EXHIBIT 1
AVERY DENNISON CORPORATION
U.S. $150,000,000
MEDIUM-TERM NOTES, SERIES D
DISTRIBUTION AGREEMENT
----------------------
December 16, 1996
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Dear Sirs:
Avery Dennison Corporation, 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 $150,000,000 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.
The Securities will be issued under an Indenture, dated as of March
15, 1991, between the Company and Security Pacific
National Bank, as trustee, as amended by the First Supplemental Indenture,
dated as of March 16, 1993 between the Company and BankAmerica National Trust
Company, which was acquired by First Trust of New York, National Association, as
successor trustee (the "Trustee"). The Indenture, as amended by the First
Supplemental Indenture, shall hereinafter be referred to as the "Indenture."
The Securities shall have the maturity ranges, interest rates, if any,
redemption provisions, if any, 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 thereof 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 in respect of $150,000,000
aggregate amount of debt securities of the Company, including 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 therein,
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, other than the prospectus and prospectus
supplement filed or to be filed with the Commission under Rule 424(b) of
the rules and regulations of the Commission under the Securities Act of
1933, as amended (the "Act"), and the Current Report on Form 8-K dated
concurrently herewith, has heretofore been filed or transmitted for filing
with the Commission; and no stop order suspending the effectiveness of such
registration statement has been issued and no proceeding for that purpose
has been initiated or threatened by the Commission (any preliminary
prospectus included in such registration statement or filed with the
Commission pursuant to Rule 424(a) under the Act being 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
2
contained in the registration statement, at the time such part of the
registration statement became effective, but excluding Form T-1 and, if
applicable, including the information contained in the form of final prospectus
filed with the Commission pursuant to Rule 424(b) under the Act, each as amended
at the time such part of the registration statement became effective, being
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 sold pursuant
to this Agreement, in the form filed 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);
(b) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with
3
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 required to be stated therein or necessary to make
the statements therein 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 required to be stated therein or necessary to make the statements
therein 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 the Securities;
(c) The Registration Statement and the Prospectus conform, and any
further amendments or supplements to the Registration Statement or the
Prospectus 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 the Registration Statement does not and will not, as of the effective
date of any part 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 the Prospectus does not and will not, as of the
applicable filing date of the Prospectus and any amendment or supplement
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, in light of the circumstances under which they were
made, not misleading; provided, however, that the representations and
warranties contained in this Section 1(c) shall not apply to any statements
or omissions made in
4
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 the Securities;
(d) 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 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, otherwise than as set forth or contemplated in the
Prospectus as amended or supplemented, which would individually or in the
aggregate have a material adverse effect on the business, management,
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries taken as a whole; and, since the respective
dates as of which information is given in the Registration Statement and
the Prospectus as amended or supplemented, there has not been any decrease
in the capital stock of the Company in excess of $20 million or any
increase in total debt of the Company and its subsidiaries of more than $50
million (excluding the issuance of any of the Securities) or any material
adverse change, or any development involving a prospective material adverse
change, in or affecting the business, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries taken as a whole, otherwise than as set forth or contemplated
in the Prospectus as amended or supplemented;
(e) 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
5
and authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus;
(f) 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;
(g) 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 and incorporated by reference, as the case may be, as an exhibit to
the Registration Statement, subject to the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or limiting the rights and remedies of
creditors generally and to the unavailability of specific performance,
injunctive relief or other equitable remedies; the Indenture has been duly
authorized and duly qualified under the Trust Indenture Act and constitutes
a valid and legally binding instrument, enforceable in accordance with its
terms, subject to the effect of bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to or
limiting the rights and remedies of creditors generally and to the
unavailability of specific performance, injunctive relief or other
equitable remedies; and the Indenture conforms and the Securities of any
particular issuance of Securities will conform to the descriptions thereof
contained in the Prospectus as amended or supplemented to relate to such
issuance of Securities;
(h) The issue and sale of the Securities, 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 or violation 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 to which the Company is a party or by which
the Company is
6
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 Bylaws 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
7
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, orders,
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;
(i) Other than as set forth in 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 on the financial position, stockholders' equity or
results of operations of the Company and its subsidiaries taken as a whole,
and, to the best of the Company's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others; and
(j) 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.
2. (a) On the basis of the representations and warranties, 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
efforts to solicit and receive offers to purchase the Securities from the
Company upon the terms and conditions set forth in the Prospectus
8
as amended or supplemented from time to time. So long as this Agreement shall
remain in effect with respect to any Agent, the Company shall not, without the
consent of 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 or more
except pursuant to this Agreement, any Terms Agreement, a private placement not
constituting a public offering under the Act, in connection with a firm
commitment underwriting pursuant to an
9
underwriting agreement that does not provide for a continuous offering of
medium-term debt securities or as otherwise provided in this Section 2(a).
However, 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.
In addition, after notice to the Agents, the Company may appoint one or more
additional agents to solicit and receive offers to purchase Securities from the
Company upon the terms and conditions set forth in the Prospectus as amended or
supplemented from time to time, provided that any such additional agent is made
a party to this Agreement or executes a distribution agreement substantially
identical to this 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 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
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.
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
10
equal to the following applicable percentage of the principal amount of such
Security sold:
11
Commission
(percentage of
aggregate
principal amount
Range of Maturities of Securities sold)
------------------- -------------------
From 9 months to less than 1 year .......... .125%
From 1 year to less than 18 months ......... .150%
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 to 30 years ....................... .750%
(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.
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
12
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
13
forth in a Terms Agreement or in accordance with the Administrative Procedure,
is referred to herein as a "Time of Delivery".
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 Latham & Watkins at 10:00 a.m., Los Angeles 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").
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)(3)
under the Act not later than the close of business of the Commission on the
fifth business day after the date on which such Pricing Supplement is first
used; (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 thereon; (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 same period to
advise such
14
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
15
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 may
reasonably 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 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
16
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 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
17
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 securityholders 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)) 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);
(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 earlier of (i) the termination of the
trading restrictions for the Securities purchased thereunder, as notified
to the
18
Company by such Agent and (ii) the related Time of Delivery, not to offer,
sell, contract to sell or otherwise dispose of any debt securities of the
Company which both mature more than 9 months after such Time of Delivery
and are substantially similar to the Securities without the prior written
consent of such Agent;
19
(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 O'Melveny & Myers 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
20
Agent a written opinion of Robert G. van Schoonenberg, General Counsel of
the Company, and of Latham & Watkins, counsel to 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 opinions of such counsel referred to in
21
Section 6(c) (1) and (2) hereof which were last furnished to such Agent to
the same extent as though they 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 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 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
22
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
23
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(1), 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, disbursements 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 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
24
Agent; (ii) the fees, disbursements and expenses of counsel for the Agents in
connection with any opinions to be rendered by such counsel hereunder and under
any Terms Agreement and the transactions contemplated hereunder and under any
Terms Agreement; (iii) the cost of printing, producing or reproducing this
Agreement, any Terms Agreement, any Indenture, any Blue Sky and Legal Investment
Memoranda and any other documents in connection with the offering, purchase,
sale and delivery of the
25
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 the 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 expenses 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 its 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 other
statements 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 such Solicitation Time
or at or prior to such Time of Delivery, as the case may be, the Prospectus
as amended or supplemented (including the Pricing Supplement) with respect
26
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
27
additional information on the part of the Commission shall have been
complied with to the reasonable satisfaction of such Agent;
(b) O'Melveny & Myers 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, this Agreement, the
validity of the Indenture, the Securities, the Registration 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) (1) Robert G. van Schoonenberg, General Counsel of the Company, or
other counsel for the Company satisfactory to such Agent, shall have
furnished to such Agent his 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) Each of the significant subsidiaries (as that term is defined
in Rule 12b-2 of the Exchange Act) of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the
28
laws of the jurisdiction of its incorporation, with corporate power
and authority to own its properties and conduct its business as
described in the Prospectus as amended or supplemented;
(ii) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any
of its subsidiaries is a
29
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 on the financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries taken as a whole; and to the best of such counsel's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(iii) The issue and sale of the Securities, the compliance by the
Company with all of the provisions of the Securities, the Indenture,
this Agreement and the applicable Terms Agreement and the consummation
of the transactions herein and therein contemplated will not conflict
with or result in a breach or violation 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 to
which the Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is
subject, 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 subsidiaries or any of its
properties, which breach or violation would individually or in the
aggregate have a material adverse effect on the financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries taken as a whole, nor will such action result in any
violation of the provisions of the Certificate of Incorporation, as
amended, of the Company or the Bylaws of the Company;
(iv) 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
30
Act and the Trust Indenture Act and such consents, approvals,
authorizations, orders, 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;
and
31
(v) Such counsel does not know of any amendment to the
Registration Statement required to be filed or any contracts or other
documents of a character 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;
(2) Latham & Watkins, counsel for the Company, or other counsel for
the Company satisfactory to such Agent, shall have furnished to such Agent
their 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 State
of Delaware, with corporate power and authority to own its properties
and conduct its business as described in the Prospectus as amended or
supplemented;
(ii) This Agreement and any applicable Terms Agreement have been
duly authorized, executed and delivered by the Company;
(iii) The Securities have been duly authorized and, when duly
executed, authenticated, issued and delivered by the Company, and paid
for as contemplated by this Agreement and any applicable Terms
Agreement, will constitute valid and legally binding obligations of
the Company entitled to the benefits provided by the Indenture,
subject to the effect of bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating
to or limiting the rights and remedies of creditors generally, the
unavailability of specific performance, injunctive relief or other
equitable remedies, the unavailability of strict enforcement in
California courts, the
32
limitation of certain rights, remedies and waivers by California laws,
and the possible limitation of damage awards to United States Dollars;
and the Indenture conforms and the Securities will conform in all
material respects to the descriptions thereof in the Prospectus as
amended or supplemented;
(iv) The Indenture has been duly authorized, executed and
delivered by the Company and, assuming the due authorization,
execution and delivery by the Trustee, constitutes a valid and legally
binding instrument, enforceable in accordance with its terms, subject
to the effect of bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to or limiting
the rights and remedies of creditors generally and to the
unavailability of specific performance, injunctive relief or other
equitable remedies; and the Indenture has been duly qualified under
the Trust Indenture Act;
(v) The issue and sale of the Securities, 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 result in
any violation of the provisions of the Certificate of Incorporation of
the Company, as amended, or the Bylaws of the Company;
(vi) The documents incorporated by reference in the Prospectus
(other than the financial statements, related schedules and other
financial or statistical data therein, as to which such counsel need
express no opinion), when they became effective or were filed with the
Commission, as the case may be, appeared on their face to comply 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
(vii) 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
33
statements, related schedules and other financial or statistical data
therein, as to which such counsel need express no opinion) appeared on
their face to 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;
Such counsel shall state that they have participated in conferences
with officers and other representatives of the Company at which the contents of
the Registration Statement and
34
Prospectus and related matters were discussed and, although such counsel may
state that they are not passing upon, and do not assume any responsibility for,
the accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus and have not made any independent
check or verification thereof, such counsel shall state that during the course
of such participation (relying in connection with questions of materiality, on
representations of factual matters of officers and other representatives of the
Company), nothing has come to their attention that caused them to believe that
the Registration Statement, at the time any part of it became effective,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or the Prospectus, as of its date and at the date of such
opinion, included 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; it being understood
that such counsel need express no belief with respect to the financial
statements, schedules and other financial or statistical data included in the
Registration Statement or the Prospectus or with respect to the Form T-1.
(d) Not later than 10:00 a.m., Los Angeles time, on the Commencement
Date and not later than 10:00 a.m., New York City time, 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;
(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,
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 decrease in the capital stock of the Company in excess of $20
million or any increase in the total debt of the Company and its
subsidiaries of more than $50 million (excluding the issuance of any of the
Securities) or any change, or any
35
development involving a prospective change, in or affecting the business,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, 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;
(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; (ii) a general moratorium on commercial banking
activities in New York declared by either Federal or New York State
authorities; (iii) the outbreak or escalation of hostilities involving the
United States or the declaration by the United States of a national
emergency or war if the effect of any such event specified in this clause
(iii) 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; (iv) 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 (v) 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 set forth in subsections (a) and (e) of this Section 6, and as to
such other matters as such Agent may reasonably request.
36
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 by it in connection with
investigating or defending any such action or claim as such expenses are
incurred; 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 amendment or supplement thereto,
in reliance upon and in conformity with written information furnished to the
Company by such Agent expressly for use therein; and provided, further, that the
Company shall not be liable to any Agent under the indemnity agreement in this
subsection (a) with respect to any Preliminary Prospectus to the extent that any
such loss, claim, damage or liability of such Agent results from the fact such
Agent sold, or acted as Agent, in the sale of, such Securities to a person to
whom there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the Prospectus (excluding any documents incorporated by
reference) or of the Prospectus as then amended or supplemented (excluding any
documents incorporated by reference) in any case where such delivery is required
by the Act if the Company has previously furnished copies thereof to such Agent
and the loss, claim, damage or liability of such Agent results from an untrue
statement or omission of a material fact contained in the Preliminary Prospectus
which was corrected in the Prospectus (or the Prospectus as amended or
supplemented).
(b) Each Agent will, severally and not jointly, 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
37
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 amendment or supplement thereto, 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 by the Company in connection with investigating or defending
any such action or claim as such expenses are incurred.
(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 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 and except as otherwise provided herein.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings, in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all such indemnified parties and that all
such fees and
38
expenses shall be reimbursed as they are incurred. The 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 prior written consent of the
indemnified party, effect any settlement of any pending or threatened proceeding
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such proceeding.
(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
39
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 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 of 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 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
40
solicited such offer any commission to which it would be entitled in connection
with such sale.
9. The respective indemnities, agreements, representations,
warranties and other statements 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 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 Goldman, Sachs & Co. shall be sufficient in all respects when
delivered or sent by facsimile transmission or registered mail to 85 Broad
Street, New York, New York 10004, Facsimile Transmission No. (212) 363-7609,
Attention: Credit Department, and if to J.P. Morgan Securities Inc. shall be
sufficient in all respects when delivered or sent by telex, facsimile
transmission or registered mail to 60 Wall Street, New York, New York 10260,
Facsimile Transmission No. (212) 648-5151, Attention: Transaction Execution
Group-Capital Markets Services, 3rd Floor, and if to the Company shall be
sufficient in all respects when delivered or sent by facsimile transmission or
registered mail to 150 North Orange Grove Boulevard, Pasadena, California 91103,
Facsimile Transmission No. (818) 304-2319, Attention: Vice President and
Treasurer.
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
41
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
Commission in Washington, D.C. is 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.
42
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 each of you thereof shall constitute a binding agreement between
the Company and each of you in accordance with its terms.
Very truly yours,
AVERY DENNISON CORPORATION
By: /s/ R. GREGORY JENKINS
--------------------------
Name: R. Gregory Jenkins
Title: Senior Vice President, Finance
and Chief Financial Officer
Accepted in New York, New York,
as of the date hereof:
/s/ GOLDMAN, SACHS & CO.
- ---------------------------------
(Goldman, Sachs & Co.)
J.P. MORGAN SECURITIES INC.
By: /s/ RAYMOND SCHMITT
------------------------------
Raymond Schmitt
Vice President
43
ANNEX I
AVERY DENNISON CORPORATION
MEDIUM-TERM NOTES
TERMS AGREEMENT
---------------
_______________, 19__
[Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.]
[J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260]
Dear Sirs:
Avery Dennison Corporation (the "Company") proposes, subject to the
terms and conditions stated herein and in the Distribution Agreement, dated
December 16, 1996 (the "Distribution Agreement"), between the Company on the one
hand and Goldman, Sachs & Co. and J.P. Morgan Securities Inc. (the "Agents") on
the other, to issue and sell to [Goldman, Sachs & Co.] [J.P. Morgan Securities
Inc.] 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
I-1
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 warranty as of
the date of this Terms Agreement in relation to the Prospectus as amended and
supplemented to relate to the Purchased Securities.
An amendment to 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.] [J.P. Morgan Securities Inc.] and
[Goldman, Sachs & Co.] and [J.P. Morgan Securities Inc.] agrees to purchase from
the Company the Purchased Securities, at the time and place, in the principal
amount and at the purchase price set forth in the Schedule hereto.
If the foregoing is in accordance with your understanding, please sign
and return to us 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.
AVERY DENNISON CORPORATION
By:___________________________
Name:
Title:
Accepted:
[_______________________________
I-2
Goldman, Sachs & Co.)]
[J.P. Morgan Securities Inc.]
By:____________________________
Name:
Title:
I-3
SCHEDULE TO ANNEX I
Title of Purchased Securities:
[ %] Medium-Term Notes
Aggregate Principal Amount:
[$ or units of other Specified Currency]
[Price to Public:]
Purchase Price by [Goldman, Sachs & Co.] [J.P. Morgan Securities Inc.]:
% 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]
Time of Delivery:
Closing Location for Delivery of Securities:
Maturity:
Interest Rate:
[ %]
Interest Payment Dates:
I-4
[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:
[(1) The opinion or opinions of counsel to the Agents referred to in
Section 4(h).]
[(2) The opinions 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):
I-5
ANNEX II
AVERY DENNISON CORPORATION
ADMINISTRATIVE PROCEDURE
------------------------
This Administrative Procedure relates to the Securities defined in the
Distribution Agreement, dated December 16, 1996 (the "Distribution Agreement"),
between Avery Dennison Corporation (the "Company") and Goldman, Sachs & Co. and
J.P. Morgan Securities Inc. (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
II-1
"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.
Certificated Securities will be issued in accordance with the
Administrative Procedure set forth in Part I hereof, and Book-Entry Securities
will be issued in accordance with the Administrative Procedure set forth in Part
II hereof.
PART I: 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.
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,
II-2
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 Selling 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 the
initial Interest Payment Date;
(3) Maturity Date;
(4) Specified Currency and, if the Specified Currency is other than
U.S. dollars, the applicable Exchange Rate for such Specified
Currency;
(5) The Base Rate and the Exchange Rate Determination Date, if
applicable;
(6) Issue Price;
(7) Selling Agent's commission or Purchasing Agent's discount, as the
case may be:
(8) Net proceeds to the Company;
(9) Settlement Date (as defined below);
(10) If a redeemable Certificated Security, such of the following as
are applicable:
(i) Redemption Commencement Date,
(ii) Initial Redemption Price (% of par), and
II-3
(iii) Amount (% of par) that the Redemption Price shall decline
(but not below par) on each anniversary of the Redemption
Commencement Date;
(11) 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;
(12) Name, address and taxpayer identification number of the
registered owner(s);
(13) Denomination of certificates to be delivered at settlement; and
(14) Book-Entry Security or Certificated Security.
II-4
Preparation of Pricing Supplement by Company:
If the Company accepts an offer to purchase a Certificated Security,
it will prepare a Pricing Supplement. The Company will supply at least ten
copies of such Pricing Supplement to the Selling Agent or Purchasing Agent, as
the case may be, not later than 5:00 p.m., New York City time, on the business
day following the date of acceptance of such offer, or if the Company and the
purchaser agree to settlement on the date of such acceptance, not later than
noon, New York City time, on such date. The Company will arrange to have the
Pricing Supplement filed with the Commission not later than the close of
business of the Commission on the fifth business day following the date on which
such Pricing Supplement is first used.
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 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 any other
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
II-5
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 prior to 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 an 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 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.
II-6
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.
PART II: 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 Bring
Down Letter of Representation from the Company and the Trustee to the
Depositary, dated November 18, 1996, and a Medium-Term Note Certificate
Agreement between the Trustee and the Depositary, dated as of April 1993 (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
II-7
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 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 Selling 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 Selling 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) Maturity Date;
II-8
(4) 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);
(5) The Base Rate and the Exchange Rate Determination Date, if
applicable;
(6) Issue Price;
(7) Selling Agent's commission or Purchasing Agent's discount or
commission, as the case may be;
(8) Net Proceeds to the Company;
(9) Settlement Date (as defined below);
(10) 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;
(11) 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,
II-9
(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;
(12) Name, address and taxpayer identification number of the
registered owner(s);
(13) Denomination of certificates to be delivered at settlement; and
(14) Book-Entry Security or Certificated Security.
B. After receiving the Sale Information from the Selling Agent or
Purchasing Agent, 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 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;
II-10
(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 and
the 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 or
discount. 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.
II-11
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 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 Bank of America National Trust and Savings
Association, Los Angeles, California, or such other account as the Company may
have previously specified to the Trustee, in funds available for immediate use,
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
II-12
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 receipt of the Sale Information, or if
the Company and the purchaser agree to settlement on the Business Day following
the date of acceptance not later than noon, New York City time, on such date.
The Company will arrange to have the Pricing Supplement filed with the
Commission not later than the close of business of the Commission on the fifth
Business Day following the date on which such Pricing Supplement is first used.
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 accepted by the Company
will be settled on the third Business Day pursuant to the timetable for
settlement set forth below unless the Company and the purchaser agree to
settlement on another day which shall be no earlier than the next Business Day.
II-13
Settlement Procedure Timetable:
For orders of Book-Entry Securities solicited by an Agent, as agent,
and accepted by the Company for settlement on the first Business Day after the
sale 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 Business Day following
the acceptance of an offer by
the Company or 10:00 a.m. on
the Business Day prior to the
settlement date, whichever is
earlier
B 12:00 noon on the sale date
C 2:00 p.m. on the sale date
D 9:00 a.m. on settlement date
E 10:00 a.m. on settlement date
F-G 2:00 p.m. on settlement date
H 4:45 p.m. on settlement date
I 5:00 p.m. on settlement date
If a sale is to be settled more than one Business Day after the sale
date, Settlement Procedures "B" and "C" shall be completed as soon as
practicable but not later than 2:00 p.m. on the first Business Day after the
sale 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 before
the settlement date. Settlement Procedure "H" is subject to extension in
accordance
II-14
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 cancelled,
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 "cancelled", make appropriate entries in the Trustee's
records and send such cancelled Global Security to the Company. The CUSIP
number assigned to such Global Security shall, in accordance with CUSIP Service
Bureau procedures, be cancelled 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 cancelled 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
II-15
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.
II-16
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 examined 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 consolidated interim financial statements,
selected financial data, pro forma financial information and/or
condensed financial statements 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) 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 or
incorporated by reference 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 where applicable) in the
audited consolidated financial statements for the five such
III-1
fiscal years which were included or incorporated by reference in the
Company's Annual Reports on Form 10-K for such fiscal years;
(iv) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
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, the performance of procedures specified by the
American Institute of Certified Public Accountants for a review of
interim financial information as described in SAS No. 71, Interim
Financial Information 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) the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements
of cash flows 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 that any material
modifications should be made thereto for such unaudited condensed
consolidated financial statements 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
III-2
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 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, warrants and stock appreciation rights,
upon earn-outs of performance shares and upon conversions of
convertible securities, in each case which were outstanding on
the date of the latest balance sheet included or incorporated by
reference in the Prospectus) or any increase in the consolidated
long-term debt of
III-3
the Company and its subsidiaries, or any decreases in
consolidated 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 operating
profit or the total or per share amounts of 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 examination 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 (iv) above, they have
carried out certain specified procedures, not constituting an
examination in accordance with generally accepted auditing standards,
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 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
III-4
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.
III-5