EXHIBIT 1
KRAFT FOODS INC.
Debt Securities and Warrants to Purchase Debt Securities
September 1, 2001
UNDERWRITING AGREEMENT
----------------------
1. Introductory. Kraft Foods Inc., a Virginia corporation (the "Company"),
proposes to issue and sell from time to time certain of its unsecured debt
securities and warrants to purchase its unsecured debt securities, in an
aggregate principal amount expressed in U.S. dollars or in such foreign
currencies or currency units as the Company shall designate at the time of the
offering. Such debt securities and such warrants and debt securities subject to
such warrants, registered under the registration statement or statements
referred to in Section 2(a), are hereinafter collectively referred to as
"Registered Securities". Registered Securities involved in any offering referred
to below are hereinafter collectively referred to as "Offered Securities", such
debt securities that are Offered Securities are hereinafter referred to as
"Offered Debt Securities", warrants to purchase debt securities that are Offered
Securities are hereinafter referred to as "Offered Debt Warrants", and debt
securities subject to Offered Debt Warrants are hereinafter referred to as
"Warrant Debt Securities". The Offered Debt Securities and Warrant Debt
Securities will be issued under an Indenture, dated as of _________ __, 2001
(the "Indenture"), between the Company and The Chase Manhattan Bank, as Trustee,
and the Offered Debt Warrants will be issued under a debt warrant agreement (the
"Debt Warrant Agreement"), between the Company and a bank or trust company, as
Debt Warrant Agent, specified in the Terms Agreement referred to in Section 3,
in one or more series or issues, which may vary as to interest rates,
maturities, redemption provisions, conversion provisions, exercise prices,
expiration dates, selling prices, currency or currency units and other terms,
with, in each case, all such terms for any particular Offered Securities being
determined at the time of sale. Particular Offered Securities will be sold
pursuant to a Terms Agreement, for resale in accordance with terms of offering
determined at the time of sale.
The firm or firms which agree to purchase the Offered Securities are
hereinafter referred to as the "Underwriters" of such Offered Securities, and
the representative or representatives of the Underwriters, if any, specified in
a Terms Agreement referred to in Section 3 are hereinafter referred to as the
"Representatives"; provided, however, that if the Terms Agreement does not
specify any representative of the Underwriters, the term "Representatives", as
used in this Agreement (other than in Section 2(b), in the second sentence of
Section 3 and the first and third use of the term "Representatives" in
Section 6, where, in each case, the reference to the terms "through the
Representatives" or "the names of any Representatives", as the case may be, if
the Terms Agreement does not specify any representatives of the Underwriters,
shall be ignored), shall mean the Underwriters.
2. Representations and Warranties of the Company. The Company, as of the
date of each Terms Agreement referred to in Section 3, represents and warrants
to, and agrees with, each Underwriter that, except as disclosed in the
Prospectus (as hereinafter defined):
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission"), pursuant to the Securities Act of 1933, as amended (the
"Act") and the rules and regulations of the Commission (the "Rules and
Regulations"), a registration statement or statements on Form S-3 under the
Act, including a prospectus, relating to the Registered Securities, and
such registration statement or statements has or have become effective.
Such registration statement or statements, as amended at the time of any
Terms Agreement referred to in Section 3, is or are hereinafter referred to
as the "Registration Statement", and the prospectus or prospectuses
included in the Registration Statement or deemed, pursuant to Rule 429
under the Act, to relate to the Registration Statement, as supplemented as
contemplated by Section 3 to reflect the terms of the Offered Securities
and the terms of the offering thereof, as filed pursuant to Rule 424(b)
("Rule 424(b)") under the Act, is or are hereinafter referred to as the
"Prospectus". If the Company has filed an abbreviated registration
statement pursuant to Rule 462(b) under the Act to register a portion of
the Offered Securities (the "Rule 462 Registration Statement"), then any
reference herein to the term "Registration Statement" shall be deemed to
include such Rule 462 Registration Statement. If the Company elects to rely
upon Rule 434 under the Act, then any reference herein to the term
"Prospectus" shall be deemed to include the final or preliminary prospectus
and the applicable term sheet or abbreviated term sheet, as the case may
be, in the form furnished to the Underwriters by the Company in reliance
upon Rule 434 under the Act. Any reference herein to the Registration
Statement or Prospectus shall be deemed to include all documents
incorporated therein by reference pursuant to the requirements of Item 12
of Form S-3 under the Act which have been filed pursuant to the Securities
Exchange Act of 1934, as amended prior to the execution of the applicable
Terms Agreement.
(b) On the effective date of the registration statement or statements
relating to the Registered Securities, such registration statement or
statements conformed in all material respects to the requirements of the
Act, the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act") and the Rules and Regulations and did not include any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make
2
the statements therein not misleading, and on the date of each Terms
Agreement and on each Closing Date, each as referred to in Section 3, the
Registration Statement and the Prospectus will conform in all material
respects to the requirements of the Act, the Trust Indenture Act and the
Rules and Regulations, and neither of such documents will include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, except that the foregoing does not apply to (i) that part of
the Registration Statement which constitutes the Statement of Eligibility
and Qualification (Form T-1) under the Trust Indenture Act of the Trustee
and (ii) statements in or omissions from any of such documents based upon
written information furnished to the Company by any Underwriter through the
Representatives specifically for use therein.
(c) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the Commonwealth of
Virginia, with power and authority to own and lease its properties and
conduct its business as described in the Prospectus; and the Company is
duly qualified to do business as a foreign corporation in good standing in
all other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where such
failure to be so qualified to do business or be in good standing would not
individually or in the aggregate have a material adverse effect on the
condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole ("Material
Adverse Effect").
(d) Each subsidiary of the Company that is a "significant subsidiary"
as defined in Rule 1-02(w) of Regulation S-X under the Act (the
"Significant Subsidiaries") has been duly incorporated or organized, as the
case may be, and is an existing corporation or limited liability company,
as the case may be, in good standing under the laws of the jurisdiction of
its incorporation or organization, with power and authority to own and
lease its properties and conduct its business as described in the
Prospectus; and each Significant Subsidiary is duly qualified to do
business as a foreign corporation or limited liability company, as the case
may be, in good standing in all other jurisdictions in which its ownership
or lease of property or the conduct of its business requires such
qualification; except where the failure to be so qualified or be in good
standing would not individually or in the aggregate have a Material Adverse
Effect; all of the issued and outstanding capital stock or limited
liability company interests of each Significant Subsidiary has been duly
authorized and validly issued and is fully paid and nonassessable; and the
capital stock or limited liability company interests of each Significant
Subsidiary owned by the Company, directly or through subsidiaries, is owned
free from claims, liens, encumbrances and defects.
3
(e) The Indenture and (to the extent the Offered Securities include
Offered Debt Warrants) the Debt Warrant Agreement have been duly authorized
and the Indenture has been duly qualified under the Trust Indenture Act;
the Offered Securities have been duly authorized; and when the Offered
Securities are delivered and paid for pursuant to the Terms Agreement on
the Closing Date or pursuant to Delayed Delivery Contracts (as hereinafter
defined), the Indenture and (to the extent the Offered Securities include
Offered Debt Warrants) the Debt Warrant Agreement will have been duly
executed and delivered, such Offered Securities will have been duly
executed, authenticated, issued and delivered, and the Registered
Securities other than any Warrant Debt Securities and any Contract
Securities (as hereinafter defined) conform, and any Warrant Debt
Securities and any Contract Securities, when so issued and delivered and
sold, will conform to the description thereof contained in the Prospectus;
the Indenture and (to the extent the Offered Securities include Offered
Debt Warrants) the Debt Warrant Agreement and the Registered Securities
other than any Warrant Debt Securities and any Contract Securities
constitute, and any Warrant Debt Securities, when executed, authenticated,
issued and delivered in the manner provided in the Indenture and sold
pursuant to the Debt Warrant Agreement, and any Contract Securities, when
executed, authenticated, issued and delivered in the manner provided in the
Indenture and sold pursuant to Delayed Delivery Contracts, will constitute
valid and legally binding obligations of the Company, enforceable in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights, to an implied
covenant of fair dealing and to general equity principles.
(f) No consent, approval, authorization, or order of, or filing with,
any governmental agency or body or any court is required for the
consummation of the transactions contemplated by the Terms Agreement
(including the provisions of this Agreement) in connection with the
issuance and sale of the Offered Securities by the Company, except (i) such
as have been obtained and made under the Act and the Trust Indenture Act,
(ii) such as may be required under state securities laws and (iii) such as
may be required under foreign securities laws.
(g) The execution, delivery and performance of the Indenture, the
Terms Agreement (including the provisions of this Agreement), any Debt
Warrant Agreement and any Delayed Delivery Contracts and the issuance and
sale of the Offered Securities and compliance with the terms and provisions
thereof will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, or result in the imposition
of any lien, charge or encumbrance upon any property or assets of the
Company or any subsidiary of the Company pursuant to any law, any statute,
any rule, regulation or order of any governmental agency or body or any
court having jurisdiction over the Company or any subsidiary of the Company
or any of their properties, or any agreement or instrument to which
4
the Company or any such subsidiary is a party or by which the Company or
any such subsidiary is bound or to which any of the properties of the
Company or any such subsidiary is subject, or the charter or by-laws of the
Company or any such subsidiary, which breach, violation, default, lien,
charge or encumbrance would have a Material Adverse Effect or have a
material adverse effect on the transactions contemplated by the Terms
Agreement (including the provisions of this Agreement), and the Company has
full power and authority to authorize, issue and sell the Offered
Securities as contemplated by the Terms Agreement (including the provisions
of this Agreement).
(h) The Terms Agreement (including the provisions of this Agreement)
and any Delayed Delivery Contracts have been duly authorized, executed and
delivered by the Company.
(i) Except as would not individually or in the aggregate have a
Material Adverse Effect, the Company and its Significant Subsidiaries have
good and marketable title to all real properties and all other properties
and assets owned by them, in each case free from liens, encumbrances and
defects and the Company and its Significant Subsidiaries hold any leased
real or personal property under valid and enforceable leases with no
exceptions; and the Company and the Significant Subsidiaries own or lease
all such properties as are necessary to the conduct of their operations as
presently conducted.
(j) The Company and its subsidiaries possess adequate certificates,
authorities or permits issued by appropriate governmental agencies or
bodies necessary to conduct the business now operated by them and have not
received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit that, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect.
(k) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that the
Company reasonably expects to have a Material Adverse Effect.
(l) Except as would not individually or in the aggregate have a
Material Adverse Effect, the Company and its subsidiaries own, possess
(through license or otherwise) or can acquire on reasonable terms, all
trademarks, trade names and other rights to inventions, know-how, patents,
copyrights, confidential information and other intellectual property
(collectively, "intellectual property rights") necessary to conduct the
business now operated by them, or presently employed by them, and neither
the Company nor any subsidiary has received any notice of infringement of
or conflict with asserted rights of others with respect to any intellectual
property rights.
5
(m) Neither the Company nor any of its subsidiaries is in violation of
any statute, any rule, regulation, decision or order of any governmental
agency or body or any court, domestic or foreign, relating to the use,
disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous
or toxic substances (collectively, "environmental laws"), owns or operates
any real property contaminated with any substance that is subject to any
environmental laws, is liable for any off-site disposal or contamination
pursuant to any environmental laws, or is subject to any claim relating to
any environmental laws, which violation, contamination, liability or claim
would individually or in the aggregate have a Material Adverse Effect; and
the Company is not aware of any pending investigation which might lead to
such a claim.
(n) There are no pending actions, suits or proceedings against or
affecting the Company, any of its subsidiaries or any of their respective
properties that individually or in the aggregate the Company reasonably
expects to have a Material Adverse Effect, or would materially and
adversely affect the ability of the Company to perform its obligations
under the Indenture, any Debt Warrant Agreement, the Terms Agreement
(including the provisions of this Agreement) or any Delayed Delivery
Contracts, or which are otherwise material in the context of the sale of
the Offered Securities; and, to the Company's knowledge, no such actions,
suits or proceedings are threatened or contemplated.
(o) The financial statements included in the Registration Statement
and Prospectus present fairly the combined or consolidated financial
position of the Company and its subsidiaries (and, to the extent the
Registration Statement and Prospectus include separate financial statements
of any subsidiary or consolidated subsidiaries of the Company, the combined
or consolidated financial position of such subsidiary or subsidiaries) as
of the dates shown and their results of operations and cash flows for the
periods shown and all such financial statements have been prepared in
conformity with the generally accepted accounting principles in the United
States applied on a consistent basis (except for changes required by
changes in such accounting principles) and comply as to form with the
applicable accounting requirements of the Act; any schedules included in
the Registration Statement present fairly the information required to be
stated therein; the summary and selected financial data included in the
Registration Statement and the Prospectus, if any, present fairly, on the
basis stated in the Registration Statement and the Prospectus, the
information shown therein; and with respect to any pro forma financial
statements included in the Registration Statement and Prospectus, such pro
forma financial statements comply as to form in all material respects with
Regulation S-X under the Act, and the assumptions used in preparing such
pro forma financial statements provide a reasonable basis for presenting
the significant effects directly attributable to the transactions or events
described therein, the related pro forma adjustments give appropriate
effect to
6
those assumptions, and the pro forma columns therein reflect the proper
application of those adjustments to the corresponding historical financial
statement amounts.
(p) Since the date of the latest audited financial statements included
in the Prospectus, there has been no material adverse change, nor any
development or event reasonably likely to have a prospective material
adverse change, in the condition (financial or other), business, properties
or results of operations of the Company and its subsidiaries taken as a
whole, and there has been no extraordinary dividend or extraordinary
distribution of any kind declared, paid or made by the Company on any class
of its capital stock.
(q) The Company is not and, after giving effect to the offering and
sale of the Offered Securities and the application of the proceeds thereof
as described in the Prospectus, will not be an "investment company" as
defined in the Investment Company Act of 1940, as amended.
3. Purchase and Offering of Offered Securities. The obligation of the
Underwriters to purchase the Offered Securities will be evidenced by an
agreement or exchange of other written communications (the "Terms Agreement") at
the time the Company determines to sell the Offered Securities. The Terms
Agreement will incorporate by reference the provisions of this Agreement, except
as otherwise provided therein, and will specify the firm or firms which will be
Underwriters, the names of any Representatives, the principal amount of Offered
Debt Securities and the number of Offered Debt Warrants to be purchased by each
Underwriter, the purchase price to be paid by the Underwriters and the terms of
the Offered Securities not already specified in the Indenture or the Debt
Warrant Agreement, as the case may be, including, but not limited to, interest
rate, maturity, any redemption provisions, any conversion provisions, and any
sinking fund requirements, the exercise price of the Offered Debt Warrants to be
purchased, the principal amount of Warrant Debt Securities issuable upon
exercise of one such Offered Debt Warrant, the date after which such Offered
Debt Warrants are exercisable, the expiration date thereof and the date, if any,
such Offered Debt Warrants are detachable and whether any of the Offered Debt
Securities or Offered Debt Warrants may be sold to institutional investors
pursuant to Delayed Delivery Contracts (as defined below). Unless otherwise
specified in the Terms Agreement or unless otherwise agreed to by the
Underwriter or Underwriters designated in the applicable Terms Agreement as the
lead Underwriter or Underwriters (the "Lead Underwriter") and the Company,
payment of the purchase price for, and delivery of, any Offered Securities to be
purchased by the Underwriters shall be made at the office of Hunton & ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, no later than 12:00 noon New York
City time, on the third business day following the date of the applicable Terms
Agreement (unless the Offered Securities are priced after 4:30 p.m. New York
City time, in which case such payment and delivery will be made no later than
12:00 noon New York City time, on the fourth business day following the date of
the applicable Terms Agreement),
7
each such time and date for payment and delivery being referred to herein and
in the Terms Agreement as the "Closing Date". For purposes of Rule 15c6-1 under
the Securities Exchange Act of 1934, the Closing Date (if later than the
otherwise applicable settlement date) shall be the date for payment of funds and
delivery of securities for all the Offered Securities sold pursuant to the
offering, other than Contract Securities for which payment of funds and delivery
of securities shall be as hereinafter provided. The obligations of the
Underwriters to purchase the Offered Securities will be several and not joint.
It is understood that the Underwriters propose to offer the Offered Securities
for sale as set forth in the Prospectus.
If the Terms Agreement provides for sales of Offered Debt Securities or
Offered Debt Warrants pursuant to delayed delivery contracts, the Company
authorizes the Underwriters to solicit offers to purchase Offered Debt
Securities or Offered Debt Warrants pursuant to delayed delivery contracts
substantially in the form of Annex I attached hereto (the "Delayed Delivery
Contracts") with such changes therein as the Company may authorize or approve.
Delayed Delivery Contracts are to be with institutional investors, including
commercial and savings banks, insurance companies, pension funds, investment
companies and educational and charitable institutions. On the Closing Date, the
Company will pay, as compensation, to the Representatives for the accounts of
the Underwriters, the fee set forth in such Terms Agreement in respect of the
principal amount of Offered Debt Securities and number of Offered Debt Warrants
to be sold pursuant to Delayed Delivery Contracts (the "Contract Securities").
The Underwriters will not have any responsibility in respect of the validity or
the performance of Delayed Delivery Contracts. If the Company executes and
delivers Delayed Delivery Contracts, the Contract Securities will be deducted
from the Offered Securities to be purchased by the several Underwriters and the
aggregate principal amount of Offered Debt Securities and number of Offered Debt
Warrants, as the case may be, to be purchased by each Underwriter will be
reduced pro rata in proportion to the principal amount of Offered Debt
Securities or number of Offered Debt Warrants set forth opposite each
Underwriter's name in such Terms Agreement, except to the extent that the Lead
Underwriter determines that such reduction shall be otherwise than pro rata and
so advise the Company. The Company will advise the Lead Underwriter not later
than the business day prior to the Closing Date of the Offered Debt Securities
and Offered Debt Warrants that are the Contract Securities.
If the Terms Agreement specifies "Book-Entry Only" settlement or otherwise
states that the provisions of this paragraph shall apply, the Company will
deliver against payment of the purchase price, the Offered Securities in the
form of one or more permanent global securities in definitive form (the "Global
Securities") deposited with the Trustee or the Debt Warrant Agent, as the case
may be, as custodian for The Depository Trust Company ("DTC") and registered in
the name of Cede & Co., as nominee for DTC. Interests in any permanent global
securities will be held only in book-entry form through DTC, except in the
limited circumstances described in the Prospectus. Payment for the Offered
Securities shall be made by the Underwriters in Federal (same
8
day) funds by wire transfer to an account previously designated by the Company
to the Lead Underwriter, in each case drawn to the order of the Company at the
place of payment specified in the Terms Agreement on the Closing Date, against
delivery to the Trustee or the Debt Warrant Agent, as the case may be, as
custodian for DTC of the Global Securities representing all of the Offered
Securities.
4. Certain Agreements of the Company. The Company agrees with the several
Underwriters that it will furnish to counsel for the Underwriters one signed or
certified copy of the registration statement or statements relating to the
Registered Securities, including all exhibits, in the form it became effective
and of all amendments thereto and that, in connection with each offering of
Offered Securities:
(a) The Company will file the Prospectus with the Commission pursuant
to and in accordance with Rule 424(b) not later than the Commission's close
of business on the second business day following the execution and delivery
of the Terms Agreement or, if applicable, such earlier time as may be
required by Rule 424(b).
(b) The Company will advise the Lead Underwriter promptly of any
proposal to amend or supplement the Registration Statement or the
Prospectus and will afford the Lead Underwriter a reasonable opportunity to
comment on any such proposed amendment or supplement; and the Company will
also advise the Lead Underwriter promptly of the filing of any such
amendment or supplement and of the institution by the Commission of any
stop order proceedings in respect of the Registration Statement or of any
part thereof and will use its reasonable best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible its
lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any Underwriter or dealer, any event occurs 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
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary at any time to
amend the Prospectus to comply with the Act, the Company promptly will
notify the Lead Underwriter of such event and will promptly prepare and
file with the Commission, at its own expense, an amendment or supplement
which will correct such statement or omission or an amendment which will
effect such compliance.
(d) As soon as practicable, but not later than 18 months after the
date of each Terms Agreement, the Company will make generally available to
its securityholders an earnings statement covering a period of at least 12
months beginning after the later of (i) the most recent effective date of
the registration statement or statements relating to the Registered
Securities, (ii) the effective date
9
of the most recent post-effective amendment to the Registration Statement
to become effective prior to the date of such Terms Agreement and (iii) the
date of the Company's most recent Annual Report on Form 10-K filed with the
Commission prior to the date of such Terms Agreement, which will satisfy
the provisions of Section 11(a) of the Act.
(e) The Company will furnish to the Representatives copies of the
Registration Statement, including all exhibits, any related preliminary
prospectus, any related preliminary prospectus supplement, and all
amendments and supplements to such documents, in each case as soon as
available, and copies of the Prospectus and all amendments and supplements
to the Prospectus not later than 1:00 p.m., New York City time, on the day
following the date thereof, or as soon thereafter as practicable and, in
each case in such quantities as the Lead Underwriter reasonably requests.
Unless otherwise specified in the Terms Agreement, the Company will pay the
expenses of printing and distributing to the Underwriters all such
documents.
(f) The Company will use its reasonable efforts to arrange for the
qualification of the Offered Securities for sale and the determination of
their eligibility for investment, under the laws of such jurisdictions as
the Lead Underwriter reasonably designates and will continue such
qualifications in effect so long as required for the distribution; provided
that the Company will not be required to qualify to do business in any
jurisdiction where it is not now qualified or take any action which would
subject it to general or unlimited service of process in any jurisdiction
where it is not now subject.
(g) During the period of three years after the date of any Terms
Agreement, the Company will furnish to the Representatives and, upon
request, to each of the other Underwriters, as soon as practicable after
the end of each fiscal year, a copy of its annual report to shareholders
for such year; and the Company will furnish to the Representatives as soon
as available, a copy of each Annual Report on Form 10-K, Quarterly Report
on Form 10-Q, Current Report on Form 8-K and definitive proxy statement of
the Company filed with the Commission under the Securities Exchange Act of
1934 or mailed to shareholders. Such documentation and information may be
furnished or made available electronically.
(h) Unless otherwise specified in the Terms Agreement, the Company
will pay all expenses incident to the performance of its obligations under
the Terms Agreement (including the provisions of this Agreement), for any
filing fees or other expenses (including reasonable fees and disbursements
of counsel) incurred in connection with qualification of the Offered
Securities for sale and any determination of their eligibility for
investment under the laws of such jurisdictions as the Lead Underwriter
reasonably designates and the printing of
10
memoranda relating thereto, for any fees charged by investment rating
agencies for the rating of the Offered Securities, for any applicable
filing fee incident to, and the reasonable fees and disbursements of
counsel for the Underwriters in connection with, the review by the National
Association of Securities Dealers, Inc. of the Offered Securities, for any
travel expenses of the Company's officers and employees and any other
expenses of the Company in connection with attending or hosting meetings
with prospective purchasers of Offered Securities and for expenses incurred
in distributing the Prospectus, any preliminary prospectuses, any
preliminary prospectus supplements or any other amendments or supplements
to the Prospectus to the Underwriters.
(i) Unless otherwise specified in the Terms Agreement, for a period
beginning at the time of execution of the Terms Agreement and ending on the
Closing Date, if any Offered Debt Securities are being issued, without the
prior consent of the Lead Underwriter, the Company will not offer or
contract to sell or, except pursuant to a commitment entered into prior to
the date of the Terms Agreement, sell or otherwise dispose of any debt
securities denominated in the currency or currency unit in which the
applicable Offered Debt Securities are denominated and issued or guaranteed
by the Company and having a maturity of more than one year from the date of
issue.
5. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Offered Securities will be
subject to the accuracy of the representations and warranties on the part of the
Company herein, to the accuracy of the statements of Company officers made
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder and to the following additional conditions precedent:
(a) On or prior to the date of the Terms Agreement, the
Representatives shall have received a letter or letters, in form and
substance satisfactory to the Representatives, dated the date of delivery
thereof, of (i) the Company's independent accountants and (ii) so long as
financial statements audited by any independent accountants for or with
respect to any entity acquired by the Company are included in the
Prospectus, such independent accountants, confirming that in the case of
clause (i), they are, and in the case of clause (ii), as of a specified
date immediately prior to such acquisition, as of the date of their report
and during the period covered by such financial statements on which they
reported, they were independent public accountants within the meaning of
the Act and the applicable published Rules and Regulations thereunder and,
stating, as of the date of such letter or letters (or with respect to
matters involving changes or developments since the respective dates as of
which specified financial information is given or incorporated in the
Prospectus, as of a date not more than three days prior to the date of such
letter or letters, provided that such date shall be after the date of the
Prospectus), the conclusions and findings of such firm or
11
firms with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus.
(b) The Prospectus shall have been filed with the Commission in
accordance with the Rules and Regulations and Section 4(a) of this
Agreement. No stop order suspending the effectiveness of the Registration
Statement or of any part thereof shall have been issued and no proceedings
for that purpose shall have been instituted or, to the knowledge of the
Company or any Underwriter, shall be contemplated by the Commission.
(c) Subsequent to the execution of the Terms Agreement, there shall
not have occurred (i) any change, or any development or event reasonably
likely to have a prospective change, in the condition (financial or other),
business, properties or results of operations of the Company and its
subsidiaries taken as a whole which, in the reasonable judgment of the
Representatives, is material and adverse and makes it impractical or
inadvisable to proceed with completion of the public offering or the sale
of and payment for the Offered Securities on the terms and in the manner
contemplated in the Prospectus; (ii) any downgrading in the rating of any
debt securities of the Company by any "nationally recognized statistical
rating organization" (as defined for purposes of Rule 436(g) under the
Act), or any public announcement that any such organization has under
surveillance or review its rating of any debt securities of the Company
(other than an announcement with positive implications of a possible
upgrading, and no implication of a possible downgrading, of such rating);
(iii) any material suspension or material limitation of trading in
securities generally on the New York Stock Exchange, or any setting of
minimum prices for trading on such exchange, or any suspension of trading
of any securities of the Company on any United States exchange or in the
over-the-counter market; (iv) any banking moratorium declared by U.S.
Federal or New York authorities, or the authorities of any country in whose
currency any Offered Debt Securities or Offered Debt Warrants are
denominated under the applicable Terms Agreement; (v) any outbreak or
escalation of major hostilities in which the United States or any country
in whose currency any Offered Debt Securities or Offered Debt Warrants are
denominated under the applicable Terms Agreement is involved, any
declaration of war by Congress or any other substantial national or
international calamity or emergency if, in the reasonable judgment of the
Representatives, the effect of any such outbreak, escalation, declaration,
calamity or emergency makes it impractical or inadvisable to proceed with
completion of the public offering or the sale of and payment for the
Offered Securities on the terms and in the manner contemplated in the
Prospectus; or (vi) any change or prospective change in, or governmental
action affecting, exchange controls applicable to the currency in which any
Offered Debt Securities or Offered Debt Warrants are denominated, which
change or action, in the reasonable judgment of the Representatives, is
material and adverse and makes it impractical or inadvisable to proceed
with the
12
completion of the public offering or the sale of and payment for the
Offered Securities on the terms and in the manner contemplated in the
Prospectus.
(d) The Representatives shall have received an opinion, dated the
Closing Date, from one or more law firms acting as counsel for the Company,
including local counsel and attorneys employed by the Company or its
subsidiaries, which, in the aggregate, are substantially to the effect
that:
(i) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the Commonwealth of
Virginia, with corporate power and authority to own and lease its
properties and conduct its business as described in the Prospectus;
(ii) The Company is duly qualified to do business as a foreign
corporation in good standing in all jurisdictions in which its
ownership or lease of property or the conduct of its business requires
such qualification and where the failure to be so qualified would,
individually or in the aggregate, have a Material Adverse Effect,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated by the Prospectus;
notwithstanding the foregoing, the Company is duly qualified to do
business as a foreign corporation and is in good standing under the
laws of those jurisdictions set forth on Annex I to such opinion;
(iii) Each Significant Subsidiary has been duly incorporated or
organized, as the case may be, and is an existing corporation or
limited liability company, as the case may be, in good standing under
the laws of the jurisdiction of its incorporation or organization,
with corporate power and authority to own and lease its properties and
conduct its business as described in the Prospectus; all of the issued
and outstanding capital stock or limited liability company interests
of each Significant Subsidiary has been duly authorized and validly
issued and is fully paid and nonassessable; and all outstanding shares
of capital stock or limited liability company interests of each
Significant Subsidiary are owned by the Company, directly or through
subsidiaries, to the knowledge of such counsel, free from security
interests, claims, liens and encumbrances;
(iv) Each Significant Subsidiary that is incorporated under the
laws of a State or Commonwealth of the United States of America (the
"U.S. Significant Subsidiaries") is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions in
which its ownership or lease of real property or the conduct of its
business requires such qualification and where the failure to be so
qualified would, individually or in the aggregate, have a Material
Adverse Effect, whether or not arising from transactions in the
ordinary course of business, except
13
as set forth in or contemplated by the Prospectus; notwithstanding the
foregoing, each U.S. Significant Subsidiary is duly qualified to do
business as a foreign corporation and is in good standing under the
laws of those jurisdictions set forth on Annex I to such opinion;
(v) The Indenture and any Debt Warrant Agreement have been duly
authorized, executed and delivered by the Company; the Indenture has
been duly qualified under the Trust Indenture Act; the Offered
Securities have been duly authorized; the Offered Securities other
than any Contract Securities have been duly executed, authenticated,
issued and delivered; the Indenture, any Debt Warrant Agreement and
the Offered Securities other than any Warrant Debt Securities and any
Contract Securities constitute, and any Warrant Debt Securities, when
executed, authenticated, issued and delivered in the manner provided
in the Indenture and sold pursuant to any Debt Warrant Agreement, and
any Contract Securities, when executed, authenticated, issued and
delivered in the manner provided in the Indenture and sold pursuant to
Delayed Delivery Contracts, will constitute, valid and legally binding
obligations of the Company enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights, to an implied covenant of
fair dealing and to general equity principles; and the Offered
Securities other than any Warrant Debt Securities and any Contract
Securities conform, and any Warrant Debt Securities and any Contract
Securities, when so issued and delivered and sold will conform, to the
description thereof contained in the Prospectus;
(vi) No consent, approval, authorization or order of, or filing
with, any governmental agency or body of the United States of America,
the State of New York, the Commonwealth of Virginia or the State of
Illinois or under the Delaware General Corporation Law or, to such
counsel's knowledge, any court of the United States of America, the
State of New York, the Commonwealth of Virginia or the State of
Illinois or acting under the Delaware General Corporation Law is
required for the consummation of the transactions contemplated by the
Terms Agreement (including the provisions of this Agreement) in
connection with the issuance or sale of the Offered Securities by the
Company, except such as have been obtained and made under the Act and
the Trust Indenture Act and such as may be required under state and
foreign securities laws;
(vii) The execution, delivery and performance of the Indenture,
the Terms Agreement (including the provisions of this Agreement), any
Debt Warrant Agreement, and any Delayed Delivery Contracts and the
issuance and sale of the Offered Securities and compliance with the
terms
14
and provisions thereof will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under, or
result in the imposition of any lien, charge or encumbrance upon any
material property or material assets of the Company or any Significant
Subsidiary pursuant to, any law or statute, or, to the knowledge of
such counsel, any rule, regulation or order of any governmental agency
or body of the United States of America, the State of New York, the
Commonwealth of Virginia or the State of Illinois or under the
Delaware General Corporation Law or of any court of the United States,
the State of New York, the Commonwealth of Virginia or the State of
Illinois or acting under the Delaware General Corporation Law and, in
any such case, having jurisdiction over the Company or any Significant
Subsidiary or any of their properties, or any agreement or instrument
to which the Company or any Significant Subsidiary is a party or by
which the Company or any Significant Subsidiary is bound or to which
any of the properties of the Company or any Significant Subsidiary is
subject, or the charter or by-laws of the Company or any Significant
Subsidiary, and the Company has full power and authority to authorize,
issue and sell the Offered Securities as contemplated by the Terms
Agreement (including the provisions of this Agreement);
(viii) The Registration Statement has become effective under the
Act, the Prospectus was filed with the Commission pursuant to the
subparagraph of Rule 424(b) specified in such opinion on the date
specified therein, and, to the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement or
any part thereof has been issued and no proceedings for that purpose
have been instituted or are pending or contemplated under the Act, and
the registration statement or statements relating to the Registered
Securities, as of its or their effective date or dates, the
Registration Statement and the Prospectus, as of the date of the Terms
Agreement, and any amendment or supplement thereto, as of its date,
complied as to form in all material respects with the requirements of
the Act, the Trust Indenture Act and the Rules and Regulations; such
counsel has no reason to believe that such registration statement or
statements, as of its or their effective date or dates, the
Registration Statement, as of the date of the Terms Agreement or as of
the Closing Date, or any amendment thereto, as of its date or as of
the Closing Date, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Prospectus, as of the date of the Terms Agreement or as of such
Closing Date, or any amendment or supplement thereto, as of its date
or as of the Closing Date, contained any untrue statement of a
material fact or omitted to state any material fact necessary in order
to make the statements therein, in the light
15
of the circumstances under which they were made, not misleading; the
descriptions in the Registration Statement and Prospectus of statutes,
legal and governmental proceedings and contracts and other documents
insofar as such descriptions constitute summaries of the legal
matters, documents or proceedings referenced therein, are accurate in
all material respects and fairly present the information required to
be shown; and such counsel does not know of any legal or governmental
proceedings required to be described in the Prospectus which are not
described as required or of any contracts or documents of a character
required to be described in the Registration Statement or Prospectus
or to be filed as exhibits to the Registration Statement which are not
described and filed as required; it being understood that such counsel
need express no opinion as to the financial statements or other
financial data contained in the Registration Statement or the
Prospectus; and
(ix) The Terms Agreement (including the provisions of this
Agreement) and any Delayed Delivery Contracts have been duly
authorized, executed and delivered by the Company.
Such counsel may rely as to certain matters of fact, to the extent
they deem proper and so long as acceptable in the reasonable opinion the
Representatives, on certificates of responsible officers of the Company and
public officials.
(e) The Representatives shall have received from counsel for the
Underwriters such opinion or opinions, dated the Closing Date, with respect
to the incorporation of the Company, the validity of the Offered
Securities, the Registration Statement, the Prospectus and other related
matters as the Representatives may require, and the Company shall have
furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters. In rendering such opinion, counsel
for the Underwriters may rely as to the incorporation of the Company and
all other matters governed by Virginia law upon the opinion of counsel for
the Company referred to above.
(f) The Representatives shall have received a certificate, dated the
Closing Date, of the President or any Vice President and a principal
financial or accounting officer of the Company in which such officers shall
state that, to their knowledge, the representations and warranties of the
Company in this Agreement are true and correct, that the Company has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date, that no
stop order suspending the effectiveness of the Registration Statement or of
any part thereof has been issued and no proceedings for that purpose have
been instituted or are contemplated by the Commission and that, subsequent
to the date of the most recent financial statements in the Prospectus,
there has been no material adverse change, nor any development or
16
event reasonably likely to have a prospective material adverse change, in
the condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole except as
set forth in or contemplated by the Prospectus or as described in such
certificate.
(g) The Representatives shall have received a letter or letters in
form and substance satisfactory to the Representatives, dated the Closing
Date, of (i) the Company's independent accountants and (ii) so long as
financial statements audited by any independent accountants for or with
respect to any entity acquired by the Company are included in the
Prospectus, such independent accountants which confirms the conclusion and
findings set forth in the letter or letters of such firm or firms delivered
pursuant to the requirements of subsection (a) of this Section, except that
the specified date referred to in such subsection will be a date not more
than three days prior to the Closing Date for purposes of this subsection.
(h) The Representatives shall have received from counsel reasonably
satisfactory to the Representatives, such opinion or opinions dated the
Closing Date, with respect to compliance with the laws of any country,
other than the United States, in whose currency the Offered Securities are
denominated, the validity of the Offered Securities, the Prospectus and
other related matters as they may reasonably require, and the Company shall
have furnished to such counsel such documents as they reasonably request
for the purpose of enabling them to pass upon such matters.
(i) If applicable to the offering of any Offered Securities, the
Representatives shall have received an opinion from ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP, special tax counsel for the Company, dated the Closing Date,
confirming their opinion as to United States tax matters set forth in the
Prospectus.
The Company will furnish the Representatives with such conformed copies of such
opinions, certificates, letters and documents as the Representatives reasonably
request. The Lead Underwriter may in its sole discretion waive on behalf of the
Underwriters compliance with any conditions to the obligations of the
Underwriters under this Agreement and the Terms Agreement.
6. Indemnification and Contribution. (a) The Company will indemnify and
hold harmless each Underwriter, its partners, directors and officers and each
person, if any, who controls such Underwriter within the meaning of Section 15
of the Act, against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter 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 any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement,
the Prospectus, or any amendment or supplement thereto, or any related
preliminary prospectus or preliminary prospectus supplement, or arise out of or
are based
17
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 each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the Company will 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 in or omission
or alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through the Representatives specifically for use therein, it being understood
and agreed that the only such information furnished by any Underwriter consists
of the information described as such in or pursuant to the Terms Agreement; and
provided, further, that with respect to any untrue statement or omission of
material fact made in any preliminary prospectus, the indemnity agreement
contained in this Section 6(a) shall not inure to the benefit of any Underwriter
from whom the person asserting any such loss, claim, damage or liability
purchased the Offered Securities concerned, to the extent that any such loss,
claim, damage or liability of such Underwriter occurs under the circumstance
where it shall have been determined by a court of competent jurisdiction by
final and nonappealable judgment that (w) the Company had previously furnished
copies of the Prospectus to the Representatives, (x) delivery of the Prospectus
was required by the Act to be made to such person, (y) the untrue statement or
omission of a material fact contained in the preliminary prospectus was
corrected in the Prospectus and (z) there was not sent or given to such person,
at or prior to the written confirmation of the sale of such securities to such
person, a copy of the Prospectus. For purposes of the second proviso to the
immediately preceding sentence, the term Prospectus shall not be deemed to
include the documents incorporated therein by reference, and no Underwriter
shall be obligated to send or give any supplement or amendment to any document
incorporated by reference in a preliminary prospectus or the Prospectus to any
person other than a person to whom such Underwriter has delivered such
incorporated documents in response to a written request therefor.
(b) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company, its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the Act, 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 any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus or preliminary prospectus
supplement, or arise out of or are based upon the omission or the 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 reliance upon and in
conformity with written information furnished to the
18
Company by such Underwriter through the Representatives specifically for use
therein, and will reimburse any legal or other expenses reasonably incurred by
the Company in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred, it being understood
and agreed that the only such information furnished by any Underwriter consists
of the information described as such in or pursuant to the Terms Agreement.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may 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 will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall (i) without the
prior written consent of the indemnified party (which consent shall not be
unreasonably withheld), settle, compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
(A) includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding and (B) does not
include a statement as to, or an admission of, fault, culpability or a failure
to act by or on behalf of an indemnified party, or (ii) be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment in accordance with the provisions of this Section 6.
(d) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other
19
from the offering of the Offered Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters. 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 relates to information supplied by the Company, on the one hand,
or the Underwriters, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of 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 action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Offered Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
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 Underwriters' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company under this Section 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 Underwriter
within the meaning of the Act; and the obligations of the Underwriters under
this Section shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each director of the Company, to each officer of the Company who
has signed the Registration Statement and to each person, if any, who controls
the Company within the meaning of the Act.
7. Default of Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase Offered Securities under the Terms Agreement and
the aggregate of Offered Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase does not exceed 10% of the aggregate
amount of the Offered Securities, the Lead Underwriter may make arrangements
satisfactory to the Company for the purchase of such Offered Securities by other
persons, including any of the Underwriters, but if no
20
such arrangements are made by the Closing Date, the non-defaulting
Underwriters shall be obligated severally, in proportion to their respective
commitments under the Terms Agreement (including the provisions of this
Agreement), to purchase the Offered Securities that such defaulting Underwriters
agreed but failed to purchase. If any Underwriter or Underwriters so default and
the aggregate amount of the Offered Securities with respect to which such
default or defaults occur exceeds 10% of the aggregate amount of the Offered
Securities, and arrangements satisfactory to the Lead Underwriter and the
Company for the purchase of such Offered Securities by other persons are not
made within 36 hours after such default, the Terms Agreement will terminate
without liability on the part of any non-defaulting Underwriter or the Company,
except as provided in Section 8. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. As used in this Section only, the "aggregate amount" of the Offered
Securities shall mean the aggregate principal amount of any Offered Debt
Securities plus the public offering price of any Offered Debt Warrants included
in the relevant offering of Offered Securities. Nothing herein will relieve a
defaulting Underwriter from liability for its default. The respective
commitments of the several Underwriters for the purposes of this Section shall
be determined without regard to reduction in the respective Underwriters'
obligations to purchase the amount of Offered Debt Securities or Offered Debt
Warrants set forth opposite their names in the Terms Agreement as a result of
Delayed Delivery Contracts entered into by the Company. The foregoing
obligations and agreements set forth in this Section will not apply if the Terms
Agreement specifies that such obligations and agreements will not apply.
8. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of the several Underwriters set forth in or made
pursuant to the Terms Agreement (including the provisions of this Agreement)
will remain in full force and effect, regardless of any investigation, or
statement as to the results thereof, made by or on behalf of any Underwriter,
the Company or any of their respective representatives, officers or directors or
any controlling person, and will survive delivery of and payment for the Offered
Securities. If the Terms Agreement is terminated pursuant to Section 7 or if for
any reason the purchase of the Offered Securities by the Underwriters is not
consummated, the Company shall remain responsible for the expenses to be paid or
reimbursed by it pursuant to Section 4 and the respective obligations of the
Company and the Underwriters pursuant to Section 6 shall remain in effect. If
the purchase of the Offered Securities by the Underwriters is not consummated
for any reason other than solely because of the termination of the Terms
Agreement pursuant to Section 7 or the occurrence of any event specified in
clause (iii), (iv) or (v) of Section 5(c), the Company will reimburse the
Underwriters for all out-of-pocket expenses (including fees and disbursements of
counsel) reasonably incurred by them in connection with the offering of the
Offered Securities.
9. Notices. All communications hereunder will be in writing and, if sent to
the Underwriters, will be mailed, delivered, telecopied or transmitted by any
other standard form
21
of telecommunication and confirmed to the Representatives at their address set
forth in the Terms Agreement, or, if sent to the Company, will be mailed,
delivered, telecopied or transmitted by any other standard form of
telecommunication and confirmed to it at Three Lakes Drive, Northfield, Illinois
60093, facsimile: (▇▇▇) ▇▇▇-▇▇▇▇, Attention: Senior Vice President, General
Counsel and Corporate Secretary.
10. Successors. The Terms Agreement (including the provisions of this
Agreement) will inure to the benefit of and be binding upon the Company and such
Underwriters as are identified in the Terms Agreement and their respective
successors and the officers and directors and controlling persons referred to in
Section 6, and no other person will have any right or obligation hereunder.
11. Representation of Underwriters. The Representatives will act for the
several Underwriters in connection with the financing described in the Terms
Agreement, and any action under such Terms Agreement (including the provisions
of this Agreement) taken by the Representatives jointly or by the Lead
Underwriter will be binding upon all the Underwriters.
12. Counterparts. The Terms Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
13. Applicable Law. This Agreement and the Terms Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York, including Article 5, Title 14, Section 5-1401 of the General Obligations
Law of the State of New York.
The Company hereby submits to the non-exclusive jurisdiction of the Federal
and state courts in the Borough of Manhattan in The City of New York in any suit
or proceeding arising out of or relating to the Terms Agreement (including the
provisions of this Agreement) or the transactions contemplated thereby.
22
ANNEX I
(Three copies of this Delayed Delivery Contract should be signed and returned
to the address shown below so as to arrive not later than 9:00 A.M.,
New York time, on .............. ......, 20 ...(1))
DELAYED DELIVERY CONTRACT
-------------------------
[Insert date of initial public offering]
KRAFT FOODS INC.
c/o [Insert name of Lead Underwriter]
[Insert address of Lead Underwriter]
Gentlemen:
The undersigned hereby agrees to purchase from Kraft Foods Inc., a
Virginia corporation (the "Company"), and the Company agrees to sell to the
undersigned, [If one delayed closing, insert--as of the date hereof, for
delivery on , 20 (the "Delivery Date"),]
$. . . . . . . . . . . . . . . . . . . . . . . . . . .
principal amount of the Company's [Insert title of debt securities] (the "Debt
Securities") and
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
of the Company's [Insert title of warrants] (the "Debt Warrants") (collectively,
the "Securities"), offered by the Company's Prospectus dated , 20 and a
Prospectus Supplement dated , 20 relating thereto, receipt of copies of which is
hereby acknowledged, at % of the principal amount of the Debt Securities plus
accrued interest, if any, and on the further terms and conditions set forth in
this Delayed Delivery Contract (the "Contract").
------------
(1) Insert date which is third full business day prior to Closing Date
under the Terms Agreement.
[If two or more delayed closings, insert the following:
The undersigned will purchase from the Company as of the date hereof, for
delivery on the dates set forth below, Debt Securities and Debt Warrants in the
principal amount and number, respectively, set forth below:
Principal Amount Number
of Debt of Debt
Delivery Date Securities Warrants
------------- ---------- --------
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Each of such delivery dates is hereinafter referred to as a Delivery Date.]
Payment for the Securities that the undersigned has agreed to purchase
for delivery on [the] [each] Delivery Date shall be made to the Company or its
order in Federal (same day) funds by certified or official bank check or wire
transfer to an account designated by the Company, at the office of at A.M. on
[the] [such] Delivery Date upon delivery to the undersigned of the Securities to
be purchased by the undersigned [for delivery on such Delivery Date] in
definitive fully registered form and in such denominations or numbers and
registered in such names as the undersigned may designate by written or
telegraphic communication addressed to the Company not less than five full
business days prior to [the] [such] Delivery Date.
It is expressly agreed that the provisions for delayed delivery and
payment are for the sole convenience of the undersigned; that the purchase
hereunder of Securities is to be regarded in all respects as a purchase as of
the date of this Contract; that the obligation of the Company to make delivery
of and accept payment for, and the obligation of the undersigned to take
delivery of and make payment for, Securities on [the] [each] Delivery Date shall
be subject only to the conditions that (1) investment in the Securities shall
not at [the] [such] Delivery Date be prohibited under the laws of any
jurisdiction in the United States to which the undersigned is subject and (2)
the Company shall have sold to the Underwriters the total principal amount of
the Debt Securities less the principal amount thereof covered by this and other
similar Contracts. The undersigned represents that its investment in the
Securities is not, as of the date hereof, prohibited under the laws of any
jurisdiction to which the undersigned is subject and which governs such
investment.
Promptly after completion of the sale to the Underwriters the Company
will mail or deliver to the undersigned at its address set forth below notice to
such effect, accompanied
2
by a copy of the opinions of counsel for the Company delivered to the
Underwriters in connection therewith.
This Contract will inure to the benefit of and be binding upon the
parties hereto and their respective successors, but will not be assignable by
either party hereto without the written consent of the other.
It is understood that the acceptance of any such Contract is in the
Company's sole discretion and, without limiting the foregoing, need not be on a
first-come, first-served basis. If this Contract is acceptable to the Company,
it is requested that the Company sign the form of acceptance below and mail or
deliver one of the counterparts hereof to the undersigned at its address set
forth below. This will become a binding contract between the Company and the
undersigned when such counterpart is so mailed or delivered.
Yours very truly,
------------------------------
(Name of Purchaser)
By
------------------------------
(Title of Signatory)
------------------------------
------------------------------
(Address of Purchaser)
Accepted, as of the above date.
KRAFT FOODS INC.
By
------------------------------
[Insert Title]
3
KRAFT FOODS INC.
("Company")
Debt Securities and Warrants to Purchase Debt Securities
TERMS AGREEMENT
---------------
, 20
To: The [Representative[s] of the] Underwriters identified herein
Dear Sirs:
The undersigned agrees to sell to the several Underwriters named [in
Schedule A hereto] [below] for their respective accounts, on and subject to the
terms and conditions of the Underwriting Agreement filed as an exhibit to the
Company's registration statement or statements on Form S-3 relating to debt
securities and warrants to purchase debt securities (the "Underwriting
Agreement"), the following securities (the "Offered Securities") on the
following terms:
OFFERED DEBT SECURITIES
-----------------------
Title: [ %] [Floating Rate]--Notes--Debentures--Bonds--Due.
Principal Amount: $ .
Interest: [ % per annum, from , 20 , payable
semiannually on and , commencing , 20 ,
to holders of record on the preceding or ,
as the case may be.] [Zero coupon.]
Maturity: , 20 .
Currency of Denomination:
Currency of Payment:
Form and Denomination:
Overseas Payment Agents:
Optional Redemption:
Conversion Provisions:
Sinking Fund:
Listing: [None.] [ Stock Exchange.]
Delayed Delivery Contracts: [None.] [Delivery Date[s] shall be
, 20 . Underwriters' fee is % of the
principal amount of the Contract Securities.]
Purchase Price: % of principal amount, plus accrued interest[, if
any,] from , 20 .
Expected Reoffering Price: % of principal amount, subject to
change by the [Representative[s] [Underwriters].
OFFERED DEBT WARRANTS
---------------------
Number of Offered Debt Warrants to be issued:
Debt Warrant Agreement:
Form of Offered Debt Warrants:
Issuable jointly with Debt Securities: [Yes] [No]
[Number of Offered Debt Warrants issued with each $ principal
amount of Offered Debt Securities:]
[Detachable Date:]
Date from which Offered Debt Warrants are exercisable:
Date on which Offered Debt Warrants expire:
Exercise Price of Offered Debt Warrants:
Expected Reoffering Price: $
Purchase Price: $
Title of Warrant Debt Securities: [ %] [Floating Rate]--Notes--
Debentures--Bonds--Due .
2
Principal Amount of Warrant Debt Securities Purchasable upon Exercise
of One Offered Debt Warrant: $
Interest: [ % per annum, from , 20 , payable semiannually
on and , commencing , 20 ,
to holders of record on the preceding or , as
the case may be.] [Zero coupon.]
Maturity: , 20 .
Currency of Denomination:
Currency of Payment:
Form and Denomination:
Overseas Paying Agents:
Optional Redemption:
Conversion Provisions:
Sinking Fund:
OTHER MATTERS
-------------
Closing: A.M. on , 20 , at ,
in Federal (same day) funds.
Settlement and Trading: [Physical certificated form.] [Book-Entry Only
via DTC.]
[Name[s] and Address[es] of the [Representative[s]] [Underwriter[s]]:]
[Name[s] and Address[es] of the Lead Underwriter[s]:]
The respective principal amounts of the Offered Debt Securities and
number of Offered Debt Warrants to be purchased by each of the Underwriters
are set forth opposite their names in Schedule A hereto.
The provisions of the Underwriting Agreement are incorporated herein by
reference.
The Offered Securities will be made available for checking and
packaging at the office of at least 24 hours prior to the Closing Date.
For purposes of Section 6 of the Underwriting Agreement, the only
information furnished to the Company by any Underwriter for use in the
Prospectus consists of [(i)] the following information in the Prospectus
furnished on behalf of each Underwriter: the concession and reallowance
figures appearing in the paragraph under the caption "Underwriting" in the
3
prospectus supplement [If paragraph regarding passive market making is
included, insert--and the information contained in the paragraph
under the caption "Underwriting" in the prospectus supplement] [If
applicable, insert--; and (ii) the following information in the prospectus
supplement furnished on behalf of [insert name of Underwriter]: [insert
description of information, such as material relationship disclosure under
the caption "Underwriting" in the prospectus supplement].
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company one of the counterparts
hereof, whereupon it will become a binding agreement between the Company
and the several Underwriters in accordance with its terms.
Very truly yours,
KRAFT FOODS INC.
By ..............................
[Insert title]
The foregoing Terms Agreement is hereby
confirmed and accepted as of the date
first above written.
[If no co-representative, use first confirmation form.
If co-representative, use second.]
[Insert name of Representative]
By .........................
[Insert title]
[Acting on behalf of itself and as the
Representative of the several
Underwriters.]
[Insert name of Representative]
.............................
.............................,
[Acting on behalf of themselves and as the
Representatives of the several
Underwriters.]
By [Insert name of Representative]
4
By .........................
[Insert title]
5
SCHEDULE A
Principal
Amount Number of
of Offered Debt Offered Debt
Underwriter Securities Warrants
----------- ---------- --------
$
------- -------
Total............................. $
======= =======