UNITED PARCEL SERVICE, INC.
1.75% CASH-SETTLED CONVERTIBLE SENIOR NOTES
DUE SEPTEMBER 27, 2007
UNDERWRITING AGREEMENT
DATED AS OF SEPTEMBER 21, 2000
1. Introductory. United Parcel Service, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell $300,000,000 of its 1.75% Cash-Settled
Convertible Senior Notes due September 27, 2007 ("Debt Securities"). The Debt
Securities will be issued under an Indenture, dated as of January 26, 1999, as
supplemented by the First Supplemental Indenture thereto, dated as of March 27,
2000, and as further supplemented by the resolutions of the Executive Committee
of the Board of Directors of the Company adopted on September 21, 2000 (the
"Indenture"), between the Company and Citibank, N.A., as Trustee, subject to the
terms stated herein and as specified in the Terms Agreement referred to in
Section 3.
The firm or firms which agree to purchase the Debt Securities are
hereinafter referred to as the "Underwriters" of such Debt Securities, and the
representative or representatives of the Underwriters, if any, specified in a
Terms Agreement referred to in Section 3 are hereinafter referred to as the
"Representatives"; provided, however, that if the Terms Agreement does not
specify any representative of the Underwriters, the term "Representatives", as
used in this Agreement (other than in Sections 2(b), 5 and 6 and the second
sentence of Section 3), shall mean the Underwriters.
2. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, each Underwriter that:
(a) Registration Statement. A registration statement (No. 333-08369),
including a prospectus, covering the registration of certain of its securities
(including the Debt Securities), has been filed with the Securities and Exchange
Commission (the "Commission"). Such registration statement, as amended, has been
declared effective by the Commission and the Indenture has been qualified under
the Trust Indenture Act of 1939 (the "Trust Indenture Act"). Such registration
statement, as amended at the time of any Terms Agreement referred to in Section
3, is hereinafter referred to as the "Registration Statement", and the
prospectus constituting a part thereof and the prospectus supplement relating to
the offering of the Debt Securities to be filed by the Company pursuant to Rule
424(b) promulgated under the Securities Act of 1933 (the "Securities Act") and
in the form first used to confirm sales of the Debt Securities, including all
documents incorporated by reference therein on the date thereof, is hereinafter
referred to as the "Prospectus". All financial statements and schedules included
in material incorporated by reference into the Prospectus shall be deemed
included in the Prospectus.
(b) Compliance. On the effective date of the most recent post-effective
amendment to the Registration Statement, such Registration Statement conformed
in all material respects to the requirements of the Securities Act, the Trust
Indenture Act and the rules and regulations of the Commission (the "Rules and
Regulations") and did not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading. On the date of its issue and on the
Closing Date (as defined in Section 3), the Prospectus conformed and will
conform in all respects to the requirements of the Securities Act and the Rules
and Regulations, and the Prospectus did not include nor will include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading. The
representations and warranties in this subsection shall not apply to statements
in or omissions from any of such documents based upon written information
furnished to the Company by any Underwriter through the Representatives, if any,
specifically for use therein.
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(c) Due Incorporation and Good Standing. The Company has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described in the
Prospectus and is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a Material
Adverse Effect (as defined below).
(d) Significant Subsidiaries. Each subsidiary of the Company that is a
"significant subsidiary" as defined in Rule 1-02(w) of Regulation S-X under the
Securities Act (the "Significant Subsidiaries") has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own
its property and to conduct its business as described in the Prospectus and is
duly qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse Effect (as
defined below); all of the issued shares of capital stock of each Significant
Subsidiary have been duly and validly authorized and issued, are fully paid and
non-assessable and are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equitable claims or other adverse claims
("Adverse Claims").
(e) Authorization of Underwriting Agreement and Terms Agreement. This
Underwriting Agreement has been, and the applicable Terms Agreement as of the
date thereof will have been, duly authorized, executed and delivered by the
Company.
(f) Authorization of Debt Securities. The Debt Securities have been duly
authorized by the Company for issuance and sale pursuant to this Underwriting
Agreement and the Terms Agreement. The Debt Securities, when issued and
authenticated in the manner provided for in the Indenture and delivered against
payment of the consideration therefor specified in the Terms Agreement, will
constitute valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally or by general
equitable principles (regardless of whether enforcement is considered in a
proceeding in equity or at law).
(g) Authorization of Indenture. 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, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally or by general equitable principles
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
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(h) Authorization of Swap Agreement. The Confirmation Letter Agreement to
be entered into between Merrill Lynch International and the Company on the
Closing Date, which supplements and forms a part of an ISDA Master Agreement,
dated as of the Closing Date (collectively, the "Swap Agreement"), will have
been duly authorized, executed and delivered by the Company on the Closing Date
and will constitute the valid and legally binding obligation of the Company,
enforceable in accordance with its terms, except as the enforcement thereof may
be limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally or by general
equitable principles (regardless of whether enforcement is considered in a
proceeding in equity or at law).
(i) Absence of Defaults and Conflicts. The Company is not in violation of
its charter or bylaws or in default in the performance of any obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Company is subject (collectively, "Agreements and
Instruments"), except for such defaults that would not result in a Material
Adverse Effect (as defined below). The (A) execution, delivery and performance
of this Underwriting Agreement, the Indenture, the Swap Agreement, the Terms
Agreement and any other agreement or instrument entered into or issued or to be
entered into or issued by the Company in connection with the transactions
contemplated hereby or thereby or in the Registration Statement, the Prospectus
and the Swap Agreement, and (B) consummation of the transactions contemplated
therein (including the issuance and sale of the Debt Securities) and compliance
by the Company with its obligations hereunder and thereunder, have been duly
authorized by all necessary corporate action and do not and will not, whether
with or without the giving of notice or passage of time or both, conflict with
or constitute a breach of, or default or Repayment Event (as defined below)
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any assets, properties or operations of the Company pursuant to
any Agreements and Instruments, nor will such action result in any violation of
the provisions of the charter or bylaws of the Company or any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any government,
government instrumentality or court (domestic or foreign), having jurisdiction
over the Company or any of its assets, properties or operations, except for such
conflicts, breaches or defaults that would not result in a Material Adverse
Effect. As used herein, a "Repayment Event" means any event or condition that
gives the holder of any note, debenture or other evidence of indebtedness (or
any person acting on such holder's behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by the Company.
(j) No Consents. No consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, the
Indenture, the Swap Agreement and the Terms Agreement, except such as have been
obtained under the federal securities laws or as may be required by the
securities or Blue Sky laws of the various states or any applicable law, rule or
regulation of any foreign jurisdiction in connection with the offer and sale of
the Debt Securities.
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(k) Financial Statements. The financial statements of the Company included
or incorporated by reference in the Registration Statement and the Prospectus,
together with the related schedules and notes thereto (the "Financial
Statements"), present fairly in all material respects the financial position of
the Company and its consolidated subsidiaries as of and for the periods
specified therein. Such Financial Statements have been prepared in conformity
with generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods involved.
(l) No Material Adverse Change. Since the respective dates as of which
information is given in the Registration Statement and Prospectus, except as
otherwise stated therein, (A) there has been no material adverse change in the
condition, financial or otherwise, or in the earnings, business or operations of
the Company and its subsidiaries considered as one enterprise (a "Material
Adverse Effect"), (B) there have been no transactions entered into by the
Company, other than those arising in the ordinary course of business, which are
material with respect to the Company and its subsidiaries considered as one
enterprise, and (C) except for regular dividends on the Company's common stock
or preferred stock, in amounts per share that are consistent with past practice
and its charter and bylaw documents (as amended), there has been no dividend or
distribution of any kind declared, paid or made by the Company on any class of
its capital stock.
(m) Legal Proceedings; Required Disclosure. There are no 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 any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the Prospectus or to
be filed as exhibits to the Registration Statement that are not described or
filed as required.
(n) Investment Company. The Company is not, and, after giving effect to the
offering and sale of the Debt Securities 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.
(o) Title to Property. The Company and the Significant Subsidiaries have
good and marketable title to all real property and good and marketable title to
all personal property owned by them which is material to the business of the
Company, in each case free and clear of all liens, encumbrances and defects
except such as are described in the Prospectus or such as do not materially
affect the value of such property and do not interefere with the use made or
proposed to be made by the Company or any Significant Subsidiary of such
property; and any real property and buildings held under lease by the Company
and the Significant Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made or proposed to be made of such property and buildings by the
Company or any Significant Subsidiary, in each case except as described in or
contemplated by the Prospectus.
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(p) Labor Disputes. Except as set forth in the Prospectus, no material
labor dispute with the employees of the Company or any of the Significant
Subsidiaries exists or, to the knowledge of the Company, is imminent.
(q) Permits. The Company and the Significant Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their businesses in
all material respects as described in the Prospectus, and neither the Company
nor any Significant Subsidiary has received any notice of proceedings relating
to the revocation or modification of any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would result in a Material Adverse Effect, except
as described in or contemplated by the Prospectus.
3. Purchase and Offering of Securities. The obligation of the Underwriters
to purchase the Debt Securities will be evidenced by an exchange of telegraphic
or other written communications (the "Terms Agreement") at the time the Company
determines to sell the Debt Securities. The Terms Agreement will incorporate by
reference the provisions of this Agreement, except as otherwise provided
therein, and will specify the firm or firms which will be Underwriters, the
names of any Representatives, the principal amount of Debt Securities to be
purchased by each Underwriter, the purchase price to be paid by the Underwriters
and the terms of the Debt Securities not already specified in the Indenture,
including, but not limited to, interest rate, maturity, any redemption
provisions and any sinking fund requirements, and whether any of the Debt
Securities may be sold to institutional investors pursuant to Delayed Delivery
Contracts (as defined below). The Terms Agreement will also specify the time and
date of delivery and payment (such time and date, or such other time and date as
the Representatives and the Company agree as the time for payment and delivery,
being herein and in the Terms Agreement referred to as the "Closing Date"), the
place of delivery and payment and any details of the terms of offering that are
reflected in the prospectus supplement relating to the offering of the Debt
Securities. The obligations of the Underwriters to purchase the Debt Securities
will be several and not joint. It is understood that the Underwriters propose to
offer the Debt Securities for sale as set forth in the Prospectus. The Debt
Securities delivered to the Underwriters on the Closing Date will be in fully
registered or bearer form in such denominations and numbers and registered in
such names as the Underwriters may request.
If the Terms Agreement provides for sales of Debt Securities pursuant to
delayed delivery contracts, the Company authorizes the Underwriters to solicit
offers to purchase Debt Securities pursuant to delayed delivery contracts
substantially in the form of Annex I attached hereto ("Delayed Delivery
Contracts") with such changes therein as the Company may authorize or approve.
Delayed Delivery Contracts are to be with institutional investors, including
commercial and savings banks, insurance companies, pension funds, investment
companies and educational and charitable institutions. On the Closing Date the
Company will pay, as compensation, to the Representatives for the accounts of
the Underwriters, the fee set forth in such Terms Agreement in respect of the
principal amount of Debt Securities to be sold pursuant to Delayed Delivery
Contracts ("Contract Securities"). The Underwriters will not have any
responsibility in respect of the validity or the performance of Delayed Delivery
Contracts. If the Company executes and delivers Delayed Delivery Contracts, the
Contract Securities will be deducted from the Debt Securities to be purchased by
the several Underwriters and the aggregate principal amount of Debt Securities
to be purchased by each Underwriter will be reduced pro rata in proportion to
the principal amount of Debt Securities set forth opposite each Underwriter's
name in such Terms Agreement, except to the extent that the Representatives
determine that such reduction shall be otherwise than pro rata and so advise the
Company. The Company will advise the Representatives not later than the business
day prior to the Closing Date of the Debt Securities that are the Contract
Securities.
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4. Certain Agreements of the Company. The Company agrees with the several
Underwriters that it will furnish to the Representatives one signed copy of the
Registration Statement, including all exhibits, in the form it became effective
and of all amendments thereto and that in connection with the offering of the
Debt Securities:
(a) The Company will advise the Representatives promptly of any proposal to
amend or supplement the Registration Statement or the Prospectus (whether
pursuant to the Securities Act or the Exchange Act) and will afford the
Representatives a reasonable opportunity to comment on any such proposed
amendment or supplement during the offering period; and the Company will also
advise the Representatives promptly of the filing of any such amendment or
supplement and of the institution by the Commission of any stop order
proceedings in respect of the Registration Statement or of any part thereof and
will use its best efforts to prevent the issuance of any such stop order and to
obtain as soon as possible its lifting, if issued.
(b) If, at any time when a prospectus relating to the Debt Securities is
required to be delivered under the Securities Act, any event occurs as a result
of which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, or if it is necessary at any time to amend the
Prospectus to comply with the Securities Act, the Company promptly will prepare
and file with the Commission an amendment or supplement which will correct such
statement or omission or an amendment which will effect such compliance, and
will afford the Representatives a reasonable opportunity to comment on any such
proposed amendment or supplement during the offering period.
(c) As soon as practicable, but not later than 18 months, after the date of
each Terms Agreement, the Company will make generally available to its security
holders an earnings statement covering a period of at least 12 months beginning
after the later of (i) the most recent effective date of the Registration
Statement, (ii) the effective date of the most recent post-effective amendment
to the Registration Statement to become effective prior to the date of such
Terms Agreement and (iii) the date of the Company's most recent Annual Report on
Form 10-K filed with the Commission prior to the date of such Terms Agreement,
which will satisfy the provisions of Section 11(a) of the Securities Act
(including, at the option of the Company, Rule 158 of the Rules and Regulations
under the Securities Act).
(d) The Company will furnish to the Representatives copies of the
Registration Statement, including all exhibits, any related preliminary
prospectus, any related preliminary prospectus supplement and all amendments and
supplements to such documents, in each case as soon as available, and copies of
the Prospectus and all amendments and supplements to the Prospectus not later
than 10:00 A.M., New York City time, on the day following the date thereof or as
soon thereafter as practicable. The Company will furnish each of such documents
in such quantities as are reasonably requested.
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(e) The Company will arrange for the qualification of the Debt Securities
for sale and the determination of their eligibility for investment under the
laws of such jurisdictions within the United States as the Representatives
designate and will continue such qualifications in effect so long as required
for the distribution; provided that the Company will not be required to qualify
to do business in any jurisdiction where it is not now qualified or to take any
action which would subject it to general or unlimited service of process in any
jurisdiction where it is not now subject.
(f) During the period of five years after the date of any Terms Agreement,
the Company will furnish to the Representatives (i) as soon as available, a copy
of each Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current
Report on Form 8-K of the Company filed with the Commission under the Securities
Exchange Act of 1934 (the "Exchange Act") or mailed to stockholders, and (ii)
from time to time, such other information concerning the Company as the
Representatives may reasonably request.
(g) The Company will pay all expenses incident to the performance of its
obligations under this Agreement and will reimburse the Underwriters for any
expenses (including fees and disbursements of counsel) incurred by them in
connection with qualification of the Debt Securities for sale and determination
of their eligibility for investment under the laws of such jurisdictions as the
Representatives may designate and the printing of memoranda relating thereto,
for any fees charged by investment rating agencies for the rating of the Debt
Securities, for the filing fee of the National Association of Securities
Dealers, Inc. relating to the Debt Securities and for expenses incurred in
distributing the Prospectus, any preliminary prospectuses and any preliminary
prospectus supplements to Underwriters.
(h) For a period beginning at the time of execution of the Terms Agreement
and ending on the later of (a) the Closing Date and (b) the date on which the
Underwriters notify the Company that they have completed their distribution of
the Debt Securities, without the prior consent of the Representatives, the
Company will not offer or contract to sell or, except pursuant to a commitment
entered into prior to the date of the Terms Agreement, sell or otherwise dispose
of any substantially similar security.
5. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Debt Securities will be
subject to the accuracy of the representations and warranties on the part of the
Company herein as of the date hereof, as of the date of the Terms Agreement and
as of the Closing Date, to the accuracy of the statements of Company officers
made pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder and to the following additional conditions precedent:
(a) The Underwriters shall have received, on each of the date hereof and
the Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form and substance satisfactory to the Underwriters, from
Deloitte & Touche LLP, independent public accountants, containing statements and
information of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus; provided
that the letter delivered on the Closing Date shall use a "cut-off date" not
earlier than the date hereof.
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(b) No stop order suspending the effectiveness of the Registration
Statement or of any part thereof shall have been issued and no proceedings for
that purpose shall have been instituted or, to the knowledge of the Company or
any Underwriter, shall be contemplated by the Commission.
(c) Subsequent to the execution of the Terms Agreement, there shall not
have occurred (i) any 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 Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the Debt
Securities on the terms and in the manner contemplated in the Prospectus; (ii)
any downgrading in the rating of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined for purposes
of Rule 436(g) under the Securities Act), and no such organization shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of such debt securities; (iii) any banking
moratorium declared by Federal or New York authorities, or the authorities of
any country in whose currency any Debt Securities are denominated under the
applicable Terms Agreement; (iv) any outbreak or escalation of hostilities in
which the United States or any country in whose currency any Debt Securities 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 Representatives, the effect of any such outbreak, escalation, material
adverse change, declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the sale of and payment for the Debt
Securities; or (v) any 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
reasonable judgment of the Representatives to proceed with the public offering
or delivery of the Purchased Securities on the terms and in the manner
contemplated in the Prospectus.
(d) The Representatives shall have received an opinion, dated the Closing
Date, of King & Spalding, special counsel for the Company, 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 corporate power and authority under
such laws 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; the Indenture constitutes a legal, valid and binding instrument 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 creditors' rights
generally, general equitable principles and the discretion of courts in
granting equitable remedies. The Indenture has been duly qualified under
the Trust Indenture Act.
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(iii)the Debt Securities have been duly authorized and, when executed,
authenticated, issued and delivered in the manner provided for in the
Indenture against payment therefor as provided in this Agreement and the
applicable Terms Agreement, will constitute legal, 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 creditors'
rights generally, general equitable principles and the discretion of courts
in granting equitable remedies; and the Debt Securities will be entitled to
the benefits of the Indenture. The Contract Securities, if any, when
executed, authenticated, issued and delivered pursuant to the Indenture and
the Delayed Delivery Contracts, if any, will constitute legal, valid and
binding obligations of the Company, subject, as to enforcement of remedies,
to bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, general equitable principles and the
discretion of courts in granting equitable remedies, and will be entitled
to the benefits of the Indenture; and the Debt Securities and the Indenture
conform in all material respects to the descriptions thereof in the
Prospectus.
(iv) no consent, approval, authorization or order of, or filing with, any
governmental agency or body or any court is required for the issuance, sale
and delivery of the Debt Securities by the Company or for the consummation
by the Company of the transactions contemplated by the Terms Agreement
(including the provisions of this Agreement), except such as have been
obtained and made under the Securities Act and the Trust Indenture Act and
such as may be required under state securities laws;
(v) this Agreement and the applicable Terms Agreement and any Delayed Delivery
Contracts have been duly authorized, executed and delivered by the Company;
(vi) the Swap Agreement has been duly authorized, executed and delivered by the
Company and constitutes a legal, valid and binding obligation 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 creditors' rights
generally, general equitable principles and the discretion of courts in
granting equitable remedies (this needs to be delivered to Merrill Lynch
International, the swap counterparty);
(vii)such counsel will confirm its opinion as to the United States tax matters
set forth in the Prospectus; and
(viii) such counsel shall state that the Registration Statement has become
effective under the Securities Act, and, to the knowledge of such counsel,
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 or contemplated under the Securities
Act, and the Registration Statement, as of its effective date, and the
Prospectus, as amended or supplemented as of its issue date and the Closing
Date, complied as to form in all material respects with the requirements of
the Securities Act, the Trust Indenture Act and the Rules and Regulations
(in each case 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);
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In addition, such counsel shall state that, although such counsel does not
assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus as
amended or supplemented, it has no reason to believe that (a) the
Registration Statement (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
effective date, 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 amended or supplemented, as of its
issue date and as of the Closing 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;
(e) The Representatives shall have received an opinion, dated the Closing
Date, of Allen Hill, Vice President, Legal Department Manager for the Company,
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
substantial 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;
(ii) each Significant Subsidiary has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse
Effect; and
(iii)the execution, delivery and performance of the Indenture, the Terms
Agreement (including the provisions of this Agreement), and any
Delayed Delivery Contracts and the issuance and sale of the Debt
Securities by the Company and the consummation of the transactions
contemplated herein and therein by the Company (a) do not and will not
result in any violation of the certificate of incorporation or bylaws
of the Company, (b) to the best of 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 Significant Subsidiary that
is material to the Company and its subsidiaries taken 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 material
judgment, order, writ, injunction or decree known to such counsel of
any governmental authority or court having jurisdiction over the
Company, and the Company has full power and authority to authorize,
issue and sell the Debt Securities as contemplated by the Terms
Agreement (including the provisions of this Agreement); and
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(iv) the descriptions in the Registration Statement and Prospectus of
statutes, legal and governmental proceedings and contracts (or
portions thereof) and other documents fairly summarize in all material
respects such statutes, legal and governmental proceedings and
contracts (or portions thereof) and fairly present the information
required to be shown; such counsel does not know of any 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 of any statutes, regulations or
contracts that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required.
(f) The Representatives shall have received from Gibson, Dunn & Crutcher
LLP, counsel for the Underwriters, such opinion or opinions, dated the Closing
Date, with respect to the incorporation of the Company, the validity of the Debt
Securities, the Registration Statement, the Prospectus and other related matters
as they may require, and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon such
matters.
(g) The Representatives shall have received a certificate, dated the
Closing Date, of the President or any Vice President and a principal financial
or accounting officer of the Company in which such officers shall state, in
their capacity as officers of the Company, that the representations and
warranties of the Company in this Agreement are true and correct with the same
force and effect as though expressly made on the Closing Date, that the Company
has complied with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date, that no stop
order suspending the effectiveness of the Registration Statement or of any part
thereof has been issued and no proceedings for that purpose have been instituted
or are contemplated by the Commission and that, subsequent to the date of the
most recent financial statements in the Prospectus, there has been no material
adverse change in earnings, business or operations of the Company and its
subsidiaries except as set forth in or contemplated by the Prospectus or as
described in such certificate.
The Company will furnish the Representatives with such conformed copies of
such opinions, certificates, letters and documents as they reasonably request.
6. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless each Underwriter against
any losses, claims, damages or liabilities, joint or several, to which such
Underwriter may become subject, under the Securities Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, the Prospectus, or
any amendment or supplement thereto, or any related preliminary prospectus or
preliminary prospectus supplement, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred,
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through the
Representatives, if any, specifically for use therein; and provided further,
that as to any preliminary prospectus this indemnity agreement shall not inure
to the benefit of any Underwriter or any person controlling that Underwriter on
account of any loss, claim, damage or liability arising from the sale of Debt
Securities to any person by that Underwriter if that Underwriter failed to send
or give a copy of the Prospectus, as the same may be amended or supplemented, to
that person within the time required by the Securities Act, and the untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact in such preliminary prospectus was corrected
in the Prospectus, unless such failure resulted from non-compliance by the
Company with Section 4(d). For purposes of the second proviso to the immediately
preceding sentence, the term Prospectus shall not be deemed to include the
documents incorporated therein by reference, and no Underwriter shall be
obligated to send or give any supplement or amendment to any document
incorporated by reference in a preliminary prospectus or the Prospectus to any
person other than a person to whom such Underwriter has delivered such
incorporated documents in response to a written request therefor.
<PAGE>
(b) Each Underwriter will indemnify and hold harmless the Company against
any losses, claims, damages or liabilities to which the Company may become
subject, under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus or preliminary
prospectus supplement, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through the Representatives, if any, specifically for use therein, and will
reimburse any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel 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 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
fees and expenses of such counsel shall be at the expense of such indemnified
party unless (i) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel or (ii) the named parties to
any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both parties
by the same counsel would be inappropriate due to actual or potential conflicts
of interests between them. It is understood that the indemnifying party shall
not, in respect of the legal expenses of any indemnified party in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the fees and expenses of more than one separate firm (in addition to any
local counsel) for all such indemnified parties and that all such fees and
expenses shall be reimbursed as they are incurred. The indemnified 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.
<PAGE>
(d) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other from the offering of the Debt
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company bear to the total underwriting discounts and commissions received
by the Underwriters. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid by an indemnified
party as a result of the losses, claims, damages or liabilities referred to in
the first sentence of this subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Debt Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this subsection (d) to contribute are several in proportion to
their respective underwriting obligations and not joint.
(e) The obligations of the Company under this Section shall be in addition
to any liability which the Company may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Securities Act; and the obligations of the
Underwriters under this Section shall be in addition to any liability which the
respective Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each director of the Company, to each officer of the Company
who has signed the Registration Statement and to each person, if any, who
controls the Company within the meaning of the Securities Act.
<PAGE>
7. Default of Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase Debt Securities under the Terms Agreement and the
aggregate amount of the Debt Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase does not exceed 10% of the aggregate
amount of the Debt Securities, the Representatives may make arrangements
satisfactory to the Company for the purchase of such Debt Securities by other
persons, including any of the Underwriters, but if no such arrangements are made
by the Closing Date, the non-defaulting Underwriters shall be obligated
severally, in proportion to their respective commitments under this Agreement
and the Terms Agreement, to purchase the Debt Securities that such defaulting
Underwriters agreed but failed to purchase. If any Underwriter or Underwriters
so default and the aggregate amount of the Debt Securities with respect to which
such default or defaults occur exceeds 10% of the aggregate amount of the Debt
Securities and arrangements satisfactory to the Representatives and the Company
for the purchase of such Debt Securities by other persons are not made within 36
hours after such default, such Terms Agreement will terminate without liability
on the part of any non-defaulting Underwriter or the Company, except as provided
in Section 8. As used in this Agreement, the term "Underwriter" includes any
person substituted for an Underwriter under this Section. As used in this
Section only, the "aggregate amount" of Debt Securities shall mean the aggregate
principal amount of any Debt Securities. Nothing herein will relieve a
defaulting Underwriter from liability for its default. The respective
commitments of the several Underwriters for the purposes of this Section shall
be determined without regard to reduction in the respective Underwriters'
obligations to purchase the amount of Debt Securities set forth opposite their
names in the Terms Agreement as a result of Delayed Delivery Contracts entered
into by the Company.
The foregoing obligations and agreements set forth in this Section will not
apply if the Terms Agreement specifies that such obligations and agreements will
not apply.
8. Survival of Certain Representations and Obligations. The indemnity and
contribution provisions contained in Section 6 and the representations,
warranties and other statements of the Company and of the Underwriters contained
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 any Underwriter or any person controlling any Underwriter or by or on
behalf of the Company, its officers or directors or any person controlling the
Company and (iii) acceptance of and payment for any of the Debt Securities. If
the obligations of the Underwriters with respect to any offering of Debt
Securities are terminated pursuant to Section 7 or if for any reason the
purchase of the Debt Securities by the Underwriters under a Terms Agreement is
not consummated, the Company shall remain responsible for the expenses to be
paid or reimbursed by it pursuant to Section 4 and the respective obligations of
the Company and the Underwriters pursuant to Section 6 shall remain in effect.
If for any reason the purchase of the Debt Securities by the Underwriters is not
consummated other than because of the termination of this Agreement pursuant to
Section 7 or a failure to satisfy the conditions set forth in Section 5(c), the
Company shall reimburse the Underwriters, severally, for all out-of-pocket
expenses (including fees and disbursements of counsel) reasonably incurred by
them in connection with the offering of the Debt Securities.
9. Notices. All communications hereunder will be in writing and, if sent to
the Underwriters, will be mailed, delivered or telegraphed and confirmed to them
at their addresses furnished to the Company in writing for the purpose of
communications hereunder or, if sent to the Company, will be mailed, delivered
or telegraphed and confirmed to it at 55 Glenlake Parkway, N.E., Atlanta,
Georgia 30328, Attention: Joseph R. Moderow, Senior Vice President, General
Counsel and Secretary.
10. Successors. This Agreement will inure to the benefit of and be binding
upon the Company and such Underwriters as are identified in Terms Agreements and
their respective successors and the officers and directors and controlling
persons referred to in Section 5, and no other person will have any right or
obligation hereunder.
11. Applicable Law. This Agreement and the Terms Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York, without giving effect to principles of conflicts of laws of such state.
Each of the parties hereto waives to the fullest extent permitted by law any
right it may have to a trial by jury in respect of any claim, demand, action or
cause of action based on, arising out of, under or in connection with this
Agreement.
<PAGE>
ANNEX I
(Three copies of this Delayed Delivery Contract should be signed and returned to
the address shown below so as to arrive not later than 9:00 A.M., Eastern
Standard time, on _____ __, 2000. [insert date which is third full business
day prior to Closing Date under the Terms Agreement])
DELAYED DELIVERY CONTRACT
__________, 2000
UNITED PARCEL SERVICE, INC.
c/o [Insert name and address of lead Underwriter]
Attention:
Gentlemen:
The undersigned hereby agrees to purchase from United Parcel Service,
Inc., a Delaware corporation ("Company"), and the Company agrees to sell to the
undersigned, as of the date hereof, for delivery on _________ __, 2000
("Delivery Date"), $_________ principal amount of the Company's [Insert title of
debt securities] ("Debt Securities") and offered by the Company's Prospectus
dated January 26, 1999 and a Prospectus Supplement dated ______________ relating
thereto, receipt of copies of which is hereby acknowledged, at ___% of the
principal amount of the Debt Securities plus accrued interest, if any, and on
the further terms and conditions set forth in this Delayed Delivery Contract
("Contract").
Payment for the Debt Securities that the undersigned has agreed to
purchase for delivery on the Delivery Date shall be made to the Company or its
order by certified or official bank check in New York Clearing House (next day)
funds at the office of _______________________ at _____ .M. on the Delivery Date
upon delivery to the undersigned of the Debt Securities to be purchased by the
undersigned [for delivery on such Delivery Date] in definitive fully registered
form and in such denominations or numbers and registered in such names as the
undersigned may designate by written or telegraphic communication addressed to
the Company not less than five full business days prior to the Delivery Date.
It is expressly agreed that the provisions for delayed delivery and
payment are for the sole convenience of the undersigned; that the purchase
hereunder of Debt Securities is to be regarded in all respects as a purchase as
of the date of this Contract; that the obligation of the Company to make
delivery of and accept payment for, and the obligation of the undersigned to
take delivery of and make payment for, Debt Securities on the Delivery Date
shall be subject only to the conditions that (1) investment in the Debt
Securities shall not at the Delivery Date be prohibited under the laws of any
jurisdiction in the United States to which the undersigned is subject and (2)
the Company shall have sold to the Underwriters the total principal amount of
the Debt Securities less the principal amount thereof covered by this and other
similar Contracts. The undersigned represents that its investment in the Debt
Securities is not, as of the date hereof, prohibited under the laws of any
jurisdiction to which the undersigned is subject and which governs such
investment.
<PAGE>
Promptly after completion of the sale to the Underwriters the Company will
mail or deliver to the undersigned at its address set forth below notice to such
effect, accompanied by a copy of the opinion of counsel for the Company
delivered to the Underwriters in connection therewith.
This Contract will (a) inure to the benefit of and be binding upon the
parties hereto and their respective successors, but will not be assignable by
either party hereto without the written consent of the other, and (b) shall be
governed by and construed in accordance with the laws of the State of New York,
without giving effect to principles of conflicts of laws of such state.
It is understood that the acceptance of any such Contract is in the
Company's sole discretion and, without limiting the foregoing, need not be on a
first-come, first-served basis. If this Contract is acceptable to the Company,
it is requested that the Company sign the form of acceptance below and mail or
deliver one of the counterparts hereof to the undersigned at its address set
forth below. This will become a binding contract between the Company and the
undersigned when such counterpart is so mailed or delivered.
Yours very truly,
(Name of Purchaser)
By:________________________________
(Title of Signatory)
(Address of Purchaser)
Accepted, as of the above date.
UNITED PARCEL SERVICE, INC.
By:
Name:
Title:
<PAGE>
UNITED PARCEL SERVICE, INC.
("COMPANY")
DEBT SECURITIES
TERMS AGREEMENT
September 21, 2000
United Parcel Service, Inc.
55 Glenlake Parkway, N.E.
Atlanta, Georgia 30328
Attention: Robert J. Clanin,
Senior Vice President and Chief Financial Officer
Dear Sirs:
The undersigned, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
offers to purchase, on and subject to the terms and conditions of the
Underwriting Agreement relating to Debt Securities dated as of the date hereof
("Underwriting Agreement"), the following securities ("Securities") on the
following terms:
DEBT SECURITIES
--------------------------------------------------------------------------------
Title of Security: 1.75% Cash-Settled Convertible Senior Notes due
September 27, 2007
Principal Amount: $300,000,000
Interest Rate and Payment 1.75%, payable semi-annually on each September 27
Dates: and March 27, commencing March 27, 2001
Maturity: September 27, 2007
Currency of Denomination: U.S. Dollar
Currency of Payment: U.S. Dollar
Form: Book-entry only held through the Depository Trust
Company
Denomination Denominations of $1,000 and integral multiples in
excess thereof; minimum purchase of $100,000
principal amount of notes.
Overseas Paying Agents: N/A
<PAGE>
Exchange Right: From and after October 27, 2000, each holder will
have the option to exchange a minimum $100,000 of
such holder's notes for cash as set forth in the
Prospectus (or such lesser amount if the holder
holds less than $100,000 of notes).
Optional Redemption: The Company may redeem all, but not less than all,
of the notes at any time after September 27, 2003
as set forth in the Prospectus.
Sinking Fund: N/A
Delayed Delivery Contracts: N/A
Delivery Date: N/A
Minimum Contract: N/A
Maximum aggregate
principal amount: N/A
Fee: N/A
Purchase Price: 98%
Expected Reoffering Price: 100%
Name and Address of Sole
Underwriter: Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower
World Financial Center
New York, New York 10281
--------------------------------------------------------------------------------
The provisions of the Underwriting Agreement are incorporated herein by
reference.
The Closing will take place at 9:00 A.M., Eastern Standard time, on
September 27, 2000 at the offices of Gibson, Dunn & Crutcher LLP.
The Securities will be made available for checking and packaging at the
offices of Gibson, Dunn & Crutcher LLP at least 24 hours prior to the Closing
Date.
<PAGE>
Please signify your acceptance by signing the enclosed response to us in
the space provided and returning it to us.
Very truly yours,
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By: /s/ Simon Smith
Name: Simon Smith
Title: Vice President
Accepted, as of the above date.
UNITED PARCEL SERVICE, INC.
By:/s/ Thomas W. Delbrook
Name: Thomas W. Delbrook
Title: Assistant Treasurer
