EXHIBIT 1
FRANKLIN RESOURCES, INC.
MEDIUM-TERM NOTES
DISTRIBUTION AGREEMENT
[_______], 199[_]
[Name of Agent]
[Address of Agent]
[Name of Agent]
[Address of Agent]
Dear Sirs:
Franklin Resources, Inc., a Delaware corporation (the "Company"), confirms
its agreement with [Names of Agents] (each referred to as an "Agent" and
collectively referred to as the "Agents") with respect to the issue and sale by
the Company of its Medium-Term Notes described herein (the "Notes"). The Notes
are part of an existing series of debt securities of the Company and are to be
issued pursuant to an indenture (the "Indenture") dated as of [_____], 199[_]
between the Company and [____], as trustee (the "Trustee"). As of the date
hereof, the Company has authorized the issuance and sale of up to U.S.
$[_],000,000 aggregate principal amount (or its equivalent, based upon the
applicable exchange rate at the time of issuance, in such foreign or composite
currencies as the Company shall designate at the time of issuance) (the issue
price of any original issue discount obligations being treated as the principal
amount thereof) of Notes to or through the Agents pursuant to the terms of this
Agreement. It is understood, however, that the Company may from time to time
authorize the issuance of additional series of Notes and that such additional
Notes may be sold to or through the Agents pursuant to the terms of this
Agreement.
This Agreement provides both for the sale of Notes by the Company to an
Agent as principal for resale to investors and other purchasers and for the sale
of Notes by the Company directly to investors (as may from time to time be
agreed to by the Company and the applicable
Agent), in which case the applicable Agent will act as an agent of the Company
in soliciting Note purchases.
The Company has filed with the Securities and Exchange Commission (the
"SEC") a registration statement on Form S-3 (No. [_]), which registration
statement also constitutes post-effective amendment no. 1 to a registration
statement on Form S-3 (No. 33-53147), for the registration of debt securities,
including the Notes, under the Securities Act of 1933, as amended (the "1933
Act"), and the offering thereof from time to time in accordance with Rule 415 of
the rules and regulations of the SEC under the 1933 Act (the "1933 Act
Regulations"). Such registration statements have been declared effective by the
SEC and the Indenture has been qualified under the Trust Indenture Act of 1939
(the "1939 Act"). Such registration statements and the prospectus constituting a
part thereof, and any prospectus supplements relating to the Notes, including
all documents incorporated therein by reference, as from time to time amended or
supplemented by the filing of documents pursuant to the Securities Exchange Act
of 1934, as amended (the "1934 Act"), or the 1933 Act or otherwise, are referred
to herein as the "Registration Statements" and the "Prospectus", respectively,
except that if any revised prospectus shall be provided to the Agents by the
Company for use in connection with the offering of the Notes, whether or not
such revised prospectus is required to be filed by the Company pursuant to Rule
424(b) of the 1933 Act Regulations, the term "Prospectus" shall refer to such
revised prospectus from and after the time it is first provided to each Agent
for such use.
SECTION 1. Appointment as Agents.
(a) Appointment. Subject to the terms and conditions stated herein and
subject to the reservation by the Company of the right to sell Notes directly on
its own behalf, the Company hereby agrees that Notes will be sold to or through
the Agents. Each Agent is authorized to engage the services of any other broker
or dealer in connection with the offer or sale of the Notes purchased by such
Agent as principal for resale to others but is not authorized to appoint
subagents. In connection with sales by an Agent of Notes purchased by such Agent
as principal to other brokers or dealers, such Agent may allow any portion of
the discount it has received in connection with such purchase from the Company
to such brokers or dealers. Each Agent is acting in connection with the Notes
individually and not collectively or jointly. The Company agrees that, during
the period the Agents are acting as the Company's agents hereunder, unless
otherwise agreed, the Company will not contact or solicit potential investors to
purchase the Notes and will not appoint other agents to act on its behalf, or to
assist it, in the placement of the Notes.
(b) Sale of Notes. The Company shall not sell or approve the solicitation
of purchases of Notes in excess of the amount which shall be authorized by the
Company from time to time or in excess of the principal amount of Notes
registered pursuant to the Registration Statements. The Agents will have no
responsibility for maintaining records with respect to the aggregate principal
amount of Notes sold, or of otherwise monitoring the availability of Notes for
sale, under the Registration Statements.
(c) Purchases as Principal. The Agents shall not have any obligation to
purchase Notes from the Company as principal, but each Agent may agree from time
to time to purchase
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Notes as principal. Any such purchase of Notes by an Agent as principal shall be
made in accordance with Section 3(a) hereof.
(d) Solicitations as Agent. If agreed upon by the Agents and the Company,
the Agents, acting solely as agents for the Company and not as principal, will
solicit purchases of the Notes. Each Agent will communicate to the Company,
orally, each offer to purchase Notes solicited by such Agent on an agency basis,
other than those offers rejected by such Agent. Each Agent shall have the right,
in its discretion reasonably exercised, to reject any proposed purchase of
Notes, as a whole or in part, and any such rejection shall not be deemed a
breach of such Agent's agreement contained herein. The Company may accept or
reject any proposed purchase of the Notes, in whole or in part. Each Agent shall
make reasonable efforts to assist the Company in obtaining performance by each
purchaser whose offer to purchase Notes has been solicited by such Agent and
accepted by the Company. The Agents shall not have any liability to the Company
in the event any such agency purchase is not consummated for any reason. If the
Company shall default on its obligation to deliver Notes to a purchaser whose
offer it has accepted, the Company shall (i) hold the applicable 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 applicable Agent
any commission to which it would be entitled in connection with such sale.
(e) Reliance. The Company and each Agent agree that any Notes purchased by
such Agent shall be purchased, and any Notes the placement of which such Agent
arranges shall be placed by such Agent, in reliance on the representations,
warranties, covenants and agreements of the Company contained herein and on the
terms and conditions and in the manner provided herein.
SECTION 2. Representations and Warranties.
(a) The Company represents and warrants to each Agent as of the date
hereof, as of the date of each acceptance by the Company of an offer for the
purchase of Notes (whether to an Agent as principal or through an Agent as
agent), as of the date of each delivery of Notes (whether to an Agent as
principal or through an Agent as agent) (the date of each such delivery to an
Agent as principal being hereafter referred to as a "Settlement Date"), and as
of any time that any Registration Statement or the Prospectus shall be amended
or supplemented or there is filed with the SEC any document incorporated by
reference into the Prospectus (each of the times referenced above being referred
to herein as a "Representation Date") as follows:
(i) Due Incorporation and Qualification. 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 all requisite power
and authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus; and the Company is duly qualified
as a foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify and be in good standing would not
have a material adverse effect on the financial
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condition or the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise.
(ii) Subsidiaries. Each subsidiary of the Company which is a
significant subsidiary (each, a "Significant Subsidiary") as defined in
Rule 405 of Regulation C of the 1933 Act Regulations has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has all requisite
power and authority to own, lease and operate its properties and conduct
its business as described in the Prospectus and is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure to so qualify and be in good standing would not have a
material adverse effect on the financial condition or the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise; and all of the issued and outstanding
capital stock of each Significant Subsidiary has been duly authorized and
validly issued, is fully paid and non-assessable and, except for
directors' qualifying shares, is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity.
(iii) Registration Statements and Prospectus. At the time each
Registration Statement became effective, such Registration Statement
complied, and as of each applicable Representation Date will comply, in
all material respects with the requirements of the 1933 Act and the 1933
Act Regulations and the 1939 Act and the rules and regulations of the SEC
promulgated thereunder. Each Registration Statement, at the time it became
effective, did not, and at each time thereafter at which any amendment to
such Registration Statement becomes effective or any Annual Report on Form
10-K is filed by the Company with the SEC and as of each Representation
Date, 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. The Prospectus, as of the date
hereof does not, and as of each Representation Date will not, include an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this subsection shall
not apply to statements in or omissions from any Registration Statement or
the Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by the Agents expressly for use in
such Registration Statement or Prospectus or to that part of a
Registration Statement which constitutes the Trustee's Statement of
Eligibility and Qualification under the 1939 Act (Form T-1).
(iv) Incorporated Documents. The documents incorporated by
reference in the Prospectus pursuant to Item 12 of Form S-3, at the time
they were or hereafter are filed with the SEC, complied or when so filed
will comply, as the case may be, in all material respects with the
requirements of the 1934 Act and the rules and regulations promulgated
thereunder (the "1934 Act Regulations"), and, when read together and with
the other information in the Prospectus, did not and will not include an
untrue statement
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of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were or are made, not misleading.
(v) Accountants. The accountants who certified the financial
statements included or incorporated by reference in the Prospectus are
independent public accountants within the meaning of the 1933 Act and the
1933 Act Regulations.
(vi) Financial Statements. The financial statements and any
supporting schedules of the Company and its consolidated subsidiaries
included or incorporated by reference in the Registration Statements and
the Prospectus present fairly the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates indicated and
the consolidated results of their operations for the periods specified;
and, except as stated therein, said financial statements have been
prepared in conformity with generally accepted accounting principles in
the United States applied on a consistent basis; and the supporting
schedules included in the Registration Statements present fairly the
information required to be stated therein.
(vii) Authorization and Validity of this Agreement, the Indenture
and the Notes. This Agreement has been duly authorized, executed and
delivered by the Company and, upon due authorization, execution and
delivery by the Agents, will be a valid and legally binding agreement of
the Company; the Indenture has been duly authorized, executed and
delivered by the Company and, upon due authorization, execution and
delivery by the Trustee, will be a valid and legally binding obligation of
the Company enforceable in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting
enforcement of creditors' rights generally or by general equity
principles, and except further as enforcement thereof may be limited by
(i) requirements that a claim with respect to any Notes denominated other
than in U.S. dollars (or a foreign currency or currency unit judgment in
respect of such claim) be converted into U.S. dollars at a rate of
exchange prevailing on a date determined pursuant to applicable law or
(ii) governmental authority to limit, delay or prohibit the making of
payments outside the United States; the Notes have been duly and validly
authorized for issuance, offer and sale pursuant to this Agreement and,
when issued, authenticated and delivered pursuant to the provisions of
this Agreement and the Indenture against payment of the consideration
therefor specified in the Prospectus or agreed upon pursuant to the
provisions of this Agreement, the Notes will constitute valid and legally
binding obligations of the Company enforceable in accordance with their
terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or
affecting enforcement of creditors' rights generally or by general equity
principles, and except further as enforcement thereof may be limited by
(i) requirements that a claim with respect to any Notes denominated other
than in U.S. dollars (or a foreign currency or currency unit judgment in
respect of such claim) be converted into U.S. dollars at a rate or
exchange prevailing on a date determined pursuant to applicable law or
(ii) governmental authority to limit, delay or prohibit the making of
payments outside the United States; the Notes and the Indenture will be
substantially in the form heretofore
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delivered to the Agents and conform in all material respects to all
statements relating thereto contained in the Prospectus; and each holder
of Notes will be entitled to the benefits of the Indenture.
(viii) Material Changes or Material Transactions. Since the
respective dates as of which information is given in each Registration
Statement and the Prospectus, except as may otherwise be stated therein or
contemplated thereby, (a) there has been no material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business and
(b) there have been no material transactions entered into by the Company
or any of its subsidiaries other than those in the ordinary course of
business.
(ix) No Defaults; Regulatory Approvals. Neither the Company nor
any of its Significant Subsidiaries is in violation of its charter or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which it is a party or by
which it or any of them or their properties may be bound, which violation
or default would have a material adverse effect on the financial condition
or the earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise; the issuance and sale of
the Notes and the compliance by the Company with all the terms and
provisions thereof and the execution and delivery of this Agreement and
the Indenture and the consummation of the transactions contemplated herein
and therein have been duly authorized by all necessary corporate action
and will not conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its subsidiaries
pursuant to, any contract, indenture, mortgage, loan agreement, note,
lease or other instrument to which the Company or any of its subsidiaries
is a party or by which it or any of them may be bound or to which any of
the property or assets of the Company or any such subsidiary is subject,
nor will such action result in any violation of the provisions of the
charter or by-laws of the Company or any law, administrative regulation or
administrative or court order or decree; and no consent, approval,
authorization, order or decree of any court or governmental agency or body
is required for the consummation by the Company of the transactions
contemplated by this Agreement or in connection with the sale of Notes
hereunder, except such as have been obtained or rendered, as the case may
be, or as may be required under the securities laws of any state or other
jurisdiction of the United States (the "Blue Sky" laws).
(x) Regulatory Certificates, Authorities and Permits. The
Company and its subsidiaries possess such certificates, authorities or
permits issued by the appropriate state, federal or foreign regulatory
agencies or bodies necessary to conduct the business now operated by them,
except where the failure to possess such certificates, authorities or
permits would not have a material adverse effect on the financial
condition or the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, and neither the
Company nor any of its subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such
6
certificate, authority or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would materially
and adversely affect the financial condition or the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise.
(xi) Legal Proceedings; Contracts. Except as may be set forth in
the Registration Statements, there is no action, suit or proceeding before
or by any court or governmental agency or body, domestic or foreign, now
pending, or, to the knowledge of the Company, threatened against or
affecting, the Company or any of its subsidiaries, which might, in the
opinion of the Company, result in any material adverse change in the
financial condition or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise, or might materially and adversely affect the properties or
assets thereof or might materially and adversely affect the consummation
of this Agreement or the Indenture or any transaction contemplated hereby
or thereby; and there are no contracts or documents of the Company or any
of its subsidiaries which are required to be filed as exhibits to the
Registration Statements by the 1933 Act or by the 1933 Act Regulations
which have not been so filed.
(xii) Advisers Act. Each subsidiary of the Company required to be
registered under the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), is duly registered as an investment adviser with the SEC
under the Advisers Act, and in each jurisdiction where the conduct of its
business requires such registration, and such subsidiary is not prohibited
from acting as an investment adviser or carrying on its business as now
conducted or as contemplated in the Registration Statements by any
applicable laws, rules, regulations, orders, by-laws or similar
requirements.
(xiii) Effect on Business. Consummation of the transactions
contemplated by this Agreement will not adversely affect the ability of
the Company or any of its subsidiaries to conduct its business as
described in the Registration Statements, including, but not limited to,
the rendering of investment advisory services to clients, all of its
mutual funds, money market funds and closed-end funds, whether or not such
funds are registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), and the rendering of distribution services to any such
entities.
(xiv) 1940 Act Registration. Each investment company or account
for which the Company or any of its subsidiaries acts as investment
adviser and which is required to be registered with the SEC as an
investment company under the 1940 Act is duly registered with the SEC as
an investment company under the 1940 Act.
(xv) Broker-Dealer Registration. Each subsidiary of the Company
required to be registered as a broker-dealer with the SEC under the 1934
Act is duly registered as a broker-dealer with the SEC under the 1934 Act,
and such subsidiary is not prohibited from acting as broker-dealer or
carrying on its business as now conducted or as contemplated in the
Registration Statements by any applicable laws, rules, regulations,
orders, by-laws or similar requirements.
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(xvi) Investment Company Status; Adviser and Broker-Dealer Status.
Neither the Company nor any of its subsidiaries is required to register
with the SEC as an investment company under the 1940 Act. The Company is
not required to register as an investment adviser with the SEC under the
Advisers Act and is not required to register as a broker-dealer with the
SEC under the 1934 Act.
(xvii) Commodity Exchange Act. The Notes, when issued,
authenticated and delivered pursuant to the provisions of this Agreement
and the Indenture, will be excluded or exempted under the provisions of
the Commodity Exchange Act.
(xviii) Business in Cuba. The Company is in compliance with all of
the provisions of Section 517.075 of the Florida statutes, and all rules
and regulations promulgated thereunder relating to issuers doing business
in Cuba.
(b) Additional Certifications. Any certificate signed by any director or
officer of the Company and delivered to the Agents or to counsel for the Agents
in connection with an offering of Notes through an Agent as agent or the sale of
Notes to an Agent as principal shall be deemed a representation and warranty by
the Company to such Agent as to the matters covered thereby on the date of such
certificate and at each Representation Date subsequent thereto.
SECTION 3. Purchases as Principal; Solicitations as Agent.
(a) Purchases as Principal. Unless otherwise agreed by an Agent and the
Company, Notes shall be purchased by such Agent as principal. Such purchases
shall be made in accordance with terms agreed upon by such Agent and the Company
(which terms shall be agreed upon orally, with written confirmation prepared by
such Agent and mailed to the Company). Each Agent's commitment to purchase Notes
as principal 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 purchase of Notes,
unless otherwise agreed, shall be at a discount from the principal amount of
each such Note equivalent to the applicable commission set forth in Schedule A
hereto. The Agents may engage the services of any other broker or dealer in
connection with the resale of the Notes purchased as principal and may allow any
portion of the discount received in connection with such purchases from the
Company to such brokers and dealers. At the time of each purchase of Notes by an
Agent as principal, such Agent shall specify the requirements for the stand-off
agreement, officer's certificate, opinion of counsel and comfort letter pursuant
to Sections 4(k), 7(b), 7(c) and 7(d) hereof.
(b) Solicitations as Agent. On the basis of the representations and
warranties herein contained, but subject to the terms and conditions herein set
forth, when agreed by the Company and an Agent, such Agent, as an agent of the
Company, will use its reasonable efforts to solicit offers to purchase the Notes
upon the terms and conditions set forth herein and in the Prospectus. All Notes
sold through an Agent as agent will be sold at 100% of their principal amount
unless otherwise agreed to by the Company and such Agent.
The Company reserves the right, in its sole discretion, to suspend
solicitation of purchases of the Notes through an Agent, as agent, commencing at
any time for any period of time or
8
permanently. Upon receipt of instructions from the Company, the Agents will
forthwith suspend solicitation of purchases 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, in the form of a
discount, equal to the applicable percentage of the principal amount of each
Note sold by the Company as a result of a solicitation made by such Agent as set
forth in Schedule A hereto.
(c) Administrative Procedures. The purchase price, interest rate or
formula, maturity date and other terms of the Notes (as applicable) specified in
Exhibit A hereto shall be agreed upon by the Company and the applicable Agent
and set forth in a pricing supplement to the Prospectus to be prepared in
connection with each sale of Notes. Except as may be otherwise provided in such
supplement to the Prospectus, the Notes will be issued in denominations of U.S.
$1,000 or any larger amount that is an integral multiple of U.S. $1,000.
Administrative procedures with respect to the sale of Notes shall be agreed upon
from time to time by the Agents, the Company and the Trustee (the "Procedures").
The Agents and the Company agree to perform the respective duties and
obligations specifically provided to be performed by them in the Procedures.
SECTION 4. Covenants of the Company.
The Company covenants with each Agent as follows:
(a) Notice of Certain Events. The Company will notify the Agents promptly
(i) of the effectiveness of any amendment to any Registration Statement, (ii) of
the transmittal to the SEC for filing of any supplement to the Prospectus or any
document to be filed pursuant to the 1934 Act which will be incorporated by
reference in the Prospectus, (iii) of the receipt of any comments from the SEC
with respect to any Registration Statement or the Prospectus, (iv) of any
request by the SEC for any amendment to any Registration Statement or any
amendment or supplement to the Prospectus or for additional information, and (v)
of the issuance by the SEC of any stop order suspending the effectiveness of any
Registration Statement or the initiation of any proceedings for that purpose.
The Company will make every reasonable effort to prevent the issuance of any
stop order and, if any stop order is issued, to obtain the lifting thereof at
the earliest possible moment.
(b) Notice of Certain Proposed Filings. The Company will give the Agents
advance notice of its intention to file or prepare any additional registration
statement with respect to the registration of additional Notes, any amendment to
any Registration Statement or any amendment or supplement to the Prospectus
(other than an amendment or supplement providing solely for a change in the
interest rates of Notes), whether by the filing of documents pursuant to the
1934 Act, the 1933 Act or otherwise, and will furnish the Agents with copies of
any such amendment or supplement or other documents proposed to be filed or
prepared a reasonable time in advance of such proposed filing or preparation, as
the case may be; provided that if the Company files any such amendment or
supplement or other documents in a form to which the Agents or counsel for the
Agents shall reasonably object, the Company shall give the Agents and counsel
for the Agents advance notice of its intention to do so and the Agents shall
have the right to suspend
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immediately any obligation hereunder to solicit purchases of the Notes as agent
or to purchase any Notes as principal.
(c) Copies of the Registration Statements and the Prospectus. The Company
will deliver to each Agent as many signed and as many conformed copies of the
Registration Statements (as originally filed) and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein and
documents incorporated by reference in the Prospectus) as the Agents may
reasonably request. The Company will furnish to each Agent as many copies of the
Prospectus (as amended or supplemented) as the Agents shall reasonably request
so long as the Agents are required to deliver a Prospectus in connection with
sales or solicitations of offers to purchase the Notes.
(d) Preparation of Pricing Supplements. The Company will prepare, with
respect to any Notes to be sold through or to the Agents pursuant to this
Agreement, a Pricing Supplement with respect to such Notes in a form previously
approved by the Agents and will file such Pricing Supplement pursuant to Rule
424(b)(3) under the 1933 Act not later than the close of business of the SEC on
the fifth business day after the date on which such Pricing Supplement is first
used.
(e) Revisions of Prospectus -- Material Changes. Except as otherwise
provided in subsection (l) of this Section, if at any time during the term of
this Agreement any event shall occur or condition exist as a result of which it
is necessary, in the reasonable opinion of counsel for the Agents or counsel for
the Company, to further amend or supplement the Prospectus in order that the
Prospectus will not include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time the Prospectus
is delivered to a purchaser, or if it shall be necessary, in the reasonable
opinion of either such counsel, to amend or supplement any Registration
Statement or the Prospectus in order to comply with the requirements of the 1933
Act or the 1933 Act Regulations, immediate notice shall be given, and confirmed
in writing, to the Agents to cease the solicitation of offers to purchase the
Notes in the Agents' capacity as agent and to cease sales of any Notes the
Agents may then own as principal, and the Company will promptly amend such
Registration Statement and/or the Prospectus, as the case may be, whether by
filing documents pursuant to the 1934 Act, the 1933 Act or otherwise, as may be
necessary to correct such untrue statement or omission or to make each
Registration Statement and the Prospectus comply with such requirements.
(f) Prospectus Revisions -- Periodic Financial Information. Except as
otherwise provided in subsection (1) of this Section, on or prior to the date on
which there shall be released to the general public interim financial statement
information related to the Company with respect to each of the first three
quarters of any fiscal year or preliminary financial statement information with
respect to any fiscal year, the Company shall furnish such information to the
Agents, confirmed in writing, and shall cause the Prospectus to be amended or
supplemented to include or incorporate by reference financial information with
respect thereto and corresponding information for the comparable period of the
preceding fiscal year, as well as such other information and explanations as
shall be necessary for an understanding thereof or as shall be required by the
1933 Act or the 1933 Act Regulations.
10
(g) Prospectus Revisions -- Audited Financial Information. Except as
otherwise provided in subsection (1) of this Section, on or prior to the date on
which there shall be released to the general public financial information
included in or derived from the audited financial statements of the Company for
the preceding fiscal year, the Company shall cause the Registration Statements
and the Prospectus to be amended, whether by the filing of documents pursuant to
the 1934 Act, the 1933 Act or otherwise, to include or incorporate by reference
such audited financial statements and the report or reports, and consent or
consents to such inclusion or incorporation by reference, of the independent
accountants with respect thereto, as well as such other information and
explanations as shall be necessary for an understanding of such financial
statements or as shall be required by the 1933 Act or the 1933 Act Regulations.
(h) Earnings Statements. The Company will make generally available to its
security holders as soon as practicable, but not later than 90 days, after the
close of the period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 under the 1933 Act) covering each twelve month
period (as contemplated in such Rule 158) beginning, in each case, not later
than the first day of the Company's fiscal quarter next following the "effective
date" (as defined in such Rule 158) of each Registration Statement with respect
to each sale of Notes.
(i) Blue Sky Qualifications. The Company will endeavor, in cooperation
with the Agents, to qualify the Notes for offering and sale under the applicable
Blue Sky laws of such states and other jurisdictions of the United States as the
Agents may designate, and will maintain such qualifications in effect for as
long as may be required for the distribution of the Notes; provided, however,
that the Company shall not be obligated to file any general consent to service
of process or to qualify as a foreign corporation in any jurisdiction in which
it is not so qualified. The Company will file such statements and reports as may
be required by the laws of each jurisdiction in which the Notes have been
qualified as above provided. The Company will promptly advise the Agents of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Notes for sale in any such state or jurisdiction or the
initiating or threatening of any proceeding for such purpose.
(j) 1934 Act Filings. The Company, during the period when the Prospectus
is required to be delivered under the 1933 Act, will file promptly all documents
required to be filed with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the 1934 Act.
(k) Stand-Off Agreement. Unless otherwise specified by an Agent in
connection with a purchase by it of Notes as principal, between the date of the
agreement to purchase such Notes and the Settlement Date with respect to such
purchase, the Company will not, without such Agent's prior written consent,
offer or sell, or enter into any agreement to sell, any debt securities of the
Company (other than the Notes that are to be sold pursuant to such agreement and
commercial paper in the ordinary course of business).
(l) Suspension of Certain Obligations. The Company shall not be required
to comply with the provisions of subsections (e), (f) or (g) of this Section
during any period from the time (i) the Agents shall have suspended solicitation
of purchases of the Notes in its capacity as agent pursuant to a request from
the Company and (ii) the Agents shall not then hold any Notes
11
purchased as principal pursuant hereto, until the time the Company shall
determine that solicitation of purchases of the Notes should be resumed or the
Agent shall subsequently purchase Notes from the Company as principal.
SECTION 5. Conditions of Obligations.
The obligations of each Agent to purchase Notes as principal and to
solicit offers to purchase the Notes as agent of the Company, and the
obligations of any purchasers of the Notes sold through each Agent as agent,
will be subject to the accuracy of the representations and warranties on the
part of the Company herein and to the accuracy of the statements of the
Company's officers made in any certificate furnished pursuant to the provisions
hereof, to the performance and observance by the Company of all its covenants
and agreements herein contained and to the following additional conditions
precedent:
(a) Legal Opinions. On the date hereof, the Agents shall have received the
following legal opinions, dated as of the date hereof and in form and substance
satisfactory to the Agents:
(1) Opinion of Company Counsel. The opinion of Weil, Gotshal &
Manges, special counsel to the Company or of Harmon E. Burns, Esq.,
Executive Vice President, Legal and Administrative, of the Company, to the
effect that:
(i) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Delaware.
(ii) The Company has all requisite corporate power and
authority to own, lease and operate its properties and to carry on
its business as described in the Registration Statements.
(iii) The Company is duly qualified to transact business and
is in good standing as a foreign corporation in each jurisdiction in
which the character of its activities requires such qualification,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure of the Company to be
so qualified and be in good standing would not have a material
adverse effect on the financial condition or the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise.
(iv) Each Significant Subsidiary of the Company is a
corporation duly incorporated, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, and has all
requisite corporate power and authority to own, lease and operate
its properties and carry on its business as described in the
Registration Statements, and is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which the character of its activities requires such
qualification, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure of
each such Significant Subsidiary to be so qualified and be in good
12
standing would not have a material adverse effect on the financial
condition or the earnings, business affairs or business prospects of
the Company and its subsidiaries considered as one enterprise; all
of the issued and outstanding capital stock of each such Significant
Subsidiary has been duly authorized and validly issued, is fully
paid and non-assessable, and, except for directors' qualifying
shares, is owned by the Company, free and clear of any mortgage,
pledge, lien, encumbrance, claim or equity.
(v) The execution, delivery and performance of this
Agreement by the Company has been duly and validly authorized by all
necessary corporate action on the part of the Company, and this
Agreement has been duly and validly executed and delivered by the
Company.
(vi) The Company has all requisite corporate power and
authority to execute and delivery the Indenture. The execution,
delivery and performance of the Indenture by the Company has been
duly and validly authorized by all necessary corporate action on the
part of the Company. The Indenture has been duly and validly
executed and delivered by the Company and (assuming the Indenture
has been duly authorized, executed and delivered by the Trustee)
constitutes a legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting enforcement of
creditors' rights and remedies, and subject as to enforceability to
general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity) and
except as enforcement thereof may be limited by (A) requirements
that a claim with respect to any Notes denominated other than in
U.S. dollars (or a foreign currency or foreign currency unit
judgment in respect of such claim) be converted into United States
dollars at a rate of exchange prevailing on a date determined
pursuant to applicable law or (B) governmental authority to limit,
delay or prohibit the making of payments in foreign currency or
currency units or payments outside the United States.
(vii) The Company has all requisite corporate power and
authority to execute and deliver the Notes; the Notes, in the
form(s) certified by the Company as of the date hereof, have been
duly and validly authorized by all necessary corporate action on the
part of the Company for issuance, offer and sale pursuant to this
Agreement and, when issued, authenticated and delivered pursuant to
the provisions of this Agreement and the Indenture against payment
of the consideration therefor, will constitute valid and legally
binding obligations of the Company, enforceable against the Company
in accordance with their terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting enforcement of creditors' rights and
remedies, and subject as to enforceability to general principles of
equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless
13
of whether enforcement is sought in a proceeding at law in equity)
and except as enforcement thereof may be limited by (A) requirements
that a claim with respect to any Notes denominated other than in
U.S. dollars (or a foreign currency or foreign currency unit
judgment in respect of such claim) be converted into United States
dollars at a rate of exchange prevailing on a date determined
pursuant to applicable law or (B) governmental authority to limit,
delay or prohibit the making of payments in foreign currency or
currency units or payments outside the United States, and each
holder of the Notes will be entitled to the benefits of the
Indenture.
(viii) The statements in the Prospectus under the captions
"Description of the Notes" and "Description of Debt Securities"
insofar as they purport to summarize certain provisions of documents
specifically referred to therein, are accurate summaries of such
provisions in all material respects.
(ix) The Indenture is qualified under the 1939 Act.
(x) The Registration Statements are effective under the
1933 Act and, to the best of such counsel's knowledge (which may be
based on telephonic confirmation from the Commission), no stop order
suspending the effectiveness of any Registration Statement has been
issued under the 1933 Act or proceedings therefor initiated or
threatened by the SEC.
(xi) At the time each Registration Statement or any
post-effective amendment thereto became effective, such Registration
Statement complied as to form in all material respects with the
requirements of the 1933 Act, the 1939 Act and the regulations under
each of those Acts (except that no opinion is expressed with respect
to the financial statements and notes thereto, the financial
statement schedules and other statistical and accounting data
included or incorporated by reference therein).
(xii) The Notes, in the form(s) certified by the Company as
of the date hereof, when issued, authenticated and delivered
pursuant to the provisions of this Agreement and the Indenture, will
be excluded or exempted from the provisions of the Commodity
Exchange Act, assuming the accuracy of any certifications of factual
matters furnished by the Agents or the Company in connection with
the issuance thereof.
(xiii) To the best of such counsel's knowledge, there are no
legal or governmental proceedings pending or threatened which are
required to be disclosed in the Prospectus, other than those
disclosed therein, and all pending legal or governmental proceedings
to which the Company or any subsidiary of the Company is a party or
of which any of their property is the subject which are not
described in the Registration Statements, including ordinary routine
litigation incidental to the business of the Company or any such
subsidiary, are, considered in the aggregate, not material.
14
(xiv) Neither the Company nor any of its Significant
Subsidiaries is in violation of its charter or, to the best of such
counsel's knowledge, in default in the performance or observance of
any material obligation, agreement, covenant or condition contained
in any contract, indenture, mortgage, loan agreement, note or lease
to which it is a party or by which it or any of them or their
properties may be bound. The consummation by the Company of the
transactions contemplated herein and in the Indenture have been duly
authorized by all necessary corporate action on the part of the
Company, and the execution and delivery of this Agreement or of the
Indenture, or the consummation by the Company of the transactions
contemplated herein and therein, will not conflict with or
constitute a breach of, or default under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or any of its Significant Subsidiaries
pursuant to, any contract, indenture, mortgage, loan agreement,
note, lease or other instrument known to such counsel and to which
the Company or any such subsidiary is a party or by which it or any
of them may be bound or to which any of the property or assets of
the Company or any such subsidiary is subject, or any law,
administrative regulation or administrative or court decree known to
such counsel to be applicable to the Company of any court or
governmental agency, authority or body or any arbitrator having
jurisdiction over the Company; nor will such action result in any
violation of the provisions of the charter or by-laws of the
Company.
(xv) To the best of such counsel's knowledge, there are no
contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments or documents required to be described or referred
to in the Registration Statements or to be filed as exhibits thereto
other than those described or referred to therein or filed or
incorporated by reference as exhibits thereto, and the descriptions
thereof or references thereto are correct.
(xvi) No consent, approval, authorization, order or decree
of any court or governmental agency or body (including the SEC) is
required for the consummation by the Company of the transactions
contemplated by this Agreement or in connection with the sale of
Notes hereunder, except such as have been obtained or rendered, as
the case may be, or as may be required under Blue Sky laws.
(xvii) Each subsidiary of the Company required to be
registered under the Investment Advisers Act of 1940, as amended
(the "Advisers Act"), is duly registered as an investment adviser
with the SEC under the Advisers Act, and in each jurisdiction where
the conduct of its business requires such registration, and such
subsidiary is not prohibited from acting as an investment adviser or
carrying on its business as now conducted or as contemplated in the
Registration Statements by any applicable laws, rules, regulations,
orders, by-laws or similar requirements.
15
(xviii) Each investment company or account for which the
Company or any of its subsidiaries acts as investment adviser and
which is required to be registered with the SEC as an investment
company under the 1940 Act is duly registered with the SEC as an
investment company under the 1940 Act.
(xix) Each subsidiary of the Company required to be
registered as a broker-dealer with the SEC under the 1934 Act is
duly registered as a broker-dealer with the SEC under the 1934 Act,
and such subsidiary is not prohibited from acting as broker-dealer
or carrying on its business as now conducted or as contemplated in
the Registration Statements by any applicable laws, rules,
regulations, orders, by-laws or similar requirements.
(xx) Neither the Company nor any of its subsidiaries is
required to register with the SEC as an investment company under the
1940 Act. The Company is not required to register as an investment
adviser with the SEC under the Advisers Act and is not required to
register as a broker-dealer with the SEC under the 1934 Act.
(xxi) Each document filed pursuant to the 1934 Act and
incorporated by reference in the Prospectus complied when filed as
to form in all material respects with the 1934 Act and the 1934 Act
Regulations thereunder.
(xxii) The information contained in the Prospectus under the
caption "Certain United States Federal Income Tax Considerations" to
the extent that it constitutes matters of law or legal conclusions,
has been reviewed by such counsel and is correct in all material
respects.
(2) Opinion of Counsel to the Agents. The opinion of Brown & Wood,
counsel to the Agents, covering the matters referred to in subparagraph
(1) under the subheadings (i) and (v) to (xi), inclusive, above.
(3) In giving their opinions required by subsection (a)(1) and
(a)(2) of this Section, Weil, Gotshal & Manges and Brown & Wood shall each
additionally state that no facts have come to their attention that would
lead them to believe that any Registration Statement, at the time it
became effective or, if an amendment to a Registration Statement or an
Annual Report on Form 10-K has been filed by the Company with the SEC
subsequent to the effectiveness of such Registration Statement, then at
the time such amendment became effective or at the time of the most recent
such filing, as the case may be, or at the date hereof, contained or
contains an untrue statement of a material fact or omitted or omits to
state a material fact required to be stated therein or necessary in order
to make the statements therein not misleading or that the Prospectus, as
amended or supplemented at the date hereof, or (if such opinion is being
delivered in connection with the purchase of Notes by an Agent as
principal pursuant to Section 7(c) hereof) at the date of any agreement by
such Agent to purchase Notes as principal and at the Settlement Date with
respect thereto, as the case may be, included or includes an untrue
statement of a
16
material fact or omitted or omits to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that no belief need be
expressed as to the financial statements and notes thereto, the financial
statement schedules and other financial, statistical and accounting data
included or incorporated by reference in the Registration Statements or
the Prospectus.
(b) Officers' Certificate. At the date hereof, the Agents shall have
received a certificate of the President or any Vice President and the chief
financial or chief accounting officer of the Company, dated as of the date
hereof, to the effect that (i) since the respective dates as of which
information is given in each Registration Statement and the Prospectus or since
the date of any agreement by an Agent to purchase Notes as principal, there has
not been any material adverse change in the condition, financial or otherwise,
or in the earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, (ii) the other representations and warranties of
the Company contained in Section 2 hereof are true and correct with the same
force and effect as though expressly made at and as of the date of such
certificate, (iii) the Company has performed or complied in all material
respects with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the date of such certificate, and (iv)
that no stop order suspending the effectiveness of any Registration Statement
has been issued and no proceedings for that purpose have been initiated or
threatened by the SEC.
(c) Comfort Letter. On the date hereof, the Agents shall have received a
letter from Coopers & Lybrand, dated as of the date hereof and in form and
substance satisfactory to the Agents to the effect that:
(i) They are independent public accountants with respect to the
Company and its subsidiaries within the meaning of the 1933 Act and the
1933 Act Regulations.
(ii) In their opinion, the consolidated financial statements and
supporting schedule(s) of the Company and its subsidiaries examined by
them and included or incorporated by reference in the Registration
Statements comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the 1933 Act Regulations with
respect to registration statements on Form S-3 and the 1934 Act and the
1934 Act Regulations.
(iii) They have performed specified procedures, not constituting
an audit, including a reading of the latest available interim financial
statements of the Company and its indicated subsidiaries, a reading of the
minute books of the Company and such subsidiaries since the end of the
most recent fiscal year with respect to which an audit report has been
issued, inquiries of and discussions with certain officials of the Company
and such subsidiaries responsible for financial and accounting matters
with respect to the un-audited consolidated financial statements included
or incorporated by reference in the Registration Statements and the
Prospectus and the latest available interim unaudited financial statements
of the Company and its subsidiaries, and such other inquiries and
17
procedures as may be specified in such letter, and on the basis of such
inquiries and procedures nothing came to their attention that caused them
to believe that: (A) the unaudited consolidated financial statements of
the Company and its subsidiaries included or incorporated by reference in
the Registration Statements and Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the 1934
Act and the 1934 Act Regulations or were not fairly presented in
conformity with generally accepted accounting principles in the United
States applied on a basis substantially consistent with that of the
audited financial statements included or incorporated by reference
therein, or (B) at a specified date not more than five days prior to the
date of such letter, there was any change in the consolidated capital
stock or any increase in consolidated long-term debt of the Company and
its subsidiaries or any decrease in the consolidated net assets of the
Company and its subsidiaries, in each case as compared with the amounts
shown on the most recent consolidated balance sheet of the Company and its
subsidiaries included or incorporated by reference in the Registration
Statements and Prospectus or, during the period from the date of such
balance sheet to a specified date not more than five days prior to the
date of such letter, there were any decreases, as compared with the
corresponding period in the preceding year, in consolidated revenues or
net income of the Company and its subsidiaries, except in each such case
as set forth in or contemplated by the Registration Statements and
Prospectus or except for such exceptions enumerated in such letter as
shall have been agreed to by the Agents and the Company.
(iv) In addition to the examination referred to in their report
included or incorporated by reference in the Registration Statements and
the Prospectus, and the limited procedures referred to in clause (iii)
above, they have carried out certain other specified procedures, not
constituting an audit, with respect to certain amounts, percentages and
financial information which are included or incorporated by reference in
the Registration Statements and Prospectus and which are specified by the
Agents, and have found such amounts, percentages and financial information
to be in agreement with the relevant accounting, financial and other
records of the Company and its subsidiaries identified in such letter.
(d) Other Documents. On the date hereof and on each Settlement Date,
counsel to the Agents shall have been furnished with such documents and opinions
as such counsel may reasonably require for the purpose of enabling such counsel
to pass upon the issuance and sale of Notes as herein contemplated and related
proceedings, or in order to evidence the accuracy and completeness of any of the
representations and warranties, or the fulfillment in all material respects of
any of the conditions, herein contained; and all proceedings taken by the
Company in connection with the issuance and sale of Notes as herein contemplated
shall be satisfactory in form and substance to the Agents and to counsel to the
Agents.
If any condition specified in this Section 5 shall not have been fulfilled
when and as required to be fulfilled, this Agreement (or, at the option of the
applicable Agent, any applicable agreement by such Agent to purchase Notes as
principal) may be terminated by the Agents by notice to the Company at any time
and any such termination shall be without liability of any party to any other
party, except that the covenant regarding provision of an earnings statement
18
set forth in Section 4(h) hereof, the provisions concerning payment of expenses
under Section 10 hereof, the indemnity and contribution agreement set forth in
Sections 8 and 9 hereof, the provisions concerning the representations,
warranties and agreements to survive delivery of Section 11 hereof, the
provisions relating to governing law set forth in Section 14 and the provions
set forth under "Parties" of Section 15 hereof shall remain in effect.
SECTION 6. Delivery of and Payment for Notes Sold through the Agents.
Delivery of Notes sold through an Agent as agent shall be made by the
Company to such Agent for the account of any purchaser only against payment
therefor in immediately available funds. If a purchaser shall fail either to
accept delivery of or to make payment for a Note on the date fixed for
settlement, the applicable Agent shall promptly notify the Company and deliver
the Note to the Company, and, if such Agent has theretofore paid the Company for
such Note, the Company will promptly return such funds to such Agent. If such
failure occurred for any reason other than default by an Agent in the
performance of its obligations hereunder, the Company will reimburse such Agent
on an equitable basis for its loss of the use of the funds for the period such
funds were credited to the Company's account.
SECTION 7. Additional Covenants of the Company.
The Company covenants and agrees with each Agent that:
(a) Reaffirmation of Representations and Warranties. Each acceptance by it
of an offer for the purchase of Notes (whether to an Agent as principal or
through an Agent as agent), and each delivery of Notes to an Agent (whether to
an Agent as principal or through an Agent as agent), shall be deemed to be an
affirmation that the representations and warranties of the Company contained in
this Agreement and in any certificate theretofore delivered to the Agents
pursuant hereto are true and correct at the time of such acceptance or sale, as
the case may be, and an undertaking that such representations and warranties
will be true and correct at the time of delivery to the purchaser or its agent,
or to such Agent, of the Note or Notes relating to such acceptance or sale, as
the case may be, as though made at and as of each such time (and it is
understood that such representations and warranties shall relate to the
Registration Statements and the Prospectus as amended and supplemented to each
such time).
(b) Subsequent Delivery of Certificates. Each time that (i) any
Registration Statement or the Prospectus shall be amended or supplemented (other
than by an amendment or supplement providing solely for a change in the interest
rates of Notes or similar changes, and, unless the Agents shall otherwise
specify, other than by an amendment or supplement which relates exclusively to
an offering of debt securities other than the Notes), (ii) there is filed with
the SEC any document incorporated by reference into the Prospectus (other than
any Current Report on Form 8-K relating exclusively to the issuance of debt
securities under either or both of the Registration Statements, unless the
Agents shall otherwise specify), (iii) (if required in connection with the
purchase of Notes by an Agent as principal) the Company sells Notes to an Agent
as principal or (iv) the Company issues and sells Notes in a form not previously
certified to the Agents by the Company, the Company shall furnish or cause to be
furnished to the Agents forthwith a certificate dated the date of filing with
the SEC of such supplement or document, the
19
date of effectiveness of such amendment, or the date of such sale, as the case
may be, in form reasonably satisfactory to the Agents and of the same tenor as
the certificate referred to in said Section 5(b), modified as necessary to
relate to the Registration Statements and the Prospectus as amended and
supplemented to the time of delivery of such certificate.
(c) Subsequent Delivery of Legal Opinions. Each time that (i) any
Registration Statement or the Prospectus shall be amended or supplemented (other
than by an amendment or supplement providing solely for a change in the interest
rates of the Notes or similar changes or solely for the inclusion of additional
financial information, and, unless the Agents shall otherwise specify, other
than by an amendment or supplement which relates exclusively to an offering of
debt securities other than the Notes), (ii) there is filed with the SEC any
document incorporated by reference into the Prospectus (other than any Current
Report on Form 8-K, unless the Agents shall otherwise specify), or (iii) (if
required in connection with the purchase of Notes by an Agent as principal) the
Company sells Notes to an Agent as principal, the Company shall furnish or cause
to be furnished forthwith to the Agents and to counsel to the Agents a written
opinion of Harmon E. Burns, Esq., Executive Vice President, Legal and
Administrative, of the Company, or other counsel satisfactory to the Agents
dated the date of filing with the SEC of such supplement or document, the date
of effectiveness of such amendment, or the date of such sale, as the case may
be, in form and substance reasonably satisfactory to the Agents, or, in lieu of
such opinion, counsel last furnishing such opinion to the Agents shall furnish
the Agents with a letter to the effect that the Agents may rely on such last
opinion to the same extent as though it was dated the date of such letter
authorizing reliance (except that statements in such last opinion shall be
deemed to relate to the Registration Statements and the Prospectus as amended
and supplemented to the time of delivery of such letter authorizing reliance).
(d) Subsequent Delivery of Comfort Letters. Each time that (i) any
Registration Statement or the Prospectus shall be amended or supplemented to
include additional financial information or there is filed with the SEC any
document incorporated by reference into the Prospectus (other than any Current
Report on Form 8-K, unless the Agents shall otherwise specify) which contains
additional financial information, or (ii) (if required in connection with the
purchase of Notes by an Agent as principal) the Company sells Notes to an Agent
as principal, the Company shall cause Coopers & Lybrand forthwith to furnish
such Agent a letter, dated the date of effectiveness of such amendment,
supplement or document with the SEC, or the date of such sale, as the case may
be, in form reasonably satisfactory to such Agent, of the same tenor as the
letter referred to in Section 5(c) hereof but modified to relate to the
Registration Statements and Prospectus, as amended and supplemented to the date
of such letter, and 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; provided, however, that if any Registration Statement or
the Prospectus is amended or supplemented solely to include financial
information as of and for a fiscal quarter, Coopers & Lybrand may limit the
scope of such letter to the unaudited financial statements included in such
amendment or supplement unless any other information included therein of an
accounting, financial or statistical nature is of such a nature that, in the
reasonable judgment of the Agents, such letter should cover such other
information.
20
SECTION 8. Indemnification.
(a) Indemnification of the Agents. The Company agrees to indemnify and
hold harmless each Agent and each person, if any, who controls each Agent within
the meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement (or any amendment thereto), or the omission or alleged omission
therefrom of a material fact necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in the Prospectus (or any amendment
or supplement thereto) or the omission or alleged omission therefrom of a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred,
(including the fees and disbursements of counsel chosen by the Agents)
reasonably incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
provided, however, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with written information furnished to
the Company by either of the Agents expressly for use in such Registration
Statement (or any amendment thereto) or the Prospectus (or any amendment
or supplement thereto).
(b) Indemnification of Company. Each Agent severally agrees to indemnify
and hold harmless the Company, its directors, each of its officers who signed
any Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in any
Registration Statement (or any amendment thereto) or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by the Agents
21
expressly for use in such Registration Statement (or any amendment thereto) or
the Prospectus (or any amendment or supplement thereto).
(c) General. Each indemnified party shall give prompt notice in writing to
each indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability which it may
have otherwise than on account of this indemnity agreement. An indemnifying
party may participate at its own expense in the defense of such action. In no
event shall the indemnifying parties be liable for the fees and expenses of more
than one counsel (in addition to any local counsel of record) for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances.
SECTION 9. Contribution.
In order to provide for just and equitable contribution in circumstances
in which the indemnity agreement provided for in Section 8 hereof is for any
reason held to be unenforceable by the indemnified parties although applicable
in accordance with its terms, the Company and the Agents shall contribute to the
aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by said indemnity agreement incurred by the Company and the Agents,
as incurred, in such proportions that each Agent is responsible for that portion
represented by the percentage that the total commissions and underwriting
discounts received by such Agent to the date of such liability bears to the
total sales price from the sale of Notes sold to or through such Agent to the
date of such liability, and the Company is responsible for the balance;
provided, however, that no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. For
purposes of this Section, each person, if any, who controls each Agent within
the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as such Agent, and each director of the Company, each officer of
the Company who signed any Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act shall have
the same rights to contribution as the Company.
SECTION 10. Payment of Expenses.
The Company will pay all expenses incident to the performance of its
obligations under this Agreement, including:
(a) The preparation and filing of the Registration Statements and all
amendments thereto and the Prospectus and any amendments or supplements thereto;
(b) The preparation, filing and reproduction of this Agreement;
(c) The preparation, printing, issuance and delivery of the Notes,
including any fees and expenses relating to the use of book-entry notes;
22
(d) The fees and disbursements of the Company's accountants and counsel,
of the Trustee and its counsel, and of any Calculation Agent or Exchange Rate
Agent;
(e) The reasonable fees and disbursements of counsel to the Agents
incurred in connection with the establishment of the program relating to the
Notes and incurred from time to time in connection with the transactions
contemplated hereby;
(f) The qualification of the Notes under the Blue Sky laws in accordance
with the provisions of Section 4(i) hereof, including filing fees and the
reasonable fees and disbursements of counsel for the Agents in connection
therewith and in connection with the preparation of any Blue Sky Survey;
(g) The printing and delivery to the Agents in quantities as hereinabove
stated of copies of the Registration Statements and any amendments thereto, and
of the Prospectus and any amendments or supplements thereto, and the delivery by
the Agents of the Prospectus and any amendments or supplements thereto in
connection with solicitations or confirmations of sales of the Notes;
(h) The preparation, printing, reproducing and delivery to the Agents of
copies of the Indenture and all supplements and amendments thereto;
(i) Any fees charged by rating agencies for the rating of the Notes;
(j) The fees and expenses incurred in connection with the listing of the
Notes on any securities exchange;
(k) The fees and expenses, if any, incurred with respect to any filing
with the National Association of Securities Dealers, Inc.;
(l) Any advertising and other out-of-pocket expenses of the Agents
incurred with the prior written consent of the Company;
(m) The cost of providing any CUSIP or other identification numbers for
the Notes; and
(n) The fees and expenses of any Depositary (as defined in the Indenture)
and any nominees thereof in connection with the Notes.
SECTION 11. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement
or in certificates of officers of the Company submitted pursuant hereto or
thereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Agents or any controlling person of
the Agents, or by or on behalf of the Company, and shall survive each delivery
of and payment for any of the Notes.
23
SECTION 12. Termination.
(a) Termination of this Agreement. This Agreement (excluding any agreement
hereunder by an Agent to purchase Notes as principal) may be terminated for any
reason, at any time by either the Company or an Agent (as to such Agent) upon
the giving of 30 days' written notice of such termination to the other party
hereto.
(b) Termination of Agreement to Purchase Notes as Principal. Each Agent
may terminate any agreement hereunder by such Agent to purchase Notes as
principal, immediately upon notice to the Company, at any time prior to the
Settlement Date relating thereto (i) if there has been, since the date of such
agreement or since the respective dates as of which information is given in the
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there shall have occurred
any material adverse change in the financial markets in the United States or any
outbreak or escalation of hostilities or other national or international
calamity or crisis the effect of which is such as to make it, in the judgment of
such Agent, impracticable to market the Notes or enforce contracts for the sale
of the Notes, or (iii) if trading in any securities of the Company has been
suspended by the SEC or a national securities exchange, or if trading generally
on either the American Stock Exchange or the New York Stock Exchange shall have
been suspended, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities have been required, by either of said
exchanges or by order of the SEC or any other governmental authority, or if a
banking moratorium shall have been declared by either Federal, New York or
Delaware authorities or if a banking moratorium shall have been declared by the
relevant authorities in the country or countries of origin of any foreign
currency or currencies in which the Notes are denominated or payable, or (iv) if
the rating assigned by any nationally recognized securities rating agency to any
debt securities of the Company as of the date of any applicable principal
purchase shall have been lowered since that date or if any such rating agency
shall have publicly announced that it has placed any debt securities of the
Company on what is commonly termed a "watch list" for possible downgrading, or
(v) if there shall have come to such Agent's attention any facts that would
cause such Agent reasonably to believe that the Prospectus, at the time it was
required to be delivered to a purchaser of Notes, 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 existing at the time
of such delivery, not misleading, or (vi) if the Company shall have filed any
amendment or supplement or other documents in a form to which such Agent or
counsel to the Agents shall have reasonably objected in accordance with Section
4(b) hereof. As used in this Section 12(b), the term "Prospectus" means the
Prospectus in the form first used to confirm sales of the Notes.
(c) General. In the event of any such termination, neither party will have
any liability to the other party hereto, except that (i) the applicable Agent
shall be entitled to any commission earned in accordance with the third
paragraph of Section 3(b) hereof, (ii) if at the time of termination (a) the
applicable Agent shall own any Notes purchased by it as principal with the
intention of reselling them or (b) an offer to purchase any of the Notes has
been accepted by the Company but the time of delivery to the purchaser or his
agent of the Note or Notes relating thereto has not occurred, the covenants set
forth in Sections 4 and 7 hereof shall remain in effect
24
until such Notes are so resold or delivered, as the case may be, and (iii) the
covenant set forth in Section 4(h) hereof, the provisions of Section 10 hereof,
the indemnity and contribution agreements set forth in Sections 8 and 9 hereof,
and the provisions of Sections 11, 14 and 15 hereof shall remain in effect.
SECTION 13. Notices.
Unless otherwise provided herein, all notices required under the terms and
provisions hereof shall be in writing, either delivered by hand, by mail or by
telex, telecopier or telegram, and any such notice shall be effective when
received at the address specified below.
If to the Company:
Franklin Resources, Inc.
777 Mariners Island Blvd.
San Mateo, California 94404
Attention: Martin L. Flanagan
Fax: (415) 312-5707
With a copy to:
Harmon E. Burns
Fax: (415) 312-4937
If to [Name of Agent]:
[Address of Agent]
If to [Name of Agent]:
[Address of Agent]
or at such other address as such party may designate from time to time by notice
duly given in accordance with the terms of this Section 13.
25
SECTION 14. Governing Law; Forum.
This Agreement and all the rights and obligations of the parties shall be
governed by and construed in accordance with the laws of the State of New York
applicable to agreements made and to be performed in such State. Any suit,
action or proceeding brought by the Company against the Agents in connection
with or arising under this Agreement shall be brought solely in the state or
federal court of appropriate jurisdiction located in the Borough of Manhattan,
The City of New York.
SECTION 15. Parties.
This Agreement shall inure to the benefit of and be binding upon the
Agents and the Company and their respective successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the parties hereto and their respective
successors and the controlling persons and officers and directors referred to in
Sections 8 and 9 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the parties
hereto and respective successors and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation. No purchaser of Notes shall be deemed to be a
successor by reason merely of such purchase.
26
If the foregoing is in accordance with the Agents' understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument along with all counterparts will become a binding agreement
between the Agents and the Company in accordance with its terms.
Very truly yours,
FRANKLIN RESOURCES, INC.
By:____________________________________
Name: Martin L. Flanagan
Title: Senior Vice President, Principal
Financial Officer and Principal
Accounting Officer
Accepted:
[Name of Agent]
By:________________________________
Name:
Title:
___________________________________
[Name of Agent]
27
EXHIBIT A
The following terms, if applicable, shall be agreed to by the applicable
Agent and the Company in connection with each sale of Notes:
Principal Amount: $_______
(or principal amount of foreign currency)
Interest Rate:
If Fixed Rate Note, Interest Rate:
If Floating Rate Note:
Interest Rate Basis:
Initial Interest Rate:
Spread or Spread Multiplier, if any:
Interest Reset Date(s):
Interest Payment Date(s):
Index Maturity:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Interest Reset Period:
Interest Payment Period:
Calculation Agent:
If Redeemable:
Initial Redemption Date:
Initial Redemption Percentage:
Annual Redemption Percentage Reduction:
If Repayable:
Optional Repayment Date(s):
Date of Maturity:
Purchase Price: ___%
Settlement Date and Time:
Currency of Denomination:
Denominations (if currency is other than U.S. dollar):
Currency of Payment:
Additional Terms:
A-1
Also, in connection with the purchase of Notes by an Agent as principal,
agreement as to whether the following will be required:
Officer's Certificate pursuant to Section 7(b) of the Distribution
Agreement. Legal Opinion pursuant to Section 7(c)of the Distribution
Agreement. Comfort Letter pursuant to Section 7(d) of the Distribution
Agreement. Stand-off Agreement pursuant to Section 4(k) of the
Distribution Agreement.
A-2
SCHEDULE A
As compensation for the services of the Agents hereunder, the Company
shall pay to the applicable Agent, on a discount basis, a commission for the
sale of each Note equal to the principal amount of such Note multiplied by the
appropriate percentage set forth below:
PERCENT OF
MATURITY RANGES PRINCIPAL AMOUNT
From 9 months to less than 1 year............
From 1 year to less than 18 months...........
From 18 months to less than 2 years..........
From 2 years to less than 3 years............
From 3 years to less than 4 years............
From 4 years to less than 5 years............
From 5 years to less than 6 years............
From 6 years to less than 7 years............
From 7 years to less than 10 years...........
From 10 years to less than 15 years..........
From 15 years to less than 20 years..........
From 20 years to less than 30 years..........
From 30 years to 40 years....................
A-3