Exhibit 1.2
$500,000,000
Union Carbide Corporation
Medium-Term Notes
DISTRIBUTION AGREEMENT
January 22, 1997
Credit Suisse First Boston Corporation
11 Madison Avenue
New York, NY 10010
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, NY 10172
Ladies and Gentlemen:
1. Introduction. Union Carbide Corporation, a New York
corporation (the "Issuer"), confirms its agreement with each of you
(individually, a "Distributor" and collectively, the "Distributors") with
respect to the issue and sale from time to time by the Issuer of its
Medium-Term Notes registered under the registration statements referred to in
Section 2(a) (any such Medium-Term Notes being hereinafter referred to as the
"Notes", which expression shall, if the context so admits, include any
permanent global Note). Notes may be offered and sold pursuant to Section 3 of
this Agreement in an aggregate amount not to exceed the amount of Registered
Securities (as defined in Section 2(a) hereof) registered pursuant to such
registration statements reduced by the aggregate amount of any other
Registered Securities sold otherwise than pursuant to Section 3 of this
Agreement. The Notes will be issued under the indenture dated as of June 1,
1995 (the "Indenture"), between the Issuer and The Chase Manhattan Bank
(formerly Chemical Bank), as trustee (the "Trustee").
The Notes shall have the terms described in the Prospectus
referred to in Section 2(a) as it may be amended or supplemented from time
to time, including any supplement to the Prospectus that sets forth only
the terms of a particular issue of the Notes (a "Pricing Supplement").
Notes will be issued, and the terms thereof established, from time to time
by the Issuer in accordance with the Indenture and the Procedures (as
defined in Section 3(d) hereof).
2. Representation and Warranties of the Issuer. The Issuer
represents and warrants to, and agrees with, each Distributor as follows:
(a) Registration statements (Nos. 33-60705 and 333-17309),
relating to $700,000,000 initial offering price of debt securities of
the Issuer (the "Registered Securities"), including a prospectus
which, as supplemented from time to time, shall be used in connection
with sales of the Notes, have been filed with the Securities and
Exchange Commission (the "Commission") and have been declared
effective under the Securities Act of 1933, as amended (the "Act").
Such registration statements, as amended as of the Closing Date (as
defined in Section 3(e) hereof), are hereinafter collectively
referred to as the "Registration Statement", and the prospectus
included in the Registration Statement, as supplemented as of the
Closing Date, including all material incorporated by reference
therein, is hereinafter referred to as the "Prospectus". Any
reference in this agreement to amending or supplementing the
Prospectus shall be deemed to include the filing of materials
incorporated by reference in the Prospectus after the Closing Date
and any reference in this Agreement to any amendment or supplement to
the Prospectus shall be deemed to include any such materials
incorporated by reference in the Prospectus after the Closing Date.
(b) On the effective date of each part of the Registration
Statement, such part of the Registration Statement conformed in all
respects to the requirements of the Act, the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act") and the rules and
regulations of the Commission under the Act, the Exchange Act and the
Trust Indenture Act ("Rules and Regulations") and did not include any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading, and on the Closing Date, at each
of the times of acceptance and delivery referred to in Section 6(a)
hereof and at each of the times of amendment or supplement to the
Registration Statement or the Prospectus (other than by a Pricing
Supplement; the Closing Date and each such time being herein
sometimes referred to as a "Representation Date"), each part of
the Registration Statement and the Prospectus as then amended or
supplemented will conform in all respects to the requirements of
the Act, the Exchange Act, the Trust Indenture Act and the Rules
and Regulations, and neither will omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, except that the foregoing does not apply
to statements in or omissions from any of such documents based
upon written information furnished to the Issuer by any
Distributor specifically for use therein.
(c) The Issuer has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the State of New
York, and has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus, as
amended or supplemented.
(d) Each significant subsidiary (as defined in Regulation S-X
under the Act) of the Issuer has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation and has the corporate power and
authority to own its property and to conduct its business as
described in the Prospectus, as amended or supplemented.
(e) This Agreement and any applicable Terms Agreement (as
defined in Section 3(b) hereof) have been duly authorized, executed
and delivered by the Issuer.
(f) The Indenture has been duly authorized, executed and
delivered by the Issuer and is a valid and binding agreement of the
Issuer, enforceable in accordance with its terms except as (i) the
enforceability thereof may be limited by fraudulent transfer,
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) the availability of equitable remedies may be
limited by equitable principles of general applicability. The
Indenture has been duly qualified under the Trust Indenture Act.
(g) The Notes have been duly authorized and established in
conformity with the Indenture and, when the terms of a
particular Note and of the issue and sale thereof have been
duly authorized and established by all necessary corporate
action in conformity with the Indenture and such Note has
been duly completed, executed, authenticated and issued in
accordance with the Indenture and delivered against payment
therefor as contemplated by this Agreement and any
applicable Terms Agreement, such Note will be entitled to
the benefits of the Indenture and will be a valid and
binding obligation of the Issuer, enforceable in accordance
with its terms except as (i) the enforceability thereof may
be limited by fraudulent transfer, bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii)
the availability of equitable remedies may be limited by
equitable principles of general applicability.
(h) The execution and delivery by the Issuer of, and the
performance by the Issuer of its obligations under, this
Agreement, any applicable Terms Agreement, the Indenture and the
Notes do not violate any provision of applicable law or the
certificate of incorporation or by-laws of the Issuer or any
agreement or other instrument that is binding upon the Issuer or
any of its subsidiaries and is material to the Issuer and its
subsidiaries, taken as a whole, or any judgment, order or decree
of any governmental body, agency or court having jurisdiction over
the Issuer or any of its subsidiaries, and no consent, approval,
authorization or order of or qualification with any governmental
body or agency is required for the performance by the Issuer of
its obligations under this Agreement, any applicable Terms
Agreement, the Notes or the Indenture, except such as may be
required by the securities or Blue Sky laws of the various states
in connection with the offer and sale of the Notes.
(i) There has not been any material adverse change in the
condition, financial or otherwise, or in the earnings, business or
operations of the Issuer and its subsidiaries, taken as a whole, from
that set forth in the Prospectus.
(j) The Issuer is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in
the Investment Company Act of 1940, as amended.
(k) There are no legal or governmental proceedings pending
or, to the knowledge of the Issuer, threatened to which the Issuer or
any of its subsidiaries is a party or to which any of the properties
of the Issuer or any of its subsidiaries is subject that are required
to be described in the Registration Statement or the Prospectus and
are not so described or any statutes, regulations, contracts or other
documents that are required to be described in the Registration
Statement or the Prospectus or to be filed or incorporated by
reference as exhibits to the Registration Statement that are not
described, filed or incorporated as required.
(l) The consolidated financial statements included in the
Registration Statement and Prospectus present fairly, in all material
respects, the financial position of the Issuer and its subsidiaries
as of the dates shown and their results of operations and cash flows
for the periods shown, in conformity with generally accepted
accounting principles in the United States; and the schedules
included in the Registration Statement present fairly the information
required to be stated therein.
(m) Immediately after any sale of Notes by the Issuer hereunder
or under any Terms Agreement, the aggregate amount of Notes which
shall have been issued and sold by the Issuer hereunder or under any
Terms Agreement and of any debt securities of the Issuer (other than
such Notes) 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.
(n) The statements in the Prospectus under the captions
"Description of Securities" and "Description of Notes", insofar as
such statements constitute summaries of the documents referred to
therein, fairly summarize the information set forth in such
documents.
3. Appointment as Distributors; Agreement of Distributors;
Solicitations.
(a) Subject to the terms and conditions stated herein, the
Issuer hereby appoints each of the Distributors as a non-exclusive agent of
the Issuer for the purpose of soliciting or receiving offers to purchase the
Notes from the Issuer by others during any Marketing Time. For purposes of
this Agreement "Marketing Time" shall mean any time when no suspension of
solicitation of offers to purchase Notes pursuant to Section 3(b) or Section
4(b) shall be in effect and any time when either any Distributor shall own any
Notes with the intention of reselling them or the Issuer has accepted an offer
to purchase Notes but the related settlement has not occurred.
Without limiting the Issuer's rights to deal with others, the
Issuer from time to time may (i) sell Registered Securities, including the
Notes, in a firm commitment underwriting, (ii) sell Notes directly to
investors, (iii) accept offers to purchase Notes solicited by a dealer other
than the Distributors, (iv) appoint additional Distributors hereunder without
obtaining the prior consent of any of the Distributors, provided that the
Issuer shall notify each of the Distributors prior to making such an
appointment and any additional Distributor shall agree to be bound by and
subject to the terms and conditions of this Agreement binding on the
Distributors, and (v) solicit other dealers to make offers for the purchase of
Notes on such terms and conditions as the Issuer may agree to. As with the
Distributors, other dealers may act as agent or purchase Notes from the Issuer
as principal for resale. Each Distributor is authorized to engage the
services of any other broker or dealer in connection with the offer or sale
of Notes purchased by such Distributor as principal for resale to others and
may reallow a portion of the commission, but such Distributor is not
authorized to appoint sub-agents.
(b) On the basis of the representations and warranties
contained herein, but subject to the terms and conditions herein set forth,
each Distributor agrees, as an agent of the Issuer, to use reasonable efforts
when requested by the Issuer to solicit offers to purchase the Notes upon the
terms and conditions set forth in the Prospectus, as from time to time amended
or supplemented. No Distributor shall have any responsibility for maintaining
records with respect to the aggregate principal amount of Notes sold, or
otherwise monitoring the availability of securities for sale under the
Registration Statement. In placing any Notes pursuant to an offer accepted by
the Issuer, the Distributor that solicited or received such offer (the
"Presenting Distributor") may act as agent or purchase such Notes from the
Issuer as principal for resale. Upon acceptance by the Issuer of an offer by
the Presenting Distributor to purchase Notes as principal, the Presenting
Distributor may complete a Terms Agreement substantially in the form of
Exhibit A hereto and transmit the completed Terms Agreement to the Issuer by
hand or by facsimile or other similar means of telecommunication. Upon
acceptance by the Issuer of an offer to purchase Notes, unless the Issuer and
the Presenting Distributor otherwise agree in writing, any such Terms
Agreement or other written confirmation or communication transmitted by the
Presenting Distributor to the Issuer or, in the absence of a Terms Agreement
or other written confirmation or communication from the Presenting
Distributor, the oral agreement with respect to the terms of the Notes and of
their offer and sale evidenced by the offer communicated by the Presenting
Distributor and accepted by the Issuer, in each case together with the
provisions of this Agreement, shall constitute an agreement (a "Terms
Agreement") between the Presenting Distributor and the Issuer for the sale and
purchase of such Notes (whether or not any written confirmation or
communication shall have been executed by the Issuer or the Presenting
Distributor).
Upon receipt of notice from the Issuer as contemplated by
Section 4(b) hereof, each Distributor shall suspend its solicitation of
offers to purchase Notes until such time as the Issuer shall have furnished
it with an amendment or supplement to the Registration Statement or the
Prospectus, as the case may be, contemplated by Section 4(b) hereof and
shall have advised such Distributor that such solicitation may be resumed.
The Issuer reserves the right, in its sole discretion, to
suspend solicitation of offers to purchase the Notes commencing at any time
for any period of time or permanently. Upon receipt of at least one Business
Day's prior notice from the Issuer, the Distributors will forthwith suspend
solicitation of offers to purchase Notes from the Issuer until such time as
the Issuer has advised the Distributors that such solicitation may be resumed.
For the purpose of the foregoing sentence, "Business Day" shall mean any day
that is not a Saturday or Sunday, and that in The City of New York is not a
day on which banking institutions generally are authorized or obligated by law
or executive order to close.
The Distributors are authorized to solicit offers to purchase
Notes as described in the Prospectus, as amended or supplemented, and only in
a minimum aggregate amount of U.S.$1,000 (or the equivalent thereof in one or
more currencies or currency units other than U.S. dollars). Each Distributor
shall communicate to the Issuer, orally or in writing, each reasonable offer
to purchase Notes received by it as agent. The Issuer shall have the sole
right to accept offers to purchase the Notes and may reject any such offer,
in whole or in part. Each Distributor shall have the right, in its discretion
reasonably exercised, without notice to the Issuer, to reject any offer to
purchase Notes received by it, in whole or in part, and any such rejection
shall not be deemed a breach of its agreement contained herein.
No Note which the Issuer has agreed to sell pursuant to this
Agreement shall be deemed to have been purchased and paid for, or sold by the
Issuer, until such Note shall have been delivered to the purchaser thereof
against payment by such purchaser.
(c) At the time of delivery of, and payment for, any Notes
sold by the Issuer as a result of a solicitation made by, or offer to purchase
received by, a Distributor, acting on an agency basis, the Issuer agrees to
pay such Distributor a commission in accordance with the schedule set forth in
Exhibit B hereto unless otherwise agreed. The Issuer agrees that each
Distributor that purchases Notes as principal for resale shall receive such
compensation, in the form of a discount or otherwise, as shall be agreed to
between such Distributor and the Issuer at the time the Issuer accepts an
offer to purchase such Notes, or, if no such compensation is agreed to, a
commission in accordance with Exhibit B hereto. Unless otherwise specified in
a Terms Agreement, a Distributor purchasing Notes may resell such Notes to
other dealers on the terms set forth in, or determined as described in, the
Prospectus (including, if applicable, the Pricing Supplement).
(d) Administrative procedures respecting the sale of Notes
(the "Procedures") shall be agreed upon from time to time by the Distributors
and the Issuer. The initial Procedures, which are set forth in Exhibit C
hereto, shall remain in effect until changed by agreement among the Issuer and
the Distributors. Each Distributor and the Issuer agree to perform the
respective duties and obligations specifically provided to be performed by
each of them herein and in the Procedures. The Issuer will furnish to the
Trustee a copy of the Procedures as from time to time in effect.
(e) The documents required to be delivered by Section 5 hereof
shall be delivered at the office of Davis Polk & Wardwell, 450 Lexington
Avenue, New York, N.Y. 10017, not later than 10:00 A.M., New York City time,
on the date of this Agreement or at such later time as may be mutually agreed
by the Issuer and the Distributors, which in no event shall be later than the
time at which the Distributors commence solicitation for purchases of Notes
hereunder, such time and date being herein called the "Closing Date".
4. Certain Agreements of the Issuer. The Issuer agrees with
the Distributors that it will furnish to Davis Polk & Wardwell, counsel for
the Distributors, one signed copy of the Registration Statement, including all
exhibits, in the form it became effective and of all amendments thereto and
that, in connection with each offering of Notes:
(a) The Issuer will if appropriate and if time permits afford
the Distributors a reasonable opportunity to comment on any proposed
amendment or supplement to the Registration Statement or the
Prospectus in respect of the Notes (other than any Pricing
Supplement) prior to the filing thereof. The Issuer will promptly
advise each Distributor of the filing and effectiveness of any such
amendment or supplement and of the institution by the Commission of
any stop order proceedings in respect of the Registration Statement
or of any part thereof and will use its best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible its
lifting, if issued.
(b) If, at any time when a prospectus relating to the Notes is
required to be delivered under the Act, any event occurs 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 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 it is necessary at any such time to
amend the Prospectus to comply with the Act, the Issuer will promptly
notify each Distributor to suspend solicitation of offers to purchase
the Notes and, if the Issuer shall decide to amend or supplement the
Registration Statement or the Prospectus, it will promptly advise
each Distributor by telephone (with confirmation in writing) and,
subject to the provisions of subsection (a) of this Section, will
promptly prepare and file with the Commission an amendment or
supplement which will correct such statement or omission or an
amendment which will effect such compliance. Notwithstanding the
foregoing, if, at the time any such event occurs or it becomes
necessary to amend the Prospectus to comply with the Act, any
Distributor shall own any of the Notes with the intention of
reselling them, or the Issuer has accepted an offer to purchase Notes
but the related settlement has not occurred, the Issuer, subject to
the provisions of subsection (a) of this Section, will promptly
prepare and file with the Commission an amendment or supplement which
will correct such statement or omission or an amendment which will
effect such compliance. Neither the Distributors' consent to, nor
their delivery of, any such amendment or supplement shall constitute
a waiver of any of the conditions set forth in Section 5 hereof.
(c) The Issuer will file promptly all documents required to be
filed with the Commission pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act. The Issuer will furnish promptly each
Distributor with copies of all Forms 8-K, 10-Q and 10-K, proxy
statements, annual reports to stockholders and all press releases.
The Issuer will immediately notify each Distributor of any
downgrading in the rating of any debt securities of the Issuer or any
proposal to downgrade the rating of any debt securities of the Issuer
by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Act), or any public
announcement that any such organization has under surveillance or
review its rating of any debt securities of the Issuer (other than
an announcement with positive implications of a possible upgrading,
and no implication of a possible downgrading of such rating), as soon
as the Issuer learns of such downgrading, proposal to downgrade or
public announcement.
(d) As soon as practicable, but not later than 16 months,
after the date of each acceptance by the Issuer of an offer to
purchase Notes hereunder, the Issuer will make generally available to
its security holders an earnings statement which will satisfy the
provisions of Section 11(a) of the Act.
(e) The Issuer will furnish to each Distributor copies of any
preliminary prospectus relating to the Notes, any preliminary
prospectus supplement relating to the Notes, the Prospectus and all
amendments and supplements to such documents relating to the Notes
(except that any Pricing Supplement will be furnished only to the
Distributors acting as such in respect of the Notes described
therein), in each case as soon as available and in such quantities as
are reasonably requested.
(f) The Issuer will arrange for the qualification of the Notes
for sale under the laws of such jurisdictions as the Distributors
designate and will continue such qualifications in effect so long as
required for the distribution; provided that the Issuer shall not be
required to qualify to do business in any jurisdiction where it is
not now qualified or to file a general consent to service of process
in any jurisdiction.
(g) Unless otherwise agreed, the Issuer will pay, or reimburse
each Distributor for, all expenses incident to the performance of
its obligations under this Agreement and will reimburse each
Distributor for any expenses (including fees and disbursements of
counsel) incurred by it in connection with qualification of the
Notes for sale under the laws of such jurisdictions as such
Distributor may designate and the printing of memoranda relating
thereto, for any fees charged by investment rating agencies for
the rating of the Notes, for any filing fee of the National
Association of Securities Dealers, Inc. relating to the Notes, for
expenses incurred by each Distributor in distributing the
Prospectus and all supplements thereto (including any Pricing
Supplement), any preliminary prospectuses and any preliminary
prospectus supplements to such Prospectus and for each
Distributor's reasonable out-of-pocket expenses (including the
reasonable fees and disbursements of counsel to the Distributors)
incurred in connection with the establishment or maintenance of
the program contemplated by this Agreement or otherwise in
connection with the activities of the Distributors under this
Agreement.
(h) Unless otherwise agreed, between the date on which any
Distributor agrees to purchase Notes from the Issuer as principal for
resale and the date of delivery of such Notes, the Issuer will not
offer or sell, or enter into any agreement to sell, any of its debt
securities (other than such Notes) in the United States, other than
borrowings under the Issuer's revolving credit agreements and lines
of credit, private placements of its securities and issuances of its
commercial paper.
5. Conditions of Obligations. The obligations of each
Distributor, as agent of the Issuer, under this Agreement at any time to
solicit offers to purchase the Notes and to purchase Notes from the Issuer as
principal is subject to the accuracy, on the date hereof, on each
Representation Date and on the date of each such solicitation, of the
representations and warranties of the Issuer herein, to the accuracy, on each
such date, of the statements of the Issuer's officers made pursuant to the
provisions hereof, to the performance, on or prior to each such date, by the
Issuer of its obligations hereunder, and to each of the following additional
conditions precedent:
(a) The Prospectus, as amended or supplemented as of any
Representation Date or date of such solicitation, as the case may be,
shall have been filed with the Commission in accordance with the
Rules and Regulations and no stop order suspending the effectiveness
of the Registration Statement or of any part thereof shall have been
issued and no proceeding for that purpose shall have been instituted
or, to the knowledge of the Issuer or any Distributor, shall be
contemplated by the Commission.
(b) Neither the Registration Statement nor the Prospectus, as
amended or supplemented as of any Representation Date or date of such
solicitation, as the case may be, shall contain any untrue statement
of fact which, in the opinion of any Distributor, is material or
omits to state a fact which, in the opinion of any Distributor, is
material and is required to be stated therein or is necessary to make
the statements therein not misleading.
(c) There shall not have occurred: (i) any material adverse
change in the condition, financial or otherwise, or in the earnings,
business or operations, of the Issuer and its subsidiaries, taken as
a whole, from that set forth in the Prospectus; (ii) any downgrading
in, or notice of any proposal to downgrade, the rating of the
Issuer's debt securities by any "nationally recognized statistical
rating organization" (as defined for purposes of Rule 436(g) under
the Act) or any public announcement that any such organization has
under surveillance or review with negative implications or without
indicating the direction of the possible change in the rating of the
Issuer's debt securities; (iii) any suspension or limitation of
trading in securities generally on or by the New York Stock Exchange,
the American Stock Exchange, the National Association of Securities
Dealers, Inc., the Chicago Board Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, or any setting of
minimum prices for trading on any such exchange; (iv) any suspension
of trading of any securities of the Issuer on any exchange; (v) any
banking moratorium declared by Federal or New York authorities; or
(vi) 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 set forth in (i)
through (vi), in the judgment of the Distributors, makes it
impractical or inadvisable to proceed with solicitations of offers to
purchase, or sales of, Notes.
(d) With respect to any Note denominated in a currency other
than U.S. dollars, more than one currency or a composite currency or
any Security the principal or interest of which is indexed to such
currency, currencies or composite currency, there shall not have
occurred a suspension or material limitation in foreign exchange
trading in such currency, currencies or composite currency by a major
international bank, a general moratorium on commercial banking
activities in the country or countries issuing such currency,
currencies or composite currency, the outbreak or escalation of
hostilities involving, the occurrence of any material adverse change
in the existing financial, political or economic conditions of, or
the declaration of war or a national emergency by, the country or
countries issuing such currency, currencies or composite currency or
the imposition or proposal of exchange controls by any government
authority in the country or countries issuing such currency,
currencies or composite currency;
(e) At the Closing Date the Distributors and, if specified in
a Terms Agreement, if any, at the time of delivery of the Notes
described in such Terms Agreement the Distributors purchasing such
Notes (collectively, if more than one, the "Purchasing Distributor"),
shall have received written opinions, dated the Closing Date, or such
date of delivery, as the case may be, of (i) Phyllis Savage, Chief
Finance and Securities Counsel of the Issuer, or other counsel to the
Issuer acceptable to the Distributors or the Purchasing Distributor,
as the case may be, substantially in the form of Schedule I hereto
and (ii) Sullivan & Cromwell, special tax counsel to the Issuer, or
other tax counsel to the Issuer acceptable to the Distributors or the
Purchasing Distributor, as the case may be, substantially in the form
of Schedule II hereto.
Provided, however, that, in the case of each such opinion delivered
pursuant to a Terms Agreement, to the extent applicable to such
opinion, (x) the statements contained in such opinion relating to the
Registration Statement or the Prospectus shall relate to the
Registration Statement or the Prospectus, as the case may be, as
amended or supplemented as of the time of delivery of such Notes; (y)
such opinion shall relate to the Notes being delivered on the date of
such opinion; and (z) in lieu of the opinion set forth in clause
(iv) of Schedule I hereto, such opinion shall state that the Notes
being delivered on the date of such opinion, when authenticated in
accordance with the Indenture and delivered to and duly paid for
by the Purchasing Distributor pursuant to this Agreement, such
Notes will have been duly authorized and executed, and will be
entitled to the benefits of the Indenture and will be valid and
binding obligations of the Issuer, enforceable in accordance with
their terms, subject to the qualifications set forth as to
fraudulent transfer, bankruptcy, insolvency and similar laws
affecting creditors' rights generally and equitable principles of
general applicability, and will conform to the description thereof
contained in the Prospectus as amended or supplemented at such
date of delivery.
(f) At the Closing Date the Distributors and, if specified in
a Terms Agreement, if any, at the time of delivery of the Notes
described in such Terms Agreement the Purchasing Distributor shall
have received a certificate, dated the Closing Date or such date
of delivery, as the case may be, of the Chairman, the President,
any Vice President or the Treasurer of the Issuer in which such
officer, to the best of such officers' knowledge after reasonable
investigation, shall state that (i) the representations and
warranties of the Issuer in this Agreement are true and correct in
all material respects, (ii) the Issuer has complied in all
material respects with all agreements and satisfied in all
material respects all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date or such date
of delivery, as the case may be, (iii) no stop order suspending
the effectiveness of the Registration Statement or of any part
thereof has been issued and no proceedings for that purpose have
been instituted or are contemplated by the Commission, and (iv)
subsequent to the date of the most recent consolidated financial
statements included in the Prospectus, there has been no material
adverse change on a consolidated basis in the financial position
of the Issuer and its subsidiaries, their results of operations or
cash flows, except as set forth in or contemplated by the
Prospectus or as described in such certificate. In the case of
each such certificate delivered pursuant to a Terms Agreement, the
statements contained in such certificate relating to the
Registration Statement or the Prospectus shall relate to the
Registration Statement or the Prospectus, as the case may be, as
amended or supplemented as of the time of delivery of such Notes.
(g) At the Closing Date the Distributors and, if specified in
a Terms Agreement, if any, at the time of delivery of the Notes
described in such Terms Agreement the Purchasing Distributor shall
have received a letter, dated the Closing Date or such date of
delivery, as the case may be, of KPMG Peat Marwick LLP, confirming
that they are independent public accountants within the meaning of
the Act and the applicable published Rules and Regulations
thereunder and stating substantially as set forth in Schedule III
hereto. In the case of each such letter delivered pursuant to a
Terms Agreement, the statements contained in such letter relating
to the Registration Statement or the Prospectus shall relate to
the Registration Statement or the Prospectus, as the case may be,
as amended or supplemented as of the time of delivery of such
Notes.
(h) At the Closing Date the Distributors and, if specified in
a Terms Agreement, if any, at the time of delivery of the Notes
described in such Terms Agreement the Purchasing Distributor, as the
case may be, shall have received from Davis Polk & Wardwell, counsel
for the Distributors, such opinion or opinions, substantially as set
forth in Schedule IV hereto, and the Issuer shall have furnished to
such counsel such documents as they request for the purpose of
enabling them to pass upon such matters; provided, however, that in
the case of each such opinion delivered pursuant to a Terms
Agreement, (i) the statements contained in such opinion relating to
the Registration Statement on the Prospectus shall relate to the
Registration Statement or the Prospectus, as the case may be, as
amended or supplemented as of the time of delivery of such Notes;
(ii) such opinion shall relate to the Notes being delivered on the
date of such opinion; and (iii) in lieu of the opinion set forth in
clause (ii) of Schedule IV hereto, such opinion shall state that the
Notes being delivered on the date of such opinion have been duly
authorized and established in conformity with the provisions of the
Indenture and, when such Notes have been executed by the Issuer and
authenticated by the Trustee in accordance with the provisions of the
Indenture and delivered to and duly paid for by the Purchasing
Distributor pursuant to the Terms Agreement, they will be entitled to
the benefits of the Indenture and will be valid and binding
obligations of the Issuer, enforceable in accordance with their
respective terms, subject to bankruptcy, insolvency or similar laws
affecting creditors' rights generally and equitable principles of
general applicability.
(i) The Issuer shall have furnished to the Distributors or
the Purchasing Distributor (as applicable) and their counsel such
further certificates and documents as the Distributors or the
Purchasing Distributors (as applicable) or such counsel request.
The Issuer will furnish the Distributors with such conformed
copies of such opinions, certificates, letters and documents as they
reasonably request.
6. Additional Covenants of the Issuer. The Issuer agrees
that:
(a) Each acceptance by the Issuer of an offer for the
purchase of Notes shall be deemed to be an affirmation that its
representations and warranties contained in this Agreement are true
and correct in all material respects at the time of such acceptance
and a covenant that such representations and warranties will be true
and correct in all materials respects at the time of delivery to the
purchaser of such Notes as though made at and as of each such time,
it being understood that such representations and warranties shall
relate to the Registration Statement and the Prospectus as amended or
supplemented at each such time. Each such acceptance by the Issuer
of an offer to purchase Notes shall be deemed to constitute an
additional representation, warranty and agreement by the Issuer that,
as of the date of delivery of such Notes to the purchaser thereof,
after giving effect to the issuance of such Notes, of any other Notes
to be issued on or prior to such delivery date and of any other
Registered Securities to be issued and sold by the Issuer on or prior
to such delivery date, the aggregate amount of Registered Securities
(including any Notes) which have been issued and sold by the Issuer
will not exceed the amount of Registered Securities registered
pursuant to the Registration Statement.
(b) At each date selected by the Issuer within 10 days after
each filing by the Issuer of any Form 10-K (a "Representation Date
referred to in Section 6(b)"), the Issuer shall furnish the
Distributors with a certificate, dated the date of delivery thereof,
of the Chairman, the President, any Vice President or the Treasurer
of the Issuer, in form satisfactory to the Distributors, to the
effect that the statements contained in the certificate covering the
matters set forth in Section 5(f) hereof which was last furnished to
the Distributors pursuant to Section 5(f) or this Section 6(b) are
true and correct in all material respects at the date thereof, as
though made at and as of such time or, in lieu of such certificate,
a certificate of the same tenor as the certificate referred to in
Section 5(f); provided, however, that any certificate furnished under
this Section 6(b) shall relate to the Registration Statement and the
Prospectus as amended or supplemented at the time of delivery of such
certificate and, in the case of the matters set forth in clause (ii)
of Section 5(f), to the date of delivery of such certificate.
(c) At each Representation Date referred to in Section 6(b),
the Issuer shall furnish the Distributors with a written opinion or
opinions, dated the date of such Representation Date, of counsel for
the Issuer, in form satisfactory to the Distributors, to the effect
referred to in Section 5(e)(i) hereof; provided, however, that to the
extent appropriate such opinion or opinions may reconfirm matters set
forth in a prior opinion or opinions delivered at the Closing Date or
under this Section 6(c); provided, further, however, that any opinion
or opinions furnished under this Section 6(c) shall relate to the
Registration Statement and the Prospectus as amended or supplemented
at such Representation Date and shall state that the Notes sold in
the relevant Applicable Period (as defined below) have been duly
executed, authenticated, issued and delivered and constitute valid
and legally binding obligations of the Issuer enforceable in
accordance with their terms, subject only to the qualifications set
forth in Schedule I hereto as to fraudulent transfer, bankruptcy,
insolvency and similar laws affecting creditors' rights generally and
equitable principles of general applicability, and conform to the
description thereof contained in the Prospectus as amended or
supplemented at the relevant date or dates for the delivery of such
Notes to the purchaser or purchasers thereof. For the purpose of
this Section 6(c), "Applicable Period" shall mean with respect to any
opinion delivered on a Representation Date the period commencing on
the date as of which the most recent prior opinion delivered at the
Closing Date or under this Section 6(c) speaks and ending on such
Representation Date.
(d) At each date selected by the Issuer within 10 days after
each filing by the Issuer of any Form 10-Q and at each Representation
Date referred to in Section 6(b), the Issuer shall cause KPMG Peat
Marwick LLP to furnish the Distributors with a letter, addressed
jointly to the Issuer and the Distributors and dated such date, in
form and substance satisfactory to the Distributors, to the effects
referred to in Section 5(g) hereof; provided, however, that to the
extent appropriate such letter may reconfirm matters set forth in a
prior letter delivered at the Closing Date or pursuant to this
Section 6(d); provided further, however, that any letter furnished
under this Section 6(d) shall relate to the Registration Statement
and the Prospectus as amended or supplemented at such date, with such
changes as may be necessary to reflect changes in the financial
statements and other information derived from the accounting records
of the Issuer.
(e) On each date for the delivery of Notes to the purchaser
thereof, the Issuer shall, if requested by the Distributor that
solicited or received the offer to purchase any Notes being
delivered on such settlement date, furnish such Distributor with a
written opinion or opinions, dated the date of delivery thereof,
of counsel for the Issuer, in form satisfactory to such
Distributor, to the effect set forth in clauses (i), (ii), (iii),
(iv) and (x) of Schedule I hereto; provided, however, that any
opinion furnished under this Section 6(e) shall relate to the
Prospectus as amended or supplemented at such delivery date and
shall state that the Notes being sold by the Issuer on such
delivery date, when delivered against payment therefor as
contemplated by this Agreement, will have been duly executed,
authenticated, issued and delivered and will constitute valid and
legally binding obligations of the Issuer enforceable in
accordance with their terms, subject only to the qualifications
set forth in Schedule I hereto as to fraudulent transfer,
bankruptcy, insolvency and similar laws affecting creditors'
rights generally and equitable principles of general
applicability, and will conform to the description thereof
contained in the Prospectus as amended or supplemented at such
settlement date.
(f) The Issuer agrees that any obligation of a person who has
agreed to purchase Notes to make payment for and take delivery of
such Notes shall be subject to (i) the accuracy, on the related
settlement date fixed pursuant to the Procedures, of the Issuer's
representation and warranty deemed to be made to the Distributors
pursuant to the last sentence of subsection (a) of this Section 6,
and (ii) the satisfaction, on such settlement date, of each of the
conditions set forth in Section 5(a), (b) and (c) hereof, it being
understood that under no circumstances shall any Distributor have any
duty or obligation to exercise the judgment permitted under Section
5(b) or (c) hereof on behalf of any such person.
7. Indemnification and Contribution.
(a) The Issuer will indemnify and hold harmless each
Distributor against any losses, claims, damages or liabilities, joint or
several, to which such Distributor 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 any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus or preliminary prospectus
supplement, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse
each Distributor for any legal or other expenses reasonably incurred by
such Distributor in connection with investigating or defending any such
loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Issuer will not be liable to such Distributor
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 of such
documents in reliance upon and in conformity with written information
furnished to the Issuer by such Distributor specifically for use therein,
unless such loss, claim, damage or liability arises out of the offer or
sale of Notes occurring after the Distributor has notified the Issuer in
writing that such information should no longer be used therein, it being
understood and agreed that the only such information furnished by any
Distributor consists of the information described as such in subsection (b)
below.
(b) Each Distributor will severally and not jointly indemnify
and hold harmless the Issuer against any losses, claims, damages or
liabilities to which the Issuer 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 any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, the Prospectus or any amendment or supplement thereto, or any
related preliminary prospectus or preliminary prospectus supplement thereto,
or arise out of or are based upon the omission or the 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 reliance upon and in conformity with
written information furnished to the Issuer by such Distributor specifically
for use therein, and will reimburse any legal or other expenses reasonably
incurred by the Issuer in connection with investigating or defending any such
loss, claim, damage, liability or action as such expenses are incurred, unless
such loss, claim, damage or liability arises out of the offer or sale of Notes
occurring after the Distributor has notified the Issuer in writing that such
information should no longer be used therein, it being understood and agreed
that the only such information furnished by any Distributor consists of the
following information in the Prospectus furnished on behalf of each
Distributor: the first sentence of the last paragraph at the bottom of the
cover page concerning the terms of the offering by the Distributors; the
legend concerning stabilization and over-allotment on the inside front cover
page; and the fifth through eighth sentences inclusive of the first paragraph
of text under the caption "Plan of Distribution of Notes" concerning the terms
of the offering of the Securities by the Distributors.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party otherwise than under subsection (a) or (b) above. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may 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 will not be liable to such indemnified party under this
Section 7 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened action 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 any claims that are the subject
matter of such action.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilities referred to in subsection (a) or (b)
above (i) in such proportion as is appropriate to reflect the relative
benefits received by the Issuer on the one hand and any Distributor on the
other from the offering pursuant to this Agreement of the Securities which are
the subject of the action or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Issuer on the one hand and any Distributor on
the other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities as well as any other relevant
equitable considerations. The relative benefits received by the Issuer on the
one hand and any Distributor on the other shall be deemed to be in the same
proportions as the total net proceeds from the offering pursuant to this
Agreement of the Notes which are the subject of the action (before deducting
expenses) received by the Issuer bear to the total discounts and commissions
received by such Distributor from the offering of such Notes pursuant to this
Agreement. 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 relates to
information supplied by the Issuer or such Distributor and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such untrue statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of 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 action or claim which
is the subject of this subsection (d). Notwithstanding the provisions of this
subsection (d), no Distributor shall be required to contribute any amount in
excess of the amount by which the total price at which the Notes which are the
subject of the action and which were distributed to the public through it
pursuant to this Agreement or upon resale of Notes purchased by it from the
Issuer exceeds the amount of any damages which such Distributor 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 Distributor in this subsection (d)
to contribute are several, in the same proportion which the amount of the
Securities which are the subject of the action and which were distributed to
the public through such Distributor pursuant to this Agreement bears to the
total amount of such Notes distributed to the public through all of the
Distributors pursuant to this Agreement, and not joint.
(e) The obligations of the Issuer under this Section 7 shall
be in addition to any liability which the Issuer may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Distributor within the meaning of the Act; and the obligations of
each Distributor under this Section 7 shall be in addition to any liability
which such Distributor may otherwise have and shall extend, upon the same
terms and conditions, to each director of the Issuer, to each officer of the
Issuer who has signed the Registration Statement and to each person, if any,
who controls the Issuer within the meaning of the Act.
8. Status of Each Distributor. In soliciting offers to
purchase the Notes from the Issuer pursuant to this Agreement and in assuming
its other obligations hereunder (other than any obligation to purchase Notes
pursuant to Section 3 hereof), each Distributor is acting individually and not
jointly and is acting solely as agent for the Issuer and not as principal. In
connection with the placement of any Notes by a Distributor, acting as agent,
(a) the Distributor will make reasonable efforts to assist the Issuer in
obtaining performance by each purchaser whose offer to purchase Notes from the
Issuer has been solicited by such Distributor and accepted by the Issuer, but
such Distributor shall have no liability to the Issuer in the event any such
purchase is not consummated for any reason; and (b) if the Issuer shall
default on its obligations to deliver Notes to a purchaser whose offer it has
accepted, the Issuer (i) shall hold the Distributors harmless against any
loss, claim or damage arising from or as a result of such default by the
Issuer, and (ii) in particular, shall pay to the Distributors any commission
to which they would be entitled in connection with such sale.
9. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Issuer or its officers and of the Distributors set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation, or statement as to the results thereof, made
by or on behalf of any Distributor, the Issuer or any of their respective
representatives, officers or directors or any controlling person and will
survive delivery of and payment for the Notes. If this Agreement is
terminated pursuant to Section 10 hereof or for any other reason or if for any
reason the sale of Notes described in a confirmation or Terms Agreement
referred to in Section 3 hereof by the Issuer to a Distributor is not
consummated, the Issuer shall remain responsible for the expenses to be paid
or reimbursed by it pursuant to Section 4(h) hereof and the obligations of the
Issuer under Sections 4(d) hereof and 4(g) hereof and the respective
obligations of the Issuer and the Distributors pursuant to Section 7 hereof
shall remain in effect. In addition, if any such termination of this
Agreement shall occur either (i) at a time when any Distributor shall own any
of the Notes with the intention of reselling them or (ii) after the Issuer has
accepted an offer to purchase Notes and prior to the related settlement, the
obligations of the Issuer under the second sentence of Section 4(b)hereof,
under Sections 4(a), 4(c), 4(e), 4(f) and 4(i) hereof and, in the case of a
termination occurring as described in (ii) above, under Sections 3(c), 6(a),
6(e) and 6(f) hereof and under the last sentence of Section 8 hereof, shall
also remain in effect.
10. Termination. This Agreement may be terminated for any
reason at any time by the Issuer as to any Distributor or, in the case of any
Distributor, by such Distributor insofar as this Agreement relates to such
Distributor, upon the giving of one Business Day's written notice of such
termination to the other parties hereto; provided, however, that this
Agreement may not be terminated with respect to a Distributor by the giving of
such notice following receipt by the Issuer of a confirmation or Terms
Agreement referred to in Section 3 hereof relating to the purchase of Notes by
the Distributor and prior to delivery of the Notes described in such
confirmation or Terms Agreement, unless the sale and purchase of Notes
contemplated thereby is rejected by the Issuer in accordance with Section 3
hereof. Any settlement with respect to Notes placed by a Distributor on an
agency basis occurring after termination of this Agreement shall be made in
accordance with the Procedures and each Distributor agrees, if requested by
the Issuer, to take the steps therein provided to be taken by such Distributor
in connection with such settlement.
11. Sales of Notes Denominated in a Currency Other Than U.S.
Dollars or of Indexed Notes. If at any time the Issuer and any Distributor
shall determine to issue and sell Notes denominated in a currency other than
U.S. dollars, which other currency may include a currency unit, or with
respect to which an index is used to determine the amounts of payments of
principal and any premium and interest, the Issuer and such Distributor may
execute and deliver a supplement to this Agreement for the purpose of making
any appropriate additions to and modifications of the terms of this Agreement
(and the Procedures) applicable to such Notes and the offer and sale thereof.
The Distributors are authorized to solicit offers to purchase Notes with
respect to which an index is used to determine the amounts of payments of
principal and any premium and interest, and the Issuer shall agree to any
sales of such Notes (whether offered on an agency or principal basis), only in
a minimum aggregate amount of $2,500,000. The Issuer will not issue Notes
denominated in Yen otherwise than in compliance with applicable Japanese laws,
regulations and policies. In particular, the Issuer or its designated agent
shall submit such reports or information as may be required from time to time
by applicable law, regulations and guidelines promulgated by Japanese
governmental and regulatory authorities in the case of the issue and purchase
of the Notes and the Issuer shall ensure that each such Note shall have a
minimum denomination of Yen1,000,000 and a minimum maturity of one year or
such other minimum denomination and maturity as may be allowed from time to
time by Japanese governmental and regulatory authorities.
12. Notices. Except as otherwise provided herein, all notices
and other communications hereunder shall be in writing and shall be deemed to
have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to Credit Suisse First Boston Corporation shall be
directed to it at 11 Madison Avenue, New York, New York 10010, Attention:
Short and Medium-Term Finance; notices to Morgan Stanley & Co. Incorporated
shall be addressed to it at 1585 Broadway, New York, New York 10036,
Attention: Manager Continuously Offered Products (2nd Floor) with a copy
directed to it at the same address, Attention: Peter Cooper - Investment
Banking Information Center; notices to Donaldson, Lufkin & Jenrette Securities
Corporation shall be addressed to it at 277 Park Avenue, New York, New York
10172, Attention: Syndicate Department / Carlos Sanchez; and notices to the
Issuer shall be directed to it at 39 Old Ridgebury Road, Danbury, Connecticut
06817-001, Attention: Treasurer; or in the case of any party hereto, to such
other address or person as such party shall specify to each other party by a
notice given in accordance with the provisions of this Section 12. Any such
notice shall take effect at the time of receipt.
13. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto, their respective successors, the
officers and directors and controlling persons referred to in Section 7 hereof
and, to the extent provided in Section 6(f)hereof, any person who has agreed
to purchase Securities from the Issuer, and no other person will have any
right or obligation hereunder.
14. Governing Law; Counterparts. This Agreement shall be
governed by and construed in accordance with the laws of the State of New
York. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all such executed counterparts
shall together constitute one and the same Agreement.
If the foregoing correctly sets forth our agreement, please
indicate your acceptance hereof in the space provided for that purpose below.
Very truly yours,
UNION CARBIDE CORPORATION
By:
-----------------------------
Name:
Title:
CONFIRMED AND ACCEPTED, as of the
date first above written:
CREDIT SUISSE FIRST BOSTON CORPORATION
By:
--------------------------
Name:
Title:
MORGAN STANLEY & CO.
INCORPORATED
By:
--------------------------
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
--------------------------
Name:
Title:
Schedule I
----------
[FORM OF OPINION OF COMPANY COUNSEL]
[Date]
[Names and Addresses of Distributor(s)]
Dear Sirs:
I have acted as counsel for Union Carbide Corporation, a New
York corporation (the "Issuer"), in connection with the proposed issuance from
time to time of up to $500,000,000 aggregate initial offering price of its
Medium-Term Notes (the "Notes") pursuant to the Distribution Agreement dated
January 22, 1997 (the "Distribution Agreement") between you and the Issuer
[and the Terms Agreement[s] dated ________ (the "Terms Agreement") between you
and the Issuer]. The Notes are to be issued pursuant to the Indenture dated
as of June 1, 1995 (the "Indenture") among the Issuer and The Chase Manhattan
Bank, as Trustee (the "Trustee").
I have examined originals or copies, certified or otherwise
identified to my satisfaction, of all such documents and corporate records
of the Issuer and its subsidiaries and all such agreements, certificates of
public officials, certificates of officers and representatives of the
Issuer and its subsidiaries and such other documents as I have deemed
relevant and necessary as a basis for the opinions hereinafter expressed.
In such examinations, I have assumed the genuineness of all signatures on
original documents and the conformity to the originals of all copies
submitted to me as conformed or photocopies. As to various questions of
fact material to my opinion, I have relied upon representations, statements
or certificates of public officials, officers and representatives of the
Issuer and its subsidiaries and others.
I am familiar with the registration statements on Form S-3
(Registration Nos. 33-60705 and 333-17309) and amendments thereto filed by the
Issuer with the Securities and Exchange Commission (the "Commission") pursuant
to the provisions of the Securities Act of 1933, as amended (the "Act"),
registering $700,000,000 aggregate initial offering price of debt securities
to be issued from time to time by the Issuer. In addition, I have examined
evidence that the registration statements were declared effective under the
Act and that the Indenture was qualified under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). Such registration statements as
amended at the date hereof (including the documents incorporated by reference
therein) are herein collectively referred to as the "Registration Statement"
and the related prospectus dated December 11, 1996 (including the documents
incorporated by reference therein) together with the prospectus supplement
dated January 22, 1997 specifically relating to the Securities, as filed with
the Commission pursuant to Rule 424(b) under the Act, is herein referred to as
the "Prospectus".
I have assumed conformity of the documents filed with the
Commission via the Electronic Date Gathering, Analysis and Retrieval System
("EDGAR"), except for required EDGAR formatting changes, to physical copies of
the documents reviewed by me. I have also assumed that none of the terms
of any Note, nor the issuance and delivery of such Note, nor the compliance
by the Issuer with the terms of such Note will result in a violation of any
agreement or other instrument then binding upon the Issuer or any of its
subsidiaries, or violate any applicable law, judgment, order, decree or
restriction then imposed by any legislature, governmental body, agency or
court having jurisdiction over the Issuer or any of its subsidiaries.
Based upon the foregoing, I am of the opinion that:
(i) The Issuer has been duly incorporated, is validly existing
as a corporation under the laws of the State of New York, and has the
corporate power and authority to own its property and to conduct its
business as described in the Prospectus.
(ii) The Distribution Agreement [and the Terms Agreement] has
[have] been duly authorized, executed and delivered by the Issuer.
(iii) The Indenture has been duly qualified under the Trust
Indenture Act and has been duly authorized, executed and delivered by
the Issuer and is a valid and binding agreement of the Issuer,
enforceable in accordance with its terms.
(iv) The Notes have been duly authorized and established in
conformity with the Indenture and, when the terms of a particular
Note and of the issue and sale thereof have been duly authorized and
established by all necessary corporate action in conformity with the
Indenture and such Note has been duly completed, executed,
authenticated and issued in accordance with the Indenture and
delivered against payment therefor as contemplated by the
Distribution Agreement [and the Terms Agreement], such Note will be
entitled to the benefits of the Indenture and will be a valid and
binding obligation of the Issuer, enforceable in accordance with its
terms.
(v) The execution and delivery by the Issuer of, and the
performance by the Issuer of its obligations under, the
Distribution Agreement, [the Terms Agreement,] the Notes and the
Indenture do not violate as of the date hereof any applicable law
or the certificate of incorporation or by-laws of the Issuer or
any agreement or other instrument now in existence that is binding
upon the Issuer or any of its subsidiaries and is material to the
Issuer and its subsidiaries, taken as a whole, or, to my
knowledge, any judgment, order or decree now in existence of any
governmental body, agency or court having jurisdiction over the
Issuer or any of its subsidiaries.
(vi) No consent, approval, authorization or order of or
qualification with any governmental body or agency is required for
the performance by the Issuer of its obligations under the
Distribution Agreement, [the Terms Agreement,] the Notes or the
Indenture except such as may be required by the securities or Blue
Sky laws of the various states in connection with the offer and sale
of the Notes.
(vii) The statements in the Prospectus under the caption
"Description of Securities", insofar as such statements constitute
summaries of the documents referred to therein, fairly summarize the
information set forth in such documents.
(viii) The documents which have been filed pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and incorporated by reference in the Prospectus (other than the
financial statements, related schedules and statistical
information of a financial nature contained or incorporated
therein, as to which I have not been asked to, and do not, express
any opinion), when they became effective or were filed with the
Commission, as the case may be, complied as to form in all
material respects with the requirements of the Act and the
Exchange Act, as applicable, and the rules and regulations
promulgated thereunder.
(ix) The Registration Statement, as of its effective date, and
the Registration Statement and the Prospectus, as of the date
hereof (other than any Statement of Eligibility on Form T-1
included in the Registration Statement and the financial
statements, related schedules and statistical information of a
financial nature contained or incorporated by reference therein,
as to which I have not been asked to, and do not, express any
opinion), complied as to form in all material respects with the
requirements of the Act and the rules and regulations promulgated
thereunder.
The opinions set forth in paragraphs (iii) and (iv) above are
qualified insofar as enforceability may be limited by fraudulent transfer,
bankruptcy, insolvency or similar laws affecting creditors' rights generally
and the availability of equitable remedies may be limited by equitable
principles of general applicability.
I have assumed, in connection with my opinion set forth in
paragraph (iv) above, that at or prior to the time of the delivery of each
Note the authorization of the Notes will not have been modified or
rescinded and, with respect to each Note, that such Note will conform to
one of the forms set forth as exhibits to the Issuer's Certificate of
Assistant Secretary delivered to you today. In rendering my opinion set
forth in paragraph (iv) above, I note that, as of the date hereof, a
judgment for money in any action based on Notes denominated in foreign
currencies or currency units in a federal or state court in the United
States ordinarily would be enforced in the United States only in United
States dollars and that the date used to determine the rate of conversion
of the foreign currency or currency unit in which a particular Note is
denominated into United States dollars will depend upon various factors,
including which court renders the judgment. I also wish to point out that
paragraph (iv) does not address any application of the Commodity Exchange
Act, as amended, or the rules, regulations or interpretations of the
Commodity Futures Trading Commission to the payments of principal or
interest on which will be determined by reference to one or more currency
exchange rates, commodity prices, equity indices or other factors.
Although I am not passing upon and do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and Prospectus, I advise you that
(relying as to materiality to a large extent upon the opinions of officers and
other representatives of the Issuer), no facts have come to my attention which
lead me to believe that at the time the Registration Statement became
effective it contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus as of the date
hereof contains an untrue statement of a material fact 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 (it being
understood that I have not been asked to, and do not, comment on the financial
statements, related schedules or statistical information of a financial nature
contained or incorporated therein or on any of the information contained in
the Statement of Eligibility on Form T-1 of the Trustee).
This opinion is limited to the Federal laws of the United
States and the laws of the State of New York.
[This opinion may contain such different or additional
qualifications and exceptions as are acceptable to the Distributor(s).]
This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon for any other purpose or
relied upon by or furnished to any other person without my prior written
consent.
Very truly yours,
Schedule II
-----------
[FORM OF OPINION OF COMPANY TAX COUNSEL]
[Date]
[Names and Addresses of
Distributor(s)]
Ladies and Gentlemen:
We have acted as the tax counsel of Union Carbide Corporation
(the "Issuer") in connection with the preparation of the Prospectus Supplement
dated January 22, 1997 relating to the Issuer's Medium-Term Notes (the
"Prospectus Supplement") and the Prospectus dated December 11, 1996, both of
which relate to the registration statements on Form S-3 (Registration Nos.
33-60705 and 333-17309) of the Issuer filed with the Securities and Exchange
Commission. In our opinion, the statements set forth under the heading
"Certain Federal Income Tax Considerations" in the Prospectus Supplement are
accurate in all material respects insofar as they relate to matters of United
States Federal income tax law and legal conclusions.
Very truly yours,
Schedule III
------------
Form of Letter from KPMG Peat Marwick LLP
-----------------------------------------
(i) In our opinion, the financial statements and schedules and
summary of earnings examined by us and included in the Prospectus
comply in form in all material respects with the applicable
accounting requirements of the Act and the related published rules
and regulations thereunder; we have performed the procedures
specified by the American Institute of Certified Public
Accountants for a review of interim financial information as
described in Statement of Auditing Standards No. 71, Interim
Financial Information, on any unaudited financial statements
included in the Registration Statement.
(ii) On the basis of the review, referred to in clause (i)
above, a reading of the latest available interim financial statements
of the Issuer, inquiries of officials of the Issuer who have
responsibility for financial and accounting matters and other
specified procedures, nothing came to their attention that caused
them to believe that:
(A) any unaudited financial statements and summary of
earnings included in the Prospectus do not comply in form in
all material respects with the applicable accounting
requirements of the Act and the related published rules and
regulations or any material modifications should be made to
such unaudited financial statements and summary of earnings
for them to be in conformity with generally accepted
accounting principles;
(B) at the date of the latest available balance sheet
read by us, or at a subsequent specified date not more than
five days prior to the date of this letter, there was any
change in the capital stock or any increase in short-term
indebtedness or long-term debt of the Issuer and its
consolidated subsidiaries or, at the date of the latest
available balance sheet read by such accountants, there was any
decrease in consolidated net current assets or net assets, as
compared with amounts shown on the latest balance sheet
included in the Prospectus; or
(C) for the period from the closing date of the latest
income statement included in the Prospectus to the closing date
of the latest available income statement read by such
accountants there were any decreases, as compared with the
corresponding period of the previous year in consolidated net
sales or net operating income or consolidated income before
extraordinary items or net income or in the ratio of earnings
to fixed charges;
except in all cases set forth in clauses (A), (B) and (C) above, for
changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter.
(iii) We have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information
contained in the Registration Statement (in each case to the extent
that such dollar amounts, percentages and other financial information
are derived from the general accounting records of the Issuer and its
subsidiaries subject to the internal controls of the Issuer's
accounting system or are derived directly from such records by
analysis or computation) with the results obtained from inquiries, a
reading of such general accounting records and other procedures
specified in such letter and have found such dollar amounts,
percentages and other financial information to be in agreement with
such results, except as otherwise specified in this letter.
All financial statements and schedules included in
material incorporated by reference into the Prospectus shall be
deemed included in the Prospectus for purposes of this letter.
Schedule IV
-----------
[FORM OF OPINION OF COUNSEL FOR THE UNDERWRITERS]
[Date]
[Names and Addresses of Distributor(s)]
Dear Sirs:
We have acted as counsel to you (the "Distributors") in
connection with the proposed placements from time to time by you pursuant to
the Distribution Agreement dated January 22, 1997 (the "Distribution
Agreement") between you and Union Carbide Corporation, a New York corporation
(the "Issuer"), [and the Terms Agreement(s) dated _________ (the "Terms
Agreement") between you and the Issuer,] of up to $500,000,000 initial
offering price of its Medium-Term Notes (the "Notes"). The Notes will be
issued pursuant to the Indenture dated as of June 1, 1995 (the "Indenture"),
between the Issuer and The Chase Manhattan Bank, as Trustee (the "Trustee").
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments as we have deemed
necessary or advisable for the purpose of rendering this opinion, including
those relating to the authorization, execution and delivery by the Issuer of
the Indenture and the Distribution Agreement, and the authorization of the
Notes by the Issuer.
We have reviewed the registration statements on Form S-3
(Registration Nos. 33-60705 and 333-17309), filed by the Issuer with the
Securities and Exchange Commission (the "Commission") pursuant to the
provisions of the Securities Act of 1933, as amended (the "Act"), and the
documents incorporated by reference in the prospectus included therein (the
"Incorporated Documents"). In addition, we have examined evidence that the
registration statements were declared effective under the Act and that the
Indenture was qualified under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"). Such registration statements (including the
Incorporated Documents), as amended at the date hereof, are herein
collectively referred to as the "Registration Statement" and the related
prospectus dated December 11, 1996 (including the Incorporated Documents),
together with the prospectus supplement dated January 22, 1997 specifically
relating to the Notes, as filed with the Commission pursuant to Rule 424(b)
under the Act, is herein referred to as the "Prospectus".
We have assumed the conformity of the documents filed with the
Commission via the Electronic Data Gathering, Analysis and Retrieval System
("EDGAR"), except for required EDGAR formatting changes, to physical copies of
the documents delivered to the Underwriters and submitted for our examination.
Based upon the foregoing, we are of the opinion that:
(i) The Indenture has been duly qualified under the Trust
Indenture Act and has been duly authorized, executed and delivered by
the Issuer and is a valid and binding agreement of the Issuer,
enforceable in accordance with its terms, subject to bankruptcy,
insolvency or similar laws affecting creditors' rights generally and
equitable principles of general applicability;
(ii) The Notes have been duly authorized and established in
conformity with the provisions of the Indenture and, when the terms
of a particular Note and of the issue and sale thereof has been duly
authorized and established by all necessary corporate action in
conformity with the Indenture and such Note has been duly completed,
executed, authenticated and issued in accordance with the Indenture
and delivered against payment therefor as contemplated by the
Distribution Agreement [and the Terms Agreement], such Note will be
entitled to the benefits of the Indenture and will be a valid and
binding obligation of the Issuer, enforceable in accordance with its
terms, subject to bankruptcy, insolvency or similar laws affecting
creditors' rights generally and equitable principles of general
applicability; and
(iii) The Distribution Agreement [and the Terms Agreement] has
been duly authorized, executed and delivered by the Issuer.
We have assumed, in connection with our opinion set forth in
paragraph (ii) above, that at or prior to the time of the delivery of each
Note the authorization of the Notes will not have been modified or rescinded
and, with respect to each Note, that such Note will conform to one of the
forms set forth as exhibits to the Issuer's Certificate of Assistant Secretary
delivered to you today. We have also assumed that none of the terms of any
Note, nor the issuance and delivery of such Note, nor the compliance by the
Issuer with the terms of such Note will result in a violation of any agreement
or instrument then binding upon the Issuer, or violate any applicable law or
any restriction then imposed by any court or governmental body having
jurisdiction over the Issuer. In rendering our opinion set forth in
paragraph (ii) above, we note that, as of the date hereof, a judgment for
money in any action based on Notes denominated in foreign currencies or
currency units in a Federal or state court in the United States ordinarily
would be enforced in the United States only in United States dollars and that
the date used to determine the rate of conversion of the foreign currency or
currency unit in which a particular Note is denominated into United States
dollars will depend upon various factors, including which court renders the
judgment. We also wish to point out that paragraph (ii) does not address any
application of the Commodity Exchange Act, as amended, or the rules,
regulations or interpretations of the Commodity Futures Trading Commission to
Notes the payments of principal or interest on which will be determined by
reference to one or more currency exchange rates, commodity prices, equity
indices or other factors.
We have considered the matters required to be included in the
Registration Statement and Prospectus and the information contained
therein. We are of the opinion that the statements in the Prospectus under
the captions "Description of Securities", "Plan of Distribution" and "Plan
of Distribution of Notes", insofar as such statements constitute summaries
of the documents referred to therein, fairly summarize the information set
forth in such documents.
We have not ourselves checked the accuracy or completeness of,
or otherwise verified, the information furnished with respect to other
matters in the Registration Statement or the Prospectus, but we have
generally reviewed and discussed with your representatives and with certain
officers and employees of, and counsel and independent public accountants
for, the Issuer the information furnished, whether or not subject to our
check and verification. On the basis of such consideration, review and
discussion, but without independent check or verification, except as
stated, (a) we are of the opinion that the Registration Statement and
Prospectus (except for the financial statements, related schedules and
statistical information of a financial nature contained or incorporated
therein, as to which we do not express any opinion, and any Statement of
Eligibility on Form T-1 included in the Registration Statement) comply as
to form in all material respects with the Act and the applicable rules and
regulations of the Commission thereunder, and (b) no facts came to our
attention which lead us to believe that (except for the financial
statements, related schedules and statistical information of a financial
nature contained or incorporated therein, as to which we do not express any
belief, and except for any Statement of Eligibility on Form T-1 included in
the Registration Statement) the Registration Statement, when it
became effective, contained any 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 the Prospectus, as of
the date hereof, contains any untrue statement of a material fact 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.
We have examined the opinions dated the date hereof of Phyllis
Savage, Chief Finance and Securities Counsel for the Issuer, delivered to you
pursuant to Section 5(e)(i) of the Distribution Agreement, and of Sullivan &
Cromwell, tax counsel to the Issuer, delivered to you pursuant to Section
5(e)(ii) of the Distribution Agreement; we believe that such opinions are
responsive to the requirements of the Distribution Agreement.
We have also examined the letter dated the date hereof of KPMG
Peat Marwick LLP relating to certain financial statements and other
information contained or incorporated by reference in the Registration
Statement and the other matters referred to in such letter, delivered to you
pursuant to Section 5(g) of the Distribution Agreement. We participated in
discussions with your representatives and representatives of KPMG Peat Marwick
LLP relating to the form of such letter, and we believe that it is
substantially in the form agreed to.
We are members of the Bar of the State of New York and the
foregoing opinion is limited to the laws of the State of New York and the
Federal laws of the United States.
This opinion is rendered solely to you pursuant to the
Distribution Agreement. This opinion may not be relied upon by or furnished
to any other person without our prior written consent.
Very truly yours,
EXHIBIT A
UNION CARBIDE CORPORATION
MEDIUM-TERM NOTES
TERMS AGREEMENT
, 19
------------------- --
UNION CARBIDE CORPORATION (the "Issuer")
39 Old Ridgebury Road
Danbury, CT 06817
Attention: Treasurer
Re: Distribution Agreement dated
January 22, 1997 (the "Distribution Agreement")
------------------------------------------------
Dear Sirs:
Subject to the applicable terms and conditions of the
Distribution Agreement, which is incorporated herein by reference, the
undersigned Distributor (terms defined in the Distribution Agreement shall
have such defined meanings herein) hereby agrees to purchase the aggregate
principal amount of Notes having terms as follows:
Principal Amount:
Specified Currency (if other than U.S. dollars):
Equivalent to $1,000 minimum denomination:
Issue Date:
Interest Accrual Date (if other than Issue Date):
Stated Maturity:
Price to Public (if other than 100%): _______% of Principal Amount
or $ ____________
Distributor's Commissions: ______% of Principal Amount or
$_______
Proceeds to Issuer: _____% of Principal Amount or $_______
Interest Payment Dates (if other than January 1 and July 1):
Record Dates (if other than the close of business on
the 15th calendar day preceding each Interest Payment Date):
Initial Interest Payment Date:
If Fixed Rate Note--
Rate of interest per annum (360-day year of twelve 30-day months
basis):
If Floating Rate Note:
Interest rate formula: [ ] Commercial Paper Rate
[ ] Prime Rate
[ ] CD Rate
[ ] Federal Funds Rate
[ ] LIBOR
[ ] Treasury Rate
[ ] Other, specify:
Index Maturity:
Spread: +/-
Spread Multiplier: x
Minimum interest rate limitation: not less than ___%
Maximum interest rate limitation: not more than ___%
Initial Interest Rate: ___%
Interest Reset Dates:
Interest Determination Dates:
Calculation Agent (if other than
The Chase Manhattan Bank):
Calculation Dates:
If redeemable at option of Issuer --
Initial Redemption Date:
Initial Redemption Percentage:
Annual Redemption Percentage Reduction:
If repayable at option of Holder --
Optional Repayment Dates:
If Original Issue Discount Note:
Terms:
Tax Legend:
If Indexed Note --
Terms:
If Specified Currency other than U.S. dollars --
Exchange Rate Agent (if other than
The Chase Manhattan Bank):
The number of participant accounts to be maintained by DTC
on behalf of the Purchasing Distributor and the Trustee:
Other Terms --
Unless specified to the contrary above under "Other Terms --",
such Notes will settle at 10:00 A.M. New York City time on the third Business
Day following the Issue Date, at the office of the undersigned Distributor
designated for notices in the Distribution Agreement, by delivery of such
Notes in book-entry form through The Depository Trust Company to the account
of such Distributor against payment in immediately available funds by Federal
wire to such account of the Issuer at a bank which receives such wires as the
Issuer shall designate to such Distributor not less than one Business Day
prior thereto.
The following conditions set forth in Section 5 of the
Distribution Agreement shall be satisfied at the time of delivery of the Notes:
[ ] (e)(i) opinion of Phyllis Savage, Chief Finance and Securities
Counsel of the Issuer, or other counsel satisfactory to the
Distributor
[ ] (e)(ii) opinion of Sullivan & Cromwell, special tax counsel to
the Issuer, or other counsel satisfactory to the Distributor
[ ] (f) officer's certificate
[ ] (g) letter of KPMG Peat Marwick LLP
[ ] (h) opinion of Davis Polk & Wardwell, Distributors' counsel
[ ] other matters:
Very truly yours,
[NAME OF RELEVANT DISTRIBUTOR]
By
------------------------
Title:
Accepted:
UNION CARBIDE CORPORATION
By
----------------------------------
Title:
EXHIBIT B
UNION CARBIDE CORPORATION
MEDIUM-TERM NOTES
COMMISSION SCHEDULE
The Issuer agrees to pay each Distributor a commission equal to the
following percentage of the principal amount of Notes sold to purchasers
solicited by such Distributor:
Commission Rate
(as a percentage of
Term principal amount)
- ----------------------------------------- --------------------------
9 months to less than 12 months .125%
12 months to less than 18 months .150
18 months to less than 24 months .200
24 months to less than 30 months .250
30 months to less than 3 years .300
3 years to less than 4 years .350
4 years to less than 5 years .450
5 years to less than 6 years .500
6 years to less than 7 years .550
7 years to less than 10 years .600
10 years to less than 15 years .625
15 years to less than 20 years .700
20 years to less than 30 years .750
30 years or more to be negotiated
EXHIBIT C
UNION CARBIDE CORPORATION
MEDIUM-TERM NOTES
ADMINISTRATIVE PROCEDURES
-------------------------------------
Explained below are certain administrative procedures applicable to
the offering of Medium-Term Notes (the "Notes") on a continuous basis by Union
Carbide Corporation (the "Issuer") pursuant to the Distribution Agreement
dated January 22, 1997 (the "Distribution Agreement") among the Issuer and
Credit Suisse First Boston Corporation, Morgan Stanley & Co. Incorporated and
Donaldson, Lufkin & Jenrette Securities Corporation (the "Distributors"). The
Notes will be issued under the Indenture dated as of June 1, 1995 (the
"Indenture") between the Issuer and The Chase Manhattan Bank (formerly
Chemical Bank), as Trustee (the "Trustee"). In the Distribution Agreement,
the Distributors have agreed to use reasonable efforts to solicit purchases of
the Notes, and the administrative procedures explained below will govern the
issuance and settlement of any Notes sold through a Distributor, as agent of
the Issuer. A Distributor, as principal, may also purchase Notes for its own
account pursuant to a Terms Agreement (a "Terms Agreement"), as contemplated
by the Distribution Agreement. These administrative procedures will govern
the issuance and settlement of any Notes purchased by a Distributor, as
principal, unless otherwise specified in the applicable Terms Agreement.
The Notes are generally described in the Issuer's Prospectus
Supplement dated January 22, 1997 to its Prospectus dated December 11, 1996.
Specific Notes will be described in an applicable Pricing Supplement thereto,
which will supersede any inconsistent provision hereof. Terms defined in the
Prospectus Supplement, the Distribution Agreement and any Pricing Supplement
are used with such defined meanings in these Administrative Procedures unless
otherwise indicated. The Issuer and the Distributors will supplement these
Administrative Procedures to the extent necessary, prior to the issuance of
Foreign Currency Notes, Indexed Notes or Original Issue Discount Notes.
All Notes having the same Issue Date and terms (a "Tranche") will be
issued in the form of one or more permanent global Notes ("Global Notes")
delivered to the Trustee, as custodian for The Depository Trust Company
("DTC"), with beneficial interests in such Global Notes credited in the
book-entry system maintained by DTC ("Book-Entry Notes"), unless the
applicable Pricing Supplement indicates that such Notes are to be issued in
definitive, certificated form to Holders ("Certificated Notes"). Except as
set forth in the Indenture, Global Notes will not be exchangeable into
Certificated Notes.
Book-Entry Notes, which currently may be payable only in U.S.
dollars, will be issued in accordance with the administrative procedures set
forth in Part I hereof as they may subsequently be amended as the result of
changes in DTC'S operating procedures (in addition to any amendments made by
the Issuer and Distributors pursuant to the Distribution Agreement).
Certificated Notes will be issued in accordance with the administrative
procedures set forth in Part II hereof.
The Issuer will advise the Distributors in writing of the employees
of the Issuer with whom the Distributors are to communicate regarding offers
to purchase Notes and the related settlement details. The Issuer will obtain
and furnish to the Trustee an adequate supply of CUSIP numbers for the Notes
and an adequate supply of executed Fixed Rate Notes and Floating Rate Notes in
the forms of Global Notes (bearing all required DTC legends) and Certificated
Notes, to be completed and authenticated by the Trustee. The Issuer will also
advise the Trustee of the bank and account information needed for the Issuer
to receive immediately available funds on settlements.
PART I: ADMINISTRATIVE PROCEDURES FOR BOOK-ENTRY NOTES
In connection with the qualification of Global Notes for eligibility
in the book-entry system maintained by DTC, the Trustee will perform the
custodial, document control and administrative functions described below, in
accordance with its respective obligations under the Letter of Representations
from the Issuer and the Trustee to DTC dated January 22, 1997 and a
Medium-Term Note Certificate Agreement between the Trustee and DTC, dated as
of December 2, 1988 (the "MTN Certificate Agreement"), and its obligations as
a participant in DTC, including DTC's Same-Day Funds Settlement System
("SDFS").
Issuance: On any date of settlement for the Book-Entry Notes
of any Tranche, the Issuer will issue one Global
Note representing the aggregate principal amount of
such Notes, registered in the name of Cede & Co.
and dated the date of its authentication by the
Trustee or the Authenticating Agent.
Pricing Supplement: If any offer to purchase Book-Entry Notes of any
Tranche is accepted by or on behalf of the Issuer,
the Issuer will prepare and file with the
Commission a Pricing Supplement reflecting the
terms of such Notes. The Issuer will, as soon as
possible after such filing, deliver such number of
copies of such Pricing Supplement to the Purchasing
Distributor as such Distributor shall request and
one copy to the Trustee. The Purchasing
Distributor will affix the Pricing Supplement to
the Prospectus Supplement prior to the delivery
thereof to purchasers of such Notes. Outdated
Pricing Supplements (other than those retained for
files) will be destroyed.
Settlement All offers accepted by the Issuer with
Procedures: respect to Book-Entry Notes of any Tranche pursuant
to the Distribution Agreement (unless otherwise
provided in a Terms Agreement) will be settled on
the third Business Day next succeeding the date of
acceptance pursuant to the procedures set forth
below, unless the Issuer and the purchaser agree to
settlement on another day, which shall be no
earlier than the next Business Day, or to different
procedures:
A. The Purchasing Distributor will advise the
Issuer by telephone or fax that such Notes are to
be Book-Entry Notes and of the following settlement
information in respect of such Notes:
1. Principal amount.
2. Issue Date and Interest Accrual Date (if
different from Issue Date).
3. Stated Maturity.
4. Price to Public (if other than 100%)
expressed as a percentage of principal amount
and in U.S. dollars.
5. Purchasing Distributor's Commission expressed
as a percentage of principal amount and in
U.S. dollars.
6. Proceeds to Issuer expressed as a percentage
of principal amount and in U.S. dollars.
7. Interest Payment Dates (if other than January
1 and July 1).
8. Record Dates (if other than the close of
business on the 15th calendar day preceding
each Interest Payment Date).
9. Initial Interest Payment Date.
10. If Fixed Rate Notes, the rate of interest per
annum (based on a 360-day year of 12 30-day
months).
11. If Floating Rate Notes, the interest rate
formula, Index Maturity, Spread, Spread
Multiplier, minimum and maximum interest rate
limitations, Initial Interest Rate, Interest
Reset Dates, Interest Determination Dates,
Calculation Agent (if other than The Chase
Manhattan Bank) and Calculation Dates.
12. If redeemable at the option of the Issuer,
the Initial Redemption Date, the Initial
Redemption Percentage and the Annual
Redemption Percentage Reduction .
13. If repayable at the option of the Holders,
the Optional Repayment Date or Dates.
14. If Original Issue Discount Notes, the terms
thereof and any tax legend required thereon.
15. If Indexed Notes, the terms thereof.
16. Any other terms applicable to such Notes.
17. The number of participant accounts to be
maintained by DTC on behalf of the Purchasing
Distributor and the Trustee.
B. The Issuer will advise the Purchasing
Distributor by telephone or fax of its receipt
of and agreement with the information set forth
pursuant to Settlement Procedure "A" above and
will forward such information to the Trustee.
The Trustee will then assign a CUSIP number to
such Notes and will notify the Issuer and the
Purchasing Distributor of such CUSIP number by
telephone or fax as soon as practicable.
C. The Trustee will enter a pending deposit
message through DTC's Participant Terminal System,
providing the following settlement information with
respect to such Notes to DTC, the relevant
Distributor and Standard & Poor's Rating Services:
1. The information set forth pursuant to
Settlement Procedure "A".
2. The Initial Interest Payment Date, the number
of days by which such date succeeds the
related DTC Record Date (which, unless
otherwise specified in the applicable Pricing
Supplement, in the case of Floating Rate
Notes which reset daily or weekly, shall be
the date five calendar days immediately
preceding the Initial Interest Payment Date
and, in the case of all other Notes, shall be
the Record Date) and, if known, the amount of
interest payable on such Initial Interest
Payment Date.
3. The CUSIP number.
4. Whether such Global Note will represent any
other Book-Entry Notes (to the extent known
at such time).
5. The number of participant accounts to be
maintained by DTC on behalf of the Purchasing
Distributor and the Trustee.
D. The Trustee will complete and authenticate the
Global Note representing such Book-Entry Notes.
E. DTC will credit such Note to the Trustee's
participant account at DTC.
F. The Trustee will enter an SDFS deliver order
through DTC'S Participant Terminal System
instructing DTC to (i) debit such Notes to the
Trustee's participant account and credit such Notes
to the relevant Distributor's participant account
and (ii) debit such Distributor's settlement
account and credit the Trustee's settlement account
for an amount equal to the price of such Notes less
any Distributor's commission. The entry of such a
deliver order shall constitute a representation and
warranty by the Trustee to DTC that (a) the Global
Note representing such Book-Entry Notes has been
issued and authenticated and (b) the Trustee is
holding such Global Note pursuant to the MTN
Certificate Agreement.
G. Unless the Purchasing Distributor is the end
purchaser of such Notes, such Distributor will
enter an SDFS deliver order through DTC's
Participant Terminal System instructing DTC (i) to
debit such Note to such Distributor's participant
account and credit such Notes to the participant
accounts of the participants with respect to such
Notes and (ii) to debit the settlement accounts of
such participants and credit the settlement account
of such Distributor for an amount equal to the
price of such Notes.
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. The Trustee will credit to the account of the
Issuer, at such bank and account as the Issuer
shall from time to time instruct the Trustee in
writing, immediately available funds in the amount
credited to the Trustee's settlement account in
accordance with Settlement Procedure "F".
J. Unless the Purchasing Distributor is the end
purchaser of such Notes, such Distributor will be
responsible in accordance with its normal
procedures to confirm the purchase of such Notes to
the purchasers either by confirmation orders
through DTC's institutional delivery system or by
mailing written confirmations to such purchasers.
Settlement For sales by the Issuer of Book-Entry
Procedures Notes to or through a Distributor (unless otherwise
Timetable: specified pursuant to a Terms Agreement) for
settlement on the first Business Day after the sale
date, Settlement Procedures "A" through "J" set
forth above shall be completed as soon as possible
but not later than the respective times in New York
City set forth below:
Settlement
Procedure (Time)
--------- ----
A 11:00 A.M. on sale date
B 12:00 Noon on sale date
C 2:00 P.M. on 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-J 5:00 P.M. on settlement date
If a sale is to be settled more than one
Business Day after the sale date, Settlement
Procedures "A", "B" and "C" shall be completed
as soon as practicable but no later than 11:00
A.M., 12:00 Noon and 2:00 P.M., respectively, on
the first Business Day after the sale date. If
the Initial Interest Rate for a Floating Rate
Note has not been determined at the time that
Settlement Procedure "A" is completed,
Settlement Procedures "B" and "C" shall be
completed as soon as such rate has been
determined but no later than 12:00 Noon and 2:00
P.M., respectively, on the first Business Day
before the settlement date. Settlement
Procedure "H" is subject to extension in
accordance with any extension of Fedwire closing
deadlines and in the other events specified in
the SDFS operating procedures in effect on the
settlement date.
If settlement of a Book-Entry Note is rescheduled
or cancelled, the Trustee, after receiving notice
from the Issuer or the Purchasing Distributor, will
deliver to DTC, through DTC's Participant
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 Note pursuant to
Settlement Procedure "F", the Trustee may deliver
to DTC, through DTC's Participant Terminal System,
as soon as practicable a withdrawal message
instructing DTC to debit such Notes to the
Trustee's participant account, provided that the
Trustee's participant account contains a principal
amount of such Notes that is at least equal to the
principal amount to be debited. If a withdrawal
message is processed with respect to all the
Book-Entry Notes represented by a Global Note, the
Trustee will mark such Global Note "cancelled",
make appropriate entries in the Trustee's records
and destroy such cancelled Global Note in
accordance with its usual procedures. The CUSIP
number assigned to such Global Note shall, in
accordance with the procedures of the CUSIP Service
Bureau of Standard & Poor's Ratings Services, 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 Notes
represented by a Global Note, the Trustee will
exchange such Global Note for two Global Notes with
the same CUSIP number, one of which shall represent
such Book-Entry Notes referred to in the withdrawal
message and shall be cancelled immediately after
issuance and the other of which shall represent the
remaining Book-Entry Notes previously represented
by the exchanged Global Note.
If the purchase price for any Book-Entry Note is
not timely paid to the participants with respect to
such Note by the beneficial purchaser thereof (or a
person, including an indirect participant in DTC,
acting on behalf of such purchaser), such
participants and, in turn, the Purchasing
Distributor may enter SDFS deliver orders through
DTC's Participant Terminal System reversing the
orders entered pursuant to Settlement Procedures
"F" and "G", respectively. Thereafter, the Trustee
will deliver the withdrawal message and take the
related actions described in the preceding
paragraph.
Notwithstanding the foregoing, upon any failure to
settle with respect to a Book-Entry Note, DTC may
take any actions in accordance with its SDFS
operating procedures then in effect.
In the event of a failure to settle with respect to
one or more, but not all, of the Book-Entry Notes
to have been represented by a Global Note, the
Trustee will provide, in accordance with Settlement
Procedures "D" and "F", for the authentication and
issuance of a Global Note representing the
Book-Entry Notes to be represented by such Global
Note and will make appropriate entries in its
records.
PART II: ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES
Issuance: Each Certificated Note will be dated
the date of its authentication by the Trustee or
the Authenticating Agent.
Pricing If any offer to purchase a Certificated
Supplement: Note accepted by or on behalf of the Issuer, the
Issuer will prepare and file with the Commission a
Pricing Supplement reflecting the terms of such
Note. The Issuer will, as soon as possible after
such filing, deliver such number of copies of such
Pricing Supplement to the Purchasing Distributor as
such Distributor shall request and a copy to the
Trustee. The Purchasing Distributor will affix the
Pricing Supplement to the Prospectus Supplement
prior to the delivery thereof to purchasers of such
Notes. Outdated Pricing Supplements (other than
those retained for files) will be destroyed.
Settlement All offers accepted by the Issuer with
Procedures: respect to any Certificated Note pursuant to the
Distribution Agreement (unless otherwise provided
pursuant to a Terms Agreement) will be settled on
the third Business Day next succeeding the date of
acceptance pursuant to the procedures set forth
below, unless the Issuer and the purchaser agree to
settlement on another day, which shall be no
earlier than the next Business Day, or to different
procedures.
A. The Purchasing Distributor will advise the
Issuer by telephone that such Note is a
Certificated Note and of the following settlement
information:
1. Name in which such Note is to be registered
("Registered Owner").
2. Address of the Registered Owner and address
for payment of principal and interest.
3. Taxpayer identification number of the
Registered Owner (if available).
4. Principal amount and Specified Currency (if
other than U.S. dollars).
5. Issue Date and Interest Accrual Date (if
different from Issue Date).
6. Stated Maturity.
7. Price to Public (if other than 100%)
expressed as a percentage of principal amount
and in the Specified Currency.
8. Purchasing Distributor's Commission expressed
as a percentage of principal amount and in
the Specified Currency.
9. Proceeds to Issuer expressed as a percentage
of principal amount and in the Specified
Currency.
10. Interest Payment Date (if other than January
1 and July 1).
11. Record Dates (if other than the close of
business on the 15th calendar day preceding
each Interest Payment Date).
12. Initial Interest Payment Date.
13. If a Fixed Rate Note, the rate of interest
per annum (based on a 360-day year of 12
30-day months).
14. If a Floating Rate Note, the interest rate
formula, Index Maturity, Spread, Spread
Multiplier, minimum and maximum interest rate
limitations, Initial Interest Rate, Interest
Reset Dates, Interest Determination Date,
Calculation Agent (if other than The Chase
Manhattan Bank) and Calculation Dates.
15. If redeemable at the option of the Issuer,
the Initial Redemption Date, the Initial
Redemption Percentage and the Annual
Redemption Percentage Reduction.
16. If repayable at the option of the Holder, the
Optional Repayment Date or Dates.
17. If an Original Issue Discount Note, the terms
hereof and any tax legend required thereon.
18. If an Indexed Note, the terms thereof.
19. Any other terms applicable to such Note.
B. The Issuer will advise the Purchasing
Distributor by telephone or fax of its receipt of
and agreement with the information set forth in
Settlement Procedure "A" above and forward such
information to the Trustee.
C. The Issuer will have delivered to the Trustee a
pre-printed four-ply packet for such Note, which
packet will contain the following documents in
forms that have been approved by the Issuer, the
Purchasing Distributor and the Trustee:
1. Certificated Note.
2. Stub One - For the Trustee.
3. Stub Two - For the relevant
Distributor.
4. Stub Three - For the Issuer.
D. The Trustee will complete and authenticate such
Note and deliver it (with a customer confirmation)
and Stubs One, Two and Three to the Purchasing
Distributor, and such Distributor will acknowledge
receipt of such Note, by stamping or otherwise
marking Stubs One and Three, and returning them to
the Trustee. Such delivery will be made only
against such acknowledgment of receipt.
E. Unless the Purchasing Distributor is the end
purchaser of such Note, such Distributor will
deliver such Note (with confirmation) to the
customer against payment in immediately available
funds. Such Distributor will obtain the
acknowledgment of receipt of such Note by its
customer on Stub Two and retain same.
F. The Trustee will send Stub Three to the Issuer
by first-class mail.
Settlement For sales by the Issuer of Certificated
Procedures Notes to or through a Distributor (unless
Timetable: otherwise specified pursuant to a Terms
Agreement), Settlement Procedures "A" through
"F" set forth above shall be completed on or
before the respective times in New York City set
forth below:
Settlement
Procedure Time
--------- ----
A 2:00 P.M. on day before
settlement date
B 3:00 P.M. on day before
settlement date
C-D 2:15 P.M. on settlement
date
E 3:00 P.M. on settlement
date
F 5:00 P.M. on settlement
date
Failure to Settle: If a purchaser fails to accept delivery of and make
payment for any Certificated Note, the
Purchasing Distributor will notify the Issuer
and the Trustee by telephone and return such
Note to the Trustee. Upon receipt of such
notice, the Issuer will immediately wire
transfer to the account of such Distributor an
amount equal to the price of such Note less such
Distributor's commission in respect of such Note
(if any). Such wire transfer will be made on
the settlement date, if possible, and in any
event not later than the Business Day following
the settlement date. If the failure shall have
occurred for any reason other than a default by
such Distributor in the performance of its
obligations hereunder and under the Distribution
Agreement, then the Issuer will reimburse such
Distributor or the Trustee, as appropriate, on
an equitable basis for its loss of the use of
the funds during the period when they were
credited to the account of the Issuer.
Immediately upon receipt of the Certificated
Note in respect of which such failure occurred,
the Trustee will mark such Note "cancelled,"
make appropriate entries in the Trustee records
and send such Note to the Issuer.