Exhibit 1(b)
McDonald's Corporation
U.S.$1,975,000,000
Medium-Term Notes, Series H
Due from 1 Year to 60 Years from Date of Issue
U.S. DISTRIBUTION AGREEMENT
July , 2002
Merrill Lynch, Pierce, Fenner & Smith Goldman, Sachs & Co.
Incorporated 85 Broad Street
4 World Financial Center, 15/th/ Floor New York, New York 10004
New York, New York 10080
J.P. Morgan Securities Inc.
ABN AMRO Incorporated 270 Park Avenue, 7/th/ Floor
55 E. 52nd Street New York, New York 10017
New York, New York 10055
Morgan Stanley & Co. Incorporated
Banc of America Securities LLC 1585 Broadway, 2/nd/ Floor
Bank of America Corporate Centre New York, New York 10020
100 North Tryon Street
Charlotte, North Carolina 28255 Salomon Smith Barney Inc.
388 Greenwich Street
Banc One Capital Markets, Inc. New York, New York 10013
1 Bank One Plaza
Suite IL1-0595 Scotia Capital (USA) Inc.
21 South Clark Street 1 Liberty Plaza, 25/th/ Floor
Chicago, Illinois 60670 165 Broadway
New York, New York 10006
Barclays Capital Inc.
222 Broadway SG Cowen
New York, New York 10038 1221 Avenue of the Americas
New York, New York 10020
BNP Paribas Securities Corp.
787 Seventh Avenue SunTrust Capital Markets, Inc.
New York, New York 10019 303 Peachtree Street N.E. 23/rd/ Floor
Atlanta, GA 30308
Deutsche Bank Securities Inc.
31 W. 52/nd/ Street Westdeutsche Landesbank Girozentrale,
New York, New York 10019 London Branch
Woolgate Exchange
Fleet Securities, Inc. 25 Basinghall Street
100 Federal Street London EC2V 5HA, England
Boston, Massachusetts 02110
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 H 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. $1,975,000,000 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 Wachovia Bank, National Association (formerly known
as 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
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 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
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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 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 2001 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
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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, 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 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.
(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
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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
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 15 years 0.625
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From 15 years to less than 20 years 0.700
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 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
respective duties and obligations specifically provided to be
performed in the Medium-Term Notes Administrative Procedures
(attached hereto as Exhibit B) (the
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"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
this Agreement shall be delivered at the office of Sidley Austin
Brown & Wood llp, Attn.: Edward F. Petrosky, Esq., 875 Third
Avenue, New York, New York 10022, not later than 5:00 P.M. New
York time, 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:
(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
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institution or threatening of any proceeding for that purpose;
(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
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
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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 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
9
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 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
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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 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
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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).
(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.
12
(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 Obligations 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.
(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, Senior
Vice President, General Counsel and Secretary, or a Vice
President and Associate 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
13
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, 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
14
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; (4) 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
(5) 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, 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
15
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 Sidley Austin Brown & Wood
LLP, 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 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
all material respects all the conditions on its part to be
in 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
16
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.
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
17
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 delivery of the written confirmation of the sale of such
Notes to such person in any case where such delivery is required by
the Securities Act, 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) and the Prospectus (as
amended or supplemented) so corrected was delivered to such Agent a
reasonable amount of time in advance of the delivery of such written
confirmation. 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 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 July , 2002 relating to the Notes constitute the only
information furnished in writing 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
18
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 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
19
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 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.
20
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 materially adversely affect the
market for the Notes or a material disruption has occurred in commercial banking
or securities settlement or clearance services in the United States or with
respect to Clearstream or Euroclear systems in Europe; (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 (iii) there has occurred any
material outbreak or material escalation of hostilities involving the United
States or any 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 make it impracticable or inadvisable to market the Notes or to enforce
contracts for the 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
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. 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, Pierce, Fenner & Smith Incorporated, 4 World
Financial Center, 15/th/ Floor, New York, New York 10080,
Attention: Global Transaction Management Group;
21
(ii) if to ABN AMRO Incorporated, at 55 E. 52nd Street, New York,
New York 10055; Attention: Legal Department
(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 IL1-0595, 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 BNP Paribas Securities Corp., at 787 Seventh Avenue,
New York, New York 10019, Attention: Syndicate Desk, Tel:
212-841-3435 Facsimile: 212- 841-3930;
(vii) if to Deutsche Bank Securities Inc., at 31 W. 52/nd/ Street,
New York, New York 10019;
(viii) if to Fleet Securities, Inc., at 100 Federal Street, Mail
Stop MA DE 10012H, Boston, Massachusetts 02110, Attention:
Paul E. McCormack;
(ix) if to Goldman, Sachs & Co., at 85 Broad Street, New York,
New York 10004, Attention: Medium-Term Note Trading
Department;
(x) if to J.P. Morgan Securities Inc., at 270 Park Avenue, 7/th/
Floor, New York, New York 10017, Attention: Transaction
Execution Group;
(xi) if to Morgan Stanley & Co. Incorporated, at 1585 Broadway,
2/nd/ Floor, New York, New York 10036, Attention:
Medium-Term Note Trading Desk;
(xii) if to Salomon Smith Barney Inc., at 388 Greenwich Street,
New York, New York 10013, Attention: Medium-Term Note
Department; Phone: (212) 816-5831; Facsimile: (212) 816-0949
(xiii) if to Scotia Capital (USA) Inc., at 1 Liberty Plaza, 25/th/
Floor, 165 Broadway, New York, New York, 10006, Attention:
C/O Investment Grade Debt, Syndicate Desk;
(xiv) if to SG Cowen, at 1221 Avenue of the Americas, New York,
New York 10020, Attention: Debt Capital Markets;
(xv) if to SunTrust Capital Markets, Inc., at 303 Peachtree
Street N.E. 23/rd/ Floor, Atlanta, GA 30308;
22
(xvi) if to Westdeutsche Landesbank Girozentrale, London Branch,
Woolgate Exchange, 25 Basinghall Street, London EC2V 5HA,
England, Attention: MTN- Desk, Primary Markets; with a copy
to Westdeutsche Landesbank, New York Branch, at 1211 Avenue
of the Americas, New York, New York 10020, Attention:
Primary Markets/Bond Origination; and
(xvii) 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.
10. 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.
11. 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.
12. APPLICABLE LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE INTERNAL 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 & GOLDMAN, SACHS & CO.
SMITH INCORPORATED
By:_________________________
By:_________________________ Title:
Title:
J.P. MORGAN SECURITIES INC.
ABN AMRO INCORPORATED
By:_________________________
By:_________________________ Title:
Title:
MORGAN STANLEY & CO.
BANC OF AMERICA SECURITIES LLC INCORPORATED
By:_________________________ By:_________________________
Title: Title:
BANC ONE CAPITAL MARKETS, INC. SALOMON SMITH BARNEY INC.
By:_________________________ By:_________________________
Title: Title:
BARCLAYS CAPITAL INC. SCOTIA CAPITAL (USA) INC.
By:_________________________ By:_________________________
Title: Title:
BNP PARIBAS SECURITIES CORP. SG COWEN
By:_________________________ By:_________________________
Title: Title:
DEUTSCHE BANK SECURITIES INC. SUNTRUST CAPITAL MARKETS, INC.
By:_________________________ By:_________________________
Title: Title:
DEUTSCHE BANK SECURITIES INC. WESTDEUTSCHE LANDESBANK
GIROZENTRALE, LONDON BRANCH,
By:_________________________
Title: By:_________________________
Title:
FLEET SECURITIES, INC.
By:_________________________
Title:
25
EXHIBIT A
FORM OF TERMS AGREEMENT
McDonald's Corporation
MEDIUM-TERM NOTES, SERIES H
TERMS AGREEMENT
_______________, 200_
McDonald's Corporation
One McDonald's Plaza
Oak Brook, Illinois 60523
Attention: Treasurer
Re: U.S. Distribution Agreement dated July , 2002
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
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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 H (the "Notes") are to be offered on a continuing
basis by McDonald's Corporation (the "Company"). Each of Merrill Lynch, Pierce,
Fenner & Smith Incorporated, ABN AMRO Incorporated, Banc of America Securities
LLC, Banc One Capital Markets, Inc., Barclays Capital Inc., BNP Paribas
Securities Corp., Deutsche Bank Securities Inc., Fleet Securities, Inc.,
Goldman, Sachs & Co., J.P. Morgan Securities Inc., Morgan Stanley & Co.
Incorporated, Salomon Smith Barney Inc., Scotia Capital (USA) Inc., SG Cowen,
SunTrust Capital Markets, Inc. and Westdeutsche Landesbank Girozentrale, London
Branch, 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 July , 2002 (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 Wachovia Bank, National Association (formerly, 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.
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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 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 $500,000,000 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 $500,000,000
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 $500,000,000 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.
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Identification The Company has arranged with the CUSIP Service Bureau of
Numbers: Standard & Poor's (the "CUSIP Service Bureau") for the
reservation of a series of CUSIP numbers (including
tranche 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
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in certain cases, one or more indirect participants in DTC)
acting on behalf of beneficial transferors and transferees
of such Note.
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
B-4
Company. Notwithstanding the foregoing, if the Global
Securities to be exchanged exceed $500,000,000 in aggregate
principal amount, one Global Security will be authenticated
and issued to represent each $500,000,000 of principal
amount of the exchanged Global Securities and an additional
Global Security will be authenticated and issued to
represent any remaining principal amount of such Global
Securities (see "Denominations" below).
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 $500,000,000 (or the equivalent thereof). If one
or more Book-Entry Notes having an aggregate principal
amount in excess of $500,000,000 (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 $500,000,000
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-
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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 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.
B-6
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
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
B-7
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
Rate, interest will be 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
B-8
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 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
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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.
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
Trustee and Paying Agent that it
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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.
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.
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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 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).
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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.
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 repre senting such Book-Entry Note
and notify the Agent and the Company by telephone
B-13
(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
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.
B-14
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
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".
B-15
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 providing 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 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
B-16
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.
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
B-17
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
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
B-18
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 be delivered to the
purchaser of the Registered Note.
Copies of Pricing Supplements shall be sent to:
if Merrill Lynch, Pierce, Fenner & Smith
Incorporated is the Presenting Agent:
Merrill Lynch Production Technologies
4 Corporate Place
Piscataway, New Jersey 08854
Attn: Prospectus Operations/Diane Walker
Telephone: (732) 878-6536
Facsimile: (732) 878-6481/6547
Email: [email protected]
with a copy to:
Merrill Lynch, Pierce, Fenner & Smith Incorporated
4 World Financial Center, 15/th/ Floor
New York, New York 10080
Attn: Global Transaction Management Group
B-19
Telephone: (212) 449-7476
Facsimile: (212) 449-2234
if ABN AMRO Incorporated is the Presenting Agent:
ABN AMRO Incorporated
55 E. 52/nd/ Street
New York, New York 10055
Attn: Teodoro Diangson
Telephone: (212) 409-7281
Facsimile: (212) 409-7423
if Banc of America Securities LLC is the
Presenting Agent:
Banc of America Securities LLC
Bank of America Corporate Center
100 North Tryon 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 IL1-0595
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
B-20
Facsimile: (212) 412-1623
with a copy to:
Barclays Capital
c/o ADP Prospectus
55 Mercedes Way
Bay 1-7
Edgewood, NY 11717
Attn: Nicole Fratangelo
Telephone: (631) 254-7129
Facsimile: (631) 254-7140
if BNP Paribas Securities Corp. is the Presenting
Agent:
BNP Paribas Securities Corp.
787 Seventh Avenue
New York, New York 10019
Attn: Syndicate Desk
Telephone: (212) 841-3435
Facsimile: (212) 841-3930
if Deutsche Bank Securities Inc. is the Presenting
Agent:
Deutsche Bank Securities 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
B-21
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 Smith Barney Inc. is the Presenting
Agent:
Salomon Smith Barney Inc.
Brooklyn Army Terminal
140 58/th/ Street
B-22
8/th/ Floor
Brooklyn, New York 11220
Telephone: (718) 765-6725
Facsimile: (718) 765-6734
if Scotia Capital (USA) Inc. is the Presenting
Agent:
Scotia Capital (USA) Inc.
1 Liberty Plaza, 25/th/ Floor
165 Broadway
New York, New York 10006
Attn: Steve Janicek
Telephone: (212) 225-5501
Facsimile: (212) 225-5285
if SG Cowen is the Presenting Agent:
SG Cowen
1221 Avenue of the Americas, 7/th/
Floor
New York, New York 10020
Attn: Colleen Wall - Debt Capital
Markets
Telephone: (212) 278-5022
Facsimile: (212) 278-5099
if SunTrust Capital Markets, Inc.
is the Presenting Agent:
SunTrust Capital Markets, Inc.
303 Peachtree Street N.E. 23/rd/
Floor
Atlanta, GA 30308
Attn: Lara McGinty
Telephone: (404) 532-0770
Facsimile: (404) 588-7005
if Westdeutsche Landesbank Girozentrale, London
Branch is the Presenting Agent:
Westdeutsche Landesbank
Girozentrale, London Branch
Woolgate Exchange
25 Basinghall Street
London EC2V 5HA, England
Attn: MTN-Desk, Primary Markets
B-23
Telephone: 44-202-020-3314
Facsimile: 44-207-020-3360
with a copy to:
Westdeutsche Landesbank, New York
Branch
1211 Avenue of the Americas
New York, New York 10020
Attn: Primary Markets/Bond
Origination
Telephone: (212) 597-8533
Facsimile: (212) 597-5427
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
file with the Commission 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 filed 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
B-24
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
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
Trustee to risk or expend its own funds 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.
B-25
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.
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 applicable
Pricing Supplement, Certificated Notes
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
B-26
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. 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.
B-27
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 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
B-28
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 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
B-29
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 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
B-30
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 the sole right to accept orders to
purchase ertificated 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:
B-31
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).
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
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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.
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
B-33
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 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.
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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 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).
B-35
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. 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
B-36
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 Pierce, Fenner & Smith
Incorporated is the Presenting Agent:
Merrill Lynch Production
Technologies
4 Corporate Place
Piscataway, New Jersey 08854
Attn: Prospectus Operations/Diane
Walker
Telephone: (732) 878-6536
Facsimile: (732) 878-6481/6547
with a copy to:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
4 World Financial Center, 15/th/
Floor
New York, New York 10080
Attn: Global Transaction Management Group
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
B-37
if Banc of America Securities LLC is the
Presenting Agent:
Banc of America Securities LLC
Bank of America Corporate Center
100 North Tryon 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 IL1-0595
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 BNP Paribas Securities Corp. is the Presenting
Agent:
BNP Paribas Securities Corp.
787 Seventh Avenue
New York, New York 10019
Attn: Syndicate Desk
Telephone: (212) 841-3435
Facsimile: (212) 841-3930
B-38
if Deutsche Bank Securities Inc. is the Presenting
Agent:
Deutsche Bank Securities 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
if J.P. Morgan Securities Inc. is the Presenting
Agent:
J.P. Morgan Securities Inc.
1 Chase Plaza Level 5B
New York, New York 10005
Attn: Gary Saheed
Telephone: (212) 552-5558
Facsimile: (212) 552-5319
B-39
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 Smith Barney Inc. is the Presenting
Agent:
Salomon Smith Barney Inc.
Brooklyn Army Terminal
154 58/th/ Street
8/th/ Floor
Brooklyn, New York 11220
Telephone: (718) 765-6725
Facsimile: (718) 765-6734
if Scotia Capital (USA) Inc. is the Presenting
Agent:
Scotia Capital (USA) Inc.
1 Liberty Plaza, 25/th/ Floor
165 Broadway
New York, New York 10006
Attn: Steve Janicek
Telephone: (212) 225-5501
Facsimile: (212) 225-5285
if SG Cowen is the Presenting Agent:
SG Cowen
1221 Avenue of the Americas, 7/th/
Floor
New York, New York 10020
Attn: Colleen Wall - Debt Capital Markets
Telephone: (212) 278-5022
Facsimile: (212) 278-5099
if SunTrust Capital Markets, Inc. is the
Presenting Agent:
B-40
SunTrust Capital Markets, Inc.
303 Peachtree Street N.E. 23/rd/ Floor
Atlanta, GA 30308
Attn: Lara McGinty
Telephone: 404-532-0770
Facsimile: 404-588-7005
if Westdeutsche Landesbank Girozentrale,
London Branch is the Presenting Agent:
Westdeutsche Landesbank Girozentrale, London
Branch
Woolgate Exchange
25 Basinghall Street
London EC2V 5HA, England
Attn: MTN-Desk, Primary Markets
Telephone: 44-202-020-3314
Facsimile: 44-207-020-3360
with a copy to:
Westdeutsche Landesbank
New York Branch
1211 Avenue of the Americas
New York, New York 10020
Attn: Primary Markets/Bond
Origination
Telephone: (212) 597-8533
Facsimile: (212) 597-5427
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 terms of the Agreement. The Company will
file
B-41
with the Commission 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 filed 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-42
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-43