Exhibit 1(b)
McDonald's Corporation
U.S.$1,500,000,000
Medium-Term Notes, Series G
Due from 1 Year to 60 Years from Date of Issue
U.S. DISTRIBUTION AGREEMENT
_____________, 2001
Merrill Lynch & Co.
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
North Tower, 4 World Financial Center
250 Vesey Street, 15/th/ Floor
New York, New York 1028110080
ABN AMRO Incorporated
1325 Avenue of the Americas, 10/th/ Floor
New York, New York 10019
Banc of America Securities LLC
Bank of America Corporate Center
100 North Tryon Street
Charlotte, North Carolina 28255
Banc One Capital Markets, Inc.
1 Bank One Plaza
Suite 1L1-0595
21 South Clark Street
Chicago, Illinois 60670
Barclays Capital Inc.
222 Broadway
New York, New York 10038
Deutsche Banc Alex. Brown Inc.
31 W. 52/nd/ Street
New York, New York 10019
Fleet Securities, Inc.
100 Federal Street
Boston, Massachusetts 02110
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
270 Park Avenue, 8/th/ Floor
New York, New York 10017
Morgan Stanley & Co. Incorporated
1585 Broadway, 2/nd/ Floor
New York, New York 10020
Salomon Brothers Inc.
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
McDonald's Corporation, a Delaware corporation (the "Company"),
confirms its agreement with you with respect to the issue and sale by the
Company of its Medium-Term
Notes, Series G due from 1 to 60 years from date of issue having an aggregate
initial public offering price or purchase price of up to U.S. $1,500,000,000 or
its equivalent in foreign currencies, including the Euro, or any composite
currency (the "Notes").
The Notes are to be issued under an indenture dated as of October 19,
1996 between the Company and First Union National Bank, as trustee (the
"Trustee") and any indentures supplemental thereto (collectively, the
"Indenture"), will be issued in fully registered definitive form in
denominations of $1,000 and integral multiples of $1,000 in excess thereof (or
in such other denominations as shall be provided in a supplement to the Basic
Prospectus referred to below). Notes may bear interest at fixed or floating
rates or rates determined by reference to a designated index or by application
of a formula, in any case to be provided in a supplement to the Basic Prospectus
referred to below, and may, whether or not bearing interest, be issued with
original issue discount. The Notes may be issued in amounts denominated in
United States dollars or in amounts denominated in foreign currencies, including
the Euro, or any composite currency. References herein to amounts stated in
United States dollars shall be deemed to refer to the equivalent amount of
foreign currency or composite currency to the extent applicable.
Subject to the terms and conditions stated herein and subject to the
reservation by the Company of the right to sell Notes directly to investors on
its own behalf or through other agents, dealers or underwriters, the Company
hereby appoints each of you (individually as "Agent" and collectively the
"Agents") as an agent for the purpose of soliciting offers to purchase the Notes
from the Company by others and agrees that if and whenever the Company
determines to sell Notes directly to an Agent as principal for resale to others
it will enter into a Terms Agreement relating to such sale in accordance with
the provisions of Section 2(b) hereof. On the basis of the representations and
warranties herein contained, but subject to the terms and conditions herein set
forth, each Agent agrees, severally but not jointly, to use its reasonable
efforts to solicit offers to purchase Notes upon terms acceptable to the Company
at such times and in such amounts as the Company shall from time to time
specify. In acting under this Agreement and in connection with the sale of any
Notes by the Company (other than Notes sold to an Agent as principal pursuant to
a Terms Agreement), each Agent is acting solely as agent of the Company and does
not assume any obligation towards or relationship of agency or trust with any
purchaser of the Notes.
1. Representations and Warranties. The Company represents and
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warrants to each Agent as follows:
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (File No.
333-______) under the Securities Act of 1933, as amended (the
"Securities Act") which has become effective, for the
registration under the Securities Act of the offering of the
Notes. Such registration statement meets the requirements set
forth in Rule 415(a)(1)(x) under the Securities Act and complies
in all other material respects with said Rule. The Indenture is
duly qualified under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"), and the Company has duly authorized
the issuance of the Notes. The Company
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proposes to file with the Commission from time to time, pursuant
to Rule 424(b)(2) or (b)(5) under the Securities Act, supplements
to the form of prospectus included in registration statement File
No. 333-_______ relating to the Notes and the plan of
distribution thereof or, if the Company elects to rely on Rule
434 under the Securities Act, a Term Sheet (as such term is
hereinafter defined) relating to the Notes that shall contain
such information as is required or permitted by Rules 434 and
424(b) under the Securities Act. The registration statement File
No. 333-_____, including the exhibits thereto, is hereinafter
called the "Registration Statement"; (i) the prospectus
(including the supplement thereto relating to the Notes) in the
form in which it appears in registration statement File No. 333-
_______ is hereinafter called the "Basic Prospectus"; and such
supplemented form of prospectus, in the form in which it shall be
filed with the Commission pursuant to Rule 424(b)(2) or (b)(5)
(including the Basic Prospectus as so supplemented) or (ii) if
the Company elects to rely on Rule 434 under the Securities Act,
in the form of the Term Sheet as first filed with the Commission
pursuant to Rule 424(b)(7) (together with the Basic Prospectus),
is hereinafter called the "Prospectus". Any abbreviated term
sheet that satisfies the requirements of Rule 434 under the
Securities Act is hereinafter called the "Term Sheet". Any
reference herein to the Registration Statement, Basic Prospectus
or Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12
of Form S-3 which were filed under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), on or before the date of
this Agreement, or the issue date of any Basic Prospectus or
Prospectus, as the case may be; and any reference herein to the
terms "amend", "amendment" or "supplement" with respect to the
Registration Statement, any Basic Prospectus or any Prospectus
shall be deemed to refer to and include the filing of any
document under the Exchange Act after the date of this Agreement,
or the issue date of any Basic Prospectus or any Prospectus, as
the case may be, and deemed to be incorporated therein by
reference.
(b) As of the date hereof, when the Prospectus is first filed
pursuant to Rule 424(b) under the Securities Act, when, prior to
the Commencement Date (as hereinafter defined), any amendment to
the Registration Statement becomes effective (including the
filing of any document incorporated by reference in the
Registration Statement), when any supplement to the Prospectus is
filed with the Commission, on the Commencement Date and on each
Settlement Date (as hereinafter defined), (i) the Registration
Statement, as amended as of any such time, the Prospectus, as
amended or supplemented as of any such time, and the Indenture
will comply in all material respects with the applicable
requirements of the Securities Act, the Trust Indenture Act and
the Exchange Act and the respective rules and regulations
thereunder and (ii) neither the Registration Statement, as
amended as of any such time, nor the Prospectus, as amended or
supplemented as of any such time, will contain any untrue
statement of a material fact or omit to state any material fact
required to be
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stated therein or necessary in order to make the statements
therein not misleading; provided, however, that the Company makes
no representations or warranties as to (i) that part of the
Registration Statement which shall constitute the Statement of
Eligibility (Form T-1) under the Trust Indenture Act of the
Trustee; (ii) information, if any, contained in the Registration
Statement or Prospectus relating to The Depository Trust Company
and its book-entry system; or (iii) the information contained in
or omitted from the Registration Statement or the Prospectus or
any amendment thereof or supplement thereto in reliance upon and
in conformity with information furnished in writing to the
Company by or on behalf of any Agent specifically for use in
connection with the preparation of the Registration Statement and
the Prospectus.
(c) The financial statements of the Company and its consolidated
subsidiaries included in the Registration Statement fairly
present the financial condition of the Company and its
consolidated subsidiaries as of the dates indicated and the
results of operations and cash flow for the periods therein
specified; and said financial statements have been prepared in
accordance with generally accepted accounting principles applied
on a consistent basis throughout the periods involved, except as
otherwise stated therein. As used herein, "consolidated
subsidiaries" means each subsidiary of the Company which is
included in the consolidated financial statements of the Company
contained in its Annual Report to shareholders for 2000 in
accordance with the consolidation policies set forth therein or
which would have been so included if it had been a subsidiary of
the Company as of the date of such consolidated financial
statements, and each other subsidiary of the Company which is
included in consolidated financial statements of the Company
prepared from time to time thereafter.
(d) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior
to the Commencement Date or on the Settlement Date, as the case
may be, except as set forth or contemplated in the Prospectus,
(i) neither the Company nor any of its consolidated subsidiaries
has entered into any transaction not in the ordinary course of
business which is material to the Company and its consolidated
subsidiaries, considered as a whole; (ii) there has been no
material adverse change in the properties, business, financial
condition or results of operations of the Company and its
consolidated subsidiaries, considered as a whole; and (iii) no
legal or governmental proceeding, which has or will have
materially affected the Company or any of its consolidated
subsidiaries, considered as a whole, or the transactions
contemplated by this Agreement, has been or will have been
instituted or threatened.
(e) The consummation of the transactions herein contemplated and the
fulfillment of the terms hereof will not conflict with or result
in a breach of any of the terms and provisions of, or constitute
a default under, any indenture,
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mortgage, deed of trust or other agreement or instrument to which
the Company is a party, or the Restated Certificate of
Incorporation or By-Laws of the Company as presently in effect,
or any order, rule or regulation applicable to the Company of any
court or any federal or state regulatory body or administrative
agency or other governmental body having jurisdiction over the
Company or its properties.
(f) The Securities Notes have been duly and validly authorized and,
when issued, authenticated and delivered against payment therefor
in accordance with the terms of the Indenture and this Agreement,
will constitute valid and legally binding obligations of the
Company enforceable in accordance with their terms and entitled
to the benefits of the Indenture, except as enforcement thereof
may be limited by applicable bankruptcy, insolvency, moratorium
and other laws affecting the enforceability of creditors" rights
and general principles of equity, and will conform to the
descriptions thereof contained in the Prospectus. The Indenture
has been duly and validly authorized by the Company and will be a
valid and legally binding agreement of the Company enforceable in
accordance with its terms, except as enforcement thereof may be
limited by applicable bankruptcy, insolvency, moratorium and
other laws affecting the enforceability of creditors" rights and
general principles of equity. The Indenture conforms to the
descriptions thereof in the Prospectus, and is duly qualified
under the Trust Indenture Act.
(g) The Company is not, and upon the issuance and sale of the Notes
as herein contemplated and the application of the net proceeds
therefrom as described in the Prospectus will not be, an
"investment company" within the meaning of the Investment Company
Act of 1940, as amended (the "Act").
(h) The Medium-Term Note Program under which the Notes are issued
(the "Program"), as well as the Notes, are rated [ ] by Moody"s
Investors Service, Inc. and [ ] by Standard & Poor"s Ratings
Services, or such other rating as to which the Company shall have
most recently notified the Agents pursuant to Section 3(a)
hereof.
2. Solicitations as Agent; Purchases as Principal.
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(a) Solicitations as Agent. On the basis of the representations and
----------------------
warranties herein contained, but subject to the terms and
conditions herein set forth, each Agent will use its reasonable
efforts to solicit, as agent, offers to purchase the Notes upon
the terms and conditions set forth in the Prospectus as then
amended or supplemented.
The Company reserves the right, in its sole discretion, to
instruct the Agents to suspend at any time, for any period of
time or permanently, the solicitation, as agent, of offers to
purchase the Notes. Upon receipt of notice from the Company, each
Agent will forthwith suspend solicitations, as agent, of offers
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to purchase Notes from the Company until such time as the Company
has advised the Agents that such solicitation may be resumed.
During the period of time that this Agreement is suspended the
Company shall not be required to deliver any certificates,
opinions or letters in accordance with Sections 3(i), (j) and (k)
hereof; provided, however, that no Agent shall be required to
resume soliciting offers to purchase Notes until the Company has
delivered such certificates, opinions or letters as requested by
such Agent if any of the events described in Section 3(i), (j) or
(k) hereof have occurred during the period of suspension.
The Company agrees to pay each Agent, as consideration for the
sale of any Notes resulting from a solicitation made by it as
agent, a commission in the form of a discount from the principal
amount of each Note sold by the Company hereunder as a result of
such solicitation. With respect to Notes with a term of one year
to 30 years, such commission will be equal to the following
percentage of the principal amount of such Note:
Term Commission Rate
---- ---------------
From 1 year to less than 18 months 0.150%
From 18 months to less than 2 years 0.200
From 2 years to less than 3 years 0.250
From 3 years to less than 4 years 0.350
From 4 years to less than 5 years 0.450
From 5 years to less than 6 years 0.500
From 6 years to less than 7 years 0.550
From 7 years to less than 10 years 0.600
From 10 years to less than 20 years 0.625
From 20 years to 30 years 0.750
and with respect to Notes with a term in excess of 30 years such
commission will be negotiated between the Company and the
applicable Agent at the time of sale. The Agents may reallow any
portion of the commission payable pursuant hereto to dealers or
purchasers in connection with the offer and sale of any Notes.
The Agents are authorized to solicit offers to purchase Notes
only in the minimum principal amount of $1,000 or any amount in
excess thereof that is a whole multiple of $1,000 (or in such
other minimum purchase amounts and multiples thereof as are
described in a supplement to the Basic
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Prospectus). Each Agent shall communicate to the Company, orally
or in writing, each offer to purchase Notes received by it as
agent which in its judgment should be considered by the Company.
The Company shall have the sole right to accept offers to
purchase Notes and may reject any offer in whole or in part. Each
Agent shall have the right to reject any offer to purchase Notes
that it considers to be unacceptable, and any such rejection
shall not be deemed a breach of its agreements contained herein.
(b) Purchases as Principal. Each sale of Notes to an Agent as
----------------------
principal shall be made in accordance with the terms of this
Agreement and a separate agreement which will provide for the
sale of such Notes to such Agent and the purchase and re-offering
thereof by such Agent. Each such separate agreement (which may
initially be an oral agreement, to be subsequently confirmed in
writing) is herein referred to as a "Terms Agreement". Unless the
context otherwise requires, each reference contained herein to
"this Agreement" shall be deemed to include any applicable Terms
Agreement between the Company and an Agent. Each such Terms
Agreement, whether oral or in writing, shall be with respect to
such information (as applicable) as is specified in Exhibit A
hereto. An Agent"s commitment to purchase Notes pursuant to any
Terms Agreement shall be deemed to have been made on the basis of
the representations and warranties of the Company herein
contained and shall be subject to the terms and conditions herein
set forth. Each Terms Agreement shall specify the principal
amount of Notes to be purchased pursuant thereto, the maturity
date thereof, the price to be paid to the Company for such Notes,
the time and place of delivery of and payment for such Notes (the
"Settlement Date") and any other relevant terms. An Agent may
utilize a selling or dealer group in connection with the resale
of the Notes purchased. Such Terms Agreement shall also specify
any requirements for officers" certificates, opinions of counsel
and letters from the independent auditors of the Company pursuant
to Sections 3 and 4 hereof.
(c) Procedures. Each Agent and the Company agree to perform the
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respective duties and obligations specifically provided to be
performed in the Medium-Term Notes Administrative Procedures
(attached hereto as Exhibit B) (the "Procedures"), as amended
from time to time. The Procedures may be amended only by written
agreement of the Company and each Agent; provided that with
respect to any single issuance of Notes, the Procedures may be
modified by written agreement of the Company and the Agents
soliciting as agents the purchase of such Notes (or purchasing as
principal such Notes pursuant to a Terms Agreement).
(d) Delivery. The documents required to be delivered by Section 4 of
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this Agreement shall be delivered at the office of Gardner,
Carton & Douglas, counsel to the Agents, at 321 North Clark
Street, Attn: George C. McKann, Quaker Tower, Chicago, Illinois
60610, not later than 5:00 p.m. Chicago time,
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on the date hereof, or at such other time and/or place as each
Agent and the Company may agree upon in writing (the
"Commencement Date").
3. Agreements. The Company agrees with each Agent that:
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(a) Prior to the termination of the offering of the Notes pursuant to
this Agreement, the Company will not file any amendment to the
Registration Statement or supplement (including the Prospectus)
to the Basic Prospectus relating to the Notes unless the Company
has previously furnished to each Agent (or, in the case of
Prospectus supplements setting out only the interest rate,
maturity and other terms of Notes ("Pricing Supplements"), the
Agent that has solicited the applicable offer of Notes), a copy
thereof for its review and will not file any such proposed
amendment or supplement to which any Agent (or, in the case of
Pricing Supplements, the Agent that has solicited the applicable
offer of Notes) reasonably objects; provided, however, that the
foregoing requirement shall not apply to any of the Company"s
periodic filings with the Commission required to be filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
or to any Pricing Supplement applicable to Notes sold by the
Company directly to investors on its own behalf; and provided
further that without the consent of, but after consultation with,
the Agents, including the furnishing of drafts thereof, the
Company may file any such proposed amendment or Prospectus
Supplement which in the opinion of its counsel it is required by
law to file. Subject to the foregoing sentence, the Company will
promptly cause each Prospectus Supplement to be filed with the
Commission pursuant to Rule 424 and/or Rule 434 under the
Securities Act. The Company will promptly advise each Agent (i)
when the Prospectus and any supplement to the Basic Prospectus
shall have been filed pursuant to Rule 424 and/or Rule 434 under
the Securities Act; (ii) when any amendment to the Registration
Statement relating to the Notes shall have become effective;
(iii) of any request by the Commission for any amendment of the
Registration Statement or any amendment of or supplement to the
Prospectus or for any additional information; (iv) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose; and (v) of the
receipt by the Company of any notification with respect to the
suspension of the qualification of the Notes for sale in any
jurisdiction or the initiation or threatening of any proceeding
for such purpose; and (vi) any change in the rating assigned by
any nationally recognized statistical rating organization to the
Program or any debt securities (including the Notes) of the
Company, or the public announcement by any nationally recognized
statistical rating organization that it has under surveillance or
review, with possible negative implications, its rating of the
Program or any such debt securities, or the withdrawal by any
nationally recognized statistical rating organization of its
rating of the Program or any such debt securities. The Company
will use its best efforts to prevent the issuance of any such
stop order and, if issued, to
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obtain as soon as possible the withdrawal thereof. If the Company
files any amendment to the Registration Statement or any
supplement to the Basic Prospectus or the Prospectus, which
filing does not require the consent of the Agents, the Company
will provide each Agent with a copy of such document promptly
after the filing thereof, and no Agent shall be obligated to
solicit offers for the purchase of Notes so long as it is not
reasonably satisfied with such document.
(b) The Company will prepare and file with the Commission, promptly
upon the request of any Agent, any amendments or supplements to
the Registration Statement or Prospectus which, in the opinion of
counsel for the Agents, may be necessary to enable the several
Agents to continue to solicit offers to purchase the Notes, and
the Company will use its best efforts to cause any such
amendments to become effective and any such supplements to be
filed with the Commission and approved for use by the Agents as
promptly as possible. If, at any time when a prospectus relating
to the Notes is required to be delivered under the Securities
Act, any event relating to or affecting the Company occurs as a
result of which the Registration Statement or the Prospectus as
then amended or supplemented would include an untrue statement of
a material fact, or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary
at any time to amend or supplement the Registration Statement or
the Prospectus, as then amended or supplemented, to comply with
the Securities Act or the Exchange Act or the respective rules
thereunder, the Company will promptly notify each Agent to
suspend solicitation of offers to purchase Notes and, if so
notified by the Company, each Agent shall forthwith suspend such
solicitation and cease using the Prospectus as then amended or
supplemented; and if the Company shall decide to amend or
supplement the Registration Statement or Prospectus as then
amended or supplemented, it will so advise each Agent promptly by
telephone (with confirmation in writing) and will prepare and
cause to be filed promptly with the Commission an amendment or
supplement to the Registration Statement or Prospectus as then
amended or supplemented which will include a description of such
facts or events and/or will correct such statement or omission or
effect such compliance and will supply such amended or
supplemented Registration Statement or Prospectus to each Agent
in such quantities as it may reasonably request; and, if such
amendment or supplement and any documents, certificates and
opinions furnished to an Agent pursuant to paragraph (f) below in
connection with the preparation or filing of such amendment or
supplement, are satisfactory in all respects to such Agent, upon
the filing of such amendment or supplement with the Commission or
effectiveness of an amendment to the Registration Statement such
Agent will resume the solicitation of offers to purchase Notes
hereunder. Notwithstanding any other provision of this Section
3(b), until the distribution of any Notes any Agent may own as
principal has been completed, if any event
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occurs or condition exists as a result of which it is necessary
to amend or supplement the Registration Statement or Prospectus
to make the information therein comply with the Securities Act or
the rules thereunder or complete or accurate in all material
respects, the Company agrees to provide such Agent with immediate
notice by telephone (with confirmation in writing) to cease sales
of any Notes, and the Company will forthwith prepare and furnish,
at its own expense, any amendments or supplements to the
Registration Statement or Prospectus, satisfactory in all
respects to such Agent, in such quantities as it may reasonably
request. If such amendment or supplement and any documents,
certificates and opinions furnished to an Agent pursuant to
paragraph (f) below in connection with the preparation and filing
of such amendment or supplement are satisfactory in all respects
to such Agent, upon the filing of such amendment or supplement to
the Registration Statement or Prospectus such Agent may resume
its resale of the Notes as principal.
(c) As soon as practicable, but not later than 90 days after the end
of the 12-month period beginning at the end of the current fiscal
quarter of the Company, the Company will make generally available
to its security holders and each Agent an earnings statement
covering a period of at least 12 months beginning not earlier
than said effective date which shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 under the
Securities Act, and, not later than 45 days after the end of the
12-month period beginning at the end of each fiscal quarter of
the Company (other than the last fiscal quarter of any fiscal
year) during which the effective date of any post-effective
amendment to the Registration Statement occurs, not later than 90
days after the end of the fiscal year beginning at the end of
each last fiscal quarter of any fiscal year of the Company during
which the effective date of any post-effective amendment to the
Registration Statement occurs, and not later than 90 days after
the end of each fiscal year of the Company during which any Notes
were issued, the Company will make generally available to its
securityholders an earnings statement covering such 12-month
period or such fiscal year, as the case may be, that will satisfy
the provisions of such Section 11(a) and Rule 158.
(d) The Company will furnish to each Agent, without charge, three
conformed copies of the Registration Statement including exhibits
and materials, if any, incorporated by reference therein and,
during the period mentioned in Section 3(b) above, as many copies
of the Prospectus, any documents incorporated by reference
therein and any supplements and amendments thereto as any Agent
may reasonably request.
(e) The Company will furnish such information and execute such
instruments as may be required to qualify the Notes for offer and
sale under the securities or blue sky laws of such jurisdictions
within the United States as any Agent shall designate, will
continue such qualifications in effect so long as required for
distribution and will arrange for the determination of the
legality of the Notes for purchase by institutional investors.
The Company shall not be required to
10
register or qualify as a foreign corporation nor, except as to
matters and transactions relating to the offer and sale of the
Notes, to consent to service of process in any jurisdiction. The
Company or its designated agent shall submit such reports or
information as may be required from time to time by applicable
law, regulations and guidelines promulgated by Japanese
governmental and regulatory authorities in the case of the issue
and purchase of, and for so long as there are outstanding any,
Notes denominated in Japanese yen.
(f) During the term of this Agreement, the Company shall furnish to
each Agent such certificates of officers of the Company relating
to the business, operations and affairs of the Company and its
subsidiaries, the Registration Statement, the Basic Prospectus,
any amendments or supplements thereto, the Indenture, the Notes,
this Agreement, the Procedures, any Terms Agreement and the
performance by the Company of its obligations hereunder as such
Agent may from time to time reasonably request.
(g) The Company will, whether or not any sale of Notes is
consummated, pay all expenses incident to the performance of its
obligations under this Agreement, including: (i) the preparation
and filing of the Registration Statement and all amendments
thereto; (ii) the preparation, issuance and delivery of the
Notes; (iii) the fees and disbursements of the Company"s
accountants and of the Trustee and Paying Agent and their
respective counsel; (iv) the qualification of the Notes under
securities laws in accordance with the provisions of Section 3(e)
hereof, including filing fees and the reasonable fees and
disbursements of counsel to the Agents in connection therewith
and in connection with the preparation of any Blue Sky
Memorandum; (v) the printing and delivery to the Agents in
quantities as hereinabove stated of copies of the Registration
Statement and all amendments thereto, and of the Basic Prospectus
and Prospectus and any amendments or supplements thereto
(including Pricing Supplements); (vi) the printing and delivery
to the Agents of copies of the Indenture and any Blue Sky
Memorandum; and (vii) any fees charged by rating agencies for the
rating of the Notes.
The Company will also, whether or not any sale of the Notes is
consummated, reimburse the Agents promptly upon receipt of an
invoice therefor for the reasonable fees of their counsel, as
agreed by the Company and the Agents, incurred in connection with
the preparation of this Agreement and the offering and sale of
the Notes as well as any reasonable disbursements and out-of-
pocket expenses incurred by such counsel, as agreed by the
Company and the Agents.
(h) Each acceptance by the Company of an offer for the purchase of
Notes solicited by an Agent, and each sale of Notes to an Agent
pursuant to a Terms Agreement, shall be deemed to be an
affirmation that the representations and warranties of the
Company contained in this Agreement and in any certificate
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theretofore delivered to such Agent pursuant hereto are true and
correct in all material respects at the time of such acceptance
or sale, as the case may be, and an undertaking that such
representations and warranties will be true and correct in all
material respects at the time of delivery to the purchaser or his
agent or to such Agent, of the Notes relating to such acceptance
or sale, as the case may be, as though made at and as of each
such time (and it is understood that such representations and
warranties shall relate to the Registration Statement and the
Basic Prospectus as amended and supplemented to each such time).
(i) Each time the Registration Statement or the Basic Prospectus is
amended or supplemented (other than by a Pricing Supplement or an
amendment or supplement providing for a change deemed immaterial
in the reasonable opinion of the Agents), if so requested by any
Agent, and each time the Company sells Notes to an Agent pursuant
to a Terms Agreement, the Company will deliver or cause to be
delivered forthwith to the relevant Agent or Agents a certificate
of the Company signed by the President or a Vice President and
the Chief Financial Officer of the Company or its Treasurer,
dated the date of the effectiveness of such amendment or filing
or supplement or sale, as the case may be, in form reasonably
satisfactory to such Agent or Agents, of the same tenor as the
certificate referred to in Section 4(e) hereof relating to the
Registration Statement and the Basic Prospectus as amended and
supplemented to the time of delivery of such certificate.
(j) Each time the Registration Statement or the Basic Prospectus is
amended or supplemented, if in the reasonable judgment of any
Agent (or, in the case of a Pricing Supplement, in the reasonable
judgment of the Agent that has solicited the offer to purchase
the relevant Notes) the information contained in the amendment or
supplement is of such nature that an opinion of counsel should be
furnished, and each time the Company sells Notes to an Agent
pursuant to a Terms Agreement, if so indicated in the applicable
Terms Agreement, the Company shall furnish or cause to be
furnished forthwith to such Agent a written opinion of counsel of
the Company. Any such opinion shall be dated the date of such
amendment or supplement or the date of such sale, as the case may
be, shall be in a form satisfactory to such Agent and shall be of
the same tenor as the opinion referred to in Section 4(d)(i)
hereof but modified to relate to the Registration Statement and
the Basic Prospectus as amended and supplemented to the time of
delivery of such opinion. In lieu of such opinion, counsel last
furnishing such an opinion to such Agent may furnish to such
Agent a letter to the effect that it may rely on such last
opinion to the same extent as though it were dated the date of
such letter (except that statements in such last opinion will be
deemed to relate to the Registration Statement and the Basic
Prospectus as amended and supplemented to the time of delivery of
such letter).
12
(k) Each time that the Registration Statement or the Basic
Prospectus is amended or supplemented to set forth amended
or supplemental financial information or such amended or
supplemental information is incorporated by reference in
the Registration Statement or the Basic Prospectus, if so
requested by any Agent, or each time the Company sells
Notes to an Agent pursuant to a Terms Agreement, if so
indicated in the applicable Terms Agreement, the Company
shall cause its independent auditors forthwith to furnish
each Agent or such Agent, as appropriate, with a letter,
dated the date of the effectiveness of such amendment or
the date of filing of such supplement, or the date of such
sale, as the case may be, in a form satisfactory to the
recipient, of the same tenor as the letter referred to in
Section 4(f) hereof, with regard to the amended or
supplemental financial information included or
incorporated by reference in the Registration Statement
and the Basic Prospectus, as amended or supplemented to
the date of such letter.
(l) Between the date of any Terms Agreement and the Settlement
Date, or such later date as may be specified in such Terms
Agreement, with respect to such Terms Agreement, the
Company will not, without the prior consent of the Agent
which is a party to such Terms Agreement, offer, sell,
contract to sell or otherwise dispose of any debt
securities of the Company substantially similar in
currency, maturity and other material terms to the Notes,
other than (i) the Notes that are to be sold pursuant to
such Terms Agreement; (ii) debt securities issued for
consideration other than cash; and (iii) commercial paper
in the ordinary course of business, except as may
otherwise be provided in any such Term Agreement.
(m) The Company will not issue any Notes except as have been
duly authorized by all necessary corporate action on the
part of the Company.
(n) The Company will not issue any Notes directly to investors
or through other agents, dealers or underwriters except in
accordance with applicable law.
4. Conditions of the Ob1igations of the Agents. The
-------------------------------------------
obligations of each Agent to solicit offers to purchase the Notes as agent of
the Company and to purchase Notes as principal pursuant to any Terms Agreement
will be subject to the accuracy of the representations and warranties on the
part of the Company herein, to the accuracy of the statements of the Company"s
officers made in each certificate furnished pursuant to the provisions hereof,
to the performance by the Company of its obligations hereunder and to the
following additional conditions precedent:
(a) No stop order suspending the effectiveness of the
Registration Statement, as amended from time to time,
shall have been issued, and no proceedings for that
purpose shall have been instituted or shall be pending,
or, to the knowledge of the Company, shall be contemplated
by the Commission.
13
(b) No event, nor any material adverse change in the condition
of the Company, financial or otherwise, shall have
occurred, nor shall any event exist, which makes untrue or
incorrect any material statement or information contained
in the Registration Statement or the Prospectus or which
is not reflected in the Registration Statement or the
Prospectus, but should be reflected therein in order to
make the statements or information contained therein not
misleading.
(c) No Agent shall have advised the Company that the
Registration Statement or any prospectus, or any amendment
or supplement thereto, contains an untrue statement of
fact which, in the opinion of counsel for the Agents, is
material, or omits to state a fact which, in the opinion
of such counsel, is material and is required to be stated
therein or is necessary to make the statements therein not
misleading.
(d) At the Commencement Date, such Agent shall have received,
and at each Settlement Date with respect to any applicable
Terms Agreement to which such Agent is a party, if called
for by such Terms Agreement, such Agent shall have
received:
(i) The opinion, dated as of such date, of Gloria
Santona, Vice President, U.S. General Counsel and
Secretary, or a Vice President and Assistant General
Counsel of the Company, to the effect that:
(A) The Company has been duly incorporated and
is validly existing as a corporation in good
standing under the laws of the State of
Delaware with corporate power and authority
to own its properties and conduct its
business as set forth in the Prospectus.
(B) The Indenture has been duly and validly
authorized, executed and delivered by the
Company and the Trustee, is duly qualified
under the Trust Indenture Act, and is a
valid and legally binding agreement of the
Company enforceable in accordance with its
terms, except as enforcement thereof may be
limited by applicable bankruptcy,
insolvency, moratorium and other laws
affecting the enforceability of creditors'
rights and general principles of equity.
(C) The Notes have been duly and validly
authorized by all necessary corporate action
and, when duly executed and issued on behalf
of the Company, duly authenticated by the
Trustee or the Trustee's authenticating
agent, and duly delivered to the several
purchasers thereof against payment therefor
in accordance with the provisions of this
Agreement, will constitute valid and legally
binding obligations of the Company
enforceable in accordance with their terms
and entitled to all the benefits of the
Indenture, except as enforcement thereof may
be limited by applicable bankruptcy,
14
insolvency, moratorium and other laws
affecting the enforceability of creditors'
rights and general principles of equity.
(D) The Indenture and the Notes conform as to
legal matters with the statements concerning
them made in the Prospectus, and such
statements accurately set forth the
provisions thereof required to be set forth
in the Prospectus.
(E) This Agreement (and, if the opinion is being
given pursuant to Section 3(j) hereof on
account of the Company having entered into a
Terms Agreement, the applicable Terms
Agreement) has been duly and validly
authorized, executed and delivered by the
Company.
(F) (1) The Registration Statement and any
amendments thereto have become effective
under the Securities Act, and, to the best
of the knowledge of such counsel, no stop
order suspending the effectiveness of the
Registration Statement, as amended, has been
issued and no proceedings for that purpose
have been instituted or are pending or
contemplated under the Securities Act; (2)
the Registration Statement, the Prospectus,
and each amendment thereof or supplement
thereto (except for the financial statements
and other financial data included therein,
as to which such counsel need express no
opinion) comply as to form in all material
respects with the requirements of the
Securities Act and the Exchange Act and the
respective rules thereunder; (3) such
counsel has no reason to believe that either
the Registration Statement or the Prospectus
or any such amendment or supplement,
contains any untrue statement of a material
fact or omits to state a material fact
required to be stated therein or necessary
to make the statements therein not
misleading; the descriptions in the
Registration Statement and Prospectus of
statutes, legal and governmental proceedings
and contracts and other documents are
accurate and fairly present the information
required to be shown; and (4) such counsel
does not know of any legal or governmental
proceedings required to be described in the
Prospectus which are not so described as
required nor of any contracts or other
documents which are required to be described
in the Registration Statement or the
Prospectus or to be filed as exhibits to the
Registration Statement which are not
described and filed as required.
(G) The execution and delivery of this
Agreement, the consummation of the
transactions herein contemplated and the
fulfillment of the terms hereof will not
result in any breach of any of the terms and
provisions of, or constitute a default
under, any indenture, mortgage, deed of
trust or other agreement or instrument to
which,
15
to the knowledge of such counsel, the
Company is a party, or the Restated
Certificate of Incorporation or By-Laws of
the Company as presently in effect or, to
the knowledge of such counsel, any order,
rule or regulation applicable to the Company
of any court or of any federal or state
regulatory body or administrative agency or
other governmental body having jurisdiction
over the Company or its properties.
(H) No authorization, approval, consent or other
action of any governmental authority or
agency is required in connection with the
sale of the Notes as contemplated by this
Agreement, except such as may be required
under the Securities Act or under state
securities or blue sky laws.
It is understood that such counsel may limit his or her
opinion to the laws of the United States of America,
the laws of the State of Illinois, and the General
Corporation Law of the State of Delaware.
The opinions set forth in paragraphs (i)(B) and (i)(C)
above may be further limited by inclusion of a
statement to the effect that insofar as such opinions
relate to Notes denominated in a currency other than
United States dollars, the effective enforcement of a
foreign currency claim in the federal or state courts
of the State of New York may be limited by requirements
that a claim (or a foreign currency judgment in respect
of such a claim) be converted into United States
dollars at the rate of exchange prevailing on the
judgment date.
(ii) The opinion dated as of such date, of Gardner,
Carton & Douglas, counsel to you, covering the
matters in paragraphs (i)(B), (i)(C), (i)(D),
(i)(E) and (i)(F)(3) above, provided that with
respect to paragraph (i)(F)(3) above, such counsel
may state that their belief is based upon their
participation in the preparation of the
Registration Statement and the Prospectus and any
amendments or supplements thereto (other than
documents incorporated by reference) and review
and discussion of the contents thereof (including
documents incorporated by reference) but is
without independent check or verification except
as specified.
The Company shall have furnished to such counsel such
documents as they may reasonably request for the
purpose of enabling them to render their opinions. In
connection with such opinions, such counsel may rely on
the representations or certificates of officers of the
Company as to factual matters.
(e) On the Commencement Date, and at each Settlement Date
with respect to any Terms Agreement to which such Agent
is a party, the Company shall have furnished to such
Agent, a certificate of the Company, signed by the
President or a Vice President, and the Chief Financial
Officer of the Company or its
16
Treasurer, dated as of the Commencement Date or such
Settlement Date, to the effect that:
(i) the representations and warranties of the
Company in this Agreement are true and
correct in all material respects on and as of
the date of such certificate, and the Company
has complied in all material respects with
all the agreements and satisfied in all
material respects all the conditions on its
part to be performed or satisfied at or prior
to the date of such certificate;
(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued
and no proceedings for that purpose have been
instituted or are pending or, to the signer"s
knowledge, are contemplated under the
Securities Act; and
(iii) the signers of the certificate have carefully
examined the Registration Statement and the
Prospectus; neither the Registration
Statement, the Prospectus nor any amendment
or supplement thereto includes, as of the
date of such certificate, any untrue
statement of a material fact or omits, as of
such date, to state any material fact
required to be stated therein or necessary to
make the statements therein not misleading;
since the latest respective dates as of which
information is given in the Registration
Statement, there has been no material adverse
change in the financial position, business or
results of operations of the Company and its
consolidated subsidiaries, considered as a
whole, except as set forth in or contemplated
by the Prospectus; and since the effective
date of the Registration Statement, as
amended, no event has occurred which is
required to be set forth in the Prospectus
which has not been so set forth.
(f) On the Commencement Date, and at each Settlement Date
with respect to any Terms Agreement to which such Agent
is a party, if called for by such Terms Agreement, the
Company's independent auditors shall have furnished to
such Agent, a letter or letters, dated as of the
Commencement Date or such Settlement Date, in form and
substance satisfactory to it, confirming that they are
independent auditors within the meaning of the
Securities Act and the respective applicable published
rules and regulations thereunder and containing
statements and information of the type ordinarily
included in "comfort letters" to underwriters with
respect to the financial statements and certain
financial information contained or incorporated by
reference in the Registration Statement and the
Prospectus as then amended or supplemented.
(g) On the Commencement Date and at each Settlement Date
with respect to any Terms Agreement to which such Agent
is a party, the Company shall have furnished to such
Agent such appropriate further certificates and
documents as it may reasonably request.
17
5. Indemnification and Contribution.
--------------------------------
(a) The Company will indemnify and hold harmless each Agent
and each person, if any, who controls such Agent either
within the meaning of the Securities Act or the
Exchange Act against any losses, claims, damages or
liabilities, joint or several, to which such Agent or
such controlling person may become subject, under the
Securities Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration
Statement or any amendment thereof, the Basic
Prospectus or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a
material fact required to be stated therein or
necessary to make the statements therein not
misleading, and will reimburse each Agent and each such
controlling person for any legal or other expenses
reasonably incurred by such Agent or such controlling
person in connection with investigating or defending
any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable
in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance
upon and in conformity with written information
furnished to the Company by an Agent specifically for
use in the preparation thereof; and provided, further,
that the foregoing indemnification with respect to the
Basic Prospectus or the Prospectus shall not inure to
the benefit of any Agent (or any person controlling
such Agent) from whom the person asserting any such
loss, claim, damage or liability purchased the
Securities, if such Agent, if acting as principal in
the sale of the Notes to such person or as agent in
such sale having solicited such person, failed to send
or give copies of the Prospectus, as amended or
supplemented, excluding documents incorporated therein
by reference, to such person at or prior to the written
confirmation of the sale of such Notes to such person
in any case where such delivery is required by the
Securities Act and the untrue statement or omission of
a material fact contained in the Basic Prospectus was
corrected in the Prospectus (or the Prospectus as
amended or supplemented). This indemnity agreement will
be in addition to any liability which the Company may
otherwise have.
(b) Each Agent severally, but not jointly, agrees to
indemnify and hold harmless the Company, each person,
if any, who controls the Company either within the
meaning of the Securities Act or the Exchange Act, each
of its directors and each of its officers who has
signed the Registration Statement, against any losses,
claims, damages or liabilities to which the Company,
any such controlling person or any such director or
officer may become subject, under the Securities Act,
the Exchange Act, or otherwise, to the same extent as
the foregoing indemnity from the Company to each Agent,
but only with reference
18
to written information relating to such Agent furnished
to the Company specifically for use in the preparation
of the documents referred to in the foregoing
indemnity. The Company acknowledges that the statements
set forth under the heading "Plan of Distribution"
(exclusive of the sixth paragraph thereof) in the
Prospectus Supplement dated _______, 2001 relating to
the Notes constitute the only information furnished in
writing by or on behalf of any Agent for inclusion in
the Prospectus, and the Agents confirm that such
statements are correct. This indemnity agreement will
be in addition to any liability which each such Agent
may otherwise have.
(c) Promptly after receipt by an indemnified party under
this Section of notice of the commencement of any
action, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying
party under this Section, notify the indemnifying party
in writing of the commencement thereof, but the
omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any
indemnified party otherwise than under this Section. In
case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that
it may elect by written notice delivered to the
indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume
the defense thereof, with counsel satisfactory to such
indemnified party; provided, however, that if the
defendants in any such action include both the
indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that
there may be legal defenses available to it and/or
other indemnified parties which are different from or
in addition to those available to the indemnifying
party, the indemnified party or parties shall have the
right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of
such action on behalf of such indemnified party or
parties. Upon receipt by such indemnified party of
notice from the indemnifying party of its election so
to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying
party will not be liable to such indemnified party
under this Section 5 for any legal or other expenses
subsequently incurred by such indemnified party in
connection with the defense thereof unless (i) the
indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in
accordance with the proviso to the next preceding
sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses
of more than one separate counsel, approved by the
applicable Agent in the case of subparagraph (a),
representing the indemnified parties under subparagraph
(a) or (b), as the case may be, who are parties to such
action); (ii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party
to represent the indemnified party within a reasonable
time after notice of commencement of the action; or
(iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the
expense
19
of the indemnifying party; provided further, that, with
respect to legal and other expenses incurred by an
indemnified party for which an indemnifying party shall
be liable hereunder, all such legal fees and expenses
shall be reimbursed by the indemnifying party as they
are incurred.
(d) In order to provide for just and equitable contribution
in circumstances in which the indemnification provided
for in paragraph (a) of this Section 5 is due in
accordance with its terms but is for any reason held by
a court to be insufficient or unavailable, the Company
and each Agent participating in the offering of Notes
that gave rise to the losses, claims, damages or
liabilities (a "Relevant Agent") for which contribution
is sought shall severally contribute to the aggregate
of such losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred
in connection with investigating or defending same) to
which the Company and one or more Relevant Agents may
be subject in such proportion so that each Relevant
Agent is responsible for that portion represented by
the percentage that the commission rate paid to such
Relevant Agent on the sale of Notes sold through it
bears to the sum of such commission rate and the
purchase price of such Notes sold through such Relevant
Agent, and the Company is responsible for the balance;
provided, however, that (i) in no case shall any such
Relevant Agent be responsible for any amount in excess
of the commission rate paid to such Relevant Agent in
connection with the sale of such Notes; and (ii) no
person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
For purposes of this Section 5, each person who
controls an Agent within the meaning of either the
Securities Act or the Exchange Act shall have the same
rights to contribution as such Agent, and each person
who controls the Company within the meaning of either
the Securities Act or the Exchange Act, each officer of
the Company who shall have signed the Registration
Statement and each director of the Company shall have
the same rights to contribution as the Company, subject
in each case to clause (i) of this paragraph (d). Any
party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit
or proceeding against such party in respect of which a
claim for contribution may be made against another
party or parties under this paragraph (d), notify such
party or parties from whom contribution may be sought,
but the omission to so notify such party or parties
shall not relieve the party or parties from whom
contribution may be sought from any other obligation it
or they may have hereunder or otherwise than under this
paragraph (d).
6. Restrictions on Offers and Sales of Registered Notes.
----------------------------------------------------
Each Agent represents and agrees that it has not offered or sold and agrees that
it will not offer or sell any Note directly or indirectly in Japan or to
residents of Japan or for the benefit of any Japanese person (which term as used
herein means any person resident in Japan, including any corporation or other
entity organized under the laws of Japan) or to others for reoffering or resale
directly or
20
indirectly in Japan or to any Japanese person except under circumstances that
will result in compliance with any applicable laws, regulations and ministerial
guidelines of Japan taken as a whole. Furthermore, in connection with the
issuance of Notes denominated in Japanese yen, the Company and each Agent agree
to comply with all applicable laws, regulations and guidelines as amended from
time to time of the Japanese governmental and regulatory authorities.
7. Position of the Agents. In soliciting offers to
----------------------
purchase the Notes, each Agent is acting solely as agent for the Company, and
not as principal. Each Agent shall make reasonable efforts to assist the Company
in obtaining performance by each purchaser whose offer to purchase Notes has
been solicited by it and accepted by the Company, but no Agent shall have any
liability to the Company in the event any such purchase is not consummated for
any reason. Under no circumstances will any Agent be obligated to purchase any
Notes for its own account other than pursuant to, and subject to the conditions
set forth in, any Terms Agreement.
8. Termination. This Agreement may be terminated at any
-----------
time either (a) by the Company as to any Agent or (b) by any Agent, insofar as
this Agreement relates to such Agent, upon the giving of written notice of such
termination to the other parties hereto. In the event of such termination with
respect to any Agent, this Agreement shall remain in full force and effect with
respect to any Agent as to which such termination has not occurred. Any Terms
Agreement may be terminated, immediately upon notice to the Company, at any time
prior to the Settlement Date relating to a Terms Agreement if (i) trading in the
Company's common stock shall have been suspended by the Commission or the New
York Stock Exchange for a period of 24 hours or more or trading in securities
generally on the New York Stock Exchange shall have been suspended or materially
limited, in either case to such a degree as would in the reasonable judgment of
the Agent which is party to such Agreement adversely affect the market for the
Notes; (ii) a general moratorium on commercial banking activities in the State
of New York or the United States shall have been declared by Federal
authorities; or or (iii) there has occurred any material outbreak, or material
escalation, of hostilities involving the United States or other national or
international calamity or crisis, of such magnitude and severity in its effect
on the financial markets of the United States, in the reasonable judgment of an
Agent which is party to such Agreement, as to prevent or materially impair the
marketing, or enforcement of contracts for sale, of the Notes. In the event of
termination of this Agreement or any Terms Agreement, no party shall have any
liability to the other parties hereto, except (1) as provided in the first two
sentences of the third paragraph of Section 2(a) (with respect to any
commissions earned by the Agents but not yet paid by the Company at the time of
such termination), Section 3(g), Section 5 and Section 9; and (2) if, at the
time of termination, an Agent shall own any Notes purchased pursuant to a Terms
Agreement entered into prior to the termination of this Agreement with the
intention of reselling them or an offer to purchase any Notes has been accepted
by the Company but the time of delivery to the purchaser or its agent of such
Notes has not occurred, as provided in Sections 3(b) through 3(e), 3(h) through
3(k) and 3(n) hereof; provided that the exception set forth in clause (2) of
this sentence shall be of no further force or effect immediately after the
earlier of (i) resale or delivery, as the case may be, of the Notes referred to
in such clause; and (ii) in the case of Notes purchased pursuant to a Terms
Agreement entered into prior to the termination of this Agreement, a date 270
calendar days from the date of such termination. The
21
provisions of the last sentence of Section 3(e) and each of Sections 3(g), 5 and
9 hereof shall survive the termination or cancellation of any Terms Agreement.
9. Representations and Indemnities to Survive. The
------------------------------------------
respective agreements, representations, warranties and indemnities of the
Company or its officers and each Agent set forth in or made pursuant to this
Agreement or any Terms Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of any Agent or the Company
or any of the officers, directors or controlling persons referred to in Section
5 hereof, and will survive delivery of and payment for the Notes.
10. Notices. All communications hereunder will be in
-------
writing and effective only on receipt, and shall be mailed, delivered or sent by
facsimile transmission and confirmed as follows:
(i) if to Merrill Lynch, Pierce, Fenner & Smith
Incorporated at Merrill Lynch & Co., Merrill Lynch
World Headquarters, North Tower, 4 World Financial
Center, 250 Vesey Street, 10th 15/th/ Floor, New
York, New York 1028110080, Attention: MTN Product
Management;
(ii) if to ABN AMRO Incorporated, at 1325 Avenue of the
Americas, 10/th/ Floor, New York, New York 10019;
(iii) if to Banc of America Securities LLC, at Bank of
America Corporate Center, 100 North Tryon Street,
Charlotte, North Carolina 28255;
(iv) if to Banc One Capital Markets, Inc., at 1 Bank
One Plaza, Suite 1L1-0595, 21 South Clark Street,
Chicago, Illinois 60670;
(v) if to Barclays Capital Inc., at 222 Broadway, New
York, New York 10038, Attention: Syndicate Desk;
(vi) if to Deutsche Banc Alex. Brown Inc., at 31 W.
52/nd/ Street, New York, New York 10019;
(vii) if to Fleet Securities, Inc., at 100 Federal
Street, Mail Stop MA DE 10012H, Boston,
Massachusetts 02110, Attn: Paul E. McCormack;
(viii) if to Goldman, Sachs & Co., at 85 Broad Street,
New York, New York 10004, Attention: Medium-Term
Note Trading Department;
(ix) if to J.P. Morgan Securities, Inc., at 270 Park
Avenue, 8/th/ Floor, New York, New York 10017,
Attention: Medium-Term Note Desk;
(x) if to Morgan Stanley & Co. Incorporated, at 1585
Broadway, 2/nd/ Floor, New York, New York 10036,
Attention: Medium-Term Note Trading Desk;
22
(xi) if to Salomon Brothers Inc., at Seven World Trade
Center, New York, New York 10048, Attention:
Medium-Term Note Department; and
(xii) if to the Company, at One McDonald's Plaza, Oak
Brook, Illinois 60523, Attention: Treasurer, with
a copy to the Controller;
or at such other address as any party may notify to the other parties hereto
from time to time.
11. Successors. This Agreement and any Terms Agreement will
----------
inure to the benefit of and be binding upon the parties hereto and thereto and
the officers, directors and controlling persons referred to in Section 5 hereof,
and their respective successors, assigns, heirs, executors and administrators,
and no other persons will have any right or obligation hereunder.
12. Counterparts. This Agreement may be signed in any
------------
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
13. APPLICABLE LAW. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE NTERNAL LAWS OF THE STATE OF
ILLINOIS.
* * *
23
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicates hereof,
whereupon this letter and your acceptance shall represent a binding agreement
between the Company and you.
Very truly yours,
McDONALD'S CORPORATION
By: ____________________________________
Title: Senior Vice President and
Treasurer
24
The foregoing Agreement is hereby confirmed and accepted as of
the date first written above.
MERRILL LYNCH, PIERCE, FENNER & DEUTSCHE BANC ALEX. BROWN INC.
SMITH INCORPORATED
By: _________________________ By: _________________________
Title: Title:
ABN AMRO INCORPORATED FLEET SECURITIES, INC.
By: _________________________ By: _________________________
Title: Title:
BANC OF AMERICA SECURITIES LLC GOLDMAN, SACHS & CO.
By: _________________________ By: _________________________
Title: Title:
BANC ONE CAPITAL MARKETS, INC. J.P. MORGAN SECURITIES INC.
By: _________________________ By: _________________________
Title: Title:
BARCLAYS CAPITAL INC. MORGAN STANLEY & CO. INCORPORATED
By: _________________________ By: _________________________
Title: Title:
DEUTSCHE BANC ALEX. BROWN INC. SALOMON BROTHERS INC.
By: _________________________ By: _________________________
Title: Title:
25
EXHIBIT A
FORM OF TERMS AGREEMENT
McDonald's Corporation
MEDIUM-TERM NOTES, SERIES G
TERMS AGREEMENT
_______________, 200_
McDonald's Corporation
One McDonald's Plaza
Oak Brook, Illinois 60523
Attention: Treasurer
Re: U.S. Distribution Agreement dated ________, 2001
The undersigned agrees to purchase the following principal amount of your
Medium-Term Notes: [Currency/Amount]
Initial Public Offering Price:
Stated Maturity:
Purchase Price:
Purchase Date and Time:
Settlement Date and Time:
Place of Delivery:
Form: Book-Entry __________ or
Certificated _____________
Redeemable by Company: ___Yes ___No
A-1
Redemption Price Schedule:
Date Price
---- -----
Repayable at option of Holder: ___Yes ___No
Repayment Price Schedule:
Date Price
---- -----
For Fixed Rate Notes:
Interest Rate:
Interest Payment Dates:
(if other than February 15 and August 15)
Regular Record Dates:
(if other than February 1 and August 1)
For Floating Rate Notes:
Base Rate:
Initial Interest Rate:
Spread:
Spread Multiplier:
Index Maturity:
Interest Reset Period:
Interest Reset Dates:
Interest Payment Dates:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
For Indexed Notes:
[specify appropriate terms]
For Original Issue Discount Notes:
[specify appropriate terms]
For Amortizing Notes:
[specify amortization schedule]
(Other terms)
The provisions of Sections 1, 2(b), 2(c), 2(d), 3 through 6 and 8
through 13 of the Distribution Agreement and the related definitions are
incorporated by reference herein and shall be deemed to have the same force and
effect as if set forth in full herein.
A-2
[The certificates referred to in Section 3(i) of the Distribution
Agreement, the opinion referred to in Section 3(j) of the Distribution Agreement
and the auditors' letter referred to in Section 3(k) of the Distribution
Agreement will be required.]
[The following opinions, letters, information, certificates and
documents referred to in Section 4 of the Distribution Agreement will be
required:]
[The lockup period referred to in Section 3(l) of the U.S. Distribution
Agreement shall extend to a date ____ calendar days after the Settlement Date.]
[NAME OF PURCHASER]
By: _______________________
Title:
Accepted as of the date written above:
McDONALD'S CORPORATION
By: _________________________________
Title:
A-3
EXHIBIT B
Medium-Term Note Administrative Procedures
------------------------------------------
Medium-Term Notes, Series G (the "Notes") are to be offered on a continuing
basis by McDonald's Corporation (the "Company"). Each of Merrill Lynch & Co.,
ABN AMRO Incorporated, Banc of America Securities LLC, Banc One Capital Markets,
Inc., Barclays Capital Inc., J.P. Morgan Securities Inc., Deutsche Banc Alex.
Brown Inc., Fleet Securities, Inc., Goldman, Sachs & Co., J.P. Morgan Securities
Inc., Morgan Stanley & Co. Incorporated and Salomon Brothers Inc. as agent (each
an "Agent"), has agreed to solicit offers to purchase the Notes and to purchase
Notes, as principal, for its own account. The Notes are being sold pursuant to a
U.S. Distribution Agreement between the Company and the Agents dated ________,
2001 (the "Agreement"). The Notes will be in registered form and will be issued
under an Indenture dated as of October 19, 1996, between the Company and First
Union National Bank as trustee (the "Trustee"), and any indenture supplemental
thereto. If any provision of these Administrative Procedures limits or conflicts
with any provision of the form of Note attached to these Administrative
Procedures as Annex I hereto, such provision in the form of Note shall be
controlling. The Notes will constitute part of the senior debt of the Company
and will rank equally with all other unsecured and unsubordinated debt of the
Company.
Each Note will be represented by either a Global Security (as defined
hereinafter) (a "Registered Note") or a certificate delivered to the Holder
thereof or a Person designated by such Holder (a "Certificated Note"). Each
Global Security representing Registered Notes will be delivered to Bank One,
N.A. ("Bank One" or the "DTC Agent"), acting as agent for The Depository Trust
Company or any successor depositary selected by the Company ("DTC", which term,
as used herein, includes any successor depositary selected by the Company), and
will be recorded in the book-entry system maintained by DTC (a "Book-Entry
Note"). Except as set forth in the Basic Prospectus (as defined in the
Agreement), an owner of a Book-Entry Note will not be entitled to receive a
certificate representing such Note.
The procedures to be followed during, and the specific terms of, the
solicitation of orders by the Agents and the sale as a result thereof by the
Company are explained below. Administrative and record-keeping responsibilities
will be handled for the Company by its Treasury Department. The Company will
advise the Agents, the Paying Agent and the Trustee in writing of those persons
handling administrative responsibilities with whom the Agents, the Paying Agent
and the Trustee are to communicate regarding orders to purchase Notes and the
details of their delivery.
Administrative procedures and specific terms of the offering are
explained below. Book-Entry Notes will be issued in accordance with the
administrative procedures set forth in Part I 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 II
hereof. Unless otherwise defined herein, terms defined in the Indenture, the
Notes or the Prospectus Supplement relating to 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
B-1
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 Indenture, DTC's operating
requirements or the Agreement, the relevant provisions of the Notes, the
Indenture, DTC's operating requirements and the Agreement shall control.
PART I: ADMINISTRATIVE PROCEDURES FOR BOOK-ENTRY NOTES
In connection with the qualification of the Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, the DTC Agent will
perform the custodial, document control and administrative functions described
below for the Registered Notes. The DTC Agent will perform such functions in
accordance with its respective obligations under a Letter of Representations
from the Company and the DTC Agent to DTC dated as of the date hereof and a
Medium-Term Note Certificate Agreement between Bank One and DTC, dated May 26,
1989 and as amended to date, and its obligations as a participant in DTC,
including DTC's Same-Day Funds Settlement system ("SDFS").
Issuance: On any date of settlement (as defined under
- -------- "Settlement" below) for one or more Fixed
Rate Book-Entry Notes, the Company will
issue a single global security in fully
registered form without coupons (a "Global
Security") representing up to $200,000,000
principal amount of all such Notes that have
the same interest rate, Stated Maturity and
redemption provisions. On any settlement
date for one or more Floating Rate Book-
Entry Notes, the Company will issue a single
Global Security representing up to
$200,000,000 principal amount of all such
Notes that have the same Base Rate, Initial
Interest Rate, Index Maturity, Spread or
Spread Multiplier, Interest Reset Period,
Interest Payment Dates, redemption
provisions, Minimum Interest Rate (if any),
Maximum Interest Rate (if any) and Stated
Maturity. On any settlement date for one or
more Indexed Book-Entry Notes, the Company
will issue a single Global Security
representing up to $200,000,000 principal
amount of all such Notes that have the same
terms (as such terms are identified in the
Pricing Supplement relating to such Notes).
Each Global Security will be dated and
issued as of the date of its authentication
by the Trustee for the Registered Notes
represented by such Global Security. No
Global Security will represent (i) more than
one of a Fixed Rate, Floating Rate and
Indexed Book-Entry Notes; or (ii) any
Certificated Note.
Identification Numbers: The Company has arranged with the CUSIP
- ----------------------- Service Bureau of Standard & Poor's (the
"CUSIP Service Bureau") for the reservation
of a series of CUSIP numbers (including
tranche
B-2
numbers) for the Registered Notes. Such
series consists of approximately 900 CUSIP
numbers and relates to Global Securities
representing Book-Entry Notes and book-entry
medium-term notes issued by the Company with
other series designations. The DTC Agent has
obtained from the CUSIP Service Bureau
written lists of such reserved CUSIP numbers
and caused such lists to be delivered to the
DTC Agent and to DTC. The DTC Agent will
assign CUSIP numbers to Global Securities as
described below under Settlement Procedure
"B". DTC will notify the CUSIP Service
Bureau periodically of the CUSIP numbers
that the DTC Agent has assigned to Global
Securities. The DTC Agent will notify the
Company at any time when fewer than 100 of
the reserved CUSIP numbers remain unassigned
to Global Securities, and, if it deems
necessary, the Company will reserve
additional CUSIP numbers for assignment to
Global Securities. Upon obtaining such
additional CUSIP numbers, the Company shall
deliver a list of such additional CUSIP
numbers to the DTC Agent, as needed, and to
DTC.
Registration: Global Securities will be issued only in
- ------------ fully registered form without coupons and
each Global Security will be registered in
the name of CEDE & Co., as nominee for DTC,
on the securities register for the Notes
(the "Securities Register") maintained under
the Indenture. The beneficial owner of a
Book-Entry Note (or one or more indirect
participants in DTC designated by such
owner) will designate one or more direct
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 beneficial owner in such
Note in the account of such Participants.
The ownership interest of such beneficial
owner (or such participants) 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.
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.
B-3
Exchanges: The DTC Agent may deliver to DTC and the
- --------- CUSIP Service Bureau at any time a written
notice of consolidation (a copy of which
shall be attached to the resulting Global
Security described below) specifying (i) the
CUSIP numbers of two or more Outstanding
Global Securities that represent (A) Fixed
Rate Book-Entry Notes having the same
interest rate, Interest Payment Date,
redemption provisions and Stated Maturity
and for which interest has been paid to the
same date; (B) Floating Rate Book-Entry
Notes having the same Base Rate, Index
Maturity, Spread or Spread Multiplier,
Interest Reset Period, Interest Payment
Dates, redemption and repayment provisions,
Minimum Interest Rate (if any), Maximum
Interest Rate (if any) and Stated Maturity
and for which interest has been paid to the
same date; or (C) Indexed Book-Entry Notes
having the same terms (as such terms are
identified in the Pricing Supplement
relating to such Notes); (ii) a date,
occurring at least 30 days after such
written notice is delivered and at least 30
days before the next Interest Payment Date
for such Book-Entry Notes, on which such
Global Securities shall be exchanged for a
single replacement Global Security; and
(iii) a new CUSIP number to be assigned to
such replacement Global Security. Upon
receipt of such a notice, DTC will send to
its participants (including the DTC Agent) a
written reorganization notice to the effect
that such exchange will occur on such date.
Prior to the specified exchange date, the
DTC Agent will deliver to the CUSIP Service
Bureau a written notice setting forth such
exchange date and the new CUSIP number and
stating that, as of such exchange date, the
CUSIP numbers of the Global Securities to be
exchanged will no longer be valid. On the
specified exchange date, the DTC Agent will
exchange such Global Securities for a single
Global Security bearing the new CUSIP number
and the CUSIP numbers of the exchanged
Global Securities will, in accordance with
CUSIP Service Bureau procedures, be canceled
and not immediately reassigned. Upon such
exchange, the DTC Agent will mark the
predecessor Global Security "canceled", make
appropriate entries in the DTC Agent"s
records and destroy such canceled Global
Security in accordance with the terms of the
Indenture and deliver a certificate of
destruction to the Company. Notwithstanding
the foregoing, if the Global Securities to
be exchanged exceed $200,000,000 in
aggregate principal amount, one Global
Security will be authenticated and issued to
represent each $200,000,000 of principal
amount of the exchanged Global Securities
and an additional
B-4
Global Security will be authenticated and
issued to represent any remaining principal
amount of such Global Securities (see
"Denominations" below).
Maturities: Each Book-Entry Note will mature on a date
- ---------- not less than one year nor more than 60
years after the settlement date for such
Note (the "Stated Maturity"). Unless
otherwise specified in the applicable
Pricing Supplement, a Floating Rate Book-
Entry Note will mature only on an Interest
Payment Date for such Note.
Denominations: Book-Entry Notes will be issued in principal
- ------------- amounts of $1,000 or any amount in excess
thereof that is an integral multiple of
$1,000. If Book-Entry Notes are denominated
in a Specified Currency other than U.S.
dollars, the denominations of such Notes
will be determined pursuant to the
provisions of the applicable Pricing
Supplement. Global Securities will be
denominated in principal amounts not in
excess of $200,000,000 (or the equivalent
thereof). If one or more Book-Entry Notes
having an aggregate principal amount in
excess of $200,000,000 (or the equivalent
thereof) would, but for the preceding
sentence, be represented by a single Global
Security, then one Global Security will be
authenticated and issued to represent each
$200,000,000 principal amount (or the
equivalent thereof) of such Book-Entry Note
or Notes and an additional Global Security
will be authenticated and issued to
represent any remaining principal amount of
such Book-Entry Note or Notes. In such a
case, each of the Global Securities
representing such Book-Entry Note or Notes
shall be assigned the same CUSIP number.
Interest: General. Unless otherwise indicated in the
- -------- -------
applicable Pricing Supplement, interest, if
any, on each Book-Entry Note will accrue
from the Original Issue Date (or such other
date on which interest otherwise begins to
accrue (if different than the Original Issue
Date)) of the Global Security representing
such Book-Entry Note or from the last day to
which interest has been paid thereon or duly
provided for and will be calculated and paid
in the manner described in such Book-Entry
Note and in the applicable Pricing
Supplement. The first payment of interest on
any Book-Entry Note originally issued
between a Regular Record Date and an
Interest Payment Date will be made on the
next succeeding Interest Payment Date.
Unless otherwise specified therein, each
payment of interest for a Book-Entry Note
will include interest accrued to but
excluding the Interest Payment Date or
B-5
to but excluding Stated Maturity. Interest
payable at the Stated Maturity of a Book-
Entry Note will be payable to the person to
whom the principal of such Note is payable.
Standard & Poor's 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
Security in the appropriate daily bond
report published by Standard & Poor's.
Regular Record Dates. Unless otherwise
--------------------
specified in the applicable Pricing
Supplement, the Regular Record Date with
respect to any Interest Payment Date for a
Fixed Rate Book-Entry Note shall be the
February 1 or August 1 (whether or not a
Business Day) immediately preceding such
Interest Payment Date. Unless otherwise
specified in the applicable Pricing
Supplement, the Regular Record Date with
respect to any Interest Payment Date for a
Floating Rate Book-Entry Note shall be the
date (whether or not a Business Day) 15
calendar days immediately preceding such
Interest Payment Date.
Interest Payment Dates on Fixed Rate Book-
------------------------------------------
Entry Notes. Unless otherwise specified
-----------
pursuant to Settlement Procedure "A" below,
interest payments on Fixed Rate Book-Entry
Notes will be made semiannually on February
15 and August 15 of each year and at Stated
Maturity; provided, however, that if any
Interest Payment Date for a Fixed Rate Book-
Entry Note is not a Business Day, the
payment due on such day shall be made on the
next succeeding Business Day, and no
interest shall accrue on such payment for
the period from and after such Interest
Payment Date; and provided further that in
the case of a Fixed Rate Book-Entry Note
issued between a Regular Record Date and an
Interest Payment Date, the first interest
payment will be made on the Interest Payment
Date following the next succeeding Regular
Record Date.
Interest Payment Dates on Floating Rate
Book-Entry Notes. Unless otherwise
specified, interest payments will be made on
Floating Rate Book-Entry Notes monthly,
quarterly, semiannually or annually. Unless
otherwise specified, interest will be
payable, in the case of Floating Rate Book-
Entry Notes that: reset daily, weekly or
monthly, on the third Wednesday of each
month or on the third Wednesday of March,
June, September and December of each year,
as
B-6
specified; reset quarterly, on the third
Wednesday of March, June, September and
December of each year; reset semiannually,
on the third Wednesday of each of two months
specified pursuant to Settlement Procedure
"A" below; and reset annually, on the third
Wednesday of the month specified pursuant to
Settlement Procedure "A" below; provided,
however, that if an Interest Payment Date
for a Floating Rate Book-Entry Note would
otherwise be a day that is not a Business
Day with respect to such Floating Rate Book-
Entry Note, such Interest Payment Date will
be the next succeeding Business Day with
respect to such Floating Rate Book-Entry
Note, except in the case of a Floating Rate
Book-Entry Note for which the Base Rate is
LIBOR, if such Business Day is in the next
succeeding calendar month, such Interest
Payment Date will be the immediately
preceding Business Day; and provided
further, that in the case of a Floating Rate
Book-Entry Note issued between a Regular
Record Date and an Interest Payment Date,
the first interest payment will be made on
the Interest Payment Date following the next
succeeding Regular Record Date.
Notice of Interest Payment and Regular
--------------------------------------
Record Dates. On the first Business Day of
------------
January, April, July and October of each
year, the DTC Agent will deliver to the
Company and DTC a written list of Regular
Record Dates and Interest Payment Dates that
will occur with respect to Book-Entry Notes
during the six-month period beginning on
such first Business Day. Promptly after each
Interest Determination Date for Floating
Rate Book-Entry Notes, Bank One, as
Calculation Agent, will make available to
Standard & Poor's the interest rates
determined on such Interest Determination
Date.
Calculation of Interest: Fixed Rate Book-Entry Notes. Interest on
- ----------------------- ---------------------------
Fixed Rate Book-Entry Notes (including
interest for partial periods) will be
calculated on the basis of a 360-day year of
twelve 30-day months.
Floating Rate Book-Entry Notes. Interest
------------------------------
rates on Floating Rate Book-Entry Notes will
be determined as set forth in the form of
Notes. Interest on Floating Rate Book-Entry
Notes, except as otherwise set forth herein,
will be calculated on the basis of actual
days elapsed and a year of 360 days, except
that in the case of a Floating Rate Book-
Entry Note for which the Base Rate is the
Treasury Rate or CMT, interest will be
B-7
calculated on the basis of the actual number
of days in the year.
Amortizing Book-Entry Notes. Unless otherwise
---------------------------
indicated in the applicable Pricing
Supplement, interest on Amortizing Notes will
be calculated on the basis of a 360-day year
of twelve 30-day months.
Payments of Principal
- ---------------------
and Interest: Payment of Interest Only. Promptly after each
- ------------ ------------------------
Regular Record Date, the DTC Agent will
deliver to the Company and DTC a written
notice specifying the CUSIP number, the amount
of interest to be paid on each Global Security
on the following Interest Payment Date (other
than an Interest Payment Date coinciding with
Stated Maturity) and the total of such
amounts. DTC will confirm the amount payable
on each Global Security on such Interest
Payment Date by reference to the daily bond
reports published by Standard & Poor's. The
Company will pay to the Paying Agent the total
amount of interest due on such Interest
Payment Date (other than at Stated Maturity),
and the Paying Agent will pay such amount to
DTC, at the times and in the manner set forth
below under "Manner of Payment".
Payments at Stated Maturity. On or about the
---------------------------
first Business Day of each month, the DTC
Agent will deliver to the Company and DTC a
written list of principal and interest to be
paid on each Global Security maturing in the
following month. The Company, DTC and the DTC
Agent will confirm the amounts of such
principal and interest payments with respect
to each such Global Security on or about the
fifth Business Day preceding the Stated
Maturity of such Global Security. The Company
will pay to the Paying Agent the principal
amount of such Global Security, together with
interest due at such Stated Maturity. The
Paying Agent 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 Stated Maturity of such Global
Security, the Paying Agent will cancel such
Global Security and deliver it to the Company
with an appropriate debit advice.
Manner of Payment. The total amount of any
-----------------
principal and interest due on Global
Securities on any Interest Payment Date or at
Stated Maturity shall be paid by the Company
to the Paying Agent in immediately available
funds no later than
B-8
9:30 a.m. (New York City time) on such date.
The Company will make such payment on such
Global Securities by instructing the Paying
Agent to withdraw funds from an account
maintained by the Company. The Company will
confirm any such instructions in writing to
the Paying Agent. For Stated Maturity,
redemption and other principal payments, the
Paying Agent will pay, prior to 10:00 a.m.
(New York City time) on such date or as soon
as possible thereafter, by separate wire
transfer (using Fedwire message entry
instructions in a form previously specified by
DTC) to an account at the Federal Reserve Bank
of New York previously specified by DTC, in
funds available for immediate use by DTC, each
payment of principal (together with interest
thereon) due on a Global Security on such
date. Thereafter on such date, DTC will pay,
in accordance with its SDFS operating
procedures then in effect, such amounts in
funds available for immediate use to the
respective Participants in whose names the
Book-Entry Notes represented by such Global
Security are recorded in the book-entry system
maintained by DTC. Payments of interest shall
be made to DTC in same day funds in accordance
with existing arrangements in place between
the DTC Agent and DTC. None of the Company,
the Paying Agent or the DTC Agent shall have
any direct responsibility or liability for the
payment by DTC to such Participants of the
principal of and interest on the Book-Entry
Notes.
If an issue of Notes is denominated in a
currency other than the U.S. dollar, the
Company will make payments of principal and
any interest in the currency in which the
Notes are denominated (the "foreign currency")
or in U.S. dollars. DTC has elected to have
all such payments of principal and interest in
U.S. dollars unless notified by any of its
Participants through which an interest in the
Notes is held that it elects, in accordance
with and to the extent permitted by the
applicable Pricing Supplement and the Note, to
receive such payment of principal or interest
in the foreign currency. On or prior to the
third Business Day after the record date for
payment of interest and twelve days prior to
the date for payment of principal, such
Participant shall notify DTC of (i) its
election to receive all, or the specified
portion, of such payment in the foreign
currency; and (ii) its instructions for wire
transfer of such payment to a foreign currency
account.
B-9
DTC will notify the applicable Trustee on or
prior to the fifth Business Day after the
record date for payment of interest and ten
days prior to the date for payment of
principal of the portion of such payment to be
received in the foreign currency and the
applicable wire transfer instructions, and the
applicable Trustee shall use such instructions
to pay the Participants directly. If DTC does
not so notify the applicable Trustee, it is
understood that only U.S. dollar payments are
to be made. The applicable Trustee shall
notify DTC on or prior to the second Business
Day prior to payment date of the conversion
rate to be used and the resulting U.S. dollar
amount to be paid per $1,000 face amount. In
the event that the applicable Trustee"s
quotation to convert the foreign currency into
U.S. dollars is not available, the applicable
Trustee shall notify DTC"s Dividend Department
that the entire payment is to be made in the
foreign currency. In such event, DTC will ask
its Participants for payment instructions and
forward such instructions to the applicable
Trustee and the applicable Trustee shall use
such instructions to pay the Participants
directly.
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.
Procedures upon Company's
- -------------------------
Exercise of Optional Redemption: Company Notice to Trustee and Paying Agent
- ------------------------------- ------------------------------------------
regarding Exercise of Optional Redemption. At
-----------------------------------------
least 45 days prior to the date on which it
intends to redeem a Book-Entry Note, the
Company will notify the Trustee and Paying
Agent that it is exercising such option with
respect to such Book-Entry Note on such date.
Paying Agent Notice to DTC regarding Company's
----------------------------------------------
Exercise of Optional Redemption. After receipt
-------------------------------
of notice that the Company is exercising its
option to redeem a Book-Entry Note, the
Trustee will, at least 30 days before the
redemption date of such Book-Entry Note, hand
deliver to DTC a notice identifying such Book-
Entry Note by CUSIP number and informing DTC
of the Company's exercise of such option with
respect to such Book-Entry Note.
B-10
Deposit of Redemption Price. On or before any
---------------------------
redemption date, the Company shall deposit
with the Paying Agent an amount of money
sufficient to pay the redemption price, plus
interest accrued to such redemption date, for
all the Book-Entry Notes or portions thereof
which are to be repaid on such redemption
date. The Paying Agent will use such money to
repay such Book-Entry Notes pursuant to the
terms set forth in such Notes.
Procedure for Rate Setting
- --------------------------
and Posting: The Company and the Agent will discuss from
- -----------
time to time the aggregate principal amount
of, the issuance price of and the interest
rates to be borne by, Book-Entry Notes that
may be sold as a result of the solicitation of
orders by the Agent. If the Company decides to
set prices of, and rates borne by, any Book-
Entry Notes in respect of which the Agent is
to solicit orders (the setting of such prices
and rates to be referred to herein as
"posting") or if the Company decides to change
prices or rates previously posted by it, it
will promptly advise the Agent of the prices
and rates to be posted.
Acceptance and Rejection
- ------------------------
of Offers: Unless otherwise instructed by the Company,
- ---------
the Agent will advise the Company promptly by
telephone of all orders to purchase Book-Entry
Notes received by the Agent, other than those
rejected by it in whole or in part in the
reasonable exercise of its discretion. Unless
otherwise agreed by the Company and the Agent,
the Company has the right to accept orders to
purchase Book-Entry Notes and may reject any
such orders in whole or in part.
Confirmation: For each order to purchase a Book-Entry Note
- ------------
solicited by the Agent and accepted by or on
behalf of the Company, the Agent will issue a
confirmation to the purchaser, with a copy to
the Company, setting forth the details set
forth above and delivery and payment
instructions.
Settlement: The receipt by the Company of immediately
- ----------
available funds in payment for a Book-Entry
Note and the authentication and issuance of
the Global Security representing such Book-
Entry Note shall constitute "settlement" with
respect to such Book-Entry Note, and the date
of such settlement, the "Settlement Date". All
orders accepted by the Company will be settled
on the third Business Day next succeeding the
date of acceptance pursuant to the timetable
for settlement set forth
B-11
below unless the Company and the purchaser
agree to settlement on another day, which
shall be no earlier than the next Business Day
following the date of sale.
Settlement Procedures: Settlement Procedures with regard to each
- ---------------------
Book-Entry Note sold by the Company to or
through the Agent, except pursuant to a Terms
Agreement, shall be as follows:
A. The Agent will advise the Company by
telephone (or by facsimile or other
acceptable written means) that such
Note is a Book-Entry Note and of the
following settlement information:
1. Principal or face amount.
2. Series.
3. Stated Maturity.
4. In the case of a Fixed Rate Book-
Entry Note, the interest rate and
reset, redemption, repayment and
extension provisions (if any) or,
in the case of a Floating Rate
Book-Entry Note, the Base Rate,
Initial Interest Rate (if known at
such time) Interest Reset Period,
Interest Reset Dates, Index
Maturity, Spread and/or Spread
Multiplier (if any), Minimum
Interest Rate (if any), Maximum
Interest Rate (if any) and reset,
redemption, repayment and
extension provisions (if any).
5. Interest Payment Dates and the
Interest Payment Period.
6. Amortization provisions, if any.
7. Settlement Date and Issue Date, if
different.
8. Specified Currency.
9. Denominated Currency, Index
Currency, base exchange rate, and
the determination date, if
applicable.
10. Price.
B-12
11. Agent's commission, determined as
provided in the Agreement.
12. Whether such Book-Entry Note is an
Original Issue Discount Note and,
if so, the total amount of a OID,
the Yield to Maturity and the
initial accrual period.
13. Any other terms necessary to
describe the Book-Entry Note.
B. The Company will advise the relevant
DTC Agent by telephone (confirmed in
writing at any time on the same date),
written telecommunication or electronic
transmission of the information set
forth in Settlement Procedure "A"
above. Each such communication by the
Company shall constitute a
representation and warranty by the
Company to the DTC Agent for such Note,
the Trustee for such Note and the Agent
that (i) such Note is then, and at the
time of issuance and sale thereof will
be, duly authorized for issuance and
sale by the Company; and (ii) such
Note, and the Global Security
representing such Note, will conform
with the terms of the Indenture for
such Note. The DTC Agent will then
assign a CUSIP number to the Global
Security representing such Book-Entry
Note and notify the Agent and the
Company by telephone (confirmed in
writing at any time on the same date),
written telecommunication or electronic
transmission of such CUSIP number as
soon as practicable.
C. The DTC Agent will enter a pending
deposit message through DTC's
Participant Terminal System, providing
the following Settlement information to
DTC, such Agent, Standard & Poor's and,
upon request, the Trustee:
1. The information set forth in
Settlement Procedure "A".
2. Identification as a Fixed Rate
Book-Entry Note or a Floating Rate
Book-Entry Note.
3. Initial Interest Payment Date for
such Note, number of days by which
such date succeeds
B-13
the related DTC Record Date and
amount of interest, if known,
payable on such Interest Payment
Date.
4. Interest Payment Period or
frequency of Interest Payment
Dates.
5. CUSIP number of the Global
Security representing such Note.
6. Whether such Global Security will
represent any other Book-Entry
Note (to the extent known at such
time).
7. The participant account numbers
maintained by DTC on behalf of the
Trustee and the Agent.
D. To the extent the Company has not
already done so, the Company will
deliver to the Trustee for such Notes a
Global Security in a form that has been
approved by the Company, the Agent and
the Trustee.
E. Bank One, as Authenticating Agent, will
complete each Book-Entry Note, stamp
the appropriate legend, as instructed
by DTC, if not already set forth
thereon, and authenticate the Global
Security representing such Note.
F. DTC will credit such Note to the DTC
Agent's participant account at DTC.
G. The DTC Agent will enter an SDFS
delivery order through DTC's
Participant Terminal System instructing
DTC to (i) debit such Note to the DTC
Agent's participant account; and credit
such Note to such Agent's participant
account; and (ii) debit such Agent's
settlement account and credit the DTC
Agent's settlement account for an
amount equal to the price of such Note
less such Agent's commission. The entry
of such a deliver order shall
constitute a representation and
warranty by the DTC Agent to DTC that
(i) the Global Security representing
such Book-Entry Note has been issued
and authenticated; and (ii) the DTC
Agent is holding such Global Security
pursuant to the
B-14
Medium-Term Note Certificate Agreement
between the DTC Agent and DTC.
H. Unless the Agent is purchasing such
Note as principal, the Agent will enter
an SDFS delivery order through DTC's
Participant Terminal System instructing
DTC (i) to debit such Note to such
Agent's participant account and credit
such Note to the participant accounts
of the Participants with respect to
such Note; and (ii) to debit the
settlement accounts of such
Participants and credit the settlement
account of such Agent for an amount
equal to the price of such Note.
I. Transfers of funds in accordance with
SDFS delivery orders described in
Settlement Procedures "G" and "H" will
be settled in accordance with SDFS
operating procedures in effect on the
settlement date.
J. The DTC Agent will, upon receipt of
funds from the Agent in accordance with
Settlement Procedure "G", credit to an
account of the Company maintained at
the DTC Agent funds available for
immediate use in the amount transferred
to the DTC Agent in accordance with
Settlement Procedure "G".
K. Such Agent will confirm the purchase of
such Note to the purchaser either by
transmitting to the Participants with
respect to such Note a confirmation
order or orders through DTC's
institutional delivery system or by
mailing a written confirmation to such
purchaser.
L. Monthly, the DTC Agent will send to the
Company a statement setting forth the
principal amount of Registered Notes
Outstanding as of the date of such
statement and setting forth a brief
description of any sales of which the
Company has advised the DTC Agent but
which have not yet been settled.
Settlement Procedures Timetable: For sales by the Company of Book-Entry
- -------------------------------
Notes solicited by an Agent and
accepted by the Company (except
pursuant to a Terms Agreement) for
settlement on the first Business Day
after the sale
B-15
date, Settlement Procedures "A" through "K" 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 11:00 a.m. on the sale date
B 12:00 Noon on the sale date
C 2:00 p.m. on the sale date
D 3:00 p.m. on 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 4:00 p.m. on Settlement Date
J-K 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 not later than 11:00
a.m., 12:00 Noon and 2:00 p.m., respectively,
on the first Business Day after the sale date.
If the Initial Interest Rate for a Floating
Rate Book-Entry Note has not been determined at
the time that Settlement Procedure "A" is
completed, Settlement Procedures "B" and "C"
shall be completed as soon as such rate has
been determined but no later than 12:00 Noon
and 2:00 p.m., respectively, on the second
Business Day before the settlement date.
Settlement Procedure "I" is subject to
extension in accordance with any extension of
Fedwire closing deadlines and in the other
events specified in SDFS operating procedures
in effect on the settlement date.
If settlement of a Book-Entry Note is
rescheduled or canceled, the DTC Agent will
deliver to DTC through DTC's Participant
Terminal System, a cancellation message to such
effect by no later than 5:00 p.m. on the
Business Day immediately preceding the
scheduled settlement date.
B-16
Failure to Settle: If settlement of a Book-Entry Note is
-----------------
rescheduled and the DTC Agent for such Note
has not entered an SDFS deliver order with
respect to a Book-Entry Note pursuant to
Settlement Procedure "G", after receiving
notice from the Company or the Agent, such
DTC Agent shall 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 such DTC
Agent's participant account. DTC will process
the withdrawal message, provided that such
DTC Agent's participant account contains a
principal amount of the Global Security
representing such Book-Entry Note that is at
least equal to the principal amount to be
debited. If a withdrawal message is processed
with respect to all the Book-Entry Notes
represented by a Global Security, the Trustee
for the Notes represented by such Global
Security will mark such Global Security
"canceled", make appropriate entries in such
Trustee"s records and destroy the canceled
Global Security in accordance with the
Indenture and deliver a certificate of
destruction to the Company. The CUSIP number
assigned to such Global Security shall, in
accordance with CUSIP Service Bureau
procedures, be canceled and not immediately
reassigned. If a withdrawal message is
processed with respect to one or more, but
not all, of the Book-Entry Notes represented
by a Global Security, the DTC Agent for such
Book-Entry Notes will exchange such Global
Security for two Global Securities, one of
which shall represent such Book-Entry Notes
and shall be canceled immediately after
issuance and the other of which shall
represent the other Book-Entry Notes
previously represented by the surrendered
Global Security and shall bear the CUSIP
number of the surrendered Global Security.
If the purchase price for any Book-Entry Note
is not timely paid to the Participants with
respect to such Note by the beneficial
purchaser thereof (or a Person, including an
indirect participant in DTC, acting on behalf
of such purchaser), such Participants and, in
turn, the Presenting Agent may enter SDFS
deliver orders through DTC's
B-17
Participant Terminal System reversing
the orders entered pursuant to
Settlement Procedures "H" and "G",
respectively. Thereafter, the DTC Agent
for such Book-Entry Note will deliver
the withdrawal message and take the
related actions described in the
preceding paragraph. If such failure
shall have occurred for any reason other
than a default by the Agent in the
performance of its obligations hereunder
and under the Agreement, then the
Company will reimburse the Agent for the
loss of the use of the funds during the
period when they were credited to the
account of the Company.
Notwithstanding the foregoing, upon any
failure to settle with respect to a
Book-Entry Note, DTC may take any
actions in accordance with its SDFS
operating procedures then in effect. In
the event of a failure to settle with
respect to one or more, but not all, of
the Book-Entry Notes to have been
represented by a Global Security, the
DTC Agent for such Book-Entry Note or
Notes will provide, in accordance with
Settlement Procedures "E" and "G", for
the authentication and issuance of a
Global Security representing the other
Book-Entry Notes to have been
represented by such Global Security and
will make appropriate entries in its
records.
Procedure for Rate Changes;
- --------------------------
Preparation of Pricing Supplements: The Company and the Agents will
- ----------------------------------
discuss from time to time the rates to
be borne by Registered Notes that may be
sold as a result of the solicitation of
offers by any Agent. If any offer to
purchase a Registered Note is accepted
by the Company, the Company will prepare
a Pricing Supplement reflecting the
terms of such Note and will arrange to
have the Pricing Supplement filed with
the Commission in accordance with the
applicable paragraph of Rule 424(b)
under the Securities Act and will supply
by facsimile transmission or by
overnight express for delivery by 11:00
a.m. on the Business Day next following
the date of acceptance one copy thereof
(or additional copies if requested) to
each Agent which presented the order
(each, a "Presenting Agent") at each
address listed below and one copy to the
Trustee. The relevant Agent will cause a
Prospectus and Pricing Supplement to
B-18
be delivered to the purchaser of the Registered
Note.
Copies of Pricing Supplements shall be sent to:
if Merrill Lynch & Co. is the Presenting Agent:
Merrill Lynch & Co. - Tritech Services
44B Colonial Drive
Piscataway, New Jersey 08854
Attn: Prospectus Operations/Nachman Kimerling
Telephone: (732) 885-2768
Facsimile: (732) 885-2774/5/6
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
4 World Financial Center,
North Tower, 15/th/ Floor
New York, New York 10080
Attn: MTN Product Management
Telephone: (212) 449-7476
Facsimile: (212) 449-2234
if ABN AMRO Incorporated is the Presenting Agent:
ABN AMRO Incorporated
181 West Madison, 17/th/ Floor
Chicago, Illinois 60602
Attn: Janet Mundell
Telephone: (312) 904-7846
Facsimile: (312) 904-4058
if Banc of America Securities LLC is the
Presenting Agent:
B-19
Banc of America Securities LLC
Bank of America Corporate Center
100 North Tyson Street
Charlotte, North Carolina 28255
Attn: MTN Product Management
Telephone: (704) 386-9690
Facsimile: (704) 388-9939
if Banc One Capital Markets, Inc. is the
Presenting Agent:
Banc One Capital Markets, Inc.
1 Bank One Plaza
Suite 1L1-0595
21 South Clark Street
Chicago, Illinois 60670-0595
Attn: Investment Grade Securities
Telephone: (312) 732-4645
Facsimile: (312) 732-4773
if Barclays Capital Inc. is the Presenting Agent:
Barclays Capital Inc.
222 Broadway
New York, New York 10038
Attn: Syndicate Desk
Telephone: (212) 412-2663
Facsimile: (212) 412-1623
if Deutsche Banc Alex. Brown Inc. is the
Presenting Agent:
Deutsche Banc Alex. Brown Inc.
31 West 52/nd/ Street
3/rd/ Floor
Debt Capital Markets
New York, New York 10019
Attn: Josh Witz
Telephone: (212) 469-8493
Facsimile: (212) 469-7505
if Fleet Securities, Inc. is the Presenting Agent:
B-20
Fleet Securities, Inc.
100 Federal Street
Mail Stop MA DE 10012H
Boston, Massachusetts 02110
Attn: Paul E. McCormack
Telephone: (617) 434-8686
Facsimile: (617) 434-3122
if Goldman, Sachs & Co. is the Presenting Agent:
Goldman, Sachs & Co.
85 Broad Street
Medium-Term Note Trading Department
New York, New York 10004
Attn: Karen Robertson
Telephone: (212) 902-8401
Facsimile: (212) 902-0658
if J.P. Morgan Securities, Inc. is the Presenting
Agent:
J.P. Morgan Securities, Inc.
270 Park Avenue
8/th/ Floor
New York, New York 10017
Attn: Medium-Term Note Desk
Telephone: (212) 834-4421
Facsimile: (212) 834-6081
if Morgan Stanley & Co. Incorporated is the
Presenting Agent:
Morgan Stanley & Co. Incorporated
1585 Broadway
2/nd/ Floor
New York, New York 10036
Attn: Medium-Term Note Trading Desk
Telephone: (212) 761-1248
Facsimile: (212) 761-0780
if Salomon Brothers Inc is the Presenting Agent:
Salomon Smith Barney
Brooklyn Army Terminal
140 58/th/ Street
8/th/ Floor
B-21
Brooklyn, New York 11220
Attn: Diane Graham
Telephone: (212) 921-8475
Facsimile: (718) 921-8472
Suspension of Solicitation;
- --------------------------
Amendment or Supplement: Subject to the Company"s representations,
- -----------------------
warranties and covenants contained in the
Agreement, the Company may instruct the Agents to
suspend solicitation of purchases at any time, for
any period of time or permanently. Upon receipt of
notice from the Company, the Agents will forthwith
suspend solicitation until such time as the
Company has advised it that solicitation of
purchases may be resumed.
If the Company decides to amend or supplement the
Registration Statement or the Prospectus, it will
promptly advise the Agents and the Trustee and
will furnish each Agent and Trustee with the
proposed amendment or supplement in accordance
with the terms of the Agreement. The Company will
mail to the Commission for filing therewith any
supplement to the Prospectus (including any
Pricing Supplement), provide each Agent with
copies of any supplement (or, in the case of a
Pricing Supplement, provide each relevant Agent
with copies of such Pricing Supplement), and
confirm to each Agent that such supplement has
been mailed for filing with the Commission (or, in
the case of a Pricing Supplement, confirm such
information with each relevant Agent).
In the event that at the time the Company suspends
solicitation of purchases there shall be any
orders outstanding for settlement, the Company
will promptly advise the relevant Agent and the
DTC Agent whether such orders may be settled and
whether copies of the Prospectus as in effect at
the time of the suspension may be delivered in
connection with the settlement of such orders. The
Company will have the sole responsibility for such
decision and for any arrangements which may be
made in the event that the Company determines that
B-22
such orders may not be settled or that copies
of such Prospectus may not be so delivered.
Delivery of Prospectus: A copy of the Prospectus and a Pricing
- ----------------------
Supplement relating to a Book-Entry Note must
accompany or precede the earlier of (i) the
written confirmation of a sale sent to an
investor or other purchaser or its agent; and
(ii) the delivery of Notes to an investor or
other purchaser or its agent the purchase of
such Note and payment of such Note by its
purchaser. Subject to the second preceding
paragraph, each Agent will deliver a
Prospectus and Pricing Supplement as herein
described with respect to each Book-Entry
Note sold by it. The Company will make such
delivery if such Note is sold directly by the
Company to a purchaser (other than an Agent).
Authenticity of Signatures: The Company will cause the Trustee and the
- --------------------------
Authenticating Agent (if other than the
Trustee) to furnish each Agent from time to
time with the specimen signatures of each of
the Trustee's or Authenticating Agent's
officers, employees or agents who have been
authorized by the Trustee to authenticate
Notes, but no Agent will have any obligation
or liability to the Company or the Trustee in
respect of the authenticity of the signature
of any officer, employee or agent of the
Company, the Trustee or the Authenticating
Agent on any Note.
Trustee Not to Risk Funds: Nothing herein shall be deemed to require
- -------------------------
the in connection with any payment to the
Company, DTC, the Agent or the purchaser, it
being understood by all parties that payments
made by the Trustee to the Company, DTC, the
Agent or the purchaser shall be made only to
the extent that funds are provided to the
Trustee for such purpose.
Payment of Selling Commissions
- ------------------------------
and Expenses: The Company agrees to pay each Agent a
- ------------
commission as set forth in the Agreement in
the form of a discount equal to the
percentage of the principal amount of each
Note sold by the Company as a result of a
solicitation made by such Agent.
B-23
PART II: ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES
Issuance: Each Certificated Note will be dated and
- --------
issued as of the date of its
authentication by the applicable Trustee.
Each Certificated Note will bear an
Original Issue Date, which will be (i)
with respect to an original Certificated
Note (or any portion thereof), its
original issuance date (which will be the
settlement date); and (ii) with respect
to any Certificated Note (or portion
thereof) issued subsequently upon
transfer or exchange of a Certificated
Note or in lieu of a destroyed, lost or
stolen Certificated Note, the Original
Issue Date of the predecessor
Certificated Note, regardless of the date
of authentication of such subsequently
issued Certificated Note.
Maturities: Each Certificated Note will have a
- ----------
maturity from date of issue of not less
than one year and not more than 60 years.
Unless otherwise specified in the
applicable Pricing Supplement, a Floating
Rate Certificated Note will mature only
on an Interest Payment Date for such
Note.
Currency: The currency denomination with respect to
- --------
any Certificated Note and the payment of
principal, premium (if any) and interest
(if any) with respect to any such
Certificated Note, shall be as set forth
therein and in the applicable Pricing
Supplement.
Denominations: Unless otherwise specified in the
- -------------
denominated in U.S. dollars will be
issued only in minimum denominations of
$1,000 and any larger amount that is an
integral multiple of $1,000. In the case
of a Certificated Note having a Specified
Currency other than U.S. dollars, the
minimum denomination and other authorized
denominations shall be set forth in the
applicable Pricing Supplement and in such
Certificated Note.
Registration: Each Certificated Note will be issued
- ------------
in fully registered definitive form.
Transfers and Exchanges: A Certificated Note may be presented for
- -----------------------
transfer or exchange at the corporate
trust office of the Trustee.
B-24
Certificated Notes will be exchangeable
for Certificated Notes having identical
terms but different authorized
denominations without service charge.
Certificated Notes will not be
exchangeable for Book-Entry Notes.
Interest: General. Unless otherwise indicated in
- -------- -------
the applicable Pricing Supplement,
interest, if any, on each Certificated
Note will accrue from the Original Issue
Date (or such other date on which
interest otherwise begins to accrue (if
different from the Original Issue Date))
of such Note for the first interest
period or the last date to which interest
has been paid, if any, for each
subsequent interest period, on such Note,
and will be calculated and paid in the
manner and on the dates described in such
Note and in the Prospectus, as
supplemented by the applicable Pricing
Supplement. Unless otherwise specified
therein, each payment of interest on a
Certificated Note will include interest
accrued to but excluding the Interest
Payment Date.
Regular Record Dates. Unless otherwise
--------------------
specified in the applicable Pricing
Supplement, the Regular Record Date with
respect to any Interest Payment Date for
a Fixed Rate Certificated Note shall,
unless otherwise specified, be the
February 1 or August 1 (whether or not a
Business Day) immediately preceding such
Interest Payment Date. Unless otherwise
specified in the applicable Pricing
Supplement, the Regular Record Date with
respect to any Interest Payment Date for
a Floating Rate Certificated Note shall
be the date (whether or not a Business
Day) 15 calendar days immediately
preceding such Interest Payment Date.
Interest Payment Dates on Fixed Rate
------------------------------------
Certificated Notes. Unless otherwise
------------------
specified pursuant to Settlement
Procedure "A" below, interest payments on
Fixed Rate Certificated Notes will be
made semiannually on February 15 and
August 15 of each year and at Stated
Maturity; provided, however, that if any
Interest Payment Date for a Fixed Rate
Book-Entry Note is not a Business Day,
the payment due on such day shall be made
on the next succeeding Business Day, and
no interest shall accrue on such
B-25
payment for the period from and after
such Interest Payment Date; and provided
further, that in the case of a Fixed Rate
Certificated Note issued between a
Regular Record Date and an Interest
Payment Date, the first interest payment
will be made on the Interest Payment Date
following the next succeeding Regular
Record Date.
Interest Payment Dates on Floating Rate
---------------------------------------
Certificated Notes. Unless otherwise
------------------
specified, interest payments will be made
on Floating Rate Certificated Notes
monthly, quarterly, semiannually or
annually. Unless otherwise specified,
interest will be payable, in the case of
Floating Rate Certificated Notes that:
reset daily, weekly or monthly, on the
third Wednesday of each month or on the
third Wednesday of March, June, September
and December of each year, as specified;
reset quarterly, on the third Wednesday
of March, June, September and December of
each year; reset semiannually, on the
third Wednesday of each of two months
specified pursuant to Settlement
Procedure "A" below; and reset annually,
on the third Wednesday of the month
specified pursuant to Settlement
Procedure "A" below; provided, however,
that if an Interest Payment Date for a
Floating Rate Certificated Note would
otherwise be a day that is not a Business
Day with respect to such Floating Rate
Certificated Note, such Interest Payment
Date will be the next succeeding Business
Day with respect to such Floating Rate
Certificated Note, except in the case of
a Floating Rate Certificated Note for
which the Base Rate is LIBOR, if such
Business Day is in the next succeeding
calendar month, such Interest Payment
Date will be the immediately preceding
Business Day; and provided further, that
in the case of a Floating Rate
Certificated Note issued between a
Regular Record Date and an Interest
Payment Date, the first interest payment
will be made on the Interest Payment Date
following the next succeeding Regular
Date.
Calculation of Interest: Fixed Rate Certificated Notes. Interest
- ----------------------- -----------------------------
on Fixed Rate Certificated Notes
(including interest for
B-26
partial periods) will be calculated on
the basis of a 360-day year of twelve 30-
day months.
Floating Rate Certificated Notes.
--------------------------------
Interest rates on Floating Rate
Certificated Notes will be determined as
set forth in the form of Notes. Interest
on Floating Rate Certificated Notes,
except as otherwise set forth herein,
will be calculated on the basis of actual
days elapsed and a year of 360 days,
except that in the case of a Floating
Rate Certificated Note for which the Base
Rate is the Treasury Rate or CMT Rate,
interest will be calculated on the basis
of the actual number of days in the year.
Amortizing Certificated Notes: Unless otherwise indicated in the
- -----------------------------
applicable Pricing Supplement, interest
on Amortizing Notes will be calculated on
the basis of a 360-day year of twelve 30-
day months.
Payments of Principal and Interest: The Trustee will pay the principal
- ----------------------------------
amount of each Certificated Note at
Stated Maturity or upon redemption upon
presentation and surrender of such Note
to the Trustee. Such payment, together
with payment of interest due at Stated
Maturity or upon redemption of such Note,
will be made in funds available for
immediate use by the Trustee and in turn
by the Holder of such Note. Certificated
Notes presented to the Trustee at Stated
Maturity or upon redemption for payment
will be canceled and destroyed by the
Trustee, and a certificate of destruction
will be delivered to the Company. All
interest payments on a Certificated Note
(other than interest due at Stated
Maturity or upon redemption) will be made
by check drawn on the Trustee (or another
person appointed by the Trustee) and
mailed by the Trustee to the person
entitled thereto as provided in such Note
and the Indenture; provided, however,
that the Holder of $10,000,000 or more of
Notes having the same Interest Payment
Dates will, upon written request prior to
the Regular Record Date in respect of an
Interest Payment Date, be entitled to
receive payment by wire transfer of
immediately available funds. Following
each Regular Record Date, the Trustee
will furnish the Company with a list of
interest payments to be
B-27
made on the following Interest Payment
Date for each Certificated Note and in
total for all Certificated Notes.
Interest at Stated Maturity or upon
redemption will be payable to the person
to whom the payment of principal is
payable. The Trustee will provide monthly
to the Company lists of principal and
interest, to the extent ascertainable, to
be paid on Certificated Notes maturing or
to be redeemed in the next month.
Withholding Taxes. The amount of any
-----------------
taxes required under applicable law to be
withheld from any interest payment on a
Certificated Note will be determined and
withheld by the Trustee.
The Company will be responsible for
withholding taxes on interest paid on
Certificated Notes as required by
applicable law.
Procedure for Rate Setting
- --------------------------
and Posting: The Company and the Agent will discuss
- -----------
from time to time the aggregate principal
amount of, the issuance price of, and the
interest rates to be borne by, Notes that
may be sold as a result of the
solicitation of orders by the Agent. If
the Company decides to set prices of, and
rates borne by, any Notes in respect of
which the Agent is to solicit orders (the
setting of such prices and rates to be
referred to herein as "posting") or if
the Company decides to change prices or
rates previously posted by it, it will
promptly advise the Agent of the prices
and rates to be posted.
Redemption: The applicable Pricing Supplement will
- ----------
set forth all terms, if any, relating to
the redemption of Notes prior to Stated
Maturity.
Acceptance and Rejection
- ------------------------
of Offers: Unless otherwise instructed by the
- ---------
Company, the Agent will advise the
Company promptly by telephone of all
orders to purchase Certificated Notes
received by the Agent, other than those
rejected by it in whole or in part in the
reasonable exercise of its discretion.
Unless otherwise agreed by the Company
and the Agent, the Company has
B-28
the sole right to accept orders to
purchase Certificated Notes and may
reject any such orders in whole or in
part. Before accepting any order to
purchase a Certificated Note to be
settled in less than three Business Days,
the Company shall verify that the Trustee
for such Certificated Note will have
adequate time to prepare and authenticate
such Note.
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 next succeeding the date of
acceptance pursuant to the timetable for
settlement set forth below, unless the
Company and the purchaser agree to
settlement on another day, which shall be
no earlier than the next Business Day
following the date of sale.
Details for Settlement: Settlement Procedures with regard to
- ----------------------
each Certificated Note sold by the
Company to or through the Agent, as agent
(except pursuant to a Terms Agreement),
shall be as follows:
A. The Agent will advise the Company
by telephone or by facsimile
transmission (or other acceptable
written means) that such Note is a
Certificated Note and of the
following settlement information,
in time for the Trustee for such
Certificated Note to prepare and
authenticate the required Note:
1. Name in which such
Certificated Note is to be
registered ("Registered
Owner").
2. Address of the Registered
Owner and address for payment
of principal and interest.
3. Taxpayer identification number
of the Registered Owner (if
available).
B-29
4. Principal or face amount.
5. Series.
6. Stated Maturity.
7. In the case of a Fixed Rate
Certificated Note, the
Interest Rate and reset
provisions (if any) or, in the
case of a Floating Rate
Certificated Note, the Base
Rate, Initial Interest Rate
(if known at such time),
Interest Reset Period,
Interest Reset Dates, Index
Maturity, Spread and/or Spread
Multiplier (if any), Minimum
Interest Rate (if any),
Maximum Interest Rate (if any)
and reset provisions (if any).
8. Interest Payment Dates and the
Interest Payment Period.
9. Specified Currency.
10. Denominated Currency, Index
Currency, Base Exchange Rate
and the Determination Date, if
applicable.
11. Redemption, repayment,
amortization or extension
provisions, if any.
12. Settlement date.
13. Price (including currency).
14. Agent's commission, if any,
determined as provided in the
Agreement.
15. Whether such Certificated Note
an Original Issue Discount
Note, and, if so, the total
amount of OID and the Yield to
Maturity and the initial
accrual period.
B-30
16. Any other terms necessary to
describe the Certificated
Note.
Such Agent will advise the Company
of the foregoing information for
each sale made by it in time for
the Trustee's authenticating agent,
including the Trustee itself if no
authenticating agent is appointed
(the "Authenticating Agent"), to
prepare the required Certificated
Notes. If the Company rejects an
offer, the Company will promptly
notify the relevant Agent.
B. The Company will advise the
relevant Trustee by telephone
(confirmed in writing at any time
on the sale date), written
telecommunication or electronic
transmission of the information set
forth in Settlement Procedure "A"
above and the name of the
Presenting Agent.
C. The Company will deliver to the
relevant Trustee a pre-printed
four-ply packet for such
Certificated Note, which packet
will contain the following
documents in forms that have been
approved by Company, the Agents and
the Trustee:
1. Certificated Note with
customer confirmation.
2. Stub One - For Trustee.
3. Stub Two - For Agent.
4. Stub Three - For Company.
D. The Trustee will complete such
Certificated Note and will
authenticate such Certificated Note
and deliver it (with the
confirmation) and Stubs One and Two
to the Agent, and the Agent will
acknowledge receipt of the Note by
stamping or otherwise marking Stub
One and returning it to the
Trustee. Such delivery will be made
only against such acknowledgment of
receipt and evidence
B-31
that instructions have been given
by the Agent for payment to such
account as the Company shall have
specified in funds available for
immediate use, of an amount equal
to the price of such Certificated
Note less the Agent's commission.
In the event that the instructions
given by the Agent for payment to
the account of the Company are
revoked, the Company will as
promptly as possible wire transfer
to the account of the Agent an
amount of immediately available
funds equal to the amount of such
payment made.
E. Unless the Agent purchased the Note
as Principal, 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 Trustee will send Stub Three to
the Company's Treasury Department
by first-class mail. Periodically,
the Authenticating Agent will also
send to the Company's Treasury
Department a statement to the
Company setting forth the principal
amount of the Notes outstanding as
of that date after giving effect to
such transaction.
Settlement Procedures Timetable: For orders of Certificated Notes
- -------------------------------
solicited by the Agent, as agent, and
accepted by the 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
day before the
Settlement Date.
B-32
B On the day two
Business Days
before the
Settlement Date.
C 2:15 P.M. two
Business Days
before the
Settlement Date.
D 2:15 P.M. on the
Settlement Date.
E 3:00 P.M. on the
Settlement Date.
F 5:00 P.M. on the
Settlement Date.
Confirmation: Each Agent shall, for each Certificated
- ------------
Note offer received by it and accepted
by the Company, issue a confirmation to
the purchaser, with a copy to the
Company, setting forth such of the
details set forth above as is deemed
appropriate by such Agent.
Note Delivery and Cash Payment: Upon instructions from the
- ------------------------------
Company, the Authenticating Agent will
deliver the Certificated Notes to the
relevant Agent (for the benefit of the
purchaser).
Delivery by the Authenticating Agent of
the Certificated Notes will be made in
accordance with paragraph D of the
Details for Settlement.
Failure to Settle: If a purchaser fails to accept delivery
- -----------------
of and make payment for any Certificated
Note, the Agent will notify the Company
and the Trustee by telephone and return
such Note to the Trustee. Upon receipt
of such notice, the Company will
immediately wire transfer to the account
of the Agent an amount equal to the
amount previously credited thereto in
respect of such Note. Such wire transfer
will be made on the settlement date, if
possible, and in any event not later
than the Business Day following the
settlement date. If the failure shall
have occurred for any reason other than
a default by the Agent in the
performance of its obligations hereunder
and under the Agreement with the
Company, then the Company will reimburse
the Agent or the Trustee, as
appropriate, on an equitable basis for
its loss of the use of the funds during
the period when they were credited to
the account of the Company.
B-33
Immediately upon receipt of the
Certificated Note in respect of which
such failure occurred, the Trustee will
mark such Note "canceled", make
appropriate entries in the Trustee's
records and send such Note to the
Company.
Maturity: At Stated Maturity, the principal
- --------
amount of each Note will be payable in
immediately available funds provided
that the Trustee or other paying agent
receives the Certificated Note and
appropriate payment information in
writing. Certificated Notes presented to
any paying agent or the Trustee will be
destroyed by the Trustee.
Procedure for Rate Changes: The Company and the Agents will discuss
- --------------------------
from time to time the rates to be borne
by Certificated Notes that may be sold
as a result of the solicitation of
offers by any Agent. If any offer to
purchase a Certificated Note is accepted
by the Company, the Company will prepare
a Pricing Supplement reflecting the
terms of such Certificated Note and will
arrange to have the Pricing Supplements
filed with the Commission in accordance
with the applicable paragraph of Rule
424(b) under the Securities Act and will
supply by facsimile transmission or by
overnight express one copy for delivery
by 11:00 a.m. on the Business Day next
following the date of acceptance one
copy thereof (or additional copies if
requested) to each Agent which presented
the order (each, a Presenting Agent") at
each address listed below and one copy
to the Trustee. The relevant Agent will
cause a Prospectus and Pricing
Supplement to be delivered to the
purchaser of the Certificated Note.
Copies of Pricing Supplements shall be
sent to:
if Merrill Lynch & Co. is the Presenting
Agent:
Merrill Lynch & Co. - Tritech Services
44B Colonial Drive
Piscataway, New Jersey 08854
Attn: Prospectus Operations/Nachman
Kimerling
Telephone: (732) 885-2768
Facsimile: (732) 885-2774/5/6
B-34
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
4 World Financial Center,
North Tower, 15/th/ Floor
New York, New York 10080
Attn: MTN Product Management
Telephone: (212) 449-7476
Facsimile: (212) 449-2234
if ABN AMRO Incorporated is the Presenting
Agent:
ABN AMRO Incorporated
181 West Madison, 17/th/ Floor
Chicago, Illinois 60602
Attn: Janet Mundell
Telephone: (312) 904-7846
Facsimile: (312) 904-4058
if Banc of America Securities LLC is the Presenting
Agent:
Banc of America Securities LLC
Bank of America Corporate Center
100 North Tyson Street
Charlotte, North Carolina 28255
Attn: MTN Product Management
Telephone: (704) 386-9690
Facsimile: (704) 388-9939
if Banc One Capital Markets, Inc. is the Presenting
Agent:
Banc One Capital Markets, Inc.
1 Bank One Plaza
Suite 1L1-0595
21 South Clark Street
Chicago, Illinois 60670-0595
Attn: Investment Grade Securities
Telephone: (312) 732-4645
Facsimile: (312) 732-4773
B-35
if Barclays Capital Inc. is the Presenting Agent:
Barclays Capital Inc.
222 Broadway
New York, New York 10038
Attn: Syndicate Desk
Telephone: (212) 412-2663
Facsimile: (212) 412-1623
if Deutsche Banc Alex. Brown Inc. is the Presenting
Agent:
Deutsche Banc Alex. Brown Inc.
31 West 52/nd/ Street
3/rd/ Floor
Debt Capital Markets
New York, New York 10019
Attn: Josh Witz
Telephone: (212) 469-8493
Facsimile: (212) 469-7505
if Fleet Securities, Inc. is the Presenting
Agent:
Fleet Securities, Inc.
100 Federal Street
Mail Stop MA DE 10012H
Boston, Massachusetts 02110
Attn: Paul E. McCormack
Telephone: (617) 434-8686
Facsimile: (617) 434-3122
if Goldman, Sachs & Co. is the Presenting
Agent:
Goldman, Sachs & Co.
85 Broad Street
Medium-Term Note Trading Department
New York, New York 10004
Attn: Karen Robertson
Telephone: (212) 902-8401
Facsimile: (212) 902-0658
B-36
if J.P. Morgan Securities, Inc. is the Presenting
Agent:
J.P. Morgan Securities, Inc.
4 New York Plaza
Ground Floor Receiving Window
New York, New York 10041
Attn: Salvatore Giallanza
Telephone: (212) 623-3104
Facsimile: (212) 623-2659
if Morgan Stanley & Co. Incorporated is the
Presenting Agent:
Morgan Stanley & Co. Incorporated
1585 Broadway
2/nd/ Floor
New York, New York 10036
Attn: Medium-Term Note Trading Desk
Telephone: (212) 761-1248
Facsimile: (212) 761-0780
if Salomon Brothers Inc is the Presenting Agent:
Salomon Smith Barney
Brooklyn Army Terminal
154 58/th/ Street
8/th/ Floor
Brooklyn, New York 11220
Attn: Diane Graham
Telephone: (212) 921-8475
Facsimile: (718) 921-8472
Suspension of Solicitation;
- --------------------------
Amendment or Supplement: The Company may instruct the Agents to suspend
- ----------------------- solicitation of purchases at any time. Upon
receipt of notice from the Company, the Agents
will forthwith suspend solicitation until such
time as the Company has advised them that
solicitation of purchases may be resumed.
If the Company decides to amend or supplement the
Registration Statement or the Prospectus, it will
promptly advise the Agents and the Trustee and
will furnish each Agent and Trustee with the
proposed amendment or supplement in accordance
with the
B-37
terms of the Agreement. The Company will
mail to the Commission for filing
therewith any supplement to the
Prospectus (including any Pricing
Supplement), provide each Agent with
copies of any supplement (or, in the
case of a Pricing Supplement, provide
each relevant Agent with copies of such
Pricing Supplement), and confirm to each
Agent that such supplement has been
mailed for filing with the Commission
(or, in the case of a Pricing
Supplement, confirm such information
with each relevant Agent).
In the event that at the time the
Company suspends solicitation of
purchases there shall be any orders
outstanding for settlement, the Company
will promptly advise the relevant Agent
and the Trustee whether such orders may
be settled and whether copies of the
Prospectus as in effect at the time of
the suspension may be delivered in
connection with the settlement of such
orders. The Company will have the sole
responsibility for such decision and for
any arrangements which may be made in
the event that the Company determines
that such orders may not be settled or
that copies of such Prospectus may not
be so delivered.
Authenticity of Signatures: The Company will cause the Trustee and
-------------------------- the Authenticating Agent (if other than
the Trustee) to furnish each Agent from
time to time with the specimen
signatures of each of the Trustee's or
Authenticating Agent's officers,
employees or agents who have been
authorized by the Trustee to
authenticate Notes, but no Agent will
have any obligation or liability to the
Company or the Trustee in respect of the
authenticity of the signature of any
officer, employee or agent of the
Company, the Trustee or the
Authenticating Agent on any Note.
Trustee Not to Risk Funds: Nothing herein shall be deemed to
- ------------------------- require the Trustee to risk or expend
its own funds in connection with any
payment to the Company, the Agent or the
purchaser, it being understood by all
parties that payments made by the
Trustee to the Company, the Agent or the
purchaser shall be made only to the
extent that funds are provided to the
Trustee for such purpose.
B-38
Payment of Selling Commissions
- ------------------------------
and Expenses: The Company agrees to pay each Agent a
- ------------ commission as set forth in the Agreement
in the form of a discount equal to the
percentage of the principal amount of
each Note sold by the Company as a
result of a solicitation made by such
Agent.
B-39