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Exhibit 1(g)
U.S. $_______________
____% GLOBAL NOTES DUE 200__
THE BEAR STEARNS COMPANIES INC.
UNDERWRITING AGREEMENT
_______ __, 2000
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U.S. $____________
THE BEAR STEARNS COMPANIES INC.
____% GLOBAL NOTES DUE 200_
UNDERWRITING AGREEMENT
_______ __, 2000
To the several Underwriters named
in Schedule I hereto
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Dear Sirs:
The Bear Stearns Companies Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to the several Underwriters named in Schedule I
hereto (the "Underwriters") the principal amount of U.S. $___________ __%
Global Notes due 200_ of the Company identified in Schedule II attached
hereto (the "Securities").
Unless otherwise specified in Schedule II, the Securities are to be
issued under an Indenture, dated as of May 31, 1991 (the "Original
Indenture"), as supplemented by the First Supplemental Indenture, dated as of
January 29, 1998 (the "Supplemental Indenture," together with the Original
Indenture, the "Indenture"), between the Company and The Chase Manhattan Bank
(formerly known as Chemical Bank and successor by merger to Manufacturers
Hanover Trust Company), as Trustee (the "Trustee"). The Securities are more
fully described in the Final Prospectus referred to below and in Schedule II
attached hereto.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to, and agrees with, the several Underwriters and their
affiliates as set forth below in this Section 1. Certain terms used in this
Section 1 are defined in paragraph (b) hereof.
(a) The Company meets the requirements for the use of Form S-3
under the U.S. Securities Act of 1933, as amended (the "1933 Act"), and has
prepared and filed with the U.S. Securities and Exchange Commission (the
"Commission") pursuant to the 1933 Act, the U.S. Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act"), and the rules and regulations
promulgated by the Commission thereunder (the "Regulations"), a registration
statement (the file number of which is set forth in Schedule II hereto) on
such Form, including a
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basic prospectus, for registration under the 1933 Act of the offering and
sale of the Securities. The Company has filed no amendments to such
registration statement through the date hereof, and may have used a
Preliminary Final Prospectus, each of which, if any, has previously been
furnished to you. Such registration statement has become effective. The
offering of the Securities is a Delayed Offering and, accordingly, it is not
necessary that any further information with respect to the Securities and the
offering thereof required by the 1933 Act and the Regulations thereunder to
be included in the Final Prospectus be included in an amendment to such
registration statement prior to the Effective Date. The Company will file
with the Commission pursuant to Rules 415 and 424(b)(2), (3) or (5) a final
supplement to the form of prospectus included in such registration statement
relating to the Securities and the offering thereof. As filed, such final
prospectus supplement shall include all required information with respect to
the Securities and the offering thereof and, except to the extent the
Underwriters shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to you prior to the Execution Time
or, to the extent not completed at the Execution Time, shall contain only
such specific additional information and other changes (beyond that contained
in the Basic Prospectus and any Preliminary Final Prospectus) as the Company
has advised you, prior to the Execution Time, will be included or made
therein.
(b) The terms which follow, when used in this Agreement, shall have
the meanings indicated. The term the "Effective Date" shall mean each date
that the Registration Statement and any post-effective amendment or
amendments thereto became or become effective. "Execution Time" shall mean
the date and time that this Agreement is executed and delivered by the
parties hereto. "Basic Prospectus" shall mean the basic prospectus referred
to in paragraph (a) above contained in the Registration Statement at the
Effective Date including any Preliminary Final Prospectus. "Preliminary Final
Prospectus" shall mean any preliminary prospectus supplement (including any
information appendixed thereto) to the Basic Prospectus which describes the
Securities and the offering thereof and is used prior to filing of the Final
Prospectus. "Final Prospectus" shall mean any and all prospectus supplements
relating to the Securities (including any information appendixed thereto)
that is filed pursuant to Rule 424(b) after the Execution Time, together
(unless the context otherwise requires) with the Basic Prospectus; the Final
Prospectus will substantially comprise the listing particulars required in
connection with the application for listing of the Securities on the Official
List of the London Stock Exchange Limited (the "London Stock Exchange")
pursuant to the Financial Services Act 1986 (the "FSA"), with such amendments
as the London Stock Exchange may require. "Registration Statement" shall mean
the registration statement referred to in paragraph (a) above, including all
exhibits, documents and financial statements incorporated by reference, as
amended at the Execution Time (or, if not effective at the Execution Time, in
the form in which it shall become effective) and, in the event any
post-effective amendment thereto becomes effective prior to the Closing Time
(as such term is hereinafter defined), shall also mean such registration
statement as so amended. "Rule 415," "Rule 424" and "Regulation S-K" refer to
such Regulations under the 1933 Act. Any reference herein to the Registration
Statement, the Basic Prospectus, any Preliminary Final Prospectus or the
Final Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 which were
filed under the U.S. Securities Exchange Act of 1934, as amended (the "1934
Act"), on or before the effective date of the Registration Statement, or the
issue date of the Basic Prospectus, any Preliminary Final Prospectus, or the
Final Prospectus, as the case may be; and
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any reference herein to the terms "amend," "amendment" or "supplement" with
respect to the Registration Statement, the Basic Prospectus, any Preliminary
Final Prospectus or the Final Prospectus shall be deemed to refer to and
include the filing of any document under the 1934 Act after the Effective
Date of the Registration Statement or the issue date of the Basic Prospectus,
any Preliminary Final Prospectus, or the Final Prospectus, as the case may
be, deemed to be incorporated therein by reference. A "Delayed Offering"
shall mean an offering of securities pursuant to Rule 415 which does not
commence promptly after the effective date of a registration statement, with
the result that only information required pursuant to Rule 415 need be
included in such registration statement at the effective date thereof with
respect to the securities so offered.
(c) 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, lease and operate its properties
and to conduct its business as described in the Final Prospectus and any
amendment or supplement thereto; and the Company is duly qualified as a
foreign corporation to transact business, and is in good standing, in each
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except where
the failure to so qualify would not have a material adverse effect on the
operations, business or properties of the Company and its subsidiaries
considered as one enterprise (any such material adverse effect being
hereinafter referred to as a "Material Adverse Effect").
(d) The Company has the corporate power and authority to enter into
this underwriting agreement ("this Agreement"), to perform its obligations
hereunder and under the Indenture and to issue, sell and deliver the
Securities. This Agreement has been duly and validly authorized, executed and
delivered by the Company, is a valid and binding agreement of the Company and
is enforceable as to the Company in accordance with its terms. The Indenture
has been duly and validly authorized, executed and delivered by the Company,
is a valid and binding agreement of the Company and is enforceable as to the
Company in accordance with its terms. The Indenture has been duly qualified
under the Trust Indenture Act.
(e) (i) On the Effective Date, and at all times subsequent thereto
to and including the Closing Time, and during such longer period as the Final
Prospectus may be required to be delivered in connection with sales by the
Underwriters or a dealer, and during such longer period until any post
effective amendment to the Registration Statement shall become effective, the
Registration Statement (including any post-effective amendment) and the Final
Prospectus (as amended or as supplemented if the Company shall have filed
with the Commission any amendment or supplement to the Registration Statement
or the Final Prospectus and including any filing under the 1934 Act
explicitly referenced as to be filed under the caption "Where You Can Find
More Information" in the Final Prospectus) will contain all statements which
are required to be stated therein in accordance with the 1933 Act, the 1934
Act, the Trust Indenture Act, and the Regulations, will comply with the
requirements of the 1933 Act, the 1934 Act, the Trust Indenture Act, and the
Regulations, and will not contain 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 in the light of the circumstances in which they
were made not misleading, and no event will have occurred which should have
been set forth in an amendment or supplement to the Registration Statement or
the Final Prospectus which has not then been set forth in such an amendment or
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supplement; and each Basic Prospectus and each Preliminary Final
Prospectus, as of the date filed with the Commission, 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 in
light of the circumstances in which they were made not misleading; PROVIDED,
HOWEVER, that the Company makes no representations and warranties as to
information contained in or omitted from (i) the Registration Statement, the
Basic Prospectus, any Preliminary Final Prospectus, or the Final Prospectus
made in reliance upon and in conformity with information furnished to the
Company in writing by any Underwriter expressly for use in the Registration
Statement or such Basic Prospectus, any Preliminary Final Prospectus, or the
Final Prospectus, as set forth in Section 6(b), and (ii) the Statement of
Eligibility and Qualification on Form T-1 of the Trustee under the Trust
Indenture Act, except statements or omissions in such Statement made in
reliance upon information furnished to the Trustee by or on behalf of the
Company for inclusion therein.
(ii) Without limiting the foregoing, on the date hereof,
and at all times subsequent thereto to and including the Closing Time, and
during such longer period as the Final Prospectus may be required to be
delivered in connection with sales by the Underwriters or a dealer, and
during such longer period until any post effective amendment to the
Registration Statement (comprising listing particulars or supplementary
listing particulars) shall become effective, the Final Prospectus (together
with the Basic Prospectus) contains all material information with respect to
the Company and its subsidiaries and the Securities (including all
information which, according to the particular nature of the Company and its
subsidiaries and the Securities, is necessary to enable investors and their
professional advisers to make an informed assessment of the assets and
liabilities, financial position, profits and losses and prospects of the
Company and its subsidiaries and of the rights attaching to the Securities),
the statements of intention, opinion, belief or expectation contained therein
are honestly and reasonably made or held and such documents (once approved by
the relevant stock exchanges as listing particulars) will contain all the
information required by section 146 of the FSA and otherwise comply with the
listing rules made by the London Stock Exchange under the FSA (the "Listing
Rules").
(f) Neither the Commission nor the "blue sky" or securities
authority of any jurisdiction (whether in the United States, the United
Kingdom or elsewhere) has issued an order or administrative proceeding (a
"Stop Order") suspending (or the effect of which is to suspend or otherwise
limit) the effectiveness of the Registration Statement, preventing,
suspending or otherwise limiting the use of the Basic Prospectus, any
Preliminary Final Prospectus, the Final Prospectus, the Registration
Statement, or any amendment or supplement thereto, refusing to permit the
effectiveness of the Registration Statement, suspending the registration or
qualification of the Securities or suspending the qualification of the
Indenture, nor has any of such authorities instituted or, to the knowledge of
the Company, threatened to institute any proceedings with respect to a Stop
Order in any jurisdiction (whether in the United States, the United Kingdom
or elsewhere) in which the Securities are to be sold, nor, with respect to
accuracy at the Closing Time, has there been any Stop Order issued or
proceedings with respect to a Stop Order instituted or, to the knowledge of
the Company, threatened on or after the effective date of the Registration
Statement in any jurisdiction.
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(g) The documents incorporated by reference in the Final Prospectus
and any amendment or supplement thereto (the "Incorporated Documents"), at
the time they were or hereafter are filed with the Commission (or to the
extent amended at the time of filing of such amendment with the Commission),
complied, or when so filed will comply, in all material respects with the
requirements of the 1933 Act, the 1934 Act or the Trust Indenture Act, as
applicable, and the rules and regulations thereunder and on the Effective
Date and through and including the Closing Time, did not and will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they are made, not misleading.
(h) Since the respective dates as of which information is given in
the Registration Statement and the Final Prospectus, except as otherwise
stated therein or contemplated thereby, there has been no material adverse
change in, or any adverse development which materially affects, the financial
condition, results of operations, business or properties of the Company and
its subsidiaries considered as one enterprise.
(i) Except for Bear, Stearns & Co. Inc. ("Bear Stearns"), Bear,
Stearns Securities Corp. ("BSSC"), Bear, Stearns International Limited
("BSIL") and Bear Stearns Holdings Limited, no subsidiary of the Company is a
"significant subsidiary" as defined in Rule 405 of Regulation C of the
Regulations. Each of Bear Stearns, BSSC and BSIL has been duly incorporated
and 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, lease and operate its properties and to conduct its business as
described in the Final Prospectus and any amendment or supplement thereto and
is duly qualified as a foreign corporation to transact business, and is in
good standing, in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not have a Material
Adverse Effect; and all of the issued and outstanding capital stock of Bear
Stearns, BSSC and BSIL has been duly authorized and validly issued and is
fully paid and nonassessable and was not issued in violation of or subject to
pre-emptive rights, and, except for directors' qualifying shares, is owned
directly or indirectly by the Company free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or other defect of title
whatsoever.
(j) The Securities have been duly authorized (or will have been so
authorized prior to each issuance of Securities) and when the Securities have
been executed and authenticated in the manner set forth in the Indenture and
are issued and delivered against payment therefor as provided in this
Agreement, such Securities will have been duly executed, authenticated
(assuming due authentication by the Trustee), issued and delivered, will
constitute valid and legally binding obligations of the Company entitled to
the benefits provided by the Indenture, and will be enforceable as to the
Company in accordance with their terms. The Indenture substantially complies
with the 1933 Act, the Trust Indenture Act and the Regulations, and the
Indenture and the Securities will conform to the descriptions thereof
contained in the Final Prospectus.
(k) The execution, delivery and performance of this Agreement, the
performance of the Indenture, the issuance, authentication, and sale of the
Securities and the
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consummation by the Company of the transactions contemplated hereby and
thereby do not, as of the date hereof, and will not, as of the Closing Time,
(A) conflict with or result in a breach of any of the terms and provisions
of, or constitute a default (or an event which with notice or lapse of time,
or both, would constitute a default) or require consent under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to, the
terms of any contract, agreement, indenture, mortgage, loan agreement, note,
lease or other instrument, franchise, license or permit to which the Company
or any of its subsidiaries is a party or by which the Company or any of its
subsidiaries or their respective properties or assets may be bound or subject
and that is material to the Company and its subsidiaries considered as one
enterprise, or (B) violate or conflict with any provision of the certificate
of incorporation or by-laws of the Company or any of its subsidiaries, or any
law, judgment, decree, order, statute, rule or regulation of any court or any
public, governmental or regulatory agency or body or any arbitrator having
jurisdiction over the Company or any of its subsidiaries, or any of their
respective properties or assets. No consent, approval, authorization, order,
registration, filing, qualification, license or permit of or with any court
or any public, governmental or regulatory agency or body having jurisdiction
over the Company or any of its subsidiaries, or any of their respective
properties or assets, is required for the execution, delivery and performance
of this Agreement, or the performance of the Indenture and the consummation
of the transactions contemplated hereby and thereby, including the issuance,
authentication, sale and delivery of the Securities, except for (1) such as
may be required under state and foreign securities or "blue sky" laws in
connection with the purchase and distribution of the Securities by the
Underwriters and (2) such as have been made or obtained or will be made or
obtained before the Closing Time under the 1933 Act and the Trust Indenture
Act.
(l) There are no holders of securities of the Company or any
subsidiary who, pursuant to any agreement, understanding or otherwise, have
any right to have securities of the Company or any subsidiary registered
under the 1933 Act in connection with the offering contemplated by the Final
Prospectus.
(m) Deloitte & Touche LLP, the accountants who certified the
financial statements included or incorporated by reference in the Company's
most recent Annual Report on Form 10-K which is included or incorporated by
reference in the Final Prospectus, were independent public accountants at the
time such statements were certified and during the periods covered by such
statements as required by the 1933 Act and the Regulations.
(n) The financial statements of the Company and its consolidated
subsidiaries included or incorporated by reference in the Registration
Statement and the Final Prospectus, and any amendment or supplement thereto,
present fairly the consolidated financial position of the Company and its
consolidated subsidiaries as at the dates indicated and the consolidated
results of their operations for the periods specified; and said financial
statements have been prepared in conformity with generally accepted
accounting principles in the United States (except to the extent that certain
footnote disclosures regarding any stub period may have been omitted in
accordance with the 1934 Act and the Regulations thereunder) applied on a
consistent basis.
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(o) Except as may be set forth or incorporated by reference in the
Final Prospectus, there is no action, suit or proceeding before or by any
court or governmental agency or body or arbitrator, domestic or foreign, now
pending, or, to the knowledge of the Company, threatened against or
affecting, the Company, Bear Stearns, BSSC or BSIL which is required to be
disclosed in the Registration Statement or the Final Prospectus or would have
a Material Adverse Effect or would otherwise be expected to materially and
adversely affect the consummation of the transactions contemplated hereby or
by the Indenture; and there are no contracts or documents of the Company,
Bear Stearns, BSSC or BSIL which are required to be filed as exhibits to,
disclosed in or summarized in the Registration Statement or the Final
Prospectus by the 1933 Act, the Regulations, the FSA or the Listing Rules,
which have not been (or which will not be, as the case may be) so filed,
disclosed or summarized.
(p) The Company, Bear Stearns, BSSC and BSIL possess such
certificates, authorities or permits issued by the appropriate state, federal
or national regulatory agencies or bodies in the United States, the United
Kingdom and elsewhere necessary to conduct the business now operated by them,
except where the failure to obtain such certificates, authorities or permits,
individually or in the aggregate, would not have a Material Adverse Effect.
None of the Company, Bear Stearns, BSSC or BSIL has received any notice of
proceedings relating to the revocation or modification of any such
certificate, authority or permit which, singly or in the aggregate, if the
subject of any unfavorable decision, ruling or finding, would materially and
adversely affect the financial condition, results of operations, business or
properties of the Company and its subsidiaries considered as one enterprise.
(q) The Securities have been rated "investment grade" by at least
one nationally recognized rating agency.
(r) The pricing and allocation of the Underwriters' Securities was
conducted through Bear Stearns' DAISS-SM- system and was conducted in
accordance with the rules set forth in Schedule VI attached hereto (the
"Auction Rules"). In addition, the Company acknowledges that the Specified
Pricing Index (as defined in the Auction Rules) and Maximum Clearing Spread
(as defined in the Auction Rules) are accurately reflected in the Term Sheet
(as defined in the Auction Rules).
2. PURCHASE, SALE AND DELIVERY OF THE SECURITIES. On the basis of the
representations, warranties, covenants, and agreements of the Company herein
contained, but subject to the terms and conditions herein set forth, the
Company agrees to sell to the several Underwriters, and the Underwriters,
severally and not jointly, agree to purchase from the Company, at the
purchase price set forth in Schedule II attached hereto, the principal amount
of Securities set forth opposite such Underwriters' respective names in
Schedule I hereto; provided, however, that the Company shall have no
obligation to sell any of the Underwriters' Securities unless the
Underwriters purchase all of the Underwriters' Securities. Securities to be
purchased by the Underwriters are herein sometimes called the "Underwriters'
Securities."
Except as otherwise provided in this Section 2, payment of the purchase
price for, and delivery of, the Underwriters' Securities to be purchased by
the Underwriters as set forth on Schedule I attached hereto shall be made at
the offices of Bear Stearns or at such other place in
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the New York City metropolitan area as you shall determine and advise the
Company in writing at least two business days prior to the Closing Time, on
the date and at the time specified in Schedule II attached hereto (unless
postponed in accordance with the provisions of Section 8), or such other time
and date as shall be agreed upon by you and the Company (such time and date
being referred to as the "Closing Time"). Payment shall be made to the
Company by wire transfer of same day funds payable to the account of the
Company specified by it against delivery to you of the Underwriters'
Securities to be purchased by the Underwriters. Such Securities shall be
represented by one or more global certificates (in the form provided in the
Indenture) which will be deposited with a custodian for, and registered in
the name of Cede & Co. ("Cede") as nominee of, The Depository Trust Company;
beneficial interests in such global certificates will be shown on the records
maintained by The Depository Trust Company for the accounts of its
participants, including the U.S. depositaries of Morgan Guaranty Trust
Company of New York, Brussels office, as operator of the Euroclear system
("Euroclear") and Cedelbank.
3. COVENANTS OF THE COMPANY. The Company covenants and agrees with the
several Underwriters and their affiliates as follows:
(a) The Company will use its best efforts to cause the Registration
Statement, if not effective at the Execution Time, to become effective as
promptly as possible. The Company will notify you immediately, and confirm
such notice in writing, (i) when the Registration Statement (including any
amendments thereto) becomes effective, (ii) of any request by the Commission
for any amendment of or supplement to the Registration Statement or the Final
Prospectus or for any additional information, (iii) of the issuance by the
Commission of a Stop Order suspending (or the effect of which is to suspend
or otherwise limit) the effectiveness of the Registration Statement
(including any post-effective amendment thereto) or of the initiation, or the
threatening, of any proceedings therefor, (iv) of the receipt of any comments
from the Commission and (v) of the receipt by the Company of any notification
with respect to the suspension or limitation of the qualification of the
Securities for sale in any jurisdiction (whether in the United States, the
United Kingdom or elsewhere) or the initiation, or threatening, of any
proceeding for that purpose. If the Commission or other authority shall
propose or enter a Stop Order at any time, the Company will make every
reasonable effort to prevent the issuance of any such Stop Order and, if
issued, to obtain the withdrawal of such Stop Order as soon as possible. The
Company will not file any amendment to the Registration Statement or any
supplement (including the Final Prospectus or any Preliminary Final
Prospectus) to the Basic Prospectus before or after the Effective Date unless
the Company has furnished you with a copy for your review prior to filing and
will not file any such proposed amendment or supplement to which you
reasonably object.
(b) During the time when a prospectus relating to the Securities is
required to be delivered hereunder or under the 1933 Act or the Regulations,
the Company will comply with all requirements imposed upon it by the 1933 Act
and the Trust Indenture Act, as now existing and as hereafter amended, and by
the Regulations, as from time to time in force, so far as necessary to permit
the continuance of sales of, or dealing in, the Securities in accordance with
the provisions thereof and the Final Prospectus. If at any time when a
prospectus relating to the Securities is required to be delivered under the
1933 Act any event shall have occurred as a result of which, in the judgment
of the Company, you or your counsel, the Final Prospectus as
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then amended or supplemented includes an untrue statement of a material fact
or omits to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it shall be necessary at
any time to amend or supplement the Final Prospectus or Registration
Statement to comply with the 1933 Act, the Trust Indenture Act or the
Regulations, or if there shall occur any material change affecting any of the
representations and warranties in Section 1, the Company will notify you
promptly and prepare and file with the Commission, the London Stock Exchange
and all other applicable bodies an appropriate amendment or supplement (in
form and substance satisfactory to you) which will correct such statement or
omission and will use its best efforts to have any amendment to the
Registration Statement declared effective as soon as possible and will
deliver to the several Underwriters, without charge, such number of copies
thereof as may be reasonably requested by the Underwriters; PROVIDED that the
Company will promptly notify you if such judgment has been reached by it.
(c) (i) The Company shall make an application for the Securities to
be listed on the London Stock Exchange. In connection with such application,
the Company shall use its best efforts to obtain such listing as promptly as
practicable and the Company shall furnish any and all documents, instruments,
information and undertakings that may be necessary or advisable in order to
obtain or maintain the listing.
(ii) The Company confirms it will use its best efforts to
ensure that the Final Prospectus together with any required supplemental
document will be approved by the London Stock Exchange as listing particulars
and shall ensure that such documents are delivered to the Registrar of
Companies in England and Wales for registration following approval by the
London Stock Exchange.
(iii) Without limiting the provisions of (b) above, if
after the preparation of the documents referred to in (ii) above for
submission to the London Stock Exchange and before the commencement of
dealings in the Securities following their admission to the Official List:
(A) there is a significant change affecting any
matter contained therein whose inclusion was required by section 146 of the
FSA or by the Listing Rules or by the London Stock Exchange; or
(B) a significant new matter arises the inclusion of
information in respect of which would have been so required if it had arisen
when such documents were prepared; the Company shall give to the Global
Coordinator (as defined in Schedule I hereto), on behalf of the Underwriters,
full information about the change or matter and shall publish such
supplementary listing particulars (in a form approved by the Global
Coordinator) as may be required by the London Stock Exchange, and shall
otherwise comply with sections 147 and 149 of the FSA and the Listing Rules
in that regard.
(iv) If the Securities cease to be listed or are not
listed on the London Stock Exchange, the Company shall use its best efforts
promptly to list the Securities on
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another stock exchange to be agreed between the Company and the Global
Coordinator on behalf of the Underwriters.
(d) The Company will promptly deliver to you a copy of the
Registration Statement, including exhibits and all amendments thereto, and
the Company will promptly deliver without charge to you such number of copies
of the Basic Prospectus, any Preliminary Final Prospectus, the Final
Prospectus, the Registration Statement, and all amendments of and supplements
to such documents (including any listing particulars and supplementary
listing particulars), if any, as may be reasonably requested by the
Underwriters.
(e) The Company will endeavor in good faith, in cooperation with
you to timely qualify the Securities for offering and sale under the
securities and other applicable laws of such jurisdictions as you may
designate and to maintain such qualification in effect for so long as
required for the distribution thereof; PROVIDED that in no event shall the
Company be obligated to qualify to do business in any jurisdiction where it
is not now so qualified or to take action which would subject it to general
service of process in any jurisdiction where it is not now so subject or to
conduct its business in a manner in which it is not currently so conducting
its business.
(f) The Company will make generally available (within the meaning
of Section 11(a) of the 1933 Act and Rule 158 of the Regulations) to its
security holders and to you as soon as practicable an earnings statement
which need not be audited but which shall satisfy the provisions of Section
11(a) of the 1933 Act and Rule 158 of the Regulations.
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(g) The Company, during the period when the Final Prospectus is
required to be delivered under the 1933 Act, will file promptly all documents
required to be filed with the Commission pursuant to Section 13 or 14 of the
1934 Act.
(h) During the period of one year after the date hereof, the
Company will furnish to you (i) as soon as publicly available, a copy of each
Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on
Form 8-K, annual report to stockholders and definitive proxy statement of the
Company filed with the Commission under the 1934 Act or mailed to
stockholders and (ii) from time to time, such other information concerning
the Company as you may reasonably request.
(i) The Company will apply the proceeds from the sale of the
Securities as set forth under the caption "Use of Proceeds" in the Final
Prospectus.
(j) Prior to the Closing Time, the Company shall furnish to you, as
soon as they have been prepared, copies of any unaudited interim consolidated
financial statements of the Company and its subsidiaries, for any periods
subsequent to the periods covered by the financial statements appearing or
incorporated by reference in the Registration Statement and the Final
Prospectus.
(k) The Company will comply with all provisions of all undertakings
contained in the Registration Statement.
(l) The Company consents to the use of the Final Prospectus or any
amendment or supplement thereto by you and by all dealers to whom the
Securities may be sold, both in connection with the offering or sale of the
Securities and for such period of time thereafter as the Final Prospectus is
required by law to be delivered in connection therewith.
4. PAYMENT OF EXPENSES. Whether or not the transactions contemplated in
this Agreement are consummated or this Agreement is terminated, the Company
hereby covenants and agrees with the several Underwriters that the Company
will pay or cause to be paid the following: (i) the fees, disbursements and
expenses of the Company's counsel and accountants in connection with the
registration of the Securities under the 1933 Act, the listing of the
Securities on the London Stock Exchange and all other expenses in connection
with the preparation, printing and filing of the Registration Statement, the
Basic Prospectus, any Preliminary Final Prospectus, the Final Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) all costs and expenses related
to the issuance, authentication, transfer and delivery of the Securities to
the Underwriters, including any transfer or other taxes payable thereon;
(iii) the cost of printing or producing this Agreement, the Indenture, any
Blue Sky and legal investment memoranda and any other documents in connection
with the offering, purchase, sale and delivery of the Securities; (iv) all
expenses in connection with the qualification of the Securities for offering
and sale under state securities laws or the securities or other applicable
laws of any other country as provided in Section 3(e) hereof, including the
fees and disbursements of counsel for the Underwriters (including, where
necessary, local counsel) in connection with such qualification and in
connection with the Blue Sky and legal investment memoranda; (v) any fees
charged by
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securities rating agencies for rating the Securities, if the Securities are
so rated; (vi) any filing fees incidental to any required reviews by the
National Association of Securities Dealers, Inc. (the "NASD") of the terms of
the sale of the Securities; (vii) the costs and expenses of any qualified
independent underwriter which may be required by the rules and regulations of
the NASD; (viii) all costs and expenses incidental to listing the Securities
on the New York Stock Exchange, Inc. ("NYSE") or other U.S. national
securities exchange (if applicable), the London Stock Exchange or any other
securities exchange; (ix) the cost of preparing certificates for the
Securities and the costs and charges of The Depository Trust Company and its
nominee for acting as depository for the Securities and otherwise effecting
any book entry ownership system for the Securities (including the costs and
charges of Euroclear and Cedelbank); (x) the costs and charges of the
Trustee, any transfer agent, calculation agent, registrar, paying agent or
disbursing agent; (xi) advertising and travel costs and expenses incurred in
connection with any roadshows; and (xii) all other costs and expenses
incident to the performance of the Company's obligations hereunder which are
not otherwise specifically provided for in this Section. It is understood,
however, that, except as provided in this Section and in Sections 6 and 7
hereof, the Underwriters will pay all of their own costs and expenses,
including the fees of their counsel, transfer taxes on the resale of any of
the Securities by them and any advertising expenses connected with any offers
they may make.
If this Agreement is entered into and the purchase of Securities by the
Underwriters pursuant to this Agreement is not consummated because any
condition to the obligations of the Underwriters set forth in Section 5
hereof is not satisfied, because of any termination pursuant to Section 10
hereof or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof
other than by reason of a default by the Underwriters, the Company will
reimburse the Underwriters severally upon demand for all out-of-pocket
expenses (including reasonable fees and disbursements of counsel) that shall
have been incurred by them in connection with the proposed purchase and sale
of the Securities.
5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters to purchase and pay for the Securities, as provided
herein, shall be subject to the continuing accuracy of the representations
and warranties of the Company, herein contained, as of the date hereof and at
the Closing Time, to the absence from any certificates, opinions, written
statements or letters furnished to you pursuant to this Section 5 or to
Kramer Levin Naftalis & Frankel LLP and Weil, Gotshal & Manges (collectively,
"Underwriters' Counsel") pursuant to this Section 5 of any misstatement or
omission, to the performance by the Company of its obligations hereunder in
all material respects and to the following additional conditions:
(a) If the Registration Statement has not become effective prior to
the Execution Time, the Registration Statement shall have become effective
not later than 6:00 p.m., New York City time, on the date of this Agreement
or such later date and time as shall be consented to in writing by you, and,
if filing of the Final Prospectus, or any supplement thereto, is required
pursuant to Rule 424(b), the Final Prospectus, and any such supplement, shall
have been filed in the manner and within the time period required by Rule
424(b).
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(b) At the Closing Time (i) no Stop Order suspending the
effectiveness of the Registration Statement or any part thereof shall have
been issued under the 1933 Act or other applicable law, and no proceeding
under the 1933 Act or the 1934 Act therefor shall have been initiated or
threatened by the Commission, or, with respect to the filing of any Form 8-A
under the 1934 Act, by any U.S. national securities exchange; and all
requests for additional information on the part of the Commission shall have
been complied with or such requests shall have been otherwise satisfied; (ii)
the rating assigned by any U.S. nationally recognized securities rating
agency to any debt securities, preferred stock or other obligations of the
Company as of the date of this Agreement shall not have been lowered since
the execution of this Agreement and no such agency shall have publicly
announced since the execution of this Agreement that it has under
surveillance or review, with possible negative implications, its rating of
any of the debt securities or preferred stock of the Company; and (iii) since
the respective dates as of which information is given in the Registration
Statement and the Final Prospectus, except as otherwise stated therein or
contemplated thereby, there shall not have been any material adverse change
in, or any adverse development which materially affects, the financial
condition, results of operations, business or properties of the Company and
its subsidiaries considered as one enterprise, the effect of which is in your
reasonable judgment so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Securities on the terms and in the manner contemplated in the Final
Prospectus.
(c) The Company will promptly make application for the Securities
to be admitted to the Official List of the London Stock Exchange.
(d) At the Closing Time, you shall have received the opinion of
Cadwalader, Wickersham & Taft, counsel for the Company, dated the date of
delivery, substantially in the form set forth in Schedule III hereto,
addressed to the Underwriters and in form and scope reasonably satisfactory
to Underwriters' Counsel.
(e) At the Closing Time, you shall have received the opinion of
Mark E. Lehman, Esq., Senior Managing Director of the Company's Legal &
Compliance Department, dated the date of delivery, substantially in the form
set forth in Schedule IV hereto, addressed to the Underwriters and in form
and scope reasonably satisfactory to Underwriters' Counsel.
(f) At the Closing Time, you shall have received a certificate of
the Chief Financial Officer, the Controller or Chairman of the Board of the
Company, dated the date of delivery, to the effect that the conditions set
forth in subsections (a) and (b) of this Section 5 have been satisfied, that
as of the date hereof and at the date of delivery, the representations and
warranties of the Company set forth in Section 1 hereof are accurate, and
that at the date of delivery, the obligations of the Company to be performed
hereunder on or prior thereto have been duly performed in all material
respects.
(g) At each of the Execution Time and the Closing Time, you shall
have received a letter (which may be an update or "bringdown" letter) from
Deloitte & Touche LLP, independent public accountants for the Company and its
subsidiaries, dated the date of delivery, substantially in content and
substance as set forth in Schedule V hereto, addressed to the Underwriters
and in form and scope reasonably satisfactory to you.
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<PAGE>
(h) The Underwriters shall have received from Underwriters' Counsel
opinions, dated the Closing Time, with respect to the issuance and sale of
the Securities, the Registration Statement, the Final Prospectus, and any
amendments or supplements to the Registration Statement or Final Prospectus
and such other related matters, as you may reasonably require, and the
Company shall have furnished to Underwriters' Counsel such documents as they
request for the purpose of enabling them to pass upon such matters.
(i) All proceedings taken in connection with the sale of the
Securities as contemplated herein shall be satisfactory in form and scope to
you and to Underwriters' Counsel, and prior to the Closing Time, the Company
shall have furnished to you such further information, certificates and
documents as you may reasonably request.
(j) The NASD, upon review of the terms of the public offering of
the Securities, shall have no objections to the fairness of the underwriting
terms and arrangements of the offering.
(k) The resolutions required by Section 3.1 of the Indenture
relating to the Securities shall have been adopted by the Board of Directors
of the Company or an authorized committee thereof.
If any of the conditions specified in this Section 5 shall not have been
fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to you or to
Underwriters' Counsel pursuant to this Section 5 shall not be in all material
respects reasonably satisfactory in form and scope to you and to
Underwriters' Counsel, all your obligations hereunder may be cancelled by you
at, or at any time prior to, the Closing Time. Notice of such cancellation
shall be given to the Company in writing, or by telephone, telex or telecopy,
confirmed in writing.
6. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, their affiliates (if any) and each person, if any, who controls
any Underwriter within the meaning of Section 15 of the 1933 Act or Section
20(a) of the 1934 Act, against any and all losses, liabilities, claims,
damages and out-of-pocket expenses whatsoever (including but not limited to
attorneys' fees and any and all expenses whatsoever reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in
settlement of any claim or litigation), to which you or any such person may
become subject under the 1933 Act, the 1934 Act, the FSA or otherwise,
insofar as such losses, liabilities, claims, damages or expenses (or actions
in respect thereof) arise out of or are based upon (i) any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement (other than that part of the Registration Statement which shall
constitute the Statement of Eligibility and Qualification on Form T-1 of the
Trustee under the Trust Indenture Act, except for statements or omissions in
such Registration Statement made in reliance upon information furnished to
the Trustee by or on behalf of the Company for inclusion therein), or any
related Basic Prospectus, Preliminary Final Prospectus, or Final Prospectus,
or in any supplement thereto or amendment thereof, or arise out
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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 (in the case of the Basic Prospectus, any Preliminary
Final Prospectus or the Final Prospectus, in light of the circumstances under
which they were made) not misleading or (ii) any breach or alleged breach of
any representation, warranty, covenant or agreement of the Company contained
in this Agreement; PROVIDED, HOWEVER, that the Company will not be liable to
any Underwriter or any person so controlling such Underwriter in any such
case to the extent, but only to the extent, that any such loss, liability,
claim, damage or expense arises out of or is based upon (x) any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished
to the Company by or on behalf of any Underwriter through you expressly for
use therein, such written information being as set forth in the penultimate
sentence of subsection (b) below or (y) any failure of such Underwriter to
deliver the Final Prospectus to a purchaser of Securities as required by
applicable law. This indemnity agreement will be in addition to any liability
which the Company may otherwise have, including under this Agreement.
(b) Each Underwriter severally, and not jointly, agrees to
indemnify and hold harmless the Company, each of its directors, each of its
officers who shall have signed the Registration Statement, and each other
person, if any, who controls the Company within the meaning of Section 15 of
the 1933 Act or Section 20(a) of the 1934 Act against any losses,
liabilities, claims, damages and out-of-pocket expenses whatsoever (including
but not limited to attorneys' fees and any and all out-of-pocket expenses
whatsoever reasonably incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever and
any and all amounts paid in settlement of any claim or litigation), to which
they or any of them may become subject under the 1933 Act, the 1934 Act, the
FSA or otherwise, insofar as such losses, liabilities, claims, damages or
expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement, or any related Basic Prospectus, any Preliminary
Final Prospectus or the Final Prospectus, or in any amendment thereof or
supplement thereto, 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 (in the case of the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus, in
light of the circumstances under which they were made) not misleading, in
each case to the extent, but only to the extent, that any such loss,
liability, claim, damage or expense arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such Underwriter through you
expressly for use therein. For all purposes of this Agreement, the
identification of the name of, and the principal amount of Notes to be
purchased by, each of the Underwriters, the amounts of the selling concession
and reallowance, and the stabilization language set forth under the heading
"Underwriting" in the Final Prospectus constitute the only information
furnished in writing by or on behalf of any Underwriter expressly for
inclusion in any Basic Prospectus or Preliminary Final Prospectus, the Final
Prospectus, or the Registration Statement (as from time to time amended or
supplemented), or any amendment or supplement thereto. This indemnity will be
in addition to any liability which any Underwriter may otherwise have,
including under this Agreement; PROVIDED, HOWEVER,
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that in no case shall any Underwriter be liable or responsible for any amount
in excess of the underwriting discounts and commissions received by such
Underwriter.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but
the failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 6 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may have otherwise). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel satisfactory to
such indemnified party. Notwithstanding the foregoing, the indemnified party
or parties shall have the right to employ its or their own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense
of such indemnified party or parties unless (i) the employment of such
counsel shall have been authorized in writing by one of the indemnifying
parties in connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel to have charge of the defense of such
action within a reasonable time after notice of commencement of the action,
or (iii) such indemnified party or parties shall have reasonably concluded
that there may be defenses available to it or them which are different from
or additional to those available to one or all of the indemnifying parties
(in which case the indemnifying parties shall not have the right to direct
the defense of such action on behalf of the indemnified party or parties, it
being understood, however, that the indemnifying party shall not, in
connection with any one such claim, action or proceeding or separate but
substantially similar or related claims, actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm (together
with appropriate local counsel) at any time for the indemnified party or
parties, which firm shall be designated in writing by the indemnified party
or parties, unless such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are
different from or additional to those available to one or all of the other
indemnified party or parties (in which case the indemnifying party shall be
liable for the fees and expenses of only one additional separate firm
(together with appropriate local counsel) for such indemnified party or
parties at any time)), in any of which events such fees and expenses shall be
borne by the indemnifying parties. Anything in this Section 6 to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement
of any claim or action effected without its written consent; PROVIDED,
HOWEVER, that such consent was not unreasonably withheld.
7. CONTRIBUTION. In order to provide for contribution in circumstances
in which the indemnification provided for in Section 6 hereof is for any
reason held to be unavailable from the Company or is insufficient to hold
harmless a party indemnified thereunder, the Company and the Underwriters
shall contribute to the aggregate losses, claims, damages, liabilities and
out-of-pocket expenses of the nature contemplated by such indemnification
provision (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after
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deducting in the case of losses, claims, damages, liabilities and expenses
suffered by the Company, any contribution received by the Company from
persons, other than the Underwriters, who may also be liable for
contribution, including persons who control the Company within the meaning of
Section 15 of the 1933 Act or Section 20(a) of the 1934 Act, officers of the
Company who signed the Registration Statement and directors of the Company)
to which the Company and one or more of the Underwriters may be subject, in
such proportions 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 Securities or, if such allocation is not permitted by
applicable law or indemnification is not available as a result of the
indemnifying party not having received notice as provided in Section 6
hereof, in such proportion as is appropriate to reflect not only the relative
benefits referred to 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, liabilities or
expenses, 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 proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company bear to
the underwriting discounts and commissions received by the Underwriters,
respectively, in each case as set forth in the table on the cover page of the
Final Prospectus. The relative fault of the Company on the one hand and of
the Underwriters on the other 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 statement or omission. The Company and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this
Section 7 were determined by pro rata allocation (even if the Underwriters
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. Notwithstanding the provisions of this Section 7, (i) in
no case shall any Underwriter be liable or responsible for any amount in
excess of the underwriting discount applicable to the Securities purchased by
such Underwriter hereunder, and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the 1933
Act or Section 20(a) of the 1934 Act shall have the same rights to
contribution as such Underwriter, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20(a) of
the 1934 Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to clauses (i)
and (ii) of the preceding sentence of this Section 7. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section,
notify such party or parties from whom contribution may be sought, but the
omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they
may have under this Section 7 or otherwise. No party shall be liable for
contribution with respect to any action or claim settled without its consent;
PROVIDED, HOWEVER, that such consent was not unreasonably withheld.
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8. DEFAULT BY AN UNDERWRITER, SELLING RESTRICTIONS AND OTHER UNDERWRITER
UNDERTAKINGS.
(a) If any Underwriter or Underwriters shall default at the Closing
Time, in its or their obligation to purchase Securities hereunder and if the
principal amount of Securities with respect to which such default relates
does not (after giving effect to arrangements, if any, made by you pursuant
to subsection (b) below) exceed in the aggregate 10% of the principal amount
of Securities which all Underwriters have agreed to purchase hereunder, then
such principal amount of Securities to which the default relates shall be
purchased by the non-defaulting Underwriters in proportion to their
respective commitments hereunder.
(b) If such default relates to more than 10% of the principal
amount of Securities, you may in your discretion arrange for yourself or for
another party or parties (including any non-defaulting Underwriter or
Underwriters who so agree) to purchase such principal amount of Securities to
which such default relates on the terms contained herein. If within five
calendar days after such a default you do not arrange for the purchase of
such principal amount of Securities to which such default relates as provided
in this Section 8, this Agreement shall thereupon terminate, without
liability on the part of the Company with respect thereto (except in each
case as provided in Sections 4, 6 and 7 hereof) or the several Underwriters
with respect thereto, but nothing in this Agreement shall relieve a
defaulting Underwriter or Underwriters of its or their liability, if any, to
the other several Underwriters and the Company for damages occasioned by its
or their default hereunder.
(c) If the principal amount of Securities to which the default
relates is to be purchased by the non-defaulting Underwriters, or is to be
purchased by another party or parties as aforesaid, you or the Company shall
have the right to postpone the Closing Time for a period, not exceeding five
Business Days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Final Prospectus or in any
other documents and arrangements, and the Company agrees to file promptly any
amendment or supplement to the Registration Statement or the Final Prospectus
which, in the opinion of Underwriters' Counsel, may thereby be made necessary
or advisable. The term "Underwriter" as used in this Agreement shall include
any party substituted under this Section 8 with like effect as if it had
originally been a party to this Agreement with respect to such Securities and
the term "Business Day" as used in this Agreement shall mean a day on which
commercial banks and foreign exchange markets settle payments in New York and
London.
(d) (i) Each Underwriter represents and agrees that:
(I) it has not offered or sold and will not offer or sell
any Securities to persons in the United Kingdom prior to the earlier of the
expiry of the period of six months from the Closing Time and the admission of
the Securities to listing in accordance with Part IV of the FSA, except to
persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the purposes
of their businesses or otherwise in circumstances which have not resulted and
will not result in an offer
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to the public in the United Kingdom within the meaning of the Public Offers
of Securities Regulations 1995 or the FSA;
(II) it has complied and will comply with all applicable
provisions of the FSA with respect to anything done by it in relation to the
Securities in, from or otherwise involving the United Kingdom; and
(III) it has only issued or passed on and will only issue
or pass on in the United Kingdom any document received by it in connection
with the issue of the Securities, other than any document which consists of
or any part of listing particulars, supplementary listing particulars or any
other document required or permitted to be published by the Listing Rules, to
a person who is of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a
person to whom the document may otherwise lawfully be issued or passed on.
(ii) No action (except in connection with the application for
approval of the Final Prospectus and the Basic Prospectus together with any
requisite supplementary document as listing particulars by the London Stock
Exchange and (when appropriate) delivery of copies thereof to the Registrar
of Companies in England and Wales) has been (or will be) taken in any
jurisdiction by the Company or any of the Underwriters that would, or is
intended to, permit a public offer of the Securities or possession or
distribution of the Final Prospectus or the Basic Prospectus in any country
or jurisdiction (except the United States) where, or in any circumstances in
which, any such action for that purpose is required. Accordingly, each
Underwriter undertakes that it will not, directly or indirectly, offer or
sell any Securities or distribute or publish any offering circular,
prospectus, form of application, advertisement or other document or
information in any country or jurisdiction except under circumstances that
will to the best of its knowledge and belief, result in compliance with any
applicable securities laws and regulations and all offers and sales of
Securities by the Underwriter will be made on the same terms.
(iii) Without prejudice to the generality of subsection (ii)
above, each Underwriter agrees that it will obtain any consent, approval or
permission which is, to the best of its knowledge and belief, required for
the offer, purchase, sale or delivery by it of Securities under the laws and
regulations in force in any jurisdiction to which it is subject or in which
it makes such offers, purchases, sales or deliveries and it will, to the best
of its knowledge and belief, comply with all such laws and regulations.
9. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS. All representations,
warranties, covenants and agreements of the Underwriters and the Company
contained in this Agreement, including the representations and warranties
contained in Section 1, the agreements contained in Section 4, the indemnity
agreements contained in Section 6 and the contribution agreements contained
in Section 7, shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any Underwriter or any
controlling person thereof or by or on behalf of the Company, any of its
officers and directors or any controlling person thereof, and shall survive
delivery of and payment for the Securities to and by the several
Underwriters. The representations contained in Section 1 and the agreements
contained in
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Sections 4, 6, 7, 9 and 13 hereof shall survive the termination of this
Agreement including pursuant to Section 10 hereof.
10. TERMINATION.
(a) You shall have the right to terminate this Agreement at any time prior
to the Closing Time if, after the date hereof: (i) any domestic or international
event or act or occurrence has materially disrupted, or in your opinion will in
the immediate future materially disrupt, the securities markets in the United
States or the United Kingdom; (ii) a general suspension of, or a general
limitation on prices for, trading in securities on the NYSE, the American Stock
Exchange, in the over-the-counter market or on the London Stock Exchange shall
have occurred; (iii) a banking moratorium shall have been declared either by
Federal or New York State authorities or the Bank of England; (iv) there shall
have occurred any outbreak or material escalation of hostilities or other
calamity or crisis the effect of which on the financial markets of the United
States or the United Kingdom or on the United States or the United Kingdom is
such as to make it, in the judgment of the Underwriters, impracticable to market
the Securities; (v) any restriction materially adversely affecting the
distribution of the Securities which was not in effect on the date hereof shall
have become effective; or (vi) there shall have been such change in the market
for the securities of the Company or securities in general or in national or
international political, financial or economic conditions or currency exchanges
rates or exchange controls as in your judgment makes it inadvisable to proceed
with the offering, sale and delivery of the Securities on the terms contemplated
by the Final Prospectus.
(b) Any notice of termination pursuant to this Section 10 shall be by
telephone, telex, or telecopy, confirmed in writing by letter.
11. STABILIZATION. If the Global Coordinator, on behalf of the
Underwriters, in connection with the distribution of the Securities or in order
to facilitate the offering of the Securities offers Securities in excess of the
aggregate principal amount to be issued or effects transactions with a view to
stabilizing, maintaining or otherwise affecting the market price of the
Securities at levels other than those which otherwise prevail in the open
market, it shall not in doing so be deemed to act as an agent of the Company.
The Company will not as a result of any action taken by the Global Coordinator,
on behalf of the Underwriters, under this Section be obliged to issue Securities
in excess of the aggregate amount of Securities to be issued under this
Agreement, nor shall the Company be liable for any loss, or entitled to any
profit, arising from any excess offers or stabilization.
12. NOTICE. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to you, shall be
mailed, delivered, or telexed or telecopied and confirmed in writing, to such
Underwriter c/o Bear, Stearns & Co. Inc., 245 Park Avenue, New York, NY 10167,
Attention: Corporate Finance Department; and, if sent to the Company, shall be
mailed, delivered, or telexed or telecopied and confirmed in writing to the
Company, 245 Park Avenue, New York, NY 10167, Attention: Chief Financial
Officer.
13. PARTIES. This Agreement shall inure solely to the benefit of, and shall
be binding upon, the several Underwriters, the Company and the controlling
persons, directors,
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<PAGE>
officers, employees and agents referred to in Sections 6 and 7, and their
respective successors and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provision herein contained.
The term "successors and assigns" shall not include a purchaser, in its
capacity as such, of Securities from any of the Underwriters. Notwithstanding
anything contained in this Agreement to the contrary, all of the obligations
of the Underwriters hereunder are several and not joint.
14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15. CONSTRUCTION. This Agreement, in respect of which time shall be of the
essence, shall be construed in accordance with the laws of the State of New York
without regard to principles of conflict of law.
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<PAGE>
If the foregoing correctly sets forth the understanding between you and the
Company please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between us.
Very truly yours,
THE BEAR STEARNS COMPANIES INC.
By:____________________________
Accepted as of the date first
above written.
BEAR, STEARNS & CO. INC.
BEAR, STEARNS INTERNATIONAL LIMITED
By: BEAR, STEARNS & CO. INC.
By:_____________________________
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<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
OF SECURITIES
UNDERWRITERS TO BE PURCHASED
------------ ----------------
<S> <C>
Bear, Stearns & Co. Inc. (the "Global Coordinator").....................................$______________
Bear, Stearns International Limited......................................................______________
Total..........................................................................$______________
</TABLE>
I-1 -
<PAGE>
SCHEDULE II
Registration Statement: No. 333-
SECURITIES:
----------
Title, Purchase Price and Description of Securities:
Title: ____% Global Notes Due 200_
Principal Amount: U.S. $___________
Interest Rate: _____% Payable semi-annually, commencing _____________
Date of Maturity: _______________
Form of Securities: Registered
Purchase Price: __________% of principal amount
Public Offering Price: ___________% of principal amount
Sinking Fund Provisions: NONE
Redemption Provisions: Not redeemable except if certain events
involving U.S. taxation occur
Other Provisions: As described in the Final Prospectus
Closing Date, Time and Location:
Date: __________, 2000
Time: 10:00 A.M.
Location: Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
Whether Securities to be represented by separate certificates
rather than a global certificate: GLOBAL
Restrictions on Resale by Underwriter: NONE
II-1 -
<PAGE>
SCHEDULE III
1. Each of the Company, Bear, Stearns & Co. Inc. ("Bear Stearns") and Bear,
Stearns Securities Corp. ("BSSC") is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and each
of Bear, Stearns International Limited ("BSIL") and Bear Stearns Holdings
Limited ("BSHL") is a corporation duly incorporated in Great Britain and
registered in England and Wales, and each has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as described in the Final Prospectus. Each of the Company, Bear Stearns and BSSC
is duly qualified to transact business and is in good standing as a foreign
corporation in the State of New York and each of BSIL and BSHL is duly qualified
to transact business and is in good standing as a foreign corporation in each
jurisdiction in which such qualification is required, whether by reason of
ownership or leasing of property or conduct of business, except where failure to
so qualify would not have a Material Adverse Effect. The opinion in the previous
sentence, as to the good standing of the Company, Bear Stearns and BSSC, is
based solely on good standing certificates from the Secretary of State of New
York, through the date hereof, and no opinion is given as to the payment of New
York franchise taxes. All of the outstanding shares of capital stock of Bear
Stearns and BSSC are owned of record and, to our knowledge, beneficially by the
Company and by Bear Stearns, respectively, all of the outstanding shares of
capital stock of BSIL is owned of record and, to our knowledge, beneficially by
BSHL; and all of the outstanding shares of capital stock of BSHL is owned of
record and, to our knowledge, beneficially by the Company, in each case free and
clear, to our knowledge, of any lien, security interest or other encumbrance.
2. The execution, delivery and performance by the Company of the Indenture
and the consummation by the Company of the transactions contemplated thereby
have been duly authorized by all necessary corporate action on the part of the
Company. The Indenture has been duly and validly executed and delivered by the
Company and (assuming the due authorization, execution and delivery thereof by
the Trustee) constitutes the legal, valid and binding obligation of the Company,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
3. The Company has all requisite corporate power to authorize, create and
issue the Securities, and the Securities, when duly executed by the Company,
authenticated by the Trustee pursuant to the terms of the Indenture, and sold
and delivered by the Company pursuant to the Underwriting Agreement, will be
duly authorized and legally issued and will constitute binding obligations of
the Company entitled to the benefits of the Indenture in accordance with the
terms of such Securities, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity). The statements in the Final Prospectus under
the captions "Description of Debt Securities" and "Description of the Notes"
III-1 -
<PAGE>
insofar as they purport to summarize certain provisions of documents
specifically referred to therein, are accurate summaries in all material
respects of such provisions.
4. The Company has all requisite corporate power and authority to execute
and deliver the Underwriting Agreement and to perform its obligations
thereunder. The execution, delivery and performance by the Company of the
Underwriting Agreement and the consummation by the Company of the transactions
contemplated thereby have been duly authorized by all necessary corporate action
on the part of the Company. The Underwriting Agreement has been duly and validly
executed and delivered by the Company and (assuming the due authorization,
execution and delivery by the other parties thereto), constitutes the legal,
valid and binding obligation of the Company, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity), and except to the extent that rights to
indemnification and contribution thereunder may be limited by federal or state
securities laws or public policy relating thereto.
5. The execution of the Underwriting Agreement, the delivery of the
Underwriting Agreement and the Indenture, the consummation of the transactions
contemplated thereby and compliance by the Company with any of the provisions
thereof will not (i) conflict with or violate any of the terms, conditions or
provisions of the Certificate of Incorporation or By-Laws of the Company, (ii)
conflict with, or result in a breach of any of the terms of, or constitute a
default (or an event which with notice or lapse of time, or both, would
constitute a default) or require consent under, or result in imposition of, any
lien or encumbrance upon any property or assets of the Company pursuant to the
terms of, any material document, agreement or other instrument of which we are
aware to which the Company is a party or by which it is bound, (iii) conflict
with or violate any New York, Delaware corporate or federal law or regulation
(other than federal and state securities or blue sky-laws, as to which we
express no opinion in this sentence), or (iv) conflict with or violate any
judgment, writ, injunction, decree, order or ruling of any court or governmental
authority binding on the Company of which we are aware. No consent, approval,
waiver, license or authorization or other action by or filing with any New York,
Delaware corporate or federal governmental authority is required in connection
with the execution and delivery by the Company of the Underwriting Agreement and
the Indenture, or the consummation by the Company of the transactions
contemplated thereby except for those that (i) may be required by Rule 424(b)
promulgated under the 1933 Act, (ii) may be required under state securities or
blue sky laws, as to which we express no opinion, or (iii) have been made or
obtained under the 1933 Act and the Trust Indenture Act.
6. The Registration Statement, as of its effective date, and the Final
Prospectus, as of its issue date and as of the date hereof, complied and comply
as to form in all material respects with the requirements of the 1933 Act and
the Trust Indenture Act and the rules and regulations thereunder (except that no
opinion is expressed herein with respect to the financial statements and notes
thereto, the financial statement schedules and the other financial,
III-2 -
<PAGE>
statistical and accounting data included or incorporated by reference therein
or that should have been included therein).
7. To our knowledge, based upon telephonic confirmation from the
Commission, the Registration Statement was declared effective under the 1933 Act
and, to our knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings therefor have been
initiated or threatened by the Commission. Any required filing of the Basic
Prospectus, any Preliminary Final Prospectus and the Final Prospectus, and any
supplements thereto, pursuant to Rule 424(b) has been made in the manner and
within the time period required by Rule 424(b).
8. To our knowledge, based upon telephonic confirmation from the
Commission, the Indenture has been qualified under the Trust Indenture Act.
9. The statements made in the Final Prospectus, under the caption, "Certain
U.S. Federal Income Tax Considerations" insofar as such statements purport to
summarize certain federal income tax laws of the United States, constitute a
fair summary of the principal U.S. federal income tax consequences of an
investment in the Securities. This opinion is based upon current law, which is
subject to change, possibly with retroactive effect, and we assume no obligation
to update or supplement this letter to reflect any facts, circumstances, laws,
rules or regulations, or any changes thereto, or any court or other authority or
body decisions or governmental or regulatory authority determinations which may
hereafter occur or come to our attention. Further, there can be no assurance
that the Internal Revenue Service will not take a contrary position.
We have not ourselves checked the accuracy, completeness or fairness of, or
otherwise verified, the information contained in the Registration Statement or
the Final Prospectus, and we do not pass upon or assume any responsibility
therefor. However, in the course of our review of the Registration Statement and
the Final Prospectus, we have attended certain conferences and participated in
the conversations with representatives of the Company, representatives of the
Underwriters and representatives of Kramer Levin Naftalis & Frankel LLP, counsel
for the Underwriters, and representatives of the Company's independent public
accountants. On the basis of the information which we gained in the course of
the representation referred to above and our examination of the documents
referred to in this opinion letter, considered in light of our understanding of
applicable law and the experience we have gained through our practice, nothing
has come to our attention in the course of our review of the Registration
Statement and the Final Prospectus which causes us to believe that, as of the
effective date of the Registration Statement, the Registration Statement
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or that as of its date or as of the date hereof, the Final
Prospectus (including any filing under the 1934 Act explicitly referenced as to
be filed under the caption "Where You Can Find More Information" in the Final
Prospectus) contained or contains any untrue statement of a material fact or
omitted 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; it being understood that we express no view as to the
adequacy or accuracy of the
III-3 -
<PAGE>
financial, numerical, statistical or quantitative information included or
incorporated by reference in the Registration Statement or the Final
Prospectus.
III-4 -
<PAGE>
SCHEDULE IV
To the best of my knowledge, there are no legal or governmental proceedings
pending or threatened that are required to be disclosed in the Registration
Statement, other than those disclosed therein, and there is no pending legal or
governmental proceeding to which the Company or any subsidiary of the Company is
a party or of which any of their property is the subject that is not described
in the Registration Statement, including ordinary routine litigation incidental
to the business, which, if adversely decided, will have a material adverse
effect upon the operations, business or assets of the Company and its
subsidiaries considered as one enterprise.
IV-1 -
<PAGE>
SCHEDULE V
1. We are independent certified public accountants with respect to the Company
and its subsidiaries within the meaning of the Act and the applicable rules
and regulations adopted by the Securities Exchange Commission ("SEC").
2. In our opinion, the consolidated financial statements and financial
statement schedules audited by us and incorporated by reference in the
Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the Act and the Securities Exchange
Act of 1934 (the "1934 Act") and the related rules and regulations adopted
by the SEC.
3. We have not audited any financial statements of the Company as of any date
or for any period subsequent to ________; although we have conducted an
audit for the years ended ________ and ________, the purpose (and
therefore the scope) of such audits was to enable us to express our
opinion on the consolidated financial statements as of ________ and
________, and for the years ended, but not on the consolidated financial
statements for any interim period within such years. Therefore, we are
unable to and do not express any opinion on the unaudited consolidated
statement of financial condition as of ________, ________, and ________
and the unaudited consolidated statements of income and cash flows
for the three-month periods ended ________and ________, the three-month
periods and six-month periods ended ________ and ________, and the
three-month periods and the nine-month periods ended ________ and ________
included in the Company's quarterly report on Form 10-Q for the quarters
ended ________, ________, as amended, and ________, filed with the
Securities and Exchange Commission (the "Commission") and incorporated by
reference in the Registration Statement; or on the financial position,
results of operations, or cash flows as of any other date or for period
subsequent to ________.
4. For the purpose of this letter, we have read the minutes of the meetings
and consents of the stockholders, the Board of Directors of the Company,
Bear, Stearns & Co., Inc. and Bear, Stearns Securities Corp., as well as
the minutes of the meetings of the Executive Committee of the Board of
Directors of the Company for the period from ________ through ________, as
set forth in the minutes books at ________. We have also read the draft
minutes of the ________ meetings of the Executive Committee of the Board of
Directors of Bear, Stearns & Co., Inc. and the Executive Committee of the
Board of Directors of the Company. Officials of the Company have advised us
that the minutes of all such meetings through ________, except for the
draft minutes noted above, were set forth therein; we have carried out
other procedures to ________ as follows:
(a) With respect to the three-month periods ended ________ and ________
and the three-month periods and the six-month periods ended ________
and ________ and the three-month periods and the nine-month periods
ended ________ and ________, we have:
V-1 -
<PAGE>
(i) Performed the procedures specified by the American Institute of
Certified Public Accountants for a review of interim financial
information as described in SAG No. 71, INTERIM FINANCIAL
INFORMATION, on the unaudited consolidated statement of financial
condition as of ________, ________ and ________ and the unaudited
consolidated statements of income and cash flows for the
three-month periods ended ________ and ________, and the
three-month periods and the six-month periods ended ________ and
________, and the three-month periods and the nine-month periods
ended ________ and ________ included in the Company's quarterly
report on Form 10-Q for the quarters ended ________, ________ as
amended, and ________, incorporated by reference in the
Registration Statement.
(ii) Inquired of certain officials of the Company who have
responsibility for financial and accounting matters whether the
unaudited consolidated financial statements referred to in (a)(i)
comply as to form in all material respects with the applicable
accounting requirements of the 1934 Act as it applies to Form
10-Q and the related rules and regulations adopted by the SEC and
are stated on a basis substantially consistent with that of the
audited consolidated financial statements incorporated by
reference in the Registration Statement.
(b) With respect to the period from ________ to ________, we have:
(i) Read the unaudited consolidated statement of financial condition
of the Company and its subsidiaries as of ________ and ________
and the unaudited consolidated statement of income of the Company
and its subsidiaries for the period ended ________, furnished
to us by the Company. Officials of the Company have advised
us that no unaudited consolidated statement of financial
condition for any period subsequent to ________ or unaudited
consolidated statement of income for any period subsequent to
________ was available.
(ii) Inquired of certain officials of the Company who have
responsibility for financial and accounting matters whether the
unaudited consolidated financial statements referred to in b(i)
are stated on a basis substantially consistent with that of the
audited consolidated financial statements incorporated by
reference in the Registration Statement.
The foregoing procedures do not constitute an audit conducted in accordance with
generally accepted auditing standards. Also, they would not necessarily reveal
matters of significance with respect to the comments in the following paragraph.
Accordingly, we make no representations about the sufficiency of the foregoing
procedures for your purposes.
5. Nothing came to our attention as a result of the foregoing procedures,
however, that caused us to believe that:
V-2 -
<PAGE>
(a) (i) Any material modifications should be made to the unaudited
consolidated financial statements described in 4(a)(i),
incorporated by reference in the Registration Statement, for them
to be in conformity with generally accepted accounting
principles.
(ii) The unaudited consolidated financial statements described in
4(a)(i) do not comply as to form in all material respects with
the applicable accounting requirements of the 1934 Act as it
applies to Form 10-Q and the related rules and regulations
adopted by the SEC.
(b) (i) For the period ________ to ________, there were any decreases,
as compared with the corresponding period in the preceding
year, in consolidated revenues, revenues net of interest
expense, or net income, except in all instances for changes,
increases, or decreases that the Registration Statement
disclosed have occurred or may occur. At ________ there was no
change in the preferred or common stock (other than the purchases
of treasury shares and the issuance of shares out of treasury
stock), new issuances of long-term debt directly by the Company
or decrease in stockholders' equity of the Company as compared
with the amounts shown in the ________ unaudited consolidated
statement of financial condition incorporated by reference in the
Registration Statement except for new issuances of long-term debt
by the Company subsequent to _______________. We have been
informed by the Company that there has been an increase in
short-term indebtedness subsequent to ________ due to additional
net bank borrowings, commercial paper, and medium-term notes and
other of approximately $________ as of ________.
6. As mentioned in 4(b), Company officials have advised us that no unaudited
consolidated statement of financial condition as of any date subsequent to
________ and no unaudited consolidated statement of income for any period
subsequent to ________ is available; accordingly, the procedures carried
out by us with respect to changes in unaudited consolidated statement of
financial condition after ________ and the unaudited consolidated statement
of income after ________, have, of necessity, been even more limited than
those with respect to the earlier periods referred to in 4. We have
inquired of certain officials of the Company who have responsibility for
financial and accounting matters whether at ________ there was any
change in the preferred or common stock (other than purchases of
treasury stock and the issuance of shares out of treasury stock),
increase in long-term indebtedness or decrease in consolidated
stockholders' equity of the Company as compared with amounts shown on
the ________ unaudited consolidated statement of financial condition
incorporated by reference in the Registration Statement. On the basis of
these inquiries and our reading of minutes as described in 4, nothing
came to our attention that caused us to believe that there was any such
change, increase, or decrease, except in all instances for changes,
increases, or decreases that the Registration Statement discloses have
occurred or may occur and except as described in 5(b)(i) above and as
described in the following sentences. We have been informed by the
V-3 -
<PAGE>
Company that there has been an increase in short-term indebtedness
subsequent to ________ due to additional net bank borrowings, commercial
paper, and medium-term notes and other of approximately $________
due ________. We have been informed by the Company that there has been an
increase in long-term indebtedness subsequent to ________ due to the
issuance of $__________________.
7. For the purposes of this letter, we have also read the following, included
or incorporated by reference in the Registration Statement on the indicated
pages:
V-4 -
<PAGE>
ITEM PAGE DESCRIPTION
a. [ ] "Selected Financial Data." All amounts in the table excluding
"Employees."
b. [ ] "Management's Discussion and Analysis of Financial Condition and
Results of Operations." All amounts and percentages under the headings
"Results of Operations" and "Liquidity and Capital Resources".
10-K
c. Exhibit 11, "Statement Re Computation of Per Share Earnings" and Exhibit
12, "Statement Re Computation of Ratio of Earnings to Fixed Charges."
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED [_____________________]
d. [ ] "Management's Discussion and Analysis of Financial Condition and
Results of Operations." All amounts and percentages under the headings
"Results of Operations" and "Liquidity and Capital Resources".
e. Exhibit 11, "Statement Re Computation of Per Share Earnings" and Exhibit
12, "Statement Re Computation of Ratio of Earnings to Fixed Charges."
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED [__________________]
f. [ ] Results of Operations." All amounts and percentages under the headings
"Results of Operations" and "Liquidity and Capital Resources."
g. Exhibit 11, "Statement Re Computation of Per Share Earnings" and Exhibit
12, "Statement Re Computation of Ratio of Earnings to Fixed Charges."
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED
[____________]
h. [ ] "Management's Discussion and Analysis of Financial Condition and
Results of Operations." All amounts and percentages under the headings
"Results of Operations" and "Liquidity and Capital Resources."
i. Exhibit 11, "Statement Re Computation of Per Share Earnings" and Exhibit
12, "Statement Re Computation of Ratio of Earnings to Fixed Charges."
PROSPECTUS SUPPLEMENT DATED [__________]
j. [ ] "Summary of the Offering", Ranking Summary regarding outstanding
indebtedness of the Company and its subsidiaries at ____________.
k. [ ] "Description of the Notes", Brief Description of the Notes regarding
outstanding indebtedness of the Company and its subsidiaries at
______________.
V-5
<PAGE>
l. [ ] "Ratio of Earnings to Fixed Charges."
m. [ ] "Description of the Notes", Brief Description of the Notes regarding
aggregate principal amount of debt securities issued and outstanding
under the Indenture.
n. [ ] Capitalization
o. [ ] "Selected Consolidated Financial Data." All amounts in table excluding
"Employees."
p. [ ] "Other Activities," Custodial Trust Company regarding CTC assets held
at ______________.
PROSPECTUS DATED [_________________]
q. [ ] "Ratio of Earnings to Fixed Charges"
8. Our audit of the consolidated financial statements for the periods referred
to in the introductory paragraph of this letter comprised audit tests and
procedures deemed necessary for the purpose of expressing an opinion on
such financial statements taken as a whole. For none of the periods
referred to therein, nor for any other period, did we perform audit tests
for the purpose of expressing an opinion on individual balances of accounts
or summaries of selected transactions such as those enumerated above, and,
accordingly, we express no opinion thereon.
9. However, at your request, we have performed the following additional
procedures, which were applied as indicated with respect to the items
enumerated in 7 above.
a. With respect to items 7a., 7.b., 7d., 7.f., 7.h., 7.n., and 7.o, we
(i) compared the dollar and share amounts to the respective amounts in
the Company's audited consolidated financial statements for the
applicable year indicated or to the Company's unaudited consolidated
financial statements for the three-month periods ended ______________
and ______________, and the three and six-month periods ended
______________ and ______________, and the three and nine-month
periods ended______________ and ______________, to the extent such
amounts are included in or can be derived from such statements and
found them to be in agreement; (ii) compared other dollar and share
amounts to amounts shown in the Company's accounting records or
analyses prepared by the Company and found them to be in agreement;
(iii) proved the arithmetic accuracy of the percentages based on the
data in the above-mentioned financial statements, accounting records,
and analyses; and (iv) compared amounts in the analyses prepared by
the Company with amounts shown in the Company's accounting records and
found them to be in agreement.
b. With respect to items 7.c., 7e., 7.g., 7i., 7.l. and 7.q, we (i)
compared the amounts of Earnings Before Taxes on Income, Net Income
and the amounts of Interest Fixed Charge to the respective amounts in
the Company's audited consolidated
V-6 -
<PAGE>
financial statements for the applicable years indicated or to the
Company's unaudited consolidated financial statements for the
three-months periods ended ______________ and ______________, and
the three and six-month periods ended ______________ and
______________, and the three and nine-month periods ended
______________ and ______________, incorporated by reference in the
Registration Statement, and found them to be in agreement; (ii)
proved the arithmetic accuracy of the Interest Factor in Rents
Fixed Charge by multiplying rent expense per the Company's
accounting records by one-third; (iii) compared the amount of
interest adjusted fixed charge, weighted average common and common
equivalent shares outstanding and other dollar amounts to amounts
in analyses prepared by the Company and found them to be in
agreement (we make no comment regarding the completeness or
appropriateness of the Company's determination of what constitutes
interest adjusted fixed charge); (iv) compared the amounts
contained in the analyses described in (iii) above to amounts in
the Company's accounting records and found them to be in agreement;
and (v) proved the arithmetic accuracy of the ratios and amounts
based on the above-mentioned financial statements, accounting
records and analyses.
c. With respect to items 7.j and 7.k, we (i) compared the dollar amounts
shown to the Company's accounting records and analyses prepared by the
Company and found them to be in agreement; (ii) inquired of the
Company's management as to the unsecured nature of the Company's
outstanding debt. Management has informed us that none of this
outstanding debt is secured.
d. With respect to item 7.m and 7.p, we compared the dollar amounts shown
to the Company's accounting records and analyses prepared by the
Company and found them to be in agreement.
10. It should be understood that we make no representations regarding questions
of legal interpretation or regarding the sufficiency for your purposes of
the procedures enumerated in the preceding paragraph; also, such procedures
would not necessarily reveal any material misstatement of the amounts or
percentages listed above. Further, we have addressed ourselves solely to
the foregoing data as included or incorporated by reference in the
Registration Statement and make no representations regarding the adequacy
of disclosure or regarding whether any material facts have been omitted.
V-7 -
<PAGE>
SCHEDULE VI
AUCTION RULES
<PAGE>
[LOGO]
--------------------------------------------------------------------------------
DAISS-SM---AUCTION RULES FOR REGISTERED OFFERINGS
A. AUCTION ELIGIBILITY
1. To access Bear Stearns' Internet website ACCESS@bear from the Bear
Stearns Home Page, you, the Bidder, must have a Bear Stearns User ID and
password. If you do not have a Bear Stearns User ID and password, please
call your Bear Stearns sales representative.
2. In order to participate in a DAISS new issue auction, for legal and
security reasons, you must complete the jurisdictional eligibility
certification, register and create a user-defined password.
3. Once you have completed the jurisdictional eligibility certification,
registered for the auction and entered your selected password, your
registration will be processed. You may contact your sales representative
or click "Register" on the DAISS Home Page to determine the status of
your registration. Until your registration is approved, you will not be
granted access to any auction screens or offering documents.
4. Upon Bear Stearns' approval of your auction registration, you will be
permitted access to the "Official Documents" hyperlink. Only by clicking
"Official Documents," reentering your auction password and certifying
that you have read the official documents by clicking "Submit
Acknowledgment" will you be permitted to proceed to the auction portion
of the website.
5. Bear Stearns reserves the right to decline to approve any Bidder for
participation in any DAISS new issue auction or revoke any Bidder's
ability to participate in any DAISS new issue auction at any time.
6. Your computer should be equipped with a standard web browser such as
Netscape Navigator-TM- 4.06 or higher or Microsoft Internet Explorer-TM-
4.0 or higher, with Java, Javascript and cookies enabled.
B. BIDDING
1. General Rules
a. Each Bid you submit is a conditional offer to buy the securities
being auctioned, which, unless it previously has been removed by you,
may be accepted by Bear Stearns at any time after the close of the
auction and the pricing of the offering.
b. You may submit up to three Bids. Each Bid will be independent of any
of your other Bids. In some auctions, the issuer may permit you to
submit more than three Bids. The TERM SHEET (as defined below)
related to the offering will reflect the number of permitted Bids.
The aggregate of your bids may be subject to a Maximum Quantity
Restriction.
------------------------
DAISS is a service mark of Bear, Stearns & Co. Inc.
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PROPRIETARY & CONFIDENTIAL PROPERTY OF BEAR, STEARNS & CO. INC. -C- 2000. ALL
RIGHTS RESERVED. DISCLOSURE OF THESE RULES OTHER THAN AS EXPRESSLY AUTHORIZED
BY BEAR STEARNS IN WRITING IS STRICTLY FORBIDDEN.
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c. Each Bid must be submitted in an integral multiple of $5,000, and in
1/4 basis point increments. The TERM SHEET will indicate the minimum
denomination established for the offering (in most auctions, minimum
denominations of $250,000 will be established for non-U.S. Bidders).
d. There may be a MAXIMUM QUANTITY RESTRICTION (the maximum aggregate
dollar amount of securities that you may submit in an auction) on the
total outstanding Bids of any Bidder. If such a restriction is
established for an auction, it will be reflected on the TERM SHEET
related to the offering.
e. Should you experience system failure or difficulties, please contact
your Bear Stearns sales representative for assistance at least twenty
minutes prior to the commencement of the auction. Bear Stearns'
Syndicate Desk will submit the Bid you communicate over a taped line
into DAISS utilizing BIDASSIST.
2. Bid Changes or Removal
a. You may change or remove one or more of your Bids in accordance with
the procedures set forth below.
(1) During the first hour of the REGULAR AUCTION PERIOD (as defined
in Section E below):
(a) For a single Bid--You may change your Bid an unlimited number
of times in order to narrow the spread or increase the
quantity of securities. You may change your Bid only once in
order to widen the spread or decrease the quantity. You may
remove your Bid.
(b) For multiple Bids--You may change one or more Bids an
unlimited number of times in order to narrow the spread or
increase the quantity. You may change each Bid only once in
order to widen the spread or decrease the quantity. You may
remove one or more Bids.
(2) During the second hour of the REGULAR AUCTION PERIOD:
(a) For a single Bid--You may change your Bid an unlimited number
of times in order to narrow the spread or increase the
quantity of securities. You may remove your Bid. You may
resubmit your Bid at a later time only if the Bid you
resubmit is either at (i) a lower spread or (ii) the same
spread and in an amount that is, at least, the greater of 5%
and $5,000 more than your original Bid. You may not change
your Bid to increase the spread.
(b) For multiple Bids--You may change each Bid an unlimited
number of times in order to narrow the spread or increase the
quantity. If you remove one Bid, all Bids will be removed.
You may resubmit a Bid at a later time only if the Bid you
resubmit is either (i) at a lower spread than the weighed
average spread of the Bids removed or (ii) at the weighted
average spread and in an amount that is, at least, the
greater of 5% and $5,000 more than the total quantity of the
Bids removed.
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PROPRIETARY & CONFIDENTIAL PROPERTY OF BEAR, STEARNS & CO. INC. -C- 2000. ALL
RIGHTS RESERVED. DISCLOSURE OF THESE RULES OTHER THAN AS EXPRESSLY AUTHORIZED
BY BEAR STEARNS IN WRITING IS STRICTLY FORBIDDEN.
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(c) If you remove a Bid during the first hour of the REGULAR
AUCTION PERIOD and want to resubmit a Bid during the second
hour of the REGULAR AUCTION PERIOD, the procedures related to
changes during the second hour shall apply.
(3) During the QUIET CLOSE (as defined in Section E below), you may
only improve your Bid(s) in one basis point increments; you may
not add a Bid, change the quantity of existing Bids or resubmit a
previously removed Bid. If you choose to remove a Bid, all of
your Bids will be removed.
(4) You must confirm any Bid submission, change or removal activity
by inputting your password on the Cash Bid or BIDASSIST screen
within the period (first or second hour of the REGULAR AUCTION
PERIOD or QUIET CLOSE) initiated in order to retain that period's
status. Please be aware that based on the speed of your computer
system and the level of traffic, it may take some time to receive
your internet transmission.
b. If the issuer, in conjunction with Bear Stearns, determines to change
the MAXIMUM QUANTITY RESTRICTION and/or THE AMOUNT TO BE ISSUED, and
there is less than one-half hour remaining in the REGULAR AUCTION
PERIOD, the issuer will permit the REGULAR AUCTION PERIOD to be
extended to permit Bidders at least one-half hour to add, change or
remove Bids in accordance with the rules applicable to changes and
removals of Bids during the first hour of the REGULAR AUCTION PERIOD.
If the determination is made at a point during the REGULAR AUCTION
PERIOD when there is more than one-half hour remaining, the auction
will not be extended. Any Bid changed during this one-half hour
period will retain its initial status as a Bid during the first or
second hour for allocation purposes.
c. If at the close of the REGULAR AUCTION PERIOD, Bids in the amount
equal to the AMOUNT TO BE ISSUED have not been received, Bear
Stearns, upon consultation with the issuer, may submit a Bid at the
MAXIMUM CLEARING SPREAD in an amount that will bring the total amount
bid to the AMOUNT TO BE ISSUED.
d. If there is a change in overall market conditions during an auction,
Bear Stearns and/or the issuer, reserve(s) the right to postpone or
terminate the auction, change the MAXIMUM CLEARING SPREAD (as defined
in Section C below) and/or allow all Bidders an opportunity to change
or remove their Bids.
e. Bear Stearns reserves the right to reject or cancel any and all Bids
at anytime without notice.
C. THE CLEARING SPREAD
1. A SPECIFIED PRICING INDEX (such as an on-the-run U.S. Treasury security
of a specific maturity) and a MAXIMUM CLEARING SPREAD (or minimum Bid)
will be established by Bear Stearns and the issuer at the commencement of
each auction. At the close of the auction, the FINAL CLEARING SPREAD (as
defined below) will be added to the SPECIFIED PRICING INDEX to determine
the yield of the bonds.
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PROPRIETARY & CONFIDENTIAL PROPERTY OF BEAR, STEARNS & CO. INC. -C- 2000. ALL
RIGHTS RESERVED. DISCLOSURE OF THESE RULES OTHER THAN AS EXPRESSLY AUTHORIZED
BY BEAR STEARNS IN WRITING IS STRICTLY FORBIDDEN.
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2. Until Bids have been submitted in an amount at least equal to the AMOUNT
TO BE ISSUED, as specified on the TERM SHEET, the "Current Auction
Information" box on each screen will reflect PRICE TALK (as defined
below), the MAXIMUM CLEARING SPREAD and the dollar amount of Bids
required before a CLEARING SPREAD (I.E., what the FINAL CLEARING SPREAD
would be if bidding ceased at that moment in time) can be established.
3. PRICE TALK is the estimated spread range for the issue as determined by
Bear Stearns and the issuer. The FINAL CLEARING SPREAD may be above or
below the lowest spread indicated in the PRICE TALK range.
4. DAISS will automatically reject any Bid submitted at a spread above the
MAXIMUM CLEARING SPREAD.
5. The CLEARING SPREAD will be calculated as the lowest spread such that
the TOTAL QUANTITY BID AND NOT REMOVED at that level and all lower levels
would equal or exceed the AMOUNT TO BE ISSUED.
Example: The AMOUNT TO BE ISSUED is $500 Million ("M"). $100M is bid
at 105 (with nothing bid at a lower spread); $150M is bid at 106 and
$275M is bid at 107. Since ($100M + $150M) = $250M < $500M, while
($100M + $150M + $275M) = $525M > $500M, the CLEARING SPREAD is 107.
6. Once the TOTAL QUANTITY BID AND NOT REMOVED equals or exceeds the AMOUNT
TO BE ISSUED, the "Current Auction Information" box on each auction
screen will reflect the CLEARING SPREAD and the TOTAL QUANTITY BID AND
NOT REMOVED by all Bidders in the auction. This information will be
updated by DAISS and reflected on your screen automatically every 10
seconds. You may update the information at more frequent intervals simply
by clicking the "Reload/Refresh" button on your web browser. PLEASE NOTE
THAT BEAR STEARNS INTENDS TO PROVIDE ACCESS TO UP-TO-THE-MINUTE
INFORMATION AT ALL TIMES, BUT CANNOT GUARANTEE SUCH ACCESS DUE TO TIMING
LAGS AND SYSTEMS LIMITATIONS. THE INTERNET AND DAISS ARE INHERENTLY
SUBJECT TO DELAYS AND OPERATIONAL FAILURES OUTSIDE THE CONTROL OF BEAR
STEARNS AND THE ISSUER, WHICH MIGHT AFFECT THE PRESENTATION OF
INFORMATION, INCLUDING THE CLEARING SPREAD, DURING ANY AUCTION.
CONSEQUENTLY, BEAR STEARNS AND THE ISSUER DO NOT ACCEPT ANY
RESPONSIBILITY FOR THE ACCURACY, TIMELINESS OR COMPLETENESS OF ANY
INFORMATION, INCLUDING THE CLEARING SPREAD, THAT A BIDDER MAY BE VIEWING
AT ANY GIVEN TIME RESULTING FROM SUCH PROBLEMS.
7. The "Submitted Bid Information" box on your Bid Monitor screen will
reflect the spread, the quantity and the tier status of each of your
Bids.
8. At the close of an auction, each Bid that is below the FINAL CLEARING
SPREAD will be allocated fully; each Bid that is AT the FINAL CLEARING
SPREAD will be allocated in accordance with Allocation Rules (see
Section F below); each Bid that is above the FINAL CLEARING SPREAD will
not receive any allocation.
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PROPRIETARY & CONFIDENTIAL PROPERTY OF BEAR, STEARNS & CO. INC. -C- 2000. ALL
RIGHTS RESERVED. DISCLOSURE OF THESE RULES OTHER THAN AS EXPRESSLY AUTHORIZED
BY BEAR STEARNS IN WRITING IS STRICTLY FORBIDDEN.
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9. Shortly after the close of an auction, your cumulative allocation will
be displayed on the Final Allocation screen and your sales representative
will call to confirm the allocation.
10. The interest rate for the Notes, as well as the amount of Notes
allocated by the underwriters to the bidders of the Notes, will be
established through DAISS (and rounded up or down to the nearest .05 of
1%). The purchase price for the Notes will be set at a premium or
discount to par so as to adjust for the rounding of the interest rate
established by the DAISS auction bidding procedure.
D. AUTOMATED BIDDING VIA BIDASSIST-SM-
1. BIDASSIST is an optional program that you may use to automatically
improve submitted Bids to specified levels as the CLEARING SPREAD
narrows.
2. When engaging BIDASSIST, you may automatically specify that a revised
Bid is to be submitted either at the CLEARING SPREAD or at a minimum
increment below the CLEARING SPREAD.
3. If your lowest Bid equals the FINAL CLEARING SPREAD, you will receive an
allocation in accordance with the Allocation Rules and the time you
submit such bid (see Section F). If you submit a Bid during the first
hour of an auction and employ BIDASSIST, that Bid will retain its 1ST
TIER status (as defined below) for purposes of allocation, even if it is
changed in the second half of the auction.
E. AUCTION TIMING
1. An auction will consist of a REGULAR AUCTION PERIOD and a QUIET CLOSE.
2. The REGULAR AUCTION PERIOD is the time period established by Bear
Stearns and the issuer during which you may submit Bids of any level in
1/4 basis point increments at or below the MAXIMUM CLEARING SPREAD, if
established.
3. The QUIET CLOSE is the series of two-minute intervals that follows the
REGULAR AUCTION PERIOD. During each two-minute interval of the QUIET
CLOSE, you may improve any of your existing Bids by a minimum increment
of one basis point or you may remove your Bids. You may not submit a new
Bid, change the quantity of any of your existing Bids or resubmit a Bid
that was earlier removed.
4. These two-minute intervals will continue until the earlier to occur of
(a) the reduction of the CLEARING SPREAD by less than one basis point
during any two-minute interval and (b) the passing of one-half hour.
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BidAssist is a service mark of Bear, Stearns & Co. Inc.
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PROPRIETARY & CONFIDENTIAL PROPERTY OF BEAR, STEARNS & CO. INC. -C- 2000. ALL
RIGHTS RESERVED. DISCLOSURE OF THESE RULES OTHER THAN AS EXPRESSLY AUTHORIZED
BY BEAR STEARNS IN WRITING IS STRICTLY FORBIDDEN.
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5. There will be an "Auction Status" box for each auction that will
identify the auction period as "Pending Open," "Regular Auction," "Quiet
Close," or "Auction Closed," as well as a clock that will reflect the
"Time Remaining." Due to network lags and possible loads on your browser,
the time remaining in each auction period is an approximation and not an
indication of the exact time remaining.
F. ALLOCATION RULES
1. All accepted Bids will be filled at the FINAL CLEARING SPREAD.
2. All Bids submitted at spreads below the FINAL CLEARING SPREAD will be
accepted and filled in their entirety.
3. Bids submitted AT the FINAL CLEARING SPREAD will be prorated based on
the time of their submission. Bids submitted AT the FINAL CLEARING SPREAD
during the first hour of the REGULAR AUCTION PERIOD will be designated
1ST TIER BIDS even if such Bids are changed during the second hour of the
REGULAR AUCTION PERIOD (t(1)); Bids submitted AT the FINAL CLEARING
SPREAD thereafter will be designated 2ND TIER BIDS (t(2)).
4. The CLEARING QUANTITY (the quantity of bonds available to the Bidders
who bid AT the FINAL CLEARING SPREAD) will be allocated according to the
following rules:
(a) If the aggregate amount of 1ST TIER BIDS is less than 2/3 of the
CLEARING QUANTITY, such 1ST TIER BIDS will receive a 100% allocation.
The remainder of the CLEARING QUANTITY will be divided among 2ND TIER
BIDS on a pro rata basis based on the quantity of those Bids.
(b) If (a) does not apply, define t(1) = ( 2/3 * CLEARING QUANTITY) /
(1ST TIER BID aggregate quantity), and t(2) = (1/3 * CLEARING
QUANTITY) / (2ND TIER BID aggregate quantity). If t(1) is greater
than or equal to t(2), 1ST TIER BIDDERS will receive a pro rata share
of the CLEARING QUANTITY equal to t(1) and 2ND TIER BIDDERS will
receive a pro rata share of the CLEARING QUANTITY equal to t(2.) If
t(1) < t(2), then the CLEARING QUANTITY will be allocated equally
among 1ST and 2ND TIER BIDDERS.
5. In the following examples, the CLEARING QUANTITY is $120M.
(a) Example 1: 1ST TIER BID aggregate is $100M, 2ND TIER BID aggregate is
$80M. t(1) = 80/100 = 0.8 and t(2) = 40/80 = 0.5. Since 0.8 > 0.5,
1ST TIER BIDDERS receive an 80% allocation of their Bids and 2ND TIER
BIDDERS receive a 50% allocation of their Bids. The amount allocated
to 1ST TIER BIDDERS is $80M and the amount allocated to 2ND TIER
BIDDERS is $40M.
(b) Example 2: 1ST TIER BID aggregate is $120M, 2ND TIER BID aggregate is
$50M. t(1) = 80/120 = 0.6666 and t(2) = 40/50 = 0.8. Since 0.6666
is less than 0.8, all 1ST and 2ND TIER BIDDERS will receive the same
pro rata share of the quantity of their Bids, which, in this case, is
120/(120 + 50) = 70.59% of the quantity of their Bid. Consequently,
if a Bidder entered a qualifying Bid for $10M of bonds, such Bidder
would receive $7,059,000 of the bonds (subject to rounding, as set
forth below) at the FINAL CLEARING SPREAD.
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PROPRIETARY & CONFIDENTIAL PROPERTY OF BEAR, STEARNS & CO. INC. -C- 2000. ALL
RIGHTS RESERVED. DISCLOSURE OF THESE RULES OTHER THAN AS EXPRESSLY AUTHORIZED
BY BEAR STEARNS IN WRITING IS STRICTLY FORBIDDEN.
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6. Rounding: To avoid fractional allotments, Bear Stearns reserves the
right to round any allocation either up or down to an integral multiple
of $5,000.
7. At any time during the auction, the issuer may decide to change the
AMOUNT TO BE ISSUED. In such case, Bear Stearns will inform all
registered Bidders by flashing a message on each auction screen and the
rules described in Section B.2.b and Section D of these Auction Rules
will apply.
8. The "Submitted Bid Information" box on the Bid Monitor screen will
identify each Bid as either a 1ST or 2ND TIER BID.
G. CONFIRMATION OF PURCHASE
Shortly after the close of an auction, the "Submitted Bid Information" box
on your Bid Monitor screen will reflect your final cumulative allocation. In
addition, your Bear Stearns sales representative will inform you of your final
allocation. Written confirmation and a copy of the final prospectus and pricing
supplement will follow in the normal course of business.
H. GOVERNING LAW
These rules and a Bidder's participation in a DAISS auction will be governed
by and construed in accordance with the laws of the State of New York, without
giving effect to the principles of conflict of laws thereof.
I. FREQUENTLY ASKED QUESTIONS ("FAQS")
1. WHAT IS THE AMOUNT TO BE ISSUED?
The AMOUNT TO BE ISSUED listed on the TERM SHEET indicates the size of
the offering, I.E., how many dollars worth of bonds will be issued.
2. WHAT IS BIDASSIST?
BIDASSIST is an optional program that you may use to automatically
improve submitted Bids to specified levels.
3. WHAT IS THE CLEARING QUANTITY?
The CLEARING QUANTITY is the difference between the AMOUNT TO BE ISSUED
and the amount allocated to all Bidders who submitted Bids at spreads
less than the FINAL CLEARING SPREAD.
4. WHAT IS THE CLEARING SPREAD?
The CLEARING SPREAD, the lowest spread at which the TOTAL QUANTITY BID
AND NOT REMOVED at that and all lower spread levels equals or exceeds the
AMOUNT TO BE ISSUED, is what the FINAL CLEARING SPREAD would be if
bidding ceased at that moment in time.
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PROPRIETARY & CONFIDENTIAL PROPERTY OF BEAR, STEARNS & CO. INC. -C- 2000. ALL
RIGHTS RESERVED. DISCLOSURE OF THESE RULES OTHER THAN AS EXPRESSLY AUTHORIZED
BY BEAR STEARNS IN WRITING IS STRICTLY FORBIDDEN.
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5. WHAT IS THE FINAL CLEARING SPREAD?
The FINAL CLEARING SPREAD is the CLEARING SPREAD at the conclusion of the
QUIET CLOSE.
6. WHAT IS THE MAXIMUM CLEARING SPREAD?
The MAXIMUM CLEARING SPREAD is the minimum admissible Bid that will be
set at the commencement of the auction.
7. WHAT IS PRICE TALK?
PRICE TALK is the estimated spread range for the offering as determined
by Bear Stearns and the issuer. The FINAL CLEARING SPREAD may be above or
below the lowest spread indicated in the PRICE TALK range.
8. WHAT IS THE QUIET CLOSE?
The QUIET CLOSE is a brief extension of the auction following the REGULAR
AUCTION PERIOD during which you may improve any of your existing Bids in
one basis point increments.
9. WHAT IS THE REGULAR AUCTION PERIOD?
The REGULAR AUCTION PERIOD is the time period during which you may submit
one or more Bids (up to three) of any level in 1/4 point increments at or
below the MAXIMUM CLEARING SPREAD.
10. WHAT IS THE SPECIFIED PRICING INDEX?
The SPECIFIED PRICING INDEX is the index that Bear Stearns and the issuer
will establish for the offering. The SPECIFIED PRICING INDEX plus the
FINAL CLEARING SPREAD will equal the yield on the securities.
11. WHAT IS THE TERM SHEET?
The TERM SHEET defines the terms of the offering.
12. WHAT IS THE TOTAL QUANTITY BID AND NOT REMOVED?
The TOTAL QUANTITY BID AND NOT REMOVED is the sum of the Bids made and
not withdrawn at any particular point in the auction.
13. WHAT ARE THE PERMITTED BIDDING INCREMENTS?
Bids may be submitted in integral multiples of $5,000. Bids will be
accepted in increments of 1/4 basis point until the QUIET CLOSE, during
which they may be changed in minimum increments of one basis point.
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PROPRIETARY & CONFIDENTIAL PROPERTY OF BEAR, STEARNS & CO. INC. -C- 2000. ALL
RIGHTS RESERVED. DISCLOSURE OF THESE RULES OTHER THAN AS EXPRESSLY AUTHORIZED
BY BEAR STEARNS IN WRITING IS STRICTLY FORBIDDEN.
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14. WHAT IS THE DIFFERENCE BETWEEN 1ST AND 2ND TIER BIDS?
Generally 1ST TIER BIDS are those Bids submitted during the first hour of
THE REGULAR AUCTION PERIOD and Bids submitted thereafter are 2ND TIER
BIDS. However, Bids submitted by BIDASSIST will be treated as 1ST or 2ND
TIER BIDS based on when the BIDASSIST program was activated.
15. WHAT DOES PRO RATA MEAN?
PRO RATA, a Latin term for "according to the rate," is a method of
proportionate allocation. For our purposes, it means that securities will
be distributed proportionately among investors whose Bids are the same as
the FINAL CLEARING SPREAD in accordance with the DAISS Allocation Rules.
16. WILL BIDS BE PRORATED?
Yes. Bids submitted at the FINAL CLEARING SPREAD will be prorated based
on the time of submission of the Bid with slight adjustments for rounding
purposes. Proration will depend on whether a Bid is a 1ST or 2ND TIER
BID.
17. CAN I CHANGE MY BID(S)?
Yes. However, there are restrictions depending on when during the auction
you wish to change your Bid(s). See Section B.2.
18. CAN I REMOVE MY BID(S)?
Yes. However, there are restrictions depending on when during the auction
you wish to remove your Bid(s). See Section B.2.
19. WHAT DOES IT MEAN TO IMPROVE YOUR BID?
Improving your Bid means changing your Bid to a narrower or tighter
spread.
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PROPRIETARY & CONFIDENTIAL PROPERTY OF BEAR, STEARNS & CO. INC. -C- 2000. ALL
RIGHTS RESERVED. DISCLOSURE OF THESE RULES OTHER THAN AS EXPRESSLY AUTHORIZED
BY BEAR STEARNS IN WRITING IS STRICTLY FORBIDDEN.
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