EXHIBIT 1
EXECUTION COPY
3M COMPANY
Medium-Term Notes, Series D
$1,500,000,000
Distribution Agreement
December 12, 2003
Goldman, Sachs & Co. Merrill Lynch, Pierce, Fenner & Smith
85 Broad Street Incorporated
New York, New York 10004 4 World Financial Center, Floor 15
New York, New York 10080
Citigroup Global Markets Inc. Morgan Stanley & Co. Incorporated
388 Greenwich Street 1585 Broadway, 2nd Floor
New York, New York 10013 New York, New York 10036
J.P. Morgan Securities Inc. UBS Securities LLC
270 Park Avenue, 8th Floor 677 Washington Boulevard
New York, New York 10017 Stamford, Connecticut 06901
Dear Sirs:
3M Company, a Delaware corporation (the "Company"), proposes to issue
and sell from time to time its Medium-Term Notes, Series D (the "Securities") in
an aggregate amount up to $1,500,000,000 and agrees with each of you
(individually, an "Agent", and collectively, the "Agents") as set forth in this
Agreement.
Subject to the terms and conditions stated herein and to the
reservation by the Company of the right to sell Securities directly on its own
behalf, the Company hereby (i) appoints each Agent as an agent of the Company
for the purpose of soliciting and receiving offers to purchase Securities from
the Company pursuant to Section 2(a) hereof and (ii) agrees that, except as
otherwise contemplated herein, whenever it determines to sell Securities
directly to any Agent as principal, it will enter into a separate agreement
(each a "Terms Agreement"), substantially in the form of Annex I hereto,
relating to such sale in accordance with Section 2(b) hereof. This Distribution
Agreement shall not be construed to create either an obligation on the part of
the Company to sell any Securities or an obligation of any of the Agents to
purchase Securities as principal.
The Securities will be issued under an indenture, dated as of November
17, 2000 (as amended from time to time, the "Indenture"), between the Company
and Citibank, N.A., Trustee (the "Trustee"). The Securities shall have the
maturity ranges, interest rates, if any, redemption
provisions and other terms set forth in the Prospectus referred to below as it
may be amended or supplemented from time to time. The Securities will be issued,
and the terms and rights established, from time to time by the Company in
accordance with the Indenture.
1. The Company represents and warrants to, and agrees with, each Agent
that:
(a) A registration statement on Form S-3 (File No. 333-109211) in
respect of the Securities has been filed with the Securities and Exchange
Commission (the "Commission"); such registration statement and any
post-effective amendment thereto, each in the form heretofore delivered or to be
delivered to such Agent, excluding exhibits to such registration statement but
including all documents incorporated by reference in the prospectus included in
the registration statement, have been declared effective by the Commission in
such form; no other document with respect to such registration statement or
document incorporated by reference therein has heretofore been filed or
transmitted for filing with the Commission (other than the prospectuses filed
pursuant to Rule 424(b) of the rules and regulations of the Commission under the
Securities Act of 1933, as amended (the "Act"), each in the form heretofore
delivered to the Agents); and no stop order suspending the effectiveness of such
registration statement has been issued and no proceeding for that purpose has
been initiated or, to the best knowledge of the Company after due inquiry,
threatened by the Commission (any preliminary prospectus included in such
registration statement or filed with the Commission pursuant to Rule 424(b) of
the rules and regulations of the Commission under the Act, is hereinafter called
a "Preliminary Prospectus"; the various parts of such registration statement,
including all exhibits thereto and the documents incorporated by reference in
the prospectus contained in the registration statement at the time such part of
such registration statement became effective but excluding Form T-1, each as
amended at the time such part of the registration statement became effective, is
hereinafter collectively called the "Registration Statement"; the prospectus
(including, if applicable, any prospectus supplement) relating to the
Securities, in the form in which it has most recently been filed, or transmitted
for filing, with the Commission on or prior to the date of this Agreement, being
hereinafter called the "Prospectus"; any reference herein to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to the applicable form
under the Act, as of the date of such Preliminary Prospectus or Prospectus, as
the case may be; any reference to any amendment or supplement to any Preliminary
Prospectus or the Prospectus, including any supplement to the Prospectus that
sets forth only the terms of a particular issue of the Securities (a "Pricing
Supplement"), shall be deemed to refer to and include any documents filed after
the date of such Preliminary Prospectus or Prospectus, as the case may be, under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
incorporated therein by reference; any reference to any amendment to the
Registration Statement shall be deemed to refer to and include any annual report
of the Company filed pursuant to Section 13(a) or 15(d) of the Exchange Act
after the effective date of the Registration Statement that is incorporated by
reference in the Registration Statement; and any reference to the Prospectus as
amended or supplemented shall be deemed to refer to and include the Prospectus
as amended or supplemented (including by the applicable Pricing Supplement filed
in accordance with Section 4(a) hereof) in relation to Securities to be sold
pursuant to this Agreement, in the form filed or transmitted for filing with the
Commission pursuant to Rule 424(b) under the Act and in accordance with Section
4(a) hereof, including any documents incorporated by reference therein as of the
date of such filing);
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(b) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; and any further documents so filed and incorporated by reference
in the Prospectus, or any further amendment or supplement thereto, when such
documents become effective or are filed with the Commission, as the case may be,
will conform in all material respects to the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any statements
or omissions made in reliance upon and in conformity with information furnished
in writing to the Company by any Agent expressly for use in the Prospectus as
amended or supplemented to relate to a particular issuance of Securities;
(c) The Registration Statement and the Prospectus conform, and any
further amendments or supplements thereto will conform, in all material respects
to the requirements of the Act and the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"), and the rules and regulations of the Commission
thereunder, and do not and will not, as of the applicable effective date in case
of the Registration Statement and any amendment thereto, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and,
as of the applicable filing date in the case of the Prospectus and any amendment
or supplement thereto, contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any statements
or omissions made in reliance upon and in conformity with information furnished
in writing to the Company by any Agent expressly for use in the Registration
Statement or the Prospectus as amended or supplemented to relate to a particular
issuance of Securities;
(d) The financial statements, and the related notes thereto, included
or incorporated by reference in the Prospectus present fairly the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates indicated and the results of their operations and the changes in their
consolidated cash flows for the periods specified; and said financial statements
have been prepared in conformity with accounting principles generally accepted
in the United States applied on a consistent basis;
(e) Neither the Company nor any of its subsidiaries has sustained since
the date of the latest audited financial statements included or incorporated by
reference in the Prospectus any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, that have resulted or would result in a material adverse change in the
general affairs, management, current or future condition, financial or
otherwise, or in the earnings, business prospects, stockholders' equity or
results of operations of the Company and its
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subsidiaries considered as one enterprise (a "Material Adverse Effect"),
otherwise than as set forth or contemplated in the Prospectus; and, since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, there has not been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries or any material adverse
change, or any development involving a prospective material adverse change, in
or affecting the general affairs, management, financial position, stockholders'
equity or results of operations of the Company and its subsidiaries considered
as one enterprise, otherwise than as set forth or contemplated in the
Prospectus;
(f) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus and has been
duly qualified as a foreign corporation for the transaction of business and is
in good standing under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business, so as to require such
qualification, except where the failure to so qualify or be in good standing
would not result in a Material Adverse Effect; and each subsidiary of the
Company with annual revenues (excluding inter-company activity) exceeding $300
million for the preceding fiscal year (the "Revenue Target") and each other
subsidiary of the Company, if any, that is a significant subsidiary (as such
term is defined in Rule 1-02 of Regulation S-X promulgated under the Act) (each,
a "Significant Subsidiary") of the Company has been duly incorporated and is
validly existing as a corporation in good standing under the law of its
jurisdiction of incorporation and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing under the
laws of each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualifications, except where the
failure to so qualify or be in good standing would not result in a Material
Adverse Effect; the only subsidiaries of the Company which meet the Revenue
Target are Sumitomo 3M Limited, 3M France, S.A., 3M Canada Inc., 3M Italia
Finanziaria S.p.A., 3M Deutschland GmbH, 3M United Kingdom Holdings P.L.C., 3M
Innovative Properties Company and 3M Korea Limited;
(g) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and issued and are fully paid and
non-assessable; and all of the issued shares of capital stock of each
Significant Subsidiary of the Company owned directly or indirectly by the
Company have been duly and validly authorized and issued, are fully paid and
non-assessable and are owned free and clear of all liens, encumbrances, equities
or claims, except, with respect to joint venture subsidiaries, for such liens,
encumbrances, equities or liens which do not individually or in the aggregate
have a Material Adverse Effect;
(h) The Securities have been duly authorized, and, when issued and
delivered pursuant to this Agreement and any Terms Agreement, will have been
duly executed, authenticated, issued and delivered and will constitute valid and
legally binding obligations of the Company entitled to the benefits provided by
the Indenture, which will be substantially in the form filed as an exhibit to
the Registration Statement; the Indenture has been duly authorized, executed and
delivered, and qualified under the Trust Indenture Act, and constitutes a valid
and legally binding instrument, both the Securities and the Indenture being
enforceable in accordance with their respective terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization
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and other laws of general applicability relating to or affecting creditors'
rights and to general equity principles, and subject further, as to enforcement,
to any requirements that a claim with respect to any debt securities issued
under the Indenture that are payable in a foreign or composite currency (or a
foreign or composite currency judgment in respect to such claim) be converted
into U.S. dollars at a rate of exchange prevailing on a date determined pursuant
to applicable law or by governmental authority to limit, delay or prohibit the
making of payments outside the United States; and the Indenture conforms and the
Securities of any particular issuance of Securities will conform to the
descriptions thereof in the Prospectus as amended or supplemented to relate to
such issuance of Securities;
(i) The issue and sale of the Securities by the Company, the compliance
by the Company with all of the provisions of the Securities, the Indenture, this
Agreement and any Terms Agreement, and the consummation of the transactions
herein and therein contemplated will not conflict with or result in a breach of
any of the terms or provisions of, or constitute a default under, any material
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company is a party or by which the Company is bound or
to which any of the property or assets of the Company is subject, nor will such
action result in any violation of the provisions of the Certificate of
Incorporation, as amended, or the By-Laws of the Company or any statute or any
order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its properties; and no consent,
approval, authorization, order, registration or qualification of or with any
court or governmental agency or body is required for the solicitation of offers
to purchase Securities, the issue and sale of the Securities or the consummation
by the Company of the other transactions contemplated by this Agreement, any
Terms Agreement or the Indenture, except such as have been, or will have been
prior to the Commencement Date (as defined in Section 3 hereof), obtained under
the Act or the Trust Indenture Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities or
Blue Sky laws in connection with the solicitation by such Agent of offers to
purchase Securities from the Company and with purchases of Securities by such
Agent as principal as the case may be in each case in the manner contemplated
hereby;
(j) Other than as set forth or contemplated in the Registration
Statement and the Prospectus, there are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a party or to which
any property of the Company or any of its subsidiaries is subject, which, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate result in a Material Adverse Effect, and, to
the best of the Company's knowledge, no such proceedings, which, if determined
adversely, would individually or in the aggregate have such a Material Adverse
Effect, are threatened or contemplated by governmental authorities or threatened
by others;
(k) Immediately after any sale of Securities by the Company hereunder
or under any Terms Agreement, the aggregate amount of Securities which shall
have been issued and sold by the Company hereunder or under any Terms Agreement
and of any debt securities of the Company (other than such Securities) that
shall have been issued and sold pursuant to the Registration Statement will not
exceed the amount of debt securities registered under the Registration
Statement;
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(l) Neither the Company nor any of its subsidiaries is (i) in violation
of its Certificate of Incorporation (or Articles of Incorporation) or By-laws or
(ii) in default in the performance or observance of any material obligation,
covenant or condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party or by
which it or any of its properties may be bound, except for such defaults that
would not result in a Material Adverse Effect;
(m) The statements set forth in the Prospectus under the captions
"Description of Debt Securities" and "Description of Notes We May Offer",
insofar as they purport to constitute a summary of the terms of the Securities,
and under the captions "United States Taxation", "Plan of Distribution" and
"Supplemental Plan of Distribution", insofar as they purport to describe the
provisions of the laws and documents referred to therein, are accurate, complete
and fair;
(n) The Company is not and, after giving effect to each offering and
sale of the Securities, will not be an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
(o) PricewaterhouseCoopers LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder; and
(p) The Medium-Term Note Program under which the Securities will be
issued (the "Program"), as well as the Securities, are rated Aa1 by Moody's
Investors Service, Inc. and AA by Standard & Poor's Ratings Services, or such
other rating as to which the Company shall have most recently notified the
Agents.
2. (a) On the basis of the representations and warranties herein contained,
and subject to the terms and conditions herein set forth, each of the Agents
hereby severally and not jointly agrees, as agent of the Company, to use its
reasonable best efforts to solicit and receive offers to purchase the Securities
from the Company upon the terms and conditions set forth in the Prospectus as
amended or supplemented from time to time (including the Pricing Supplement),
and to deliver the Prospectus as amended or supplemented from time to time
(including the Pricing Supplement) to all purchasers of the Securities as set
forth in the Administrative Procedure (as hereinafter defined). So long as this
Agreement shall remain in effect with respect to any Agent, the Company may,
without requiring the consent of or payment of commissions to such Agent,
solicit or accept offers to purchase, or sell, any debt securities with a
maturity at the time of original issuance of 9 months to 30 years. The Company
reserves the right to sell, and may solicit and accept offers to purchase,
Securities directly on its own behalf, and, in the case of any such sale not
resulting from a solicitation made by any Agent, no commission will be payable
with respect to such sale. These provisions shall not limit Section 4(f) hereof
or any similar provision included in any Terms Agreement.
Procedural details relating to the issue and delivery of Securities,
the solicitation of offers to purchase Securities and the payment in each case
therefor shall be as set forth in the Administrative Procedure attached hereto
as Annex II as it may be amended from time to time by written agreement between
the Agents and the Company (the "Administrative Procedure"). The
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provisions of the Administrative Procedure shall apply to all transactions
contemplated hereunder other than those made pursuant to a Terms Agreement. Each
Agent and the Company agree to perform the respective duties and obligations
specifically provided to be performed by each of them in the Administrative
Procedure. The solicitation of offers to purchase Securities will be made in a
manner consistent with such reasonable guidelines developed from time to time by
the Company as agreed with the Agents. The Company will furnish to the Trustee a
copy of the Administrative Procedure as from time to time in effect.
The Company reserves the right, in its sole discretion, to instruct the
Agents to suspend at any time, for any period of time or permanently, the
solicitation of offers to purchase the Securities. As soon as practicable, but
in any event not later than one business day in New York City, after receipt of
notice from the Company, the Agents will suspend solicitation of offers to
purchase Securities from the Company until such time as the Company has advised
the Agents that such solicitation may be resumed. During such period, the
Company shall not be required to comply with the provisions of Sections 4(h),
4(i), 4(j) and 4(k). Upon advising the Agents that such solicitation may be
resumed, however, the Company shall simultaneously provide the documents
required to be delivered by Sections 4(h), 4(i), 4(j) and 4(k), and the Agents
shall have no obligation to solicit offers to purchase the Securities until such
documents have been received by the Agents. In addition, any failure by the
Company to comply with its obligations to deliver the documents required by
Sections 4(h), 4(i), 4(j) and 4(k) shall automatically suspend the Agents'
obligations hereunder, including without limitation its obligations to solicit
offers to purchase the Securities hereunder as agent or to purchase Securities
hereunder as principal, until such time as the documents required to be
delivered by Sections 4(h), 4(i), 4(j) and 4(k) are received by the Agents.
Unless otherwise agreed in writing, the Company agrees to pay each
Agent a commission, at the time of settlement of any sale of a Security by the
Company as a result of a solicitation made by such Agent, in an amount equal to
the following applicable percentage of the principal amount of such Security
sold:
Commission (percentage
of aggregate principal
Range of Maturities amount of Securities sold)
------------------- --------------------------
From 9 months to less than 1 year.......... .125%
From 1 year to less than 18 months......... .50%
From 18 months to less than 2 years........ .200%
From 2 years to less than 3 years.......... .250%
From 3 years to less than 4 years.......... .350%
From 4 years to less than 5 years.......... .450%
From 5 years to less than 6 years.......... .500%
From 6 years to less than 7 years.......... .550%
From 7 years to less than 10 years......... .600%
From 10 years to less than 15 years........ .625%
From 15 years to less than 20 years........ .675%
20 years and more.......................... .750%
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The Agents may offer the Securities they have purchased as principal to
other dealers. The Agents may sell Securities to any dealer at a discount and
such discount allowed to any dealer may include all or part of the discount to
be received by such Agents from the Company.
(b) Each sale of Securities to any Agent as principal shall be made in
accordance with the terms of this Agreement and (unless the Company and such
Agent shall otherwise agree) a Terms Agreement which will provide for the sale
of such Securities to, and the purchase thereof by, such Agent. A Terms
Agreement may also specify certain provisions relating to the reoffering of such
Securities by such Agent. The commitment of any Agent to purchase Securities as
principal, whether pursuant to any Terms Agreement or otherwise, shall be deemed
to have been made on the basis of the representations and warranties of the
Company herein contained and shall be subject to the terms and conditions herein
set forth. Each Terms Agreement shall specify the principal amount of Securities
to be purchased by any Agent pursuant thereto, the price to be paid to the
Company for such Securities, any provisions relating to rights of, and default
by, underwriters acting together with such Agent in the reoffering of the
Securities and the time and date and place of delivery of and payment for such
Securities. Such Terms Agreement shall also specify any requirements for
opinions of counsel, accountants' letters and officers' certificates pursuant to
Section 4 hereof. Each Agent proposes to offer Securities purchased by it as
principal for sale at prevailing market prices or prices related thereto at the
time of sale, which may be equal to, greater than or less than the price at
which such Securities are purchased by such Agent from the Company.
For each sale of Securities to an Agent as principal that is not made
pursuant to a Terms Agreement, the procedural details relating to the issue and
delivery of such Securities and payment therefor shall be as set forth in the
Administrative Procedure. For each such sale of Securities to an Agent as
principal that is not made pursuant to a Terms Agreement, the Company agrees to
pay such Agent a commission (or grant an equivalent discount) as provided in
Section 2(a) hereof and in accordance with the schedule set forth therein.
Each time and date of delivery of and payment for Securities to be
purchased by an Agent as principal, whether set forth in a Terms Agreement or in
accordance with the Administrative Procedure, is referred to herein as a "Time
of Delivery".
(c) Each Agent agrees, with respect to any Security denominated in a
currency other than U.S. dollars, as agent, directly or indirectly, not to
solicit offers to purchase, and as principal under any Terms Agreement or
otherwise, directly or indirectly, not to offer, sell or deliver, such Security
in, or to residents of, the country issuing such currency, except as permitted
by applicable law.
3. The documents required to be delivered pursuant to Section 6 hereof on
the Commencement Date (as defined below) shall be delivered to the Agents at the
offices of Sidley Austin Brown & Wood LLP, 787 Seventh Avenue, New York, New
York 10019, at 10:00 a.m., New York time, on the date of this Agreement, which
date and time of such delivery may be postponed by agreement between the Agents
and the Company but in no event shall be later than the day prior to the date on
which solicitation of offers to purchase Securities is commenced or on which any
Terms Agreement is executed (such time and date being referred to herein as the
"Commencement Date").
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4. The Company covenants and agrees with each Agent:
(a) (i) To make no amendment or supplement to the Registration
Statement or the Prospectus (A) prior to the Commencement Date which shall be
reasonably disapproved by any Agent promptly after reasonable notice thereof or
(B) after the date of any Terms Agreement or other agreement by an Agent to
purchase Securities as principal and prior to the related Time of Delivery which
shall be reasonably disapproved by any Agent party to such Terms Agreement or so
purchasing as principal promptly after reasonable notice thereof; (ii) to
prepare, with respect to any Securities to be sold through or to such Agent
pursuant to this Agreement, a Pricing Supplement with respect to such Securities
in a form previously approved by such Agent and to file such Pricing Supplement
pursuant to Rule 424(b) under the Act within the applicable time period
prescribed for such filing by the rules and regulations under the Act; (iii) to
make no amendment or supplement to the Registration Statement or Prospectus,
other than any Pricing Supplement, at any time prior to having afforded each
Agent a reasonable opportunity to review and comment on it; (iv) to file
promptly all reports and any definitive proxy or information statements required
to be filed by the Company with the Commission pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act for so long as the delivery of a prospectus is
required in connection with the offering or sale of the Securities, and during
such time period to advise such Agent, promptly after the Company receives
notice thereof, of the time when any amendment to the Registration Statement has
been filed or has become effective or any supplement to the Prospectus or any
amended Prospectus (other than any Pricing Supplement that relates to Securities
not purchased through or by such Agent) has been filed with the Commission, of
the issuance by the Commission of any stop order or of any order preventing or
suspending the use of any prospectus relating to the Securities, of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amendment or supplement of
the Registration Statement or Prospectus or for additional information; and (v)
in the event of the issuance of any such stop order or of any such order
preventing or suspending the use of any such prospectus or suspending any such
qualification, to use promptly its best efforts to obtain its withdrawal;
(b) Promptly from time to time to take such action as such Agent
reasonably may request to qualify the Securities for offering and sale under the
securities laws of such jurisdictions as such Agent may request and to comply
with such laws so as to permit the continuance of sales and dealings therein for
as long as may be necessary to complete the distribution or sale of the
Securities; provided, however, that in connection therewith the Company shall
not be required to qualify as a foreign corporation or to file a general consent
to service of process in any jurisdiction;
(c) To furnish such Agent with copies of the Registration Statement and
each amendment thereto, with copies of the Prospectus as each time amended or
supplemented, other than any Pricing Supplement (except as provided in the
Administrative Procedure), in the form in which it is filed with the Commission
pursuant to Rule 424 under the Act, and with copies of the documents
incorporated by reference therein, all in such quantities as such Agent may
reasonably request from time to time; and, if the delivery of a prospectus is
required at any time in connection with the offering or sale of the Securities
(including Securities purchased from the Company by such Agent as principal) and
if at such time any event shall have occurred as a
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result of which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such same period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the Act, the
Exchange Act or the Trust Indenture Act, to immediately notify such Agent and
request such Agent, in its capacity as agent of the Company, to suspend
solicitation of offers to purchase Securities from the Company (and, if so
notified, such Agent shall cease such solicitations as soon as practicable, but
in any event not later than one business day later); and if the Company shall
decide to amend or supplement the Registration Statement or the Prospectus as
then amended or supplemented, to so advise such Agent promptly by telephone
(with confirmation in writing) and to prepare and cause to be filed promptly
with the Commission an amendment or supplement to the Registration Statement or
the Prospectus as then amended or supplemented that will correct such statement
or omission or effect such compliance; provided, however, that if during such
same period such Agent continues to own Securities purchased from the Company by
such Agent as principal or such Agent is otherwise required to deliver a
prospectus in respect of transactions in the Securities, the Company shall
promptly prepare and file with the Commission such an amendment or supplement;
(d) To make generally available to its security holders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the Registration Statement (as defined in Rule 158(c) under the Act), an
earnings statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Act and the rules and regulations
of the Commission thereunder (including, at the option of the Company, Rule 158)
by making an appropriate filing with the Commission if the Company is subject to
the reporting requirements of the Exchange Act or by other means if the Company
is not so subject;
(e) So long as any Securities are outstanding, to furnish to such Agent
copies of all reports or other communications (financial or other) furnished to
stockholders, and deliver to such Agent (i) as soon as they are available,
copies of any reports and financial statements furnished to or filed with the
Commission or any national securities exchange on which any class of securities
of the Company is listed; and (ii) such additional information concerning the
business and financial condition of the Company as such Agent may from time to
time reasonably request (such financial statements to be on a consolidated basis
to the extent the accounts of the Company and its subsidiaries are consolidated
in reports furnished to its stockholders generally or to the Commission);
(f) That, from the date of any Terms Agreement with such Agent or other
agreement by such Agent to purchase Securities as principal and continuing to
and including the later of (i) the termination of the trading restrictions for
the Securities purchased thereunder and (ii) the related Time of Delivery
(provided that such Agent shall notify the Company if such trading restrictions
will not terminate on the related Time of Delivery), the Company will not,
without the prior written consent of such Agent, offer, sell, contract to sell
or otherwise dispose of any debt securities of the Company (other than the sale
of Securities pursuant to such Terms Agreement) which both mature more than 9
months after such Time of Delivery and are substantially similar to the
Securities;
10
(g) That each acceptance by the Company of an offer to purchase
Securities hereunder (including any purchase by such Agent as principal not
pursuant to a Terms Agreement), and each execution and delivery by the Company
of a Terms Agreement with such Agent, shall be deemed to be an affirmation to
such Agent that the representations and warranties of the Company contained in
or made pursuant to this Agreement are true and correct as of the date of such
acceptance or of such Terms Agreement, as the case may be, as though made at and
as of such date, and an undertaking that such representations and warranties
will be true and correct as of the settlement date for the Securities relating
to such acceptance or as of the Time of Delivery relating to such sale, as the
case may be, as though made at and as of such date (except that such
representations and warranties shall be deemed to relate to the Registration
Statement and the Prospectus as amended and supplemented relating to such
Securities);
(h) That reasonably in advance of each time the Registration Statement
or the Prospectus shall be amended or supplemented (other than by a Pricing
Supplement) and each time a document filed under the Act or the Exchange Act is
incorporated by reference into the Prospectus, and each time the Company sells
Securities to such Agent as principal pursuant to a Terms Agreement and such
Terms Agreement specifies the delivery of an opinion or opinions by Sidley
Austin Brown & Wood LLP, counsel to the Agents, as a condition to the purchase
of Securities pursuant to such Terms Agreement, the Company shall furnish to
such counsel such papers and information as they may reasonably request to
enable them to furnish to such Agent the opinion or opinions referred to in
Section 6(b) hereof;
(i) That each time the Registration Statement or the Prospectus shall
be amended or supplemented (other than by a Pricing Supplement), each time a
document filed under the Act or the Exchange Act is incorporated by reference
into the Prospectus and each time the Company sells Securities to such Agent as
principal pursuant to a Terms Agreement and such Terms Agreement specifies the
delivery of an opinion under this Section 4(i) as a condition to the purchase of
Securities pursuant to such Terms Agreement, the Company shall furnish or cause
to be furnished forthwith to such Agent a written opinion of Gregg Larson,
Assistant General Counsel of the Company, or other counsel for the Company
satisfactory to such Agent, dated the date of such amendment, supplement,
incorporation or Time of Delivery relating to such sale, as the case may be, in
form satisfactory to such Agent, to the effect that such Agent may rely on the
opinion of such counsel referred to in Section 6(c) hereof which was last
furnished to such Agent to the same extent as though it were dated the date of
such letter authorizing reliance (except that the statements in such last
opinion shall be deemed to relate to the Registration Statement and the
Prospectus as amended and supplemented to such date) or, in lieu of such
opinion, an opinion of the same tenor as the opinion of such counsel referred to
in Section 6(c) hereof but modified to relate to the Registration Statement and
the Prospectus as amended and supplemented to such date;
(j) That each time the Registration Statement or the Prospectus shall
be amended or supplemented (other than by a Pricing Supplement which does not
set forth financial information included in or derived from the Company's
consolidated financial statements or accounting records) and each time that a
document filed under the Act or the Exchange Act is incorporated by reference
into the Prospectus, in either case to set forth financial information included
in or derived from the Company's consolidated financial statements or accounting
records, and each time the Company sells Securities to such Agent as principal
pursuant to a Terms Agreement and
11
such Terms Agreement specifies the delivery of a letter under this Section 4(j)
as a condition to the purchase of Securities pursuant to such Terms Agreement,
the Company shall cause the independent certified public accountants who have
certified the financial statements of the Company and its subsidiaries included
or incorporated by reference in the Registration Statement forthwith to furnish
such Agent a letter, dated the date of such amendment, supplement, incorporation
or Time of Delivery relating to such sale, as the case may be, in form
satisfactory to such Agent, of the same tenor as the letter referred to in
Section 6(d) hereof but modified to relate to the Registration Statement and the
Prospectus as amended or supplemented to the date of such letter, with such
changes as may be necessary to reflect changes in the financial statements and
other information derived from the accounting records of the Company, to the
extent such financial statements and other information are available as of a
date not more than five business days prior to the date of such letter;
provided, however, that, with respect to any financial information or other
matter, such letter may reconfirm as true and correct at such date as though
made at and as of such date, rather than repeat, statements with respect to such
financial information or other matter made in the letter referred to in Section
6(d) hereof which was last furnished to such Agent;
(k) That each time the Registration Statement or the Prospectus shall
be amended or supplemented (other than by a Pricing Supplement), each time a
document filed under the Act or the Exchange Act is incorporated by reference
into the Prospectus, and each time the Company sells Securities to such Agent as
principal and the applicable Terms Agreement specifies the delivery of a
certificate under this Section 4(k) as a condition to the purchase of Securities
pursuant to such Terms Agreement, the Company shall furnish or cause to be
furnished forthwith to such Agent a certificate, dated the date of such
supplement, amendment, incorporation or Time of Delivery relating to such sale,
as the case may be, in such form and executed by such officers of the Company as
shall be satisfactory to such Agent, to the effect that the statements contained
in the certificate referred to in Section 6(g) hereof which was last furnished
to such Agent are true and correct at such date as though made at and as of such
date (except that such statements shall be deemed to relate to the Registration
Statement and the Prospectus as amended and supplemented to such date), or, in
lieu of such certificate, certificates of the same tenor as the certificates
referred to in said Section 6(g) but modified to relate to the Registration
Statement and the Prospectus as amended and supplemented to such date; and
(l) To offer to any person who has agreed to purchase Securities as the
result of an offer to purchase solicited by such Agent the right to refuse to
purchase and pay for such Securities if, on the related settlement date fixed
pursuant to the Administrative Procedure, any condition set forth in Section
6(a), 6(e) or 6(f) hereof shall not have been satisfied (it being understood
that the judgment of such person with respect to the impracticability or
inadvisability of such purchase of Securities shall be substituted, for purposes
of this Section 4(l), for the respective judgments of an Agent with respect to
certain matters referred to in such Sections 6(a), 6(e) and 6(f), and that such
Agent shall have no duty or obligation whatsoever to exercise the judgment
permitted under such Sections 6(a), 6(e) and 6(f) on behalf of any such person).
5. The Company covenants and agrees with each Agent that the Company will
pay or cause to be paid the following: (i) the fees and expenses of the
Company's counsel and accountants in connection with the registration of the
Securities under the Act and all other expenses in connection with the
preparation, printing and filing of the Registration Statement, any
12
Preliminary Prospectus, the Prospectus and any Pricing Supplements and all other
amendments and supplements thereto and the mailing and delivering of copies
thereof to such Agent; (ii) the reasonable fees and expenses of counsel for the
Agents in connection with the establishment of the program contemplated hereby,
any opinions to be rendered by such counsel hereunder and the transactions
contemplated hereunder; (iii) the cost of printing, preparing by word processor
or reproducing this Agreement, any Terms Agreement, any Indenture, any Blue Sky
Memoranda and any other documents in connection with the offering, purchase,
sale and delivery of the Securities; (iv) all expenses in connection with the
qualification of the Securities for offering and sale under state securities
laws as provided in Section 4(b) hereof, including fees and disbursements of
counsel for the Agents in connection with such qualification and in connection
with the Blue Sky and legal investment surveys; (v) any fees charged by
securities rating services for rating the Securities; (vi) any filing fees
incident to any required review by the National Association of Securities
Dealers, Inc. of the terms of the sale of the Securities; (vii) the cost of
preparing the Securities; (viii) the fees and expenses of any Trustee and any
agent of any Trustee and any transfer or paying agent of the Company and the
fees and disbursements of counsel for any Trustee or such agent in connection
with any Indenture and the Securities; (ix) any advertising connected with the
solicitation of offers to purchase and the sale of Securities so long as such
advertising expenses have been approved by the Company; and (x) all other costs
and expenses incident to the performance of the Company's obligations hereunder
which are not otherwise specifically provided for in this Section. Except as
provided in Sections 7 and 8 hereof, each Agent shall pay all other expenses it
incurs.
6. The obligation of any Agent, as agent of the Company, at any time
("Solicitation Time") to solicit offers to purchase the Securities and the
obligation of any Agent to purchase Securities as principal, pursuant to any
Terms Agreement or otherwise, shall in each case be subject, in such Agent's
discretion, to the condition that all representations and warranties and
covenants of the Company herein (and, in the case of an obligation of an Agent
under a Terms Agreement, in or incorporated in such Terms Agreement by
reference) are true and correct at and as of the Commencement Date and any
applicable date referred to in Section 4(k) hereof that is prior to such
Solicitation Time or Time of Delivery, as the case may be, and at and as of such
Solicitation Time or Time of Delivery, as the case may be, the condition that
prior to such Solicitation Time or Time of Delivery, as the case may be, the
Company shall have performed all of its obligations hereunder theretofore to be
performed, and the following additional conditions:
(a) (i) With respect to any Securities sold at or prior to such
Solicitation Time or Time of Delivery, as the case may be, the Prospectus as
amended or supplemented (including the Pricing Supplement) with respect to such
Securities shall have been filed with the Commission pursuant to Rule 424(b)
under the Act within the applicable time period prescribed for such filing by
the rules and regulations under the Act and in accordance with Section 4(a)
hereof; (ii) no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission; and (iii) all requests for
additional information on the part of the Commission shall have been complied
with to the reasonable satisfaction of such Agent;
(b) Sidley Austin Brown & Wood LLP, counsel to the Agents, shall have
furnished to such Agent (i) such opinion or opinions, dated the Commencement
Date, with respect to the incorporation of the Company, the validity of the
Indenture, the Securities, the Registration
13
Statement, the Prospectus as amended or supplemented and other related matters
as such Agent may reasonably request, and (ii) if and to the extent requested by
such Agent, with respect to each applicable date referred to in Section 4(h)
hereof that is on or prior to such Solicitation Time or Time of Delivery, as the
case may be, an opinion or opinions, dated such applicable date, to the effect
that such Agent may rely on the opinion or opinions which were last furnished to
such Agent pursuant to this Section 6(b) to the same extent as though it or they
were dated the date of such letter authorizing reliance (except that the
statements in such last opinion or opinions shall be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented to such
date) or, in any case, in lieu of such an opinion or opinions, an opinion or
opinions of the same tenor as the opinion or opinions referred to in clause (i)
but modified to relate to the Registration Statement and the Prospectus as
amended and supplemented to such date; and in each case such counsel shall have
received such papers and information as they may reasonably request to enable
them to pass upon such matters;
(c) Gregg Larson, Secretary and Assistant General Counsel of the
Company, or other counsel for the Company satisfactory to such Agent, shall have
furnished to such Agent such counsel's written opinions, dated the Commencement
Date and each applicable date referred to in Section 4(i) hereof that is on or
prior to such Solicitation Time or Time of Delivery, as the case may be, in form
and substance satisfactory to such Agent, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with power and authority (corporate
and other) to own its properties and conduct its business as described
in the Prospectus as amended or supplemented;
(ii) The Company has an authorized capitalization as set forth
in the Prospectus as amended or supplemented and all of the issued
shares of capital stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable;
(iii) The Company has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in the United States in which
it owns or leases properties, or conducts any business, so as to
require such qualification, except where the failure to so qualify or
be in good standing would not result in a Material Adverse Effect (such
counsel being entitled to rely in respect of the opinion in this clause
upon opinions of local counsel and in respect of the matters of fact
upon certificates of officers of the Company, provided that such
counsel shall state that he believes that both you and he are justified
in relying upon such opinions and certificates);
(iv) Each Significant Subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, and has been duly
qualified as a foreign corporation for the transaction of business and
is in good standing under the laws of each other jurisdiction in the
United States in which it owns or leases properties or conducts any
business, except where the failure to so qualify or be in good standing
would not have a Material Adverse Effect; and all of the issued shares
of capital stock of each such subsidiary have been duly and
14
validly authorized and issued, are fully paid and nonassessable, and
the shares of each such Significant Subsidiary owned directly or
indirectly by the Company are owned free and clear of all such liens,
encumbrances, equities or claims, except, with respect to joint venture
subsidiaries, for such liens, encumbrances, equities or liens which do
not individually or in the aggregate have a Material Adverse Effect
(such counsel being entitled to rely in respect of the opinion in this
clause upon opinions of local counsel and in respect of matters of fact
upon certificates of officers of the Company or its subsidiaries,
provided that such counsel shall state that he believes that both you
and he are justified in relying upon such opinions and certificates);
(v) To the best of such counsel's knowledge and other than as
set forth or contemplated in the Registration Statement or the
Prospectus, there are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or to which any
property of the Company or any of its subsidiaries is subject, which,
if determined adversely to the Company or any of its subsidiaries,
would individually or in the aggregate have a Material Adverse Effect;
and to the best of such counsel's knowledge, no such proceedings,
which, if determined adversely, would individually or in the aggregate
have such a Material Adverse Effect, are threatened or contemplated by
governmental authorities or threatened by others;
(vi) This Agreement and any applicable Terms Agreement have
been duly authorized, executed and delivered by the Company;
(vii) The Securities have been duly authorized and, when duly
executed, authenticated, issued and delivered by the Company, will
constitute valid and legally binding obligations of the Company
entitled to the benefits provided by the Indenture, enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity
principles, and subject further, as to enforcement, to any requirements
that a claim with respect to any debt securities issued under the
Indenture that are payable in a foreign or composite currency (or a
foreign or composite currency judgment in respect to such claim) be
converted into U.S. dollars at a rate of exchange prevailing on a date
determined pursuant to applicable law or by governmental authority to
limit, delay or prohibit the making of payments outside the United
States; and the Indenture conforms and the Securities will conform in
all material respects to the descriptions thereof in the Prospectus as
amended or supplemented;
(viii) The Indenture has been duly authorized, executed and
delivered by the parties thereto and constitutes a valid and legally
binding instrument, enforceable in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors'
rights and to general equity principles, and subject further, as to
enforcement, to any requirements that a claim with respect to any debt
securities issued under the Indenture that are payable in a foreign or
composite currency (or a foreign or composite currency judgment in
respect to such claim) be converted into U.S. dollars at a rate of
exchange prevailing on a date determined pursuant to applicable law or
by governmental authority
15
to limit, delay or prohibit the making of payments outside the United
States; and the Indenture has been duly qualified under the Trust
Indenture Act;
(ix) The issue and sale of the Securities by the Company, the
compliance by the Company with all of the provisions of the Securities,
the Indenture, this Agreement and any applicable Terms Agreement and
the consummation of the transactions herein and therein contemplated
will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument known to
such counsel to which the Company is a party or by which the Company is
bound or to which any of the property or assets of the Company is
subject, nor will such action result in any violation of the provisions
of the Certificate of Incorporation, as amended, of the Company or the
By-Laws of the Company or any statute or any order, rule or regulation
known to such counsel of any court or governmental agency or body
having jurisdiction over the Company or any of its properties;
(x) No consent, approval, authorization, order, registration
or qualification of or with any court or governmental agency or body is
required for the solicitation of offers to purchase Securities, the
issue and sale of the Securities or the consummation by the Company of
the other transactions contemplated by this Agreement, any applicable
Terms Agreement, or the Indenture, except such as have been obtained
under the Act and the Trust Indenture Act and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the
solicitation by the Agents of offers to purchase Securities from the
Company and with purchases of Securities by an Agent as principal, as
the case may be, in each case in the manner contemplated hereby;
(xi) Neither the Company nor any of its subsidiaries is (i) in
violation of its Certificate of Incorporation (or Articles of
Incorporation) or By-laws or (ii) to the best of such counsel's
knowledge, in default in the performance or observance of any material
obligation, covenant or condition contained in any indenture, mortgage,
deed of trust, loan agreement, lease or other agreement or instrument
to which it is a party or by which it or any of its properties may be
bound that is described or referred to in the Registration Statement or
the Prospectus, if such default would result in a Material Adverse
Effect;
(xii) The statements set forth in the Prospectus under the
captions "Description of the Debt Securities" and "Description of Notes
We Offer", insofar as they purport to constitute a summary of the terms
of the Securities, and under the captions "United States Taxation",
"Plan of Distribution" and "Supplemental Plan of Distribution", insofar
as they purport to describe the provisions of the laws and documents
referred to therein, are correct in all material respects;
(xiii) The Company is not and, after giving effect to the
offering and sale of the Securities, will not be an "investment
company" as such term is defined in the Investment Company Act;
16
(xiv) The documents incorporated by reference in the
Prospectus (other than the financial statements or data and related
schedules included therein, as to which such counsel expresses no
opinion), when they became effective or were filed with the Commission,
as the case may be, complied as to form in all material respects with
the requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder; and such counsel
has no reason to believe that any of such documents, when they became
effective or were so filed, as the case may be, contained, in the case
of a registration statement which became effective under the Act, an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and, in the case of other documents which were
filed under the Act or the Exchange Act with the Commission, an untrue
statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such documents were so
filed not misleading; and
(xv) The Registration Statement and the Prospectus as amended
and supplemented and any further amendments and supplements thereto
made by the Company prior to the date of such opinion (other than the
financial statements or data and related schedules included therein or
the Form T-1, as to which such counsel expresses no opinion) comply as
to form in all material respects with the requirements of the Act and
the Trust Indenture Act and the rules and regulations thereunder;
nothing has come to such counsel's attention that would lead him to
believe that, as of its effective date, the Registration Statement or
any further amendment or supplement thereto made by the Company prior
to the date of such opinion (other than financial statements or data
and related schedules included therein or the Form T-1, as to which
such counsel makes no statement) contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or
that, as of the date of such opinion, the Prospectus or any amendment
or supplement thereto made by the Company prior to the date of such
opinion (other than the financial statements or data and related
schedules included therein, as to which such counsel makes no
statement) contained an untrue statement of a material fact or omitted
to state a material fact necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading; and
such counsel does not know of any amendment to the Registration
Statement required to be filed or any contracts or other documents
required to be filed as an exhibit to the Registration Statement or
required to be incorporated by reference into the Prospectus as amended
or supplemented or required to be described in the Registration
Statement or the Prospectus as amended or supplemented which are not
filed or incorporated by reference or described as required.
(d) Not later than 10:00 a.m., New York City time, on the Commencement
Date and on each applicable date referred to in Section 4(j) hereof that is on
or prior to such Solicitation Time or Time of Delivery, as the case may be, the
independent certified public accountants who have certified the financial
statements of the Company and its subsidiaries included or incorporated by
reference in the Registration Statement shall have furnished to such Agent a
letter, dated the Commencement Date or such applicable date, as the case may be,
in form and substance satisfactory to such Agent, to the effect set forth in
Annex III hereto;
17
(e) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus as amended or supplemented any loss
or interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, that would result in a Material Adverse
Effect, otherwise than as set forth or contemplated in the Prospectus as amended
or supplemented and (ii) since the respective dates as of which information is
given in the Prospectus as amended or supplemented there shall not have been any
change in the capital stock or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a prospective change,
in or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries considered as one enterprise, otherwise than as set forth or
contemplated in the Prospectus as amended or supplemented, the effect of which,
in any such case described in clause (i) or (ii), is in the judgment of such
Agent so material and adverse as to make it impracticable or inadvisable to
proceed with the solicitation by such Agent of offers to purchase Securities
from the Company or the purchase by such Agent of Securities from the Company as
principal, as the case may be, on the terms and in the manner contemplated in
the Prospectus as amended or supplemented, provided, however, that in the case
where any Agent purchases Securities as principal, the references to the
"Prospectus as amended or supplemented" in clauses (i) and (ii) shall refer to
the Prospectus as amended or supplemented as of the date of the applicable Terms
Agreement);
(f) There shall not have occurred any of the following: (i) a
suspension or material limitation in trading in securities generally on the New
York Stock Exchange, American Stock Exchange or the NASDAQ National Market; (ii)
a suspension or material limitation in trading in the Company's securities on
the New York Stock Exchange; (iii) a general moratorium on commercial banking
activities in New York declared by either Federal or New York State authorities;
(iv) a material adverse change in the financial markets of the United States or
an outbreak or escalation of hostilities or the declaration of a national
emergency or war if the effect of any such event specified in this clause (iv)
in the judgment of such Agent makes it impracticable or inadvisable to proceed
with the solicitation of offers to purchase Securities or the purchase of
Securities from the Company as principal, pursuant to the applicable Terms
Agreement or otherwise, as the case may be, on the terms and in the manner
contemplated in the Prospectus as amended or supplemented; (v) any downgrading
in the rating accorded the Company's debt securities by any "nationally
recognized statistical rating organization", as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the Act; or (vi) no such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the Company's
debt securities; and
(g) The Company shall have furnished or caused to be furnished to such
Agent certificates of officers of the Company dated the Commencement Date and
each applicable date referred to in Section 4(k) hereof that is on or prior to
such Solicitation Time or Time of Delivery, as the case may be, in such form and
executed by such officers of the Company as shall be satisfactory to such Agent,
as to the accuracy of the representations and warranties of the Company herein
at and as of the Commencement Date or such applicable date, as the case may be,
as to the performance by the Company of all of its obligations hereunder to be
performed at or prior to the Commencement Date or such applicable date, as the
case may be, as to the matters
18
set forth in subsections (a) and (e) of this Section 6, and as to such other
matters as such Agent may reasonably request.
7. (a) The Company will indemnify and hold harmless each Agent against any
losses, claims, damages or liabilities, joint or several, to which such Agent
may become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement, the
Prospectus, the Prospectus as amended or supplemented or any other prospectus
relating to the Securities, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse such Agent for any legal or other
expenses reasonably incurred, as incurred, by it in connection with
investigating or defending any such action or claim; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement, the Prospectus, the Prospectus as
amended or supplemented or any other prospectus relating to the Securities, or
any such amendment or supplement, in reliance upon and in conformity with
written information furnished to the Company by such Agent expressly for use
therein.
(b) Each Agent will indemnify and hold harmless the Company against any
losses, claims, damages or liabilities to which the Company may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement, the Prospectus, the
Prospectus as amended or supplemented or any other prospectus relating to the
Securities or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement, the Prospectus, the
Prospectus as amended or supplemented or any other prospectus relating to the
Securities, or any such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by such Agent
expressly for use therein; and will reimburse the Company for any legal or other
expenses reasonably incurred, as incurred, by the Company in connection with
investigating or defending any such action or claim.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
19
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. An indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without the written consent of the indemnified party, effect the
settlement or compromise of, or consent to the entry of any judgment with
respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement as to, or an admission of, fault,
culpability or a failure to act, by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and each Agent on the
other from the offering of the Securities to which such loss, claim, damage or
liability (or action in respect thereof) relates. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and each Agent on the other in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and each Agent on the other shall be deemed to be in the same
proportion as the total net proceeds from the sale of Securities (before
deducting expenses) received by the Company bear to the total commissions or
discounts received by such Agent in respect thereof. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading relates to information supplied by the Company
on the one hand or by any Agent on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and each Agent agree that it would not be
just and equitable if contribution pursuant to this subsection (d) were
determined by per capita allocation (even if all Agents were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect
20
thereof) referred to above in this subsection (d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), an Agent shall not be
required to contribute any amount in excess of the amount by which the total
public offering price at which the Securities purchased by or through it were
sold exceeds the amount of any damages which such Agent has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
obligations of each of the Agents under this subsection (d) to contribute are
several in proportion to the respective purchases made by or through it to which
such loss, claim, damage or liability (or action in respect thereof) relates and
are not joint.
(e) The obligations of the Company under this Section 7 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Agent within the meaning of the Act; and the obligations of each Agent under
this Section 7 shall be in addition to any liability which such Agent may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company and to each person, if any, who controls the
Company within the meaning of the Act.
8. Each Agent, in soliciting offers to purchase Securities from the
Company and in performing the other obligations of such Agent hereunder (other
than in respect to any purchase by an Agent as principal, pursuant to a Terms
Agreement or otherwise), is acting solely as agent for the Company and not as
principal. Each Agent will make reasonable best efforts to assist the Company in
obtaining performance by each purchaser whose offer to purchase Securities from
the Company was solicited by such Agent and has been accepted by the Company,
but such Agent shall not have any liability to the Company in the event such
purchase is not consummated for any reason. If the Company shall default on its
obligation to deliver Securities to a purchaser whose offer it has accepted, the
Company shall (i) hold each Agent harmless against any loss, claim or damage
arising from or as a result of such default by the Company and (ii)
notwithstanding such default, pay to the Agent that solicited such offer any
commission to which it would be entitled in connection with such sale.
9. The respective indemnities, agreements, representations, warranties,
covenants and other statements, if any, by any Agent and the Company set forth
in or made pursuant to this Agreement shall remain in full force and effect
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Agent or any controlling person of any Agent, or the
Company, or any officer or director or any controlling person of the Company,
and shall survive each delivery of and payment for any of the Securities.
10. The provisions of this Agreement relating to the solicitation of offers
to purchase Securities from the Company may be suspended or terminated at any
time by the Company as to any Agent or by any Agent as to such Agent upon the
giving of written notice of such suspension or termination to such Agent or the
Company, as the case may be. In the event of such suspension or termination with
respect to any Agent, (x) this Agreement shall remain in full force and effect
with respect to any Agent as to which such suspension or termination has not
21
occurred, (y) this Agreement shall remain in full force and effect with respect
to the rights and obligations of any party which have previously accrued or
which relate to Securities which are already issued, agreed to be issued or the
subject of a pending offer at the time of such suspension or termination and (z)
in any event, this Agreement shall remain in full force and effect insofar as
the fourth paragraph of Section 2(a), Section 4(d), Section 4(e), Section 5,
Section 7, Section 8 and Section 9 hereof are concerned.
11. Except as otherwise specifically provided herein or in the
Administrative Procedure, all statements, requests, notices and advices
hereunder shall be in writing, or by telephone if promptly confirmed in writing,
and if to the Agents shall be sufficient in all respects when delivered or sent
by facsimile transmission or registered mail to:
Goldman, Sachs & Co. Merrill Lynch, Pierce, Fenner & Smith
85 Broad Street Incorporated
New York, New York 10004 4 World Financial Center, Floor 15
Facsimile Transmission No. (212) 363-7609 New York, New York 10080
Attention: Credit Department Facsimile Transmission No. (212) 449-2234
Attention: Transaction Management Group
Citigroup Global Markets Inc. UBS Securities LLC
388 Greenwich Street 677 Washington Boulevard
New York, New York 10013 Stamford, Connecticut 06901
Attention: MTN Department Facsimile Transmission No. (203) 719-3160
Facsimile Transmission No. (212) 816-0949 Attention: Debt Capital Markets
J.P. Morgan Securities Inc. with a copy to:
270 Park Avenue, 8th Floor New York,
New York 10017 UBS Securities LLC
Facsimile Transmission No. (212) 834-4533 677 Washington Boulevard
Attention: Medium-Term Note Desk Stamford, Connecticut 06901
Facsimile Transmission No. (203) 719-0680 Attention: Legal Affairs
Morgan Stanley & Co. Incorporated
1585 Broadway, 2nd Floor
New York, New York 10036
Facsimile Transmission No. (212) 761-0780
Attention: Manager-Continuously Offered
Products
with a copy to:
Morgan Stanley & Co. Incorporated
1585 Broadway, 29th Floor
New York, New York 10036
Facsimile Transmission No. (212) 761-0260
22
Attention: Peter Cooper, Investment Banking
Center
and if to the Company shall be sufficient in all respects when delivered or sent
by facsimile transmission or registered mail to 3M Office of General Counsel, 3M
Center, St. Paul, Minnesota 55133, Facsimile Transmission No. (612) 736-9469,
Attention: Gregg Larson.
12. This Agreement and any Terms Agreement shall be binding upon, and inure
solely to the benefit of, each Agent and the Company, and to the extent provided
in Section 7, Section 8 and Section 9 hereof, the officers and directors of the
Company and any person who controls any Agent or the Company, and their
respective personal representatives, successors and assigns, and no other person
shall acquire or have any right under or by virtue of this Agreement or any
Terms Agreement. No purchaser of any of the Securities through or from any Agent
hereunder shall be deemed a successor or assign by reason merely of such
purchase.
13. Time shall be of the essence in this Agreement and any Terms Agreement.
As used herein, the term "business day" shall mean any day when the office of
the Commission in Washington, D.C. is normally open for business.
14. This Agreement and any Terms Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
15. This Agreement and any Terms Agreement may be executed by any one or
more of the parties hereto and thereto in any number of counterparts, each of
which shall be an original, but all of such respective counterparts shall
together constitute one and the same instrument.
23
If the foregoing is in accordance with your understanding, please sign
and return to us two counterparts hereof, whereupon this letter and the
acceptance by you thereof shall constitute a binding agreement between the
Company and you in accordance with its terms.
Very truly yours,
3M Company
By: /s/ Patrick D. Campbell
-------------------------------------
Name: Patrick D. Campbell
Title: Senior Vice President
Chief Financial Officer
By: /s/ J. Mark Borseth
-------------------------------------
Name: J. Mark Borseth
Title: Treasurer
Accepted in New York, New York,
as of the date hereof:
Goldman, Sachs & Co. Merrill Lynch, Pierce, Fenner & Smith
Incorporated
/s/ Goldman, Sachs & Co. By: /s/ Scott Primrose
- ----------------------------------- ----------------------------------
(Goldman, Sachs & Co.) Its: Authorized Signatory
------------------------------
Morgan Stanley & Co. Incorporated
Citigroup Global Markets, Inc.
By: /s/ M. Corey Whisner By: /s/ Harold J. Hendershot III
------------------------------- ----------------------------------
Its: Vice President Its: Executive Director
--------------------------- ------------------------------
J.P. Morgan Securities Inc. UBS Securities LLC
By: /s/ Carl Mehldau Jr. By: /s/ Scott Yeager
------------------------------- ---------------------------------
Its: Vice President Its: Managing Director
--------------------------- -----------------------------
24
ANNEX I
3M COMPANY
[TITLE OF SECURITY]
TERMS AGREEMENT
__________________, 200_
Goldman, Sachs & Co. Merrill Lynch, Pierce, Fenner & Smith
85 Broad Street Incorporated
New York, New York 10004 4 World Financial Center, Floor 15
New York, New York 10080
Citigroup Global Markets Inc. Morgan Stanley & Co. Incorporated
388 Greenwich Street 1585 Broadway, 2nd Floor
New York, New York 10013 New York, New York 10036
J.P. Morgan Securities Inc. UBS Securities LLC
270 Park Avenue, 8th Floor 677 Washington Boulevard
New York, New York 10017 Stamford, Connecticut 06901
Dear Sirs:
3M Company, (the "Company") proposes, subject to the terms and
conditions stated herein and in the Distribution Agreement, dated December 12,
2003 (the "Distribution Agreement"), between the Company on the one hand and
Goldman, Sachs & Co., Citigroup Global Markets Inc., J.P. Morgan Securities
Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co.
Incorporated and UBS Securities LLC (the "Agents") on the other, to issue and
sell to [Goldman, Sachs & Co., Citigroup Global Markets Inc., J.P. Morgan
Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan
Stanley & Co. Incorporated and UBS Securities LLC] the securities specified in
the Schedule hereto (the "Purchased Securities"). Each of the provisions of the
Distribution Agreement not specifically related to the solicitation by the
Agents, as agents of the Company, of offers to purchase Securities is
incorporated herein by reference in its entirety, and shall be deemed to be part
of this Terms Agreement to the same extent as if such provisions had been set
forth in full herein. Nothing contained herein or in the Distribution Agreement
shall make any party hereto an agent of the Company or make such party subject
to the provisions therein relating to the solicitation of offers to purchase
Securities from the Company, solely by virtue of its execution of this Terms
Agreement. Each of the representations and warranties set forth therein shall be
deemed to have been made at and as of the date of this Terms Agreement, except
that each representation and warranty in Section 1 of the Distribution Agreement
which makes reference to the Prospectus shall be deemed to be a representation
and warranty as of the date of the Distribution Agreement in relation to the
Prospectus (as therein defined), and also a representation and a warranty as of
the date of this Terms Agreement in relation to the Prospectus as amended and
supplemented to relate to the Purchased Securities.
Annex I-1
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Purchased Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the
Distribution Agreement incorporated herein by reference, the Company agrees to
issue and sell to [Goldman, Sachs & Co., Citigroup Global Markets Inc., J.P.
Morgan Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Morgan Stanley & Co. Incorporated and UBS Securities LLC] and such Agent[s]
agree[s] to purchase from the Company the Purchased Securities, at the time and
place, in the principal amount and at the purchase price set forth in the
Schedule hereto.
[**If one or more of the Agents shall fail at the Time of Delivery to
purchase the Purchased Securities (the "Defaulted Securities"), then the
nondefaulting Agents shall have the right, within 24 hours thereafter, to make
arrangements for one of them or one or more other Agents to purchase all, but
not less than all, of the Defaulted Securities in such amounts as may be agreed
upon and upon the terms herein set forth; provided however, that if such
arrangements shall not have been completed within such 24-hour period, then:
(a) if the aggregate principal amount of Defaulted Securities
does not exceed 10% of the aggregate principal amount of Purchased
Securities, the nondefaulting Agents shall be obligated, severally and
not jointly, to purchase the full amount thereof in the proportions
that their respective initial obligations under this Terms Agreement
bear to the obligations of all nondefaulting Agents under this Terms
Agreement; or
(b) if the aggregate principal amount of Defaulted Securities
exceed 10% of the aggregate principal amount of Purchased Securities,
this Terms Agreement shall terminate without liability on the part of
any nondefaulting Agent.
No action taken pursuant to this paragraph above shall relieve any
defaulting Agent from liability in respect of its default. In the event of any
such default which does not result in a termination of this Terms Agreement,
either the nondefaulting Agents or the Company shall have the right to postpone
the Time of Delivery for a period not exceeding seven days in order to effect
any required changes in the Registration Statement or the Prospectus or in any
other documents or arrangements.]
Annex I-2
If the foregoing is in accordance with your understanding, please sign
and return to us two counterparts hereof, and upon acceptance hereof by you this
letter and such acceptance hereof, including those provisions of the
Distribution Agreement incorporated herein by reference, shall constitute a
binding agreement between you and the Company.
3M Company
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
Accepted in New York, New York,
as of the date hereof:
Merrill Lynch, Pierce, Fenner & Smith
- ----------------------------------- Incorporated
(Goldman, Sachs & Co.)
By:
---------------------------------
Citigroup Global Markets Inc. Its:
----------------------------
By: Morgan Stanley & Co. Incorporated
-------------------------------
Its:
-------------------------- By:
---------------------------------
J.P. Morgan Securities Inc. Its:
----------------------------
By: UBS Securities LLC
-------------------------------
Its:
-------------------------- By:
---------------------------------
Its:
----------------------------
Annex I-3
Schedule to Annex I
TITLE OF PURCHASED SECURITIES:
[____ %] Medium-Term Notes, Series C
AGGREGATE PRINCIPAL AMOUNT:
[$____ or units of other Specified Currency]
[Price to Public:]
PURCHASE PRICE by [Goldman, Sachs & Co., Citigroup Global Markets Inc., J.P.
Morgan Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Morgan Stanley & Co. Incorporated, UBS Securities LLC]:
__% of the principal amount of the Purchased Securities [, plus accrued interest
from _________ to _________] [and accrued amortization, if any, from _________
to __________]
METHOD OF AND SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE:
[By Certified or official bank check or checks, payable to the order of
the Company, in [[New York] Clearing House] [immediately available] funds]
[By wire transfer to a bank account specified by the Company in [next
day] [immediately available] funds]
INDENTURE:
Indenture, dated as of November 17, 2000, between the Company and
Citibank, N.A., Trustee
TIME OF DELIVERY:
CLOSING LOCATION:
MATURITY:
INTEREST RATE:
[____%]
INTEREST PAYMENT DATES:
[months and dates]
DOCUMENTS TO BE DELIVERED.
The following documents referred to in the Distribution Agreement shall
be delivered as a condition to the Closing:
Annex I-4
[(l) The opinion or opinions of counsel to the Agents referred to
in Section 4(h).]
[(2) The opinion of counsel to the Company referred to in Section
4(i).]
[(3) The accountants' letter referred to in Section 4(j).]
[(4) The officers' certificate referred to in Section 4(k).]
OTHER PROVISIONS (INCLUDING SYNDICATE PROVISIONS, IF APPLICABLE):
APPLICABILITY OF ADMINISTRATIVE PROCEDURE:
Annex I-5
ANNEX II
3M COMPANY
ADMINISTRATIVE PROCEDURE
This Administrative Procedure relates to the Securities defined in the
Distribution Agreement, dated December 12, 2003 (the "Distribution Agreement"),
between 3M Company (the "Company") and Goldman, Sachs & Co., Citigroup Global
Markets Inc., J.P. Morgan Securities Inc., Merrill Lynch, Pierce, Fenner and
Smith Incorporated, Morgan Stanley & Co. Incorporated and UBS Securities LLC
(together, the "Agents"), to which this Administrative Procedure is attached as
Annex II. Defined terms used herein and not defined herein shall have the
meanings given such terms in the Distribution Agreement, the Prospectus as
amended or supplemented or the Indenture.
The procedures to be followed with respect to the settlement of sales
of Securities directly by the Company to purchasers solicited by an Agent, as
agent, are set forth below. The terms and settlement details related to a
purchase of Securities by an Agent, as principal, from the Company will be set
forth in a Terms Agreement pursuant to the Distribution Agreement, unless the
Company and such Agent otherwise agree as provided in Section 2(b) of the
Distribution Agreement, in which case the procedures to be followed in respect
of the settlement of such sale will be as set forth below. An Agent, in relation
to a purchase of a Security by a purchaser solicited by such Agent, is referred
to herein as the "Selling Agent" and, in relation to a purchase of a Security by
such Agent as principal other than pursuant to a Terms Agreement, as the
"Purchasing Agent".
The Company will advise each Agent in writing of those persons with
whom such Agent is to communicate regarding offers to purchase Securities and
the related settlement details.
Each Security will be issued only in fully registered form and will be
represented by either a global security (a "Global Security") delivered to the
Trustee, as agent for The Depository Trust Company (the "Depositary") and
recorded in the book-entry system maintained by the Depositary (a "Book-Entry
Security") or a certificate issued in definitive form (a "Certificated
Security") delivered to a person designated by an Agent, as set forth in the
applicable Pricing Supplement. An owner of a Book-Entry Security will not be
entitled to receive a certificate representing such a Security, except as
provided in the Indenture.
Book-Entry Securities will be issued in accordance with the
Administrative Procedure set forth in Part I hereof, and Certificated Securities
will be issued in accordance with the Administrative Procedure set forth in Part
II hereof.
PART I: ADMINISTRATIVE PROCEDURE FOR BOOK-ENTRY SECURITIES
In connection with the qualification of the Book-Entry Securities for
eligibility in the book-entry system maintained by the Depositary, the Trustee
will perform the custodial, document control and administrative functions
described below, in accordance with its respective obligations under a Letter of
Representation from the Company and the Trustee to the Depositary, dated the
date hereof, and a Medium-Term Note Certificate Agreement between the
Annex II-1
Trustee and the Depositary, dated as of October 31, 1988 (as amended from time
to time, the "Certificate Agreement"), and its obligations as a participant in
the Depositary, including the Depositary's Same-Day Funds Settlement System
("SDFS").
POSTING RATES BY THE COMPANY:
The Company and the Agents will discuss from time to time the rates of
interest per annum to be borne by and the maturity of Book-Entry Securities that
may be sold as a result of the solicitation of offers by an Agent. The Company
may establish a fixed set of interest rates and maturities for an offering
period ("posting"). If the Company decides to change already posted rates, it
will promptly advise the Agents to suspend solicitation of offers until the new
posted rates have been established with the Agents.
ACCEPTANCE OF OFFERS BY THE COMPANY:
Each Agent will promptly advise the Company by telephone or other
appropriate means of all reasonable offers to purchase Book-Entry Securities,
other than those rejected by such Agent. Each Agent may, in its discretion
reasonably exercised, reject any offer received by it in whole or in part. Each
Agent also may make offers to the Company to purchase Book-Entry Securities as a
Purchasing Agent. The Company will have the sole right to accept offers to
purchase Book-Entry Securities and may reject any such offer in whole or in
part.
The Company will promptly notify the Agent or Purchasing Agent, as the
case may be, of its acceptance or rejection of an offer to purchase Book-Entry
Securities. If the Company accepts an offer to purchase Book-Entry Securities,
it will confirm such acceptance in writing to the Selling Agent or Purchasing
Agent, as the case may be, and the Trustee.
COMMUNICATION OF SALE INFORMATION TO THE COMPANY BY AGENT AND SETTLEMENT
PROCEDURES:
A. After the acceptance of an offer by the Company, the Selling Agent
or Purchasing Agent, as the case may be, will communicate promptly, but in no
event later than the time set forth under "Settlement Procedure Timetable"
below, the following details of the terms of such offer (the "Sale Information")
to the Company by telephone (confirmed in writing) or by facsimile transmission
or other acceptable written means:
(1) Principal Amount of Book-Entry Securities to be purchased;
(2) If a Fixed Rate Book-Entry Security, the interest rate and
initial interest payment date;
(3) Trade Date;
(4) Settlement Date;
(5) Maturity Date;
Annex II-2
(6) Specified Currency and, if the Specified Currency is other
than U.S. dollars, the applicable Exchange Rate for such
Specified Currency (it being understood that currently the
Depositary accepts deposits of Global Securities denominated
in U.S. dollars only);
(7) Indexed Currency, the Base Rate and the Exchange Rate
Determination Date, if applicable;
(8) Issue Price;
(9) Selling Agent's commission or Purchasing Agent's discount, as
the case may be;
(10) Net Proceeds to the Company;
(11) If a redeemable Book-Entry Security, such of the following as
are applicable:
(i) Redemption Commencement Date,
(ii) Initial Redemption Price (% of par), and
(iii) Amount (% of par) that the Redemption Price shall
decline (but not below par) on each anniversary of
the Redemption Commencement Date;
(12) If a Floating Rate Book-Entry Security, such of the following
as are applicable:
(i) Interest Rate Basis,
(ii) Index Maturity,
(iii) Spread or Spread Multiplier,
(iv) Maximum Rate,
(v) Minimum Rate,
(vi) Initial Interest Rate,
(vii) Interest Reset Dates,
(viii) Calculation Dates,
(ix) Interest Determination Dates,
(x) Interest Payment Dates,
(xi) Regular Record Dates, and
(xii) Calculation Agent;
(13) Denomination of certificates to be delivered at settlement;
(14) Selling Agent or Purchasing Agent; and
(15) Any other terms.
B. After receiving the Sale Information from the Selling Agent or
Purchasing Agent, as the case may be, the Company will communicate such Sale
Information to the Trustee by facsimile transmission or other acceptable written
means. The Trustee will assign a CUSIP number to the Global Security from a list
of CUSIP numbers previously delivered to the Trustee
Annex II-3
by the Company representing such Book-Entry Security and then advise the Company
and the Selling Agent or Purchasing Agent, as the case may be, of such CUSIP
number.
C. The Trustee will enter a pending deposit message through the
Depositary's Participant Terminal System, providing the following settlement
information to the Depositary, and the Depositary shall forward such information
to such Agent and Standard & Poor's Corporation:
(1) The applicable Sale Information;
(2) CUSIP number of the Global Security representing such
Book-Entry Security;
(3) Whether such Global Security will represent any other
Book-Entry Security (to the extent known at such time);
(4) Number of the participant account maintained by the Depositary
on behalf of the Selling Agent or Purchasing Agent, as the
case may be;
(5) The interest payment period; and
(6) Initial Interest Payment Date for such Book-Entry Security,
number of days by which such date succeeds the record date for
the Depositary's purposes (which in the case of Floating Rate
Securities which reset weekly shall be the date five calendar
days immediately preceding the applicable Interest Payment
Date and in the case of all other Book-Entry Securities shall
be the Regular Record Date, as defined in the Security) and,
if calculable at that time, the amount of interest payable on
such Interest Payment Date.
D. The Trustee will complete and authenticate the Global Security
previously delivered by the Company representing such Book-Entry Security.
E. The Depositary will credit such Book-Entry Security to the Trustee's
participant account at the Depositary.
F. The Trustee will enter an SDFS deliver order through the
Depositary's Participant Terminal System instructing the Depositary to (i) debit
such Book-Entry Security to the Trustee's participant account and credit such
Book-Entry Security to such Agent's participant account and (ii) debit such
Agent's settlement account and credit the Trustee's settlement account for an
amount equal to the price of such Book-Entry Security less such Agent's
commission. The entry of such a deliver order shall constitute a representation
and warranty by the Trustee to the Depositary that (a) the Global Security
representing such Book-Entry Security has been issued and authenticated and (b)
the Trustee is holding such Global Security pursuant to the Certificate
Agreement.
G. Such Agent will enter an SDFS deliver order through the Depositary's
Participant Terminal System instructing the Depositary (i) to debit such
Book-Entry Security to such Agent's participant account and credit such
Book-Entry Security to the participant accounts of the Participants with respect
to such Book-Entry Security and (ii) to debit the settlement accounts
Annex II-4
of such Participants and credit the settlement account of such Agent for an
amount equal to the price of such Book-Entry Security.
H. Transfers of funds in accordance with SDFS deliver orders described
in Settlement Procedures "F" and "G" will be settled in accordance with SDFS
operating procedures in effect on the settlement date.
I. Upon confirmation of receipt of funds, the Trustee will transfer to
the account of the Company maintained at Citibank, N.A., New York, or such other
account as the Company may have previously specified to the Trustee, in funds
available for immediate use in the amount transferred to the Trustee in
accordance with Settlement Procedure "F".
J. Upon request, the Trustee will send to the Company a statement
setting forth the principal amount of Book-Entry Securities outstanding as of
that date under the Indenture.
K. Such Agent will confirm the purchase of such Book-Entry Security to
the purchaser either by transmitting to the Participants with respect to such
Book-Entry Security a confirmation order or orders through the Depositary's
institutional delivery system or by mailing a written confirmation to such
purchaser.
L. The Depositary will, at any time, upon request of the Company or the
Trustee, promptly furnish to the Company or the Trustee a list of the names and
addresses of the participants for whom the Depositary has credited Book-Entry
Securities.
PREPARATION OF PRICING SUPPLEMENT:
If the Company accepts an offer to purchase a Book-Entry Security, it
will prepare a Pricing Supplement reflecting the terms of such Book-Entry
Security and arrange to have delivered to the Selling Agent or Purchasing Agent,
as the case may be, at least ten copies of such Pricing Supplement, not later
than 5:00 p.m., New York City time, on the Business Day following the Trade Date
(as defined below), or if the Company and the purchaser agree to settlement on
the Business Day following the date of acceptance of such offer, not later than
noon, New York City time, on such date. With the consent of the Selling Agent or
Purchasing Agent, as the case may be, delivery of the Pricing Supplement may be
in electronic form. The Company will arrange to have the Pricing Supplement
filed with the Commission not later than the close of business of the Commission
within the applicable time period prescribed for such filing by the rules and
regulations under the Act.
Copies of Pricing Supplements shall be sent to:
if Goldman, Sachs & Co. is the Selling Agent or Purchasing Agent:
Goldman, Sachs & Co.
85 Broad Street
Concourse Level
New York, New York 10004
Telephone: (212) 357-9471
Annex II-5
Facsimile: (212) 902-9316
Email: jose.echevarria@gs.com
if Citigroup Global Markets Inc. is the Selling Agent or Purchasing Agent:
Citigroup Global Markets Inc.
Attn: Annabelle Avila
Brooklyn Army Terminal
140 58th Street, 8th Floor
Brooklyn, NY 11220
Phone: (718) 765-6725
Fax: (718) 765-6734
Email: andrea.springer@citigroup.com
if J.P. Morgan Securities Inc. is the Selling Agent or Purchasing Agent:
J.P. Morgan Securities Inc.
270 Park Avenue, 7th Floor
New York, New York 10017
Attn: Medium Term Note Desk
Telephone: (212) 834-4421
Facsimile: (212) 834-6081
Copy to:
J.P. Morgan Securities Inc.
270 Park Avenue, 8th Floor
New York, New York 10017
Attn: Transaction Execution Group
Email: joseph.demma@jpmorgan.com
joy.dunphy@jpmorgan.com
carl.mehldau@jpmorgan.com
Prospectus-FI@jpmchase.com
if Merrill Lynch, Pierce, Fenner & Smith Incorporated
is the Selling Agent or Purchasing 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: mtnsuppl@na2.us.ml.com
with a copy to:
Annex II-6
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
4 World Financial Center, 15th Floor
New York, New York 10080
Attn: Global Transaction Management Group
Telephone: (212) 449-7476
Facsimile: (212) 449-2234
if Morgan Stanley & Co. Incorporated is the Selling Agent or Purchasing Agent:
Morgan Stanley & Co. Incorporated
1585 Broadway, 2nd Floor
New York, New York 10036
Attn: Medium Term Note Trading Desk
Telephone: (212) 761-1248
Facsimile: (212) 761-0780
Email: tom.lewis@morganstanley.com
if UBS Securities LLC is the Selling Agent or Purchasing Agent:
John Doherty
UBS Securities LLC
Debt Capital Markets
677 Washington Boulevard, 6th Floor
Stamford, Connecticut 06901
Telephone: (203) 719-8241
Facsimile: (203) 719-7139
Email: john.doherty@ubs.com
DELIVERY OF CONFIRMATION AND PROSPECTUS TO PURCHASER BY SELLING AGENT:
The Selling Agent will deliver to the purchaser of a Book-Entry
Security a written confirmation of the sale and delivery and payment
instructions. In addition, the Selling Agent will deliver to such purchaser or
its agent the Prospectus as amended or supplemented (including the Pricing
Supplement) in relation to such Book-Entry Security prior to or together with
the earlier of the delivery to such purchaser or its agent of (a) the
confirmation of sale or (b) the Book-Entry Security.
DATE OF SETTLEMENT:
The receipt by the Company of immediately available funds in payment
for a Book-Entry Security and the authentication and issuance of the Global
Security representing such Book-Entry Security shall constitute "settlement"
with respect to such Book-Entry Security. All orders of Book-Entry Securities
solicited by a Selling Agent or made by a Purchasing Agent and accepted by the
Company on a particular date (the "Trade Date") will be settled on a date (the
"Settlement Date") which is the third Business Day after the Trade Date pursuant
to the
Annex II-7
"Settlement Procedure Timetable" set forth below, unless the Company and the
purchaser agree to settlement on another Business Day which shall be no earlier
than the next Business Day after the Trade Date.
SETTLEMENT PROCEDURE TIMETABLE:
For orders of Book-Entry Securities solicited by a Selling Agent and
accepted by the Company for settlement on the third Business Day after the Trade
Date, Settlement Procedures "A" through "I" 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 5:00 p.m. on the Trade Date
B 12:00 noon on the second Business Day immediately
preceding the Settlement Date
C 2:00 p.m. on the second Business Day immediately
preceding the Settlement Date
D 9:00 a.m. on the Settlement Date
E 10:00 a.m. on the Settlement Date
F-G 2:00 p.m. on the Settlement Date
H 4:45 p.m. on the Settlement Date
I 5:00 p.m. on the Settlement Date
If the initial interest rate for a Floating Rate Book-Entry Security
has not been determined at the time that Settlement Procedure "A" is completed,
Settlement Procedures "B" and "C" shall be completed as soon as such rate has
been determined but no later than 2:00 p.m. on the second Business Day
immediately preceding the Settlement Date. Settlement Procedure "H" is subject
to extension in accordance with any extension of Fedwire closing deadlines and
in the other events specified in the SDFS operating procedures in effect on the
Settlement Date.
If settlement of a Book-Entry Security is rescheduled or canceled, the
Trustee, upon obtaining knowledge thereof, will deliver to the Depositary,
through the Depositary's Participation Terminal System, a cancellation message
to such effect by no later than 2:00 p.m. on the Business Day immediately
preceding the scheduled Settlement Date.
FAILURE TO SETTLE:
If the Trustee fails to enter an SDFS deliver order with respect to a
Book-Entry Security pursuant to Settlement Procedure "F", the Trustee may
deliver to the Depositary, through the Depositary's Participant Terminal System,
as soon as practicable a withdrawal message instructing the Depositary to debit
such Book-Entry Security to the Trustee's participant account, provided that the
Trustee's participant account contains a principal amount of the Global Security
representing such Book-Entry Security that is at least equal to the principal
amount to be debited. If a withdrawal message is processed with respect to all
the Book-Entry Securities represented by a Global Security, the Trustee will
mark such Global Security "canceled", make appropriate entries in the Trustee's
records and send such canceled Global Security to the Company. The CUSIP number
assigned to such Global Security shall, in accordance with CUSIP
Annex II-8
Service Bureau procedures, be canceled and not immediately reassigned. If a
withdrawal message is processed with respect to one or more, but not all, of the
Book-Entry Securities represented by a Global Security, the Trustee will
exchange such Global Security for two Global Securities, one of which shall
represent such Book-Entry Security or Securities and shall be canceled
immediately after issuance and the other of which shall represent the remaining
Book-Entry Securities previously represented by the surrendered Global Security
and shall bear the CUSIP number of the surrendered Global Security.
If the purchase price for any Book-Entry Security is not timely paid to
the participants with respect to such Book-Entry Security by the beneficial
purchaser thereof (or a person, including an indirect participant in the
Depositary, acting on behalf of such purchaser), such participants and, in turn,
the Agent for such Book-Entry Security may enter deliver orders through the
Depositary's Participant Terminal System debiting such Book-Entry Security to
such participant's account and crediting such Book-Entry Security to such
Agent's account and then debiting such Book-Entry Security to such Agent's
participant account and crediting such Book-Entry Security to the Trustee's
participant account and shall notify the Company and the Trustee thereof.
Thereafter, the Trustee will (i) immediately notify the Company of such order
and the Company shall transfer to such Agent funds available for immediate use
in an amount equal to the price of such Book-Entry Security which was credited
to the account of the Company maintained at the Trustee in accordance with
Settlement Procedure I, and (ii) deliver the withdrawal message and take the
related actions described in the preceding paragraph. If such failure shall have
occurred for any reason other than default by the applicable Agent to perform
its obligations hereunder or under the Distribution Agreement, the Company will
reimburse such Agent on an equitable basis for the loss of its use of funds
during the period when the funds were credited to the account of the Company.
Notwithstanding the foregoing, upon any failure to settle with respect
to a Book-Entry Security, the Depositary may take any actions in accordance with
its SDFS operating procedures then in effect. In the event of a failure to
settle with respect to one or more, but not all, of the Book-Entry Securities to
have been represented by a Global Security, the Trustee will provide, in
accordance with Settlement Procedure "D", for the authentication and issuance of
a Global Security representing the other Book-Entry Securities to have been
represented by such Global Security and will make appropriate entries in its
records. The Company will, from time to time, furnish the Trustee with a
sufficient quantity of Securities.
PART II: ADMINISTRATIVE PROCEDURE FOR CERTIFICATED SECURITIES POSTING RATES BY
COMPANY:
The Company and the Agents will discuss from time to time the rates of
interest per annum to be borne by and the maturity of Certificated Securities
that may be sold as a result of the solicitation of offers by an Agent. The
Company may establish a fixed set of interest rates and maturities for an
offering period ("posting"). If the Company decides to change already posted
rates, it will promptly advise the Agents to suspend solicitation of offers
until the new posted rates have been established with the Agents.
Annex II-9
ACCEPTANCE OF OFFERS BY COMPANY:
Each Agent will promptly advise the Company by telephone or other
appropriate means of all reasonable offers to purchase Certificated Securities,
other than those rejected by such Agent. Each Agent may, in its discretion
reasonably exercised, reject any offer received by it in whole or in part. Each
Agent also may make offers to the Company to purchase Certificated Securities as
a Purchasing Agent. The Company will have the sole right to accept offers to
purchase Certificated Securities and may reject any such offer in whole or in
part.
The Company will promptly notify the Selling Agent or Purchasing Agent,
as the case may be, of its acceptance or rejection of an offer to purchase
Certificated Securities. If the Company accepts an offer to purchase
Certificated Securities, it will confirm such acceptance in writing to the
Selling Agent or Purchasing Agent, as the case may be, and the Trustee.
COMMUNICATION OF SALE INFORMATION TO COMPANY BY AGENT:
After the acceptance of an offer by the Company, the Selling Agent or
Purchasing Agent, as the case may be, will communicate the following details of
the terms of such offer (the "Sale Information") to the Company by telephone
(confirmed in writing) or by facsimile transmission or other acceptable written
means:
(1) Principal Amount of Certificated Securities to be purchased;
(2) If a Fixed Rate Certificated Security, the interest rate and
initial interest payment date;
(3) Trade Date;
(4) Settlement Date;
(5) Maturity Date;
(6) Specified Currency and, if the Specified Currency is other
than U.S. dollars, the applicable Exchange Rate for such
Specified Currency;
(7) Indexed Currency, the Base Rate and the Exchange Rate
Determination Date, if applicable;
(8) Issue Price;
(9) Selling Agent's commission or Purchasing Agent's discount, as
the case may be;
(10) Net Proceeds to the Company;
(11) If a redeemable Certificated Security, such of the following
as are applicable:
(i) Redemption Commencement Date,
(ii) Initial Redemption Price (% of par), and
Annex II-10
(iii) Amount (% of par) that the Redemption Price shall
decline (but not below par) on each anniversary of
the Redemption Commencement Date;
(12) If a Floating Rate Certificated Security, such of the
following as are applicable:
(i) Interest Rate Basis,
(ii) Index Maturity,
(iii) Spread or Spread Multiplier,
(iv) Maximum Rate,
(v) Minimum Rate,
(vi) Initial Interest Rate,
(vii) Interest Reset Dates,
(viii) Calculation Dates,
(ix) Interest Determination Dates,
(x) Interest Payment Dates,
(xi) Regular Record Dates, and
(xii) Calculation Agent;
(13) Name, address and taxpayer identification number of the
registered owner(s);
(14) Denomination of certificates to be delivered at settlement;
(15) Selling Agent or Purchasing Agent; and
(16) Any other terms.
PREPARATION OF PRICING SUPPLEMENT BY COMPANY:
If the Company accepts an offer to purchase a Certificated Security, it
will prepare a Pricing Supplement reflecting the terms of such Certificated
Security and arrange to have delivered to the Selling Agent or Purchasing Agent,
as the case may be, at least ten copies of such Pricing Supplement, not later
than 5:00 p.m., New York City time, on the Business Day following the Trade
Date, or if the Company and the purchaser agree to settlement on the date of
acceptance of such offer, not later than noon, New York City time, on such date.
With the consent of the Selling Agent or Purchasing Agent, as the case may be,
delivery of the Pricing Supplement may be in electronic form. The Company will
arrange to have the Pricing Supplement filed with the Commission within the
applicable time period prescribed for such filing by the rules and regulations
of the Commission.
Annex II-11
Copies of Pricing Supplements shall be sent to:
if Goldman, Sachs & Co. is the Selling Agent or Purchasing Agent:
Goldman, Sachs & Co.
85 Broad Street
Concourse Level
New York, New York 10004
Telephone: (212) 357-9471
Facsimile: (212) 902-9316
Email: jose.echevarria@gs.com
if Citigroup Global Markets Inc. is the Selling Agent or Purchasing Agent:
Citigroup Global Markets Inc.
Attn: Annabelle Avila
Brooklyn Army Terminal
140 58th Street, 8th Floor
Brooklyn, NY 11220
Phone: (718) 765-6725
Fax: (718) 765-6734
Email: andrea.springer@citigroup.com
if J.P. Morgan Securities Inc. is the Selling Agent or Purchasing Agent:
J.P. Morgan Securities Inc.
270 Park Avenue, 7th Floor
New York, New York 10017
Attn: Medium Term Note Desk
Telephone: (212) 834-4421
Facsimile: (212) 834-6081
Copy to:
J.P. Morgan Securities Inc.
270 Park Avenue, 8th Floor
New York, New York 10017
Attn: Transaction Execution Group
Email: joseph.demma@jpmorgan.com
joy.dunphy@jpmorgan.com
carl.mehldau@jpmorgan.com
Prospectus-FI@jpmchase.com
Annex II-12
if Merrill Lynch, Pierce, Fenner & Smith Incorporated
is the Selling Agent or Purchasing 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: mtnsuppl@na2.us.ml.com
with a copy to:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
4 World Financial Center, 15th Floor
New York, New York 10080
Attn: Global Transaction Management Group
Telephone: (212) 449-7476
Facsimile: (212) 449-2234
if Morgan Stanley & Co. Incorporated is the Selling Agent or Purchasing Agent:
Morgan Stanley & Co. Incorporated
1585 Broadway, 2nd Floor
New York, New York 10036
Attn: Medium Term Note Trading Desk
Telephone: (212) 761-1248
Facsimile: (212) 761-0780
Email: tom.lewis@morganstanley.com
if UBS Securities LLC is the Selling Agent or Purchasing Agent:
John Doherty
UBS Securities LLC
Debt Capital Markets
677 Washington Boulevard, 6th Floor
Stamford, Connecticut 06901
Telephone: (203) 719-8241
Facsimile: (203) 719-7139
Email: john.doherty@ubs.com
Annex II-13
DELIVERY OF CONFIRMATION AND PROSPECTUS TO PURCHASER BY SELLING AGENT:
The Selling Agent will deliver to the purchaser of a Certificated
Security a written confirmation of the sale and delivery and payment
instructions. In addition, the Selling Agent will deliver to such purchaser or
its agent the Prospectus as amended or supplemented (including the Pricing
Supplement) in relation to such Certificated Security prior to or together with
the earlier of the delivery to such purchaser or its agent of (a) the
confirmation of sale or (b) the Certificated Security.
DATE OF SETTLEMENT:
All offers of Certificated Securities solicited by a Selling Agent or
made by a Purchasing Agent and accepted by the Company will be settled on a date
(the "Settlement Date") which is the third Business Day after the date of
acceptance of such offer, unless the Company and the purchaser agree to
settlement (a) on another Business Day after the acceptance of such offer or (b)
with respect to an offer accepted by the Company prior to 10:00 a.m., New York
City time, on the date of such acceptance.
INSTRUCTION FROM COMPANY TO TRUSTEE FOR PREPARATION OF CERTIFICATED SECURITIES:
After receiving the Sale Information from the Selling Agent or
Purchasing Agent, as the case may be, the Company will communicate such Sale
Information to the Trustee by telephone (confirmed in writing) or by facsimile
transmission or other acceptable written means.
The Company will instruct the Trustee by facsimile transmission or
other acceptable written means to authenticate and deliver the Certificated
Securities no later than 2:15 p.m., New York City time, on the Settlement Date.
Such instruction will be given by the Company prior to 3:00 p.m., New York City
time, on the Business Day immediately preceding the Settlement Date unless the
Settlement Date is the date of acceptance by the Company of the offer to
purchase Certificated Securities in which case such instruction will be given by
the Company by 11:00 a.m., New York City time.
PREPARATION AND DELIVERY OF CERTIFICATED SECURITIES BY TRUSTEE AND RECEIPT OF
PAYMENT THEREFOR:
The Trustee will prepare each Certificated Security and appropriate
receipts that will serve as the documentary control of the transaction.
In the case of a sale of Certificated Securities to a purchaser
solicited by a Selling Agent, the Trustee will, by 2:15 p.m., New York City
time, on the Settlement Date, deliver the Certificated Securities to the Selling
Agent for the benefit of the purchaser of such Certificated Securities against
delivery by the Selling Agent of a receipt therefor. On the Settlement Date the
Selling Agent will deliver payment for such Certificated Securities in
immediately available funds to the Company in an amount equal to the issue price
of the Certificated Securities less the Selling Agent's commission; provided
that the Selling Agent reserves the right to withhold
Annex II-14
payment for which it has not received funds from the purchaser. The Company
shall not use any proceeds advanced by a Selling Agent to acquire securities.
In the case of a sale of Certificated Securities to a Purchasing Agent,
the Trustee will, by 2:15 p.m., New York City time, on the Settlement Date,
deliver the Certificated Securities to the Purchasing Agent against delivery of
payment for such Certificated Securities in immediately available funds to the
Company in an amount equal to the issue price of the Certificated Securities
less the Purchasing Agent's discount.
FAILURE OF PURCHASER TO PAY SELLING AGENT:
If a purchaser (other than a Purchasing Agent) fails to make payment to
the Selling Agent for a Certificated Security, the Selling Agent will promptly
notify the Trustee and the Company thereof by telephone (confirmed in writing)
or by facsimile transmission or other acceptable written means. The Selling
Agent will immediately return the Certificated Security to the Trustee.
Immediately upon receipt of such Certificated Security by the Trustee, the
Company will return to the Selling Agent an amount equal to the amount
previously paid to the Company in respect of such Certificated Security. The
Company will reimburse the Selling Agent on an equitable basis for its loss of
the use of funds during the period when they were credited to the account of the
Company.
The Trustee will cancel the Certificated Security in respect of which
the failure occurred, make appropriate entries in its records and, unless
otherwise instructed by the Company, destroy the Certificated Security.
Annex II-15
ANNEX III
ACCOUNTANTS' LETTER
Pursuant to Section 4(j) and Section 6(d), as the case may be, of the
Distribution Agreement, the Company's independent certified public accountants
shall furnish letters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules audited (and, if
applicable, financial forecasts and/or pro forma financial information)
by them and included or incorporated by reference in the Registration
Statement or the Prospectus comply as to form in all material respects
with the applicable accounting requirements of the Act or the Exchange
Act, as applicable, and the related published rules and regulations
thereunder; and, if applicable, they have made a review in accordance
with standards established by the American Institute of Certified
Public Accountants of the unaudited condensed consolidated interim
financial statements, selected financial data, pro forma financial
information, financial forecasts and/or condensed financial statement
derived from audited financial statements of the Company for the
periods specified in such letter, as indicated in their reports
thereon, copies of which have been furnished to the Agents;
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited condensed consolidated interim statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus and/or included in the Company's quarterly
report on Form 10-Q incorporated by reference into the Prospectus as
indicated in their reports thereon copies of which have been separately
furnished to the Agents; and on the basis of specified procedures
including inquiries of officials of the Company who have responsibility
for financial and accounting matters regarding whether the unaudited
condensed consolidated interim financial statements referred to in
paragraph (vi)(A)(i) below comply as to form in all material respects
with the applicable accounting requirements of the Act and the Exchange
Act and the related published rules and regulations, nothing came to
their attention that caused them to believe that the unaudited
condensed consolidated interim financial statements do not comply as to
form in all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the related published
rules and regulations;
(iv) The unaudited selected financial information with respect
to the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the
Prospectus and included or incorporated by reference in Item 6 of the
Company's Annual Report on Form 10-K for the most recent fiscal year
agrees with the corresponding amounts (after restatement and
reclassification where applicable) in the audited consolidated
financial statements for the five such fiscal years
Annex III-1
which were included or incorporated by reference in the Company's
Annual Reports on Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K
and on the basis of limited procedures specified in such letter nothing
came to their attention as a result of the foregoing procedures that
caused them to believe that this information does not conform in all
material respects with the disclosure requirements of Items 301, 302,
402 and 503(d), respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with auditing standards generally accepted in
the United States of America, consisting of a reading of the unaudited
financial statements and other information referred to below, a reading
of the latest available interim financial statements of the Company and
its subsidiaries, inspection of the minute books of the Company and its
subsidiaries since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus, inquiries of
officials of the Company and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures as may
be specified in such letter, nothing came to their attention that
caused them to believe that:
(A) (i) the unaudited condensed consolidated interim
statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the
Prospectus and/or included or incorporated by reference in the
Company's Quarterly Reports on Form 10-Q incorporated by
reference in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements
of the Exchange Act as it applies to Form 10-Q and the related
published rules and regulations thereunder or (ii) any
material modifications should be made to the unaudited
condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of changes in cash
flows included in the Prospectus or included in the Company's
Quarterly Reports on Form 10-Q incorporated by reference in
the Prospectus for them to be in conformity with generally
accepted accounting principles;
(B) any other unaudited income statement data and
balance sheet items included in the Prospectus do not agree
with the corresponding items in the unaudited consolidated
financial statements from which such data and items were
derived, and any such unaudited data and items were not
determined on a basis substantially consistent with the basis
for the corresponding amounts in the audited consolidated
financial statements included or incorporated by reference in
the Company's Annual Report on Form 10-K for the most recent
fiscal year;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived the
unaudited condensed
Annex III-2
consolidated interim financial statements referred to in
Clause (A) and any unaudited income statement data and balance
sheet items included in the Prospectus and referred to in
Clause (B) were not determined on a basis substantially
consistent with the basis for the audited financial statements
included or incorporated by reference in the Company's Annual
Report on Form 10-K for the most recent fiscal year;
(D) any unaudited pro forma consolidated condensed
financial statements included or incorporated by reference in
the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the
Act and the published rules and regulations thereunder or the
pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements;
(E) as of a specified date not more than five days
prior to the date of such letter, there have been any changes
in the consolidated capital stock (other than issuances of
capital stock upon exercise of options outstanding on the date
of the latest balance sheet included or incorporated by
reference in the Prospectus and purchase by the Company under
its program of repurchasing its common stock) or any increases
in consolidated long-term debt of the Company, or any
decreases in consolidated net current assets or stockholders'
equity or other items specified by the Agents, or any
increases in any items specified by the Agents, in each case
as compared with amounts shown in the latest balance sheet
included or incorporated by reference in the Prospectus,
except in each case for changes, increases or decreases which
the Prospectus discloses have occurred or may occur or which
are described in such letter; and
(F) for the period from the date of the latest
financial statements included or incorporated by reference in
the Prospectus to the specified date referred to in Clause (E)
there were any decreases in consolidated net revenues or
consolidated net income or other items specified by the
Agents, or any increases in any items specified by the Agents,
in each case as compared with the comparable period of the
preceding year and with any other period of corresponding
length specified by the Agents, except in each case for
increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter;
and
(v) In addition to the audit referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (vi) above, they have carried out
certain specified procedures, not constituting an audit in accordance
with auditing standards generally accepted in the United States of
America, with respect to certain amounts, percentages and financial
information specified by the Agents which are derived from the general
accounting records of the Company and its
Annex III-3
subsidiaries, which appear in the Prospectus (excluding documents
incorporated by reference), or in Part II of, or in exhibits and
schedules to, the Registration Statement specified by the Agents or in
documents incorporated by reference in the Prospectus specified by the
Agents, and have compared certain of such amounts, percentages and
financial information with the accounting records of the Company and
its subsidiaries and have found them to be in agreement.
All references in this Annex III to the Prospectus shall be deemed to
refer to the Prospectus (including the documents incorporated by reference
therein) as defined in the Distribution Agreement as of the Commencement Date
referred to in Section 6(d) thereof and to the Prospectus as amended or
supplemented (including the documents incorporated by reference therein) as of
the date of the amendment, supplement, incorporation or the Time of Delivery
relating to the Terms Agreement requiring the delivery of such letter under
Section 4(j) thereof.
Annex III-4