EXECUTION COPY
CENDANT CORPORATION
U.S. $1,010,000,000
Medium-Term Notes
DISTRIBUTION AGREEMENT
March 5, 1998
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, NY 10167
Chase Securities Inc.
270 Park Avenue
New York, New York 10017
Lehman Brothers Inc.
3 World Financial Center
12th Floor
New York, NY 10285
Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
North Tower
World Financial Center
New York, New York 10281
Dear Sirs:
Section 1. Introductory. Cendant Corporation, a Delaware
corporation (the "Company"), has filed with the Securities and Exchange
Commission (the "Commission"), and the Commission declared effective on
February 23, 1998, a registration statement on Form S-3 (Registration No.
333-45227, hereinafter called the "Registration Statement"), covering up to
U.S. $4,000,000,000 aggregate principal amount of the Company's debt and equity
securities (the "Securities"). Any reference herein to the term "Registration
Statement" shall be deemed to refer, unless the context otherwise indicates, to
the Registration Statement, including the form of final prospectus, financial
statements and other documents included or incorporated by reference therein
and all exhibits included therein, as
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from time to time amended, and the term "Prospectus" shall be deemed to refer
collectively, unless the context otherwise indicates, to the final prospectus
in the form filed with the Commission pursuant to Rule 424(b) under the
Securities Act of 1933 (the "Act") and each prospectus as supplemented mailed
to the Commission pursuant to Rule 424(c) under the Act, including documents
incorporated by reference therein, as from time to time amended or supplemented
(exclusive of any supplements relating solely to Securities that are not
Offered Securities as hereinafter defined). The Securities will be issued under
one or more indentures (the "Indentures") identified and described in the
Registration Statement between the Company and one or more commercial banks, as
trustees (the "Trustees"). One class of Securities that the Company is
authorized to issue under the Indentures is Medium-Term Notes (the "Offered
Securities"). Without limitation on the Company's right to sell all other
classes of Securities through underwriters (which may include any or all of
you) or dealers, or directly to one or more institutional investors, or through
agents (which may include any or all of you), and without limitation on the
Company's right to sell Offered Securities through other agents as provided in
Section 3(a) hereof, the Company confirms its agreement with you with respect
to the issue and sale by the Company of up to U.S. $1,010,000,000 (or the
equivalent in foreign currency or currency units) principal amount of the
Offered Securities issued under the Indentures, subject to reduction as a
result of the concurrent sale of other Securities of the Company.
Section 2. Representations and Warranties of the Company. The
Company represents and warrants to each of you, as of the date hereof, as of
the Closing Time hereinafter referred to and as of the times referred to in
Sections 4(k) and 4(l) (in each case the "Representation Date"), as follows:
(a) The Registration Statement and the Prospectus, on their
respective dates of effectiveness and filing did, and as of the applicable
Representation Date will, conform in all material respects to the requirements
of the Act, the Trust Indenture Act of 1939 (the "Trust Indenture Act") and the
rules and regulations (the "Rules and Regulations") of the Commission; as of
the respective dates of their effectiveness and filing, neither the
Registration Statement nor the Prospectus did, nor as of the applicable
Representation Date will, include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except that the representations and warranties contained in this paragraph do
not apply to (i) statements or omissions in the Registration Statement or the
Prospectus based upon written information furnished to the Company by any of
you or any of the Trustees expressly for use therein or (ii) that part of the
Registration Statement that constitutes the Statement of Eligibility under the
Trust Indenture Act on Form T-1 of any Trustee, except statements or omissions
in such Statement made in reliance upon information furnished in writing to
such Trustee by or on behalf of the Company for use therein.
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(b) The Company has been duly incorporated and is validly
existing and in good standing under the laws of the State of Delaware and has
full power and authority to conduct the businesses presently being conducted by
it.
(c) Neither the execution or delivery of this Agreement, the
Offered Securities or the Indentures, the consummation of the transactions
herein or therein contemplated, nor compliance with the terms, conditions or
provisions of any such instruments, will result in a breach or violation of any
of the terms and provisions of, or constitute (with due notice or lapse of
time, or both) a default under, any indenture, mortgage, deed of trust or other
agreement or instrument to which the Company or any material subsidiary of the
Company is a party or by which it or any of its assets is bound, any statute,
the charter or by-laws of the Company or any material subsidiary or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any material subsidiary or over its assets
(except, no representation, warranty or agreement is being made in this
paragraph as to the Blue Sky or securities laws of any State of the United
States or the District of Columbia, the Commonwealth of Puerto Rico or foreign
jurisdictions).
(d) This Agreement has been duly authorized, executed and
delivered on behalf of the Company and is a valid and legally binding agreement
of the Company enforceable in accordance with its terms (except as the same may
be limited by bankruptcy, insolvency, reorganization or other laws relating to
or affecting creditors' rights generally); the Offered Securities have been
duly authorized and, when authenticated as contemplated by the applicable
Indenture or Indentures and delivered and paid for in accordance with this
Agreement, will have been duly executed, authenticated, issued and delivered
and will constitute valid and legally binding obligations of the Company
enforceable in accordance with their terms (except as the same may be limited
by bankruptcy, insolvency, reorganization or other laws relating to or
affecting creditors' rights generally) and will be entitled to the benefits
provided by the applicable Indenture or Indentures.
(e) There is no consent, approval, authorization, order,
registration or qualification of or with any court or any regulatory authority
or other governmental body having jurisdiction over the Company or any material
subsidiary which is required for, or the absence of which would materially
affect, the issue and sale of the Offered Securities as contemplated by this
Agreement or the execution, delivery or performance of the Indentures, except
the registration under the Act of the Offered Securities, the qualification of
the Indentures under the Trust Indenture Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under the
securities or "Blue Sky" laws of any jurisdiction in connection with the
offering of the Offered Securities by the Company and the Agent in the manner
contemplated hereby.
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(f) All financial statements of the Company provided to the
Agent(s) by the Company (including those contained in the Registration
Statement) fairly present the financial condition of the Company in all
material respects and have been prepared in conformity with U.S. generally
accepted accounting principles.
(g) The Company has complied with all provisions of section
517.075, Florida Statutes (Chapter 92-198, Laws of Florida).
Section 3. Solicitations as Agent; Purchases as Principal or
Underwriter.
(a) Solicitations as Agent. On the basis of the
representations and warranties herein contained, but subject to the terms and
conditions herein set forth, each of you will use your best efforts to solicit
offers to purchase the Offered Securities upon the terms and conditions set
forth in the Prospectus as then amended or supplemented. You are hereinafter
sometimes referred to in your capacity as agents, individually as an "Agent"
and collectively as the "Agents". The Company reserves the right, and may
submit offers, to purchase and sell Offered Securities directly to the public
on its own behalf in jurisdictions in which it is authorized to do so. In
addition, after notice to each of the Agents, the Company may appoint any
additional agent to solicit and receive offers to purchase Offered Securities
from the Company upon the terms and conditions set forth in the Prospectus,
provided that any such additional agent is made a party to this Agreement or
executes a distribution agreement substantially identical to this Agreement.
Each Agent further undertakes that in connection with the
distribution of Offered Securities denominated in any foreign currency or
currency unit, it will comply with the further restrictions in respect of
offers and sales of Offered Securities so denominated set forth in Exhibit C
hereto.
The Company agrees to pay each Agent a commission for each
Offered Security sold, the purchase of which is solicited by such Agent, as
follows:
Commission as a Percentage
Maturity of Principal Amount
9 months to less than 1 year .125%
1 year to less than 18 months .150
18 months to less than 2 years .200
2 years to less than 3 years .250
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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 30 years .750
More than 30 years to 40 years To be negotiated
The authorized denominations of Offered Securities
denominated in a currency or currency unit other than United States dollars
shall be the equivalent, as determined by the Market Exchange Rate (as defined
herein) for such currency or currency unit on the business day immediately
preceding the trade date for such Offered Securities, of U.S. $1,000 (rounded
down to an integral multiple of 1,000 units of such currency or currency unit),
and any larger amount that is an integral multiple of 1,000 units of such
currency or currency unit. The authorized denominations of Offered Securities
denominated in United States dollars shall be U.S. $1,000 and any larger amount
that is an integral multiple of U.S. $1,000. The Agents shall communicate to
the Company, orally or in writing, each offer to purchase Offered Securities
other than those rejected by the Agents. The Company shall have the sole right
to accept offers to purchase the Offered Securities and may reject any such
offer in whole or in part. The Agents shall have the right to reject any offer
to purchase the Offered Securities in whole or in part, and any such rejection
shall not be deemed a breach of their agreements contained herein.
The "Market Exchange Rate" on a given date for a given
foreign currency means the noon buying rate in New York City for cable
transfers in such currency as certified for customs purposes by the Federal
Reserve Bank of New York on such date; provided, however, that in the case of
European Currency Units, Market Exchange Rate means the rate of exchange
determined by the Council of European Communities (or any successor thereto) as
published on such date or the most recently available date in the Official
Journal of the European Communities (or any successor publication).
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(b) Purchases as Principal or Underwriter. Each sale of
Offered Securities to any or all of you as principal or underwriter for resale
to others shall be made in accordance with the terms of this Agreement and a
separate agreement to be entered into between us which will provide for the
sale of such Offered Securities to, and the purchase and reoffering thereof by,
any or all of you. Each such separate agreement is herein referred to as a
"Terms Agreement". Your commitment to purchase Offered Securities pursuant to
any Terms Agreement shall be deemed to have been made on the basis of the
representations and warranties of the Company herein contained and shall be
subject to the terms and conditions herein set forth. Each Terms Agreement
shall specify the currency denomination, principal amount and maturity of
Offered Securities to be purchased by you pursuant thereto, the price to be
paid to the Company for such Offered Securities (which, if not so specified in
a Terms Agreement, shall be at a discount equivalent to the applicable
commission set forth in Section 3(a) hereof), the initial public offering
price, if any, at which the Offered Securities are proposed to be reoffered,
the time and place of delivery of and payment for such Offered Securities, and
any provisions relating to rights of, and default by, any purchasers acting
together with you in the reoffering of the Offered Securities. To the extent
required, such Terms Agreement shall also specify any requirements for opinions
of counsel, officer's certificates and letters from its independent certified
public accountants (who must be of national standing) (the "Accountants")
pursuant to Section 5 hereof. Terms Agreements, each of which shall be
substantially in the form of Exhibit A hereto, may take the form of an exchange
of any standard form of written communication (including a written confirmation
of an oral agreement) between the Company and each of you participating in the
sale referred to therein, including by telecopy or telex. If agreed to by the
Company and any one or more Agents, such Agents may purchase Offered Securities
as principal pursuant to the procedures for documentation and settlement
applicable to agency sales. The Agents may utilize a selling or dealer group in
connection with the resale of the Offered Securities.
(c) Procedures. Certain administrative functions are set
forth in the Medium-Term Note Administrative Procedures (the "Procedure"),
attached hereto as Exhibit B. You and the Company agree to perform the
respective duties and obligations specifically provided to be performed by each
of them herein and in the Procedure, as amended from time to time. The
Procedure may only be amended by written agreement of all the parties hereto.
(d) Delivery. The documents required to be delivered by
Section 5 hereof (subject to paragraph (b) above) shall be delivered at the
office of Shearman & Sterling, 599 Lexington Avenue, New York, New York, on the
date hereof, and at the delivery time specified in each Terms Agreement (each
called a "Closing Time").
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Section 4. Covenants of the Company. The Company covenants
with you that:
(a) The Company will make no amendment or supplement (other
than by an amendment or supplement in the form previously agreed to by the
parties providing solely for a change in the interest rates or maturities
offered in the Offered Securities, or for a change in the currency in which the
Offered Securities are denominated, chosen from among currencies that have
previously been described in the Prospectus (a "Pricing Supplement")) to the
Registration Statement or the Prospectus, whether by the filing of documents
incorporated by reference in whole or in part into the Registration Statement
or the Prospectus or otherwise, or make any change in the form of final
prospectus prior to the time it is first filed with the Commission pursuant to
Rule 424(b) under the Act, prior to having furnished each of you a reasonable
opportunity to review the same and which shall not have been disapproved by
you; the Company will advise each of you promptly of the filing and
effectiveness of any amendment to the Registration Statement or the filing of
any amendment or supplement (other than a Pricing Supplement) to the Prospectus
(including the filing and effectiveness of any document incorporated by
reference in whole or in part into the Registration Statement or the
Prospectus), and of the institution by the Commission of any stop-order
proceedings in respect of the Registration Statement, 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 Offered
Securities is required to be delivered under the Act any event occurs as a
result of which the Registration Statement or Prospectus would include an
untrue statement of a material fact, or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if, in your reasonable opinion
or in the reasonable opinion of the Company, it is necessary at any time to
amend or supplement the Registration Statement or Prospectus (including any
document incorporated by reference in whole or part therein) to comply with the
Act, the Company promptly will notify you, or you shall, as the case may be,
suspend solicitation of offers to purchase Offered Securities and, if so
notified by the Company, you shall forthwith suspend such solicitation and
cease using the Prospectus; the Company will promptly prepare and file with the
Commission an amendment or supplement to such Registration Statement or
Prospectus (or to such document incorporated by reference therein) which will
correct such statement or omission or effect such compliance and will supply
such amended or supplemented Prospectus or document to each of you in such
quantities as you may reasonably request; and if such amendment or supplement
or document, and any documents, certificates and opinions furnished to each of
you pursuant to paragraph (i) below in connection with the preparation or
filing of such amendment or supplement, are satisfactory in all respects to
you, you will, upon the filing of such amendment or supplement or document with
the Commission or effectiveness of an
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amendment to the Registration Statement, resume your respective obligation to
solicit offers to purchase Offered Securities hereunder.
(c) As soon as practicable, the Company will make generally
available to its security holders an earnings statement or statements that will
satisfy the provisions of Section 11(a) of the Act and Rule 158 thereunder.
(d) The Company will furnish to each of you copies of all
amendments of and supplements (other than Pricing Supplements, copies of which
need only be furnished to the Agents involved in the sale of the Offered
Securities to which such Pricing Supplements relates) to the Registration
Statement and the Prospectus, as soon as available and in such quantities as
you reasonably request.
(e) The Company will take such action as you may request in
order to qualify the Offered Securities for offer and sale under the securities
or Blue Sky laws of such jurisdictions as you may request; provided, however,
that in no event shall the Company be obligated to subject itself to taxation
or to qualify to do business in any jurisdiction where it is not now so subject
or qualified or to take any action which would subject it to service of process
in suits, other than those arising out of the offering or sale of the Offered
Securities, in any jurisdiction where it is not now so subject.
(f) So long as any Offered Security is outstanding, the
Company will furnish to each of you, as soon as practicable after the end of
each fiscal year, a balance sheet and statement of income of the Company as at
the end of and for such fiscal year in reasonable detail and reported on by
independent public accountants. The Company will furnish to each of you as soon
as practicable after the end of each quarterly fiscal period (except for the
last quarterly fiscal period of each fiscal year), a balance sheet and
statement of income of each of the Company as at the end of such period and for
the fiscal year to date, certified by either the Chief Financial Officer or
Chief Accounting Officer of the Company. So long as the Company has active
subsidiaries, such financial statements will be furnished on a consolidated
basis to the extent the accounts of the Company and its subsidiaries are
consolidated.
(g) The Company shall furnish to each of you as soon as
practicable following the filing of any amendment or supplement (other than a
Pricing Supplement) to the Registration Statement or Prospectus (including the
filing of any document incorporated by reference in whole or in part into the
Registration Statement or Prospectus), a certificate of (i) the Chairman of the
Board, the President, any Executive Vice President or any Vice President and
(ii) the Vice President and Treasurer, the Vice President and Controller or any
other Vice President of the Company to the effect that, at the date of such
certificate, neither the Registration Statement nor the Prospectus includes any
untrue statement of a material fact or omits to state any material fact
necessary to make the statements therein, in the light of
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the circumstances under which they were made, not misleading, except that the
foregoing does not apply to (i) statements or omissions in the Registration
Statement or Prospectus based upon written information furnished to the Company
by any of you expressly for use therein or (ii) that part of the Registration
Statement that constitutes the Statement of Eligibility under the Trust
Indenture Act on Form T-1 of any Trustee, except statements or omissions in
such Statement made in reliance upon information furnished in writing to such
Trustee by or on behalf of the Company for use therein.
(h) The Company shall furnish to each of you (i) forthwith
after the Company is required to file the same with the Commission, copies of
its annual reports and quarterly reports on Forms 10-K and 10-Q, respectively,
its proxy statements and of any other information, documents and reports that
the Company is required to file with the Commission pursuant to Section 13, 14
or Section 15(d) of the Securities Exchange Act of 1934 or with the New York
Stock Exchange, Inc., or any other national securities exchange on which any
security of the Company is listed and (ii) at the earliest time the Company
makes the same available to others, copies of annual reports and other
financial reports of the Company furnished or made available to the public
generally.
(i) The Company shall furnish to each of you such documents,
certificates of officers of the Company and opinions of counsel for the Company
relating to the business, operations and affairs of the Company, the
Registration Statement, the Prospectus (including any amendments or supplements
thereto), the Indenture, the Offered Securities, this Agreement, the Procedure
and the performance by the Company and you of our respective obligations
hereunder and thereunder as you may from time to time and at any time prior to
the termination of this Agreement reasonably request.
(j) The Company shall pay all expenses incident to the
performance of its obligations under this Agreement, including the fees and
disbursements of its Accountants, the cost of printing and delivery of the
Registration Statement, the Prospectus (including all amendments and
supplements thereto) and the Indentures, the costs of preparing, printing,
packaging and delivering the Offered Securities, the fees and disbursements of
the Trustees and the fees of any agency that rates the Offered Securities, the
reasonable fees of your counsel, and will reimburse you from time to time for
all reasonable out-of-pocket expenses incurred by you, including in connection
with the offering and sale of the Offered Securities and the qualification of
the Offered Securities for sale and determination of eligibility for investment
of the Offered Securities under the securities or Blue Sky laws of such
jurisdictions as you designate and any advertising expenses connected with the
offering and sale of Offered Securities.
(k) Each acceptance by the Company of an offer to purchase
Offered Securities and each delivery of Offered Securities in any sale made to,
or pursuant to an offer solicited by, you will be deemed to be an affirmation
to any Agent that solicited such
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offer or purchased such Offered Securities that the representations and
warranties of the Company contained in Sections 2(a) through 2(f) are true and
correct at the time of such acceptance or delivery, as though made at and as of
such time, and a representation and warranty to any Agent that solicited such
offer or purchased such Offered Securities that neither the Registration
Statement nor the Prospectus includes any untrue statement of a material fact
or omits to state any material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading,
except that the foregoing does not apply to (i) statements or omissions in the
Registration Statement or the Prospectus based upon written information
furnished to the Company by any of you expressly for use therein or (ii) that
part of the Registration Statement that constitutes the Statement of
Eligibility under the Trust Indenture Act on Form T-1 of any Trustee, except
statements or omissions in such Statement made in reliance upon information
furnished in writing to such Trustee by or on behalf of the Company for use
therein.
(l) Each time that the Registration Statement or the
Prospectus (including any portion of any document incorporated by reference in
whole or part into either), is amended or supplemented (other than by a Pricing
Supplement), the Company will deliver or cause to be delivered forthwith to
each of you a certificate of the officers of the Company as specified in
Section 4(g), dated the date of the effectiveness of such amendment or the date
of filing of such supplement, in form reasonably satisfactory to you, to the
effect that the statements contained in the certificate referred to in Section
5(c)(ii) that was last furnished to you (either pursuant to Section 5(c)(ii) or
this Section 4(l)) are true and correct at the time of the effectiveness of
such amendment or the filing of such supplement 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(c)(ii) dated the effective date of
such amendment or the date of filing of such supplement.
(m) Each time that the Registration Statement or the
Prospectus, including any portion of any document incorporated by reference in
whole or part into either, is amended or supplemented (other than by a Pricing
Supplement, and except for an amendment or supplement occasioned by the
incorporation by reference of proxy materials of the Company or reports of the
Company on Form 10-K, Form 10-Q or Form 8-K, in which case the written opinion
furnished by the Company referred to hereafter shall be that of the General
Counsel or Assistant General Counsel of the Company), the Company shall furnish
or cause to be furnished forthwith to each of you a written opinion of counsel
for the Company acceptable to the Agents, dated the date of the effectiveness
of such amendment or the date of filing of such supplement or the filing of
such document incorporated by reference into the Registration Statement or the
Prospectus, in form satisfactory to you, relating to the Registration Statement
and the Prospectus.
(n) Each time that the Registration Statement or the
Prospectus is amended or supplemented to set forth amended or supplemental
financial information, whether by
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incorporation by reference in whole or in part or otherwise, the Company shall
cause its Accountants forthwith to furnish to each of you a letter, dated the
date of the effectiveness of such amendment or the date of filing of such
supplement, in form satisfactory to you, of the same tenor as the letter
referred to in Section 5(d) with such changes as may be necessary to reflect
the amended or supplemental financial information included in the Registration
Statement and the Prospectus and the other financial information of the Company
available within five days of the date of such letter; provided, however, that
such Accountants need only furnish you a letter in compliance with SAS 71, as
appropriately modified, where such amendment or supplement or document
incorporated by reference only sets forth unaudited quarterly financial
information contained in the Company's Quarterly Report on Form 10-Q.
(o) Between the date of any Terms Agreement and the
settlement date with respect to the Offered Securities covered thereby, the
Company will not, without the prior consent of each of you that is a party to
such Terms Agreement, offer or sell, or enter into any agreement to sell, any
debt securities of the Company, other than (i) borrowings under the Company's
revolving credit agreements and lines of credit and (ii) issuances of the
Company's commercial paper.
(p) The Company shall offer to any person who has agreed to
purchase Offered Securities as a result of an offer to purchase solicited by
any of you the right to refuse to purchase and pay for such Offered Securities
if, on the related settlement date fixed pursuant to the Procedure, (i) the
condition set forth in Section 5(a) hereof shall not be satisfied, (ii) the
rating assigned by any nationally recognized securities rating agency to any
debt securities of the Company as of the date of the applicable Terms Agreement
shall have been lowered since such date or any such agency shall have publicly
announced that it has under surveillance or review, with possible negative
implications, its ratings of any debt securities of the Company or (iii) if any
of the events set forth in clause (ii) or clause (iii) of the second sentence
of Section 9 hereof shall have occurred (it being understood that, for purposes
of this paragraph (p), the judgment of such person shall be substituted for the
judgment of the Agent with respect to the matters referred to in clause (ii) of
the second sentence of Section 9 hereof, and that the Agent shall have no duty
or obligation to exercise its judgment on behalf of such person). This
paragraph (p) shall not affect any other right of any person who has agreed to
purchase Offered Securities to refuse to purchase and pay for such Offered
Securities that arises under any other provision of this Agreement.
Section 5. Conditions of Obligations. Your several
obligations to solicit offers to purchase the Offered Securities as Agent(s)
and your obligations to purchase Offered Securities pursuant to any Terms
Agreement or otherwise will be subject to the accuracy of the representations
and warranties on the part of the Company herein, to the accuracy of the
statements of the Company's officers made in each certificate furnished
pursuant to the provisions hereof, to the performance and observance by the
Company of all
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covenants and agreements herein contained on its part to be performed and
observed and to the following additional conditions precedent:
(a) At and subsequent to the date hereof and at each Closing
Time no stop-order suspending the effectiveness of the Registration Statement
shall have been issued and remain outstanding and no proceedings for that
purpose shall have been instituted or, to your knowledge or the knowledge of
the Company, threatened or contemplated by the Commission.
(b) At the date hereof and at each Closing Time if called for
by the applicable Terms Agreement, each of you (or, with respect to a Closing
Time called for by any Terms Agreement, each of you that is a party to such
Terms Agreement) shall have received an opinion, dated, as applicable, either
the date hereof or such Closing Time, of counsel for the Company acceptable to
the Agents (it being understood that the opinion of the General Counsel or Vice
President, Legal of the Company shall be acceptable to the Agents unless
otherwise provided in the Terms Agreement), substantially identical to the
proposed form of their opinion heretofore delivered to each of you.
(c) (i) At the date hereof and at each Closing Time,
subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus (except as set forth in or
contemplated by the Registration Statement and the Prospectus), the Company
shall not have incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions not in the ordinary
course of business, nor shall there have been any material decrease in the
stockholders' equity or any material increase in the long-term debt of the
Company or any material adverse change in the condition, financial or
otherwise, or in the earnings, affairs or business prospects of the Company,
whether or not arising in the ordinary course of business.
(ii) At the date hereof and at each Closing Time if called
for by the applicable Terms Agreement, each of you (or, with respect to a
Closing Time called for by any Terms Agreement, each of you that is a party to
such Terms Agreement) shall have received a certificate, dated, as applicable,
the date hereof or such Closing Time, signed by the officers of the Company
specified in Section 4(g), certifying that, to the best of their knowledge
after reasonable investigation, the statements made in the immediately
preceding paragraph (i) are accurate and to the effect that (A) no stop-order
suspending the effectiveness of the Registration Statement has been issued, and
no proceedings for that purpose have been instituted or, to the knowledge of
such officers, are threatened or contemplated by the Commission, (B) the
Registration Statement and the Prospectus conform in all material respects to
the requirements of the Act, the Trust Indenture Act and the Rules and
Regulations, (C) neither the Registration Statement nor the Prospectus contains
any untrue statement of a material fact or omits to state any material fact
necessary to make the statements therein, in the case of the Prospectus, in the
light of the circumstances under
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which they were made, not misleading, except that the foregoing does not apply
to (i) statements or omissions in the Registration Statement or the Prospectus
made in reliance upon information furnished in writing to the Company by any of
you or on your behalf expressly for use therein, it being understood and agreed
that the only such information consists of the information described as such in
Section 6(b) hereof, or (ii) that part of the Registration Statement that
constitutes the Statement of Eligibility under the Trust Indenture Act on Form
T-1 of any Trustee, except statements or omissions in such Statement made in
reliance upon information furnished in writing to such Trustee by or on behalf
of the Company for use therein, and (D) the representations and warranties of
the Company included in Sections 2(a) through 2(g) are, as of the Closing Time,
accurate in all material respects and the Company has performed and observed
all covenants and agreements herein contained on its part to be performed and
observed prior to the Closing Time.
(d) At the date hereof, and at each Closing Time if called
for by the applicable Terms Agreement, each of you (or, with respect to a
Closing Time called for by any Terms Agreement, each of you that is a party to
such Terms Agreement) shall have received a letter, dated as of the Closing
Time, signed by the Accountants, substantially identical to the proposed form
of such letter heretofore delivered to each of you.
(e) At the date hereof and at each Closing Time if called for
by the applicable Terms Agreement, each of you (or with respect to a Closing
Time called for by any Terms Agreement, each of you that is a party to such
Terms Agreement) shall have received an opinion, dated such date, of Shearman &
Sterling, or other counsel selected by the Agents, with respect to the Company,
the Offered Securities, the Registration Statement, including the form of final
prospectus included therein, this Agreement and the form and sufficiency of all
proceedings taken in connection with the authorization, sale and delivery of
the Offered Securities, all of which shall be satisfactory in all respects to
you, and the Company shall have furnished to your counsel such documents as
such counsel may reasonably request for the purpose of enabling them to render
such opinion.
(f) At the date hereof and at each Closing Time if called for
by the applicable Terms Agreement, the Company shall have furnished to each of
you (or, with respect to a Closing Time called for by any Terms Agreement, each
of you that is a party to such Terms Agreement) such further information and
documents as you may have reasonably requested.
(g) There shall not have occurred any change, or any
development involving a prospective change, involving currency exchange rates,
exchange controls, taxation or similar matters that in your respective
judgments makes it impracticable or inadvisable to proceed with your
solicitation of offers to purchase the Offered Securities denominated in the
affected currency or currencies, or your purchase of such Offered Securities
from the Company as principal; provided, however, that any such change or
14
development shall not affect your respective obligations with respect to
Offered Securities denominated in any currency not so affected.
Your respective obligations to purchase Offered Securities
pursuant to any Terms Agreement (or as contemplated by the last sentence of
Section 3(b) hereof) will be subject to the following further conditions: (a)
the rating assigned by any nationally recognized securities rating agency to
any debt securities of the Company as of the date of the applicable Terms
Agreement shall not have been lowered since that date nor shall any such
organization have publicly announced that it has under surveillance or review,
with possible negative implications, its ratings of any debt securities of the
Company and (b) there shall not have come to your attention any facts that
would cause you to believe that the Prospectus, at the time it was required to
be delivered to a purchaser of the Offered Securities, contained an untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in light of the circumstances existing at
such time, not misleading.
Section 6. Indemnification. (a) The Company shall indemnify
and hold harmless each of you, each of your partners, directors, officers and
employees and each person, if any, who controls you within the meaning of
Section 15 of the Act against any and all losses, claims, damages, and
liabilities, joint or several (including any investigation, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted), to which
you or they, or any of you or them, may become subject under the Act, the
Securities Exchange Act of 1934 or other Federal or state law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in any preliminary prospectus, the Registration
Statement or the Prospectus, or 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, except that the foregoing does not apply to
(i) untrue statements or omissions or alleged untrue statements or omissions in
such preliminary prospectus, the Registration Statement or the Prospectus,
based upon written information furnished to the Company by any of you expressly
for use therein, it being understood and agreed that the only such information
consists of the information described as such in subsection (b) below, or (ii)
that part of the Registration Statement that constitutes the Statement of
Eligibility under the Trust Indenture Act on Form T-1 of any Trustee; provided,
however, that the aforesaid indemnity agreement with respect to the
Registration Statement and the Prospectus shall not inure to your or their
benefit (if the person asserting any such loss, claim, damage or liability
purchased the Offered Securities which are the subject thereof through you), or
to the benefit of any person controlling you, if the Company shall have
furnished an amendment or supplement to the Prospectus to you prior to the time
a written confirmation of the sale of such Offered Securities was sent or given
to the person asserting such loss, claim, damage, liability or action for which
indemnification is sought, and the Prospectus as so supplemented
15
or amended (i) corrected the alleged misstatement or omission on which the
asserted loss, claim, damage or liability was based and (ii) was not sent or
given to such person at or prior to the written confirmation of the sale of
such Offered Securities to such person.
(b) Each Agent shall indemnify and hold harmless the Company,
each person, if any, who controls the Company within the meaning of Section 15
of the Act, each director of the Company and each officer of the Company who
signs the Registration Statement or any amendment thereto to the same extent as
the foregoing indemnity from the Company to you but only insofar as such
losses, claims, damages or liabilities arise out of or are based upon any
untrue statement or omission or alleged untrue statement or omission which was
made in any preliminary prospectus, the Registration Statement or the
Prospectus in reliance upon and in conformity with information furnished in
writing to the Company by such Agent expressly for use therein, it being
understood and agreed that the only such information furnished by the Agents
consists of the following information in the prospectus supplement dated March
5, 1998 (the "Prospectus Supplement"), relating to the Offered Securities: (i)
the paragraph on page S-2 (the inside cover page) concerning stabilization by
the Agents; (ii) the first sentence in the first paragraph of text under the
caption "Supplemental Plan of Distribution" in the Prospectus Supplement, but
only with respect to any determination of price by the Agents; (iii) the second
sentence in the second paragraph of text under the caption "Supplemental Plan
of Distribution" in the Prospectus Supplement; (iv) the third sentence in the
second paragraph of text under the caption "Supplemental Plan of Distribution"
in the Prospectus Supplement, but only with respect to any determination of
price by the Agents; (v) the last sentence in the second paragraph of text
under the caption "Supplemental Plan of Distribution" in the Prospectus
Supplement; (vi) the third paragraph of text under the caption "Supplemental
Plan of Distribution" in the Prospectus Supplement; and (vii) the second
sentence in the fifth paragraph of text under the caption "Supplemental Plan of
Distribution" in the Prospectus Supplement.
(c) Any party which proposes to assert the right to be
indemnified under this Section 6 shall, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim is to be made against an indemnifying party under paragraph (a)
or (b) of this Section 6, notify each such indemnifying party of the
commencement of such action, suit or proceeding, enclosing a copy of all papers
served, but the omission so to notify such indemnifying party of any such
action, suit or proceeding shall not relieve it from any liability which it may
have to any indemnified party otherwise than under paragraph (a) or (b) of this
Section 6. In case any such action, suit or proceeding is brought against any
indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate in, and, to
the extent that it wishes, 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
16
party of its election so to assume the defense thereof the indemnifying party
will not be liable to such indemnified party for any legal or other expenses,
other than reasonable costs of investigation subsequently incurred by such
indemnified party in connection with the defense thereof. The indemnified party
shall have the right to employ its own counsel in any such action, but the fees
and expenses of such counsel will be at the expense of such indemnified party
unless (i) the employment of counsel by such indemnified party has been
authorized by the indemnifying party, (ii) the indemnified party shall have
reasonably concluded that there may be a conflict of interest between the
indemnifying party and the indemnified party in the conduct of the defense of
such action (in which case the indemnifying party shall not have the right to
direct the defense of such action on behalf of the indemnified party) or (iii)
the indemnifying party has not in fact employed counsel satisfactory to such
indemnified party to assume the defense of such action, in any of which events
such fees and expenses shall be borne by the indemnifying party. An
indemnifying party shall not be liable for any settlement of any action or
claim effected without its consent (which shall not be unreasonably withheld).
No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any action or claim in respect of
which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.
(d) If the indemnification provided for in this Section 6 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and each of you
on the other from the offering of the Offered Securities to which such loss,
claim, damage or liability (or action in respect thereof) relates. If, however,
the allocation provided by the immediately preceding sentence is not permitted
by applicable law or if the indemnified party failed to give the notice
required under subsection (c) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company on the one hand and each of you on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and each of you on the other shall be deemed to
be in the same proportion as the total net proceeds received by the Company
(before deducting expenses) from the sale of the Offered Securities to which
such loss, claim, damage or liability (or action in respect thereof) relates
bear to the total commissions or discounts received by each of you in respect
thereof. The relative fault shall be determined by reference to, among other
things, whether the
17
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading relates to
information supplied by the Company on the one hand or by you on the other and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company and you agree
that it would not be just and equitable if contribution pursuant to this
subsection (d) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subsection (d). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), no Agent shall be
required to contribute any amount in excess of the amount by which the total
price at which the Offered Securities purchased by or through such Agent and to
which such loss, claim, damage or liability (or action in respect thereof)
relates were sold exceeds the amount of any damages which such Agent has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Agents' obligations to contribute pursuant to this
Section 6(d) are several, in proportion to the respective principal amounts of
Offered Securities to which such loss, claim, damage or liability (or action in
respect thereof) relates and purchased or sold by each of such Agents, and not
joint.
(e) The obligations of the Company under this Section 6 shall
be in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls you within the meaning of the Act; and your obligations under this
Section 6 shall be in addition to any liability which you may otherwise have
and shall extend, upon the same terms and conditions, to each officer and
director of the Company and to each person, if any, who controls the Company
within the meaning of the Act.
Section 7. Position of the Agent(s). In soliciting purchases
of the Offered Securities, each Agent is acting solely as agent for the
Company, and not as principal. Each Agent shall make reasonable efforts to
assist the Company in obtaining performance by each purchaser whose offer to
purchase Offered Securities has been solicited by such Agent and accepted by
the Company, but such Agent shall not have any liability to the Company in the
event any such purchase is not consummated for any reason.
Section 8. Representations and Indemnities to Survive
Delivery. Your respective indemnities, agreements, representations, warranties
and other statements and those of the Company or its officers set forth in or
made pursuant to this Agreement shall
18
remain in full force and effect, regardless of any investigation, or statement
as to the results thereof, made by or on behalf of any of you or on behalf of
the Company or any of its officers or directors or any controlling person, and
will survive each delivery of and payment for any of the Offered Securities.
Section 9. Termination. This Agreement may be terminated at
any time (i) by the Company with respect to any Agent by giving written notice
of such termination to such Agent or (ii) by any Agent, as to the rights and
obligations of such Agent only, by giving written notice to the Company. Any
Agent that is a party to any Terms Agreement may also terminate such Terms
Agreement (or other obligation to purchase Offered Securities as principal as
contemplated by the penultimate sentence of Section 3(b) hereof), immediately
upon notice to the Company, at any time prior to the Closing Time relating
thereto (i) if there has been, since the respective dates as of which
information is given in the Registration Statement and Prospectus, any material
adverse change in the condition, financial or otherwise, of the Company and its
subsidiaries considered as one enterprise, or in the earnings, affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any outbreak or escalation of hostilities or other
calamity or crisis the effect of which on the financial markets of the United
States, or of any other country in the currency of which the Offered Securities
are denominated, is such as to make it, in the judgment of such Agent,
impracticable to market the Offered Securities or enforce contracts for the
sale of the Offered Securities, or (iii) if trading in any securities of the
Company has been suspended by the Commission or a national securities exchange,
or if trading generally on either the American Stock Exchange or the New York
Stock Exchange has been suspended, or minimum or maximum prices for trading
have been fixed, or maximum ranges for prices for securities have been
required, by either of said exchanges or by order of the Commission or any
other governmental authority, or if a banking moratorium has been declared by
either Federal or New York State authorities or by authorities in any other
country in the currency of which the Offered Securities are denominated. In the
event of such termination by the Company, the Company and any Agent as to which
this Agreement has been terminated shall have no liability or other obligation
to each other, and in the event of such termination by an Agent, such Agent and
the Company shall have no further liability or obligation to each other, in
each case except as provided in the first sentence of the third paragraph of
Section 3(a), Section 4(c), Section 4(j), Section 6 and Section 8 and except
that, if at the time of termination (i) an offer to purchase any of the Offered
Securities has been accepted by the Company but the time of delivery to the
purchaser or its agent of the Offered Security or Offered Securities relating
thereto has not occurred or (ii) any Agent shall own any of the Offered
Securities which were bought by such Agent as principal with the intention of
reselling them, the Company's obligations provided in Sections 4(k) through
4(n) and, in the circumstances described in clause (ii) of this sentence, all
obligations of the Company relating to such Agent's ability to resell such
Offered Securities, shall not be terminated.
19
Section 10. Notices. All communications hereunder will be in
writing and, if sent to you, will be mailed, delivered or telegraphed and
confirmed in duplicate originals to:
Chase Securities Inc.
270 Park Avenue
New York, New York 10017
Attention: Medium-Term Note Desk
Telephone: 212-834-4421
Telecopier: 212-834-6081
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, NY 10167
Attention: Medium-Term Note Desk
Telephone: 212-272-5371
Telecopier: 212-272-6227
Lehman Brothers Inc.
3 World Financial Center
12th Floor
New York, NY 10285
Attention: MTN Product Management
Telephone: 212-526-2040
Telecopier: 212-528-1718
Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
North Tower
World Financial Center
New York, New York 10281
Attention: MTN Product Management
Telephone: 212-449-7476
Telecopier: 212-449-2234
or, if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to it at 6 Sylvan Way, Parsippany, New Jersey 07054,
Attention of Vice President and Treasurer.
Section 11. Parties. This Agreement will inure to the benefit
of and be binding upon each of the parties hereto and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or is
to be construed to give any person, firm or
20
corporation, other than the parties hereto and their respective successors and
the controlling persons, directors, officers and employees referred to in
Section 6, any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision herein contained; this Agreement and all
conditions and provisions hereof being intended to be and being for the sole
exclusive benefit of the parties hereto and their respective successors and
said controlling persons and said directors, officers and employees, and for
the benefit of no other person, firm or corporation. No purchaser of any
Offered Securities through any Agent will be deemed to be a successor by reason
merely of such purchase.
Section 12. Governing Law. This Agreement will be governed by
and construed in accordance with the laws of the State of New York.
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us a counterpart hereof, whereupon
this instrument along with all counterparts will become a binding agreement
between the Company and you in accordance with its terms.
Very truly yours,
CENDANT CORPORATION
By /s/ Eric J. Bock
-------------------------------
Name: Eric J. Bock
Title: Vice President, Legal
Confirmed and Accepted,
as of the date first
above-written:
BEAR, STEARNS & CO. INC.
By /s/ Timothy A. O'Neill
---------------------------
Name: Timothy A. O'Neill
Title: Senior Managing Director
CHASE SECURITIES INC.
By /s/ Kevin J. Kulak
-----------------------------
Name: Kevin J. Kulak
Title: Vice President
LEHMAN BROTHERS INC.
By /s/ Robert H. Swindell
------------------------------
Name: Robert H. Swindell
Title: Managing Director
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
By /s/ Scott G. Primrose
------------------------------
Name: Scott G. Primrose
Title: Authorized Signatory
EXHIBIT A
CENDANT CORPORATION
(A Delaware corporation)
Medium-Term Notes
TERMS AGREEMENT
[Date]
Cendant Corporation
6 Sylvan Way
Parsippany, New Jersey 07054
Attention: __________________
Re: Distribution Agreement for
Above-Mentioned Securities
Pursuant to the Distribution Agreement dated March 5, 1998
between Cendant Corporation (the "Company") and Bear, Stearns & Co. Inc., Chase
Securities Inc., Lehman Brothers Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as Agents, the undersigned agrees to purchase the Company's
Medium-Term Notes having the principal amounts (denominated in the respective
currencies), maturities, interest rates and other terms set forth in Schedule I
hereto.
[The opinions referred to in Sections 5(b) and 5(e) of the
Distribution Agreement, the accountants' letter referred to in Section 5(d) of
the Distribution Agreement [and the officer's certificate referred to in
Section 5(c)(ii) of the Distribution Agreement] will be required.]
[AGENT]
By
Name:
Title:
Accepted:
CENDANT CORPORATION
By
Schedule I
- ---------------------------------------------------------------------------------------------------------------------
Discount (as
Principal % of Initial Public
Maturity Settlement Amount and Principal Offering
Date Date Currency Interest Rate Amount) Price Trustee
- ---------------------------------------------------------------------------------------------------------------------
A.
B.
C.
D.
E.
F.
G.
H.
Time of delivery
Place of delivery
[Other terms]
[Closing date]
NYL4A/20521 2
EXHIBIT B
CENDANT CORPORATION
Administrative Procedures
These Administrative Procedures relate to the Offered
Securities defined in the Distribution Agreement, dated March 5, 1998 (the
"Distribution Agreement"), between Cendant Corporation (the "Company") and
Bear, Stearns & Co. Inc., Chase Securities Inc., Lehman Brothers Inc. and
Merrill Lynch, Pierce, Fenner & Smith Incorporated (together, the "Agents"), to
which this Administrative Procedure is attached as Exhibit B. Defined terms
used herein and not defined herein shall have the meanings given such terms in
the Distribution Agreement, the Prospectus as amended or supplemented, or the
applicable Indenture. As used in these Administrative Procedures, the
"Indenture" refers to the Indenture pursuant to which the subject Offered
Securities are issued and the "Trustee" refers to the Trustee under such
Indenture.
The procedures to be followed with respect to the settlement
of sales of Offered Securities directly by the Company to purchasers solicited
by an Agent, as agent, are set forth below. The terms and settlement details
related to a purchase of Offered Securities by an Agent, as principal, from the
Company will be set forth in a Terms Agreement pursuant to the Distribution
Agreement, unless the Company and such Agent otherwise agree as provided in
Section 3(b) of the Distribution Agreement, in which case the procedures to be
followed in respect of the settlement of such sale will be as set forth below.
An Agent, in relation to a purchase of an Offered Security by a purchaser
solicited by such Agent, is referred to herein as the "Selling Agent" and, in
relation to a purchase of an Offered Security by such Agent as principal other
than pursuant to a Terms Agreement, as the "Purchasing Agent."
The Company will advise each Agent in writing of those
persons with whom such Agent is to communicate regarding offers to purchase
Offered Securities and the related settlement details.
Each Offered Security will be issued only in fully registered
form and will be represented by either a global security (a "Global Security")
delivered to the Trustee, as agent for The Depository Trust Company (the
"Depositary") and recorded in the book-entry system maintained by the
Depositary (a "Book-Entry Security") or a certificate issued in definitive form
(a "Certificated Security") delivered to a person designated by an Agent, as
set forth in the applicable Pricing Supplement. An owner of a Book-Entry
Security will not be entitled to receive a certificate representing such a
Security, except as provided in the Indenture.
B-2
Certificated Securities will be issued in accordance with the
Administrative Procedure set forth in Part I hereof, and Book-Entry Securities
will be issued in accordance with the Administrative Procedure set forth in
Part II hereof.
PART I: ADMINISTRATIVE PROCEDURE FOR CERTIFICATED SECURITIES
Posting Rates by Company:
The Company and the Agents will discuss from time to time the
rates of interest per annum to be borne by and the maturity of Certificated
Securities that may be sold as a result of the solicitation of offers by an
Agent. The Company may establish a fixed set of interest rates and maturities
for an offering period ("posting"). If the Company decides to change already
posted rates, it will promptly advise the Agents to suspend solicitation of
offers until the new posted rates have been established with the Agents.
Acceptance of Offers by Company:
Each Agent will promptly advise the Company by telephone or
other appropriate means of all reasonable offers to purchase Certificated
Securities, other than those rejected by such Agent. Each Agent may, in its
discretion reasonably exercised, reject any offer received by it in whole or in
part. Each Agent also may make offers to the Company to purchase Certificated
Securities as a Purchasing Agent. The Company will have the sole right to
accept offers to purchase Certificated Securities and may reject any such offer
in whole or in part.
The Company will promptly notify the Selling Agent or
Purchasing Agent, as the case may be, of its acceptance or rejection of an
offer to purchase Certificated Securities. If the Company accepts an offer to
purchase Certificated Securities, it will confirm such acceptance in writing to
the Selling Agent or Purchasing Agent, as the case may be, and the Trustee.
Communication of Sale Information to
Company by Selling Agent:
After the acceptance of an offer by the Company, the Selling
Agent or Purchasing Agent, as the case may be, will communicate the following
details of the terms of such offer (the "Sale Information") to the Company by
telephone (confirmed in writing) or by facsimile transmission or other
acceptable written means:
(1) Principal amount of Certificated Securities to be
purchased;
B-3
(2) If a Fixed Rate Certificated Security, the interest rate
and the initial interest payment date;
(3) Maturity Date;
(4) Specified Currency and, if the Specified Currency is
other than U.S. dollars, the applicable Exchange Rate for such
Specified Currency;
(5) Indexed Currency, the Base Rate and the Exchange Rate
Determination Date, if applicable;
(6) Issue Price;
(7) Selling Agent's commission or Purchasing Agent's
discount, as the case may be;
(8) Net proceeds to the Company;
(9) Settlement Date;
(10) If a redeemable Certificated Security, such of the
following as are applicable:
(i) Redemption Commencement Date,
(ii) Initial Redemption Price (% of par), and
(iii) Amount (% of par) that the Redemption Price
shall decline (but not below par) on each anniversary of the
Redemption Commencement Date;
(11) If a Floating Rate Certificated Security, such of the
following as are applicable:
(i) Interest Rate Basis,
(ii) Index Maturity,
(iii) Spread or Spread Multiplier,
(iv) Maximum Rate,
(v) Minimum Rate,
B-4
(vi) Initial Interest Rate,
(vii) Interest Reset Dates,
(viii) Calculation Dates,
(ix) Interest Determination Dates,
(x) Interest Payment Dates, and
(xi) Calculation Agent;
(12) Name, address and taxpayer identification number of the
registered owner(s);
(13) Denomination of certificates to be delivered at
settlement; and
(14) Name of the Trustee.
Preparation of Pricing Supplement by Company:
If the Company accepts an offer to purchase a Certificated
Security, it will prepare a Pricing Supplement. The Company will supply at
least ten copies of such Pricing Supplement to the Selling Agent or Purchasing
Agent, as the case may be, not later 3:00 p.m., New York City time, on the
second business day following the date of acceptance of such offer, or if the
Company and the purchaser agree to settlement on the date of such acceptance,
not later than noon, New York City time, on such date. The Company will arrange
to have ten Pricing Supplements filed with the Commission not later than the
close of business of the Commission on the fifth business day following the
date on which such Pricing Supplement is first used.
Pricing Supplements will be delivered to the Selling Agent or
Purchasing Agent as follows:
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, NY 10167
Attention: Medium-Term Note desk
Telephone: 212-272-5371
Telecopier: 212-272-6227
B-5
Chase Securities Inc.
270 Park Avenue
New York, New York 10017
Attention: Medium-Term Note Desk
Telephone: 212-834-4421
Telecopier: 212-834-6081
Lehman Brothers Inc.
3 World Financial Center
9th Floor
New York, NY 10285
Attention: Brunnie Vasquez
Telephone: 212-526-8400
Telecopier: 212-528-6139
Merrill Lynch & Co. - Tritech Services
44-B Colonial Drive
Corporate Park 287
Piscataway, NJ 08854
Attn: Final Prospectus Unit
Telephone: (732) 885-2768
Telecopy: (732) 885-2775
with a copy to:
Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
North Tower
World Financial Center
New York, New York 10281
Attention: MTN Product Management
Telephone: 212-449-7476
Telecopier: 212-449-2234
Delivery of Confirmation and Prospectus to Purchaser by Selling Agent:
The Selling Agent will deliver to the purchaser of a
Certificated Security a written confirmation of the sale and delivery and
payment instructions. In addition, the Selling Agent will deliver to such
Purchaser or its agent the Prospectus as amended or supplemented (including the
Pricing Supplement) in relation to such Certificated Security
B-6
prior to or with the earlier of the delivery to such purchaser or its agent of
(a) the confirmation of sale or (b) the Certificated Security.
Date of Settlement:
All offers solicited by a Selling Agent or made by a
Purchasing Agent and accepted by the Company will be settled on a date (the
"Settlement Date") which is the third business day after the date of acceptance
of such offer, unless the Company and the purchaser agree to settlement (a) on
any other business day after the acceptance of such offer or (b) with respect
to an offer accepted by the Company prior to 10:00 a.m., New York City time, on
the date of such acceptance.
Instruction from Company to Trustee for Preparation of Certificated Securities:
After receiving the Sale Information from the Selling Agent
or Purchasing Agent, as the case may be, the Company will communicate such Sale
Information to the Trustee by facsimile transmission or other acceptable
written means.
The Company will instruct the Trustee by facsimile
transmission or other acceptable written means to authenticate and deliver the
Certificated Securities no later than 2:15 p.m., New York City time, on the
Settlement Date. Such instruction will be given by the Company prior to 3:00
p.m., New York City time, on the business day prior to the Settlement Date
unless the Settlement Date is the date of acceptance by the Company of the
offer to purchase Certificated Securities in which case such instruction will
be given by the Company by 11:00 a.m., New York City time.
Preparation and Delivery of Certificated Securities by Trustee and Receipt of
Payment Therefor:
The Trustee will prepare each Certificated Security and
appropriate receipts that will serve as the documentary control of the
transaction.
In the case of a sale of Certificated Securities to a
purchaser solicited by an Agent, the Trustee will, by 2:15 p.m., New York City
time, on the Settlement Date, deliver the Certificated Securities to the
Selling Agent for the benefit of the purchaser or such Certificated Securities
against delivery by the Selling Agent of a receipt therefor. On the Settlement
Date the Selling Agent will deliver payment for such Certificated Securities in
immediately available funds to the Company in an amount equal to the issue
price of the Certificated Securities less the Selling Agent's commission;
provided that the Selling Agent reserves the right to withhold payment for
which it has not received funds from the purchaser. The Company shall not use
any proceeds advanced by a Selling Agent to acquire securities.
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In the case of a sale of Certificated Securities to a
Purchasing Agent, the Trustee will, by 2:15 p.m., New York City time, on the
Settlement Date, deliver the Certificated Securities to the Purchasing Agent
against delivery of payment for such Certificated Securities in immediately
available funds to the Company in an amount equal to the issue price of the
Certificated Securities less the Purchasing Agent's discount.
Certificated Securities will be delivered to the Agents as
follows:
Chase Securities Inc.
55 Water Street
Room 226
New York, New York 10041
Attention: Window 17 or 18
Telephone: 212-638-6787
Telecopier: 212-638-5618
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, NY 10167
Attention: Medium-Term Note desk
Telephone: 212-272-5371
Telecopier: 212-272-6227
The Chase Manhattan Bank
4 New York Plaza
Ground Floor
New York, NY 10004
Attention: Verna Covington
For the account of Lehman Brothers Inc.
Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
North Tower
World Financial Center
New York, New York 10281
Attention: MTN Product Management
Telephone: 212-449-7476
Telecopier: 212-449-2234
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Failure of Purchaser to Pay Selling Agent:
If a purchaser (other than a Purchasing Agent) fails to make
payment to the Selling Agent for a Certificated Security, the Selling Agent
will promptly notify the Trustee and the Company thereof by telephone
(confirmed in writing) or by facsimile transmission or other acceptable written
means. The Selling Agent will immediately return the Certificated Security to
the Trustee. Immediately upon receipt of such Certificated Security by the
Trustee, the Company will return to the Selling Agent an amount equal to the
amount previously paid to the Company in respect of such Certificated Security.
The Company will reimburse the Selling Agent on an adequate basis for its loss
of the use of funds during the period when they were credited to the account of
the Company.
The Trustee will cancel the Certificated Security in respect
of which the failure occurred, make appropriate entries in its records and,
unless otherwise instructed by the Company, destroy the Certificated Security.
PART II: ADMINISTRATIVE PROCEDURE FOR BOOK-ENTRY SECURITIES
In connection with the qualification of the Book-Entry
Securities for eligibility in the book-entry system maintained by the
Depositary, the Trustee will perform the custodial, document control and
administrative functions described below, in accordance with its respective
obligations under a Letter of Representation from the Company and the Trustee
to the Depositary, dated the date hereof, and a Medium-Term Note Certificate
Agreement between the Trustee and the Depositary (the "Certificate Agreement"),
and its obligations as a participant in the Depositary, including the
Depositary's Same Day Funds Settlement System ("SDFS").
Posting Rates by the Company:
The Company and the Agents will discuss from time to time the
rates of interest per annum to be borne by the maturity of Book-Entry
Securities that may be sold as a result of the solicitation of offers by an
Agent. The Company may establish a fixed set of interest rates and maturities
for an offering period ("posting"). If the Company decides to change already
posted rates, it will promptly advise the Agents to suspend solicitation of
offers until the new posted rates have been established with the Agents.
Acceptance of Offers by the Company:
Each Agent will promptly advise the Company by telephone or
other appropriate means of all reasonable offers to purchase Offered
Securities, other than those rejected by such Agent. Each Agent may, in its
discretion reasonably exercised, reject any
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offer received by it in whole or in part. Each Agent also may make offers to
the Company to purchase Book-Entry Securities as a Purchasing Agent. The
Company will have the sole right to accept offers to purchase Book-Entry
Securities and may reject any such offer in whole or in part.
The Company will promptly notify the Selling Agent or
Purchasing Agent, as the case may be, of its acceptance or rejection of an
offer to purchase Book-Entry Securities. If the Company accepts an offer to
purchase Book-Entry Securities, it will confirm such acceptance in writing to
the Selling Agent or Purchasing Agent, as the case may be, and the Trustee.
Communication of Sale Information to the Company by Selling Agent and
Settlement Procedures:
A. After the acceptance of an offer by the Company, the
Selling Agent or Purchasing Agent, as the case may be, will communicate
promptly, but in no event later than the time set forth under "Settlement
Procedure Timetable" below, the following details of the terms of such offer
(the "Sale Information") to the Company by telephone (confirmed in writing) or
by facsimile transmission or other acceptable written means:
(1) Principal amount of Book-Entry Securities to be
purchased;
(2) If a Fixed Rate Book-Entry Security, the interest rate
and the initial interest payment date;
(3) Maturity Date;
(4) Specified Currency and, if the Specified Currency is
other than U.S. dollars, the applicable Exchange Rate for such
Specified Currency (it being understood that currently the Depositary
accepts deposits of Global Securities denominated in U.S. dollars
only);
(5) Indexed Currency, the Base Rate and the Exchange Rate
Determination Date, if applicable;
(6) Issue Price;
(7) Selling Agent's commission or Purchasing Agent's
discount, as the case may be;
(8) Net Proceeds to the Company;
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(9) Settlement Date;
(10) If a redeemable Book-Entry Security, such of the
following as are applicable:
(i) Redemption Commencement Date,
(ii) Initial Redemption Price (% of par), and
(iii) Amount (% of par) that the Redemption Price
shall decline (but not below par) on each anniversary of the
Redemption Commencement Date;
(11) If a Floating Rate Book-Entry Security, such of the
following as are applicable:
(i) Interest Rate Basis,
(ii) Index Maturity,
(iii) Spread or Spread Multiplier,
(iv) Maximum Rate,
(v) Minimum Rate,
(vi) Initial Interest Rate,
(vii) Interest Reset Dates,
(viii) Calculation Dates,
(ix) Interest Determination Dates,
(x) Interest Payment Dates, and
(xi) Calculation Agent; and
(12) Name of the Trustee.
B. After receiving the Sale Information from the Selling
Agent or Purchasing Agent, the Company will communicate such Sale Information
to the Trustee by facsimile transmission or other acceptable written means. The
Company will assign a CUSIP
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number to the Global Security representing such Book-Entry Security and then
advise the Trustee and the Selling Agent or Purchasing Agent, as the case may
be, of such CUSIP number.
C. The Trustee will enter a pending deposit message through
the Depositary's Participant Terminal System, providing the following
settlement information to the Depositary, and the Depositary shall forward such
information to such Agent and Standard & Poor's Corporation:
(1) The applicable Sale Information;
(2) CUSIP number of the Global Security representing such
Book-Entry Security;
(3) Whether such Global Security will represent any other
Book-Entry Security (to the extent known at such time);
(4) Number of the Participant account maintained by the
Depositary on behalf of the Selling Agent or Purchasing Agent, as the
case may be;
(5) The interest payment period;
(6) Initial Interest Payment Date for such Book-Entry
Security, number of days by which such date succeeds the record date
for the Depositary's purposes (which, in the case of Floating Rate
Offered Securities which reset weekly shall be the date five calendar
days immediately preceding the applicable Interest Payment Date and in
the case of all other Book-Entry Securities shall be the Regular
Record Date, as defined in the Offered Security) and, if calculable at
that time, the amount of interest payable on such Interest Payment
Date per $1,000 principal amount.
D. The Trustee will complete and authenticate the Global
Security previously delivered by the Company representing such Book-Entry
Security.
E. The Depositary will credit such Book-Entry Security to the
Trustee's participant account at the Depositary.
F. The Trustee will enter an SDFS deliver order through the
Depositary's Participant Terminal System instructing the Depositary to (i)
debit such Book-Entry Security to the Trustee's participant account and credit
such Book-Entry Security to such Agent's participant account and (ii) debit
such Agent's settlement account and credit the Trustee's settlement account for
an amount equal to the price of such Book-Entry Security less such Agent's
commission or discount, as applicable. The entry of such a deliver order shall
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constitute a representation and warranty by the Trustee to the Depositary that
(a) the Global Security representing such Book-Entry Security has been issued
and authenticated and (b) the Trustee is holding such Global Security pursuant
to the Certificate Agreement.
G. Such Agent will enter an SDFS deliver order through the
Depositary's Participant Terminal System instructing the Depositary (i) to
debit such Book-Entry Security to such Agent's participant account and credit
such Book-Entry Security to the participant accounts of the Participants with
respect to such Book-Entry Security and (ii) to debit the settlement accounts
of such Participants and credit the settlement account of such Agent for an
amount equal to the price of such Book-Entry Security.
H. Transfers of funds in accordance with SDFS deliver orders
described in Settlement Procedures "F" and "G" will be settled in accordance
with SDFS operating procedures in effect on the settlement date.
I. Upon confirmation of receipt of funds, the Trustee will
transfer to an account of the Company previously specified by the Company to
the Trustee funds available for immediate use in the amount transferred to the
Trustee in accordance with Settlement Procedure "F".
J. Upon request, the Trustee will send to the Company a
statement setting forth the principal amount of Book-Entry Securities
outstanding as of that date under the Indenture.
K. Such Agent will confirm the purchase of such Book-Entry
Security to the purchaser either by transmitting to the Participants with
respect to such Book-Entry Security a confirmation order or orders through the
Depositary's institutional delivery system or by mailing a written confirmation
to such purchaser.
L. The Depositary will, at any time, upon request of the
Company or the Trustee, promptly furnish to the Company or the Trustee a list
of the names and addresses of the Participants for whom the Depositary has
credited Book-Entry Securities.
Preparation of Pricing Supplement:
If the Company accepts an offer to purchase a Book-Entry
Security, it will prepare a Pricing Supplement reflecting the terms of such
Book-Entry Security and arrange to have delivered to the Selling Agent or
Purchasing Agent, as the case may be, at least ten copies of such Pricing
Supplement, not later than 3:00 p.m., New York City time, on the second
Business Day following the receipt of the Sale Information, or if the Company
and the purchaser agree to settlement on the Business Day following the date of
acceptance, not later than noon, New York City time, on such date. The Company
will arrange to have ten
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Pricing Supplements filed with the Commission not later than the close of
business of the Commission on the fifth Business Day following the date on
which such Pricing Supplement is first used.
Pricing Supplements will be delivered to the Selling Agent or
Purchasing Agent as follows:
Chase Securities Inc.
270 Park Avenue
New York, New York 10017
Attention: Medium-Term Note Desk
Telephone: 212-834-4421
Telecopier: 212-834-6081
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, NY 10167
Attention: Medium-Term Note Desk
Telephone: 212-272-5371
Telecopier: 212-272-6227
Lehman Brothers Inc.
3 World Financial Center
9th Floor
New York, NY 10285
Attention: Brunnie Vasquez
Telephone: 212-526-8400
Telecopier: 212-528-6139
Merrill Lynch & Co. - Tritech Services
44-B Colonial Drive
Corporate Park 287
Piscataway, NJ 08854
Attn: Final Prospectus Unit
Telephone: (732) 885-2768
Telecopy: (732) 885-2775
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with a copy to:
Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
North Tower
World Financial Center
New York, New York 10281
Attention: MTN Product Management
Telephone: 212-449-7476
Telecopier: 212-449-2234
Delivery of Confirmation and Prospectus
to Purchaser by Selling Agent:
The Selling Agent will deliver to the purchaser of a
Book-Entry Security a written confirmation of the sale and delivery and payment
instructions. In addition, the Selling Agent will deliver to such purchaser or
its agent the Prospectus as amended or supplemented (including the Pricing
Supplement) in relation to such Book-Entry Security prior to or with the
earlier of the delivery to such purchaser or its agent of (a) the confirmation
of sale or (b) the Book-Entry Security.
Date of Settlement:
The receipt by the Company of immediately available funds in
payment for a Book-Entry Security and the authentication and issuance of the
Global Security representing such Book-Entry Security shall constitute
"settlement" with respect to such Book-Entry Security. All orders accepted by
the Company will be settled on the third Business Day pursuant to the timetable
for settlement set forth below unless the Company and the purchaser agree to
settlement on another day which shall be no earlier than the next Business Day.
Settlement Procedure Timetable:
For orders of Book-Entry Securities solicited by an Agent, as
agent, and accepted by the Company for settlement on the first Business Day
after the sale date, Settlement Procedures "A" through "I" set forth above
shall be completed as soon as possible but not later than the respective times
(New York City time) set forth below:
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Settlement
Procedure Time
A 5:00 p.m. on the Business Day following the acceptance of an
offer by the Company or 10:00 a.m. on the Business
Day prior to the settlement date, whichever is earlier
B 12:00 noon on the sale date
C 2:00 p.m. on the sale date
D 9:00 a.m. on settlement date
E 10:00 a.m. on settlement date
F-G 2:00 p.m. on settlement date
H 4:45 p.m. on settlement date
I 5:00 p.m. on settlement date
If a sale is to be settled more than one Business Day after
the sale date, Settlement Procedures "B" and "C" shall be completed as soon as
practicable but not later than 2:00 p.m. on the first Business Day after the
sale date. If the initial interest rate for a Floating Rate Book-Entry Security
has not been determined at the time that Settlement Procedure "A" is completed,
Settlement Procedures "B" and "C" shall be completed as soon as such rate has
been determined but no later than 2:00 p.m. on the second Business Day before
the settlement date. Settlement Procedure "H" is subject to extension in
accordance with any extension of Fedwire closing deadlines and in the other
events specified in the SDFS operating procedures in effect on the settlement
date.
If settlement of a Book-Entry Security is rescheduled or
cancelled, the Trustee, upon obtaining knowledge thereof, will deliver to the
Depositary, through the Depositary's Participation Terminal System, a
cancellation message to such effect by no later than 2:00 p.m. on the Business
Day immediately preceding the scheduled settlement date.
Failure to Settle:
If the Trustee fails to enter an SDFS deliver order with
respect to a Book-Entry Security pursuant to Settlement Procedure "F", the
Trustee may deliver to the Depositary, through the Depositary's Participant
Terminal System, as soon as practicable a withdrawal message instructing the
Depositary to debit such Book-Entry Security to the Trustee's participant
account, provided that the Trustee's participant account contains a principal
amount of the Global Security representing such Book-Entry Security that is at
least
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equal to the principal amount to be debited. If a withdrawal message is
processed with respect to all the Book-Entry Securities represented by a Global
Security, the Trustee will mark such Global Security "cancelled", make
appropriate entries in the Trustee's records and send such cancelled Global
Security to the Company. The CUSIP number assigned to such Global Security
shall, in accordance with CUSIP Service Bureau procedures, be cancelled and not
immediately reassigned. If a withdrawal message is processed with respect to
one or more, but not all, of the Book-Entry Securities represented by a Global
Security, the Trustee will exchange such Global Security for two Global
Securities, one of which shall represent such Book-Entry Security or Securities
and shall be cancelled immediately after issuance and the other of which shall
represent the remaining Book-Entry Securities previously represented by the
surrendered Global Security and shall bear the CUSIP number of the surrendered
Global Security.
If the purchase price for any Book-Entry Security is not
timely paid to the Participants with respect to such Book-Entry Security by the
beneficial purchaser thereof (or a person, including an indirect participant in
the Depositary, acting on behalf of such purchaser), such participants and, in
turn, the Agent for such Book-Entry Security may enter deliver orders through
the Depositary's Participant Terminal System debiting such Book-Entry Security
to such participant's account and crediting such Book-Entry Security to such
Agent's account and then debiting such Book-Entry Security to such Agent's
participant account and crediting such Book-Entry Security "free" to the
Trustee's participant account and shall notify the Company and the Trustee
thereof. Thereafter, the Trustee will (i) immediately notify the Company of
such order and the Company shall transfer to such Agent funds available for
immediate use in an amount equal to the price of such Book-Entry Security which
was transferred to the Company in accordance with Settlement Procedure I, and
(ii) deliver the withdrawal message and take the related actions described in
the preceding paragraph. If such failure shall have occurred for any reason
other than default by the applicable Agent to perform its obligations hereunder
or under the Distribution Agreement, the Company will reimburse such Agent on
an equitable basis for the loss of its use of funds during the period when the
funds were credited to the account of the Company.
Notwithstanding the foregoing, upon any failure to settle
with respect to a Book-Entry Security, the Depositary may take any actions in
accordance with its SDFS operating procedures then in effect. In the event of a
failure to settle with respect to one or more, but not all, of the Book-Entry
Securities to have been represented by a Global Security, the Trustee will
provide, in accordance with Settlement Procedure "D" for the authentication and
issuance of a Global Security representing the other Book-Entry Securities to
have been represented by such Global Security and will make appropriate entries
in its records. The Company will, from time to time, furnish the Trustee with a
sufficient quantity of Offered Securities.
EXHIBIT C
Restrictions on Sale of
Medium-Term Notes
No Offered Securities denominated in a currency other than
United States dollars will be sold or offered for sale in the country issuing
such currency.