
Book-Entry Security to the Trustee's participant account and shall notify the
Company and the Trustee thereof. Thereafter, the Trustee will (i) immediately
notify the Company of such order and the Company shall transfer to such Agent
funds available for immediate use in an amount equal to the price of such
Book-Entry Security which was credited to the account of the Company maintained
at the Trustee in accordance with Settlement Procedure J, and (ii) deliver the
withdrawal message and take the related actions described in the preceding
paragraph. If such failure shall have occurred for any reason other than
default by the applicable Agent to perform its obligations hereunder or under
the Distribution Agreement, the Company will reimburse such Agent on an
equitable basis for the loss of its use of funds during the period when the
funds were credited to the account of the Company.
II-8
Notwithstanding the foregoing, upon any failure to settle with respect to a
Book-Entry Security, 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 Securities to have been
represented by a Global Security, the Trustee will provide, in accordance with
Settlement Procedures "D", "E" and G, for the authentication and issuance of a
Global Security representing the other Book-Entry Securities to have been
represented by such Global Security and will make appropriate entries in its
records. The Company will, from time to time, furnish the Trustee with a
sufficient quantity of Securities.
PART II: ADMINISTRATIVE PROCEDURE FOR CERTIFICATED SECURITIES
POSTING RATES BY COMPANY:
The Company and the Agents will discuss from time to time the rates of
interest per annum to be borne by and the maturity of Certificated Securities
that may be sold as a result of the solicitation of offers by an Agent. The
Company may establish a fixed set of interest rates and maturities for an
offering period ("posting"). If the Company decides to change already posted
rates, it will promptly advise the Agents to suspend solicitation of offers
until the new posted rates have been established with the Agents.
ACCEPTANCE OF OFFERS BY COMPANY:
Each Agent will promptly advise the Company by telephone or other
appropriate means of all reasonable offers to purchase Certificated Securities,
other than those rejected by such Agent. Each Agent may, in its discretion
reasonably exercised, reject any offer received by it in whole or in part. Each
Agent also may make offers to the Company to purchase Certificated Securities as
a Purchasing Agent. The Company will have the sole right to accept offers to
purchase Certificated Securities and may reject any such offer in whole or in
part.
The Company will promptly notify the Selling Agent or Purchasing Agent, as
the case may be, of its acceptance or rejection of an offer to purchase
Certificated Securities. If the Company accepts an offer to purchase
Certificated Securities, it will confirm such acceptance in writing to the
Selling Agent or Purchasing Agent, as the case may be, and the Trustee.
COMMUNICATION OF SALE INFORMATION TO THE COMPANY BY SELLING AGENT:
After the acceptance of an offer by the Company, the Selling Agent or
Purchasing Agent, as the case may be, will communicate promptly on the Sale Date
the following details of the terms of such offer (the "Sale Information") to the
Company by telephone (confirmed in writing) or by facsimile transmission or
other acceptable written means:
(1) Principal Amount of Certificated Securities to be purchased;
II-9
(2) If a Fixed Rate Certificated Security, the interest rate, the Interest
Payment Dates, the initial Interest Payment Date and whether such
Security is an Amortizing Security, and if so, the Amortization
Schedule;
(3) Trade Date;
(4) Settlement Date;
(5) Maturity Date;
(6) If denominated or payable in a currency other than U.S. dollars, the
relevant provisions relating thereto;
(7) If payments thereon are to be determined by reference to an index, the
relevant provisions relating thereto;
(8) Issue Price;
(9) Selling Agent's commission or Purchasing Agent's discount, as the case
may be;
(10) Net Proceeds to the Company;
(11) If a redeemable or repayable Certificated Security, provisions
relating to such redemption or repayment;
(12) If a Floating Rate Certificated Security, such of the following as are
applicable:
(i) nterest Rate Basis,
(ii) Index Maturity,
(iii) Spread or Spread Multiplier,
(iv) Maximum Rate,
(v) Minimum Rate,
(vi) Initial Interest Rate,
(vii) Interest Reset Dates,
(viii) Calculation Dates,
(ix) Interest Determination Dates,
(x) Interest Payment Dates,
II-10
(xi) Regular Record Dates, and
(xii) Calculation Agent;
(13) Name, address and taxpayer identification number of the registered
owner(s) and address for payment of principal and interest;
(14) Denomination of certificates to be delivered at settlement;
(15) Original Issue Discount provisions, if any;
(16) Selling Agent or Purchasing Agent; and
(17) Any other applicable terms.
PREPARATION OF PRICING SUPPLEMENT BY COMPANY:
If the Company accepts an offer to purchase a Certificated Security, it
will prepare a Pricing Supplement reflecting the terms of such Certificated
Security and arrange to have delivered to the Selling Agent or Purchasing Agent,
as the case may be, at least ten copies of such Pricing Supplement, not later
than 5:00 p.m., New York City time, on the Business Day following the Trade
Date, or if the Company and the purchaser agree to settlement on the date of
acceptance of such offer, not later than noon, New York City time, on such date.
The Company will arrange to file a copy of the Pricing Supplement with the
Commission not later than the close of business of the Commission on the fifth
Business Day following the date on which such Pricing Supplement is first used.
Deliveries of Pricing Supplements made in accordance with this section, if
sent to ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, shall be sufficient
when delivered to TriTech Services, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Fax No. (▇▇▇) ▇▇▇-▇▇▇▇, Phone No. (732)
▇▇▇-▇▇▇▇, and if sent to ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., shall be sufficient when
delivered to Brooklyn Army Terminal, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Fax No. (▇▇▇) ▇▇▇-▇▇▇▇, Phone No. (718)
▇▇▇-▇▇▇▇.
In each instance that a Pricing Supplement is prepared, the relevant Agent
will provide a copy of such Pricing Supplement to each investor or purchaser of
the relevant Certificated Security or its agent. Pursuant to Rule 434 under the
Securities Act, the Pricing Supplement may be delivered separately from the
Prospectus. Outdated Pricing Supplements (other than those retained for files)
will be destroyed.
DELIVERY OF CONFIRMATION AND PROSPECTUS TO PURCHASER BY SELLING AGENT:
The Selling Agent will deliver to the purchaser of a Certificated Security
a written confirmation of the sale and delivery and payment instructions. In
addition, the Selling Agent will deliver to such purchaser or its agent the
Prospectus as amended or supplemented
II-11
(including the Pricing Supplement) in relation to such Certificated Security
prior to or together with the earlier of the delivery to such purchaser or its
agent of (a) the confirmation of sale or (b) the Certificated Security.
DATE OF SETTLEMENT:
All offers of Certificated Securities solicited by a Selling Agent or made
by a Purchasing Agent and accepted by the Company will be settled on a date (the
"Settlement Date") which is the third Business Day after the date of acceptance
of such offer, unless the Company and the purchaser agree to settlement (a) on
another Business Day after the acceptance of such offer or (b) with respect to
an offer accepted by the Company prior to 10:00 a.m., New York City time, on the
date of such acceptance.
INSTRUCTION FROM COMPANY TO TRUSTEE FOR PREPARATION OF CERTIFICATED SECURITIES:
After receiving the Sale Information from the Selling Agent or Purchasing
Agent, as the case may be, the Company will communicate such Sale Information to
the Trustee by telephone (confirmed in writing) or by facsimile transmission or
other acceptable written means.
The Company will instruct the Trustee by facsimile transmission or other
acceptable written means to authenticate and deliver the Certificated Securities
no later than 12:00 noon, New York City time, on the Settlement Date. Such
instruction will be given by the Company prior to 3:00 p.m., New York City time,
on the Business Day immediately preceding the Settlement Date unless the
Settlement Date is the date of acceptance by the Company of the offer to
purchase Certificated Securities, in which case such instruction will be given
by the Company by 11:00 a.m., New York City time.
PREPARATION AND DELIVERY OF CERTIFICATED SECURITIES BY TRUSTEE AND RECEIPT OF
PAYMENT THEREFOR:
The Trustee will prepare each Certificated Security and appropriate
receipts that will serve as the documentary control of the transaction.
In the case of a sale of Certificated Securities to a purchaser solicited
by a Selling Agent, the Trustee will, by 12:00 noon, New York City time, on the
Settlement Date, deliver the Certificated Securities to the Selling Agent for
the benefit of the purchaser of such Certificated Securities against delivery by
the Selling Agent of a receipt therefor. On the Settlement Date the Selling
Agent will deliver payment for such Certificated Securities in immediately
available funds to the Company in an amount equal to the issue price of the
Certificated Securities less the Selling Agent's commission on or before
12:00 noon, New York City time, on the Settlement Date. The Company shall not
use any proceeds advanced by a Selling Agent to acquire securities prior to the
Selling Agent receiving the Certificated Securities from the Company.
II-12
In the case of a sale of Certificated Securities to a Purchasing Agent, the
Trustee will, by 12:00 noon, New York City time, on the Settlement Date, deliver
the Certificated Securities to the Purchasing Agent against delivery of payment
for such Certificated Securities in immediately available funds to the Company
in an amount equal to the issue price of the Certificated Securities less the
Purchasing Agent's discount.
FAILURE OF PURCHASER TO PAY SELLING AGENT:
If a purchaser (other than a Purchasing Agent) fails to make payment to the
Selling Agent for a Certificated Security, the Selling Agent will promptly
notify the Trustee and the Company thereof by telephone (confirmed in writing)
or by facsimile transmission or other acceptable written means. The Selling
Agent will immediately return the Certificated Security to the Trustee.
Immediately upon receipt of such Certificated Security by the Trustee, the
Company will return to the Selling Agent an amount equal to the amount
previously paid to the Company in respect of such Certificated Security. If the
failure shall have occurred for any reason other than a default by such Selling
Agent in the performance of its obligations hereunder and under the Distribution
Agreement, then the Company will reimburse the Selling Agent on an equitable
basis for its loss of the use of funds during the period when they were credited
to the account of the Company.
The Trustee will cancel the Certificated Security in respect of which the
failure occurred, make appropriate entries in its records and, unless otherwise
instructed by the Company, destroy the Certificated Security.
II-13
ANNEX III
Pursuant to Sections 4(j) and 6(e), as the case may be, of the Distribution
Agreement, the Company's independent certified public accountants shall furnish
letters to the effect that:
(i) They are independent certified public accountants with respect
to the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules examined by them and included or
incorporated by reference in the Registration Statement or the Prospectus comply
as to form in all material respects with the applicable accounting requirements
of the Act or the Exchange Act, as applicable, and the related published rules
and regulations thereunder; and, if applicable, they have made a review in
accordance with standards established by the American Institute of Certified
Public Accountants of the consolidated interim financial statements, selected
financial data, pro forma financial information and/or condensed financial
statements derived from audited financial statements of the Company for the
periods specified in such letter, as indicated in their reports thereon, copies
of which have been furnished to the Agents;
(iii) In their opinion, the unaudited selected financial information
with respect to the consolidated results of operations and financial position of
the Company for the five most recent fiscal years included in the Prospectus and
included or incorporated by reference in Item 6 of the Company's Annual Report
on Form 10-K for the most recent fiscal year agrees with the corresponding
amounts (after restatement where applicable) in the audited consolidated
financial statements for such five fiscal years which were included or
incorporated by reference in the Company's Annual Reports on Form 10-K for such
fiscal years;
(iv) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of the
minute books of the Company and its subsidiaries since the date of the latest
audited financial statements included or incorporated by reference in the
Prospectus, inquiries of officials of the Company and its subsidiaries
responsible for financial and accounting matters and such other inquiries and
procedures as may be specified in such letter, nothing came to their attention
that caused them to believe that:
(A) the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of changes in
financial position included or incorporated by reference in the Company's
Quarterly Reports on Form 10-Q incorporated by reference in the Prospectus
do not comply as to form in all material respects with the applicable
accounting requirements of the Exchange Act
III-1
as it applies to Form 10-Q and the related published rules and regulations
thereunder or are not in conformity with generally accepted accounting
principles for interim financial statements applied on a basis
substantially consistent with the basis for the audited consolidated
statements of income, consolidated balance sheets and consolidated
statements of changes in financial position included or incorporated by
reference in the Company's Annual Report on Form 10-K for the most recent
fiscal year;
(B) any other unaudited income statement data and balance sheet items
included in the Prospectus do not agree with the corresponding items in the
unaudited consolidated financial statements from which such data and items
were derived, and any such unaudited data and items were not determined on
a basis substantially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements included or
incorporated by reference in the Company's Annual Report on Form 10-K for
the most recent fiscal year;
(C) the unaudited financial statements which were not included in the
Prospectus but from which were derived the unaudited condensed financial
statements referred to in clause (A) and any unaudited income statement
data and balance sheet items included in the Prospectus and referred to in
Clause (B) were not determined on a basis substantially consistent with the
basis for the audited financial statements included or incorporated by
reference in the Company's Annual Report on Form 10-K for the most recent
fiscal year;
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus do not
comply as to form in all material respects with the applicable accounting
requirements of the Act and the published rules and regulations thereunder
or the pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to the date
of such letter, when compared with amounts shown in the latest balance
sheet included or incorporated by reference in the Prospectus, there have
been
- any changes in the consolidated capital stock (other than
issuances of common stock pursuant to stock option and other
compensatory plans and arrangements adopted by the Board of
Directors of the Company, issuances of common stock upon
conversions of convertible preferred stock and repurchases by the
Company under its publicly announced common stock buy back
program authorized by the Company's Board of Directors on
January 13, 1999, in each case which were outstanding on the date
of the latest balance sheet included or incorporated by reference
in the Prospectus), or
III-2
- any increase in the consolidated long-term debt (excluding
capital leases and commercial paper backed by long-term credit
facilities) of the Company or any of its subsidiaries, or
- any decrease in consolidated working capital greater than 1.5% of
the Company's most recent fiscal year-end total consolidated
assets (treating all commercial paper as a current liability), or
- any decreases in consolidated shareholders' investment greater
than 0.5% of the Company's most recent fiscal year-end total
consolidated assets (excluding decreases resulting from normally
recurring dividends), or
- any decreases or increases in other items specified by the Agents
in each case except for changes, increases or decreases which the
Prospectus discloses have occurred or may occur or which are described in
such letter; and
(F) for the period from the date of the latest financial statements
included or incorporated by reference in the Prospectus to the specified
date referred to in Clause (E), when compared with the comparable period of
the preceding year and with any other period of corresponding length
specified by the Agents, there were
- any decreases in consolidated net sales or earnings before income
taxes and extraordinary charges, or
- any decreases in the total or per share amounts of consolidated
net income or other items specified by the Agents, or
- any increases in any items specified by the Agents,
in each case except for increases or decreases which the Prospectus
discloses have occurred or may occur or which are described in such letter;
and
(v) In addition to the examination referred to in their report(s) included
or incorporated by reference in the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures referred to in
paragraphs (iii) and (vi) above, they have carried out certain specified
procedures, not constituting an examination in accordance with generally
accepted auditing standards, with respect to certain amounts, percentages and
financial information specified by the Agents which are derived from the general
accounting records of the Company and its subsidiaries, which appear in the
Prospectus (excluding documents incorporated by reference), or in Part II of, or
in exhibits and schedules to, the Registration Statement specified by the Agents
or in documents incorporated by reference in the Prospectus specified by the
Agents, and have compared certain of such amounts, percentages and financial
information with the accounting records of the Company and its subsidiaries and
have found them to be in agreement.
III-3
All references in this Annex III to the Prospectus shall be deemed to refer
to the Prospectus (including the documents incorporated by reference therein) as
defined in the Distribution Agreement as of the Commencement Date referred to in
Section 6(e) thereof and to the Prospectus as amended or supplemented (including
the documents incorporated by reference therein) as defined in such Agreement,
as of the date of the amendment, supplement, incorporation or the Time of
Delivery relating to the Terms Agreement requiring the delivery of such letter
under Section 4(j) thereof.
III-4
