EXHIBIT 10.1
EXECUTION COPY
UNITED PARCEL SERVICE, INC.
$500,000,000
UPS NOTES
WITH MATURITIES OF 9 MONTHS OR MORE FROM DATE OF ISSUE
SELLING AGENT AGREEMENT
November 17, 2006
The Purchasing Agents Listed in
Schedule I hereto
Dear Sirs:
United Parcel Service, Inc., a Delaware corporation (the "COMPANY"),
proposes to issue and sell up to $500,000,000 aggregate principal amount of its
UPS Notes (the "NOTES") with maturities of 9 months or more from date of issue
pursuant to the provisions of the Indenture, dated as of August 26, 2003 (the
"INDENTURE"), between the Company and Citibank, N.A., as Trustee (the
"Trustee"). The Notes shall have the maturity ranges, interest rates and other
terms set forth in the Prospectus referred to below as it may be amended or
supplemented from time to time. The Notes will be issued, and the terms thereof
established, from time to time by the Company in accordance with the Indenture.
Subject to the terms and conditions contained in this Selling Agent
Agreement (the "AGREEMENT") and to the reservation by the Company of the right
to sell up to $50,000,000 aggregate principal amount of Notes directly on its
own behalf or indirectly through agents other than the Agents (as hereinafter
defined) in up to ten separate transactions, the Company hereby (i) appoints
each of you as an agent of the Company (individually, an "AGENT" and
collectively the "AGENTS") for the purpose of soliciting and receiving offers to
purchase Notes from the Company and (ii) agrees that whenever the Company
determines to sell Notes pursuant to this Agreement, such Notes shall be sold
pursuant to a Terms Agreement (as defined in Section IV(b) below) relating to
such sale in accordance with the provisions of Section IV(b) hereof between the
Company and LaSalle Financial Services, Inc. (the "PURCHASING AGENT"), with the
Purchasing Agent purchasing such Notes as principal for resale to others. You
hereby agree to use your reasonable best efforts to solicit and receive offers
to purchase Notes upon terms acceptable to the Company at such times and in such
amounts as the Company shall from time to time specify and in accordance with
the terms hereof. This Agreement shall not be construed to create either an
obligation on the part of the Company to sell any Notes or an obligation of any
of the Agents to purchase Notes.
I.
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement on Form S-3 (No. 333-108272) relating to
the Notes and the offering thereof, from time to time, in accordance with Rule
415 under the Securities Act of 1933, as amended (the "SECURITIES ACT"). The
term "REGISTRATION STATEMENT" as used with respect to a particular issue of the
Notes means the registration statement, as from time to time amended or
supplemented, at the time of its effectiveness for purposes of Section 11 of the
Securities Act as such section applies to the Company and the Agents for such
offering of Notes pursuant to Rule 430B(f)(1) and Rule 430B(f)(2) under the
Securities Act (the "EFFECTIVE TIME"), including (i) all documents then filed as
a part thereof or incorporated or deemed to be incorporated by reference therein
and (ii) any information contained or incorporated by reference in a prospectus
filed with the Commission pursuant to Rule 424(b) under the Securities Act, to
the extent such information is deemed, pursuant to Rule 430B(f)(1) under the
Securities Act, to be part of the Registration Statement at the Effective Time.
The Registration Statement was declared effective by the Commission on September
8, 2003, and the Indenture has been qualified under the Trust Indenture Act of
1939, as amended (the "TRUST INDENTURE ACT"). The Company has prepared or will
promptly prepare for filing with, or transmission for filing to, the Commission,
pursuant to Rule 424 under the Securities Act, a prospectus supplement (the
"PROSPECTUS SUPPLEMENT") for the purpose of supplying information in respect of
the public offering of the Notes. The term "BASE PROSPECTUS" means the
prospectus included in the Registration Statement exclusive of any supplement
filed pursuant to Rule 424. The Base Prospectus, as supplemented by the
Prospectus Supplement, is referred to herein as the "PROGRAM PROSPECTUS." Prior
to the determination of the final terms of a particular issue of the Notes the
term "PROSPECTUS" means the Program Prospectus, and after such determination,
such document plus a supplement (the "PRICING SUPPLEMENT") prepared for the sale
of a particular issue of the Notes and including a description of the final
terms of the particular issue of Notes and the terms of the offering thereof.
The term "PERMITTED FREE WRITING PROSPECTUS" as used herein means any "issuer
free writing prospectus," as defined in Rule 433 under the Securities Act ("RULE
433"), the form of which is attached as Exhibit D and relating to the Notes and
intended for general distribution to prospective investors that (i) is required
to be filed with the Commission by the Company, or (ii) is exempt from filing
pursuant to Rule 433(d)(5)(i) because it contains a description of the Notes or
of the offering that does not reflect the final terms, in each case in the form
filed or required to be filed with the Commission or, if not required to be
filed, in the form retained in the Company's records pursuant to Rule 433(g).
The "PRICING EFFECTIVE TIME" as used herein shall occur when either (i) a
Permitted Free Writing Prospectus with the final terms of the offering and the
Program Prospectus, or (ii) the Pricing Supplement, prepared by the Company, and
the Program Prospectus, shall be made available to the Agents for electronic
delivery to purchasers (the documentation in (i) or (ii), as applicable, in the
aggregate, the "PRICING DISCLOSURE MATERIAL").
II.
Your obligations hereunder are subject to the following conditions, each of
which shall be met on such date as you and the Company shall subsequently fix
for the commencement of your obligations hereunder (the "COMMENCEMENT DATE"):
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(a) No litigation or proceeding shall be threatened or pending to
restrain or enjoin the issuance or delivery of the Notes, or which in any
way questions or affects the validity of the Notes. No stop order
suspending the effectiveness of the Registration Statement shall be in
effect, and no proceedings for such purpose shall be pending before or
threatened by the Commission. There shall have been no material adverse
change in the consolidated financial condition of the Company and its
subsidiaries, considered as a whole (a "MATERIAL ADVERSE CHANGE"), from
that set forth in the Registration Statement and the Prospectus (excluding
any amendments or supplements to the Prospectus since the relevant Pricing
Effective Time, if any).
(b) You shall have received on the Commencement Date a certificate of
the Company dated such Commencement Date and signed by an executive officer
of the Company to the foregoing effect. The officer signing such
certificate may rely upon the best of his knowledge as to proceedings
threatened.
(c) You shall have received a favorable opinion of King & Spalding
LLP, counsel for the Company, dated the Commencement Date, to the effect
that:
(i) The Company is a corporation validly existing and in good
standing under the laws of the State of Delaware with the corporate
power and authority to own its properties and conduct its business as
described in the Prospectus.
(ii) The Indenture has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement
of the Company, enforceable against the Company in accordance with its
terms, subject, as to enforcement of remedies, to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
rights and remedies of creditors generally and to the effect of
general principles of equity; and the Indenture has been duly
qualified under the Trust Indenture Act.
(iii) The Notes have been duly authorized and, when the terms
thereof have been established in accordance with the Indenture and
when executed, authenticated, issued and delivered in the manner
provided for in the Indenture against payment therefor, will
constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, subject as to
enforcement of remedies, to bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights and remedies of
creditors generally and to the effect of general principles of equity.
(iv) This Agreement has been duly authorized, executed and
delivered by the Company.
(v) No authorization, consent or approval of, or registration or
filing with, any governmental or public body or regulatory authority
is required on the part of the Company for the issuance of the Notes
in accordance with the Indenture or the sale of the Notes in
accordance with this Agreement other than
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the registration of the Notes under the Securities Act, qualification
of the Indenture under the Trust Indenture Act and compliance with the
securities or Blue Sky laws of various jurisdictions.
(vi) The statements in the Prospectus under the captions
"Description of Debt Securities", "Description of Notes" and "Certain
United States Federal Income Tax Considerations", insofar as such
statements constitute summaries of the documents (or provisions
thereof) or statutes (or provisions thereof) referred to therein,
fairly present the information required to be described with respect
to such documents (or provisions thereof) or statutes (or provisions
thereof) and fairly summarize in all material respects such documents
(or provisions thereof) or statutes (or provisions thereof).
(vii) The Indenture and the form of the Notes conform in all
material respects to the descriptions thereof in the Prospectus.
(viii) The Registration Statement has become effective under the
Securities Act, and, to our knowledge, 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 pending under the Securities Act.
(ix)(A) Each document, if any, filed pursuant to the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and
incorporated by reference in the Prospectus, when such document was
filed with the Commission, complied as to form in all material
respects with the Exchange Act and the rules and regulations
thereunder; and (B) the Registration Statement, as of its effective
date, and the Prospectus, as of its issue date and the Commencement
Date, complied as to form in all material respects with the
requirements of the Trust Indenture Act and the Securities Act and the
rules and regulations thereunder (in each case other than the
financial statements and notes thereto, the financial statement
schedules and the other financial and statistical data and Form T-1
included or incorporated by reference therein).
In addition, King & Spalding LLP shall state that, in its capacity as
counsel for the Company, it has rendered legal advice and assistance in
connection with the Company's preparation of the Registration Statement and
the Prospectus. Rendering such assistance included, among other things,
discussions and inquiries concerning various legal matters, the review of
certain documents, and participating in conferences with officers and other
representatives of the Company, representatives of the Company's
independent auditors and representatives of the Agents and their counsel
during which the contents of the Registration Statement and the Prospectus
and related matters were discussed and reviewed. Such counsel shall state
that although it is not passing upon and does not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in
the Registration Statement or the Prospectus, on the basis of the
information that was developed in the course of the performance of the
services referred to above, nothing came to their attention that causes
them to believe that (A) each part of
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the Registration Statement (other than the financial statements and notes
thereto, the financial statement schedules and the other financial and
statistical data and the Form T-1 included or incorporated by reference
therein), at the time it became effective, and if any amendment to the
Registration Statement has been filed with the Commission subsequent to
such date, at the time of the most recent filing, contained an untrue
statement of a material fact or omitted to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading or (B) the Prospectus (other than the financial statements and
notes thereto, the financial statement schedules and the other financial
and statistical data included or incorporated by reference therein), as of
its issue date and as of the Commencement Date, contained or contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) You shall have received a favorable opinion of counsel in the
Legal Department of the Company, reasonably satisfactory to the Agents,
dated the Commencement Date, to the effect that:
(i) The Company is duly qualified to do business as a foreign
corporation in good standing in each jurisdiction in which it owns or
leases material properties or in which the conduct of its business
requires such qualification and in which the failure to so qualify
would have a material adverse effect on the Company and its
subsidiaries considered as a whole.
(ii) The execution and delivery of the Indenture, the issuance of
the Notes in accordance with the Indenture and the sale of the Notes
pursuant to this Agreement: (A) do not and will not result in any
violation of the certificate of incorporation or bylaws of the
Company; (B) to such counsel's knowledge, do not and will not result
in a breach or violation of any of the terms and provisions of, or
constitute a default under, any agreement or other instrument binding
upon the Company or any subsidiary of the Company that is a
"significant subsidiary" as defined in Rule 1-02(w) of Regulation S-X
under the Securities Act (each, a "SIGNIFICANT SUBSIDIARY") that is
material to the Company and its subsidiaries considered as a whole;
and (C) do not and will not result in a violation of any existing
material law, rule or regulation applicable to the Company or any of
its subsidiaries or any material judgment, order, writ, injunction or
decree known to such counsel of any governmental authority or court
having jurisdiction over the Company or any of its subsidiaries.
(iii) The Company has the corporate power and authority to
authorize, issue and sell the Notes as contemplated by this Agreement.
(iv) The statements in the (A) documents incorporated by
reference into the Prospectus under the captions "Government
Regulation" and "Legal Proceedings" in the Company's most recently
filed Annual Report on Form 10-K and Part II, Item 1 of the Company's
subsequently filed Quarterly Reports on Form 10-Q, if any (or
comparable paragraphs under the caption "Liquidity and Capital
Resources" in Part I, Item 2 of such Quarterly Reports on Form 10-Q,
as
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the case may be), and (B) the Registration Statement under Item 15,
insofar as such statements purport to constitute summaries of the
documents (or provisions thereof), statutes (or provisions thereof) or
legal proceedings referred to therein, fairly present the information
required to be described with respect to such documents (or provisions
thereof), statutes (or provisions thereof) or legal proceedings and
fairly summarize in all material respects such documents (or
provisions thereof), statutes (or provisions thereof), or legal
proceedings.
(v) To such counsel's knowledge, there are no (A) legal or
governmental proceedings pending or threatened to which the Company or
any Significant Subsidiary is a party, or to which any of the
properties of the Company or any Significant Subsidiary is subject,
that are required to be described in the Registration Statement or the
Prospectus and are not so described or (B) statutes, regulations or
contracts that are required to be described in the Registration
Statement or the Prospectus or contracts that are required to be filed
as exhibits to the Registration Statement that are not described or
filed as required.
(e) You shall have received on the Commencement Date a letter dated
the Commencement Date from Deloitte & Touche LLP, independent auditors,
containing statements and information of the type ordinarily included in
auditors' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in or incorporated
by reference into the Registration Statement and the Prospectus.
(f) You shall have received a favorable opinion of Gibson, Dunn &
Crutcher LLP, counsel for the Agents, dated such Commencement Date, to the
effect set forth in Section II(c) in clauses (ii), (iii), (iv), (vii) and
(ix)(B) and the paragraph following clause (ix).
(g) You shall have received a certificate of the secretary or
assistant secretary of the Company as to the Certificate of Incorporation
of the Company, the Bylaws of the Company and the resolutions authorizing
the issuance and sale of the Notes and certain related matters.
The obligations of the Purchasing Agent to purchase Notes as principal,
both under this Agreement and under any Terms Agreement, are subject to the
conditions that: (i) no litigation or proceeding shall be pending or, to the
Company's knowledge, threatened to restrain or enjoin the issuance or delivery
of the Notes, or which in any way questions or affects the validity of the
Notes; (ii) no stop order suspending the effectiveness of the Registration
Statement shall be in effect and no proceedings for such purpose or pursuant to
Section 8A under the Securities Act shall be pending before or, to the Company's
knowledge, threatened by the Commission; and (iii) there shall have been no
Material Adverse Change in the consolidated financial condition of the Company
and its subsidiaries, considered as a whole, from that set forth in the
Registration Statement and the Prospectus, each of which conditions shall be met
on the corresponding Settlement Date (as defined in Section IV(b) hereof).
Further, if specifically called for by any written agreement by the Purchasing
Agent to purchase Notes as principal, the Purchasing
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Agent's obligations hereunder and under such agreement shall be subject to such
of the additional conditions set forth in clause (a), as it relates to the
executive officer's certificate, and clauses (b), (c), (d) and (e) above, as
agreed to by the parties, each of which such agreed conditions shall be met on
the corresponding Settlement Date.
III.
In further consideration of your agreements herein contained, the Company
covenants as follows:
(a) The Company will furnish you, without charge, a copy of (i) the
Indenture, (ii) the resolutions of the Board of Directors (or the Executive
Committee) of the Company authorizing the issuance and sale of the Notes,
certified by the Secretary or Assistant Secretary of the Company as having
been duly adopted, (iii) the Registration Statement including exhibits and
documents incorporated by reference therein, and (iv) as many copies of the
Prospectus, any Permitted Free Writing Prospectus, any documents
incorporated by reference therein, and any supplements and amendments
thereto as you may reasonably request.
(b) Before amending or supplementing the Registration Statement, the
Prospectus or the Pricing Disclosure Material (other than amendments or
supplements to change interest rates and other than amendments or
supplements in the form of the Company's periodic filings to be filed with
the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act that are incorporated by reference in the Prospectus and the
Pricing Disclosure Material), the Company will furnish you a copy of each
such proposed amendment or supplement and afford you a reasonable
opportunity to comment on any such proposed amendment or supplement.
(c) The Company will furnish you copies of each amendment to the
Registration Statement and of each amendment and supplement to the
Prospectus or the Pricing Disclosure Material in such quantities as you may
from time to time reasonably request. If at any time when the delivery of a
Prospectus shall be required by law in connection with sales of any of the
Notes, either (i) any event shall have occurred as a result of which the
Prospectus or the Pricing Disclosure Material as then amended or
supplemented would include any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading or (ii) for any other reason it shall be necessary to amend or
supplement the Prospectus or Pricing Disclosure Material as then amended or
supplemented or to file under the Exchange Act any document incorporated by
reference in the Prospectus in order to comply with the Securities Act or
the Exchange Act, the Company will (A) notify you to suspend the
solicitation of offers to purchase Notes and if notified by the Company,
you shall forthwith suspend such solicitation and cease using the
Prospectus or the Pricing Disclosure Material, as applicable, as then
amended or supplemented and (B) if the Company notifies you that it would
like you to resume the solicitation of offers to purchase Notes, promptly
prepare and file with the Commission such document incorporated by
reference in the Prospectus or the Pricing Disclosure Material or an
amendment or supplement to the Registration
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Statement, the Prospectus or the Pricing Disclosure Material which will
correct such statement or omission or effect such compliance and will
provide to you without charge a reasonable number of copies thereof, which
you shall use thereafter.
(d) The Company will endeavor to qualify such Notes for offer and sale
under the securities or Blue Sky laws of such jurisdictions as you shall
reasonably request and will pay all reasonable expenses (including fees and
disbursements of counsel) in connection with such qualification; provided,
that, in connection therewith the Company shall not be required to qualify
as a foreign corporation to do business, or to file a general consent to
service of process, in any jurisdiction.
(e) The Company will make generally available to its security holders
and to you as soon as practicable earning statements that satisfy the
provisions of Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder covering 12 month periods
beginning, in each case, not later than the first day of the Company's
fiscal quarter next following the "effective date" (as defined in Rule 158
under the Securities Act) of the Registration Statement with respect to
each sale of Notes.
(f) If the Company and the Purchasing Agent mutually agree to list
Notes on any stock exchange (a "STOCK EXCHANGE"):
(i) The Company will use its reasonable efforts, in cooperation
with the Purchasing Agent, to cause such Notes to be accepted for
listing on any such Stock Exchange, in each case as the Company and
the Purchasing Agent shall deem to be appropriate. In connection with
any such agreement to list Notes on a Stock Exchange, the Company
shall use its reasonable efforts to obtain such listing promptly and
shall furnish any and all documents, instruments, information and
undertakings that may be reasonably necessary or advisable in order to
obtain and maintain the listing.
(ii) So long as any Note remains outstanding and listed on a
Stock Exchange, if the Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state
any material fact relating to any matter described in the Prospectus
the inclusion of which was required by the listing rules and
regulations of such Stock Exchange on which any Notes are listed (the
"LISTING RULES") or by such Stock Exchange, the Company will provide
to the Purchasing Agent information about the change or matter and to
amend or supplement the Prospectus in order to comply with the Listing
Rules or as otherwise requested by the Stock Exchange.
(iii) The Company will use reasonable efforts to comply with any
undertakings given by it from time to time to any Stock Exchange on
which any Notes are listed.
(g) The Company promptly will notify the Purchasing Agent in writing
in the event that the Company does not have a security listed on the New
York Stock Exchange.
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(h) The Company will notify the Agents immediately, and confirm such
notice in writing, of any change in the rating assigned by any nationally
recognized statistical rating organization, as such term is defined in Rule
436(g)(2) under the Securities Act, to the Medium-Term Note Program under
which the Notes are issued (the "PROGRAM") or any debt securities
(including the Notes) of the Company, or the public announcement by any
nationally recognized statistical rating organization that it has under
surveillance or review, with possible negative implications, its rating of
the Program or any such debt securities, or the withdrawal by any
nationally recognized statistical rating organization of its rating of the
Program or any such debt securities.
IV.
(a) Solicitations as Agent. You hereby agree, as Agents hereunder, to use
your reasonable best efforts to solicit and receive offers to purchase Notes
upon the terms and conditions set forth herein and in the Prospectus and upon
the terms communicated to you from time to time by the Company or the Purchasing
Agent, as the case may be. For the purpose of such solicitation you will use the
Prospectus as then amended or supplemented which has been most recently
distributed to you by the Company, and you will solicit offers to purchase only
as permitted or contemplated thereby and herein. The Company reserves the right,
in its sole discretion, to suspend solicitation of offers to purchase Notes at
any time for any period of time or permanently. Upon receipt of notice of any
such suspension (which may be given orally) from the Company, you will as soon
as practicable, but in any event no later than one business day after receipt of
such instructions, suspend solicitation of offers to purchase until such time as
the Company has advised you that such solicitation may be resumed. In addition,
the Company reserves the right to sell, and may solicit and accept offers to
purchase, up to $50,000,000 aggregate principal amount of Notes directly on its
own behalf in up to ten separate transactions; and, in the case of any such sale
not resulting from a solicitation made by any Agent, no Concession (as defined
below) will be payable with respect to such sale.
You are authorized to solicit orders for the Notes only in denominations of
$1,000 or more (in multiples of $1,000). You are not authorized to appoint
subagents or to engage the service of any other broker or dealer in connection
with the offer or sale of the Notes without the consent of the Company;
provided, however, the Purchasing Agent may engage the service of any other
broker or dealer without the consent of the Company. The Purchasing Agent,
however, on a periodic basis upon request, will provide the Company with a list
of those brokers or dealers so engaged. In addition, unless otherwise instructed
by the Company, the Purchasing Agent shall communicate to the Company, orally or
in writing, the aggregate amount of each offer to purchase each proposed series
or issuance of Notes. The Company shall have the sole right to accept offers to
purchase Notes offered through you and may reject any proposed purchase of Notes
as a whole or in part. You shall have the right, in your discretion reasonably
exercised, to reject any proposed purchase of Notes, as a whole or in part, and
any such rejection shall not be deemed a breach of your agreements contained
herein.
The Company agrees to pay the Purchasing Agent, as consideration for
soliciting offers to purchase Notes, a concession in the form of a discount
equal to the percentages of the principal amount of each Note sold not in excess
of the concession set forth in Exhibit A (the "CONCESSION"). Notwithstanding the
foregoing, for Notes that bear a zero interest rate and are
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issued at a substantial discount from the principal amount payable at the
Maturity Date (a "ZERO-COUPON NOTE"), the Company agrees to pay the Purchasing
Agent, as consideration for soliciting the sale of the Zero-Coupon Notes, a
Concession in the form of a discount equal to the percentages of the initial
offering price of each Zero-Coupon Note sold not in excess of the Concession set
forth in Exhibit A. The Purchasing Agent and the other Agents will share the
Concession in such proportions as they may agree.
Except as provided in Section IV(b) hereof, in soliciting offers to
purchase Notes from the Company, you are acting solely as agent for the Company
and not as principal. When acting on behalf of the Company on an agency basis,
you will make reasonable efforts to assist the Company in obtaining performance
by each purchaser whose offer to purchase Notes has been accepted by the
Company, but you shall not have any liability to the Company in the event such
purchase is not consummated for any reason, other than to repay to the Company
any Concession with respect thereto.
(b) Purchases as Principal. Each sale of Notes to an Agent as principal
shall be made in accordance with the terms of this Agreement and a separate
agreement, substantially in the form of Exhibit C, to be entered into on behalf
of such Agent(s) by the Purchasing Agent, which will provide for the sale of
such Notes to, and the purchase and reoffering thereof by, the Purchasing Agent
as principal. Each such separate agreement (which may be an oral agreement and
confirmed in writing as described below between the Purchasing Agent and the
Company) is herein referred to as a "TERMS AGREEMENT". A Terms Agreement may
also specify certain provisions relating to the reoffering of such Notes by the
Purchasing Agent. The Terms Agreement shall not be effective, and the Agents
agree that no contract of sale may be entered into by the Agents in respect of a
sale of Notes as described in this section, until the Company has made the
Pricing Disclosure Material available to the Agents and the Pricing Effective
Time occurs. The Purchasing Agent's agreement to purchase Notes pursuant to any
Terms Agreement shall be deemed to have been made on the basis of the
representations, warranties and agreements of the Company herein contained and
shall be subject to the terms and conditions herein set forth. Except pursuant
to a Terms Agreement, under no circumstances shall you be obligated to purchase
any Notes for your own account. Each Terms Agreement, whether oral (and
confirmed in writing which may be by facsimile transmission) or in writing,
shall describe the Notes to be purchased pursuant thereto by the Purchasing
Agent as principal, and may specify, among other things, the principal amount of
Notes to be purchased, the interest rate or formula and maturity date or dates
of such Notes, the interest payment dates, if any, the price to be paid to the
Company for such Notes, the initial public offering price at which the Notes are
proposed to be reoffered, and the time and place of delivery of and payment for
such Notes (the "SETTLEMENT DATE"), whether the Notes provide for a survivor's
option or for optional redemption by the Company and on what terms and
conditions, and any other relevant terms.
In connection with the resale of the purchased Notes, you are not
authorized, without the consent of the Company, to appoint subagents or to
engage the service of any other broker or dealer, nor may you reallow any
portion of the discount paid to you by the Company in excess of the designated
reallowance portion; provided, however, that the Purchasing Agent may engage the
service of any other broker or dealer without the consent of the Company. The
Purchasing Agent however, on a periodic basis, will provide the Company with a
list of those brokers or
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dealers so engaged. Unless authorized by the Purchasing Agent in each instance,
no Agent will purchase and sell Notes for which an order from a client has not
been received.
Each purchase of Notes by the Purchasing Agent from the Company shall be at
a discount from the principal amount of each such Note on the date of issue not
in excess of the applicable Concession set forth in Exhibit A. Notwithstanding
the foregoing, for Zero-Coupon Notes, each purchase of Zero-Coupon Notes by the
Purchasing Agent from the Company shall be at a discount from the initial
offering price of each such Note on the date of issue not in excess of the
applicable Concession set forth in Exhibit A.
(c) Public Offering Price. Unless otherwise authorized by the Company, all
Notes, other than Zero Coupon Notes, shall be sold to the public at a purchase
price not to exceed 100% of the principal amount thereof, plus accrued interest,
if any. Zero-Coupon Notes shall be sold to the public at a purchase price no
greater than an amount, expressed as a percentage of the principal face amount
of such Notes, equal to (i) the net proceeds to the Company on the sale of such
Notes, plus (ii) the Concession, plus (iii) accrued interest, if any. Such
purchase price shall be set forth in the confirmation statement of the Agent
responsible for such sale and delivered to the purchaser along with a notice of
availability (pursuant to Rule 172 of the Securities Act) or a copy of the
Pricing Disclosure Material.
(d) Procedures. Procedural details relating to the issue and delivery of,
and the solicitation of offers to purchase and payment for, the Notes, whether
under Section IV(a) or IV(b), are set forth in the Administrative Procedures
attached hereto as Exhibit B, as amended from time to time (the "PROCEDURES").
Unless otherwise provided in a Terms Agreement, the provisions of the Procedures
shall apply to all transactions contemplated hereunder. You and the Company each
agree to perform the respective duties and obligations specifically provided to
be performed by each in the Procedures. The Procedures may only be amended by
written agreement of the Company and each of you.
(e) Information. The Company authorizes the Agents, in connection with
their solicitation of purchase of the Notes, to use only the information taken
from the Registration Statement, the Prospectus and any Permitted Free Writing
Prospectus, and the documents incorporated therein by reference, and each of the
Agents agrees that it has and will have sole responsibility for the completeness
and accuracy of all other information, written or oral, furnished by such Agent
and its agents and employees to purchasers and prospective purchasers of the
Notes.
(f) Prospectus Delivery. You shall, as required by applicable law, furnish
to each person to whom you sell or deliver Notes a copy of the Prospectus (as
then amended or supplemented) or, if delivery of the Prospectus is not required
by applicable law, inform each such person that a copy thereof (as then amended
or supplemented) will be made available upon request. You are not authorized to
give any information or to make any representation not contained in the
Prospectus or the documents incorporated by reference or specifically referred
to therein in connection with the offer and sale of the Notes. You will not use
any marketing materials other than the Prospectus and any Permitted Free Writing
Prospectus in connection with any offer or sale of the Notes except for
marketing materials prepared by the Company, if any, and furnished to you
together with written authorization from the Company to the
11
Purchasing Agent to use the same hereunder. The Company hereby grants the
Purchasing Agent a limited, non-exclusive, non-sublicenseable, non-assignable,
revocable worldwide right and license to use the Company's name and logo (the
"Logo") as displayed on Exhibit F in "Marketing Materials" that include only (i)
brochures and (ii) the Purchasing Agent's website to identify the Company as a
member of the Direct Access Notes Program in the Purchasing Agent's general
materials and marketing objectives relating to the Direct Access Notes Program
(the "MARKETING MATERIALS"). The Purchasing Agent shall not use the Company's
name or Logo unless approved in writing by the Company prior to their use. Any
approvals from or authorizations by the Company under this Section IV(e) may be
transmitted electronically by the Company to the Purchasing Agent. The
Purchasing Agent understands and agrees that the rights granted by the Company
to use and display the Company's name and Logo convey to the Purchasing Agent no
greater rights than those expressly stated herein and that, in particular, the
Purchasing Agent shall at no time acquire any legal or equitable right, title or
interest of any sort in the Company's name and Logo or in the use thereof.
Unless terminated earlier, the Purchasing Agent's right to use the Company's
name and Logo shall cease upon the end of the term of this Agreement.
(g) Compliance With Laws. The Purchasing Agent is aware that other than
registering the Notes under the Securities Act, no action has been or will be
taken by the Company that would permit the offer, sale or purchase of the Notes
or possession or distribution of the Prospectus or any other offering material
relating to the Notes in any jurisdiction where action for that purpose is
required. Accordingly, the Purchasing Agent agrees that it will obtain any
consent, approval or permission required for the offer, sale or purchase by it
of Notes under the laws and regulations in force in any such jurisdiction to
which it is subject or in which it makes such offer, sale or purchase.
V.
The Company represents and warrants to the Agents that as of the date
hereof, as of each date on which the Company accepts an offer to purchase Notes
(including any purchase by the Purchasing Agent as principal, pursuant to a
Terms Agreement or otherwise), as of each date the Company issues and sells
Notes (each of the times referenced above being referred to herein as a
"REPRESENTATION DATE"):
(a)(i) Each document, if any, filed, or to be filed, pursuant to the
Exchange Act and incorporated by reference in the Prospectus complied as to
form when so filed, or will on the applicable Representation Date comply as
to form, in all material respects with the Exchange Act and the rules and
regulations thereunder; (ii) the Registration Statement, as of the latest
effective date thereof, did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; (iii) each
Prospectus, if any, filed pursuant to Rule 424 under the Securities Act,
complied as to form when so filed in all material respects with the
Securities Act and the applicable rules and regulations thereunder; (iv)
the Registration Statement and each Prospectus comply as to form and, as
amended or supplemented, if applicable, will on the applicable
Representation Date comply as to form in all material respects with the
Securities Act and the applicable rules and regulations thereunder; (v) the
Registration Statement and any amendment thereto, as of
12
the applicable effective date of the Registration Statement or any such
amendment, did not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading; and (vi) the Prospectus and any
amendment or supplement thereto, as of the date of the Prospectus or any
such amendment or supplement, do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; and (vi) at the time made available by the
Company to the Agents for electronic delivery with respect to the Notes,
the Pricing Disclosure Material will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that this representation and
warranty shall not apply to (i) any statements or omissions made in
reliance upon and in conformity with information furnished in writing to
the Company by any Agent expressly for use in the Prospectus as amended or
supplemented relating to the Notes or (ii) the Statement of Eligibility on
Form T-1 of the Trustee.
(b) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware,
with corporate power and authority to own its properties and conduct its
business as described in the Prospectus and the Pricing Disclosure
Material, and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties, or conducts any
business so as to require such qualification, or is subject to no material
liability or disability by reason of the failure to be so qualified or in
good standing in any such jurisdiction.
(c) The Company has an authorized capitalization as set forth in the
financial statements incorporated by reference in the Prospectus and the
Pricing Disclosure Material, and all of the issued shares of capital stock
of the Company have been duly and validly authorized and issued and are
fully paid and non-assessable.
(d) The Notes have been duly authorized and, when the terms thereof
have been established in accordance with the Indenture and when executed,
authenticated, issued and delivered in the manner provided for in the
Indenture against payment therefor, will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance
with their terms, subject, as to enforcement of remedies, to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights
and remedies of creditors generally and to the effect of general principles
of equity. The Indenture has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms,
subject, as to enforcement of remedies, to bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights and
remedies of creditors generally and to the effect of general principles of
equity. The Indenture has been duly qualified under the Trust Indenture
Act. The Indenture conforms and the Notes of any particular issuance of
Notes will conform in all material respects to the descriptions thereof
contained in the Prospectus and the Pricing Disclosure Material as amended
or supplemented that relate to such Notes.
13
(e) Other than as set forth in the Prospectus and the Pricing
Disclosure Material, the Company and each of its subsidiaries have
conducted their businesses and are in compliance in all material respects
with all applicable federal and state laws and regulations, except for any
conduct or noncompliance which would not have a material adverse effect on
the Company and its subsidiaries considered as a whole.
(f) The issue and sale of the Notes, the compliance by the Company
with the provisions of the Notes, the Indenture, this Agreement and any
Terms Agreement and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under: (i) the
Certificate of Incorporation or By-Laws of the Company; (ii) any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the property
or assets of the Company or any of its subsidiaries is subject; or (iii)
any statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its
properties, except for such conflicts, breaches, violations or defaults
under subsections (ii) or (iii) that would not result in a material adverse
effect on the Company and its subsidiaries considered as a whole. No
consent, approval, authorization, order, registration or qualification of
or with any court or governmental agency or body is required for the issue
and sale of the Notes or the consummation by the Company of the other
transactions contemplated by this Agreement, any Terms Agreement or the
Indenture, except such as have been obtained, or will have been obtained
prior to the Commencement Date, under the Securities Act or the Trust
Indenture Act and such consents, approvals, authorizations, registrations
or qualifications as may be required under state securities or Blue Sky
laws.
(g) Other than as set forth in the Prospectus and the Pricing
Disclosure Material, there are no legal or governmental proceedings pending
or, to the Company's knowledge, threatened to which the Company or any of
its subsidiaries is a party or to which any property of the Company or any
of its subsidiaries is subject, which are of a character that are required
to be disclosed in the Prospectus and Pricing Disclosure Material which
have not been disclosed therein as required.
(h) Immediately after any sale of Notes by the Company hereunder or
under any Terms Agreement, the aggregate amount of Notes which shall have
been issued and sold by the Company hereunder or under any Terms Agreement
and of any other debt securities of the Company (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.
(i) The Company is not, and, after giving effect to the offering and
sale of the Notes and the application of the proceeds thereof as described
in the Prospectus, the Company will not be, required to register as an
"investment company" as such term is defined in the Investment Company Act
of 1940, as amended.
14
(j) The Program, as well as the Notes, are rated Aaa by Moody's
Investors Service, Inc. and AAA by Standard & Poor's Ratings Services, or,
after the Commencement Date, such other rating as to which the Company
shall have most recently notified the Agents pursuant to Section III(h)
hereof.
(k) The Company has not distributed and will not distribute any
offering material in connection with the offering and sales of the Notes
other than the Prospectus, the Pricing Disclosure Materials, if any, and a
Permitted Free Writing Prospectus and will not use a Permitted Free Writing
Prospectus except in compliance with Rule 433 under the Securities Act and
otherwise in compliance with the Securities Act.
The above representations and warranties shall not apply to any statements
or omissions made in the Prospectus or the Pricing Disclosure Material in
reliance upon and in conformity with information furnished in writing to the
Company by you expressly for use therein. Each acceptance by the Company of an
offer for the purchase of Notes and each issuance of Notes shall be deemed an
affirmation by the Company that the foregoing representations and warranties are
true and correct at the time, as the case may be, of such acceptance or of such
issuance, in each case as though expressly made at such time. The
representations, warranties and covenants of the Company shall survive the
execution and delivery of this Agreement and the issuance and sale of the Notes.
Unless the Company has suspended the solicitation of offers to purchase
Notes pursuant to Section IV(a), each time the Registration Statement shall be
amended by the filing of a post-effective amendment or a Form 10-K or Form 10-Q
pursuant to Section 13 of the Exchange Act, or if agreed to by the Company in
connection with a particular sale of Notes, the Company shall furnish the Agents
with: (i) a written opinion, dated the date of such amendment, filing or as
otherwise agreed, of counsel to the Company, in substantially the form
previously delivered under Sections II(b) and II(c), but modified, as necessary,
to relate to the Registration Statement and the Prospectus as amended or
supplemented at such date; (ii) a letter, dated the date of such amendment,
filing or as otherwise agreed, of Deloitte & Touche LLP, independent auditors,
in substantially the form previously delivered under Section II(d), but
modified, as necessary, to relate to the Registration Statement and the
Prospectus as amended or supplemented at such date; and (iii) a certificate,
dated the date of such amendment, filing or as otherwise agreed and signed by an
executive officer of the Company, in substantially the form previously delivered
under Section II(a), but modified, as necessary, to relate to the Registration
Statement and the Prospectus as amended or supplemented at such date.
VI.
(a) The Company agrees to indemnify and hold harmless you, each person, if
any, who controls (within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act) you and each of your and such person's
officers and directors against any and all losses, liabilities, costs or claims
(or actions in respect thereof) to which any of them may become subject
(including all reasonable legal and other costs of investigating, disputing or
defending any such claim or action), insofar as such losses, liabilities, costs
or claims (or actions in respect thereof) arise out of or in connection with any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, any Prospectus, any Pricing
15
Disclosure Materials, any Permitted Free Writing Prospectus or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading provided, however that the Company shall not be liable
for any such loss, liability, cost, claim or action arising from any statements
or omissions made in reliance on and in conformity with written information
provided by you to the Company expressly for use in the Registration Statement,
any Prospectus, any Pricing Disclosure Materials, any Permitted Free Writing
Prospectus or any amendment or supplement thereto.
(b) Each Agent severally agrees to indemnify and hold harmless the Company,
each person, if any, who controls (within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act) the Company and the
Company's and such person's officers and directors from and against any and all
losses, liabilities, costs or claims (or actions in respect thereof) to which
any of them may become subject (including all reasonable legal and other costs
of investigating, disputing or defending any such claim or action), insofar as
such losses, liabilities, costs or claims (or actions in respect thereof) arise
out of or in connection with any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement, any Prospectus, any
Pricing Disclosure Materials, any Permitted Free Writing Prospectus or any
amendment or supplement thereto, or any omission or alleged omission to state
therein a material fact necessary to make the statements therein not misleading,
in each case only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance on and in
conformity with written information furnished to the Company by such Agent
expressly for use therein.
(c) If any claim, demand, action or proceeding (including any governmental
investigation) shall be brought or alleged against an indemnified party in
respect of which indemnity is to be sought against an indemnifying party
pursuant to the preceding paragraphs, the indemnified party shall, promptly
after receipt of notice of the commencement of any such claim, demand, action or
proceeding, notify the indemnifying party in writing of the commencement of such
claim, demand, action or proceeding, enclosing a copy of all papers served, if
any; provided, that, the omission to so notify such indemnifying party will not
relieve the indemnifying party from any liability that it may have to any
indemnified party under the foregoing provisions of this Section VI unless, and
only to the extent that, such omission results in the forfeiture of substantive
rights or defenses by the indemnifying party. 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 reasonably
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 VI for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. In any such proceeding,
any indemnified party shall have the right to retain its own counsel, but the
reasonable fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party and the indemnified party
shall have mutually agreed to the retention of such counsel, (ii) the
indemnifying party has assumed the defense of such
16
proceeding and has failed within a reasonable time to retain counsel reasonably
satisfactory to such indemnified party or (iii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential conflicts of interests between
them. It is agreed that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate law firm (in addition to
local counsel where reasonably necessary) for all such indemnified parties. Such
firm shall be designated in writing by the indemnified party. The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement (i) includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding; and (ii) does not include a statement as to or an admission of
fault, culpability or a failure to act, by or on behalf of any indemnified
party.
(d) If the indemnification provided for in this Section VI is unavailable
to or insufficient to hold harmless an indemnified party under the preceding
paragraphs of this Section VI in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and each Agent on the
other from the offering of the Notes 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, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company on the one hand and each Agent on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and each Agent on the other shall be deemed to be in the same
proportion as the total net proceeds from the sale of Notes (before deducting
expenses) received by the Company bear to the total commissions or discounts
received by such Agent in respect thereof. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading relates to information supplied by the Company
on the one hand or by any Agent on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and each Agent agree that it would not be
just and equitable if contribution pursuant to this Section VI(d) were
determined by per capita allocation (even if all Agents were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
VI(d). The
17
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 Section VI(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
Section VI(d), no Agent shall be required to contribute any amount in excess of
the amount by which the total public offering price at which the Notes purchased
by it in the offering giving rise to the damages 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, and no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The obligations of each
of the Agents under this Section VI(d) to contribute are several in proportion
to the respective purchases made by or through it to which such loss, claim,
damage or liability (or action in respect thereof) relates and are not joint.
(e) The indemnity and contribution agreements contained in this Section VI
and the representations and warranties of the Company and you in this Agreement
shall remain operative and in full force and effect regardless of: (i) any
termination of this Agreement; (ii) any investigation made by or on behalf of
the Agents; (iii) any investigation by an indemnified party or on such party's
behalf or any person controlling an indemnified party or by or on behalf of the
indemnifying party, its directors or officers or any person controlling the
indemnifying party; and (iv) acceptance of and payment for any of the Notes.
VII.
This Agreement may be terminated at any time by the Agents, on the one
hand, or the Company, on the other hand, upon the giving of five business days
written notice of such termination to the other party. In the event of any such
termination, neither party shall have any liability to the other party, except
for obligations hereunder which expressly survive the termination of this
Agreement and except that, if at the time of termination an offer for the
purchase of Notes shall have been accepted by the Company but the time of
delivery to the purchaser or his agent of the Note or Notes relating thereto
shall not yet have occurred, the Company shall have the obligations provided
herein with respect to such Note or Notes.
Subsequent to the execution of a Terms Agreement, (i) the Purchasing Agent
may terminate such Terms Agreement and (ii), if the Purchasing Agent does not
elect to terminate such Terms Agreement pursuant to clause (i) of this sentence,
upon the request of an Agent with respect to Notes to be purchased through the
Purchasing Agent by such Agent, the Purchasing Agent shall terminate such Terms
Agreement to the extent of the Notes that were to be purchased through the
Purchasing Agent by such requesting Agent, in each case immediately upon notice
to the Company, at any time prior to the Settlement Date relating thereto, if
there shall have occurred any:
(i) change in the long-term debt of the Company or any change, or any
development involving a prospective change, in the financial condition or
in the earnings, business or operations of the Company, otherwise than as
set forth or contemplated in the Prospectus, the effect of which is, in the
judgment of the Purchasing Agent or such requesting Agent, so material and
adverse as to make it impracticable or inadvisable to
18
proceed with the public offering of such Notes or enforce contracts for the
sale of such Notes; or
(ii) downgrading in the rating of the Company's debt securities
(including the Notes) by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Securities
Act) or public announcement by any such organization that it has under
surveillance or review, with possible negative implications, its rating of
such debt securities; or
(iii) banking moratorium declared by Federal or New York authorities,
or the authorities of any country in whose currency any Notes are
denominated under the applicable Terms Agreement; or
(iv) outbreak or escalation of hostilities in which the United States
or any country in whose currency any Notes are denominated under the
applicable Terms Agreement is involved, any declaration of war by Congress,
any material adverse change in financial markets or any other substantial
national or international calamity or emergency if, in the judgment of the
Purchasing Agent or such requesting Agent, the effect of any such outbreak,
escalation, material adverse change, declaration, calamity or emergency
makes it impractical or inadvisable to proceed with the public offering of
such Notes or enforce contracts for the sale of such Notes; or
(v) action by any governmental authority or any change, or any
development involving a prospective change, involving currency exchange
rates or exchange controls, which makes it impracticable or inadvisable in
the judgment of the Purchasing Agent or such requesting Agent to proceed
with the public offering of such Notes or enforce contracts for the sale of
such Notes.
If this Agreement is terminated, the last sentence of the second paragraph
of Section IV(a), Section III(c), (d) and (e), Section VI, and the first
paragraph of Section XII shall survive; provided, that, if at the time of
termination of this Agreement an offer to purchase Notes has been accepted by
the Company but the time of delivery to the purchaser or its agent of such Notes
has not occurred, the provisions of Section III(a) and (b), and Section IV(b)
and (d) shall also survive until time of delivery.
VIII.
Except as otherwise specifically provided herein, all statements, requests
and notices hereunder shall be in writing, or by telephone if promptly confirmed
in writing, and if to you shall be sufficient in all respects if delivered in
person or sent by facsimile transmission (confirmed in writing), or registered
mail to you at your address, telecopier number set forth below by your signature
and if to the Company shall be sufficient in all respects if delivered or sent
by telecopier or registered mail to the Company at 55 Glenlake Parkway, N.E.,
Atlanta, Georgia 30328, Attention: Legal Department, telecopier number (404)
828-6912. All such notices shall be effective on receipt.
19
IX.
This Agreement shall be binding upon each of you and the Company, and inure
solely to the benefit of you and the Company and any other person expressly
entitled to indemnification hereunder and the respective personal
representatives, successors and assigns of each, and no other person shall
acquire or have any rights under or by virtue of this Agreement.
X.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York. Each party to this Agreement irrevocably agrees
that any legal action or proceeding against it arising out of or in connection
with this Agreement or for recognition or enforcement of any judgment rendered
against it in connection with this Agreement may be brought in any Federal or
New York State court sitting in the Borough of Manhattan. By execution and
delivery of this Agreement, such party hereby irrevocably accepts and submits to
the jurisdiction of each of the aforesaid courts in personam, generally and
unconditionally with respect to any such action or proceeding for itself and in
respect of its property, assets and revenues. Each party hereby also irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of venue of any such action or proceeding
brought in any such court and any claim that any such action or proceeding has
been brought in an inconvenient forum.
XI.
If this Agreement is executed by or on behalf of any party, such person
hereby states that at the time of the execution of this Agreement he has no
notice of revocation of the power of attorney by which he has executed this
Agreement as such attorney.
XII.
The Company will pay the expenses incident to the performance of its
obligations under this Agreement, including: (i) the preparation and filing of
the Registration Statement and all amendments thereto and the Prospectus and any
amendments or supplements thereto and any Permitted Free Writing Prospectus;
(ii) the preparation, issuance and delivery of the Notes; (iii) the fees and
disbursements of the Company's counsel and auditors, of the Trustee and its
counsel and of any paying or other agents appointed by the Company; (iv) the
printing and delivery to you in quantities as hereinabove stated of copies of
the Registration Statement and the Prospectus; (v) the reasonable fees and
disbursements of Gibson, Dunn & Crutcher LLP, counsel for the Agents (including
"Blue Sky" fees and disbursements, if any); (vi) if the Company lists Notes on a
securities exchange, the costs and fees of such listing; and (vii) any fees
charged by rating agencies for the rating of the Notes.
The Company hereby acknowledges that the Agents will be acting pursuant to
contractual relationship on an arm's length basis and in no event do the parties
intend that the Agents act or be responsible as a fiduciary to the Company,
their management, stockholders, creditors or any other person. The Company and
the Agents each hereby expressly disclaim any fiduciary relationship and agree
they are each responsible for making their own independent judgments with
respect to any transactions entered into between them.
20
This Agreement may be executed by each of the parties hereto in any number
of counterparts, and by each of the parties hereto on separate counterparts,
each of which counterparts, when so executed and delivered, shall be deemed to
be an original, but all such counterparts shall together constitute but one and
the same instrument.
As used herein, "business day" means any day other than a Saturday, Sunday
or any day on which banking institutions are authorized or required by law,
regulation or executive order to be closed in the City of New York.
21
If the foregoing is in accordance with your understanding, please sign and
return to us a counterpart hereof, and upon acceptance hereof by you, this
letter and such acceptance hereof shall constitute a binding agreement between
the Company and you.
Very truly yours,
UNITED PARCEL SERVICE, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Confirmed and accepted
as of the date first above written:
LASALLE FINANCIAL SERVICES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
LaSalle Financial Services, Inc.
327 Plaza Real, Suite 225
Boca Raton, FL 33432
Attention: Product Origination
Telecopier:
-------------------------
CHARLES SCHWAB & CO., INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Charles Schwab & Co., Inc.
101 Montgomery Street
San Francisco, CA 94104
Attention:
--------------------------
Telecopier:
-------------------------
22
CITIGROUP GLOBAL MARKETS INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013
Attention: Transaction Execution Group
Telecopier: (646) 291-5209
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
4 World Financial Center, Floor 15
New York, New York 10080
Attention: Transaction Management
Group
Telecopier: 212-449-2234
MORGAN STANLEY & CO. INCORPORATED
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Morgan Stanley & Co. Incorporated
1585 Broadway, 4th Floor
New York, New York 10036
Attention: Greg Hamwi
Telecopier: 212-507-2460
With a copy to:
Morgan Stanley & Co. Incorporated
1585 Broadway, 4th Floor
New York, New York 10036
Attention: Financing Services Group
Telecopier: 646-202-9159
23
SAMUEL A. RAMIREZ & CO., INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Samuel A. Ramirez & Co., Inc.
61 Broadway
New York, New York 10006
Attention:
--------------------------
Telecopier:
-------------------------
MURIEL SIEBERT & CO., INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Muriel Siebert & Co., Inc.
885 Third Avenue, Suite 1720
New York, New York 10022
Attention:
--------------------------
Telecopier:
-------------------------
UBS SECURITIES LLC
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
UBS Securities LLC
800 Harbor Blvd.
Weehawken, New Jersey 07087
Attention: Taxable Fixed Income
Department -- Corporate
Desk
Telecopier: (201) 352-6900
24
WACHOVIA SECURITIES LLC
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Wachovia Securities LLC
901 East Byrd Street
River Front Plaza
West Tower, 3rd Floor
Richmond, VA 23219
Attention: George Curci
Fax: 804-868-2205
25
SCHEDULE I
Names of Agents
LaSalle Financial Services, Inc.
Charles Schwab & Co., Inc.
Citigroup Global Markets Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
Samuel A. Ramirez & Co., Inc.
Muriel Siebert & Co., Inc.
UBS Securities LLC
Wachovia Securities LLC
EXHIBIT A
UPS Notes
UNITED PARCEL SERVICE, INC.
DEALER AGENT PROGRAM
The following Concessions are payable as a percentage of the Price to Public of
each note sold to or through the Purchasing Agent and will not exceed the
amounts listed below.
9 months to less than 23 months........................................ 0.600%
23 months to less than 35 months....................................... 0.850%
35 months to less than 47 months....................................... 1.375%
47 months to less than 59 months....................................... 1.625%
59 months to less than 71 months....................................... 2.000%
71 months to less than 83 months....................................... 2.250%
83 months to less than 95 months....................................... 2.250%
95 months to less than 107 months...................................... 2.375%
107 months to less than 119 months..................................... 2.375%
119 months to less than 131 months..................................... 2.500%
131 months to less than 143 months..................................... 2.750%
143 months to less than 179 months..................................... 3.250%
179 months to less than 239 months..................................... 3.500%
239 months to 360 months............................................... 5.000%
A-1
EXHIBIT B
UNITED PARCEL SERVICE, INC.
UPS Notes
WITH MATURITIES OF 9 MONTHS OR MORE FROM DATE OF ISSUE
ADMINISTRATIVE PROCEDURES
UPS Notes with maturities of nine months or more from date of issue (the
"NOTES") are offered on a continuing basis by United Parcel Service, Inc. The
Notes will be offered by LaSalle Financial Services, Inc. (the "PURCHASING
AGENT"), Charles Schwab & Co., Inc., Citigroup Global Markets Inc., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated,
Samuel A. Ramirez & Co., Inc., Muriel Siebert & Co., Inc., UBS Securities LLC,
Wachovia Securities LLC (collectively, the "AGENTS") pursuant to a Selling Agent
Agreement among the Company and the Agents dated as of the date hereof (the
"SELLING AGENT AGREEMENT") and one or more terms agreements substantially in the
form attached to the Selling Agent Agreement as Exhibit C (each a "TERMS
AGREEMENT"). The Notes are being resold by the Purchasing Agent (and by any
Agent that purchases them from the Purchasing Agent) to (i) customers of the
Agents or (ii) selected broker-dealers (the "SELLING GROUP") for distribution to
their customers pursuant to a Master Selected Dealers Agreement (a "DEALERS
AGREEMENT") attached hereto as Exhibit E. The Agents have agreed to use their
reasonable best efforts to solicit offers to purchase Notes. The Notes will be
senior debt and have been registered with the Securities and Exchange Commission
(the "COMMISSION"). Citibank, N.A. is trustee (the "TRUSTEE") under an
Indenture, dated as of August 26, 2003, between the Company and the Trustee (the
"INDENTURE") covering the Notes. Pursuant to the terms of the Indenture,
Citibank, N.A. also will serve as authenticating agent, issuing agent and paying
agent. Each tranche of Notes will be issued in book-entry form and represented
by one or more fully registered global notes without coupons (each, a "GLOBAL
NOTE") held by the Trustee, as agent for the Depository Trust Corporation
("DTC") and recorded in the book-entry system maintained by DTC. Each Global
Note will have the annual interest rate, maturity and other terms set forth in
the relevant Pricing Supplement (as defined in the Selling Agent Agreement).
Owners of beneficial interests in a Global Note will be entitled to physical
delivery of Notes issued in certificated form equal in principal amount to their
respective beneficial interests only upon certain limited circumstances
described in the Indenture.
Administrative procedures and specific terms of the offering are explained
below. Administrative responsibilities will be handled for the Company by its
Treasury Department; accountable document control and record-keeping
responsibilities will be performed by its Legal Department. The Company will
advise the Agents and the Trustee in writing of those persons handling
administrative responsibilities with whom the Agents and the Trustee are to
communicate regarding offers to purchase Notes and the details of their
delivery.
Notes will be issued in accordance with the administrative procedures set forth
herein. To the extent the procedures set forth below conflict with or omit
certain of the provisions of the Notes, the Indenture, the Selling Agent
Agreement or the Prospectus and the Pricing Supplement
B-1
(together, the "PROSPECTUS"), the relevant provisions of the Notes, the
Indenture, the Selling Agent Agreement and the Prospectus shall control.
Capitalized terms used herein that are not otherwise defined shall have the
meanings ascribed thereto in the Selling Agent Agreement, the Prospectus in the
form most recently filed with the Commission pursuant to Rule 424 of the
Securities Act, or the Indenture.
ADMINISTRATIVE PROCEDURES FOR NOTES
In connection with the qualification of 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
obligations under a Letter of Representations from the Company and the Trustee
to DTC, dated September 12, 2003, and a Medium-Term Note Certificate Agreement
between the Trustee and DTC (the "CERTIFICATE AGREEMENT"), dated October 31,
1988, and its obligations as a participant in DTC, including DTC's Same-Day
Funds Settlement System ("SDFS"). The procedures set forth below may be modified
in compliance with DTC's then applicable procedures and upon agreement by the
Company, the Trustee and the Purchasing Agent.
Maturities: Each Note will mature on a date (the "MATURITY
DATE") not less than nine months after the date of
delivery by the Company of such Note. Notes will
mature on any date selected by the initial
purchaser and agreed to by the Company. "MATURITY"
when used with respect to any Note means the date
on which the outstanding principal amount of such
Note becomes due and payable in full in accordance
with its terms, whether at its Maturity Date or by
declaration of acceleration, call for redemption,
repayment or otherwise.
Issuance: All Notes having the same terms will be represented
initially by a single Global Note. Each Global Note
will be dated and issued as of the date of its
authentication by the Trustee.
All Discount Notes which have the same terms
(collectively, the "ZERO-COUPON TERMS") will be
represented initially by a single Global
Certificate in fully registered form without
coupons.
Each Global Note will bear an original issue date
(the "ORIGINAL ISSUE DATE"). The Original Issue
Date shall remain the same for all Notes
subsequently issued upon registration of transfer,
exchange or substitution of an original Note
regardless of their dates of authentication.
B-2
Identification Numbers: The Company has received from the CUSIP Service
Bureau (the "CUSIP SERVICE BUREAU") of Standard &
Poor's Corporation ("STANDARD & POOR'S") one series
of CUSIP numbers consisting of approximately 900
CUSIP numbers for future assignment to Global
Notes. The Company will provide DTC and the Trustee
with a list of such CUSIP numbers. The Company will
assign CUSIP numbers as described below under
Settlement Procedure "B". DTC will notify the CUSIP
Service Bureau periodically of the CUSIP numbers
that the Company has assigned to Global Notes. The
Company will reserve additional CUSIP numbers when
necessary for assignment to Global Notes and will
provide the Trustee and DTC with the list of
additional CUSIP numbers so obtained.
Registration: Unless otherwise specified by DTC, Global Notes
will be issued only in fully registered form
without coupons. Each Global Note will be
registered in the name of Cede & Co., as nominee
for DTC, on the Note Register maintained under the
Indenture by the Trustee. The beneficial owner of a
Note (or one or more indirect participants in DTC
designated by such owner) will designate one or
more participants in DTC (with respect to such
Note, the "PARTICIPANTS") to act as agent or agents
for such owner in connection with the book-entry
system maintained by DTC, and DTC will record in
book-entry form, in accordance with instructions
provided by such Participants, a credit balance
with respect to such beneficial owner of such Note
in the account of such Participants. The ownership
interest of such beneficial owner in such Note will
be recorded through the records of such
Participants or through the separate records of
such Participants and one or more indirect
participants in DTC.
Transfers: Transfers of interests in a Global Note will be
accomplished by book entries made by DTC and, in
turn, by Participants (and in certain cases, one or
more indirect participants in DTC) acting on behalf
of beneficial transferors and transferees of such
interests.
Exchanges: The Trustee, at the Company's request, may deliver
to DTC and the CUSIP Service Bureau at any time a
written notice of consolidation specifying (a) the
CUSIP numbers of two or more Global Notes
outstanding on such date that represent Notes
having the same terms (except that Issue Dates need
not be the same) and for which interest, if any,
has been paid to the same date and which otherwise
constitute Notes of the same series and tenor under
the Indenture, (b) a date, occurring at least 30
days after such written notice is delivered and at
least 30 days before the next Interest Payment
Date, if any, for the related Notes, on which such
Global Notes shall be exchanged for a single
replacement Global Note; and (c) a new CUSIP
number, obtained from the Company, to be assigned
to such replacement Global Note. Upon receipt of
such a
B-3
notice, DTC will send to its participants
(including the Issuing Agent) and the Trustee a
written reorganization notice to the effect that
such exchange will occur on such date. Prior to the
specified exchange date, the Trustee will deliver
to the CUSIP Service Bureau written notice setting
forth such exchange date and the new CUSIP number
and stating that, as of such exchange date, the
CUSIP numbers of the Global Notes to be exchanged
will no longer be valid. On the specified exchange
date, the Trustee will exchange such Global Notes
for a single Global Note bearing, the new CUSIP
number and the CUSIP numbers of the exchanged
Global Notes will, in accordance with CUSIP Service
Bureau procedures, be cancelled and not immediately
reassigned. Notwithstanding the foregoing, if the
Global Notes to be exchanged exceed $500,000,000 in
aggregate principal or face amount, one replacement
Global Note will be authenticated and issued to
represent each $500,000,000 of principal or face
amount of the exchanged Global Notes and an
additional Global Note will be authenticated and
issued to represent any remaining principal amount
of such Global Notes (See "Denominations" below).
Denominations: Notes will be issued in denominations of $1,000 or
more (in multiples of $1,000). Global Notes will be
denominated in principal or face amounts not in
excess of $500,000,000. If one or more Notes having
an aggregate principal or face amount in excess of
$500,000,000 would, but for the preceding sentence,
be represented by a single Global Note, then one
Global Note will be issued to represent each
$500,000,000 principal or face amount of such Note
or Notes and an additional Global Note will be
issued to represent any remaining principal amount
of such Note or Notes. In such case, each of the
Global Notes representing such Note or Notes shall
be assigned the same CUSIP number.
Issue Price: Unless otherwise specified in an applicable Pricing
Disclosure Material, each Note will be issued at
the percentage of principal amount specified in the
Pricing Disclosure Material relating to such Note.
Interest: Each Note will bear interest at a fixed rate, which
may be zero during all or any part of the term in
the case of certain Notes issued at a price
representing a substantial discount from the
principal amount payable at Maturity. Interest on
each Note will accrue from the Issue Date of such
Note for the first interest period and from the
most recent Interest Payment Date to which interest
has been paid for all subsequent interest periods.
Except as set forth hereafter, each payment of
interest on a Note will include interest accrued to
but excluding, as the case may be, the Interest
Payment Date or the date of Maturity (other than a
Maturity Date of a Note occurring on the 31st day
of a month in which case such payment of interest
will include interest accrued to but excluding the
30th day of such month). Any payment of principal,
premium or interest required to be made on a day
that is not a Business Day (as defined
B-4
below) may be made on the next succeeding Business
Day and no interest shall accrue as a result of any
such delayed payment.
Each pending deposit message described under
Settlement Procedure "C" below will be routed to
Standard & Poor's, which will use the message to
include certain information regarding the related
Notes in the appropriate daily bond report
published by Standard & Poor's.
Each Note will bear interest from and including its
Issue Date at the rate per annum set forth thereon
and in the applicable Pricing Disclosure Material
until the principal amount thereof is paid, or made
available for payment, in full. Unless otherwise
specified in the applicable Pricing Disclosure
Material, interest on each Note (other than a
Zero-Coupon Note) will be payable either monthly,
quarterly, semi-annually or annually on each
Interest Payment Date and at Maturity (or on the
date of redemption or repayment if a Note is
repurchased by the Company prior to maturity
pursuant to mandatory or optional redemption
provisions or the Survivor's Option). Interest will
be payable to the person in whose name a Note is
registered at the close of business on the Regular
Record Date next preceding each Interest Payment
Date; provided, however, that interest payable at
Maturity, on a date of redemption or in connection
with the exercise of the Survivor's Option will be
payable to the person to whom principal shall be
payable.
Any payment of principal, and premium, if any, or
interest required to be made on a Note on a day
which is not a Business Day need not be made on
such day, but may be made on the next succeeding
Business Day with the same force and effect as if
made on such day, and no additional interest shall
accrue as a result of such delayed payment. Unless
otherwise specified in the applicable Pricing
Disclosure Material, any interest on the Notes will
be computed on the basis of a 360-day year of
twelve 30-day months. The interest rates the
Company will agree to pay on newly-issued Notes are
subject to change without notice by the Company
from time to time, but no such change will affect
any Notes already issued or as to which an offer to
purchase has been accepted by the Company.
The Interest Payment Dates for a Note that provides
for monthly interest payments shall be the
fifteenth day of each calendar month (or the next
Business Day if not a Business Day), commencing in
the calendar month that next succeeds the month in
which the Note is issued. In the case of a Note
that provides for quarterly interest payments, the
Interest Payment Dates shall be the fifteenth day
of each third month (or the next Business Day if
not a Business Day), commencing in the third
succeeding calendar month following the month in
which the Note is issued. In the case of a Note
that provides for semi-annual interest payments,
the Interest Payment dates shall be the fifteenth
day of each sixth month (or the next
B-5
Business Day if not a Business Day), commencing in
the sixth succeeding calendar month following the
month in which the Note is issued. In the case of a
Note that provides for annual interest payments,
the Interest Payment Date shall be the fifteenth
day of every twelfth month (or the next Business
Day if not a Business Day), commencing in the
twelfth succeeding calendar month following the
month in which the Note is issued. The Regular
Record Date with respect to any Interest Payment
Date shall be the date fifteen calendar days prior
to such Interest Payment Date, whether or not such
date shall be a Business Day; provided, however,
that interest payable at Maturity will be payable
to the person to whom principal shall be payable.
Each payment of interest on a Note shall include
accrued interest from and including the Issue Date
or from and including the last day in respect of
which interest has been paid (or duly provided
for), as the case may be, to, but excluding, the
Interest Payment Date or Maturity Date, as the case
may be.
Calculation of Interest: Unless otherwise specified in the applicable
Pricing Disclosure Material, interest on the Notes
(including interest for partial periods) will be
calculated on the basis of a 360-day year of twelve
30-day months. (Examples of interest calculations
are as follows: October 1, 2003 to April 1, 2004
equals 6 months and 0 days, or 180 days; the
interest paid equals 180/360 times the annual rate
of interest times the principal amount of the Note.
The period from December 3, 2003 to April 1, 2004
equals 3 months and 28 days, or 118 days; the
interest payable equals 118/360 times the annual
rate of interest times the principal amount of the
Note.)
Business Day: "Business Day" means, unless otherwise specified in
the applicable Pricing Supplement, any day, other
than a Saturday or Sunday, that meets the following
applicable requirement: such day is not a day on
which banking institutions are authorized or
required by law, regulation or executive order to
be closed in The City of New York.
Payments of Principal
and Interest: Payments of Principal and Interest. Promptly after
each Regular Record Date, the Trustee will deliver
to the Company and DTC a written notice specifying
by CUSIP number the amount of interest, if any, to
be paid on each Global Note on the following
Interest Payment Date (other than an Interest
Payment Date coinciding with a Maturity Date) and
the total of such amounts. DTC will confirm the
amount payable on each Global Note on such Interest
Payment Date by reference to the daily bond reports
published by Standard & Poor's. On such Interest
Payment Date, the Company will pay to the Trustee,
and the Trustee in turn will pay to
B-6
DTC, such total amount of interest due (other than
on the Maturity Date), at the times and in the
manner set forth below under "Manner of Payment".
If any Interest Payment Date for any Note is not a
Business Day, the payment due on such day shall be
made on the next succeeding Business Day and no
interest shall accrue on such payment for the
period from and after such Interest Payment Date.
Payments on the Maturity Date. On or about the
first Business Day of each month, the Trustee will
deliver to the Company and DTC a written list of
principal, premium, if any, and interest to be paid
on each Global Note representing Notes maturing or
subject to redemption (pursuant to a sinking fund
or otherwise) or repayment ("MATURITY") in the
following month. The Trustee, the Company and DTC
will confirm the amounts of such principal,
premium, if any, and interest payments with respect
to each Global Note on or about the fifth Business
Day preceding the Maturity Date of such Global
Note. On the Maturity Date, the Company will pay to
the Trustee, and the Trustee in turn will pay to
DTC, the principal amount of such Global Note,
together with interest and premium, if any, due on
such Maturity Date, at the times and in the manner
set forth below under "Manner of Payment". If the
Maturity Date of any Global Note is not a Business
Day, the payment due on such day shall be made on
the next succeeding Business Day and no interest
shall accrue on such payment for the period from
and after such Maturity Date. Promptly after
payment to DTC of the principal and interest due on
the Maturity Date of such Global Note and all other
Notes represented by such Global Note, the Trustee
will cancel and destroy such Global Note in
accordance with the Indenture and so advise the
Company.
Manner of Payment. The total amount of any
principal, premium, if any, and interest due on
Global Notes on any Interest Payment Date or at
Maturity shall be paid by the Company to the
Trustee in immediately available funds on such
date. The Company will make such payment on such
Global Notes by instructing the Trustee to withdraw
funds from an account maintained by the Company
with Citibank, N.A. by wire transfer to Citibank,
N.A. or as otherwise agreed with the Trustee. The
Company will confirm such instructions in writing
to the Trustee. Prior to 10:00 a.m., New York City
time, on the Maturity Date or as soon as possible
thereafter, the Trustee will make payment to DTC in
accordance with existing arrangements between DTC
and the Trustee, in funds available for immediate
use by DTC, each payment of interest, principal and
premium, if any, due on a Global Note on such date.
On each Interest Payment Date (other than on the
Maturity Date) the Trustee will pay DTC such
interest payments in same-day funds in accordance
with existing arrangements between the Trustee and
DTC. Thereafter, on each such date, DTC will pay,
in accordance with its SDFS operating procedures
then in effect, such amounts in funds available for
immediate use to the respective Participants with
payments in amounts proportionate
B-7
to their respective holdings in principal amount of
beneficial interest in such Global Note as are
recorded in the book-entry system maintained by
DTC. Neither the Company nor the Trustee shall have
any direct responsibility or liability for the
payment by DTC of the principal of, or premium, if
any, or interest on, the Notes to such
Participants.
Withholding Taxes. The amount of any taxes required
under applicable law to be withheld from any
interest payment on a Note will be determined and
withheld by the Participant, indirect participant
in DTC or other person responsible for forwarding
payments and materials directly to the beneficial
owner of such Note.
Procedure for Rate Setting
and Posting: The Company and the Agents will discuss, from time
to time, the aggregate principal amounts of, the
Maturities, the Issue Price and the interest rates
to be borne by Notes that may be sold as a result
of the solicitation of orders by the Agents. If the
Company decides to set interest rates borne by any
Notes in respect of which the Agents are to solicit
orders (the setting of such interest rates to be
referred to herein as "POSTING"), or if the Company
decides to change interest rates previously posted
by it, it will promptly advise the Agents of the
prices and interest rates to be posted.
The Company will assign a separate CUSIP number for
each tranche of Notes to be posted, and will so
advise and notify the Trustee and Purchasing Agent
of said assignment by telephone and/or by
telecopier or other form of electronic
transmission. The Purchasing Agent will, in turn,
include the assigned CUSIP number on all Posting
notices communicated to the Agents and Selling
Group members.
Offering of Notes: In the event that there is a Posting, the
Purchasing Agent will communicate to each of the
Agents and Selling Group members the aggregate
principal amount and Maturities of, along with the
interest rates to be borne by, each tranche of
Notes that is the subject of the Posting.
Thereafter, the Purchasing Agent, along with the
other Agents and the Selling Group, will solicit
offers to purchase the Notes accordingly.
Purchase of Notes by the
Purchasing Agent: The Purchasing Agent will, no later than 4:00 p.m.
(New York City time) on the sixth day subsequent to
the day on which such Posting occurs, or if such
sixth day is not a Business Day, on the preceding
Business Day, or on such other Business Day and
time as shall be mutually agreed upon by the
Company and the Agents (any such day, a "TRADE
DAY"), (i) complete, execute and deliver to the
Company a Terms Agreement
B-8
that sets forth, among other things, the amount of
each tranche that the Purchasing Agent is offering
to purchase or (ii) inform the Company that none of
the Notes of a particular tranche will be purchased
by the Purchasing Agent.
Acceptance and Rejection
of Orders: Unless otherwise agreed by the Company and the
Agents, the Company has the sole right to accept
orders to purchase Notes and may reject any such
order in whole or in part. Unless otherwise
instructed by the Company, the Purchasing Agent
will promptly advise the Company by telephone of
all offers to purchase Notes received by it, other
than those rejected by it in whole or in part in
the reasonable exercise of its discretion. No order
for less than $1,000 principal amount of Notes will
be accepted.
Upon receipt of a completed and executed Terms
Agreement from the Purchasing Agent, the Company
will (i) promptly execute and return such Terms
Agreement to the Purchasing Agent or (ii) inform
the Purchasing Agent that its offer to purchase the
Notes of a particular tranche has been rejected, in
whole or in part. The Purchasing Agent will
thereafter promptly inform the other Agents and
participating Selling Group members of the action
taken by the Company.
Preparation of Pricing
Disclosure Material: If any offer to purchase a Note is accepted by or
on behalf of the Company, the Company will provide
a Pricing Supplement or a Permitted Free Writing
Prospectus (substantially in the form attached to
the Selling Agent Agreement as Exhibit D)
reflecting the terms of such Note and will have
filed such Pricing Supplement or Permitted Free
Writing Prospectus with the Commission in
accordance with the applicable paragraph of Rule
424(b) in the case of a Pricing Supplement, or Rule
533 in the case of a Permitted Free Writing
Prospectus, and will supply a copy thereof (or
additional copies if requested) to the Purchasing
Agent, by no later than 11:00 a.m. on the Business
Day immediately following the Trade Day, and one
copy to the Trustee. The Purchasing Agent will
cause the Pricing Disclosure Material to be
delivered to each of the other Agents and Selling
Group members that purchased such Notes, and each
of these, in turn, will, pursuant to the terms of
the Selling Agent Agreement and the Master Selected
Dealer Agreement, cause to be delivered a copy of
the applicable Pricing Supplement or Permitted Free
Writing Prospectus to each purchaser of Notes from
such Agent or Selling Group member. If the Pricing
Disclosure Material do not include a Pricing
Supplement, the Company will prepare and file with
the Commission in accordance with the applicable
paragraph of Rule 424(b) a Pricing Supplement
within two
B-9
Business Days of the Pricing Effective Time.
In each instance that a Pricing Supplement or
Permitted Free Writing Prospectus is prepared, the
Agents will affix the Pricing Supplement or
Permitted Free Writing Prospectus to Prospectuses
prior to their use. Outdated Pricing Supplements
and Permitted Free Writing Prospectuses and the
Prospectuses to which they are attached (other than
those retained for files) will be destroyed.
Delivery of Confirmation
and Prospectus to
Purchaser by Purchasing
Agent: Subject to "Suspension of Solicitation; Amendment
or Supplement" below, the Agents will deliver a
Prospectus (including the Pricing Supplement or
Permitted Free Writing Prospectus) as herein
described with respect to each Note sold by it.
For each offer to purchase a Note solicited by an
Agent and accepted by or on behalf of the Company,
the Purchasing Agent will issue a confirmation to
the purchaser, with a copy to the Company, setting
forth the terms of such Note and other applicable
details described above and delivery and payment
instructions. In addition, the Purchasing Agent
will deliver to such purchaser either the
Prospectus (including the Pricing Supplement or
Permitted Free Writing Prospectus) in relation to
such Note or the notice specified in Rule 173 of
the Securities Act prior to or together with the
earlier of any written offer of such Note, delivery
of the confirmation of sale or delivery of the
Note.
Settlement: The receipt of immediately available funds by the
Company in payment for Notes and the authentication
and issuance of the Global Note representing such
Notes shall constitute "SETTLEMENT" with respect to
such Note. All orders accepted by the Company will
be settled within one to three Business Days
pursuant to the timetable for Settlement set forth
below, unless the Company and the purchaser agree
to Settlement on a later date, and shall be
specified upon acceptance of such offer; provided,
however, that in all cases the Company will notify
the Trustee on the date issuance instructions are
given.
Settlement Procedures: In the event of a purchase of Notes by any Agent,
as principal, appropriate Settlement details, if
different from those set forth below, will be set
forth in the applicable Terms Agreement to be
entered into between such Agent and the Company
pursuant to the Selling Agent Agreement. Settlement
Procedures with regard to each Note sold by an
B-10
Agent, as agent for the Company, shall be as
follows:
A. After the acceptance of an offer by the
Company with respect to a Note, the Purchasing
Agent will communicate the following details
of the terms of such offer (the "NOTE SALE
INFORMATION") to the Company by telephone
confirmed in writing or by facsimile
transmission or other acceptable written
means:
1. Principal amount of the purchase;
2. Interest Rate;
3. Interest Payment Dates;
4. Settlement Date;
5. Maturity Date;
6. Purchase Price;
7. Purchasing Agent's commission determined
pursuant to Section IV(a) of the Selling
Agent Agreement;
8. Net proceeds to the Company;
9. Trade Date;
10. If a Note is redeemable by the Company,
such of the following as are applicable:
(i) The date on and after which such
Note may be redeemed (the
"REDEMPTION COMMENCEMENT DATE"),
(ii) Initial redemption price (% of par),
and
(iii) Amount (% of par) that the initial
redemption price shall decline (but
not below par) on each anniversary
of the Redemption Commencement Date;
11. Whether the Note has the Survivor's
Option;
12. If a Discount Note, the total amount of
original issue discount, the yield to
maturity and the initial accrual period
of original issue discount;
13. DTC Participant Number of the institution
through which the customer will hold the
beneficial interest in the Global
B-11
Note; and
14. Such other terms as are necessary to
complete the applicable form of Note.
B. The Company will advise the Trustee by
telephone (confirmed in writing and signed by
an authorized person at any time on the same
date) or by facsimile transmission signed by
an authorized person of the information set
forth in Settlement Procedure "A" above and
the name of the Purchasing Agent. The Trustee
will assign a CUSIP number to the Global
Security representing such Note. The Trustee
will notify the Company and the Purchasing
Agent of such CUSIP number by telephone as
soon as practicable.
C. The Trustee will communicate to DTC and the
Purchasing Agent through DTC's Participant
Terminal System, a pending deposit message
specifying the following Settlement
information:
1. The information received in accordance
with Settlement Procedure "A".
2. The numbers of the participant accounts
maintained by DTC on behalf of the
Trustee and the Purchasing Agent.
3. The initial Interest Payment Date for
such Note, number of days by which such
date succeeds the related DTC record date
(which term means the Regular Record
Date), and if then calculated, the amount
of interest payable on such Initial
Interest Payment Date (which amount shall
have been confirmed by the Trustee).
4. The CUSIP number of the Global Note
representing such Notes.
5. The frequency of interest.
6. Whether such Global Note represents any
other Notes issued or to be issued (to
the extent then known).
D. DTC will credit such Note to the participant
account of the Trustee maintained by DTC.
E. The Trustee will complete and deliver a Global
Note representing such Note in a form that has
been approved by the Company, the Agents and
the Trustee.
F. The Trustee will authenticate the Global Note
representing such
B-12
Note and maintain possession of such Global
Note.
G. The Trustee will enter an SDFS deliver order
through DTC's Participant Terminal System
instructing DTC to (i) debit such Note to the
Trustee's participant account and credit such
Note to the participant account of the Agent
maintained by DTC and (ii) debit the
settlement account of the Agent and credit the
settlement account of the Trustee maintained
by DTC, in an amount equal to the price of
such Note less the Purchasing Agent's
commission. The entry of such a deliver order
shall be deemed to constitute a representation
and warranty by the Trustee to DTC that (a)
the Global Note representing such Note has
been issued and authenticated and (b) the
Trustee is holding such Global Note pursuant
to the Certificate Agreement.
H. The Purchasing Agent will enter an SDFS
deliver order through DTC's Participant
Terminal System instructing DTC to (i) debit
such Note to the Purchasing Agent's
participant account and credit such Note to
the participant accounts of the Participants
to whom such Note is to be credited maintained
by DTC and (ii) debit the settlement accounts
of such Participants and credit the settlement
account of the Purchasing Agent maintained by
DTC, in an amount equal to the price of the
Note so credited to their accounts.
I. Transfers of funds in accordance with SDFS
deliver orders described in Settlement
Procedures "G" and "H" will be settled in
accordance with SDFS operating procedures in
effect on the Settlement Date.
J. The Trustee will credit to an account of the
Company maintained at Citibank, N.A. funds
available for immediate use in an amount equal
to the amount credited to the Trustee's DTC
participant account in accordance with
Settlement Procedure "G".
K. The Trustee will send a copy of the Global
Note representing such Note by first-class
mail to the Company.
L. The Purchasing Agent will confirm the purchase
of each Note to the purchaser thereof either
by transmitting to the Participant to whose
account such Note has been credited a
confirmation order through DTC's Participant
Terminal System or by mailing a written
confirmation to such purchaser. In all cases
the Prospectus, as most recently amended or
supplemented, must accompany or precede such
confirmation.
M. Upon request by the Company, the Trustee will
send to the
B-13
Company a statement setting forth the
principal amount of Notes outstanding as of
that date under the Indenture and setting
forth the CUSIP number(s) assigned to, and a
brief description of, any orders which the
Company has advised the Trustee but which have
not yet been settled.
Settlement Procedures
Timetable: In the event of a purchase of Notes by the
Purchasing Agent, as principal, appropriate
Settlement details, if different from those set
forth below, will be set forth in the applicable
Terms Agreement to be entered into between the
Purchasing Agent and the Company pursuant to the
Selling Agent Agreement.
For orders of Notes solicited by an Agent, as
agent, and accepted by the Company, Settlement
Procedures "A" through "M" shall be completed as
soon as possible but not later than the respective
times (New York City time) set forth below:
Settlement: Procedure Time
A 4:00 p.m. on the Trade Day.
B 5:00 p.m. on the Trade Day.
C 2:00 p.m. on the Business Day before
the Settlement Date.
D 10:00 a.m. on the Settlement Date.
E 12:00 p.m. on the Settlement Date.
F 12:30 p.m. on the Settlement Date.
G-H 2:00 p.m. on the Settlement Date.
I 4:45 p.m. on the Settlement Date.
J-L 5:00 p.m. on the Settlement Date
M At the request of the Company.
NOTE: The Pricing Disclosure Material as most
recently amended or supplemented must accompany or
precede any written confirmation given to the
customer (Settlement Procedure "L"). Settlement
Procedure "I" is subject to extension in accordance
with any extension Fedwire closing deadlines and in
the other events specified in the SDFS operating
procedures in effect on the Settlement Date.
If Settlement of a Note is rescheduled or
cancelled, the Trustee will deliver to DTC, through
DTC's Participant Terminal System, a cancellation
message to such effect by no later than 2:00 p.m.,
New York City time, on the Business Day immediately
preceding the scheduled Settlement Date.
B-14
Failure to Settle: If the Trustee fails to enter an SDFS deliver order
with respect to a Note pursuant to Settlement
Procedure "G", the Trustee may deliver to DTC,
through DTC's Participant Terminal System, as soon
as practicable a withdrawal message instructing DTC
to debit such Note to the participant account of
the Trustee maintained at DTC. DTC will process the
withdrawal message; provided, that, such
participant account contains Notes having the same
terms and having a principal amount that is at
least equal to the principal amount of such Note to
be debited. If withdrawal messages are processed
with respect to all the Notes issued or to be
issued represented by a Global Note, the Trustee
will cancel such Global Note in accordance with the
Indenture, make appropriate entries in its records
and so advise the Company. The CUSIP number
assigned to such Global Note shall, in accordance
with CUSIP Service Bureau procedures, be cancelled
and not immediately reassigned. If withdrawal
messages are processed with respect to one or more,
but not all, of the Notes represented by a Global
Note, the Trustee will exchange such Global Note
for two Global Notes, one of which shall represent
such Notes and shall be cancelled immediately after
issuance, and the other of which shall represent
the remaining Notes previously represented by the
surrendered Global Note and shall bear the CUSIP
number of the surrendered Global Note. If the
purchase price for any 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 related Agent may enter SDFS deliver
orders through DTC's participant Terminal System
reversing the orders entered pursuant to Settlement
Procedures "G" and "H", respectively. Thereafter,
the Trustee will 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 Agent in the
performance of its obligations hereunder or under
the Selling Agent Agreement, the Company will
reimburse the Agent on an equitable basis for its
loss of the use of funds during the period when
they were credited to the account of the Company.
Notwithstanding the foregoing, upon any failure to
settle with respect to a 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 Notes that were to have been
represented by a Global Note, the Trustee will
provide, in accordance with Settlement Procedures
"D" and "E", for the authentication and issuance of
a Global Note representing the other Notes to have
been represented by such Global Note and will make
appropriate entries in its records.
B-15
Procedure for Rate
Changes: Each time a decision has been reached to change
rates, the Company will promptly advise the Agents
of the new rates, who will forthwith suspend
solicitation of purchases of Notes at the prior
rates. The Agents may telephone the Company with
recommendations as to the changed interest rates.
Suspension of
Solicitation; Amendment
or Supplement: Subject to the Company's representations,
warranties and covenants contained in the Selling
Agent Agreement, the Company may instruct the
Agents to suspend at any time for any period of
time or permanently, the solicitation of orders to
purchase Notes. Upon receipt of such instructions
(which may be given orally), each Agent will
forthwith suspend solicitation until such time as
the Company has advised it that solicitation of
offers to purchase may be resumed.
In the event that at the time the Company suspends
solicitation of offers to purchase there shall be
any orders outstanding for settlement, the Company
will promptly advise the Agents and the Trustee
whether such orders may be settled and whether
copies of the Prospectus as in effect at the time
of the suspension may be delivered in connection
with the settlement of such orders. The Company
will have the sole responsibility for such decision
and for any arrangements which may be made in the
event that the Company determines that such orders
may not be settled or that copies of such
Prospectus may not be so delivered.
If the Company decides to amend or supplement the
Registration Statement or the Prospectus, it will
promptly advise the Agents and furnish the Agents
and the Trustee with the proposed amendment or
supplement and with such certificates and opinions
as are required, all to the extent required by and
in accordance with the terms of the Selling Agent
Agreement. Subject to the provisions of the Selling
Agent Agreement, the Company may file with the
Commission any supplement to the Prospectus
relating to the Notes. The Company will provide the
Agents and the Trustee with copies of any such
supplement, and confirm to the Agents that such
supplement has been filed with the Commission.
Trustee Not to Risk Funds: Nothing herein shall be deemed to require the
Trustee to risk or expend its own funds in
connection with any payment to the Company, or the
Agents or the purchasers, it being understood by
all parties that payments made by the Trustee to
either the Company or the Agents shall be made only
to the extent that funds are provided to the
Trustee for such purpose.
B-16
Advertising Costs: The Company shall have the sole right to approve
the form and substance of any advertising an Agent
may initiate in connection with such Agent's
solicitation to purchase the Notes. The expense of
such advertising will be solely the responsibility
of such Agent, unless otherwise agreed to by the
Company.
B-17
EXHIBIT C
UNITED PARCEL SERVICE, INC.
UPS Notes
TERMS AGREEMENT
__________ __, 20__
United Parcel Service, Inc.
55 Glenlake Parkway, N.E.
Atlanta, Georgia 30328
The undersigned agrees to purchase the following aggregate principal amount of
Notes:
$__________
The terms of such Notes shall be as follows:
CUSIP Number: __________
Interest Rate: __________%
Maturity Date: __________
Price to Public: __________
Agent's Concession: __________%
Settlement Date, Time
and Place: ____________________
Survivor's Option: ____________________
Interest Payment Dates: __________
Optional Redemption, if any: __________
Initial Redemption Date: __________
Redemption Price: Initially % of Principal Amount and declining __________%
of the Principal Amount on each anniversary of the Initial Redemption Date
until the Redemption Price is 100% of the Principal Amount.
[Any other terms and conditions agreed to by such Agent and the Company]
[NAME OF PURCHASING AGENT]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ACCEPTED:
UNITED PARCEL SERVICE, INC.
By:
---------------------------------
Name:
--------------------------------
Title:
------------------------------
C-1
EXHIBIT D
FORM OF PRICING SUPPLEMENT/FREE WRITING PROSPECTUS
Filed Under Rule 424(b)(2) / Filed Under Rule 433
Registration Statement No. 333-108272
Pricing Supplement Number 26, Dated November 27, 2006
(To: Prospectus Dated September 8, 2003, as supplemented by Prospectus
Supplement Dated November 17, 2006)
United Parcel Service, Inc.
UPS Notes
With Maturities of 9 Months or More from Date of Issue
Offering Dates: November 27, 2006 through December 4, 2006
Trade Date: December 4, 2006 @12:00 PM ET
Settle Date: December 7, 2006
Minimum Denomination/Increments: $1,000.00/$1,000.00
CUSIP or Discounts and
Common Code Interest Rate (1) Maturity Date Price to Public (2) Commissions (2)
- ----------- ----------------- ------------- ------------------- ---------------
91131UHK3 4.25% 09/15/15 100% 1.5%
Interest Payment
Frequency Subject to Dates and terms of redemption
(begin date) Survivor's Option Redemption (including the redemption price)
- ---------------- ----------------- ---------- --------------------------------
semi-annually Yes Yes 100% 03/15/05
(09/15/04) semi-annually thereafter
(1) The interest rates on UPS Notes may be changed by the issuer from time to
time, but any such change will not affect the interest rate on any UPS
Notes offered prior to the effective date of the change.
(2) Expressed as a percentage of the aggregate principal amount.
United Parcel Service, Inc. ("UPS") has filed a registration statement
(including prospectus) with the SEC for the offering to which this communication
relates. Before you invest, you should read the prospectus in that registration
statement and the other documents UPS has filed with the SEC for more complete
information about UPS and this offering. You may get these documents for free by
visiting EDGAR on the SEC web site at www.sec.gov. Alternatively, UPS, any
selling agent participating in the offering will arrange to send you the
prospectus if you request it by calling (___)___-___.
D-1
Agents: LaSalle Financial Services, Inc., Charles Schwab & Co., Inc., Citigroup
Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan
Stanley & Co. Incorporated, Samuel A. Ramirez & Co., Inc., Muriel Siebert & Co.,
Inc., UBS Securities LLC and Wachovia Securities LLC
D-2
EXHIBIT E
Form of Master Selected Dealer Agreement
[Name of Broker-Dealer]
[Broker-Dealer's Address]
Dear Selected Dealer:
In connection with public offerings of securities after the date hereof for
which we are acting as manager of an underwriting syndicate or are otherwise
responsible for the distribution of securities to the public by means of an
offering of securities for sale to selected dealers, you may be offered the
right as such a selected dealer to purchase as principal a portion of such
securities. This will confirm our mutual agreement as to the general terms and
conditions applicable to your participation in any such selected dealer group
organized by us as follows.
1. Applicability of this Agreement. The terms and conditions of this
Agreement shall be applicable to any public offering of securities
("SECURITIES") pursuant to a registration statement filed under the Securities
Act of 1933 (the "SECURITIES ACT"), or exempt from registration thereunder
(other than a public offering of Securities effected wholly outside the United
States of America), wherein LaSalle Financial Services, Inc. ("AAFS") (acting
for its own account or for the account of any underwriting or similar group or
syndicate) is responsible for managing or otherwise implementing the sale of the
Securities to selected broker-dealers ("SELECTED DEALERS") and has expressly
informed you that such terms and conditions shall be applicable. Any such
offering of Securities to you as a Selected Dealer is hereinafter called an
"OFFERING". In the case of any Offering where we are acting for the account of
any underwriting or similar group or syndicate ("UNDERWRITERS"), the terms and
conditions of this Agreement shall be for the benefit of, and binding upon, such
Underwriters, including, in the case of any Offering where we are acting with
others as representatives of Underwriters, such other representatives.
2. Conditions of Offering; Acceptance and Purchases. Any Offering will
be subject to delivery of the Securities and their acceptance by us and any
other Underwriters, may be subject to the approval of all legal matters by
counsel and the satisfaction of other conditions, and may be made on the basis
of reservation of Securities or an allotment against subscription. We will
advise you by telegram, telex or other form of written communication ("WRITTEN
COMMUNICATION", which term, in the case of any Offering described in Section
3(a) or 3(b) hereof, may include a prospectus or offering circular) of the
particular method and supplementary terms and conditions (including, without
limitation, the information as to prices and offering date referred to in
Section 3(c) hereof) of any Offering in which you are invited to participate. To
the extent such supplementary terms and conditions are inconsistent with any
provision herein, such terms and conditions shall supersede any such provision.
Unless otherwise indicated in any such Written Communication, acceptances and
other communications by you with respect to an Offering should be sent to
LaSalle Financial Services, Inc., 327 Plaza Real, Suite 225, Boca Raton, Florida
33432 (Telecopy: (561) 416-6180). We reserve the right to reject any acceptance
in whole or in part. Unless notified otherwise by us, Securities purchased
E-1
by you shall be paid for on such date as we shall determine, on one business
day's prior notice to you, by certified or official bank check, in an amount
equal to the Public Offering Prices (as hereinafter defined) or, if we shall so
advise you, at such Public Offering Price less the Concession (as hereinafter
defined), payable in immediately available funds to the order of LaSalle
Financial Services, Inc., against delivery of the Securities. If Securities are
purchased and paid for at such Public Offering Price, such Concession will be
paid after the termination of the provisions of Section 3(c) hereof with respect
to such Securities. Notwithstanding the foregoing, unless notified otherwise by
us, payment for and delivery of Securities purchased by you shall be made
through the facilities of The Depository Trust Company, if you are a member,
unless you have otherwise notified us prior to the date specified in a Written
Communication to you from us or, if you are not a member, settlement may be made
through a correspondent who is a member pursuant to instructions which you will
send to us prior to such specified date.
3. Representations, Warranties and Agreements.
(a) Registered Offerings. In the case of any Offering of Securities
that are registered under the Securities Act ("REGISTERED OFFERING"), we shall
provide you with such number of copies of the Pricing Disclosure Material
relating thereto as you may reasonably request for the purposes contemplated by
the Securities Act and the Securities Exchange Act of 1934 (the "EXCHANGE ACT")
and the applicable rules and regulations of the Securities and Exchange
Commission (the "COMMISSION") thereunder. You represent and warrant that you are
familiar with Rule 15c2-8 under the Exchange Act relating to the distribution of
preliminary and final prospectuses and agree that you will comply therewith. You
agree to make a record of your distribution of each preliminary prospectus and,
when furnished with copies of any revised preliminary prospectus, you will, upon
our request, promptly forward copies thereof to each person to whom you have
theretofore distributed a preliminary prospectus. You agree that in purchasing
Securities in a Registered Offering you will rely upon no statement whatsoever,
written or oral, other than the statements in the final prospectus delivered to
you by us. You will not be authorized by the issuer or other seller of
Securities offered pursuant to a prospectus or by any Underwriter to give any
information or to make any representation not contained in the prospectus in
connection with the sale of such Securities.
(b) Offerings Pursuant to Offering Circular. In the case of any
Offering of Securities, other than a Registered Offering, which is made pursuant
to an offering circular or other document comparable to a prospectus in a
Registered Offering, including, without limitation, an Offering of "exempted
securities" as defined in Section 3(a)(12) of the Exchange Act (an "EXEMPTED
SECURITIES OFFERING"), we shall provide you with such number of copies of each
preliminary offering circular and of the final offering circular relating
thereto as you may reasonably request. You agree that you will comply with the
applicable Federal and state laws, and the applicable rules and regulations of
any regulatory body promulgated thereunder, governing the use and distribution
of offering circulars by brokers or dealers. You agree that in purchasing
Securities pursuant to an offering circular you will rely upon no statements
whatsoever, written or oral, other than the statements in the final offering
circular delivered to you by us. You will not be authorized by the issuer or
other seller of Securities offered pursuant to an offering circular or by any
Underwriter to give any information or to make any representation not contained
in the offering circular in connection with the sale of such Securities.
E-2
(c) Offer and Sale to the Public. With respect to any Offering of
Securities, we will inform you by a Written Communication of the public offering
price, the selling concession, the reallowance (if any) to broker-dealers and
the time when you may commence selling Securities to the public. After such
public offering has commenced, we may change the public offering price, the
selling concession and the reallowance (if any) to broker-dealers. The offering
price, selling concession and reallowance (if any) to broker-dealers at any time
in effect with respect to an Offering are hereinafter referred to, respectively,
as the "PUBLIC OFFERING PRICE", the "CONCESSION" and the "REALLOWANCE". With
respect to each Offering of Securities, until the provisions of this Section
3(c) shall be terminated pursuant to Section 5 hereof, you agree to offer
Securities to the public at no more than the Public Offering Price. If notified
by us, you may sell securities to the public at a lesser negotiated price than
the Public Offering Price, but in an amount not to exceed the Concession. If a
Reallowance is in effect, a reallowance from the Public Offering Price not in
excess of such Reallowance may be allowed as consideration for services rendered
in distribution to broker-dealers (i) who are actually engaged in the investment
banking or securities business, (ii) who execute the written agreement
prescribed by Rule 2740(c) of the Conduct Rules of the National Association of
Securities Dealers. Inc. (the "NASD") and (iii) who, if they are foreign banks,
broker-dealers or institutions not eligible for membership in the NASD,
represent to you that they will promptly reoffer such Securities at the Public
Offering Price and will abide by the conditions with respect to foreign banks,
broker-dealers and institutions set forth in Section 3(e) hereof.
(d) Over-allotment; Stabilization; Unsold Allotments. We may, with
respect to any Offering, be authorized to over-allot in arranging sales to
Selected Dealers, to purchase and sell Securities for long or short account and
to stabilize or maintain the market price of the Securities. You agree not to
purchase and sell Securities for which an order from a client has not been
received without our consent in each instance. You further agree that, upon our
request at any time and from time to time prior to the termination of the
provisions of Section 3(c) hereof with respect to any Offering, you will report
to us the amount of Securities purchased by you pursuant to such Offering which
then remain unsold by you and will, upon our request at any such time, sell to
us for our account or the account of one or more Underwriters such amount of
such unsold Securities as we may designate at the Public Offering Price less an
amount to be determined by us not in excess of the Concession. If, prior to the
later of (i) the termination of the provisions of Section 3(c) hereof with
respect to any Offering or (ii) the covering by us of any short position created
by us in connection with such Offering for our account or the account of one or
more Underwriters, we purchase or contract to purchase for our account or the
account of one or more Underwriters in the open market or otherwise any
Securities purchased by you under this Agreement as part of such Offering, you
agree to pay us on demand an amount equal to the Concession with respect to such
Securities (unless you shall have purchased such Securities pursuant to Section
2 hereof at the Public Offering Price in which case we shall not be obligated to
pay such Concession to you pursuant to Section 2) plus transfer taxes and
broker's commissions or dealer's mark-up, if any, paid in connection with such
purchase or contract to purchase.
(e) NASD. You represent and warrant that you are actually engaged in
the investment banking or securities business. In addition, you further
represent and warrant that you are either (i) a member in good standing of the
NASD(ii) a foreign bank, broker-dealer or institution not eligible for
membership in the NASD which agrees not to make any sales within
E-3
the United States, its territories or its possessions or to persons who are
citizens thereof or residents therein, and in making any other sales to comply
with the NASD's interpretation with respect to free riding and withholding, or
(iii), solely in connection with an Exempted Securities Offering, a bank, as
defined in Section 3(a)(6) of the Exchange Act, that does not otherwise fall
within provision (i) or (ii) of this sentence (a "BANK"). You further represent,
by your participation in an Offering, that you have provided to us all documents
and other information required to be filed with respect to you, any related
person or any person associated with you or any such related person pursuant to
the supplementary requirements of the NASD's interpretation with respect to
review of corporate financing as such requirements relate to such Offering.
You agree that, in connection with any purchase or sale of the
Securities wherein a selling Concession, discount or other allowance is received
or granted, (1) you will comply with the provisions of Rule 2740 of the Conduct
Rules of the NASD, (2) if you are a non-NASD member broker or dealer in a
foreign country, you will also comply (a), as though you were an NASD member,
with the provision of Rules 2730, 2740 and 2750 of the Conduct Rules and (b)
with Rule 2420 of the Conduct Rules as that Rule applies to a non-NASD member
broker or dealer in a foreign country and (3), in connection with an Exempted
Securities Offering, if you are a Bank, you will also comply, as though you were
an NASD member, with the provision of Rules 2730, 2740 and 2750 of the Conduct
Rules.
You further agree that, in connection with any purchase of securities
from us that is not otherwise covered by the terms of this Agreement (whether we
are acting as manager, as a member of an underwriting syndicate or a selling
group or otherwise), if a selling Concession, discount or other allowance is
granted to you, clauses (1), (2) and (3) of the preceding paragraph will be
applicable.
(f) Relationship among Underwriters and Selected Dealers. We may buy
Securities from or sell Securities to any Underwriter or Selected Dealer and the
Underwriters (if any) and the Selected Dealers may purchase Securities from and
sell Securities to each other at the Public Offering Price less all or any part
of the Reallowance. You are not authorized to act as agent for us, any
Underwriter or the issuer or other seller of any Securities in offering
Securities to the public or otherwise. Neither we nor any Underwriter shall be
under any obligation to you except for obligations assumed hereby or in any
Written Communication from us in connection with any Offering. Nothing contained
herein or in any Written Communication from us shall constitute the Selected
Dealers an association or partners with us or any Underwriter or with one
another. If the Selected Dealers, among themselves or with the Underwriters,
should be deemed to constitute a partnership for Federal income tax purposes,
then you elect to be excluded from the application of Subchapter K, Chapter 1,
Subtitle A of the Internal Revenue Code of 1986 and agree not to take any
position inconsistent with that election. You authorize us, in our discretion,
to execute and file on your behalf such evidence of that election as may be
required by the Internal Revenue Service. In connection with any Offering, you
shall be liable for your proportionate amount of any tax, claim, demand or
liability that may be asserted against you alone or against one or more Selected
Dealers participating in such Offering, or against us or the Underwriters, based
upon the claim that the Selected Dealers (including you), or any of them,
constitute an association, an unincorporated business or other
E-4
entity, including, in each case, your proportionate amount of any expense
incurred in defending against any such tax, claim, demand or liability.
(g) Blue Sky Laws. Upon application to us, we shall inform you as to
any advice we have received from counsel concerning the jurisdictions in which
Securities have been qualified for sale or are exempt under the securities or
blue sky laws of such jurisdictions, but we do not assume any obligation or
responsibility as to your right to sell Securities in any such jurisdiction.
(h) Compliance with Law. You agree that in selling Securities pursuant
to any Offering (which agreement shall also be for the benefit of the issuer or
other seller of such Securities) you will comply with all applicable laws, rules
and regulations, including the applicable provisions of the Securities Act and
the Exchange Act, the applicable rules and regulations of the Securities and
Exchange Commission thereunder, the applicable rules and regulations of the
NASD, the applicable rules and regulations of any securities exchange having
jurisdiction over the Offering and the applicable laws, rules and regulations
specified in Section 3(b) hereof.
(i) Registration of the Securities. You are aware that no action has
been or will be taken by the issuer of the Securities that would permit the
offer or sale of the Securities or possession or distribution of the Prospectus
or any other offering material relating to the Securities in any jurisdiction
where action for that purpose is required, other than registering the Securities
under the Securities Act in the case of a Registered Offering. Accordingly, you
agree that you will observe all applicable laws and regulations in each
jurisdiction in or from which you may directly or indirectly acquire, offer,
sell, or deliver Securities or have in your possession or distribute the
Prospectus or any other offering material relating to the Securities, and you
will obtain any consent, approval or permission required by you for the
purchase, offer, or sale by you of the Securities under the laws and regulations
in force in any such jurisdiction to which you are subject or in which you make
such purchase, offer, or sale. Neither the issuer of the Securities nor AAFS or
any Selected Dealers or Underwriters shall have any responsibility for
determining what compliance is necessary by you or for your obtaining such
consents, approvals, or permissions. You further agree that you will take no
action that will impose any obligations on the issuer of the Securities, AAFS,
or any Selected Dealers or Underwriters. Subject as provided above, you shall,
unless prohibited by applicable law, furnish to each person to whom you offer,
sell or deliver Securities a copy of the Prospectus (as then amended or
supplemented) or (unless delivery of the Prospectus is required by applicable
law) inform each such person that a copy thereof (as then amended or
supplemented) will be made available upon request. You are not authorized to
give any information or to make any representation not contained in the
Prospectus or the documents incorporated by reference or specifically referred
to therein in connection with the offer and sale of the Securities. In the case
of an Exempted Securities Offering, all references to "Prospectus" in this
section shall be interpreted to mean "offering circular."
4. Indemnification. You agree to indemnify and hold harmless LaSalle
Financial Services, Inc., the issuer of the Securities, each person, if any, who
controls (within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act) LaSalle Financial Services, Inc. or the issuer
of the Securities, and their respective directors, officers and
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employees from and against any and all losses, liabilities, costs or claims (or
actions in respect thereof) (collectively, "LOSSES") to which any of them may
become subject (including all reasonable costs of investigating, disputing or
defending any such claim or action), insofar as such Losses arise out of or are
in connection with the breach of any representation, warranty or agreement made
by you herein.
If any claim, demand, action or proceeding (including any governmental
investigation) shall be brought or alleged against an indemnified party in
respect of which indemnity is to be sought against an indemnifying party, the
indemnified party shall promptly notify the indemnifying party in writing, and
the indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnified party may designate in such
proceeding and shall pay the reasonable fees and expenses of such counsel
related to such proceeding. In any such proceeding, any indemnified party shall
have the right to retain its own counsel, but the reasonable fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel, (ii) the indemnifying party has failed within a
reasonable time to retain counsel reasonably satisfactory to such indemnified
party or (iii) the named parties to any such proceeding (including any impleaded
parties) include both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them. It is agreed that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate law firm (in addition to local counsel where
necessary) for all such indemnified parties. Such firm shall be designated in
writing by the indemnified party. The indemnifying party shall not be liable for
any settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
The indemnity agreements contained in this Section and the
representations and warranties by you in this Agreement shall remain operative
and in full force and effect regardless of: (i) any termination of this
Agreement; (ii) any investigation made by an indemnified party or on such
party's behalf or any person controlling an indemnified party or by or on behalf
of the indemnifying party, its directors or officers or any person controlling
the indemnifying party; and (iii) acceptance of and payment for any Securities.
5. Termination, Supplements and Amendments. This Agreement constitutes
the entire agreement of the parties with regard to the subject matter hereof and
supercedes all prior oral or written agreements between the parties hereto or
their predecessors with regard to the subject matter hereof. This Agreement may
be terminated by Written Communication from you to AAFS or from AAFS to you.
Until so terminated, this Agreement shall continue in full force and effect.
This Agreement may be supplemented or amended by us by written notice
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thereof to you, and any such supplement or amendment to this Agreement shall be
effective with respect to any Offering to which this Agreement applies after the
date you received such supplement or amendment. Each reference to "this
Agreement" herein shall, as appropriate, be to this Agreement as so amended and
supplemented. The terms and conditions set forth in Section 3(c) hereof with
regard to any Offering will terminate at the close of business on the 30th day
after the commencement of the public offering of the Securities to which such
Offering relates, but in our discretion may be extended by us for a further
period not exceeding 30 days and in our discretion, whether or not extended, may
be terminated at any earlier time.
6. Successors and Assigns. This Agreement shall be binding on, and
inure to the benefit of, the parties hereto and other persons specified in
Section 1 hereof, and the respective successors and assigns of each of them.
7. Governing Law. This Agreement and the terms and conditions set
forth herein with respect to any Offering together with such supplementary terms
and conditions with respect to such Offering as may be contained in any Written
Communication from us to you in connection therewith shall be governed by, and
construed in accordance with, the laws of the State of New York.
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Please confirm by signing and returning to us the enclosed copy of this
Agreement that your subscription to, or your acceptance of any reservation of,
any Securities pursuant to an Offering shall constitute (i) acceptance of and
agreement to the terms and conditions of this Agreement (as supplemented and
amended pursuant to Section 5 hereof) together with and subject to any
supplementary terms and conditions contained in any Written Communication from
us in connection with such Offering, all of which shall constitute a binding
agreement between you and us, individually or as representative of any
Underwriters, (ii) confirmation that your representations and warranties set
forth in Section 3 hereof are true and correct at that time, (iii) confirmation
that your agreements set forth in Sections 2 and 3 hereof have been and will be
fully performed by you to the extent and at the times required thereby and (iv)
in the case of any Offering described in Section 3(a) and 3(b) hereof,
acknowledgment that you have requested and received from us sufficient copies of
the final prospectus or offering circular, as the case may be, with respect to
such Offering in order to comply with your undertakings in Section 3(a) or 3(b)
hereof.
Very truly yours,
LASALLE FINANCIAL SERVICES, INC.
By:
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Name:
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Title:
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CONFIRMED: ________ __, 200_
- -------------------------------------
(NAME OF BROKER-DEALER)
By:
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Name:
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Title:
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