[Draft -- 9/2/98]
Exhibit 1.2
$[ ] 1/
Medium-Term Senior Notes, Series C, and
Medium-Term Subordinated Notes, Series D,
Due from Nine Months to 30 Years
from Date of Issue
▇▇▇▇▇ ▇▇▇▇▇▇ Group Inc.
Distribution Agreement
September [ ], 1998
New York, New York
PaineWebber Incorporated
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
▇▇▇▇▇ ▇▇▇▇▇▇ Group Inc., a Delaware corporation (the "Company"),
confirms its agreement with you with respect to the issue and sale by the
Company of up to $[ ] 1/ aggregate principal amount of its Medium-Term Senior
Notes, Series C, and Medium-Term Subordinated Notes, Series D, Due from Nine
Months to 30 Years from Date of Issue (the "Notes"). The Notes will be issued
either as subordinated to ("Subordinated Notes") or on a parity with ("Senior
Notes") other unsecured and unsubordinated indebtedness of the Company and will
have the annual interest rates, maturities, redemption provisions, optional
repayment rights and other terms as set forth in a supplement to the Prospectus
referred to below. The Senior Notes will be issued under an Indenture dated as
of March 15, 1988, between the Company and The Chase Manhattan Bank (formerly
known as Chemical Bank), as trustee (the "Senior Note Trustee"), as amended by
the First Supplemental Indenture dated as of September 22, 1989, and by the
Second Supplemental Indenture dated as of March 22, 1991 (such Indenture, as so
supplemented, being hereinafter referred to as the "Senior Note Indenture"),
each between the Company and the Senior Note Trustee. The Subordinated Notes
will be issued under an Indenture dated as of March 15, 1988, between the
Company and Chase Manhattan Bank Delaware (formerly known as Chemical Bank
Delaware), as trustee (the
--------
1/ Or the U.S. dollar equivalent.
"Subordinated Note Trustee"), as amended by the First Supplemental Indenture
dated as of September 22, 1989, by the Second Supplemental Indenture dated as of
March 22, 1991, and by the Third Supplemental Indenture dated as of November 30,
1993 (such Indenture, as so supplemented, being hereinafter referred to as the
"Subordinated Note Indenture"), each between the Company and the Subordinated
Note Trustee. The Senior Note Indenture and the Subordinated Note Indenture are
hereinafter sometimes referred to as the "Indentures"; and the Senior Note
Trustee and the Subordinated Note Trustee are hereinafter sometimes referred to
as the "Trustees". The Notes will be issued, and the terms thereof established,
in accordance with the Indentures and, in the case of Notes sold pursuant to
Section l(a), the Medium-Term Notes Administrative Procedures attached hereto as
Annex A (the "Procedures"). For the purposes of this Agreement, the term the
"Agent" shall refer to you acting solely in the capacity as agent for the
Company pursuant to Section l(a) and not as principal, the term the "Purchaser"
shall in each instance refer to you acting solely as principal pursuant to
Section l(g) and not as agent, and the term "you" shall refer to you acting in
both such capacities or in either such capacity.
1. Appointment of Agent; Solicitation by the Agent of Offers
to Purchase; Sales of Notes to a Purchaser. (a) Subject to the terms and
conditions set forth herein, the Company hereby appoints the Agent to act as its
agent for the purpose of soliciting offers to purchase all or part of the Notes
from the Company upon the terms set forth in the Prospectus, as amended or
supplemented from time to time, and in the Procedures. The appointment of the
Agent hereunder is not exclusive and the Company may from time to time offer
Notes for sale otherwise than to or through the Agent; provided, however, that
so long as this Agreement is in effect the Company will not solicit offers to
purchase Notes through any agent without amending this Agreement to appoint such
agent an additional Agent hereunder on the same terms and conditions as provided
herein for the Agent and without giving the Agent prior notice of such
appointment. It is understood, however, that if from time to time the Company is
approached by a prospective agent offering to solicit a specific purchase of
Notes, the Company may engage such agent with respect to such specific purchase,
provided that (i) such agent is engaged on terms substantially similar to the
applicable terms of this Agreement and (ii) the Agent is given notice of such
engagement promptly after it is agreed to.
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(b) On the basis of the representations and warranties set forth
herein, but subject to the terms and conditions set forth herein, the Agent
agrees to use reasonable efforts, as agent of the Company, to solicit offers to
purchase Notes from the Company upon the terms set forth in the Prospectus, as
amended or supplemented from time to time, and in the Procedures. The Agent
shall make reasonable efforts to assist the Company in obtaining performance by
each purchaser whose offer to purchase Notes has been solicited by the Agent and
accepted by the Company, but the Agent shall not, except as otherwise provided
in this Agreement, be obligated to disclose the identity of any purchaser or
have any liability to the Company in the event any such purchase is not
consummated for any reason. Subject to the provisions of this Section and to the
Procedures, offers for the purchase of Notes may be solicited by the Agent at
such times and in such amounts as the Agent may from time to time deem
advisable.
(c) The Company reserves the right, in its sole discretion, to suspend
solicitation of offers to purchase Senior Notes or Subordinated Notes from the
Company at any time for any period of time or permanently. Upon receipt of
instructions from the Company, the Agent forthwith will suspend its solicitation
of offers to purchase Senior Notes or Subordinated Notes, as the case may be,
from the Company until such time as the Company has advised the Agent that such
solicitation may be resumed.
(d) The Agent will communicate to the Company, orally or in writing,
each offer to purchase Notes from the Company that is received by the Agent as
agent of the Company and that is not rejected by the Agent as provided below.
The Company will have the sole right to accept offers to purchase Notes from the
Company and may reject any such offer, in whole or in part, for any reason. The
Agent may, in its discretion reasonably exercised, reject any offer to purchase
Notes from the Company that is received by the Agent, in whole or in part, and
any such rejection shall not be deemed a breach of the Agent's agreements
contained herein.
(e) The Company agrees to pay the Agent a commission, on the date of
delivery by the Company of any Note sold hereunder (a "Closing Date"), with
respect to each sale of Notes by the Company as a result of a solicitation made
by the Agent, in an amount equal to that percentage specified in Schedule I
hereto of the aggregate principal amount of each Senior Note and each
Subordinated Note sold by the Company. Such commission shall be payable as
specified in the Procedures. The commission rates may be
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amended from time to time by written agreement of the Company and the Agent.
(f) The Agent agrees, with respect to any Note denominated in a
currency other than the U.S. dollar or a composite currency, as agent, directly
or indirectly, not to solicit offers to purchase, and as principal under any
Terms Agreement (as hereinafter defined) or otherwise, directly or indirectly,
not to offer, sell or deliver, such Note in, or to residents of, the country
issuing such currency, except as permitted by applicable law.
(g) Subject to the terms and conditions stated herein, whenever the
Company and the Agent determine that the Company shall sell Notes directly to
the Agent as purchaser (the "Purchaser"), each such sale of Notes shall be made
in accordance with the terms of this Agreement and any supplemental agreement
relating thereto between the Company and the Purchaser. Each such supplemental
agreement (which shall be substantially in the form of Annex B) is herein
referred to as a "Terms Agreement". The Purchaser's commitment to purchase Notes
pursuant to any Terms Agreement shall be deemed to have been made on the basis
of the representations and warranties of the Company herein contained and shall
be subject to the terms and conditions herein set forth. Each Terms Agreement
shall describe the Notes to be purchased by the Purchaser pursuant thereto and
shall specify the principal amount of such Notes, the price to be paid to the
Company for such Notes, the rate at which interest will be paid on the Notes,
the Closing Date for such Notes, the place of delivery of the Notes and payment
therefor, the method of payment and any modification of the requirements for the
delivery of the opinions of counsel, the certificates from the Company or its
officers and the letter from the Company's independent public accountants
pursuant to Section 7(c). Such Terms Agreement shall also specify any period of
time referred to in Section 5(l).
Delivery of the Notes sold to the Purchaser pursuant to any Terms
Agreement shall be made as agreed to between the Company and the Purchaser and
set forth in the respective Terms Agreement, not later than the Closing Date set
forth in such Terms Agreement, against payment of funds to the Company in the
net amount due to the Company for such Notes by the method and in the form set
forth in such Terms Agreement.
2. Offering Procedures. The Procedures may be amended only by written
agreement of the Company and the Agent after notice to the Trustees, and, to the
extent any such amendment affects a Trustee, with the approval of such
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Trustee. The Company and the Agent agree to perform the respective duties and
obligations specifically provided to be performed by them in the Procedures.
3. Registration Statements and Prospectus. The Company has filed with
the Securities and Exchange Commission (the "Commission"), pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), and the published
rules and regulations adopted by the Commission thereunder (the "Rules"), a
registration statement on Form S-3 (No. 333-17913)(the "First Registration
Statement") and a registration statement on Form S-3 (No. 333-[ ]) (the "Second
Registration Statement") (such Second Registration Statement also constituting
Post-Effective Amendment No. 1 to the First Registration Statement), each
including a basic prospectus, which have become effective under the Securities
Act under which the sale of $[ ] aggregate initial public offering price of debt
securities (the "Securities"), including the Notes, remains registered at this
time (the First Registration Statement and the Second Registration Statement,
each including all exhibits thereto and each as amended at the date of this
Agreement, being hereinafter collectively called the "Registration Statements").
The Company has included in the Registration Statements, or has filed or will
file with the Commission pursuant to the applicable paragraph of Rules 424(b)
and 429 under the Securities Act, a supplement to the form of prospectus
included in the Registration Statements relating to the Notes and the plan of
distribution thereof (the "Prospectus Supplement"). In connection with the sale
of the Notes the Company proposes to file with the Commission pursuant to the
applicable paragraph of Rules 424(b) and 429 under the Securities Act further
supplements to the Prospectus Supplement specifying the interest rates, maturity
dates, redemption provisions, if any, optional repayment rights, if any, and
other terms of the Notes sold pursuant hereto or the offering thereof. The
Indentures have been qualified under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"). The term "the Effective Date" shall mean, for each
of the Registration Statements, each date (in the case of the First Registration
Statement, on or after the effective date of Post-Effective Amendment No. 1
thereto) that such Registration Statement or any post-effective amendment or
amendments thereto became or become effective. "Basic Prospectus" shall mean the
form of basic prospectus relating to the Securities contained in each
Registration Statement at the Effective Date. The term "Prospectus" means the
Basic Prospectus as supplemented by the Prospectus Supple ment. Any reference
herein to a Registration Statement, the Basic Prospectus, the Prospectus
Supplement or the Prospectus
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includes the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 (the "Incorporated Docu ments") which were filed under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), on or before the
Effective Date of such Registration Statement or the issue date of the Basic
Prospectus, the Prospectus Supplement or the Prospectus, as the case may be, and
any reference herein to "amend", "amendment" or "supplement" with respect to a
Registration Statement, the Basic Prospectus, the Prospectus Supplement or the
Prospectus includes the Incorporated Documents filed under the Exchange Act
after the Effective Date of such Registration Statement or the issue date of the
Basic Prospectus, the Prospectus Supplement or the Prospectus, as the case may
be; and any reference herein to the Registration Statements includes each of the
First Registration Statement and the Second Registration Statement only so long
as Notes may be issued in the future thereunder and shall refer to either one or
both of such Registration Statements, as appropriate.
The Company confirms that you are authorized to distribute the
Prospectus and any amendments or supplements thereto.
4. Representations and Warranties. The Company represents and warrants
to you as follows:
(a) The Company meets the requirements for the use of Form S-3 under
the Securities Act. The Registration Statements meet the requirements set forth
in Rule 415(a)(1)(ix) or (x) of the Rules and comply in all other material
respects with Rule 415 of the Rules.
(b) As of the date hereof, on the Effective Date, when any amendment or
supplement to the Prospectus is filed with the Commission pursuant to Rule 424
or Rule 429 of the Rules, as of the date of any Terms Agreement and on any
Closing Date, (i) the Registration Statements, as amended as of any such time,
the Prospectus, as amended or supplemented as of any such time, and the
Incorporated Documents will comply in all material respects with the applicable
requirements of the Securities Act and the Rules, and the Exchange Act and the
Trust Indenture Act and the respective published rules and regulations adopted
by the Commission thereunder, (ii) the Registration Statements, as amended as of
any such time, did not or will not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading, and (iii) the
Prospectus, as amended or supplemented as of any such time, will not contain any
untrue statement of a material fact or
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omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
except that this representation and warranty does not apply to (x) statements or
omissions made in reliance on and in conformity with information relating to you
furnished in writing to the Company by you expressly for use in the Registration
Statements, the Prospectus or any amendment or supplement thereto or (y) that
part of the Registration Statements that shall constitute the Statements of
Eligibility and Qualification on Form T-1 of the Trustees under the Trust
Indenture Act, except statements or omissions in any such Statement made in
reliance upon information furnished in writing to the applicable Trustee by or
on behalf of the Company for use therein.
(c) As of the time any Notes are issued and sold hereunder, the
Indenture will constitute a legal, valid and binding instrument enforceable
against the Company in accordance with its terms and such Notes will have been
duly authorized, executed, authenticated and, when paid for by the purchasers
thereof, will constitute legal, valid and binding obligations of the Company
entitled to the benefits of the Indenture.
Each acceptance by the Company of an offer to purchase Notes from the
Company and each request by the Company to you that you solicit offers to
purchase Notes from the Company will be deemed to be a representation and
warranty by the Company to you that the representations and warranties of the
Company in this Agreement are true and correct as of the time of such acceptance
and that such representations and warranties will be true and correct as of the
Closing Date for such Notes, in each case as though made at and as of such time;
it being understood that such representations and warranties will relate to the
Registration Statements as amended as of any such time and the Prospectus as
amended or supplemented as of any such time.
5. Agreements. (a) Prior to the termination of the offering of the
Notes, the Company will not file any amendment or supplement to either of the
Registration Statements or the Prospectus (except for (i) periodic or current
reports filed under the Exchange Act, (ii) a supplement relating to any offering
of Notes providing solely for the specification of or a change in the maturity
dates, the interest rates, the issuance prices or other similar terms of any
Notes or (iii) a supplement relating to an offering of Securities other than
Notes) (including any document to be incorporated therein by reference) unless a
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copy thereof has been submitted to you a reasonable period of time before its
filing and you have not reasonably objected thereto within a reasonable period
of time after receiving such copy. Subject to the foregoing sentence, the
Company will cause each amendment or supplement to the Prospectus to be filed
with the Commission as required pursuant to the applicable paragraph of Rules
424(b) and/or 429 of the Rules or, in the case of any document to be
incorporated therein by reference, to be filed with the Commission as required
pursuant to the Exchange Act, within the time period prescribed and will provide
evidence satisfactory to you of such filing.
(b) The Company will advise you promptly (i) when each amendment or
supplement to the Prospectus shall have been filed with the Commission pursuant
to Rules 424(b) and/or 429 or, in the case of any document incorporated therein
by reference, when such document shall have been filed with the Commission
pursuant to the Exchange Act, (ii) when, prior to the termination of the
offering of the Notes, any amendment to either of the Registration Statements
shall have been filed or become effective, (iii) of the initiation or
threatening of any proceedings for, or receipt by the Company of any notice with
respect to, the suspension of the qualification of the Notes for sale in any
jurisdiction or the issuance of any order by the Commission suspending the
effectiveness of either of the Registration Statements and (iv) of the receipt
by the Company or any representative or attorney of the Company of any other
communication from the Commission relating to either of the Registration
Statements, the Prospectus or any amendment or supplement thereto or to the
transactions contemplated by this Agreement. The Company will use its best
efforts to prevent the issuance of an order suspending the effectiveness of
either of the Registration Statements and, if any such order is issued, to
obtain its lifting as soon as possible.
(c) The Company will deliver to you, without charge, two conformed
copies of the Second Registration Statement and each post-effective amendment to
the Registration Statements filed after the date hereof (including all exhibits
filed with any such document) and as many conformed copies of the Registration
Statements and each such amendment (excluding exhibits) and each Indenture as
you may reasonably request.
(d) The Company, during the period when a prospectus relating to the
Notes is required to be delivered under the Act, will deliver, without charge,
to you, at such office or offices as you may designate, as many copies of
8
the Prospectus or any amendment or supplement thereto as you may reasonably
request, and, if any event occurs during such period as a result of which the
Prospectus, as then amended or supplemented, would include any 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, not misleading, or if during such period it is necessary to amend either
Registration Statement or to amend or supplement the Prospectus to comply with
the Securities Act or the Rules or the Exchange Act or the published rules and
regulations adopted by the Commission thereunder, the Company promptly will (i)
notify you to suspend solicitation of offers to purchase Notes from the Company,
(ii) prepare and file with the Commission, subject to Section 5(a), and deliver,
without charge, to you, an amendment or supplement which will correct such
statement or omission or effect such compliance and (iii) supply any amended or
supplemented Prospectus to you in such quantities as you may reasonably request.
(e) The Company, during the period when a prospectus relating to the
Notes is required to be delivered under the Act, will file promptly all
documents required to be filed with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act. The Company will make generally
available to its security holders as soon as practicable, but in any event not
later than fifteen months after (i) the Effective Date of the Registration
Statements, (ii) the Effective Date of each post-effective amendment to either
of the Registration Statements and (iii) the date of each filing by the Company
with the Commission of an Annual Report on Form 10-K that is incorporated by
reference in the Registration Statements, an earnings statement satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 of the Rules.
(f) The Company will take such actions as you designate in order to
qualify the Notes for offer and sale under the securities or "blue sky" laws of
such jurisdictions as you designate, will maintain such qualification in effect
for so long as may be required for the distribution of the Notes and will
arrange for the determination of the legality of the Notes for purchase by
institutional investors.
(g) The Company will supply to you copies of such financial statements
and other periodic and special reports as the Company may from time to time
distribute generally to the holders of any class of its capital stock and of
each annual or other report it is required to file with the
9
Commission. The Company shall furnish to you such information, documents,
certificates of officers of the Company and opinions of counsel for the Company
relating to the business, operations and affairs of the Company, the
Registration Statements, the Prospectus, and any amendments thereof or
supplements thereto, the Indenture, the Notes, this Agreement, the Procedures
and the performance by the Company and you of its and your respective
obligations hereunder and thereunder as you may from time to time and at any
time prior to the termination of this Agreement reasonably request.
(h) The Company will, whether or not the transactions contemplated by
this Agreement are consummated or this Agreement is terminated, (i) pay, or
reimburse if paid by you, all costs and expenses incident to the performance of
the obligations of the Company under this Agreement, including costs and
expenses relating to (A) the preparation, printing and filing of the
Registration Statements and exhibits thereto, the Prospectus, all amendments and
supplements to either of the Registration Statements and the Prospectus, and the
printing or other reproduction of the Indentures and this Agreement, (B) the
authorization and issuance of the Notes and the preparation and delivery of
certificates for the Notes, (C) the registration or qualification of the Notes
for offer and sale under the securities or "blue sky" laws of the jurisdictions
referred to in paragraph (f) of this Section 5 and the determination of the
legality of the Notes, including the fees and disbursements of Cravath, Swaine &
▇▇▇▇▇, your counsel, in that connection, and the preparation and printing of any
preliminary and supplemental "blue sky" memoranda and legal investment
memoranda, (D) the furnishing (including costs of shipping and mailing) to you
of copies of the Prospectus, and all amendments or supplements to the
Prospectus, and of all other documents, reports and other information required
by this Section to be so furnished, (E) all transfer taxes, if any, with respect
to the sale and delivery of the Notes by the Company, (F) the fees and expenses
of the Trustees, (G) all fees charged by the National Association of Securities
Dealers, Inc., in connection with the Notes and (H) the fees charged by rating
agencies in connection with any rating of the Notes, (ii) reimburse you on a
quarterly basis for all out-of-pocket expenses (including advertising expenses)
incurred by you with the advance approval of the Company and (iii) reimburse the
reasonable fees and disbursements of Cravath, Swaine & ▇▇▇▇▇, your counsel,
incurred in connection with this Agreement.
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(i) Each time that either of the Registration Statements or the
Prospectus is amended or supplemented (other than by an amendment or supplement
relating to any offering of Securities other than the Notes or providing solely
for the specification of or a change in the maturity dates, the interest rates,
the issuance prices or other similar terms of any Notes sold pursuant hereto),
including by the filing of any document incorporated therein by reference, the
Company will deliver or cause to be delivered forthwith to you a certificate of
the chief executive, operating or financial officer or treasurer and the
secretary or chief financial or accounting officer or treasurer of the Company,
dated the date of the effectiveness of such amendment or the date of filing of
such supplement, in form reasonably satisfactory to you, to the effect that the
statements contained in the certificate that was last furnished to you pursuant
to either Section 6(c) or this paragraph (i) are true and correct at the time of
the effectiveness of such amendment or the filing of such supplement as though
made at and as of such time (except that (i) the last day of the fiscal quarter
for which financial statements of the Company were last filed with the
Commission shall be substituted for the corresponding date in such certificate
and (ii) such statements shall be deemed to relate to the Registration
Statements and the Prospectus as amended or supplemented to the time of the
effectiveness of such amendment or the filing of such supplement) or, in lieu of
such certificate, a certificate of the same tenor as the certificate referred to
in Section 6(c) but modified to relate to the last day of the fiscal quarter for
which financial statements of the Company were last filed with the Commission
and to the Registration Statements and the Prospectus as amended or supplemented
to the time of the effectiveness of such amendment or the filing of such
supplement.
(j) Each time that either of the Registration Statements or the
Prospectus is amended or supplemented (other than by an amendment or supplement
(i) relating to any offering of Securities other than the Notes, (ii) providing
solely for the specification of or a change in the maturity dates, the interest
rates, the issuance prices or other similar terms of any Notes sold pursuant
hereto, or (iii) setting forth or incorporating by reference financial
statements or other information as of and for a fiscal quarter, unless, in the
case of clause (iii) above, in your reasonable judgment, such financial
statements or other information are of such a nature that an opinion of counsel
should be furnished), including by the filing of any document incorporated
therein by reference, the Company will furnish or cause to be furnished
forthwith to you a written
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opinion and a written letter of counsel for the Company satisfactory to you,
dated the date of the effectiveness of such amendment or the date of filing of
such supplement, in form satisfactory to you, of the same tenor as the opinion
and letter referred to in Section 6(d) but modified to relate to the
Registration Statements and the Prospectus as amended or supplemented to the
time of the effectiveness of such amendment or the filing of such supplement or,
in lieu of such opinion and letter, counsel last furnishing such an opinion and
letter to you may furnish you with a letter to the effect that you may rely on
such counsel's last opinion and last letter to the same extent as though it were
dated the date of such letter authorizing reliance (except that statements in
such counsel's last opinion and last letter will be deemed to relate to the
Registration Statements and the Prospectus as amended or supplemented to the
time of the effectiveness of such amendment or the filing of such supplement).
(k) Each time that either of the Registration Statements or the
Prospectus is amended or supplemented to set forth amended or supplemental
financial information, including by the filing of any document incorporated
therein by reference, the Company will cause its independent public accountants
forthwith to furnish a letter, dated the date of the effectiveness of such
amendment or the date of filing of such supplement, in form satisfactory to you,
of the same tenor as the letter referred to in Section 6(f) with such changes as
may be necessary to reflect the amended and supplemental financial information
included or incorporated by reference in the Registration Statements and the
Prospectus, as amended or supplemented to the date of such letter, provided that
if either of the Registration Statements or the Prospectus is amended or
supplemented solely to include or incorporate by reference financial information
as of and for a fiscal quarter, the Company's independent public accountants may
limit the scope of such letter, which shall be satisfactory in form to you, to
the unaudited financial statements, the related "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and any other
information of an accounting, financial or statistical nature included in such
amendment or supplement, unless, in your reasonable judgment, such letter should
cover other information or changes in specified financial statement line items.
(l) During the period, if any, specified in any Terms Agreement, the
Company shall not, without the prior consent of the Purchaser, issue or announce
the proposed issuance of any of its debt securities, including Notes,
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with terms substantially similar to the Notes being purchased pursuant to such
Terms Agreement.
(m) Upon your reasonable request on any Closing Date, the Company will
furnish or cause to be furnished forthwith to you a written opinion of counsel
for the Company satisfactory to you, dated such Closing Date, of the same tenor
as paragraphs 1 and 3 of the opinion referred to in Section 6(d), but modified,
as necessary, to relate to the Prospectus as amended or supplemented at such
Closing Date and except that such opinion shall state that the Notes being sold
by the Company on such Closing Date, when delivered against payment therefor as
provided in the applicable Indenture and this Agreement, will, assuming
performance by the authenticating agent or the applicable Trustee under the
applicable Indenture, have been duly executed, authenticated, issued and
delivered and will constitute legal, valid and binding obligations of the
Company entitled to the benefits of the applicable Indenture and enforceable in
accordance with their terms, subject only to the exceptions as to enforcement
set forth in paragraph 3 of the opinion referred to in Section 6(d), and that
such Notes conform to the description thereof contained in the Prospectus as
amended or supplemented to such Closing Date.
6. Conditions to the Obligations of the Agent. The obligations of the
Agent to solicit offers to purchase Notes from the Company are subject to the
accuracy, on the date of this Agreement, on the Effective Date of each
Registration Statement, when any amendment or supplement to the Prospectus is
filed with the Commission pursuant to the applicable paragraph of Rule 424(b)
and/or 429 of the Rules and on each Closing Date, of the representations and
warranties of the Company in this Agreement, to the accuracy and completeness of
all statements made by the Company or any of its officers in any certificate
delivered to the Agent or the Agent's counsel pursuant to this Agreement, to
performance by the Company of its obligations under this Agreement and to each
of the following additional conditions:
(a) If filing of the Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b), the Prospectus, and any such
supplement, shall have been filed in the manner and within the time
period required by Rule 424(b); and no order suspending the
effectiveness of either of the Registration Statements, as amended from
time to time, shall be in effect and no proceedings for such purpose
shall be pending before or threatened by the Commission, and any
requests for additional information on the part of the
13
Commission (to be included in either of the Registration Statements or
the Prospectus or otherwise) shall have been complied with to the
reasonable satisfaction of the Agent.
(b) Since the date of the most recent financial statements
included or incorporated by reference in the Prospectus, (i) there must
not have been any change (of the type indicated in paragraph (b)(3) of
Annex D to this Agreement) specified in the most recent letter of the
type referred to in Section 5(k), in paragraph (f) of this Section 6 or
in Section 7(c)(iv), (ii) there must not have been any material adverse
change in the general affairs, prospects, management, business,
properties, financial condition or results of operations of the Company
and its subsidiaries taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated by the Prospectus, as then amended or supplemented,
(iii) the Company and its subsidiaries must not have sustained any
material loss or interference with their business or properties from
fire, explosion, earthquake, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree not described
in the Prospectus, as then amended or supplemented, and (iv) there must
not have been any downgrading in the rating of any of the Company's
debt securities by any nationally recognized statistical rating
organization (as defined for purposes of Rule 436(g) of the Rules) or
any public announcement by any such organization of any proposal by it
to downgrade such rating or that it has under surveillance or review
its rating of the Notes or any other 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) if, in the judgment of the Agent, any such development referred
to in clause (i), (ii), (iii) or (iv) makes it impracticable or
inadvisable to proceed with the soliciting of offers to purchase Notes
from the Company as contemplated by the Prospectus, as then amended or
supplemented.
(c) The Company shall have furnished to the Agent on the date
of this Agreement a certificate of the Treasurer and the General
Counsel of the Company, dated such date, certifying that (i) the
signers have carefully examined the Registration Statements, the
Prospectus, the Indentures and this Agreement, (ii) the
14
representations and warranties of the Company in this Agreement are
accurate on and as of the date of such certificate and the Company has
complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied as a condition to the obligation
of the Agent to solicit offers to purchase the Notes, (iii) since the
date of the most recent financial statements included or incorporated
by reference in the Prospectus, there has not been any material adverse
change in the general affairs, prospects, management, business,
properties, financial condition or results of operations of the Company
and its subsidiaries taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus, as amended or supplemented as of the
date of such certificate, and (iv) to the knowledge of such officers,
no action to suspend the effectiveness of either of the Registration
Statements, as amended as of the date of such certificate, or to
prohibit the sale of the Notes has been taken or threatened by the
Commission.
(d) The Agent shall have received on the date of this
Agreement from the General Counsel of the Company an opinion and a
letter each dated such date substantially identical to the proposed
form of opinion and form of letter set forth in Annex C to this
Agreement.
(e) The Agent shall have received on the date of this
Agreement from Cravath, Swaine & ▇▇▇▇▇, its counsel, an opinion dated
such date with respect to the Company, the Notes, the Indentures, this
Agreement and the form and sufficiency of all proceedings taken in
connection with the sale and delivery of the Notes and a letter dated
such date with respect to the Registration Statements and the
Prospectus. Such opinion, letter and proceedings shall be satisfactory
in all respects to the Agent. The Company must have furnished to such
counsel such documents as they may reasonably request for the purpose
of enabling them to render such opinion and letter.
(f) The Agent shall have received, at the date of this
Agreement, a signed letter from Ernst & Young LLP, independent
accountants for the Company, substantially in the form of Annex D to
this Agreement.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement will comply
15
with this Agreement only if they are in form and scope satisfactory to the Agent
and its counsel.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Agent and its counsel, this Agreement and all obligations
of the Agent hereunder may be canceled at any time by the Agent. Notice of such
cancelation shall be given to the Company in writing or by telephone or
telegraph confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the office of Cravath, Swaine & ▇▇▇▇▇, counsel for the Agent, at
Worldwide Plaza, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ the date of this
Agreement.
7. Conditions to the Obligations of the Pur chaser. The obligations of
the Purchaser to purchase any Notes from the Company are subject to the
accuracy, on the date of any related Terms Agreement and on the Closing Date for
such Notes, of the representations and warranties of the Company in this
Agreement, to the accuracy and completeness of all statements made by the
Company or any of its officers in any certificate delivered to the Purchaser or
its counsel pursuant to this Agreement, to performance by the Company of its
obligations under this Agreement and to each of the following additional
conditions:
(a) No stop order suspending the effectiveness of either of
the Registration Statements shall have been issued and no proceedings
for that purpose shall have been instituted or threatened.
(b) Since the date of the most recent financial statements
included or incorporated by reference in the Prospectus, (i) there must
not have been any change (of the type indicated in paragraph (b)(3) of
Annex D to this Agreement) specified in the most recent letter of the
type referred to in Section 5(k), in Section 6(f) or in paragraph
(c)(iv) of this Section 7, (ii) there must not have been any material
adverse change in the general affairs, prospects, management, business,
properties, financial condition or results of operations of the Company
and its subsidiaries taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
16
or contemplated by the Prospectus, as then amended or supplemented,
(iii) the Company and its subsidiaries must not have sustained any
material loss or interference with their business or properties from
fire, explosion, earthquake, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree not described
in the Prospectus, as then amended or supplemented, and (iv) there must
not have been any downgrading in the rating of any of the Company's
debt securities by any nationally recognized statistical rating
organization (as defined for purposes of Rule 436(g) of the Rules) or,
if so specified in the applicable Terms Agreement, any public
announcement by any such organization of any proposal by it to
downgrade such rating or that it has under surveillance or review its
rating of the Notes or any other 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) if, in the judgment of the Purchaser, any such development
referred to in clause (i), (ii), (iii) or (iv) makes it impracticable
or inadvisable to consummate the purchase of the Notes.
(c) If specified by any related Terms Agreement and except to
the extent modified by such Terms Agreement, the Purchaser shall have
received, appropriately updated, (i) a certificate of the Company,
dated as of the Closing Date, to the effect set forth in Section 6(c)
(except that references to the Prospectus shall be to the Prospectus as
supplemented at the time of execution of the Terms Agreement), (ii) the
opinion and letter of the General Counsel of the Company, each dated as
of the Closing Date, to the effect set forth in Section 6(d), (iii) the
opinion and letter of Cravath, Swaine & ▇▇▇▇▇, counsel for the
Purchaser, each dated as of the Closing Date, to the effect set forth
in Section 6(e) and (iv) a letter of Ernst & Young LLP, independent
accountants for the Company, dated as of the Closing Date, to the
effect set forth in Section 6(f).
(d) Prior to the Closing Date, the Company shall have
furnished to the Purchaser such further information, certificates and
documents as the Purchaser may reasonably request.
If any of the conditions specified in this Section 7 shall not have
been fulfilled in all material respects when and as provided in this Agreement
and any
17
Terms Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement or such Terms Agreement shall not be in all material
respects reasonably satisfactory in form and substance to the Purchaser and its
counsel, such Terms Agreement and all obligations of the Purchaser thereunder
and with respect to the Notes subject thereto may be canceled at, or at any time
prior to, the respective Closing Date by the Purchaser. Notice of such
cancelation shall be given to the Company in writing or by telephone or
telegraph confirmed in writing.
8. Right of Person Who Agreed to Purchase to Refuse to Purchase. The
Company agrees that any person who has agreed to purchase and pay for any Note,
including the Purchaser and any person who purchases pursuant to a solicitation
by the Agent, shall have the right to refuse to purchase such Note if, at the
Closing Date therefor, any condition set forth in Section 6 or 7, as applicable,
shall not be satisfied, it being understood that under no circumstances
whatsoever shall the Agent have any duty or obligation to exercise the judgment
permitted under Section 6(b) or Section 7(b) on behalf of any such person.
9. Indemnification. (a) The Company will indemnify and hold harmless
you, your directors, officers, employees and agents and each person, if any, who
controls you within the meaning of either the Securities Act or the Exchange Act
against any and all losses, claims, damages and liabilities, joint or several
(including any investigation, legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted), to which they, or any of them, may become
subject under the Securities Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, either Registration Statement or the Prospectus or any
amendment or supplement to any of the foregoing, 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,
provided that the Company will not be liable to the extent that such loss,
claim, damage or liability arises from the sale of Notes by the Company to any
person in the manner contemplated in the Prospectus, as amended or supplemented
as of the time of the confirmation of such sale, as a result of a solicitation
by you and is based upon an untrue statement or omission or alleged untrue
statement or omission (i) made in reliance upon and in conformity with
18
information relating to you furnished in writing to the Company by you expressly
for use in the document or (ii) in a preliminary prospectus if the Prospectus,
as amended or supplemented as of the time of the confirmation of the sale to
such person, corrected the untrue statement or omission or alleged untrue
statement or omission which is the basis of the loss, claim, damage or liability
for which indemnification is sought and a copy of the Prospectus, as so amended
(but excluding any documents incorporated therein by reference), was not sent or
given to such person at or before the confirmation of the sale to such person in
any case where such delivery is required by the Securities Act, unless such
failure to deliver the Prospectus, as so amended, was a result of noncompliance
by the Company with Section 5(d). This indemnity agreement will be in addition
to any liability that the Company might otherwise have.
(b) You will indemnify and hold harmless the Company, each person, if
any, who controls the Company within the meaning of either the Securities Act or
the Exchange Act, each director of the Company and each officer of the Company
who signs either of the Registration Statements to the same extent as the
foregoing indemnity from the Company to you, but only insofar as losses, claims,
damages or liabilities arise from the sale of Notes by the Company to any person
in the manner contemplated in the Prospectus as a result of a solicitation by
you and are based upon any untrue statement or omission or alleged untrue
statement or omission made in any preliminary prospectus, either Registration
Statement or the Prospectus or any amendment or supplement to any of them in
reliance upon and in conformity with information relating to you furnished in
writing to the Company by you expressly for use in the document. This indemnity
agreement will be in addition to any liability that you might otherwise have.
(c) Any party that proposes to assert the right to be indemnified under
this Section 9 will, promptly after receipt of notice of commencement of any
action against such party in respect of which a claim is to be made against an
indemnifying party or parties under this Section 9, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission so to notify such indemnifying party (i) will
not relieve it from liability under this Section 9 unless and to the extent it
did not otherwise learn of such action and such failure results in the
forfeiture by the indemnifying party of substantial rights and defenses and (ii)
will not relieve it from any liability that it may have to any indemnified party
otherwise than under this Section 9. If any such action is brought against any
indemnified party and
19
it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate in, and, to the extent that it elects by
delivering written notice to the indemnified party promptly after receiving
notice of the commencement of the action from the indemnified party, jointly
with any other indemnifying party similarly notified, to assume the defense of
the action, with counsel satisfactory to the indemnified party, and, after
notice from the indemnifying party to the indemnified party of its election to
assume the defense, the indemnifying party will not be liable to the indemnified
party for any legal or other expenses except as provided below and except for
the reasonable costs of investigation subsequently incurred by the indemnified
party in connection with the defense. The indemnified party will have the right
to employ its own counsel in any such action, but the fees and expenses of such
counsel will be at the expense of such indemnified party unless (1) the
employment of counsel by the indemnified party has been authorized in writing by
the indemnifying party, (2) the indemnified party has reasonably concluded that
there may be legal defenses available to it or other indemnified parties which
are different from or in addition to those available to the indemnifying party
(in which case the indemnifying party will not have the right to direct the
defense of such action on behalf of the indemnified party) or (3) the
indemnifying party has not in fact employed counsel to assume the defense of
such action within a reasonable time after receiving notice of the commencement
of the action, in each of which cases the fees and expenses of such counsel will
be at the expense of the indemnifying party or parties and all such fees and
expenses will be reimbursed promptly as they are incurred. An indemnifying party
will not be liable for any settlement of any action or claim effected without
its written consent or, in connection with any proceeding or related proceedings
in the same jurisdiction, for the fees and expenses of more than one separate
counsel for all indemnified parties.
10. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 9 is applicable in accordance with its terms but for any reason is held
to be unavailable from the Company or you, the Company and you agree to
contribute to the aggregate losses, claims, damages and liabilities (including
any investigation, legal and other expenses reasonably incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding or
any claim asserted) (collectively "Losses") to which the Company and you may be
subject in such proportion as is appropriate to reflect the relative benefits
received by the Company and by you from the offering of the Notes
20
from which such Losses arise; provided, however, that in no case shall you be
responsible for any amount in excess of the commissions received by you in
connection with the sale of Notes from which such Losses arise (or, in the case
of Notes sold pursuant to a Terms Agreement, the aggregate commissions that
would have been received by you if such commissions had been payable). If the
allocation provided by the immediately preceding sentence is unavailable for any
reason, the Company and you shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and you in connection with the statements or omissions
which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal to
the total net proceeds from the offering (before deducting expenses) of the
Notes from which such Losses arise, and benefits received by you shall be deemed
to be equal to the total commissions received by you in connection with the sale
of Notes from which such Losses arise (or, in the case of Notes sold pursuant to
a Terms Agreement, the aggregate commissions that would have been received by
you if such commissions had been payable). Relative fault shall be determined by
reference to whether any alleged untrue statement or omission relates to
information provided by the Company or you. The Company and you agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this Section 10, no person found guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 10, any person who controls a
party to this Agreement within the meaning of either the Securities Act or the
Exchange Act will have the same rights to contribution as that party, and each
officer of the Company who signed either of the Registration Statements and each
director of the Company will have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of this
Section 10. Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action against such party in respect of which a
claim for contribution may be made under this Section 10, notify such party or
parties from whom contri bution may be sought, but the omission so to notify (i)
will not relieve such party or parties from liability under this Section 10
unless and to the extent it or they did not otherwise learn of such action and
such failure results in the forfeiture by such party or parties of substantial
21
rights and defenses and (ii) will not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have
otherwise than under this Section 10. No party will be liable for contribution
with respect to any action or claim settled without its written consent.
11. Termination. (a) This Agreement may, as between the Company and
you, be terminated for any reason at any time by either the Company or you
giving written notice of such termination to the other party. If any such notice
is given, this Agreement will terminate, as between the Company and you, at the
close of business on the third business day following the receipt of such notice
by the party to whom such notice is given. In the event of any such termination,
no party shall have any liability to the other party hereto, except as provided
in Sections l(e), 5(h), 9, 10 and 12, and this Agreement shall continue between
the Company and any other party to this Agreement without regard to any such
termination.
(b) Each Terms Agreement shall be subject to termination in the
absolute discretion of the Purchaser by notice given to the Company if, prior to
delivery of any payment for Notes to be purchased thereunder, (1) trading in the
equity securities of the Company is suspended by the Commission, by an exchange
that lists such equity securities of the Company, or by the NASDAQ National
Market, (2) additional material governmental restrictions, not in force on the
date of this Agreement, have been imposed upon trading in securities generally
or minimum or maximum prices have been generally established on the New York
Stock Exchange or on the American Stock Exchange, or trading in securities
generally has been suspended on any such Exchange or a general banking
moratorium has been established by Federal or New York authorities or (3) any
outbreak or material escalation of hostilities or other calamity or crisis
occurs the effect of which is such as to make it, in the judgment of the
Purchaser, impracticable to market such Notes.
12. Miscellaneous. The respective representa tions, warranties and
agreements of the Company and you in this Agreement will remain in full force
and effect regardless of any investigation made by or on behalf of you, the
Company or any person controlling you or the Company and will survive delivery
of and payment for the Notes. The reimbursement, indemnification and
contribution agreements in Sections 1(e), 5(h), 9, 10 and 12 will remain in full
force and effect regardless of any termination of this Agreement.
22
This Agreement is for the benefit of you and the Company and the
respective successors of you and the Company and, to the extent expressed in
this Agreement, for the benefit of persons controlling you or the Company, and
directors and officers of the Company, and their respective successors, and no
other person, partnership, association or corporation shall acquire or have any
right under or by virtue of this Agreement.
Notwithstanding anything to the contrary contained in the Distribution
Agreement dated December 23, 1996, between the Company and you (the "Prior
Agreement"), the Prior Agreement shall terminate (except with respect to
Sections 1(e), 5(h), 9, 10 and 12 thereof) immediately upon the execution and
delivery of this Agreement.
All notices and communications under this Agreement will be in writing,
effective only on receipt and mailed or delivered by messenger, facsimile
transmission or otherwise to PaineWebber Incorporated at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, attention of General Counsel and Treasurer
or to the Company at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
attention of General Counsel and Treasurer.
This Agreement may be signed in multiple counterparts that taken as a
whole constitute one agreement.
This Agreement will be governed by and construed in accordance with the
laws of the State of New York.
Please confirm that the foregoing correctly sets forth the agreement
between us.
Very truly yours,
▇▇▇▇▇ ▇▇▇▇▇▇ GROUP INC.,
by
------------------------
Title:
23
Confirmed:
PAINEWEBBER INCORPORATED,
by
--------------------
Title:
24
Schedule I
SENIOR AND SUBORDINATED MEDIUM-TERM NOTE FEES
Maturity Senior Subordinated
----------------------------------- ------ ------------
9 months to less than 12 months .050 .050
12 months to less than 18 months .125 .125
18 months to less than 2 years .150 .150
2 years to less than 3 years .250 .250
3 years to less than 4 years .350 .350
4 years to less than 5 years .450 .450
5 years to less than 7 years .500 .500
7 years to less than 10 years .550 .550
10 years to less than 20 years .600 .600
20 years to 30 years .750 .750
Annex A
-------
▇▇▇▇▇ ▇▇▇▇▇▇ GROUP INC.
Medium-Term Notes Administrative Procedures
September [ ], 1998
Medium-Term Senior Notes, Series C, and Medium-Term Subordinated Notes,
Series D, Due from Nine Months to 30 Years from Date of Issue (the "Notes") are
to be offered on a continuing basis by ▇▇▇▇▇ ▇▇▇▇▇▇ Group Inc. (the "Company").
PaineWebber Incorporated, as agent (the "Agent"), has agreed to use reasonable
efforts to solicit offers to purchase Notes from the Company. The Agent will be
obligated to purchase Notes for its own account. The Notes are being sold
pursuant to a Distribution Agreement between the Company and the Agent dated
September [ ], 1998 (the "Distribution Agreement"). The Notes will be issued
either as subordinated to ("Subordinated Notes") or on a parity with ("Senior
Notes") other unsecured and unsubordinated indebtedness of the Company and have
been registered with the Securities and Exchange Commission (the "Commission").
The Chase Manhattan Bank (the "Senior Note Trustee") is the trustee under the
Indenture dated as of March 15, 1988, covering the Senior Notes, as supplemented
by the First Supplemental Indenture dated as of September 22, 1989, and by the
Second Supplemental Indenture dated as of March 22, 1991 (such Indenture, as so
supplemented, being hereinafter referred to as the "Senior Note Indenture"),
each between the Company and the Senior Note Trustee. Chase Manhattan Bank
Delaware (the "Subordinated Note Trustee") is the trustee under the Indenture
dated as of March 15, 1988, covering the Subordinated Notes, as supplemented by
the First Supplemental Indenture dated as of September 22, 1989, by the Second
Supplemental Indenture dated as of March 22, 1991, and by the Third Supplemental
Indenture dated as of November 30, 1993 (such Indenture, as so supplemented,
being hereinafter referred to as the "Subordinated Note Indenture"), each
between the Company and the Subordinated Note Trustee. The Senior Note Indenture
and the Subordinated Note Indenture are hereinafter sometimes called the
"Indentures"; and the Senior Note Trustee and the Subordinated Note Trustee are
hereinafter sometimes called the "Trustees".
Notes may be represented by a Global Note (as hereinafter defined)
delivered to The Chase Manhattan Bank (in such capacity, the "Custodian") as
agent for The Depository Trust Company ("DTC"), with ownership of beneficial
interests in such Global Notes recorded in the book-entry system maintained by
DTC (each such interest in a
Global Note being referred to herein as a "Book-Entry Note"), or may be
represented by a certificate delivered to the holder thereof or a person
designated by such holder (each a "Certificated Note"). An owner of a Book-Entry
Note will not be entitled to receive a certificate representing such Note. In
connection with the qualification of the Book-Entry Notes for eligibility in the
book-entry system maintained by DTC, The Chase Manhattan Bank will perform the
custodial, document control and administrative functions described in Part II
below, in accordance with its respective obligations under a Letter of
Representations from the Company and The Chase Manhattan Bank to DTC relating to
the Senior Notes and a Letter of Representations from the Company, The Chase
Manhattan Bank and the Subordinated Note Trustee to DTC relating to the
Subordinated Notes (each a "Letter of Representations", and, collectively, the
"Letters of Representations") and a Medium-Term Note Certificate Agreement (the
"Certificate Agreement") between The Chase Manhattan Bank and DTC, and its
obligations as a participant in DTC, including DTC's Same-Day Funds Settlement
system ("SDFS").
Administrative procedures and certain terms of the offering are
explained below. Certain general terms of the offering, applicable to both
Book-Entry Notes and Certificated Notes, are set forth in Part I hereof.
Book-Entry Notes will be issued in accordance with the administrative procedures
set forth in Part II hereof, as adjusted in accordance with changes in DTC's
operating requirements, and Certificated Notes will be issued in accordance with
the administrative procedures set forth in Part III hereof. Unless otherwise
defined herein, terms defined in the Distribution Agreement, the Indentures and
the Notes shall be used herein as therein defined. Notes for which interest is
calculated on the basis of a fixed interest rate, which may be zero, are
referred to herein as "Fixed Rate Notes". Notes for which interest is calculated
on the basis of a floating interest rate are referred to herein as "Floating
Rate Notes". To the extent the procedures set forth below conflict with the
provisions of the Notes, the Indentures, DTC's operating requirements or the
Distribution Agreement, the relevant provisions of the Notes, the Indentures,
DTC's operating requirements and the Distribution Agreement shall control. The
Company will advise the Agent from time to time in writing of those persons with
whom the Agent is to communicate with respect to offers to purchase Notes from
the Company and the details of their delivery. References below to "the Agent"
shall mean the Agent involved in any proposed purchase and sale of any Note or
Notes.
2
Part I. Certain Terms of the Offering
-----------------------------
Price to Public: Each Note will be issued at the percentage
of its principal amount specified in the
Prospectus Supplement, as then amended or
supplemented, relating to the Notes.
Denominations: Notes denominated in U.S. dollars will be
-------------- issued in minimum denominations of $100,000
and in denominations exceeding such amount
by integral multiples of $1,000. Book-Entry
Notes will not be denominated in any
currency or composite currency other than
the U.S. dollar. Certificated Notes
denominated in other than U.S. dollars will
be issued in the denominations specified
pursuant to "Settlement Procedures" in Part
III below.
Registration: Notes will be issued only in fully
------------- registered form.
Maturities: Each Note will mature on a date selected by
----------- the purchaser and agreed to by the Company,
which will be not less than nine months and
not more than 30 years after the date of
issue thereof.
Interest Each Note will bear interest (i) in the case
Payment: of Fixed Rate Notes, at the annual rate
--------- stated on the face thereof, payable in
arrears on such dates as are specified
therein (each such date of payment other
than the maturity date being an "Interest
Payment Date" with respect to such Fixed
Rate Note) and at maturity and (ii) in the
case of Floating Rate Notes, at a rate
determined pursuant to the formula stated on
the face thereof, payable in arrears on such
dates as
3
are specified therein (each such date of
payment other than the maturity date being
an "Interest Payment Date" with respect to
such Floating Rate Note) and at maturity.
Unless otherwise specified, each Note will
bear interest from and including the later
of its date of issue and the most recent
date to which interest has been paid or
provided for, to but excluding the current
Interest Payment Date or the maturity date
of such Note. Interest payments for a Note
will include interest accrued to but
excluding the Interest Payment Date;
provided, however, that a Floating Rate Note
which has a rate of interest that is reset
daily or weekly will bear interest from and
including the later of its date of issue and
the day following the most recent Regular
Record Date (as defined below) to which
interest on such Note has been paid or
provided for, to and including the next
preceding Regular Record Date or the
maturity date of such Note, except as
otherwise provided in such Note. Unless
otherwise specified, the "Regular Record
Date" with respect to any Interest Payment
Date for any Note shall be the 15th day
preceding such Interest Payment Date,
whether or not such date shall be a Business
Day.
Unless otherwise specified, interest
(including payments for partial periods)
will be calculated and paid, in the case of
Fixed Rate Notes, on the basis of a 360-day
year of twelve 30-day months and, in the
case of Floating Rate Notes, on the basis of
the actual number of days elapsed over a
year of 360 days, except with respect to
interest on Treasury Rate Notes (as
4
defined in the Prospectus Supplement
relating to the Notes) which will be
calculated and paid on the basis of the
actual number of days elapsed over a year of
365 or 366 days, as applicable. Interest
will be payable to the person in whose name
the Note is registered at the close of
business on the Regular Record Date next
preceding the Interest Payment Date except
that, in the case of Notes issued between a
Regular Record Date and an Interest Payment
Date, interest payable on such Interest
Payment Date will be paid to the person in
whose name such Note was initially
registered; provided, however, that interest
payable at Maturity (as defined below) will
be payable to the person to whom principal
shall be payable. "Maturity" shall mean the
date on which the principal of a Note or an
installment of principal becomes due,
whether on the Maturity Date specified for
such Note, upon redemption or early
repayment or otherwise.
Procedure for Rate The Company and the Agent will discuss from
Setting and Posting: time to time the interest rates per annum to
-------------------- be borne by, the issuance price of, the
aggregate principal amount of and maturity
of Notes that may be sold as a result of the
solicitation of offers by the Agent. If the
Company establishes a fixed set of interest
rates and maturities for an offering period
(a "posting"), or if the Company decides to
change already posted rates, it will
promptly advise the Agent of the rates and
maturities to be posted.
If the Company decides to post interest
rates and a decision has been reached to
change the posted interest rates, the
Company will
5
promptly notify the Agent. The Agent
forthwith will suspend solicitation of
offers to purchase notes from the Company
until such time as the Company has advised
the Agent as to the new rates. Until such
time only "indications of interest" may be
recorded.
Acceptance of Offers: The Agent will communicate to the Company,
--------------------- orally or in writing, each offer to purchase
Notes from the Company that is received by
the Agent as agent of the Company and that
is not rejected by the Agent as provided
below. The Company will have the sole right
to accept offers to purchase Notes from the
Company and may reject any such offer, in
whole or in part, for any reason. The Agent
may, in its discretion reasonably exercised,
reject any offer to purchase Notes from the
Company that is received by the Agent, in
whole or in part.
The Company will promptly notify the Agent
of its acceptance or rejection of an offer
to purchase Notes. If the Company accepts an
offer to purchase Notes it will confirm such
acceptance in writing to the Agent.
Suspension of As provided in the Distribution Agreement,
Solicitation; the Company may suspend solicitation of
Amendment or offers to purchase at any time and, upon
Supplement: receipt of instructions from the Company,
------------ the Agent will forthwith suspend
solicitation until such time as the Company
has advised it that solicitation of offers
to purchase may be resumed.
If the Agent receives the notice from the
Company contemplated by Section 5(d) of the
Distribution Agreement, it will promptly
suspend solicitation and will only resume
solicitation as provided in the
6
Distribution Agreement. If the Company is
required, pursuant to Section 5(d) of the
Distribution Agreement, to prepare an
amendment or supplement, it will promptly
furnish the Agent with the proposed
amendment or supplement; in all other cases,
if the Company decides to amend or
supplement either of the Registration
Statements or the Prospectus, it will
promptly advise the Agent and will furnish
the Agent with the proposed amendment or
supplement in accordance with the terms of
the Distribution Agreement. The Company will
promptly file such amendment or supplement,
provide the Agent (and Cravath, Swaine &
▇▇▇▇▇ or such other law firm as may be
counsel to the Agent at the time) with
copies of any such amendment or supplement,
confirm to the Agent that such amendment or
supplement has been filed with the
Commission and advise the Agent that
solicitation may be resumed.
In the event that at any time the Company
suspends solicitation of offers to purchase
Notes from the Company there shall be any
outstanding offers to purchase Notes from
the Company that have been accepted by the
Company but for which settlement has not yet
occurred, the Company will promptly advise
the Agent and the Trustees whether such
sales may be settled and whether copies of
the Prospectus as amended or supplemented to
the time of the suspension may be delivered
in connection with the settlement of such
sales. The Company will have the sole
responsibility for such decision and for any
arrangements which may be made in the event
that the Company determines that such sales
may not be settled or that copies of the
Prospectus as so
7
amended or supplemented may not be so
delivered.
Delivery of
Prospectus: A copy of the Prospectus, as most recently
----------- amended or supplemented on the date of
delivery thereof (except as provided below),
relating to any Note must be delivered to a
purchaser prior to or together with the
earliest of (i) any written offer of such
Note, (ii) the delivery of the written
confirmation provided for below and (iii)
the delivery of any Note purchased by such
purchaser. Subject to the foregoing and to
the procedures described in Part II below,
it is anticipated that delivery of the
Prospectus, confirmation and Notes to the
purchaser will be made simultaneously at
settlement. The Company shall ensure that
the Agent receives copies of the Prospectus
and each amendment or supplement thereto
(including appropriate pricing stickers) in
such quantities and within such time limits
as will enable the Agent to deliver such
confirmation or Note to a Purchaser as
contemplated by these procedures and in
compliance with the preceding sentence. If,
since the date of acceptance of a
purchaser's offer, the Prospectus shall have
been supplemented solely to reflect any sale
of Notes on terms different from those
agreed to between the Company and such
purchaser or a change in posted rates not
applicable to such purchaser, such purchaser
shall not receive the Prospectus as
supplemented by such new supplement, but
shall receive the Prospectus as supplemented
to reflect the terms of the Notes being
purchased by such Purchaser and otherwise as
most recently amended or supplemented on the
date of delivery of the Prospectus.
8
Confirmation: For each offer to purchase a Note from the
------------- Company solicited by the Agent and accepted
by the Company, the Agent will issue a
confirmation to the purchaser, with a copy
to the Company, setting forth the Settlement
Details (as hereinafter defined) and
delivery and payment instructions.
Business Day: "Business Day" with respect to any Note
------------- means each day, other than a Saturday or
Sunday, that is (i) not a day on which
banking institutions in the Business Day
Centers with respect to such Note are
authorized or obligated by law or executive
order to close and (ii) if such Note is a
LIBOR Note (as defined in the Prospectus
Supplement), a London Banking Day (as
hereinafter defined). Unless otherwise
specified in the applicable Note, "Business
Day Centers" with respect to any Note shall
mean The City of New York and, in the case
of any Note payable in a Specified Currency
other than U.S. dollars or a composite
currency, the principal financial center of
the country issuing the Specified Currency.
As used herein, "London Banking Day" shall
mean any day on which dealings in deposits
in U.S. dollars are transacted in the London
interbank market.
Advertising Cost: The Company will determine with the Agent
----------------- the amount of advertising that may be
appropriate in offering the Notes.
Advertising expenses approved in advance by
the Company will be paid by the Company.
Payment of Expenses: The Agent will forward to the Company,
-------------------- following the end of each quarter, a
statement of the out-of-pocket expenses
incurred by the Agent during that quarter
which are reimbursable to it pursuant to
the terms of the Distribution
9
Agreement. The Company will remit payment to
the Agent promptly following the receipt of
each such statement.
Authenticity of
Signatures: The Agent will not have any obligation or
---------- liability to the Company or either Trustee
or any Authenticating Agent in respect of
the authenticity of the signature of any
officer, employee or agent of the Company or
either Trustee or such Authenticating Agent
on any Note.
PART II. Administrative Procedures for Book-Entry Notes
----------------------------------------------
Issuance: On any date of settlement (as defined under
--------- "Settlement" below) for one or more
Book-Entry Notes, the Company will issue a
single global note in fully registered form
without coupons (a "Global Note")
representing up to $200,000,000 principal
amount of all of such Book-Entry Notes that
have the same terms, except as to principal
amount. Each Global Note will be dated and
issued as of the date of its authentication
by the relevant Trustee (or, in the case of
the Subordinated Note Trustee, by The Chase
Manhattan Bank, as the Authenticating
Agent). No Global Note will represent any
Certificated Note.
Identification Numbers: The Company will arrange with the CUSIP
----------------------- Service Bureau of Standard & Poor's
Corporation (the "CUSIP Service Bureau")
for the reservation of a series of CUSIP
numbers (including tranche numbers)
consisting of approximately 900 CUSIP
numbers and relating to Global Notes
representing Book-Entry Notes. The
Company will obtain from the CUSIP
Service Bureau a written list of such
series of reserved CUSIP numbers
10
and will deliver such list to The Chase
Manhattan Bank and DTC. The Company will
assign CUSIP numbers to Global Notes as
described below under Settlement Procedure
"B". DTC will notify the CUSIP Service
Bureau periodically of the CUSIP numbers
that the Company has assigned to Global
Notes. The Chase Manhattan Bank will notify
the Company at any time when fewer than 100
of the reserved CUSIP numbers remain
unassigned to Global Notes, and if it deems
necessary, the Company will reserve
additional CUSIP numbers for assignment to
Global Notes representing Book-Entry Notes.
Upon obtaining such additional CUSIP
numbers, the Company shall deliver a list
thereof to The Chase Manhattan Bank and DTC.
Registration: Each Global Note will be registered in the
------------- name of Cede & Co., as nominee for DTC, on
the Security Register maintained under the
Indenture governing such Global Note. The
beneficial owner of a Book-Entry Note (or
one or more indirect participants in DTC
designated by such owner) will designate one
or more participants in DTC (with respect to
such Note, the "Participants") to act as
agent or agents for such owner in connection
with the book-entry system maintained by
DTC, and DTC will record in book-entry form,
in accordance with instructions provided by
such Participants, a credit balance with
respect to such Note in the account of such
Participants. The ownership interest of such
beneficial owner (or such participant) in
such Note will be recorded through the
records of such Participants or through the
separate records of such Participants and
one or more indirect participants in DTC. So
11
long as Cede & Co. is the registered owner
of a Global Note, DTC will be considered the
sole owner and holder of the Book-Entry
Notes represented by such Global Note for
all purposes under the Indenture governing
such Global Note.
Transfers: Transfers of a Book-Entry Note will
---------- be accomplished by book entries made by
DTC and, in turn, by Participants (and in
certain cases, one or more indirect
participants in DTC) acting on behalf of
beneficial transferors and transferees of
such Note.
Consolidation
and Exchange: The Chase Manhattan Bank may deliver to DTC
------------- and the CUSIP Service Bureau at any time a
written notice of consolidation specifying
(i) the CUSIP numbers of two or more
outstanding Global Notes that represent Book
Entry Notes having the same terms other than
principal amount and (for all such Notes
other than zero coupon Notes) for which
interest has been paid to the same date,
(ii) a date, occurring at least 30 days
after such written notice is delivered and
(for all such Notes other than zero coupon
Notes) at least 30 days before the next
Interest Payment Date for such Book-Entry
Notes, on which such Global Notes shall be
exchanged for a single replacement Global
Note and (iii) a new CUSIP number, obtained
from the Company, to be assigned to such
replacement Global Note. Upon receipt of
such a notice, DTC will send to its
participants (including The Chase Manhattan
Bank) a written reorganization notice to the
effect that such exchange will occur on such
date. Prior to the specified exchange date,
The Chase Manhattan Bank will deliver to the
CUSIP Service Bureau a written notice
12
setting forth such exchange date and the new
CUSIP number and stating that, as of such
exchange date, the CUSIP numbers of the
Global Notes to be exchanged will no longer
be valid. On the specified exchange date,
The Chase Manhattan Bank will exchange such
Global Notes for a single Global Note
bearing the new CUSIP number and new
Original Issue Date (determined in
accordance with the Letters of
Representations), and the CUSIP numbers of
the exchanged Global Notes will, in
accordance with CUSIP Service Bureau
procedures, be canceled and not immediately
reassigned. Notwithstanding the foregoing,
if the Global Notes to be exchanged exceed
$200,000,000 in aggregate principal amount,
one Global Note will be authenticated and
issued to represent each $200,000,000 of
principal amount of the exchanged Global
Notes and an additional Global Note will be
authenticated and issued to represent any
remaining principal amount of such Global
Notes (see "Denominations" below).
Denominations: As noted in Part I above, Book-Entry Notes
-------------- will be issued in minimum denominations of
$100,000 and in denominations exceeding such
amount by integral multiples of $1,000.
Global Notes will be denominated in
principal amounts not in excess of
$200,000,000. If one or more Book-Entry
Notes having an aggregate principal amount
in excess of $200,000,000 would, but for the
preceding sentence, be represented by a
single Global Note, then one Global Note
will be issued to represent each
$200,000,000 principal amount of such
Book-Entry Note or Notes and an additional
Global Note will be issued to represent any
remaining
13
principal amount of such Book-Entry Note or
Notes. In such a case, each of the Global
Notes representing such Book-Entry Note or
Notes shall be assigned the same CUSIP
number.
Interest: General. Except as set forth below, each
-------- Book-Entry Note will bear interest as set
forth in "Interest Payment" above, and such
interest shall be payable as set forth
therein.
Standard & Poor's Ratings Services, a
Division of the ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
("S&P"), will use the information received
in the pending deposit message described
under Settlement Procedure "C" below in
order to include the amount of any interest
payable and certain other information
regarding the related Global Note in the
appropriate (daily or weekly) bond report
published by S&P.
Payments of Payments of Interest Only. On the fifth
Principal and Business Day immediately preceding each
Interest: Interest Payment Date, The Chase Manhattan
--------- Bank will deliver to the Company's
Treasurer's Office and DTC a written notice
specifying by CUSIP number the amount of
interest to be paid on each Global Note on
such Interest Payment Date and the total of
such amounts. DTC will confirm the amount
payable on each Global Note on such Interest
Payment Date by reference to the appropriate
(daily or weekly) bond reports published by
S&P. The Company will pay to The Chase
Manhattan Bank, as paying agent, the total
amount of interest due on such Interest
Payment Date and The Chase Manhattan Bank
will pay such amount to DTC at the times and
in the manner set forth below under "Manner
of Payment".
14
Payments at Maturity. On or about the first
Business Day of each month, The Chase
Manhattan Bank will deliver to the Company
and DTC a written list of principal and
interest to be paid on each Global Note
maturing in the following month. The
Company, The Chase Manhattan Bank and DTC
will confirm the amounts of such principal
and interest payments with respect to each
such Global Note on or about the fifth
Business Day preceding the Maturity of such
Global Note. The Company will pay to The
Chase Manhattan Bank, as paying agent, the
principal amount of such Global Note,
together with interest due at such Maturity
and The Chase Manhattan Bank will pay such
amount to DTC at the times and in the manner
set forth below under "Manner of Payment".
Promptly after payment to DTC of the
principal and interest due at the Maturity
of such Global Note, the Senior Note
Trustee, in the case of Senior Notes, and
the Authenticating Agent, in the case of
Subordinated Notes, will cancel such Global
Note and deliver it to the Company with an
appropriate debit advice. On the first
Business Day of each month, The Chase
Manhattan Bank will deliver to each Trustee
a written statement indicating the total
principal amount of outstanding Global Notes
for which such Trustee serves as trustee as
of the immediately preceding Business Day.
Manner of Payment. The total amount of
any principal and/or interest due on
Global Notes on any Interest Payment Date
or at Maturity shall be paid by the
Company to The Chase Manhattan Bank in
funds available for use by The Chase
Manhattan Bank as of
15
9:30 a.m. (New York City time) on such date.
The Company will make such payment on such
Global Notes by instructing The Chase
Manhattan Bank to withdraw funds from an
account maintained by the Company at The
Chase Manhattan Bank or by wire transfer to
The Chase Manhattan Bank. The Company will
confirm such instruction in writing to The
Chase Manhattan Bank (with a copy to the
Subordinated Note Trustee if such Global
Notes represent Subordinated Notes). Prior
to 10:00 a.m. (New York City time) on such
date or as soon as possible thereafter, The
Chase Manhattan Bank will pay the foregoing
amounts to DTC in same day funds in
accordance with the payment provisions
contained in the applicable Letter of
Representations. DTC will allocate such
payments to its Participants in accordance
with its existing operating procedures.
NEITHER THE COMPANY, AS ISSUER, THE CHASE
MANHATTAN BANK, THE SENIOR NOTE TRUSTEE NOR
THE SUBORDINATED NOTE TRUSTEE SHALL HAVE ANY
RESPONSIBILITY OR LIABILITY FOR THE PAYMENT
BY DTC TO SUCH PARTICIPANTS OF THE PRINCIPAL
OF, PREMIUM, IF ANY, AND INTEREST ON THE
BOOK-ENTRY NOTES.
Withholding Taxes. The amount of any
taxes required under applicable law to be
withheld from any interest payment on a
Book-Entry Note will be determined and
withheld by the Participant, indirect
participant in DTC or other person
responsible for forwarding payments and
materials directly to the beneficial
owner of such Note.
Settlement: The receipt by the Company of immediately
----------- available funds in
16
payment for a Book-Entry Note and the
authentication and issuance of the Global
Note representing such Note shall constitute
"settlement" with respect to such Book-Entry
Note. All orders accepted by the Company
will be settled on the third Business Day
following the date of acceptance unless
otherwise agreed by the purchaser and the
Company. Such date of acceptance shall be
specified upon acceptance of such offer.
Settlement Procedures: Settlement Procedure with regard to each
---------------------- Book-Entry Note sold by the Company through
the Agent, as agent, shall be as follows:
A. The Agent will provide to the Company
(unless provided by the purchaser
directly to the Company) by telephone,
facsimile transmission or other means
agreed upon by the Company and the Agent
the following information (the
"Settlement Details"):
1. Principal amount and issue price.
2. If a Fixed Rate Note, the interest
rate, Regular Record Dates and
Interest Payment Dates, if any.
3. Settlement date (Original Issue
Date).
4. Maturity Date.
5. Type of Note (i.e., Senior Note or
Subordinated Note).
6. Agent's commission (to be paid in the
form of a discount from the issue
price remitted to the Company upon
settlement).
17
7. Redemption provisions, if any.
8. Repayment provisions, if any.
9. If a Floating Rate Note, 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) Calculation Date,
(ix) Interest Determination Dates,
(x) Interest Payment Dates,
(xi) Regular Record Dates and
(xii) Calculation Agent.
10. All other terms of the Book-Entry
Note and all other items necessary to
complete the applicable Global Note.
Before accepting any offer to
purchase a Book-Entry Note that will
have terms in addition to or
different from the terms set forth on
any form of Note previously delivered
by the Company to, and approved by,
the applicable Trustee, other
18
than merely as a result of completing
any blanks (other than the "Other
Terms" or equivalent blank) on such
form the Company will provide a
description of the proposed different
or additional terms to the applicable
Trustee and its counsel for the
purpose of determining whether such
terms are consistent with the
applicable Indenture, are
administratively acceptable to such
Trustee and its agents and do not
affect such Trustee's or its agents'
own rights, duties or immunities
under the Notes or the applicable
Indenture or otherwise in a manner
which is not reasonably acceptable to
such Trustee or its agents (all such
terms having been authorized, as of
the date of these Administrative
Procedures, by or pursuant to a Board
Resolution and the applicable Trustee
having received, as of the date of
these Administrative Procedures, all
opinions, certificates and orders
required prior to the authentication
and issuance of a Note containing
such terms). Any offer to purchase
such a Book-Entry Note shall only be
accepted by the Company if such terms
shall not be disapproved by the
applicable Trustee or its counsel on
one of the above-mentioned grounds
after the foregoing review.
In addition, before accepting any
offer to purchase any Note to be
settled in less than three Business
Days, the Company will verify that
the Authenticating Agent will have
adequate time to prepare and
authenticate such Note.
19
B. The Company will assign a CUSIP
number to the Global Note
representing such Book-Entry Note and
then advise The Chase Manhattan Bank
in writing, including facsimile or
electronic transmission, and, in the
case of Subordinated Notes, the
Subordinated Note Trustee by
telephone (confirmed in writing at
any time on the same date) or
facsimile transmission of the
information set forth in Settlement
Procedure "A" above, such CUSIP
number and the name of the Agent.
Each such communication by the
Company shall constitute a
representation and warranty by the
Company to The Chase Manhattan Bank,
each Trustee and the Agent that (i)
such Book-Entry Note is then, and at
the time of issuance and sale thereof
will be, duly authorized for issuance
and sale by the Company, (ii) such
Book-Entry Note, and the Global Note
representing such Book-Entry Note,
will conform with the terms of the
Indenture pursuant to which such
Book- Entry Note is issued and (iii)
upon authentication and delivery of
such Global Note and any other
Securities to be issued on or prior
to the settlement date for the Book-
Entry Note represented by such Global
Note, the aggregate amount of
Securities which have been issued and
sold by the Company will not exceed
the amount of Securities registered
under the Registration Statements.
C. The Chase Manhattan Bank will enter a
pending deposit message through DTC's
Participant Terminal System,
providing the
20
following settlement information to
DTC, the Agent, S&P and, upon
request, the Trustee under the
Indenture pursuant to which each
Book-Entry Note which is represented
by the Global Note is to be issued:
1. The information set forth in
Settlement Procedure "A".
2. Initial Interest Payment Date for
each such Book-Entry Note, the
number of days by which such date
succeeds the related Regular
Record Date and the amount of
interest payable on such Interest
Payment Date (to the extent known
at such time).
3. CUSIP number of the Global Note
representing such Book-Entry Note.
4. Whether such Global Note will
represent any other Book-Entry
Note (to the extent known at such
time).
D. Upon receipt of appropriate
documentation and instructions, the
Company will instruct the Senior Note
Trustee to prepare and authenticate
each Senior Global Note and will
instruct the Authenticating Agent to
prepare and authenticate each
Subordinated Global Note by facsimile
transmission or other acceptable
written means.
E. The Chase Manhattan Bank will
complete and the Senior Note Trustee
or the Authenticating Agent, as the
case may be, will authenticate the
Global Note, and The Chase Manhattan
Bank
21
will register the Global Note in the
name of Cede & Co., as nominee of
DTC, and hold such Global Note for
delivery on the Closing Date therefor
to The Chase Manhattan Bank, as
Custodian.
F. DTC will credit each Book-Entry Note
represented by the Global Note to be
issued to the applicable participant
account at DTC.
G. The Chase Manhattan Bank will enter
an SDFS deliver order through DTC's
Participant Terminal System with
respect to each Book-Entry Note
represented by the Global Note to be
issued instructing DTC to (i) debit
such Book-Entry Note to The Chase
Manhattan Bank's participant account
and credit such Book-Entry Note to
the Agent's participant account and
(ii) debit the Agent's settlement
account and credit The Chase
Manhattan Bank's settlement account
for an amount equal to the price of
such Book-Entry Note less the Agent's
commission. The entry of such a
deliver order shall constitute a
representation and warranty by The
Chase Manhattan Bank to DTC that (i)
the Global Note representing such
Book- Entry Note has been issued and
authenticated and (ii) The Chase
Manhattan Bank is holding such Global
Note pursuant to the Certificate
Agreement.
H. The Agent will enter an SDFS deliver
order through DTC's Participant
Terminal System with respect to each
Book-Entry Note represented by the
Global Note to be issued instructing
DTC (i) to debit such
22
Book-Entry Note to the Agent's
participant account and credit such
Book-Entry Note to the participant
account of the Participant with
respect to such Book-Entry Note and
(ii) to debit the settlement account
of such Participant and credit the
settlement account of the Agent for
an amount equal to the price of such
Book-Entry Note.
I. Transfers of funds in accor dance
with SDFS deliver orders described in
Settlement Procedures "G" and "H"
will be settled in accordance with
SDFS operating procedures (as
referenced in the Letters of
Representations) in effect on the
settlement date.
J. The Chase Manhattan Bank will credit
to an account of the Company
maintained at The Chase Manhattan
Bank funds available for immediate
use in the amount transferred to The
Chase Manhattan Bank in accordance
with Settlement Procedure "G".
K. The Chase Manhattan Bank, as
Custodian, will hold the Global Note
pursuant to the Certificate
Agreement. Periodically, The Chase
Manhattan Bank will send to the
Company a statement setting forth the
principal amount of Book-Entry Notes
outstanding as of that date under
each Indenture.
L. The Agent will deliver to the
purchaser a copy of the most recent
Prospectus applicable to the Notes
with or prior to the earlier of any
written offer of Notes and the
confirmation and
23
payment by the purchaser of the Note.
The Agent will confirm the purchase
of each Book-Entry Note to the
purchaser either by transmitting to
the Participant with respect to such
Book-Entry Note a confirmation order
or orders through DTC's institutional
delivery system or by mailing a
written confirmation to such
purchaser.
Settlement
Procedures
Timetable: For orders of Book-Entry Notes solicited by
---------- the Agent, as agent, and accepted by the
Company for settlement on the first Business
Day after the sale date, Settlement
Procedures "A" through "L" 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 sale date
C 2:00 P.M. on the sale date
D 3:00 P.M. on Business Day
before
settlement date
E 9:00 A.M. on settlement
date
F 10:00 A.M. on settlement
date
G-H 2:00 P.M. on settlement
date
I 4:45 P.M. on settlement
date
▇-▇ 5:00 P.M. on settlement
date
If a sale is to be settled more than one
Business Day after the sale date, Settlement
Procedures "A", "B" and "C" shall be
completed as soon as practicable but no
later than 11:00 A.M. and 2:00 P.M., as the
case may be, on the first
24
Business Day after the sale date. Settlement
Procedure "I" is subject to extension in
accordance with any extension of Fedwire
closing deadlines and in other events
specified in the SDFS operating procedures
in effect on the settlement date. Settlement
Procedures "D-H" and "▇-▇" shall be
completed as soon as practicable but no
later than the respective dates set forth
above.
If settlement of a Book-Entry Note is
rescheduled or canceled, the Company will as
soon as practicable give The Chase Manhattan
Bank notice to such effect. The Chase
Manhattan Bank will deliver to DTC, through
DTC's Participant Terminal System, a
cancelation message to such effect by no
later than 2:00 P.M. on the Business Day
immediately preceding the scheduled
settlement date (provided The Chase
Manhattan Bank has received such notice from
the Company by noon on the Business Day
immediately preceding the settlement date).
Fails: If The Chase Manhattan Bank fails to enter
------ an SDFS deliver order with respect to a
Book-Entry Note pursuant to Settlement
Procedure "G", The Chase Manhattan Bank may
deliver to DTC, through DTC's Participant
Terminal System, as soon as practicable a
withdrawal message instructing DTC to debit
such Book-Entry Note to The Chase Manhattan
Bank's participant account. DTC will process
the withdrawal message, provided that The
Chase Manhattan Bank's participant account
contains a principal amount of the Global
Note representing such Book-Entry Note that
is at least equal to the principal amount to
be debited. If a withdrawal message is
processed with respect to all the Book-Entry
25
Notes represented by a Global Note, the
Senior Note Trustee, in the case of Senior
Notes, or the Authenticating Agent, in the
case of Subordinated Notes, will ▇▇▇▇ such
Global Note "Canceled", make appropriate
entries in its records and send such
canceled Global Note to the Company. The
CUSIP number assigned to such Global Note
shall, in accordance with CUSIP Service
Bureau procedures, be canceled and not
immediately reassigned. If a withdrawal
message is processed with respect to one or
more, but not all, of the Book-Entry Notes
represented by a Global Note, The Chase
Manhattan Bank and the Senior Note Trustee
or the Authenticating Agent, as the case may
be, will exchange such Global Note for two
Global Notes, one of which shall represent
such Book-Entry Note or Notes and shall be
canceled immediately after issuance and the
other of which shall represent the other
Book-Entry Notes previously represented by
the surrendered Global Note and shall bear
the CUSIP number of the surrendered Global
Note.
If the purchase price for any Book-Entry
Note is not timely paid to the Participant
with respect to such Note by the beneficial
purchaser thereof (or a person, including an
indirect participant in DTC, acting on
behalf of such purchaser), such Participant
and, in turn, the Agent for such Note may
enter SDFS deliver orders through DTC's
Participant Terminal System reversing the
orders entered pursuant to Settlement
Procedures "H" and "G", respectively.
Thereafter, The Chase Manhattan Bank will
deliver the withdrawal message and take the
related actions described in the preceding
paragraph.
26
Notwithstanding the foregoing, upon any
failure to settle with respect to a
Book-Entry Note, DTC may take any actions in
accordance with its SDFS operating
procedures then in effect. In the event of a
failure to settle with respect to one or
more, but not all, of the Book-Entry Notes
to have been represented by a Global Note,
The Chase Manhattan Bank and the Senior Note
Trustee or the Authenticating Agent, as the
case may be, will provide, in accordance
with Settlement Procedures "D" and "E", for
the authentication and issuance of a Global
Note representing the other Book-Entry Notes
to have been represented by such Global Note
and will make appropriate entries in its
records.
PART III
Administrative Procedures for Certificated Notes
------------------------------------------------
Issuance: Each Certificated Note will be dated and
--------- issued as of the date of its authentication
by the relevant Trustee (or, in the case of
the Subordinated Note Trustee, by the
Authenticating Agent).
Transfers and A Certificated Note (whether a Senior Note
Exchanges: or a Subordinated Note) may be presented for
---------- transfer or exchange at the principal
corporate trust office in New York City of
the Senior Trustee. Certificated Notes will
be exchangeable for other Certificated Notes
having identical terms but different
authorized denominations. Certificated Notes
will not be exchangeable for Book-Entry
Notes.
Payments of On the fifth Business Day immediately
Principal and preceding each Interest Payment Date, The
Interest: Chase Manhattan
---------
27
Bank, as paying agent, will furnish the
Company with the total amount of the
interest payments to be made on such
Interest Payment Date to the extent known.
In addition, on or about the first Business
Day of each month, The Chase Manhattan Bank
will provide to the Company's Treasurer's
Office a list of the principal and interest
to be paid on the respective Notes maturing
in the following month. The Company will
provide to The Chase Manhattan Bank not
later than any payment date sufficient
moneys to pay in full all principal and
interest payments due on such payment date.
The Chase Manhattan Bank shall make all such
payments in accordance with the terms of the
Notes. Notes presented to The Chase
Manhattan Bank at Maturity will be canceled
by The Chase Manhattan Bank.
The Chase Manhattan Bank will be responsible
for withholding taxes on interest paid on
Certificated Notes as required by applicable
law.
Settlement: The receipt by the Company of immediately
----------- available funds in exchange for an
authenticated Certificated Note delivered to
the Agent and the Agent's delivery of such
Certificated Note against receipt of
immediately available funds shall, with
respect to such Certificated Note,
constitute "settlement". All orders accepted
by the Company will be settled on the third
Business Day following the date of
acceptance unless otherwise agreed by the
purchaser and the Company. Such date of
settlement shall be specified upon
acceptance of such offer.
Settlement Settlement Procedures with regard to each
Procedures: Certificated Note sold by
-----------
28
the Company through the Agent, as agent,
shall be as follows:
A. The Agent will provide to the Company
(unless provided by the purchaser
directly to the Company), by
telephone, facsimile transmission or
other means agreed upon by the
Company and the Agent, the following
information (the "Settlement
Details"):
1. Exact name in which the Note or Notes
are to be registered.
2. Exact address of registered owner
and, if different, address for
payment of principal and interest.
3. Taxpayer identification number of
registered owner.
4. Principal amount and issue price.
5. If a Fixed Rate Note, the interest
rate, Regular Record Dates and
Interest Payment Dates, if any.
6. Settlement date (Original Issue
Date).
7. Maturity Date.
8. Type of Note (i.e., Senior Note or
Subordinated Note).
9. Agent's commission (to be paid in the
form of a discount from the issue
price remitted to the Company upon
settlement).
10. Redemption provisions, if any.
29
11. Repayment provisions, if any.
12. If a Floating Rate Note, 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,
(viii) Calculation Date,
(ix) Interest Determination Dates,
(x) Interest Payment Dates,
(xi) Regular Record Dates, and
(xii) Calculation Agent.
13. Authorized denominations of Notes
denominated in other than U.S.
dollars.
14. All other terms of the Note and all
other items necessary to complete the
Note.
Before accepting any offer to
purchase a Certificated Note that
will have terms in addition to or
different from the terms set forth on
any form
30
of Note previously delivered by the
Company to, and approved by, the
applicable Trustee, other than merely
as a result of completing any blanks
(other than the "Other Terms" or
equivalent blank) on such form, the
Company will provide a description of
the proposed different or additional
terms to the applicable Trustee and
its counsel for the purpose of
determining whether such terms are
consistent with the applicable
Indenture, are administratively
acceptable to such Trustee and its
agents and do not affect such
Trustee's or its agents' own rights,
duties or immunities under the Notes
or the applicable Indenture or
otherwise in a manner which is not
reasonably acceptable to such Trustee
or its agents (all such terms having
been authorized, as of the date of
these Administrative Procedures, by
or pursuant to a Board Resolution and
the applicable Trustee having
received, as of the date of these
Administrative Procedures, all
opinions, certificates and orders
required prior to the authentication
and issuance of a Note containing
such terms). Any offer to purchase
such a Certificated Note shall only
be accepted by the Company if such
terms shall not be disapproved by the
applicable Trustee or its counsel on
one of the above-mentioned grounds
after the foregoing review.
In addition, before accepting any
offer to purchase any Certificated
Note to be settled in fewer than
three Business Days, the Company will
verify
31
that the Senior Trustee or the
Authenticating Agent, as the case may
be, will have adequate time to
prepare and authenticate such
Certificated Note.
B. The Company will advise the relevant
Trustee (and, in the case of the
Subordinated Note Trustee, the
Authenticating Agent) by telephone
(confirmed in writing at any time on
the next Business Day) or electronic
transmission of the information set
forth in Settlement Procedure "A"
above and the name of the Agent and
shall instruct the relevant Trustee
or the Authenticating Agent, as
applicable, to authenticate the Note.
Each such communication by the
Company shall constitute a
representation and warranty by the
Company to each Trustee and the Agent
that (i) such Certificated Note is
then, and at the time of issuance and
sale thereof will be, duly authorized
for issuance and sale by the Company,
(ii) such Certificated Note will
conform with the terms of the
Indenture pursuant to which such
Certificated Note is issued and (iii)
upon authentication and delivery of
such Certificated Note and any other
Securities to be issued on or prior
to the settlement date for such
Certificated Note, the aggregate
amount of Securities which have been
issued and sold by the Company will
not exceed the amount of Securities
registered under the Registration
Statements.
C. The Company will deliver to The Chase
Manhattan Bank a pre-
printed five-ply packet for such
Certificated Note, which packet
will contain the following
documents in forms that have been
approved by the Company, the Agent
and the Trustees:
1. Certificated Note with customer
confirmation.
2. Stub One - For Trustee.
3. Stub Two - For Agent.
4. Stub Three - For the Company.
5. Stub Four - For the Authenticating
Agent.
D. The Senior Trustee (or, in the case
of a Subordinated Note, the
Authenticating Agent) will complete
and authenticate such Certificated
Note and deliver it (with the
confirmation) and Stubs One, Two and
Four to the Agent, and the Agent will
acknowledge receipt of the Note by
stamping or otherwise marking Stubs
One and Four and returning Stub One
to the relevant Trustee and Stub Four
to the Authenticating Agent in the
case of Subordinated Notes. Such
delivery will be made only against
such acknowledgment of receipt. Upon
verification by the Agent that a Note
has been properly prepared and
authenticated by the Senior Note
Trustee or the Authenticating Agent,
payment therefor will be made to the
Company by the Agent on the
settlement date in immediately
available funds in an amount equal to
the issue price of such Note less the
Agent's commission. Such payment
shall
33
be made only upon prior receipt by
the Agent of immediately available
funds from or on behalf of the
purchaser unless the Agent decides,
at its option, to advance its own
funds for such payment against
subsequent receipt of funds from the
purchaser.
In the event that any Certificated
Note is incorrectly prepared, the
applicable Trustee (and, if a
Subordinated Note, the Authenticating
Agent) will promptly issue a
replacement Senior Note or
Subordinated Note, as the case may
be, in exchange for the incorrectly
prepared Certificated Note.
E. The Agent will deliver such
Certificated Note (with the
confirmation) to the customer against
payment in immediately payable funds.
The Agent will obtain the
acknowledgment of receipt of such
Certificated Note by retaining Stub
Two.
F. The applicable Trustee will send Stub
Three to the Company by first-class
mail.
Notwithstanding the foregoing, the
Company, the Agent and the applicable
Trustee and its agents may decide to
issue Certificated Notes which are
printed as separate documents and not as
part of five-ply packets and may decide
to dispense with the delivery of Stubs
and instead to use different forms of
receipt. Any such different arrangements
must be agreed to prior to the
acceptance by the Company of an offer to
purchase Notes.
34
Settlement For orders of Certificated Notes solicited
Procedures by the Agent, as agent, and accepted by the
Timetable: Company, Settlement Procedures "A" through
---------- "F" set forth above shall be completed on or
before the respective times (New York City
time) set forth below:
Settlement
Procedure Time
--------------
A 2:00 P.M. on the Business
Day before
settlement
B-C 3:00 P.M. on the Business
Day before
settlement
D 2:15 P.M. on settlement
date
E 3:00 P.M. on settlement
date
F 5:00 P.M. on settlement
date
Notwithstanding the foregoing, if the
settlement date is the date of acceptance of
the offer to purchase the Note, Settlement
Procedures "A" through "C" shall be
completed on or before 11:00 A.M. (New York
City time) on the settlement date.
Fails: In the event that a purchaser shall fail to
------ accept delivery of and make payment for a
Note by 3:00 P.M., New York City time, on
the settlement date therefor, the Agent will
notify the relevant Trustee and, if
applicable, the Authenticating Agent and the
Company by telephone, confirmed in writing
(which may be given by telex or telecopy),
and if the Note has been delivered to the
Agent, return the Note to the Senior Note
Trustee or the Authenticating Agent. The
Company will promptly provide such Trustee
or the Authenticating Agent with appropriate
documentation and
35
instructions to complete the transactions
hereinafter outlined and will remit to the
Agent funds in the amount, if any, it
received with respect to such Note. Such
payment will be made on the settlement date
for such Note, if possible, and in any event
not later than the Business Day following
such settlement date. If such fail shall
have occurred for any reason other than the
failure of the Agent to provide the
Settlement Details to the Company or to
provide a confirmation to the purchaser
within a reasonable period of time as
described above, the Company will reimburse
the 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.
Immediately upon receipt of a Note in
respect of which a fail occurred, the Senior
Note Trustee or Authenticating Agent will
make appropriate entries in its records and
cancel such Note.
36
Annex B
-------
▇▇▇▇▇ ▇▇▇▇▇▇ Group Inc.
Terms Agreement
---------------
, 199[ ]
[PaineWebber Incorporated
1285 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇]
Dear Sirs:
▇▇▇▇▇ ▇▇▇▇▇▇ Group Inc. (the "Company") proposes, subject to the terms
and conditions stated herein and in the Distribution Agreement dated September [
], 1998 (the "Distribution Agreement"), between the Company and PaineWebber
Incorporated, to issue and sell to [PaineWebber Incorporated] (the "Purchaser")
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 Agent, as the agent 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 such
party's execution of this Terms Agreement. Each of the representations and
warranties set forth in the Distribution Agreement shall be deemed to have been
made at and as of the date of this Terms Agreement, except that each
representation and warranty in Section 4 of the Distribution Agreement which
makes reference to the Prospectus shall be deemed to be a representation and
warranty as of the date of the Distribution Agreement in relation to the
Prospectus (as therein defined), and also a representation and warranty as of
the date of this Terms Agreement in relation to the Prospectus as amended and
supplemented to relate to the Purchased Securities.
An amendment to one or both of the Registration Statements (as defined
in the Distribution Agreement), or a supplement to the Prospectus, as the case
may be, relating to the Purchased Securities, in the form heretofore
1
delivered to you is now proposed to be filed with the Commission.
Subject to the terms and conditions set forth herein and in the
Distribution Agreement incorporated herein by reference, the Company agrees to
issue and sell to the Purchaser and the Purchaser agrees to purchase from the
Company the Purchased Securities, at the time and place, in the principal amount
and at the purchase price set forth in the Schedule hereto.
If the foregoing is in accordance with your understanding, please
sign and return to us the counterpart hereof, and upon acceptance hereof by you
this letter and such acceptance hereof, including those provisions of the
Distribution Agreement incorporated herein by reference, shall constitute a
binding agreement between you and the Company.
▇▇▇▇▇ ▇▇▇▇▇▇ GROUP INC.,
By
------------------------
Title:
Accepted:
[PAINEWEBBER INCORPORATED],
By
-------------------------
Title:
SCHEDULE TO ANNEX B
Title of Purchased Securities:
[ %] Medium-Term [Senior] [Subordinated] Notes, Series [C]
[D]
Aggregate Principal Amount:
$
[Price to Public:]
Purchase Price by [PaineWebber Incorporated]:
% of the principal amount of the Purchased Securities,
plus accrued interest from
to [and accrued amortization, if any, from
to ]
Method of and Specified Funds for Payment of Purchase Price:
[By certified or official bank check or checks, payable to the order of the
Company, in [[New York] Clearing House] [immediately available] funds]
[By wire transfer to a bank account specified by the
Company in [next day] [immediately available] funds]
Indenture:
[Senior] [Subordinated] Note Indenture, as defined in the
Distribution Agreement
Time of Delivery:
Closing Location:
Maturity:
Interest Rate:
[ %]
Interest Payment Dates:
[months and dates]
Other Terms of the Purchased Securities:
Documents to be Delivered:
The following documents referred to in the Distribution Agreement shall be
delivered as a condition to the Closing:
[(1) The officers' certificate referred to in
Section 7(c)(i).]
[(2) The opinion referred to in Section 7(c)(ii).]
[(3) The opinion referred to in Section
7(c)(iii).]
[(4) The accountant's letter referred to in
Section 7(c)(iv).]
Other Provisions (including syndicate provisions or Section 5(l) limitations, if
applicable):
2
Annex C
-------
(A) The Company 1/ shall furnish to the Agent an opinion of the General
Counsel of the Company 2/ , dated the Closing Date, to the effect that:
(1) each of the Company and its significant United States
subsidiaries listed on Schedule I hereto (individually, a "U.S.
Subsidiary" and collectively, the "U.S. Subsidiaries"), has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or
organized, with full corporate power and authority to own its
properties and conduct its business as described in the Prospectus, and
is duly qualified to do business as a foreign corporation and is in
good standing under the laws of each jurisdiction in which the failure
to qualify and be in good standing would materially and adversely
affect the Company and its subsidiaries, considered as a whole;
(2) all the outstanding shares of capital stock of each U.S.
Subsidiary have been duly and validly authorized and issued and are
fully paid and nonassessable, and are owned by the Company either
directly or through wholly owned subsidiaries, free and clear of any
perfected security interest and, to the knowledge of such counsel,
after due inquiry of appropriate officers of the Company, any other
security interests, claims, liens or encumbrances, except for
restrictions on sales of capital stock contained in debt instruments;
(3) the Notes conform in all material respects to the
description thereof contained in the Prospectus. The Indentures have
been duly authorized, executed and delivered by the Company, have been
duly qualified under the Trust Indenture Act of 1939 and constitute
legal, valid and binding obligations of the Company
--------
1/ All capitalized terms used herein and not otherwise defined shall have
the respective meanings ascribed to them in the Distribution Agreement of which
this Annex C is a part.
2/ To the extent any significant subsidiary of the Company is not chartered
or organized under the laws of a State of the United States, counsel qualified
to practice law in the jurisdiction in which such subsidiary is chartered or
organized will furnish an opinion on behalf of the Company with respect to the
matters set forth in paragraphs 1 and 2 below for such subsidiary.
enforceable against the Company in accordance with their terms (subject
to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws affecting creditors' rights
generally from time to time in effect and to general principles of
equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, regardless of whether
considered in a proceeding in equity or at law). The Notes have been
duly authorized and, when executed and authenticated in accordance with
the provisions of the Indentures and delivered and paid for pursuant to
the Distribution Agreement, will constitute legal, valid and binding
obligations of the Company entitled to the benefits of the appropriate
Indenture and enforceable against the Company in accordance with their
terms (subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing, regardless of
whether considered in a proceeding in equity or at law). In expressing
the opinion set forth in this paragraph, counsel will, with your
consent, assume that the Notes will conform as to form to the forms of
Notes reviewed by him (with maturity, interest rate and original
issuance date and other data requiring completion appropriately
completed and without any entry having been made on the face of the
Notes under "Other Terms") and that the Notes will be duly
authenticated by the appropriate Trustee.
(4) to the best knowledge of such counsel, there is no pending
or threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries of a character required to be
disclosed in either of the Registration Statements or the Prospectus,
and there is no franchise, contract or other document of a character
required to be described in either of the Registration Statements or
the Prospectus, or to be filed as an exhibit to either of the
Registration Statements or the Prospectus, which is not disclosed,
described or filed as required; and the statements included or
incorporated in the Prospectus describing any legal proceedings or
material contracts or agreements relating to the Company fairly
summarize such matters;
2
(5) the Registration Statements have become effective under
the Securities Act, and, to the best knowledge of such counsel, no stop
order suspending the effectiveness of either of the Registration
Statements has been issued and no proceedings for that purpose have
been instituted or are pending or contemplated under the Securities
Act;
(6) the Distribution Agreement has been duly
authorized, executed and delivered by the Company;
(7) the information required to be set forth in each of the
Registration Statements in answer to Item 10 (insofar as it relates to
such counsel) of Form S-3, to the best knowledge of such counsel, is
accurately set forth in such Registration Statement in all material
respects or no response is required with respect to such Item; and the
authorized equity capitalization of the Company is as described in the
documents incorporated by reference in the Prospectus;
(8) no consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation of the
transactions contemplated in the Distribution Agreement, except such as
have been obtained under the Securities Act and the Trust Indenture Act
and such as may be required under the "blue sky" laws of any
jurisdiction in connection with the sale of Notes;
(9) none of the issuance and sale of the Notes, the
consummation by the Company of any other of the transactions
contemplated in the Distribution Agreement or the fulfillment of the
terms of the Distribution Agreement will (a) conflict with, result in a
breach of, or constitute a default under (i) the Restated Certificate
of Incorporation, as amended, or By-laws of the Company, or (ii) the
terms of any indenture or other agreement or instrument known to such
counsel and to which the Company or any of its U.S. Subsidiaries or
significant foreign subsidiaries listed on Schedule I hereto (the
"Foreign Subsidiaries" and, together with the U.S. Subsidiaries, the
"Subsidiaries") is a party or bound, or (b) violate any order or
regulation known to such counsel to be applicable to the Company or any
of its subsidiaries, of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over the
Company or any of its subsidiaries except, in the case of clauses
(a)(ii) and (b) above, for conflicts, breaches, defaults or violations
as would not have a material adverse effect
3
on the Company and its subsidiaries, taken as a whole,
and would not have a material adverse effect on the
issuance or sale of the Notes; and
(10) to the best knowledge of such counsel, no holder of
securities of the Company has rights to the registration of such
securities under either of the Registration Statements.
In rendering such opinion, such counsel may rely as to matters
involving the application of laws of any jurisdiction other than the States of
Delaware and New York or the United States, to the extent deemed proper and
specified in such opinion, upon the opinion of other counsel of good standing
believed to be reliable and who are satisfactory to counsel for the Agent.
(B) The Company shall furnish to the Agent a letter from the General
Counsel of the Company, dated the Closing Date, to the effect that such counsel
has no reason to believe that: (i) the Registration Statements and the
Prospectus (except for the financial statements and other information of an
accounting or financial nature included therein, and the Statements of
Eligibility (Form T-1) included as exhibits to the Registration Statements, as
to which he need not express any view) were not appropriately responsive in all
material respects to the requirements of the Securities Act and the Trust
Indenture Act and the respective applicable rules and regulations of the
Commission thereunder and (ii) the First Registration Statement, at the time
Post Effective Amendment No. 1 thereto became effective, or the Second
Registration Statement, at the time it became effective, 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, or
that the Prospectus, at the date of the letter, includes an untrue statement of
a material fact or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (in each case except for the financial statements and other
information of an accounting or financial nature included therein, and the
Statements of Eligibility (Form T-1) included as exhibits to the Registration
Statements, as to which he need not express any view).
4
SCHEDULE I
Significant U.S. Subsidiaries
-----------------------------
PaineWebber Incorporated
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Assets Management Inc.
Significant U.K. Subsidiary
---------------------------
PaineWebber International (U.K.) Ltd.
Annex D
-------
Accountant's Comfort Letter
---------------------------
At each Closing Date and at such times as provided in the Distribution
Agreement, 1/ Ernst & Young LLP shall furnish to the Agent or the Purchaser, as
the case may be, a letter or letters (which may refer to letters previously
delivered to the Agent or the Purchaser, as the case may be), dated as of the
Closing Date or such other date, in form and substance satisfactory to the Agent
or the Purchaser, as the case may be, confirming that they are independent
certified public accountants within the meaning of the Securities Act and the
Exchange Act and the respective applicable published rules and regulations
thereunder, that the response to Item 10 of each of the Registration Statements
is correct insofar as it relates to them and stating in effect that:
(a) in their opinion the consolidated financial statements and
schedules audited by them and incorporated by reference in the
Registration Statements and the Prospectus and reported on by them
comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the Exchange Act and
the related published rules and regulations thereunder;
(b) on the basis of a reading of the "Selected Financial
Data", if any, included or incorporated in the Registration Statements
and the Prospectus and of the latest unaudited consolidated condensed
financial statements made available by the Company and its consolidated
subsidiaries; carrying out certain specified procedures (but not an
examination in accordance with generally accepted auditing standards)
which would not necessarily reveal matters of significance with respect
to the comments set forth in such letter; a reading of the minutes of
the meetings of the stockholders, directors and audit and executive
committees of the Company; and inquiries of certain officials of the
Company who have responsibility for financial and accounting matters of
the Company and its subsidiaries as to transactions and events
subsequent to the date of the most recent financial statements included
or incorporated in the Registration Statements
--------
1/ All capitalized terms used herein shall have the meanings ascribed to
them in the Distribution Agreement of which this Annex D is a part.
and the Prospectus, nothing came to their attention which caused them
to believe that:
(1) the amounts in the unaudited "Summary Financial
Information", if any, included in the Prospectus, and the
amounts in the "Selected Financial Data", if any, included or
incorporated by reference in the Registration Statements and
the Prospectus, do not agree with the corresponding amounts in
the audited financial statements from which such amounts were
derived;
(2) any unaudited financial statements included or
incorporated in the Registration Statements and the Prospectus
do not comply as to form in all material respects with
applicable accounting requirements and with the published
rules and regulations of the Commission with respect to
financial statements included or incorporated in quarterly
reports on Form 10-Q under the Exchange Act or any material
modifications should be made to the unaudited financial
statements for them to be presented in conformity with such
generally accepted accounting principles;
(3) with respect to the period subsequent to the date
of the most recent financial statements included or
incorporated in the Registration Statements and the
Prospectus, there were any changes, at a specified date not
more than five business days prior to the date of the letter,
in the consolidated long-term debt or non-convertible
redeemable preferred stock of the Company and its subsidiaries
or capital stock of the Company (excluding retained earnings
and foreign currency translation adjustment) as compared with
the amounts shown on the most recent consolidated balance
sheet included or incorporated in the Registration Statements
and the Prospectus, except in all instances for changes
disclosed in such letter or letters; or
(4) if any unaudited pro forma consolidated condensed
financial statements are included or incorporated by reference
in the Registration Statements and the Prospectus, on the
basis of a reading of the unaudited pro forma financial
statements, carrying out certain specified procedures,
inquiries of certain officials of the Company and the acquired
company who have
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responsibility for financial and accounting matters, and
proving the arithmetic accuracy of the application of the pro
forma adjustments to the historical amounts in the pro forma
financial statements, nothing came to their attention which
caused them to believe that the pro forma financial statements
do not comply in form in all material respects with the
applicable accounting requirements of Rule 11-02 of Regulation
S-X or that the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of those
statements;
(c) they have performed certain other specified procedures as
a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company) set forth in the
Registration Statements, as amended, and the Prospectus, as amended or
supplemented, and in Exhibit 12 to the Registration Statements,
including specified information, if any, included or incorporated from
the Company's Annual Report on Form 10-K incorporated therein or
specified information, if any, included or incorporated from any of the
Company's Quarterly Reports on Form 10-Q incorporated therein, agrees
with the accounting records of the Company and its subsidiaries,
excluding any questions of legal interpretation.
3