<PAGE> 1
Total Number of Pages including Exhibits 69
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Exhibit Index is on Page 3
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
October 12, 1994
(Date of earliest event reported)
AVCO FINANCIAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-6119 13-2530491
(State or other (Commission File Number) (I.R.S. Employer)
jurisdiction of (Identification No.)
incorporation or
organization)
3349 Michelson Drive, Irvine, California 92715-1606
(Address or principal executive offices) (Zip Code)
Registrant's telephone number, including area code
714-553-1200
<PAGE> 2
Item 7. Financial Statements and Exhibits
- ------------------------------------------
(b) Exhibits.
The following exhibit relates to the Registrant's Registration Statement
No. 33-50547 on Form S-3 with respect to which the Registrant commenced an
offering from time to time of $600,000,000 of Medium Term Notes, Series F, due
from more than 9 months to 10 years from date of issue.
1(b)(i) - Form of Distribution Agreement (Medium Term Notes).
4(i)(a)(1) - Form of Medium Term Note, Series F.
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AVCO FINANCIAL SERVICES, INC.
By: /s/ HERBERT F. SMITH
--------------------------------
Herbert F. Smith
Senior Vice President and
Secretary
Dated: October 14, 1994
<PAGE> 3
INDEX TO EXHIBITS
<TABLE>
<Captions>
Sequentially
Exhibit Numbered
Number Page
- ------- ----
<S> <C> <C>
1(b)(i) Form of Distribution Agreement (Medium Term Notes) 4-56
4(i)(a)(1) Form of Medium Term Note, Series F 57-69
</TABLE>
-3-
<PAGE> 1
EXHIBIT 1(b)(i)
AVCO FINANCIAL SERVICES, INC.
MEDIUM-TERM NOTES, SERIES F
DUE FROM MORE THAN NINE MONTHS TO TEN YEARS FROM DATE OF ISSUE
DISTRIBUTION AGREEMENT
October 12, 1994
MORGAN STANLEY & CO. INCORPORATED
1251 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281
SALOMON BROTHERS INC
SEVEN WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
Dear Sirs:
Avco Financial Services, Inc., a Delaware corporation (the "Company"),
confirms its agreement with each of you with respect to the issue and sale by
the Company of its Medium-Term Notes, Series F (the "Notes") in such principal
amount as may result in the initial public offering or purchase prices for all
Notes aggregating up to $600,000,000, subject to increase from time to time to
such larger amount as may be authorized by the Company. In the event that the
Company shall from time to time authorize the issuance of additional Notes, it
is understood that such Notes shall be distributed through you pursuant to the
terms of this Agreement, all as though the issuance of such Notes were
authorized as of the date hereof. The Notes are to be issued under an indenture
dated as of October 1, 1994, (the "Indenture"), between the Company and Mellon
Bank, N.A., as trustee. The Notes will mature more than nine months and not more
than ten years from date of issue and will bear interest at rates to be
specified in a pricing supplement to the Note Prospectus referred to below.
Subject to the terms and conditions stated herein, the Company hereby
appoints each of you as an agent of the Company for the purpose of soliciting
offers to purchase the Notes; provided, however, that the Company reserves the
right to sell and may accept offers to purchase the Notes directly on its own
behalf. In addition, the Company reserves the right to appoint additional agents
for the purpose of soliciting offers to purchase the Notes (the "Other Agents");
provided, however, that such Other Agents shall enter into a Distribution
Agreement with the Company substantially identical hereto. For the purposes of
this Agreement, the term "the Agent" shall refer to any of you acting in the
capacity as agent for the Company hereunder (collectively, the "Agents").
1. Solicitations by the Agents of Offers To Purchase. (a) Following the
Commencement Date (referred to below), the Company shall notify each Agent from
time to time as to the commencement of a period during which the Notes may be
offered and sold by such Agent (each period, commencing with such a notification
and ending at such time as the authorization for offers and sales through such
Agent shall have been suspended by the Company or such Agent as provided
hereunder, being herein referred to as an "Offering Period"). On the basis of
the representations and warranties herein contained, but subject to the terms
and conditions herein set forth, each Agent will use its reasonable efforts to
solicit offers to purchase the Notes during each Offering Period upon the terms
and conditions set forth in the Prospectus as then amended and supplemented.
<PAGE> 2
The Company agrees to pay each Agent, as consideration for soliciting the
sale of the Notes, a commission equal to the percentage set forth on Schedule I
hereto of the principal amount of each Note sold by the Company as the result of
a solicitation by such Agent; provided, however, that any such Agent or the
Company may upon not less than 30 days' notice request that the commissions be
renegotiated, and if no agreement is reached within such 30-day period this
Agreement shall be terminated subject to Section 9 hereof with respect to such
Agent.
Each Agent is authorized to solicit orders for the Notes only in
denominations of $1,000 and any multiple of $1,000, at a purchase price equal to
100% of their principal amount (unless otherwise specified in its applicable
pricing supplement to the Note Prospectus). Each Agent shall communicate to the
Company, orally or in writing, each reasonable offer or indication of interest
received by it to purchase Notes. The Company shall have the sole right to
accept offers to purchase the Notes and may reject any such offer in whole or in
part. Each Agent shall have the right to reject, in its discretion reasonably
exercised, any offer received by it to purchase the Notes, in whole or in part,
and any such rejection shall not be deemed a breach of its agreements contained
herein. In soliciting offers to purchase the Notes hereunder, each Agent is
acting solely as agent for the Company, and not as principal. Each Agent shall
make reasonable efforts to assist the Company in obtaining performance by each
purchaser whose offer to purchase Notes has been solicited by such Agent and
accepted by the Company, but such Agent shall not have any liability to the
Company in the event any such purchase is not consummated for any reason. Under
no circumstances will an Agent be obligated to purchase any Notes for its own
account.
Each Agent and the Company agree to perform the respective duties and
obligations specifically provided to be performed by it in the Medium-Term Note
Administrative Procedures attached hereto as Exhibit A (the "Procedures"). The
Procedures may be amended only by written agreement of the Company and the
Agents.
The documents required to be delivered by Section 5 of this Agreement shall
be delivered at the office of LeBoeuf, Lamb, Greene & MacRae, counsel for the
Agents, 125 West 55th Street, New York, N.Y. 10019, on such date as may be
agreed to by the Company and the Agents (the "Commencement Date").
(b) Subject to the terms and conditions stated herein, the Company agrees
that, whenever the Company determines to sell Notes directly to any of the
Agents as principal for resale to others, it will enter into a Terms Agreement
relating to such sale in accordance with the provisions of this Section 1(b).
Each sale of Notes to any of the Agents as principal shall be made in accordance
with the terms of this Agreement and a supplemental agreement which will provide
for the sale of such Notes to, and the purchase and reoffering thereof by, such
Agent. Each such supplemental agreement (which shall be an oral agreement unless
otherwise agreed) is herein referred to as a "Terms Agreement". Each such Terms
Agreement, whether oral or in writing, shall be with respect to such information
(as applicable) as is specified in Exhibit B hereto. Each Agent's commitment to
purchase Notes pursuant to any Terms Agreement shall be deemed to have been made
on the basis of the representations and warranties of the Company herein
contained and shall be subject to the terms and conditions herein set forth.
Each Terms Agreement shall describe the Notes to be purchased by any of the
Agents pursuant thereto, specify the principal amount of such Notes, the price
to be paid to the Company for such Notes, the rate at which interest will be
paid on the Notes, the date and time of delivery of payment for such Notes (the
"Purchase Date"), the place of delivery of the Notes and payment therefor, the
method of payment and any modification of the requirements for the delivery of
the opinions of counsel, the certificates from the Company, and the letter from
Ernst & Young, pursuant to Section 5(B)(b). Such Terms Agreement shall also
specify the period of time referred to in Section 4(m).
Delivery of the certificates for Notes sold to any of the Agents pursuant
to any Terms Agreement shall be made as agreed to between the Company and such
Agent as set forth in the Terms Agreement, not later than the Purchase Date set
forth in such Terms Agreement, against payment of funds to the
2
<PAGE> 3
Company in the net amount due to the Company for such Notes by the method and in
the form set forth in the Terms Agreement.
Unless otherwise indicated in the applicable Pricing Supplement, any Note
sold to an Agent as principal will be purchased by such Agent at a price equal
to 100% of the principal amount thereof less a percentage equal to the
commission applicable to any agency sale of a Note of identical maturity, and
may be resold by such Agent to investors and other purchasers from time to time
in one or more transactions at varying prices determined at the time of sale, or
at a fixed public offering price, if so agreed. In addition, such Agent may sell
Notes to any dealer at a discount and, unless otherwise specified in the
applicable Pricing Supplement, such discount allowed to any dealer will not be
in excess of the discount to be received by such Agent from the Company.
2. Other Activities of Agents. The Company acknowledges that nothing in
this Agreement shall prohibit an Agent from (i) acting as broker for the sale of
Notes by customers other than the Company, (ii) soliciting the sale of Notes
through the Agent as broker for the seller, soliciting the sale of Notes to the
Agent as principal and soliciting offers to buy Notes, (iii) purchasing Notes,
and (iv) offering and selling as principal for its own account Notes which the
Agent has purchased.
3. Representations and Warranties. The Company represents and warrants
to, and agrees with, the Agent that:
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933 (the "Act") and has filed with the Securities and
Exchange Commission (the "Commission") a registration statement on such
form (File No. 33-50547) for the registration under the Act of certain debt
securities, including the Notes, which registration statement was declared
effective on October 22, 1993, as amended by Post-Effective Amendment
No.1, which amendment was declared effective on October 5, 1994. The
Company may from time to time file with the Commission additional
registration statements for the registration of additional amounts of
debt securities. At the time of the offer and sale of any Note pursuant
to this Agreement, such Note shall be registered pursuant to an effective
registration statement under the Act. Each registration statement under
which Notes are offered or sold pursuant to this Agreement at the date
hereof and at the date of such offer and sale meets and will meet the
requirements set forth in Rule 415(a)(1)(x) under the Act and complies
and will comply in all other material respects with said Rule.
"Registration Statement" shall mean, as of any date, each effective
registration statement relating to debt securities pursuant to which
Notes are or may then be offered or sold, including incorporated
documents, exhibits and financial statements, as amended at such date.
"Prospectus" shall mean the form of prospectus relating to debt securities
contained in the Registration Statement. The term "preliminary prospectus"
as used herein means a prospectus filed as part of any post-effective
amendment to the Registration Statement prior to the effective date of
such post-effective amendment, as contemplated in Rule 430 under the Act.
The Company has included and will include in each such Registration
Statement, or has filed or will file with the Commission pursuant to the
applicable paragraph of Rule 424(b) under the Act, a supplement to the
form of Prospectus included in each such Registration Statement relating
to the Notes and prior to any such filing will advise each Agent of all
further information (financial and other) with respect to the Company to
be set forth therein. The Prospectus so supplemented from time to time is
hereinafter called the "Note Prospectus". Any preliminary form of
supplemental prospectus which may be filed pursuant to Rule 424(b) under
the Act is hereinafter called a "preliminary supplemental prospectus".
Any reference herein to the Registration Statement, any preliminary
prospectus, any preliminary supplemental prospectus, the Prospectus, or
the Note Prospectus, as amended and supplemented, shall be deemed to
refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 that were filed under the Securities
Exchange Act of 1934 (the "Exchange Act") on or before the effective date
of the Registration Statement, or the issue date of such preliminary
prospectus, preliminary supplemental prospectus, supplemental prospectus,
the Prospectus, or the Note Prospectus, as the case may be; and any
reference herein to the terms "amend", "amendment" or "supplement" with
respect to the Registration Statement, any preliminary prospectus, any
preliminary supplemental prospectus,
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<PAGE> 4
any supplemental prospectus, the Prospectus, or the Note Prospectus shall
be deemed to refer to and include (i) the filing of any document under the
Exchange Act after the effective date of the Registration Statement or the
issue date of any preliminary prospectus, any preliminary supplemental
prospectus, any supplemental prospectus, the Prospectus, or the Note
Prospectus, as the case may be, deemed to be incorporated therein by
reference and (ii) with respect to the Registration Statement, the filing
of any additional registration statement relating to debt securities if
Notes are to be offered or sold under such additional registration
statement.
(b) When the Registration Statement became effective, when any
amendment to the Registration Statement becomes effective (including the
filing of any document incorporated by reference in the Registration
Statement), when any supplement to the Prospectus (other than a supplement
specifying the terms of debt securities other than the Notes) or the Note
Prospectus is filed with the Commission pursuant to Rule 424(b) under the
Act, on each day during an Offering Period, and at the time of delivery of
any Notes to (i) any purchaser or his agent whose offer to purchase such
Notes was delivered to the Company during an Offering Period and (ii) any
Agent purchasing such Notes as principal pursuant to a Terms Agreement:
(i) the Registration Statement, as amended as of any such time, and
the Note Prospectus, as amended and supplemented as of any such time,
and the Indentures will comply in all material respects with the
applicable requirements of the Act, the Exchange Act and the Trust
Indenture Act of 1989 (the "Trust Indenture Act") and the respective
rules thereunder; and
(ii) neither the Registration Statement nor the Note Prospectus,
each as amended and supplemented as of any such time, will contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading; provided, however, that the Company
makes no representations or warranties as to (i) that part of the
Registration Statement which shall constitute the Statement of
Eligibility and Qualification (Form T-1) under the Trust Indenture Act
of the trustee or (ii) the information contained in or omitted from the
Registration Statement or the Note Prospectus or any amendment thereof
or supplement thereto in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of the
Agent or the Other Agents specifically for use in connection with the
preparation of the Registration Statement and the Note Prospectus or any
amendment thereof or supplement thereto.
(iii) The documents incorporated by reference in the Registration
Statement or Note Prospectus, when they became effective or were filed
with the Commission, as the case may be, under the Exchange Act,
conformed, and any documents so filed and incorporated by reference
after the date of this Agreement will, when they are filed with the
Commission, conform, in all material respects to the requirements of the
Act and the Exchange Act, as applicable, and the rules and regulations
of the Commission thereunder.
(iv) The consolidated financial statements and consolidated
financial schedules of the Company and any subsidiaries included in the
Registration Statement and Note Prospectus, each as amended or
supplemented as of any such time, fairly present the financial condition
of such companies as of the dates indicated and the results of
operations and changes in financial position for the periods therein
specified in conformity with generally accepted accounting principles
consistently applied throughout the periods involved (except as
otherwise stated therein). Ernst & Young, which has examined certain of
such financial statements and schedules, as set forth in their reports
included in the Registration Statement and Note Prospectus, each as
amended or supplemented as of any such time, are independent public
accountants with respect to the Company and its subsidiaries as required
by the Act and the rules and regulations thereunder.
(v) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of its jurisdiction of
incorporation; the Company's subsidiaries have been duly incorporated
and are existing corporations in good standing under the laws of their
4
<PAGE> 5
respective jurisdictions of incorporation; each of the Company and its
subsidiaries has full power and authority (corporate and other) to
conduct its business as described in the Registration Statement and Note
Prospectus; each of the Company and its subsidiaries is duly qualified
to do business in each jurisdiction in which it owns or leases real
property or in which the conduct of its business requires such
qualification, or if in any jurisdiction the Company or any of its
subsidiaries is not so qualified, the failure to so qualify would not,
in the aggregate, have any material adverse effect upon the business,
condition or properties of the Company and its subsidiaries, taken as a
whole; and all of the outstanding shares of capital stock of each such
subsidiary have been duly authorized and validly issued, are fully paid
and non-assessable and are owned beneficially (except as otherwise
stated in the Registration Statement) by the Company subject to no
security interest, other encumbrance or adverse claim.
(vi) The Indenture has been duly authorized, executed, delivered
and qualified under the Trust Indenture Act; the Notes have been duly
authorized and, when duly executed, authenticated, issued and delivered
as contemplated hereby and by the Indenture will constitute valid and
legally binding obligations of the Company in accordance with their
terms and the terms of the applicable indenture subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to
general equity principles.
(vii) Unless you shall have been otherwise promptly notified by the
Company in writing, except as contemplated in the Note Prospectus, as
amended and supplemented as of any such time, subsequent to the
respective dates as of which information is given in the Registration
Statement and the Note Prospectus, each as amended and supplemented as
of any such time, neither the Company nor any of its subsidiaries has
incurred any liabilities or obligations, direct or contingent, or
entered into any transactions, not in the ordinary course of business,
which are material to the Company and its subsidiaries, taken as a
whole, and there has not been any material change, on a consolidated
basis, in the capital stock, short-term debt or long-term debt of the
Company and its subsidiaries, or any material adverse change, or any
development involving a prospective material adverse change, in the
condition (financial or other), business, prospects, net worth or
results of operations of the Company and its subsidiaries.
(viii) Except as set forth in the Note Prospectus, as amended and
supplemented as of any such time, there is not pending or, to the
knowledge of the Company, threatened, any action, suit or proceeding to
which the Company or any of its subsidiaries is a party before or by any
court or governmental agency or body, which might result in any material
adverse change in the condition (financial or other), business,
prospects, net worth or results of operations of the Company and its
subsidiaries, taken as a whole, or might materially and adversely affect
the properties or assets thereof; and there are no contracts or
documents of the Company or any of its subsidiaries which are required
to be filed as exhibits to the Registration Statement by the Act or by
the Rules and Regulations which have not been so filed or which will not
be so filed as required by the Act.
(ix) The Company and its subsidiaries hold good and marketable
title in fee simple, except as otherwise stated in the Note Prospectus,
as amended and supplemented as of any such time, to all of the real
property referred to therein as being owned by them, free and clear of
all liens and encumbrances, except liens and encumbrances referred to in
the Note Prospectus, as amended and supplemented as of any such time (or
reflected in the financial statements included therein), and liens and
encumbrances which are not material in the aggregate and do not
materially interfere with the conduct of the business of the Company and
its subsidiaries; and the properties referred to in the Note Prospectus,
as amended and supplemented as of any such time, as held under lease by
the Company or any of its
5
<PAGE> 6
subsidiaries are held by them under valid and enforceable leases with
such exceptions as do not materially interfere with the conduct of the
business of the Company and its subsidiaries.
(x) The performance of this Agreement and the consummation of the
transactions herein contemplated will not result in a breach or
violation of any of the terms and provisions of, or constitute a default
under, any statute, any agreement or instrument to which the Company or
any of its subsidiaries is a party or by which any of them is bound or
to which any of the property of the Company or any of its subsidiaries
is subject, the Company's charter or by-laws, or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its properties; no consent,
approval, authorization or order of, or filing with, any court or
governmental agency or body is required for the consummation of the
transactions contemplated in connection with the issuance or sale of the
Notes by the Company, except such as may be required under the Act, the
Trust Indenture Act or state securities laws; and the Company has full
power and authority to authorize, issue and sell the Notes as
contemplated by this Agreement.
(c) The Company confirms as of the date hereof that the Company and
its affiliates are in compliance with all provisions of Section 1 of the
Laws of Florida, Chapter 92-198, An Act Relating to Disclosure of Doing
Business with Cuba, (Section 517.075 of Florida Statutes, 1987, as amended)
and the Company further agrees that if the Company or any of its affiliates
commences engaging in business with the government of Cuba or with any
person or affiliate located in Cuba after the date hereof, or if the
information reported in the Prospectus, if any, concerning the Company's
business with Cuba or with any person or affiliate located in Cuba changes
in any material way, the Company will provide the Florida Department of
Banking and Finance (the "Department") notice of such business or change,
as appropriate, in a form acceptable to the Department.
4. Agreements of the Company. The Company agrees with each Agent that:
(a) Prior to the termination of the offering of the Notes pursuant to
this Agreement, the Company will not file any amendment to the Registration
Statement, any supplement to the Prospectus which would create a Note
Prospectus or any supplement to the Note Prospectus unless the Company has
previously furnished each Agent a copy thereof for its review and will not
file any such proposed amendment or supplement to which any Agent
reasonably objects. Subject to the foregoing sentence, the Company will
promptly cause the Prospectus together with each supplement thereto which
would create a Note Prospectus, and each Note Prospectus together with each
supplement thereto, to be filed with the Commission pursuant to the
applicable paragraph of Rule 424(b). The Company will promptly advise each
Agent (i) of the filing of any amendment or supplement to the Prospectus
which creates a Note Prospectus, including the filing of documents
incorporated therein by reference, (ii) of the filing of any amendment or
supplement to the Note Prospectus, including the filing of documents
incorporated therein by reference, (iii) of the filing or effectiveness of
any amendment to the Registration Statement, (iv) of any comments from the
Commission relating to or any request by the Commission for any amendment
of the Registration Statement, any amendment of or supplement to the
Prospectus which would create a Note Prospectus, or any amendment of or
supplement to the Note Prospectus, or for any additional information,
(v) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (vi) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of the Notes for sale in any jurisdiction or the initiation
of threatening of any proceeding for such purpose. The Company will use its
best efforts to prevent the issuance of any such stop order and, if issued,
to obtain as soon as possible the withdrawal thereof. The Company will
inform you promptly, upon your request, of the aggregate offering price or
purchase price of debt securities registered under the Registration
Statement that remain unissued, and will promptly advise you to suspend
solicitations of orders to purchase Notes at any time when all securities
registered under the Registration Statement have been issued.
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<PAGE> 7
(b) If, at any time when a prospectus relating to the Notes is
required to be delivered under the Act, any event occurs as a result of
which, in the reasonable opinion of counsel for the Agents or counsel for
the Company, the Registration Statement or the Note Prospectus, as then
amended or supplemented, would not reflect any facts or events which,
individually or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement or the Note Prospectus,
as then amended or supplemented, and/or would include an untrue statement
of a material fact, or omit to state any material fact necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, or if, in the reasonable opinion of either such
counsel, it is necessary at any time to amend or supplement the
Registration Statement or the Note Prospectus, as then amended or
supplemented, to comply with the Act, the Company promptly will notify each
Agent and, if so notified by the Company, each Agent shall forthwith
suspend solicitation of offers to purchase Notes and cease using the Note
Prospectus, as then amended or supplemented; the Company will promptly
prepare and file with the Commission, subject to the first sentence of
Section 4(a) above, an amendment or supplement to such Registration
Statement or Note Prospectus which will include such facts or events and/or
will correct such statement or omission or effect such compliance and will
supply such amended or supplemented Note Prospectus to each Agent in such
quantities as such Agent may reasonably request. If such amendment or
supplement, and any documents, certificates and opinions furnished to each
Agent pursuant to Section 4(f) below in connection with the preparation or
filing of such amendment or supplement, are satisfactory in all respects to
each Agent, each Agent will, upon the filing of such amendment or
supplement with the Commission or effectiveness of an amendment to the
Registration Statement, resume its obligations to solicit offers to
purchase Notes hereunder.
(c) The Company will make generally available to its security holders
as soon as practicable, but not later than 15 months after the end of a
fiscal quarter of the Company during which any Notes are sold through or
purchased by any of the Agents, an earnings statement of the Company (which
need not be audited) covering a 12-month period within such 15 months,
which earnings statement shall satisfy the provisions of Section 11(a) of
the Act and the rules and regulations of the Commission issued thereunder
(including Rule 158 under the Act).
(d) The Company will furnish to each Agent and counsel for the Agents
copies of the Registration Statement, the Note Prospectus and all
amendments of and supplements to such documents (including exhibits thereto
and documents incorporated by reference therein), in each case as soon as
available and in such quantities as each Agent reasonably requests; the
Company will also furnish to each Agent and counsel for the Agents one
manually signed copy of the Registration Statement and all amendments
thereto (including in each case all Exhibits thereto) as soon as available.
(e) The Company will use its best efforts to qualify the Notes for
sale under the securities laws of such jurisdictions as the Agents may
reasonably designate, will maintain such qualifications in effect so long
as required for the distribution of the Notes pursuant to this Agreement
(except that the Company shall not be required in connection therewith to
qualify as a foreign corporation or to execute a general consent to service
of process in any State) and will arrange for the determination of the
eligibility for investment of the Notes under the laws of such
jurisdictions as the Agents may reasonably request.
(f) The Company shall furnish to each Agent such documents,
certificates of officers of the Company and opinions of counsel for the
Company relating to the business, operations and affairs of the Company,
the Registration Statement and the Note Prospectus, any amendments or
supplements thereto, the Indenture, the Notes, this Agreement, the
Procedures and the performance by the Company and the Agents of their
respective obligations hereunder and thereunder as any of the Agents may
from time to time prior to the termination of this Agreement reasonably
request.
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<PAGE> 8
(g) The Company, whether or not any Notes are sold through or
purchased by the agents and whether or not this Agreement is terminated,
shall pay all expenses incident to the performance of its obligations under
this Agreement, including, without limitation, the fees and disbursements
of its accountants, the cost of printing and delivery of the Registration
Statement and the Note Prospectus, all amendments and supplements thereto,
the Indenture, and all other documents relating to the offering, the cost
of preparing, printing, packaging and delivering the Notes, the fees and
disbursements (including fees of counsel) incurred in connection with the
qualification of the Notes for sale and determination of eligibility for
investment of the Notes under the securities or Blue Sky laws of such
jurisdictions as the Agents may designate, any filing fees of the National
Association of Securities Dealers, Inc. relating to the Notes, the fees and
disbursements of each of the trustees under the Indentures, the fees of any
agency that rates the Notes and the fees and expenses in connection with
any listing of the Notes on the New York Stock Exchange.
(h) The Company shall reimburse each Agent for any out-of-pocket
expenses (including, without limitation, advertising expenses approved by
the Company in its discretion and the reasonable fees and disbursements of
counsel to the Agents) incurred heretofore or hereafter by the Agents in
connection with the offering, purchase and sale of the Notes. Any such
out-of-pocket expenses shall be payable upon the receipt by the Company
from any of the Agents of any itemized statement therefor.
(i) Each time the Registration Statement or the Note Prospectus is
amended (which term for the purposes of this Section 4 shall include the
filing by the Company of materials incorporated by reference in the
Registration Statement or the Note Prospectus) or supplemented (other than
by an amendment or supplement relating to any offering of securities other
than the Notes or providing solely for the terms of any Notes or for a
change deemed immaterial in the reasonable opinion of the Agents), or the
Prospectus is supplemented to create a Note Prospectus, the Company will
deliver or cause to be delivered forthwith to each Agent a certificate of
the Company signed by the Chairman of the Board, the President or a Vice
President, and by the principal financial or accounting officer of the
Company, dated the date of the effectiveness of such amendment or the date
of filing of such amendment or supplement, as the case may be, in form
reasonably satisfactory to the Agents, to the effect that the statements
contained in the certificate referred to in Section 5(d) that was last
furnished to each Agent (either pursuant to Section 5(d) or pursuant to
this Section 4(i)) are true and correct at the time of the effectiveness of
such amendment (which for the purposes of this Agreement in the case of the
filing of materials incorporated by reference shall be the date of the
filing of such materials) or the filing of such amendment or supplement, as
the case may be, as though made at and as of such time (except that such
statements shall be deemed to relate to the Registration Statement, as
amended at the time of effectiveness of such amendment, and to the
Prospectus or the Note Prospectus (as the case may be), as amended and
supplemented at the date of such certificate) or, in lieu of such
certificate, a certificate of the same tenor as the certificate referred to
in Section 5(d) but modified, if necessary, to relate to the Registration
Statement, as amended at the time of the effectiveness of such amendment,
and to the Prospectus or the Note Prospectus (as the case may be), as
amended and supplemented at the date of such certificate.
(j) Each time the Registration Statement or the Note Prospectus is
amended or supplemented, including by incorporation by reference, or the
Prospectus is supplemented to create a Note Prospectus, the Company shall
furnish to or cause to be furnished forthwith to each Agent a written
opinion of Herbert F. Smith, Esquire, General Counsel of the Company, to
the effect set forth in Exhibit C hereto; provided, however, that such
opinion need not be furnished with respect to an amendment or supplement
(i) providing solely for the terms of any Notes or for a change deemed
immaterial in the reasonable opinion of any of the Agents, or (ii) setting
forth or incorporating by reference financial statements or other
information as of and for a fiscal quarter, unless in the reasonable
judgment of any of the Agents, such financial statements or other
8
<PAGE> 9
information are of such a nature that an opinion of counsel should be
furnished. Any such opinion shall be dated the date of the effectiveness of
such amendment or the date of filing of such supplement, as the case may
be, in form satisfactory to each Agent. In lieu of such opinion, such
counsel may furnish to each Agent a letter to the effect that each Agent
may rely on such counsel's last opinion to the same extent as though it
were dated the date of such letter authorizing reliance on such last
opinion (except that statements in such last opinion will be deemed to
relate to the Registration Statement, as amended at the time of the
effectiveness of such amendment, and to the Prospectus or the Note
Prospectus (as the case may be), as amended and supplemented at the date of
such letter).
(k) Each time that the Registration Statement or the Note Prospectus
is amended or supplemented to set forth amended or supplemental financial
information, the Company shall cause Ernst & Young, its independent
auditors, forthwith to furnish each Agent a letter, dated the date of the
effectiveness of such amendment or the date of filing of such supplement,
as the case may be, in form satisfactory to each Agent, of the same tenor
as the letter referred to in Section 5(e) and clause (1) of Exhibit D
hereto but modified to relate to the Registration Statement and Note
Prospectus, as amended and supplemented to the date of such letter, and of
the same tenor as the portions of the letter referred to in clauses (2) and
(3) of Exhibit D hereto with such changes as may be necessary to reflect
changes in the financial statements and other information derived from the
accounting records of the Company; provided, that if the Registration
Statement or the Note Prospectus is amended or supplemented solely to
include or incorporate by reference financial information with respect to a
fiscal quarter, Ernst & Young may limit the scope of such letter to the
unaudited financial statements included in such amendment or supplement
unless any other information included or incorporated by reference therein
of an accounting, financial or statistical nature is of such a nature that,
in the reasonable judgment of any of the Agents, such letter should cover
such other information.
(l) Each acceptance by the Company of an offer for the purchase of
Notes shall be deemed to be an affirmation that the representations and
warranties of the Company contained in this Agreement to the Agents
pursuant hereto are true and correct at the time of such acceptance, and an
undertaking that such representations and warranties will be true and
correct at the time of delivery of the Notes relating to such acceptance as
though made at and as of each such time (and it is understood that such
representations and warranties shall relate to the Registration Statement
and the Note Prospectus as amended and supplemented to each such time).
(m) During the period, if any, specified in any Terms Agreement, the
Company shall not, without the prior consent of the Agent purchasing
thereunder, issue or announce the proposed issuance of any of its debt
securities, including Notes, with terms substantially similar to those of
the Notes being purchased pursuant to the Terms Agreement.
5. Conditions to the Obligations of the Agents. (A) The obligations of
each Agent to solicit offers to purchase the Notes will be subject to the
accuracy of the representations and warranties on the part of the Company herein
as of the date hereof and the Commencement Date, to the accuracy of the
statements of the Company's officers made in each certificate furnished pursuant
to the provisions hereof, to the performance and observance by the Company of
all covenants and agreements herein contained on its part to be performed and
observed and to the following additional conditions precedent:
(a) No stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and no
proceedings for that purpose shall have been instituted or threatened.
(b) The Company shall have furnished to each Agent the opinion of
Herbert F. Smith, Esquire, General Counsel of the Company, dated the
Commencement Date, to the effect set forth in Exhibit C hereto.
9
<PAGE> 10
(c) Each Agent shall have received from LeBoeuf, Lamb, Greene &
MacRae, counsel for the Agents, an opinion dated the Commencement Date with
respect to the issuance and sale of the Notes, the Indentures, the
Registration Statement, as amended as of the Commencement Date, the Note
Prospectus, as amended and supplemented as of the Commencement Date, and
other related matters as any of the Agents may reasonably require; and the
Company shall have furnished to such counsel such documents as they may
request for the purpose of enabling them to pass on such matters.
(d) The Company shall have furnished to each Agent a certificate of
the Company, signed by the Chairman of the Board, the President or any Vice
President, and by the principal financial or accounting officer of the
Company (or another officer acceptable to each Agent), dated the
Commencement Date, to the effect that the signers of such certificate have
carefully examined the Registration Statement, as amended as of the date of
such certificate, the Note Prospectus, as amended and supplemented as of
the date of such certificate, and this Agreement and that:
(i) The representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of the
date of such certificate with the same effect as if made on the date of
such certificate, and the Company has complied with all the agreements
and satisfied all the conditions on its part to be performed or
satisfied as a condition to the obligations of the Agents under this
Agreement;
(ii) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or, to the Company's knowledge, have been contemplated; and
(iii) since the date of the most recent financial statements
included in the Note Prospectus, as amended and supplemented, there has
been no material adverse change, or any development involving a
prospective material adverse change, in the condition (financial or
other), business, prospects, net worth or results of operations of the
Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, nor any material
change in the debt maturing more than one year after the date of issue
of the Company and its consolidated subsidiaries, other than those
changes reflected in or contemplated by the Note Prospectus, as amended
and supplemented as of the date of the certificate.
(e) Ernst & Young shall have furnished to each Agent a letter or
letters, dated the Commencement Date, in form and substance satisfactory to
each Agent, confirming that they are independent accountants within the
meaning of the Act and the Exchange Act and the respective applicable
published rules and regulations thereunder, that the response to Item 10 of
the Registration Statement is correct insofar as it relates to them and to
the effect set forth in Exhibit D hereto.
(f) The Company shall have furnished to each Agent such further
information, certificates and documents as any of the Agents may reasonably
request from time to time. Any certificate signed by any officer of the
Company and delivered to any of the Agents or their counsel and delivered
explicitly pursuant to the terms of this Agreement shall be deemed a
representation and a warranty by the Company to the Agents as to matters
covered thereby, as if set forth herein.
(g) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Note Prospectus, as amended and
supplemented, there shall not have been any change, on a consolidated
basis, in the capital stock, short-term debt or long-term debt of the
Company and its subsidiaries, or any change, or any development involving a
prospective change in the condition (financial or other), business,
prospects, net worth or results of operations of the Company and its
subsidiaries, taken as a whole, which is, in the judgment of any of the
Agents, so material and adverse as to make it impractical or inadvisable to
proceed with the soliciting of offers to purchase the Notes as contemplated
by the Registration Statement and the Note Prospectus.
10
<PAGE> 11
If any of the conditions specified in this Section 5(A) shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to an Agent and its counsel, this Agreement, with respect to such
Agent, and all obligations of such Agent hereunder may be cancelled at any time
by such Agent. Notice of such cancellation shall be given to the Company in
writing or by telephone or telegraph confirmed in writing.
(B) The obligations of any Agent to purchase Notes pursuant to any Terms
Agreement entered into pursuant to Section 1(b) hereof will be subject to the
accuracy of the representations and warranties on the part of the Company herein
as of the date of such Terms Agreement and as of the Purchase Date thereunder,
to the accuracy of the statements of the Company's officers made in each
certificate furnished pursuant to the provisions hereof, to the performance and
observance by the Company of all covenants and agreements contained herein and
in such Terms Agreement on its part to be performed and observed and to the
following additional conditions precedent:
(a) No stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and no
proceedings for that purpose shall have been instituted or threatened.
(b) Except to the extent modified by such Terms Agreement, each Agent
shall have received, appropriately updated and modified, (i) a certificate
of the Company, dated as of the Purchase Date, to the effect set forth in
Section 5(A)(d), (ii) the opinion of the General Counsel of the Company,
dated as of the Purchase Date, to the effect set forth in Section 5(A)(b),
(iii) the opinion of LeBoeuf, Lamb, Greene & MacRae, counsel for the
Agents, dated as of the Purchase Date, to the effect set forth in Section
5(A)(c) and (iv) the letter of Ernst & Young, dated as of the Purchase
Date, to the effect set forth in Section 5(A)(e).
(c) Prior to the Purchase Date, the Company shall have furnished to
the Agent purchasing pursuant to the Terms Agreement such further
information, certificates and documents as such Agent may reasonably
request.
(d) Subsequent to the execution of the Terms Agreement, there shall
not have been any downgrading, nor any notice given of any intended or
potential downgrading or of a possible change that does not indicate the
direction of the possible change, in the ratings of any of the Company's
debt securities by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act).
If any of the conditions specified in this Section 5(B) shall not have been
fulfilled in all material respects when and as provided in this Agreement and in
such Terms Agreement, or if any of the opinions and certificates mentioned above
or elsewhere in this Agreement and in such Terms Agreement shall not be in all
material respects reasonably satisfactory in form and substance to the Agent
purchasing thereunder and its counsel, such Terms Agreement and all obligations
of such Agent thereunder may be cancelled at, or at any time prior to, the
Purchase Date by such Agent. Notice of such cancellation shall be given to the
Company in writing or by telephone or telegraph confirmed in writing.
6. Right of Person Who Agreed to Purchase to Refuse to Purchase. The
Company agrees that any person who has agreed to purchase and pay for any Note,
including any Agent and any person who purchases pursuant to a solicitation by
such Agent, shall have the right to refuse to purchase such Note if, at the date
of delivery of such Note, either (a) any condition set forth in Section 5 shall
not be satisfied or (b) subsequent to the agreement to purchase such Note, any
change, or any development involving a prospective change, in or affecting the
condition (financial or other), business, prospects, net worth or results of
operations of the Company and its subsidiaries, taken as a whole, shall have
occurred the effect of which is, in the judgment of such Agent, so material and
adverse as to make it impractical or inadvisable to proceed with the delivery of
such Note. Notwithstanding the foregoing,
11
<PAGE> 12
under no circumstances shall any such Agent have any duty or obligation to
exercise the judgment permitted to be exercised under this Section 6.
7. Indemnification and Contribution. (a) The Company agrees to indemnify
and hold harmless each Agent and each person who controls an Agent within the
meaning of either the Act or the Exchange Act against any and all losses,
claims, damages or liabilities (or actions in respect thereof), joint or
several, to which they or any of them may become subject under the Act, the
Exchange Act or other Federal or state statutory law or regulation, at common
law or otherwise, arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement as
originally filed or in any amendment thereof, or in any preliminary prospectus,
any preliminary supplemental prospectus, the Prospectus, the Note Prospectus or
in any amendment thereof or supplement thereto, or arising out of or based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading and
agrees to reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that (i) the Company will not be liable in any such case to the extent that any
such loss, claim, damage, liability or expense arises out of or is based upon
any untrue statement or omission, or allegation thereof, which has been made
therein or omitted therefrom in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any of the Agents
specifically for use in connection with the preparation thereof, and (ii) such
indemnity with respect to any preliminary prospectus, any preliminary
supplemental prospectus, the Prospectus or the Note Prospectus shall not inure
to the benefit of any of the Agents (or any person controlling an Agent), if the
Company shall have delivered sufficient quantities of the Note Prospectus, as
amended and supplemented, to such Agent within a reasonable time prior to the
earlier of the delivery of the written confirmation of the sale of such Notes or
the delivery of such Notes to the person asserting such loss, claim, damage,
liability or action for which indemnification is sought, and the Note Prospectus
as so amended and supplemented (excluding documents incorporated by reference)
was not sent or given to such person at or prior to the earlier of the delivery
of the written confirmation of the sale of such Notes or the delivery of such
Notes to such person in any case where such sending or giving of a prospectus is
required by the Act and the untrue statement or omission of a material fact
contained in such preliminary prospectus, such preliminary supplemental
prospectus, such Prospectus or such Note Prospectus was corrected in the Note
Prospectus, as so amended and supplemented, provided to each Agent. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
(b) Each Agent, severally and not jointly, agrees to indemnify and hold
harmless the Company, each person, if any, who controls the Company within the
meaning of either the Act or the Exchange Act, each director of the Company and
each officer of the Company who signs the Registration Statement or any
amendment thereto to the same extent as the foregoing indemnity from the Company
to each Agent, but only insofar as such losses, claims, damages or liabilities
arise out of or are based upon any untrue statement or omission or alleged
untrue statement or omission which was made therein in reliance upon and in
conformity with written information supplied to the Company by or on behalf of
such Agent with respect to such Agent. This indemnity agreement will be in
addition to any liability which such Agent may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 7, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 7. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent
that it may 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; provided
however, that if the defendants in any such action
12
<PAGE> 13
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assert such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to assume the
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 7 for any legal or other expense subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to the next preceding
sentence (it being understood, however, that the indemnifying party shall not be
liable for the expenses of more than one separate counsel, approved by the
Agents in the case of paragraph (a) of this Section 7, representing the
indemnified parties under such paragraph (a) who are parties to such action),
(ii) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party; and except that, if clause (i) or (iii) is applicable,
such liability shall be only in respect of the counsel referred to in such
clause (i) or (iii).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 7(a) is due
in accordance with its terms but is for any reason held by a court to be
unavailable from the Company on grounds of policy or otherwise, the Company and
the Agents shall contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending same) to which the Company and the Agents may be
subject in such proportion so that each Agent is responsible for that portion
represented by the percentage that the aggregate commissions received by such
Agent pursuant to Section 1 in connection with the Notes from which such losses,
claims, damages and liabilities arise (or, in the case of Notes sold pursuant to
a Terms Agreement, the aggregate commissions that would have been received by
such Agent if such commissions had been payable) bears to the aggregate
principal amount of such Notes sold and the Company is responsible for the
balance; provided, however, that (i) in no case shall an Agent be responsible
for any amount in excess of the commissions received by such Agent in connection
with the Notes from which such losses, claims, damages and liabilities arise
(or, in the case of Notes sold pursuant to a Terms Agreement, the aggregate
commissions that would have been received by such Agent if such commissions had
been payable) and (ii) no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For purposes
of this Section 7(d), each person who controls an Agent within the meaning of
the Act shall have the same rights to contribution as the Agent. 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
7(d), notify such party or parties from whom contribution may be sought, but the
omission to notify such party or parties shall not relieve the party or parties
from whom contribution may be sought from any other obligation it or they may
have hereunder or otherwise than under this Section 7(d).
8. Termination of the Appointment of an Agent. (a) The appointment of an
Agent and the obligations of such Agent under this Agreement may be terminated
at any time either by the Company or by such Agent upon the giving of written
notice of such termination to such Agent or the Company, as the case may be. In
the event of such termination, neither such Agent nor the Company shall have any
liability to the other, except as provided in the first sentence of the second
paragraph of Section 1 and Section 4(g), 4(h), 7 and 9 and except that, if at
the time of termination an offer to purchase any of the Notes has been accepted
by the Company but the time of delivery to the purchaser or its agent of the
Note or Notes relating thereto has not occurred, the Company's representations
and warranties
13
<PAGE> 14
stated in Section 3(b) and its obligations under the third paragraph of Section
1 and Sections 4(a), 4(b), 4(e), 4(f), 4(i), 4(j), 4(k) and 4(m) shall remain in
full force and effect and not be terminated.
(b) Each Terms Agreement shall be subject to termination in the absolute
discretion of the Agent purchasing thereunder, by notice given to the Company
prior to delivery of any payment for Notes to be purchased thereunder, if prior
to such time (i) trading in securities generally on the New York Stock Exchange
shall have been suspended or limited or minimum prices shall have been
established on such Exchange, (ii) a banking moratorium shall have been declared
by either Federal or New York State authorities or (iii) 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 is such
as to make it, in the judgment of such Agent, impracticable to market such
Notes.
9. Representations and Indemnities to Survive. The respective agreements,
representations. warranties, indemnities and other statements of the Company or
its officers and of each Agent set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation made by or
on behalf of the Agent or the Company or any of the officers, directors or
controlling persons referred to in Section 7 hereof, and will survive delivery
of and payment for the Notes.
10. Notices. All communications hereunder will be in writing and
effective opinion receipt, and, if sent to any Agent, will be mailed, delivered
or telegraphed and confirmed to such Agent at the address specified in Schedule
I hereto; or, if sent to the Company, will be mailed, delivered or telegraphed
and confirmed to it at 3349 Michelson Drive, Irvine, California 92715-1606,
attention of the Executive Vice President, Chief Financial Officer and
Treasurer.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 7 hereof, and no
other person will have any right or obligation hereunder.
12. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York.
14
<PAGE> 15
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement between the
Company and each Agent, severally and not jointly.
Very truly yours,
AVCO FINANCIAL SERVICES, INC.
By:
-----------------------------------
Title: Executive Vice President
The foregoing Agreement is hereby
confirmed and accepted as of the date
first above written.
MORGAN STANLEY & CO. INCORPORATED
By:
------------------------------------
Title:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
------------------------------------
Title:
SALOMON BROTHERS INC
By:
------------------------------------
Title:
15
<PAGE> 16
SCHEDULE 1
AVCO FINANCIAL SERVICES, INC.
MEDIUM-TERM NOTES, SERIES F, COMMISSION SCHEDULE
<TABLE>
<CAPTION>
TERM COMMISSION RATE
---- ---------------
<S> <C>
More than 9 months to less than 1 year................... .125%
1 year to less than 18 months............................ .150
18 months to less than 2 years........................... .200
2 years to less than 3 years............................. .250
3 years to less than 4 years............................. .350
4 years to less than 5 years............................. .450
5 years to less than 6 years............................. .500
6 years to less than 7 years............................. .550
7 years to 10 years...................................... .600
</TABLE>
ADDRESS FOR NOTICES TO AGENTS:
Notices to Morgan Stanley & Co. Incorporated shall be directed to it at
both 1251 Avenue of the Americas, New York, New York 10020, Attention of
Manager -- Credit Department, Telecopy No. (212) 703-6503 and 1221 Avenue of the
Americas, New York, New York 10020, Attention of Managing Director, Short and
Medium Term Finance Department, Telecopy No. (212) 764-7490.
Notices to Merrill Lynch & Co. shall be directed to it at Merrill Lynch
World Headquarters, North Tower-World Financial Center, 10th Floor, New York,
New York 10281, Attention MTN Product Management, Telecopy No. (212) 449-2234.
Notices to Salomon Brothers Inc shall be directed to it at Seven World
Trade Center, New York, New York 10048, Attention of the Medium Term Note
Department, Telecopy No. (212) 783-2274.
16
<PAGE> 17
EXHIBIT A
AVCO FINANCIAL SERVICES, INC.
MEDIUM-TERM NOTES, SERIES F,
ADMINISTRATIVE PROCEDURES
October 12, 1994
The administrative procedures and specific terms of the
offering of the Medium-Term Notes, Series F (the "Notes"), on a continuous
basis by Avco Financial Services, Inc. (the "Company") pursuant to the
Distribution Agreement, dated as of October 12, 1994 (the "Distribution
Agreement") between the Company and Morgan Stanley & Co. Incorporated, Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon
Brothers Inc (each an "Agent") are explained below. In the Distribution
Agreement, the Agents have agreed to use their reasonable efforts to solicit
purchases of the Notes. Each Agent, as principal, may purchase Notes for its
own account pursuant to the terms and settlement details of a terms agreement
entered into between the Company and such Agent, as contemplated by the
Distribution Agreement between them.
The Notes will be issued under an indenture dated as of
October 1, 1994 (the "Indenture"), between the Company and Mellon Bank, N.A.
("MELLON") as trustee. MELLON is sometimes hereinafter referred to as the
"Trustee".
The Notes will constitute part of the Senior Debt of the
Company and will rank equally with all other unsecured debt of the Company
except subordinated debt. Notes will bear interest at either fixed rates
("Fixed Rate Notes") or floating rates ("Floating Rate Notes"). Each Note will
be represented by either a Global Security (as defined hereinafter) delivered
to MELLON, as Agent for the Depository Trust Company ("DTC"), and recorded in
the book entry system maintained by DTC ("a Book-Entry Note") or a certificate
delivered to the Holder thereof or a Person designated by such Holder (a
"Certificated Note"). An owner of a Book-Entry Note will not be entitled to
receive a certificate representing such a Note.
MELLON will act as Securities Registrar and Paying Agent for
the payment of principal of and premium, if any, and interest on the Notes, and
will perform the other duties specified herein. Book-Entry Notes will be
issued in accordance
<PAGE> 18
with the administrative procedures set forth in Part I hereof, and Certificated
Notes will be issued in accordance with the administrative procedures set forth
in Part II hereof. Unless otherwise defined herein, terms defined in the
Indenture or the Notes shall be used herein as therein defined.
PART I: ADMINISTRATIVE PROCEDURES FOR BOOK-ENTRY NOTES
In connection with the qualification of the Book-Entry Notes
for eligibility in the book-entry system maintained by DTC, MELLON will perform
the custodial, document control and administrative functions described below
for the Notes, in accordance with its respective obligations under a Letter of
Representations from the Company and MELLON to DTC dated as of the date hereof
and a Certificate Agreement between MELLON and DTC dated as of September 20,
1994, and its obligations as a participant in DTC, including DTC's Same-Day
Funds Settlement System ("SDFS").
Issuance: On any date of settlement (as defined under "Settlement"
below) for one or more Book-Entry Notes, the Company will
issue a single global security in fully registered form
without coupons (a "Global Security") representing up to
$150,000,000 principal amount of all such Notes of the
same series that have the same Stated Maturity,
redemption provisions, repayment provisions, Interest
Payment Dates, Interest Payment Period, Original Issue
Date, Original Issue Discount provisions, and in the case
of Fixed Rate Notes, interest rate, or in the case of
Floating Rate Notes, initial interest rate, Base Rate,
Index Maturity, Interest Reset Period, Interest Reset
Dates, Spread or Spread Multiplier, minimum interest rate
(if any), and maximum interest rate (if any)
(collectively, the "Terms"). Each Global Security will
be dated and issued as of the date of its authentication
by MELLON. Each Global Security will bear an "Interest
Accrual Date," which will be (i) with respect to an
original Global Security (or any portion thereof), its
original issuance date, and (ii) with respect to any
Global Security (or any portion thereof) issued
subsequently upon exchange of a Global Security or in
lieu of a destroyed, lost or stolen Global Security, the
most recent Interest Payment Date to which interest has
been paid or duly provided for on the predecessor
-2-
<PAGE> 19
Global Security or Securities (or if no such payment or
provisions has been made, the original issuance date of
the predecessor Global Security), regardless of the date
of authentication of such subsequently issued Global
Security. Notes may only be denominated and payable in
U.S. dollars. No Global Security will represent any
Certificated Note.
Identification The Company has arranged with the CUSIP Service Bureau of
Numbers: Standard & Poor's Corporation (the "CUSIP Service Bureau")
for the reservation of a series of CUSIP numbers
(including tranche numbers). Such series consists of
approximately 900 CUSIP numbers and relates to Global
Securities representing the Book-Entry Notes. The Company
has obtained from the CUSIP Service Bureau a written list
of such reserved CUSIP numbers and has delivered to
MELLON and DTC such written list. The Company will
assign CUSIP numbers to Global Securities as described
below under Settlement Procedure "B". DTC will notify
the CUSIP Service Bureau periodically of the CUSIP
numbers that the Company has assigned to Global
Securities. At any time when fewer than 100 of the
reserved CUSIP numbers remain unassigned to Global
Securities, and, if it deems necessary, the Company will
reserve additional CUSIP numbers for assignment to Global
Securities representing Book-Entry Notes of such series.
Upon obtaining such additional CUSIP numbers, the Company
shall deliver a list of such additional CUSIP numbers to
MELLON and DTC.
Registration: Each Global Security will be registered in the name of
Cede & Co., as nominee for DTC, on the Securities
Register maintained under the Indenture. The beneficial
owner of a Book-Entry Note (or one or more indirect
participants in DTC designated by such owner) will
designate one or more participants in DTC (with respect
to such Note, the "Participants") to act as agent or
agents for such owner in connection with the book-entry
system maintained by DTC, and DTC will record in
book-entry form, in accordance with instructions provided
by such Participants, a credit
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<PAGE> 20
balance with respect to such beneficial owner in such
Note in the account of such Participants. The ownership
interest of such beneficial owner in such Note will be
recorded through the records of such Participants or
through the separate records of such Participants and one
or more indirect participants in DTC.
Transfers: Transfers of a Book-Entry Note will be accomplished by
book entries made by DTC and, in turn, by Participants
(and in certain cases, one or more indirect participants
in DTC) acting on behalf of beneficial transferors and
transferees of such Note.
Exchanges: MELLON may deliver to DTC and the CUSIP Service Bureau at
any time a written notice of consolidation specifying
(i) the CUSIP numbers of two or more Outstanding Global
Securities that represent Book-Entry Notes having the same
Terms and for which interest has been paid to the same
date, (ii) a date, occurring at least thirty days after
such written notice is delivered and at least thirty days
before the next Interest Payment Date for such Book-Entry
Notes, on which such Global Securities shall be exchanged
for a single replacement Global Security and (iii) a new
CUSIP number, obtained from the Company, to be assigned
to such replacement Global Security. Upon receipt of
such a notice, DTC will send to its participants
(including MELLON) a written reorganization notice to the
effect that such exchange will occur on such date. Prior
to the specified exchange date, MELLON will deliver to
the CUSIP Service Bureau a written notice setting forth
such exchange date and the new CUSIP number and stating
that, as of such exchange date, the CUSIP numbers of the
Global Securities to be exchanged will no longer be valid.
On the specified exchange date, MELLON will exchange such
Global Securities for a single Global Security bearing
the new CUSIP number and a new Interest Accrual Date, and
the CUSIP numbers of the exchanged Global Securities
will, in accordance with CUSIP Service Bureau procedures,
be cancelled and not
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<PAGE> 21
immediately reassigned. Notwithstanding the foregoing,
if the Global Securities to be exchanged exceed
$150,000,000 in aggregate principal amount, one Global
Security will be authenticated and issued to represent each
$150,000,000 of principal amount of the exchanged Global
Securities and an additional Global Security will be
authenticated and issued to represent any remaining
principal amount of such Global Securities (see
"Denominations" below).
Maturities: Each Book-Entry Note will mature on a date from more
than nine months to ten years after the settlement date
for such Note.
Notice of MELLON will notify DTC 60 days prior to each Repayment
Repayment Dates: Date (as defined in the Note), if any, with respect to a
Note of the CUSIP number of such Note, the Repayment
Date, the Repayment Price and the exercise period.
Denominations: Unless otherwise specified in the applicable Pricing
Supplement, Book-Entry Notes will be issued in principal
amounts of $1,000 or any amount that is a multiple of
$1,000. Global Securities will be denominated in
principal amounts not in excess of $150,000,000. If one
or more Book- Entry Notes having an aggregate principal
amount in excess of $150,000,000 would, but for the
preceding sentence, be represented by a single Global
Security, then one Global Security will be authenticated
and issued to represent each $150,000,000 principal
amount of such Book-Entry Note or Notes and an additional
Global Security will be authenticated and issued to
represent any remaining principal amount of such
Book-Entry Note or Notes. In such a case, each of the
Global Securities representing such Book-Entry Note or
Notes shall be assigned the same CUSIP number.
Interest: General. Interest, if any, on each Book-Entry Note will
accrue from the Interest Accrual Date of the Global
Security representing such Note. Each payment of
interest on a Book-Entry Note will include interest
accrued to but excluding the
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<PAGE> 22
Interest Payment Date (provided that in the case of
Floating Rate Notes which reset daily or weekly interest
payments will include the Regular Record Date immediately
preceding the Interest Payment Date) or Maturity (other
than a maturity of a Fixed Rate Book-Entry Note occurring
on the thirty-first day of a month, in which case such
payment will include interest accruing to but excluding
only the thirtieth day of such month). Interest payable
at the Maturity of a Book-Entry Note will be payable to
the Person to whom the principal of such Note is payable.
Standard & Poor's Corporation will use the information
received in the pending deposit message described under
Settlement Procedure "C" below in order to include the
amount of any interest payable and certain other
information regarding the related Global Security in the
appropriate weekly bond report published by Standard
& Poor's Corporation.
Regular Record Dates. The Regular Record Date with
respect to any Interest Date shall be the date fifteen
calendar days immediately preceding such Interest
Payment Date.
Fixed Rate Book-Entry Notes. Unless otherwise specified
pursuant to Settlement Procedure "A" below, interest
payments on Fixed Rate Book- Entry Notes will be made
semi-annually on May 1 and November 1 of each year and at
Maturity; provided, however, that in the case of a Fixed
Rate Book-Entry Note issued between a Regular Record Date
and an Interest Payment Date or on an Interest Payment
Date, the first interest payment will be made on the
Interest Payment Date following the next succeeding
Regular Record Date; and provided, further, that any
payment required to be made on a date that is not a
Business Day need not be made on such date, but may be
made on the next succeeding Business Day with the same
force and effect as if made on such date, and no
additional interest shall accrue as a result of such
delayed payment.
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<PAGE> 23
Floating Rate Book-Entry Notes. Interest payments will
be made on Floating Rate Book-Entry Notes monthly,
quarterly, semi-annually or annually. Unless otherwise
agreed upon, interest will be payable, in the case of
Floating Rate Book-Entry Notes with a monthly Interest
Payment Period, on the third Wednesday of each month;
with a quarterly Interest Payment Period, on the third
Wednesday of March, June, September and December of each
year; with a semi-annual Interest Payment Period, on the
third Wednesday of the two months specified pursuant to
Settlement Procedure "A" below; and with an annual
Interest Payment Period, on the third Wednesday of the
month specified pursuant to Settlement Procedure "A"
below; provided, however, that if an Interest Payment
Date for Floating Rate Book-Entry Notes would otherwise
be a day that is not a Business Day with respect to such
Floating Rate Book-Entry Notes, such Interest Payment
Date will be postponed to the next succeeding Business
Day with respect to such Floating Rate Book-Entry Notes,
except in the case of a LIBOR Note if such Business Day
is in the next succeeding calendar month, in which event
such Interest Payment Date will be the immediately
preceding Business Day; and provided, further, if the
Maturity Date (or date of redemption or repayment) of
any Floating Rate Note would fall on a day that is not a
Business Day, the payment of interest and principal
(and premium, if any) may be made on the next succeeding
Business Day, and no interest on such payment will accrue
for the period from and after the Maturity Date (or the
date of redemption or repayment). In the case of a
Floating Rate Book- Entry Note issued between a Regular
Record Date and an Interest Payment Date or on an
Interest Payment Date, the first interest payment will
be made on the Interest Payment Date following the next
succeeding Regular Record Date.
Notice of Interest Payment and Regular Record Dates.
On the first Business Day of January, April, July and
October of each year, MELLON will deliver to the
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<PAGE> 24
Company and DTC a written list of Regular Record Dates
and Interest Payment Dates that will occur with respect to
Book-Entry Notes during the six-month period beginning on
such first Business Day. Promptly after each Interest
Determination Date for Floating Rate Notes, MELLON as
Calculation Agent will notify Standard & Poor's
Corporation of the interest rates determined on such
Interest Determination Date.
Calculation of Fixed Rate Book-Entry Notes. Interest on Fixed Rate
Interest: Book-Entry Notes (including interest for partial
periods) will be calculated on the basis of a year of
twelve thirty-day months. (Examples of interest
calculations are as follows: the period from August 15,
1994, to February 18, 1995, equals 6 months and 3 days, or
183 days; the interest payable equals 183/360 times the
annual rate of interest times the principal amount of the
Note. The period from September 17, 1994, to February 18,
1995, equals 4 months and 31 days, or 151 days; the
interest payable equals 151/360 times the annual rate of
interest times the principal amount of the Note.)
Floating Rate Book-Entry Notes. Interest rates on
Floating Rate Book-Entry Notes will be determined as set
forth in the form of such Notes. Interest on Floating
Rate Book-Entry Notes will be calculated on the basis of
actual days elapsed and a year of 360 days except
that in the case of Treasury Rate Notes, interest will be
calculated on the basis of the actual number of days in
the year.
Payments of Payment of Interest Only. Promptly after each Regular
Principal and Record Date MELLON will deliver to the Company and DTC a
Interest: written notice specifying by CUSIP number the amount of
interest to be paid on each Global Security on the
following Interest Payment Date (other than an Interest
Payment Date coinciding with Maturity) and the total of
such amounts. DTC will confirm the amount payable on each
Global Security on such Interest Payment Date by reference
to the daily bond reports
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<PAGE> 25
published by Standard & Poor's Corporation. The
Company will pay to MELLON, as Paying Agent for the Notes,
the total amount of interest due on such Interest Payment
Date (other than at Maturity), and MELLON will pay such
amount to DTC at the times and in the manner set forth
below under "Manner of Payment." If any Interest Payment
Date for a Book-Entry Note is not a Business Day, the
payment due on such day shall be made on the next
succeeding Business Day and no interest shall accrue on
such payment for the period from and after such Interest
Payment Date.
Payments at Maturity. On or about the first Business
Day of each month, MELLON will deliver to the Company and
DTC a written list of principal and interest to be paid on
each Global Security maturing either at Stated Maturity or
on a Redemption or Repayment Date in the following month.
The Company and DTC will confirm the amounts of such
principal and interest payments with respect to each such
Global Security on or about the fifth Business Day
preceding the Maturity of such Global Security. The
Company will pay to MELLON, as the Paying Agent for the
Notes, the principal amount of such Global Security,
together with interest due at such Maturity. MELLON will
pay such amounts to DTC at the times and in the manner set
forth below under "Manner of Payment." If any Maturity of
a Global Security representing Book-Entry Notes is not a
Business Day, the payment due on such day shall be made on
the next succeeding Business Day and no interest shall
accrue on such payment for the period from and after such
Maturity. Promptly after payment to DTC of the principal
and interest due at the Maturity of such Global Security,
MELLON will cancel such Global Security in accordance with
the terms of the Indenture and deliver it to the Company
with a certificate of cancellation, a copy of which
certificate shall also be furnished to the Trustee for
such series.
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<PAGE> 26
Manner of Payment. The total amount of any principal
and interest due on Global Securities on any Interest
Payment Date or at Maturity shall be paid by the Company
to MELLON in funds available for immediate use by MELLON
as of 9:30 A.M. (New York City time) on such date. The
Company will make such payment on such Global Securities
by instructing MELLON to withdraw funds from an account
maintained by the Company at MELLON. The Company will
confirm such instructions in writing to MELLON. Prior to
10:00 A.M. (New York City time) on each Maturity Date or
as soon as possible thereafter, MELLON will pay by
separate wire transfer (using Fedwire message entry
instructions in a form previously specified by DTC) to an
account at the Federal Reserve Bank of New York previously
specified by DTC, in funds available for immediate use by
DTC, each payment of interest or principal (together with
interest thereon) due on Global Securities on any Maturity
Date. On each Interest Payment Date, interest payment
shall be made to DTC in same day funds in accordance with
existing arrangements between MELLON and DTC. Thereafter
on each such date, DTC will pay, in accordance with its
SDFS operating procedures then in effect, such amounts in
funds available for immediate use to the respective
Participants in whose names the Book-Entry Notes
represented by such Global Securities are recorded in the
book-entry system maintained by DTC. Neither the Company
nor MELLON shall have any direct responsibility or
liability for the payment by DTC to such Participants of
the principal of and interest on the Book-Entry Notes.
Withholding Taxes. The amount of any taxes required
under applicable law to be withheld from any interest
payment on a Book-Entry Note will be determined and
withheld by the Participant, indirect participant in DTC
or other Person responsible for forwarding payments and
materials directly to the beneficial owner of such Note.
Procedure for The Company and the Agents will discuss
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<PAGE> 27
Rate Setting and from time to time the aggregate principal amount of,
Posting: the issuance price of, and the interest rates to be borne
by, Book-Entry Notes that may be sold as a result of the
solicitation of orders by the Agents. If the Company
decides to set prices of, and rates borne by, any
Book-Entry Notes in respect of which the Agents are to
solicit orders (the setting of such prices and rates to be
referred to herein as "posting") or if the Company decides
to change prices or rates previously posted by it, it will
promptly advise the Agents of the prices and rates to be
posted.
Acceptance and Unless otherwise instructed by the Company, each Agent
Rejection of will advise the Company promptly by telephone of all
Offers: offers to purchase Book-Entry Notes received by such
Agent. Unless otherwise agreed by the Company and each of
the Agents, the Company has the sole right to accept
offers to purchase Book-Entry Notes and may reject any
such offer in whole or in part.
Preparation of If any order to purchase a Book-Entry Note is accepted
Pricing by or on behalf of the Company, the Company will prepare a
Supplement: pricing supplement (a "Pricing Supplement") reflecting the
terms of such Note and will arrange to file it with the
Commission in accordance with the applicable paragraph of
Rule 424(b) under the Act. The Company will also deliver
a completed Pricing Supplement, via next day mail or
telecopy to arrive no later than 11:00 A.M. on the
Business Day following the trade date, to the appropriate
Agent at the following locations (or at such other
locations as designated by the appropriate Agent):
Morgan Stanley & Co. Incorporated:
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, NY 10020
Attn: Manager - Credit Department
Telephone: (212) 703-7182
Telecopy: (212) 703-6503
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<PAGE> 28
also, please send a copy to:
Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
New York, NY 10020
Attn: Managing Director Short and Medium Term
Finance Department
Telephone: (212) 296-5322
Telecopy: (212) 764-7490
Merrill Lynch & Co.:
Merrill Lynch & Co. - Tritech Services
4 Corporate Place
Corporate Park 287
Piscataway, NJ 08854
Attn: Final Prospectus Unit/Nachman
Kimerling
Telephone: (908) 878-6525/26/27
Telecopy: (908) 878-6530
also, for recordkeeping purposes, please send a
copy to:
Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
Merrill Lynch World Headquarters
World Financial Center, North Tower
10th Floor
New York, NY 10281-1310
Attn: MTN Product Management
Telephone: (212) 449-3780
Telecopy: (212) 449-2234
Salomon Brothers Inc:
Salomon Brothers Inc
Seven World Trade Center
New York NY 10048
Attn: Medium Term Note Department
Telephone: (212) 783-2882
Telecopy: (212) 783-4120
The Agent will cause a Pricing Supplement to be
delivered to the purchaser of the Note.
In each instance that a Pricing Supplement is prepared,
the Agent will affix the Pricing Supplement to
Prospectuses prior
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<PAGE> 29
to their use. Outdated Pricing Supplements, and the
Prospectuses to which they are attached (other than those
retained for files), will be destroyed.
Settlement: The receipt by the Company of immediately available
funds in payment for a Book-Entry Note and the
authentication and issuance of the Global Security
representing such Note shall constitute "settlement" with
respect to such Note. All orders accepted by the Company
will be settled on the fifth Business Day pursuant to the
timetable for settlement set forth below unless the
Company and the purchaser agree to settlement on another
day, which shall be no earlier than the next Business Day.
Settlement Settlement Procedures with regard to each Book-Entry
Procedures: Note sold by the Company through an Agent, as agent, shall
be as follows:
A. Such Agent will advise the Company by telephone
of the following settlement information:
1. Principal amount.
2. Stated Maturity.
3. In the case of a Fixed Rate Book-Entry
Note, the interest rate, or in the case
of a Floating Rate Book-Entry Note, the
initial interest rate (if known at such
time), the Base Rate, Index Maturity,
Interest Reset Period, Interest Reset
Dates, Spread or Spread Multiplier (if
any), minimum interest rate (if any) and
maximum interest rate (if any).
4. Interest Payment Period and Interest
Payment Dates.
5. Redemption provisions, if any.
6. Repayment provisions, if any.
7. Settlement date.
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<PAGE> 30
8. Price.
9. Agent's commission, determined as
provided in Section 1 of the Distribution
Agreement between the Company and such
Agent.
10. Whether the Note is an Original Issue
Discount Note, and if it is an Original
Issue Discount Note, the total amount of
OID, the yield to maturity and the
initial accrual period OID.
B. The Company will assign a CUSIP number to the
Global Security representing such Note and then
advise MELLON by telephone or electronic
transmission (confirmed in writing at any time on
the same date) of the information set forth in
Settlement Procedure "A" above, such CUSIP number
and the name of such Agent. The Company will
also notify the Agent of such CUSIP number by
telephone as soon as practicable. Each such
communication by the Company shall constitute a
representation and warranty by the Company to
MELLON and to each Agent that (i) such Note is
then, and at the time of issuance and sale
thereof will be, duly authorized for issuance and
sale by the Company, (ii) such Note, and the
Global Security representing such Note, will
conform with the terms of the Indenture, and
(iii) upon authentication and delivery of such
Global Security, the aggregate initial offering
price of all Notes issued under the Indenture
will not exceed $600,000,000, or such larger
amount as instructed by written order of the
Company in accordance with the Indenture (except
for Book-Entry Notes represented by Global
Securities authenticated and delivered in
exchange for or in lieu of Global Securities
pursuant to the Indenture).
C. MELLON will enter a pending deposit
message through DTC's Participant
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<PAGE> 31
Terminal System, providing the following
settlement information to DTC, such Agent,
Standard & Poor's Corporation and Interactive
Data Corporation:
1. The information set forth in Settlement
Procedure "A".
2. The Participant account numbers
maintained by DTC on behalf of MELLON
and the Agents.
3. Identification as a Fixed Rate or
Floating Rate Note.
4. Initial Interest Payment Date for such
Note, number of days by which such date
succeeds the related Record Date (which,
in the case of Floating Rate Notes which
reset daily or weekly, shall be the date
five calendar days immediately preceding
the applicable Interest Payment Date and,
in the case of all other Notes, shall be
the Regular Record Date as defined in
the Note) and amount of interest payable
on such Interest Payment Date.
5. The Interest Payment Period.
6. CUSIP number of the Global Security
representing such Note.
7. Whether such Global Security will
represent any other Book-Entry Note (to
the extent known at such time).
D. The Company will deliver to MELLON the Global
Security representing such Note.
E. MELLON will complete such Note and
authenticate the Global Security representing
such Note.
F. DTC will credit such Note to MELLON's
participant account at DTC.
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<PAGE> 32
G. MELLON will enter an SDFS deliver order
through DTC's Participant Terminal System
instructing DTC to (i) debit such Note to
MELLON's participant account and credit such Note
to such Agent's participant account and (ii)
debit such Agent's settlement account and credit
MELLON's settlement account for an amount equal
to the price of such Note less such Agent's
commission. The entry of such a deliver order
shall constitute a representation and warranty by
MELLON to DTC that (a) the Global Security
representing such Book-Entry Note has been issued
and authenticated and (b) MELLON is holding such
Global Security pursuant to the Certificate
Agreement between MELLON and DTC.
H. Such Agent will enter an SDFS deliver order
through DTC's Participant Terminal System
instructing DTC (i) to debit such Note to such
Agent's participant account and credit such Note
to the participant accounts of the Participants
with respect to such Note and (ii) to debit the
settlement accounts of such Participants and
credit the settlement account of such Agent for
an amount equal to the price of such Note.
I. Transfers of funds in accordance with SDFS
deliver orders described in Settlement
Procedures "G" and "H" will be settled in
accordance with SDFS operating procedures in
effect on the settlement date.
J. MELLON will credit to the account of the
Company maintained at MELLON funds available
for immediate use in the amount transferred to
MELLON in accordance with Settlement Procedure
"G".
K. Monthly, MELLON will send to the Company a
statement setting forth the principal amount of
Notes Outstanding as of that date under the
Indenture
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<PAGE> 33
and setting forth a brief description of any
sales of which the Company has advised MELLON but
which have not yet been settled.
L. Such Agent will confirm the purchase of such
Note to the purchaser either by transmitting to
the Participants with respect to such Note a
confirmation order or orders through DTC's
institutional delivery system or by mailing a
written confirmation to such purchaser.
Settlement For orders of Book-Entry Notes solicited by an Agent,
Procedures as agent, and accepted by the Company for settlement on
Timetable: the first Business Day after the sale date, Settlement
Procedures "A" through "K" set forth above shall be
completed as soon as possible but not later than the
respective times (New York City time) set forth below:
Settlement
Procedure Time
---------- ----
A 11:00 A.M. on the sale date
B 12:00 Noon on the sale date
C 2:00 P.M. on the sale date
D 3:00 P.M. on day before
settlement date
E 9:00 A.M. on settlement
date
F 10:00 A.M. on settlement
date
G-H 2:00 P.M. on settlement
date
I 4:45 P.M. on settlement
date
J-L 5:00 P.M. on settlement
date
If a sale is to be settled more than one Business Day
after the sale date, Settlement Procedures "A", "B" and
"C" shall be completed as soon as practicable but no later
than 11:00 A.M., Noon and 2:00 P.M., as the case may be,
on the first Business Day after the sale date. If the
initial interest rate for a Floating Rate Book-Entry Note
has not been determined at the time that Settlement
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<PAGE> 34
Procedure "A" is completed, Settlement Procedures "B"
and "C" shall be completed as soon as such rate has been
determined but no later than Noon and 2:00 P.M.,
respectively, on the second Business Day before the
settlement date. Settlement Procedure "I" is subject to
extension in accordance with any extension of Fedwire
closing deadlines and in the other events specified in the
SDFS operating procedures in effect on the settlement
date.
If settlement of a Book-Entry Note is rescheduled or
cancelled, MELLON will deliver to DTC, through DTC's
Participation Terminal System, a cancellation message to
such effect by no later than 2:00 P.M. on the Business Day
immediately preceding the scheduled settlement date.
Failure to If MELLON fails to enter an SDFS deliver order with
Settle: respect to a Book-Entry Note pursuant to Settlement
Procedure "G", MELLON may deliver to DTC, through DTC's
Participant Terminal System, as soon as practicable a
withdrawal message instructing DTC to debit such Note to
MELLON's participant withdrawal message, provided that
MELLON's participant account contains a principal amount
of the Global Security representing such Note that is at
least equal to the principal amount to be debited. If a
withdrawal message is processed with respect to all the
Book-Entry Notes represented by a Global Security, MELLON
will mark such Global Security "cancelled", make
appropriate entries in MELLON's records and send such
cancelled Global Security to the Company. The CUSIP number
assigned to such Global Security shall, in accordance with
CUSIP Service Bureau procedures, be cancelled and not
immediately reassigned. If a withdrawal message is
processed with respect to one or more, but not all, of the
Book-Entry Notes represented by a Global Security, MELLON
will exchange such Global Security for two Global
Securities, one of which shall represent such Book-Entry
Note or Notes and shall be cancelled immediately after
issuance and the other of which shall represent the
remaining
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<PAGE> 35
Book-Entry Notes previously represented by the
surrendered Global Security and shall bear the CUSIP number
of the surrendered Global Security.
If the purchase price for any Book-Entry Note is not
timely paid to the Participants with respect to such Note
by the beneficial purchaser thereof (or a Person, including
an indirect participant in DTC, acting on behalf of such
purchaser), such Participants and, in turn, the Agent for
such Note may enter SDFS deliver orders through DTC's
Participant Terminal System reversing the orders entered
pursuant to Settlement Procedures "H" and "G",
respectively. Thereafter, MELLON will deliver the
withdrawal message and take the related actions described
in the preceding paragraph.
Notwithstanding the foregoing, upon any failure to settle
with respect to a Book-Entry Note, DTC may take any
actions in accordance with its SDFS operating procedures
then in effect. In the event of a failure to settle with
respect to one or more, but not all, of the Book-Entry
Notes to have been represented by a Global Security, MELLON
will provide, in accordance with Settlement Procedures "D"
and "E", for the authentication and issuance of a Global
Security representing the other Book-Entry Notes to have
been represented by such Global Security and will make
appropriate entries in its records.
Procedures for When the Company has determined to change the interest
Rate Changes: rates of Notes being offered, it will promptly advise the
Agents and the Agents will forthwith suspend solicitation
of offers. The Agents will telephone the Company with
recommendations as to the changed interest rates. At such
time as the Company has advised the Agents of the new
interest rates, the Agents may resume solicitation of
offers. Until such time only "indications of interest" may
be recorded.
Suspension of Subject to the Company's representations,
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<PAGE> 36
Solicitation; warranties and covenants contained in the Distribution
Amendment or Agreement, the Company may instruct each Agent to suspend
Supplement solicitation of purchases of Book-Entry Notes at any
time. Upon receipt of such instructions, each Agent will
forthwith suspend such solicitations until such time as it
has been advised by the Company that such solicitations
may be resumed. If the Company decides to amend or
supplement the registration statement filed by the Company
with the Securities and Exchange Commission with respect
to the Notes or the prospectus and prospectus supplement
relating to the Notes, it will promptly advise each Agent
and will furnish it with the proposed amendment or
supplement, all consistent with the Company's obligations
under the Distribution Agreement. The Company will,
consistent with such obligations, promptly advise each
Agent and MELLON whether orders outstanding at the time
each Agent suspends solicitation may be settled and
whether copies of such prospectus and prospectus
supplement as in effect at the time of the suspension,
together with the appropriate pricing supplement, may be
delivered in connection with the settlement of such
orders. The Company will have the sole responsibility for
such decision and for any arrangements that may be made in
the event that the Company determines that such orders may
not be settled or that copies of such prospectus,
prospectus supplement and pricing supplement may not be so
delivered.
Delivery of A copy of the prospectus and prospectus supplement
Prospectus: relating to the Notes and a pricing supplement relating to
a Book-Entry Note must accompany or precede the
earliest of any written offer of such Note, confirmation
of the purchase of such Note or payment for such Note by
its purchaser. If notice of a change in the terms of the
Book-Entry Notes is received by an Agent between the time
an order for a Book-Entry Note is placed and the time
written confirmation thereof is sent by such Agent to a
customer or his agent, such confirmation shall be
accompanied by a prospectus, prospectus supplement and
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<PAGE> 37
pricing supplement setting forth the terms in effect
when the order was placed. Subject to the preceding
paragraph, each Agent will deliver a prospectus,
prospectus supplement and pricing supplement as herein
described with respect to each Book-Entry Note sold by it.
PART II: ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES
MELLON will serve as Securities Registrar in connection with
the Certificated Notes.
Issuance: Each Certificated Note will be dated and issued as of the
date of its authentication by MELLON. Each
Certificated Note will bear an Original Issue Date, which
will be (i) with respect to an original Certificated Note
(or any portion thereof), its original issuance date
(which will be the settlement date) and (ii) with respect
to any Certificated Note (or portion thereof) issued
subsequently upon transfer or exchange of a Certificated
Note or in lieu of a destroyed, lost or stolen
Certificated Note, the original Issue Date of the
predecessor Certificated Note, regardless of the date of
authentication of such subsequently issued Certificated
Note.
Registration: Certificated Notes will be issued only in fully
registered form without coupons.
Transfers and A Certificated Note may be presented for transfer or
Exchanges: exchange at the corporate trust office of MELLON.
Certificated Notes will be exchangeable for other
Certificated Notes of the same series having identical
terms but different denominations without service charge.
Certificated Notes will not be exchangeable for Book-Entry
Notes.
Maturities: Each Certificated Note will mature on a date from more
than nine months to ten years from the settlement date for
such Note.
Denominations: Unless otherwise specified in the applicable Pricing
Supplement,
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<PAGE> 38
Certificated Notes will be issued in denominations of
$1,000 or any amount that is a multiple of $1,000.
Interest: General. Interest on each Certificated Note will accrue
from the Original Issue Date of such Note for the first
interest period and from the most recent Interest
Payment Date to which interest has been paid for all
subsequent interest periods. Each payment of interest on a
Certificated Note will include interest accrued to but
excluding the Interest Payment Date or Maturity (other than
a Maturity of a Fixed Rate Certificated Note occurring on
the thirty-first day of a month, in which case such payment
will include interest accruing to but excluding the
thirtieth day of such month).
Fixed Rate Certificated Notes. Unless otherwise specified
pursuant to Settlement Procedure "A" below, interest
payments on Fixed Rate Certificated Notes will be made
semi-annually on May 1 and November 1 of each year and
at Maturity; provided, however, that in the case of Fixed
Rate Certificated Notes issued between a Regular Record
Date and an Interest Payment Date or on an Interest Payment
Date, the first interest payment will be made on the
Interest Payment Date following the next succeeding Regular
Record Date; and provided, further, that any payment
required to be made on a date that is not a Business Day
need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as
if made on such date, and no additional interest shall
accrue as a result of such delayed payment.
Floating Rate Certificated Notes. Interest payments
will be made on Floating Rate Certificated Notes monthly,
quarterly, semi-annually or annually. Interest will be
payable, in the case of Floating Rate Certificated Notes
with a monthly Interest Payment Period, on the third
Wednesday of each month; with a quarterly Interest Payment
Period, on the third Wednesday of March, June, September
and December of each year; with a
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<PAGE> 39
semi-annual Interest Payment Period, on the third
Wednesday of the two months specified pursuant to
Settlement Procedure "A" below; and with an annual Interest
Payment Period, on the third Wednesday of the month
specified pursuant to Settlement Procedure "A" below;
provided, however, that if an Interest Payment Date for
Floating Rate Certificated Notes would otherwise be a day
that is not a Business Day with respect to such Floating
Rate Certificated Notes, such Interest Payment Date will be
postponed to the next succeeding Business Day with respect
to such Floating Rate Certificated Notes, except in the
case of a LIBOR Note if such Business Day is in the next
succeeding calendar month, in which event such Interest
Payment Date will be the immediately preceding Business
Day; and provided, further, if the Maturity Date (or date
of redemption or repayment) of any Floating Rate Note would
fall on a day that is not a Business Day, the payment of
interest and principal (and premium, if any) may be made on
the next succeeding Business Day, and no interest on such
payment will accrue for the period from and after the
Maturity Date (or the date of redemption or repayment). In
the case of a Floating Rate Certificated Note issued
between a Regular Record Date and an Interest Payment Date
or on an Interest Payment Date, the first interest payment
will be made on the Interest Payment Date following the
next succeeding Regular Record Date.
Calculation of Fixed Rate Certificated Notes. Interest on Fixed Rate
Interest: Certificated Notes (including interest for partial periods)
will be calculated on the basis of a year of twelve
thirty-day months. (Examples of interest calculations are
as follows: August 15, 1994 to February 18, 1995, equals
6 months and 3 days or 183 days; the interest payable
equals 183/360
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<PAGE> 40
times the annual rate of interest times the principal
amount of the Note. The period from September 17, 1994, to
February 18, 1995 equals 4 months and 31 days, or 151 days;
the interest payable equals 151/360 times the annual rate
of interest times principal amount of the Note.)
Floating Rate Certificated Notes. Interest rates on
Floating Rate Certificated Notes will be determined as set
forth in the form of Notes. The Company and MELLON will
confirm the amount of the initial interest payment due on
any Floating Rate Certificated Note for which the initial
Interest Period is shorter or longer than the Index
Maturity. Interest on Floating Rate Certificated Notes
will be calculated on the basis of actual days elapsed and
a year of 360 days except that in the case of Treasury Rate
Notes, interest will be calculated on the basis of the
actual number of days in the year.
Payments of MELLON will pay the principal amount of each Certificated
Principal and Note at Maturity upon presentation and surrender of such
Interest: Note to MELLON. Such payment, together with payment of
interest due at Maturity of such Note, will be made in
funds available for immediate use by MELLON and in turn by
the Holder of such Note. Certificated Notes presented to
MELLON at Maturity for payment will be cancelled by
MELLON and delivered to the Company with a certificate of
cancellation. All interest payments on a Certificated Note
(other than interest due at Maturity) will be made by check
drawn on MELLON (or another Person appointed by MELLON) and
mailed by MELLON to the Person entitled thereto as provided
in such Note and the Indenture; provided, however, that the
Holder of $10,000,000 or more of Notes with similar tenor
and terms will be entitled to receive payment by wire
transfer. Following each Regular Record Date and Special
Record Date, MELLON will furnish the Company with a list of
interest payments to be made on the following Interest
Payment Date for each Certificated Note and in total for
all Certificated Notes. Interest at Maturity will be
payable to the Person to whom the payment of principal is
payable. MELLON will provide monthly to the Company lists
of principal and interest, to the extent ascertainable, to
be paid on Certificated
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<PAGE> 41
Notes maturing in the next month. MELLON will be
responsible for withholding taxes on interest paid on
Certificated Notes as required by applicable law.
If any Interest Payment Date for or the Maturity of a
Certificated Note is not a Business Day, the payment due on
such day shall be made on the next succeeding Business Day
and no interest shall accrue on such payment for the period
from and after such Interest Payment Date or Maturity, as
the case may be.
Procedure for The Company and the Agents will discuss from time to
Rate Setting and time the aggregate principal amount of, the issuance price
Posting: of, and the interest rates to be borne by, Certificated
Notes that may be sold as a result of the solicitation of
orders by the Agents. If the Company decides to set prices
of, and rates borne by, any Certificated Notes in respect
of which the Agents are to solicit orders (the setting of
such prices and rates to be referred to herein as
"posting") or if the Company decides to change prices or
rates previously posted by it, it will promptly advise the
Agents of the prices and rates to be posted.
Acceptance and Unless otherwise instructed by the Company, each Agent
Rejection of will advise the Company promptly by telephone of all offers
Offers: to purchase Certificated Notes received by such Agent,
other than those rejected by it in whole or in part in the
reasonable exercise of its discretion. Unless otherwise
agreed by the Company and each of the Agents, the Company
has the sole right to accept offers to purchase Notes and
may reject any such offer in whole or in part.
Preparation of If any Order to purchase a Certificated Note is accepted
Pricing by or on behalf of the Company, the Company will prepare a
Supplement: pricing supplement (a "Pricing Supplement") reflecting the
terms of such Note and will arrange to file it with the
Commission in accordance with the applicable paragraph of
Rule 424(b) under the Act. The Company will also deliver a
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<PAGE> 42
completed Pricing Supplement, via next day mail or
telecopy to arrive no later than 11:00 A.M. on the Business
Day following the trade date, to the appropriate Agent at
the following locations (or at such other location as
designated by the appropriate Agent):
Morgan Stanley & Co. Incorporated:
Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, NY 10020
Attn: Manager - Credit Department
Telephone: (212) 703-7182
Telecopy: (212) 703-6503
also, please send a copy to:
Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
New York, NY 10020
Attn: Managing Director Short and
Medium Term Finance Department
Telephone: (212) 296-5322
Telecopy: (212) 764-7490
Merrill Lynch & Co.:
Merrill Lynch & Co. - Tritech Services
4 Corporate Place
Corporate Park 287
Piscataway, NJ 08854
Attn: Final Prospectus Unit/Nachman
Kimerling
Telephone: (908) 878-6525/26/27
Telecopy: (908) 878-6530
also, for recordkeeping purposes, please send a copy
to:
Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
Merrill Lynch World Headquarters
World Financial Center, North Tower
10th Floor
New York, NY 10281-1310
Attn: MTN Product Management
Telephone: (212) 449-3780
Telecopy: (212) 449-2234
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<PAGE> 43
Salomon Brothers Inc:
Salomon Brothers Inc
Seven World Trade Center
New York NY 10048
Attn: Medium Term Note Department
Telephone: (212) 783-2882
Telecopy: (212) 783-4120
The Agent will cause a Pricing Supplement to be
delivered to the purchaser of the Note.
In each instance that a Pricing Supplement is prepared,
the Agent will affix the Pricing Supplement to Prospectuses
prior to their use. Outdated Pricing Supplements, and the
Prospectuses to which they are attached (other than those
retained for files), will be destroyed.
Settlement: The receipt by the Company of immediately available funds
in exchange for an authenticated Certificated Note
delivered to the selling Agent and such Agent's delivery
of such Note against receipt of immediately available
funds shall, with respect to such Note, constitute
"settlement". All orders accepted by the Company will be
settled on or before the fifth Business Day next
succeeding the date of acceptance pursuant to the
timetable for settlement set forth below, unless the
Company and the purchaser agree to settlement on a
later date.
Settlement Settlement Procedures with regard to each Certificated
Procedures: Note sold by the Company through an Agent, as agent, shall
be as follows:
A. Such Agent will advise the Company by telephone of
the following settlement information:
1. Name in which such Note is to be
registered ("Registered Owner").
2. Address of the Registered Owner and
address for payment of principal and
interest.
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<PAGE> 44
3. Taxpayer identification number of the
Registered Owner (if available).
4. Principal amount.
5. Stated Maturity.
6. In the case of a Fixed Rate
Certificated Note, the interest rate or,
in the case of a Floating Rate
Certificated Note, the initial interest
rate (if known at such time), Base Rate,
Index Maturity, Interest Reset Dates,
Spread or Spread Multiplier (if any),
minimum interest rate (if any) and
maximum interest rate (if any).
7. Interest Payment Period and Interest
Payment Dates.
8. Redemption provisions, if any.
9. Repayment provisions, if any.
10. Settlement date.
11. Price.
12. Agent's commission, determined as
provided in Section 1 of the Distribution
Agreement between the Company and such
Agent.
13. Whether the Note is an Original Issue
Discount Note, and if it is an Original
Issue Discount Note, the total amount of
OID, the yield to maturity and the
initial accrual period OID.
B. The Company will advise MELLON by telephone or
electronic transmission (confirmed in writing at
any time on the sale date) of the information set
forth in Settlement Procedure "A" above and the
name of such Agent. Each such communication by
the Company shall constitute a representation and
warranty by the Company to MELLON and to each Agent
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<PAGE> 45
that (i) such Note is then, and at the time of
issuance and sale thereof will be, duly authorized
for issuance and sale by the Company, (ii) such
Note will conform with the terms of the Indenture,
and (iii) upon authentication and delivery of such
Note, the aggregate initial offering price of all
Notes issued under the Indenture will not exceed
$600,000,000, or such larger amount as instructed
by written order of the Company in accordance with
the Indenture (except for Notes represented by
Notes authenticated and delivered in exchange for
or in lieu of Notes pursuant to such Indentures).
C. The Company will deliver to MELLON for such
Note either (i) a preprinted four-ply packet or
(ii) a single-ply Note with three appropriately
designated photocopies thereof in forms that have
been approved by the Company, the Agents and
MELLON, as follows:
1. Note.
2. Stub (or Copy) One - For MELLON.
3. Stub (or Copy) Two - For Agent.
4. Stub (or Copy) Three - For the Company.
D. MELLON will complete such Note and
authenticate such Note and deliver it and Stubs
(Copies) One and Two to such Agent, and such
Agent will acknowledge receipt of the Note by
stamping or otherwise marking Stub (Copy) One
and returning it to MELLON. Such delivery will
be made only against such acknowledgment of
receipt and evidence that instructions have been
given by such Agent for payment to the account of
the Company at MELLON, in funds available for
immediate use, of an amount equal to the price
of such Note less such Agent's commission.
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<PAGE> 46
In the event that the instructions given by such
Agent for payment to the account of the Company
are revoked, the Company will as promptly as
possible wire transfer to the account of such
Agent an amount of immediately available funds
equal to the amount of such payment made.
E. Such Agent will deliver such Note to the
customer against payment in immediately payable
funds. Such Agent will obtain the
acknowledgment of receipt of such Note by
retaining Stub (Copy) Two.
F. MELLON will send Stub (Copy) Three to the
Company by first-class mail. Periodically, MELLON
will also send to the Company a statement setting
forth the principal amount of the Notes
Outstanding as of that date under the Indentures
and setting forth a brief description of any
sales of which the Company has advised MELLON but
which have not yet been settled.
Settlement For offers of Certificated Notes solicited by an Agent,
Procedures as agent, and accepted by the Company, Settlement
Timetable: Procedures "A" through "F" set forth above shall be
completed on or before the respective times (New York City
time) set forth below:
Settlement
Procedure Time
---------- ----
A 2:00 P.M. on day before
settlement date
B 3:00 P.M. on day before
settlement date
C-D 2:15 P.M. on settlement
date
E 3:00 P.M. on settlement
date
F 5:00 P.M. on settlement
date
Failure to If a purchaser fails to accept delivery of and make
Settle: payment for any Certificated Note, the selling Agent will
notify the Company and MELLON by telephone and return
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<PAGE> 47
such Note to MELLON. Upon receipt of such notice, the
Company will immediately wire transfer to the account of
the Agent an amount equal to the amount previously
credited thereto in respect of such Note. Such wire
transfer will be made on the settlement date, if possible,
and in any event not later than the day following the
settlement date. If the failure shall have occurred for
any reason other than a default by such Agent in the
performance of its obligations hereunder and under the
Distribution Agreement with the Company, then the Company
will reimburse such Agent or MELLON, as appropriate, on an
equitable basis for its loss of the use of the funds
during the period when they were credited to the account
of the Company. Immediately upon receipt of the
Certificated Note in respect of which such failure
occurred, MELLON will mark such Note "cancelled," make
appropriate entries in MELLON's records and send such Note
to the Company.
Procedure for When the Company has determined to change the interest
Rate Changes: rates of Notes being offered, it will promptly advise the
Agents and the Agents will forthwith suspend solicitation
of offers. The Agents will telephone the Company with
recommendations as to the changed interest rates. At such
time as the Company has advised the Agents of the new
interest rates, the Agents may resume solicitation of
offers. Until such time only "indications of interest"
may be recorded.
Suspension of Subject to the Company's representations, warranties
Solicitation; and covenants contained in the Distribution Agreement, the
Amendments or Company may instruct each Agent to suspend solicitation of
Supplement: purchases of Certificated Notes at any time. Upon receipt
of such instructions, each Agent will forthwith suspend
such solicitations until such time as it has been advised
by the Company that such solicitations may be resumed. If
the Company decides to amend or supplement the
registration statement filed by the Company with the
Securities and Exchange Commission with respect to the
Notes or the prospectus and prospectus supplement
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<PAGE> 48
relating to the Notes, it will promptly advise each
Agent and will furnish it with the proposed amendment or
supplement, all consistent with the Company's obligations
under the Distribution Agreement. The Company will,
consistent with such obligations, promptly advise each
Agent and MELLON whether orders outstanding at the time
each Agent suspends solicitation may be settled and
whether copies of such prospectus and prospectus
supplement as in effect at the time of the suspension,
together with the appropriate pricing supplement, may be
delivered in connection with the settlement of such
orders. The Company will have the sole responsibility for
such decision and for any arrangements that may be made in
the event that the Company determines that such orders may
not be settled or that copies of such prospectus,
prospectus supplement and pricing supplement may not be so
delivered.
Delivery of A copy of the prospectus and prospectus supplement
Prospectus: relating to the Notes and a pricing supplement relating to
a Certificated Note must accompany or precede the earlier
of any written offer of such Note, delivery of such Note,
confirmation of the purchase of such Note and payment for
such Note by its purchaser. If notice of a change in the
terms of the Certificated Notes is received by an Agent
between the time an order for a Certificated Note is
placed and the time written confirmation thereof is sent
by such Agent to a customer or his agent, such
confirmation shall be accompanied by a prospectus,
prospectus supplement and pricing supplement setting forth
the terms in effect when the order was placed. Subject to
the preceding paragraph, each Agent will deliver a
prospectus, prospectus supplement and pricing supplement
as herein described with respect to each Note sold by it.
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<PAGE> 49
EXHIBIT B
AVCO FINANCIAL SERVICES, INC.
MEDIUM-TERM NOTES
DUE FROM MORE THAN 9 MONTHS TO 10 YEARS FROM DATE OF ISSUE
TERMS AGREEMENT
, 199
Avco Financial Services, Inc.
3349 Michelson Drive
Irvine, California 92715
Attention: Treasurer
Subject in all respects to the terms and conditions of the Distribution
Agreement dated October 12, 1994, between you and the undersigned (the
"Agreement"), the undersigned agrees to purchase the following Medium Term
Notes, Series F, of Avco Financial Services, Inc.:
Aggregate Principal Amount:
Interest Rate or Method of Calculation:
Interest Reset Period:
Maximum or Minimum Interest Rates:
Spread or Spread Multiplier:
Date of Maturity:
Interest Payment Dates:
Regular Record Dates:
Redemption/Repayment:
Price to Public:
Purchase Price: % of Principal Amount [plus accrued interest from
, 199 ]
Purchase Date and Time:
Other Provisions:
Place for Delivery of Notes and Payment Therefor:
Form:
Method of Payment:
Modification, if any, in the requirements to deliver the documents specified in
Section 5(B)(b) of the Agreement:
Period during which additional debt securities may not be sold pursuant to
Section 4(m) of the Agreement (until the Purchase Date, unless otherwise
specified herein):
[ ]
By:
--------------------------------
Accepted:
AVCO FINANCIAL SERVICES, INC.
By:
---------------------------------
Title:
<PAGE> 50
EXHIBIT C
FORM OF OPINION OF
HERBERT F. SMITH, ESQUIRE, GENERAL COUNSEL OF
AVCO FINANCIAL SERVICES, INC.
The opinion of counsel for the Company, to be delivered pursuant to Section
4(j), 5(A)(b) or 5(B)(b) of this Agreement, shall be to the effect set forth
below. All references to the "Registration Statement" shall be to the
Registration Statement as amended as of the date of such opinion and all
references to the "Note Prospectus" shall be to the Note Prospectus, as amended
and supplemented as of the date of such opinion.
(i) The Company has been duly incorporated and is an existing corporation
in good standing under the laws of its jurisdiction of incorporation; the
Company's subsidiaries have been duly incorporated and are existing corporations
in good standing under the laws of their respective jurisdictions of
incorporation; each of the Company and its subsidiaries has full power and
authority (corporate and other) to conduct its business as described in the
Registration Statement and Note Prospectus; and each of the Company and its
subsidiaries is duly qualified to do business in each jurisdiction in which it
owns or leases real property or in which the conduct of its business requires
such qualification, or if in any jurisdiction the Company or any of its
subsidiaries is not so qualified, the failure to so qualify would not, in the
aggregate, have any material adverse effect upon the business, condition or
properties of the Company and its subsidiaries, taken as a whole; and all of the
outstanding shares of capital stock of each of the Company's subsidiaries have
been duly authorized and validly issued, are fully paid and non-assessable and,
with respect to any such subsidiary organized under the laws of the United
States or Canada or any of their respective jurisdictions, are owned
beneficially (except as otherwise stated in the Registration Statement) by the
Company subject to no security interest, other encumbrance, or adverse claim;
(ii) Each of the Indentures has been duly authorized, executed, and
delivered, has been qualified under the Trust Indenture Act, and constitutes a
valid and legally binding instrument in accordance with its terms; the Notes
have been duly authorized and, when executed and authenticated as specified in
the Senior Indenture or the Senior Subordinated Indenture, as the case may be,
and delivered pursuant to the provisions of this Agreement, will constitute
valid and legally binding obligations of the Company in accordance with their
terms and the terms of the applicable indenture, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles; and
the Notes and the Indentures conform to the description thereof in the Note
Prospectus;
(iii) The Registration Statement has become effective under the Act and to
the best knowledge of such counsel no stop order suspending the effectiveness of
the Registration Statement has been issued, and no proceeding for that purpose
has been instituted or, to the knowledge of such counsel, threatened by the
Commission;
(iv) The Registration Statement and the Note Prospectus, as of their
respective effective or issue dates, complied as to form in all material
respects with the requirements of the Act, the Trust Indenture Act and the rules
and regulations thereunder; such counsel has no reason to believe that the
Registration Statement, at the time it became effective and as of the date of
the opinion, or the Note Prospectus or any amendment or supplement thereto, as
of the date of this Agreement or the date of the opinion, 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; and
the documents incorporated by reference in the Registration Statement or Note
Prospectus, when they became effective under the Act or were filed with the
Commission under the Exchange Act, as the case may be, complied as to form in
all material respects with the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder; it being
understood that such counsel need express no opinion as to the financial
statements or other financial data included in any of the documents mentioned in
this clause;
<PAGE> 51
(v) The descriptions in the Registration Statement and Note Prospectus of
statutes, legal and governmental proceedings, contracts and other documents are
accurate and fairly present the information required to be shown; and such
counsel does not know of any statutes or legal or governmental proceedings
required to be described in the Prospectus which are not described as required,
or of any contracts or documents of a character required to be described in the
Registration Statement or Note Prospectus (or then required to be filed under
the Exchange Act if upon such filing they would be incorporated by reference
therein) or to be filed as exhibits to the Registration Statement which are not
described and filed as required; and
(vi) This Agreement and any Terms Agreement have been duly authorized,
executed and delivered by the Company; the performance thereof and the
consummation of the transactions therein contemplated will not result in a
breach or violation of any of the terms and provisions of, or constitute a
default under, any statute, any agreement or instrument known to such counsel to
which the Company or any of its subsidiaries is a party or by which it is bound
or to which any of the property of the Company or any of its subsidiaries is
subject, the Company's charter or by-laws, or any order, rule or regulation
known to such counsel of any court or governmental agency or body having
jurisdiction over the Company or any of its properties; and no consent,
approval, authorization or order of, or filing with, any court or governmental
agency or body is required for the consummation of the transactions contemplated
by this Agreement and any Terms Agreement in connection with the issuance or
sale of the Notes by the Company, except such as have been obtained under the
Act and the Trust Indenture Act and such as may be required under state
securities laws in connection with the sale of the Notes.
In addition, such opinion shall also cover such other matters as the Agent
may reasonably require.
C-2
<PAGE> 52
EXHIBIT D
FORM OF LETTER OF
ERNST & YOUNG
INDEPENDENT AUDITORS TO THE COMPANY
All references to the "Registration Statement" shall be to the Registration
Statement as amended as of the date of such letter and all references to the
"Note Prospectus" shall be to the Note Prospectus, as amended and supplemented
as of the date of such letter.
(1) In their opinion, the financial statements examined by them and
incorporated by reference in the Registration Statement and Note Prospectus
comply as to form in all material respects with the applicable accounting
requirements of the Act or the Exchange Act, as applicable, and the published
rules and regulations thereunder.
Include the following clauses modified appropriately in light of each of
the documents incorporated by reference in the Note Prospectus and any interim
results contained in the Note Prospectus.
(2) On the basis of procedures referred to in such letter, including a
reading of the latest available interim financial statements of the Company and
inquiries of officials of the Company responsible for financial and accounting
matters, nothing caused them to believe that:
[If incorporated Annual Report on Form 10-K contains unaudited
financial information derived from audited financial statements (e.g.,
unaudited five or ten year summaries of financial information),
insert -- (A) the unaudited information with respect to the results of
operations [and financial position] for [and at the end of] the years
ended , 19 , included [or incorporated by reference] in the
Company's Annual Report on Form 10-K for the year ended , 19
does not comply as to form in all material respects with the applicable
accounting requirements of the Exchange Act and the published rules and
regulations thereunder, or does not agree with the corresponding amounts in
the audited financial statements for the years then ended included [or
incorporated by reference] in the Company's Annual Reports on Form 10-K for
the year ended , 19 , and , 19 ; or]
[If Note Prospectus includes unaudited information derived from
audited financial statements, insert -- (B) the unaudited information with
respect to the results of operations [and financial position] for [and at
the end of] the years ended , 19 , included in the Note
Prospectus under the caption " " does not agree
with the corresponding amounts in the audited financial statements for the
years then ended included [or incorporated by reference] in the Company's
Annual Reports on Form 10-K for the years ended , 19 ,
and , 19 ; or]
[If a Quarterly Report on Form 10-Q is incorporated by reference in
the Note Prospectus, insert -- (C) the unaudited financial statements
included in the Company's Quarterly Report[s] on Form 10-Q for the
quarter[s] ended , 19 [,] [and] [ , 19 ] [and]
[ , 19 ] [respectively,] do not comply as to form in all material
respects with the applicable accounting requirements of the Exchange Act
and the published rules and regulations thereunder or are not stated on a
basis substantially consistent with that of the audited financial
statements included in the Company's Annual Report on Form 10-K for the
year ended , 19 ; or]
[If unaudited interim financial information is included in the Note
Prospectus and is derived from unaudited financial information included in
a Quarterly Report on Form 10-Q referred to in (C) above, insert -- (D) the
unaudited information with respect to the results of operations [and
financial position] for [and at the end of] the months ended ,
19 and , 19 , included in the Note Prospectus under the caption
" " does not agree with the corresponding amounts
in the unaudited financial statements referred to in Subsection (C), which
were not included in the Note Prospectus but from which such unaudited
information
<PAGE> 53
included in the Note Prospectus was derived, or was not determined on a
basis substantially consistent with that of the corresponding amounts in
the audited financial statements included in the Company's Annual Report on
Form 10-K for the year ended , 19 ; or]
[If unaudited interim "capsule" information is included in the Note
Prospectus but is not derived from unaudited financial information included
or incorporated by reference in any incorporated document, insert -- (E)
the unaudited net income [Insert other applicable items] and net income per
share amounts for the month periods ended [Insert dates] included in the
Note Prospectus were not determined on a basis substantially consistent
with the corresponding amounts in the audited financial statements included
[or incorporated by reference] in the Company's Annual Report on Form 10-K
for the year ended , 19 , and do not agree with the
corresponding amounts in the unaudited financial statements for such
periods which were not included in the Note Prospectus but from which such
amounts were derived and that such unaudited financial statements are not
fairly presented in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that of the
audited financial statements included [or incorporated by reference] in the
Note Prospectus; or]
(F) at the date of the latest available interim statement of
consolidated financial position of the Company and at a subsequent
specified date not more than five days prior to the date of such letter,
there was any change in the capital stock or increase in total short-term
or total long-term debt of the Company and its consolidated subsidiaries or
any decrease in its consolidated net assets as compared with amounts shown
in the Consolidated Balance Sheet as of , 199 included [or
incorporated by reference] in the Note Prospectus; or
(G) for the period from [Insert date of latest statement of income
included or incorporated by reference in the Note Prospectus] to the date
of the latest available interim Consolidated Statement of Income of the
Company and to a subsequent specified date not more than five days prior to
the date of such letter, there were any decreases, as compared with the
corresponding period of the previous year [If appropriate, insert -- and
with the period of corresponding length ended [Insert date of latest income
statement included or incorporated by reference in the Note Prospectus]],
in consolidated total revenue or consolidated net income, except in all
cases for changes or decreases which the Note Prospectus discloses have
occurred or may occur or as may be set forth in such letter.
3. In addition to their examination referred to in their report[s] included
[incorporated by reference] in the Registration Statement and Note Prospectus
and the procedures referred to in (2) above, they have carried out certain other
specified procedures, not constituting an audit, with respect to the dollar
amounts, percentages and other financial information (in each case to the extent
that such dollar amounts, percentages and other financial information, either
directly or by analysis or computation, are derived from the general accounting
records of the Company and its subsidiaries) which are included [or incorporated
by reference] in the Note Prospectus and appear in the Note Prospectus [or
incorporated documents] under the caption " ", and nothing caused
them to believe that such dollar amounts, percentages and financial information
were not in agreement with the general accounting records of the Company.
D-2
<PAGE> 1
EXHIBIT 4(i)(a)(1)
REGISTERED REGISTERED
No. F - 1
CUSIP
IF INDICATED ON THE FACE HEREOF THAT THIS NOTE IS A
GLOBAL SECURITY, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART
FOR THE INDIVIDUAL SECURITIES REPRESENTED HEREBY, IT MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH
NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY, UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW
YORK, NEW YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND
ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
AVCO FINANCIAL SERVICES, INC.
MEDIUM-TERM NOTE, SERIES F
IF APPLICABLE, THE "TOTAL AMOUNT OF OID," "YIELD TO MATURITY"
AND "INITIAL ACCRUAL PERIOD OID" (COMPUTED UNDER THE
DESIGNATED METHOD) BELOW WILL BE COMPLETED SOLELY FOR THE
PURPOSES OF APPLYING THE FEDERAL INCOME TAX ORIGINAL ISSUE
DISCOUNT ("OID") RULES.
<TABLE>
<S> <C> <C>
FLOATING RATE NOTE [ ] _____% FIXED RATE NOTE [ ] INDEXED NOTE [ ] (SEE OTHER PROVISIONS
BELOW)
GLOBAL SECURITY: [ ] YES [ ] NO PRINCIPAL AMOUNT:
ORIGINAL ISSUE DATE: MATURITY DATE:
INTEREST ACCRUAL DATE: INTEREST PAYMENT DATES:
ISSUE PRICE:
REDEMPTION DATE(S) REDEMPTION PRICE(S)
REPAYMENT DATE(S) REPAYMENT PRICE(S) TOTAL AMOUNT OF OID:
YIELD TO MATURITY:
INITIAL ACCRUAL
PERIOD OID:
MINIMUM DENOMINATION (IF OTHER THAN $1,000):
(ONLY APPLICABLE IF THIS IS A FLOATING RATE NOTE):
INITIAL INTEREST RATE: SPREAD (PLUS OR MINUS):
INDEX MATURITY: SPREAD MULTIPLIER:
BASE RATE: MAXIMUM INTEREST RATE:
INTEREST RESET PERIOD: MINIMUM INTEREST RATE:
INTEREST RESET DATES:
OTHER PROVISIONS:
</TABLE>
<PAGE> 2
AVCO FINANCIAL SERVICES, INC., a Delaware corporation (the
"Company"), for value received, hereby promises to pay to
or registered assigns, the principal sum of DOLLARS
on the "Maturity Date," as set forth above, and to pay interest thereon as
described below.
The principal of (and premium, if any) and interest on this
Note are payable by the Company in such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
NOTE SET FORTH BELOW, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE
SAME EFFECT AS IF SET FORTH AT THIS PLACE.
Unless the certificate of authentication hereon has been
manually executed by or on behalf of the Trustee under the Indenture, this Note
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, AVCO FINANCIAL SERVICES, INC. has caused
this instrument to be signed in its corporate name by the signatures or
facsimile signatures of its President or a Vice-President, and its Secretary or
an Assistant Secretary, and its corporate seal or a facsimile thereof to be
hereon impressed, engraved or imprinted and attested by such signature or
facsimile signature of its Secretary or an Assistant Secretary.
Dated:
AVCO FINANCIAL SERVICES, INC.
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
By:
This is one of the Securities
of the series provided for under
the within-mentioned indenture.
MELLON BANK, N.A.
as Trustee
Executive Vice-President
[Seal]
By: Attest:
Authorized Officer Secretary
<PAGE> 3
1. This Note is one of a duly authorized issue of
debentures, notes or other evidences of indebtedness (hereinafter called the
"Securities") of the Company of the series hereinafter specified, all such
Securities issued and to be issued under an indenture dated as of October 1,
1994, between the Company and Mellon Bank, N.A., as Trustee (herein called the
"Indenture"), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the rights and limitations of
rights thereunder of the Holders of the Securities and of the rights,
obligations, duties and immunities of the Trustee for each series of Securities
and of the Company, and the terms upon which the Securities are and are to be
authenticated and delivered. As provided in the Indenture, the Securities may
be issued in one or more series which different series may be issued in various
aggregate principal amounts, may mature at different times, may bear interest,
if any, at different rates, may be subject to different redemption provisions,
if any, may be subject to different sinking, purchase or analogous funds, if
any, may be subject to different covenants and Events of Default and may
otherwise vary as in the Indenture provided or permitted. This Note is one of
a series of the Securities designated therein as Medium-Term Notes, Series F
(the "Notes"). The Notes of this series may be issued at various times with
different maturity dates and different principal repayment provisions, may bear
interest at different rates, and may otherwise vary, all as provided in the
Indenture.
2. A. The regular record date (the "Regular Record Date")
with respect to any Interest Payment Date (as defined below) shall be the date
15 calendar days immediately preceding such Interest Payment Date, whether or
not such date shall be a Business Day (unless otherwise shown on the face
hereof or specified in paragraph B below). Interest which is payable and is
punctually paid or duly provided for, on any Interest Payment Date shall be
paid to the person in whose name the Note is registered at the close of
business on the Regular Record Date for such Interest Payment Date; provided,
however, that interest payable on the Interest Payment Date occurring at
Maturity will be to the person to whom principal shall be payable.
Notwithstanding the foregoing, any interest that is payable but not punctually
paid or duly provided for on any Interest Payment Date shall forthwith cease to
be payable to the registered owner hereof on such Regular Record Date, and may
be paid to the person in whose name such Note is registered on the close of
business on a special record date (the "Special Record Date") for the payment
of such Defaulted Interest to be fixed by the Trustee, notice whereof having
been given to the Holder of such Note not less than ten days prior to such
Special Record Date, or may be paid at any time and in any other lawful manner,
or as more fully provided in the Indenture. "Business Day" means any day,
other than a Saturday or Sunday, that is (a) not a day on which banking
institutions are authorized or required by law or regulation to be closed in
The City of New York and (b) with respect to a LIBOR Note, a London Banking
Day. "London Banking Day" means any day on which dealings in deposits in U.S.
Dollars are transacted in the London Interbank market. In connection with any
calculations, all percentages will be rounded, if necessary, to the nearest one
hundred-thousandth of a percentage point, with five one-millionths of a
percentage point being rounded upwards and all dollar amounts used and
resulting from such calculations on the Notes will be rounded to the nearest
one-hundredth of a unit (with .005 of a unit being rounded upwards).
B. If this is a Fixed Rate Note, the Company promises to
pay interest on the principal amount at the rate per annum shown on the face
hereof until the principal amount hereof is paid or duly made available for
payment. Unless otherwise provided on the face hereof, the Company will pay
interest semi-annually on May 1 and November 1 (each an "Interest Payment
Date"), commencing with the Interest Payment Date immediately following the
Original Issue Date shown on the face hereof and at Maturity; provided,
however, that the first payment of interest on any Fixed Rate Note with an
Original Issue Date shown on the face hereof between a Regular Record Date and
an Interest Payment Date will be made on the Interest Payment Date following
-3-
<PAGE> 4
the next succeeding Regular Record Date; provided, further, that any payment
required to be made on a date that is not a Business Day need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on such date, and no additional interest shall
accrue as a result of such delayed payment. Unless otherwise specified on the
face hereof, the Regular Record Dates with respect to Interest Payment Dates
occurring on May 1 and November 1 shall be April 15 and October 15,
respectively. Interest will accrue from and including the most recent Interest
Payment Date or, if no interest has been paid or duly provided for, from and
including the Original Issue Date on the face hereof, to, but excluding the
Interest Payment Date. The amount of such interest payable on any Interest
Payment Date shall be computed on the basis of a 360-day year of twelve 30-day
months.
C. If this is a Floating Rate Note, the Company promises
to pay interest on the principal amount at the rate per annum determined in
accordance with the provisions below under the heading "Determination of CD
Rate", "Determination of Commercial Paper Rate", "Determination of Federal
Funds Rate", "Determination of LIBOR" or "Determination of Treasury Rate",
depending upon whether the Base Rate specified above is CD Rate, Commercial
Paper Rate, Federal Funds Rate, LIBOR or Treasury Rate, respectively, and in
accordance with any applicable provisions on the face hereof under the heading
"Other Provisions", until the principal hereof is paid or duly made available
for payment. The Company will pay interest monthly, quarterly, semi-annually
or annually as specified on the face hereof under "Interest Payment Period",
commencing with the first Interest Payment Date specified on the face hereof
next succeeding the Original Issue Date, and at Maturity; provided, however,
that the first payment of interest on any Floating Rate Note with an Original
Issue Date shown on the face hereof between a Regular Record Date and an
Interest Payment Date will be made on the Interest Payment Date following the
next succeeding Regular Record Date. Unless otherwise provided on the face
hereof, the dates on which interest will be payable (each an "Interest Payment
Date") will be, in the case of Floating Rate Notes with a monthly Interest
Payment Period, the third Wednesday of each month; in the case of Floating Rate
Notes with a quarterly Interest Payment Period, the third Wednesday of March,
June, September and December, in the case of Floating Rate Notes with a
semi-annual Interest Payment Period, the third Wednesday of the two months
specified on the face hereof; and in the case of Floating Rate Notes with an
annual Interest Payment Period, the third Wednesday of the month specified on
the face hereof; provided, however, that if an Interest Payment Date would
otherwise be a day that is not a Business Day, such Interest Payment Date shall
be postponed to the next day that is a Business Day, except that in case the
Base Rate is LIBOR, if such date falls in the next succeeding calendar month,
such Interest Payment Date shall be the immediately preceding Business Day. If
the Maturity Date (or date of redemption or repayment) of any Floating Rate
Note would fall on a day that is not a Business Day, the payment of interest
and principal (and premium, if any) may be made on the next succeeding Business
Day, and no interest on such payment will accrue for the period from and after
the Maturity Date (or the date of redemption or repayment).
The interest payable on a Floating Rate Note on each Interest
Payment Date will include accrued interest from and including the Original
Issue Date or from and including the last date in respect of which interest has
been paid, as the case may be, to but excluding such Interest Payment Date;
provided, however, that if the Interest Reset Period is daily or weekly, the
interest payable on each Interest Payment Date, other than at Maturity, will
include accrued interest from and including the Original Issue Date or from but
excluding the last date in respect of which interest has been paid, as the case
may be, to and including, the Record Date immediately preceding such Interest
Payment Date, and the interest payable at Maturity will include accrued
interest from and including the Original Issue Date or from but excluding the
last date in respect of which interest has been paid, as the
-4-
<PAGE> 5
case may be, to, but excluding, the date of Maturity. Such accrued interest
will be calculated by multiplying the principal amount hereof by an accrued
interest factor. This accrued interest factor shall be computed by adding the
interest factors calculated for each day in the period for which accrued
interest is being calculated. The interest factor (expressed as a decimal) for
each day shall be computed by dividing the interest rate applicable to such day
by 360 if the Base Rate is CD Rate, Commercial Paper Rate, Federal Funds Rate
or LIBOR, as indicated on the face hereof, or by the actual number of days in
the year if the Base Rate is Treasury Rate, as indicated on the face hereof.
The interest rate in effect on each day will be (a) if such day is an Interest
Reset Date, the interest rate with respect to the Interest Determination Date
pertaining to such Interest Reset Date or (b) if such day is not an Interest
Reset Date, the interest rate with respect to the Interest Determination Date
pertaining to the next preceding Interest Reset Date; provided, however, unless
otherwise specified on the face hereof, the interest rate in effect from the
Original Issue Date to the first Interest Reset Date (the "Initial Interest
Rate") will be determined as if the Original Issue Date were an Interest Reset
Date. Notwithstanding the foregoing, the interest rate hereon shall not be
greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any, shown on the face hereof. In addition, the interest
rate hereon shall in no event be higher than the maximum rate, if any,
permitted by New York law. Commencing with the first Interest Reset Date
specified on the face hereof following the Original Issue Date and thereafter
upon each succeeding Interest Reset Date specified on the face hereof, the rate
at which interest on a Floating Rate Note is payable shall be adjusted as
specified on the face hereof under Interest Reset Period; provided, however,
that if any Interest Reset Date would otherwise be a day that is not a Business
Day, such Interest Reset Date shall be postponed to the next day that is a
Business Day, except that (i) if the Base Rate is LIBOR and such Business Day
is in the next succeeding calendar month, such Interest Reset Date shall be the
immediately preceding Business Day or (ii) if the Base Rate is Treasury Rate
and the Interest Reset Date falls on a date which is an auction date, the
Interest Reset Date shall be the following day that is a Business Day.
The Interest Determination Date pertaining to an Interest
Reset Date will be, if the Base Rate is CD Rate, Commercial Paper Rate or
Federal Funds Rate, the second Business Day next preceding such Interest Reset
Date. The Interest Determination Date pertaining to an Interest Reset Date
will be, if the Base Rate is LIBOR, the second London Banking Day next
preceding such Interest Reset Date. The Interest Determination Date pertaining
to an Interest Reset Date will be, if the Base Rate is Treasury Rate, the day
of the week in which such Interest Reset Date falls on which direct obligations
of the United States ("Treasury Bills") of the Index Maturity specified on the
face hereof are auctioned. Treasury Bills are normally auctioned on Monday of
each week, unless that day is a legal holiday, in which case the auction is
normally held on the following Tuesday, except that such auction may be held on
the preceding Friday. If, as a result of a legal holiday, an auction is so
held on the preceding Friday, such Friday will be the Interest Determination
Date pertaining to the Interest Reset Date occurring in the next succeeding
week.
Subject to applicable provisions of law and except as
specified herein, on each Interest Reset Date the rate of interest shall be the
rate determined in accordance with the provisions of the applicable heading
below.
Determination of CD Rate. If the Base Rate is CD Rate, as
indicated on the face hereof, the interest rate shall equal (a) the rate on the
Interest Determination Date specified on the face hereof for negotiable
certificates of deposit having the Index Maturity specified on the face hereof
(1) as published by the Board of Governors of the Federal Reserve System in
"Statistical Release H.15(519), Selected Interest Rates" or any successor
publication of the Board of Governors of the Federal Reserve System (the
-5-
<PAGE> 6
"H.15(519)"), under the heading "CDs (Secondary Market)" or (2) if such rate is
not so published by 9:00 A.M., New York City time, on the Calculation Date (as
defined below) pertaining to such Interest Determination Date, then as
published by the Federal Reserve Bank of New York in its daily statistical
release "Composite 3:30 P.M. Quotations for U.S. Government Securities" (the
"Composite Quotations") under the heading "Certificates of Deposit" or (b) if
neither of such rates is published by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, the arithmetic
mean as calculated by the Calculation Agent of the secondary market offered
rates as of 10:00 A.M., New York City time, on such Interest Determination Date
of three leading nonbank dealers in negotiable U.S. Dollar certificates of
deposit in The City of New York selected by the Calculation Agent for
negotiable certificates of deposit of major United States money center banks of
the highest credit standing (in the market for negotiable certificates of
deposit) with a remaining maturity closest to the Index Maturity (as specified
on the face hereof) in a denomination of $5,000,000, in each of the above cases
adjusted by the addition or subtraction of the Spread, if any, specified on the
face hereof, or by multiplication by the Spread Multiplier, if any, specified
on the face hereof; provided, however, that if such dealers are not quoting as
mentioned above, the CD Rate shall be the CD Rate in effect on such Interest
Determination Date.
Determination of Commercial Paper Rate. If the Base Rate is
Commercial Paper Rate, as indicated on the face hereof, the interest rate shall
equal (a) the Money Market Yield (as defined herein) on the Interest
Determination Date specified on the face hereof of the rate for commercial
paper having the Index Maturity specified on the face hereof (1) as published
in the H.15(519), under the heading "Commercial Paper", or (2) if such yield is
not so published by 9:00 A.M., New York City time, on the Calculation Date (as
defined below) pertaining to such Interest Determination Date, then as
published in the Composite Quotations under the heading "Commercial Paper" or
(b) if neither of such yields is published by 3:00 P.M., New York City time, on
such Calculation Date, the Money Market Yield of the arithmetic mean as
calculated by the Calculation Agent of the offered rates, as of 11:00 A.M., New
York City time on such Interest Determination Date, of three leading dealers of
commercial paper in The City of New York, selected by the Calculation Agent,
for commercial paper of the Index Maturity specified on the face hereof placed
for an industrial issuer whose bond rating is "AA" or the equivalent, from a
nationally recognized rating agency, in each of the above cases adjusted by the
addition or subtraction of the Spread, if any, specified on the face hereof, or
by multiplication by the Spread Multiplier, if any, specified on the face
hereof; provided, however, that if such dealers are not quoting as mentioned
above, the Commercial Paper Rate shall be the Commercial Paper Rate in effect
on such Interest Determination Date.
"Money Market Yield" shall be the yield calculated in
accordance with the following formula:
D x 360
Money Market Yield = --------------- x 100
360 - (D x M)
where "D" refers to the per annum rate for commercial paper quoted on a bank
discount basis and expressed as a decimal; and "M" refers to the actual number
of days in the interest period for which interest is being calculated.
Determination of Federal Funds Rate. If the Base Rate is
Federal Funds Rate, as indicated on the face hereof, the interest rate shall
equal (a) the rate on the Interest Determination Date specified on the face
hereof for Federal Funds (1) as published in the H.15(519), under the heading
"Federal Funds (Effective)" or (2) if such rate is not so published by 9:00
A.M., New York City time, on the Calculation Date (as defined below) pertaining
to such Interest Determination Date, then as published in the Composite
Quotations
-6-
<PAGE> 7
under the heading "Federal Funds/Effective Rate" or (b) if neither of such
rates is published by 3:00 P.M., New York City time, on such Calculation Date
pertaining to such Interest Determination Date, the arithmetic mean as
calculated by the Calculation Agent of the rates for the last transaction in
overnight Federal Funds arranged by three leading brokers of Federal Funds
transactions in The City of New York selected by the Calculation Agent as of
11:00 A.M., New York City time, on such Interest Determination Date, in each of
the above cases adjusted by the addition or subtraction of the Spread, if any,
specified on the face hereof, or by multiplication by the Spread Multiplier, if
any, specified on the face hereof; provided, however, that if such brokers are
not quoting as mentioned above, the Federal Funds Rate shall be the Federal
Funds Rate in effect on such Interest Determination Date.
Determination of LIBOR. If the Base Rate indicated on the
face hereof is LIBOR, with respect to LIBOR indexed to the offered rates for
U.S. Dollar deposits, the interest rate shall equal either (a) if the method of
calculation of LIBOR is specified on the face hereof to be "LIBOR - Reuters",
the arithmetic mean as calculated by the Calculation Agent of offered rates for
deposits in U.S. Dollars having the Index Maturity specified on the face
hereof, commencing on the second London Banking Day immediately following the
Interest Determination Date specified on the face hereof, which appear on the
Reuters Screen LIBO Page as of 11:00 A.M., London time, on such Interest
Determination Date, adjusted by the addition or subtraction of the Spread, if
any, specified on the face hereof or by multiplication by the Spread
Multiplier, if any, specified on the face hereof, or (b) if the method of
calculation of LIBOR is specified on the face hereof to be "LIBOR - Telerate"
or if no method of calculation of LIBOR is specified, the rate for deposits in
U.S. Dollars having the Index Maturity specified on the face hereof which
appears on the Telerate Page 3750 or such other page which may replace Telerate
Page 3750 on that service for the purpose of displaying London interbank
offered rates of major banks (the "Telerate Page") as of 11:00 A.M., London
time, on such Interest Determination Date, adjusted by the addition or
subtraction of the Spread, if any, specified on the face hereof or by
multiplication by the Spread Multiplier, if any, specified on the face hereof;
provided, however, that if less than two such offered rates appear, in the case
of alternative (a) above, or if such rate does not appear on the Telerate Page,
in the case of alternative (b) above, the Calculation Agent shall request the
principal London office of each of four major banks in the London interbank
market selected by the Calculation Agent to provide a quotation of the rate at
which deposits in U.S. Dollars are offered by each such bank to prime banks in
the London interbank market at approximately 11:00 A.M., London time, on such
Interest Determination Date having the Index Maturity specified on the face
hereof commencing on the second London Banking Day immediately following such
Interest Determination Date and in a principal amount equal to an amount not
less than U.S. $1,000,000 that is representative for a single transaction in
such market at such time. Such rate of interest hereon shall equal the
arithmetic mean of (a) such quotations, if at least two quotations are
provided, or (b) if less than two quotations are provided, the rates quoted at
approximately 11:00 A.M., New York City time, on such Interest Determination
Date by three major banks in The City of New York selected by the Calculation
Agent for loans in U.S. Dollars to leading European banks having the Index
Maturity specified on the face hereof commencing on the second London Banking
Day immediately following such Interest Determination Date and in a principal
amount as aforesaid, in either case, adjusted by the addition or subtraction of
the Spread, if any, specified on the face hereof or by multiplication by the
Spread Multiplier, if any, specified on the face hereof; provided, however,
that if the three banks selected as aforesaid by the Calculation Agent are not
quoting as mentioned above, the LIBOR shall be the LIBOR in effect on such
Interest Determination Date.
Determination of Treasury Rate. If the Base Rate is Treasury
Rate as indicated on the face hereof, the interest rate shall equal the rate
for the auction held on the Interest Determination Date of Treasury Bills
having
-7-
<PAGE> 8
the Index Maturity shown on the face hereof as published in the H.15(519),
under the heading "Treasury Bills--auction average (investment)" or, if not so
published by 9:00 A.M., New York City time, on the Calculation Date (as defined
below) pertaining to such Interest Determination Date, the auction average rate
(expressed as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) as otherwise announced by the United
States Department of the Treasury, in either case, adjusted by the addition or
subtraction of the Spread, if any, specified on the face hereof, or, by
multiplication by the Spread Multiplier, if any, specified on the face hereof.
In the event that the results of the auction of Treasury Bills having the Index
Maturity shown on the face hereof are not published or reported as provided
above by 3:00 P.M., New York City time, on such Calculation Date or if no such
auction is held in a particular week, then the rate of interest hereon shall be
calculated by the Calculation Agent and shall be a yield to maturity (expressed
as a bond equivalent on the basis of a year of 365 or 366 days, as applicable,
and applied on a daily basis) of the arithmetic mean of the secondary market
bid rates, as of approximately 3:30 P.M., New York City time, on such Interest
Determination Date, of three leading primary United States government
securities dealers selected by the Calculation Agent for the issue of Treasury
Bills with a remaining maturity closest to the Index Maturity shown on the face
hereof, adjusted by the addition or subtraction of the Spread, if any,
specified on the face hereof, or by multiplication by the Spread Multiplier, if
any, specified on the face hereof; provided, however, that if the dealers
selected as aforesaid by the Calculation Agent are not quoting as mentioned
above, the Treasury Rate shall be the Treasury Rate in effect on such Interest
Determination Date.
The Calculation Date pertaining to an Interest Determination
Date shall be the earlier of (i) the tenth calendar day after such Interest
Determination Date or if any such day is not a Business Day, the next
succeeding Business Day or (ii) the Business Day preceding the applicable
Interest Payment Date or Maturity Date (or date of redemption or repayment), as
the case may be. Unless otherwise specified on the face hereof, Mellon Bank,
N.A. shall be the Calculation Agent. The Calculation Agent shall calculate the
interest rate hereon in accordance with the foregoing and will confirm in
writing such calculation to the Trustee and any Paying Agent immediately after
each determination. Neither the Trustee nor any Paying Agent shall be
responsible for any such calculation. At the request of the Holder hereof the
Calculation Agent will provide to the Holder hereof the interest rate hereon
then in effect and, if determined, the interest rate which will become
effective as of the next Interest Reset Date.
D. If this is an Indexed Note, any interest payments will be
determined in accordance with the provisions above under the heading "Other
Provisions."
3. Unless indicated on the face hereof that this Note is a
Global Security, payments of interest (other than interest payable at Maturity)
will be made by mailing a check to the Holder at the address of the Holder
appearing on the Securities Register on the applicable Record Date.
Notwithstanding the foregoing, a Holder of $10,000,000 or more in aggregate
principal amount of Notes of like tenor and terms shall be entitled to receive
such payments by wire transfer of immediately available funds, but only if
appropriate payment instructions have been received in writing by the Company's
Paying Agent in The City of New York not less than 15 days prior to the
applicable Interest Payment Date. Unless indicated on the face hereof that
this Note is a Global Security, principal and any premium and interest payable
at Maturity will be paid in immediately available funds upon surrender of such
Note at the office of a Paying Agent in The City of New York or at such other
office or agency as the Company may designate. If indicated on the face hereof
that this Note is a Global Security, the principal hereof and any premium and
interest due on any Interest Payment Date or at Maturity will be made available
to the Trustee on such date. As soon as possible thereafter,
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<PAGE> 9
the Trustee will make such payments to the Depositary in immediately available
funds in accordance with existing arrangements between the Trustee and the
Depositary.
4. If specified on the face hereof, this Note may be
redeemed, as a whole or from time to time in part, at the option of the
Company, on not less than 30 nor more than 60 days' prior notice given as
provided in the Indenture, on any Redemption Date(s) and at the related
Redemption Price(s) (expressed as a percentage of the principal amount hereof)
set forth on the face hereof, together with interest accrued and unpaid hereon
to such Redemption Date. If no such Redemption Date is set forth on the face
hereof, this Note may not be so redeemed prior to stated Maturity. If less
than all the Outstanding Notes of like tenor and terms are to be redeemed, the
particular Notes to be redeemed shall be selected by the Trustee not more than
60 days prior to the Redemption Date from the Outstanding Notes of like tenor
or terms not previously called for redemption. Such selection shall be of
principal amounts in increments of $1,000 (provided that any remaining
principal of any Note shall be at least $1,000), or such other minimum
denomination specified on the face hereof. Subject to the immediately
preceding sentence, such selection shall be made by any method as the Trustee
deems fair and appropriate. The notice of such redemption shall specify which
Notes are to be redeemed. In the event of redemption of this Note in part
only, a new Note or Notes of this series of like tenor or terms for the
unredeemed portion hereof will be issued to the Holder hereof upon the
cancellation hereof.
5. If specified on the face hereof, this Note will be subject
to repayment at the option of the Holder hereof on the Redemption Date(s) and
at the Repayment Price(s) (expressed as a percentage of the principal amount
hereof) indicated on the face hereof. If no such Repayment Date is set forth
on the face hereof, this Note may not be so repaid prior to stated Maturity.
On each Repayment Date, if any, this Note shall be repayable in whole or in
part at the option of the Holder hereof at the applicable Repayment Price set
forth on the face hereof, together with interest accrued and unpaid hereon to
such Repayment Date. For this Note to be repaid in whole or in part at the
option of the Holder hereof, the Paying Agent in The City of New York must
receive not less than 30 nor more than 45 days prior to the Repayment Date (i)
the Note with the form entitled "Option to Elect Repayment" below duly
completed or (ii) a telegram, telex, facsimile transmission or a letter from a
member of a national securities exchange or the National Association of
Securities Dealers, Inc. or a commercial bank or a trust company in the United
States of America setting forth the name of the Holder of the Note, the
principal amount of the Note, the certificate number of the Note or a
description of the Note's tenor or terms, the principal amount of the Note to
be prepaid, a statement that the option to elect repayment is being exercised
thereby and a guarantee that the Note to be prepaid with the form entitled
"Option to Elect Repayment" on the reverse of the Note duly completed will be
received by such Paying Agent no later than five Business Days after the date
of such telegram, telex, facsimile transmission or letter and such Note and
form duly completed are received by such Paying Agent by such fifth Business
Day. Exercise of such repayment option shall be irrevocable. Such option may
be exercised by the Holder for less than the entire principal amount provided
that the principal amount remaining outstanding after repayment is at least
$1,000 or any amount that is a multiple of $1,000, or such other minimum
denomination specified on the face hereof.
6. If an Event of Default with respect to the Notes shall
occur and be continuing, the principal of all of the Notes may be declared due
and payable in the manner and with the effect provided in the Indenture. If
the principal of any Original Issue Discount Note is declared to be due and
payable the amount of principal due and payable with respect to such Note shall
be limited to the sum of the aggregate principal amount of such Note multiplied
by the Issue Price (expressed as a percentage of the aggregate
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<PAGE> 10
principal amount) indicated on the face hereof plus the original issue discount
accrued from the Original Issue Date indicated on the face hereof to the date
of declaration, which accrual shall be calculated using the "interest method"
(computed in accordance with generally accepted accounting principles) in
effect on the date of declaration. An Original Issue Discount Note is a Note
that has a stated redemption price at maturity that exceeds its Issue Price by
at least 0.25% of its Principal Amount, multiplied by the number of full years
from the Original Issue Date to the Maturity Date for such Note and any other
Note designated by the Company as issued with original issue discount for
United States federal income tax purposes.
7. The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities
under the Indenture at any time by the Company with the consent of the Holders
of 66 2/3% in principal amount of the Securities at the time Outstanding of
each series to be affected thereby. The Indenture also contains provisions
permitting the Holders of specified percentages in principal amount of the
Securities of any series at the time Outstanding, on behalf of the Holders of
all Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences with respect to such series. Any such consent or waiver by
the Holder of this Note shall be conclusive and binding upon such Holder and
upon all future Holders of this Note and of any Note issued upon the transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Note.
8. No reference herein to the Indenture and no provision of
this Note or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest on this Note at the times, place and rate, and in the coin or currency
herein prescribed.
9. The authorized denominations of Notes will be $1,000 and
any multiple of $1,000, or such other minimum denomination specified on the
face hereof.
10. As provided in the Indenture and subject to certain
limitations therein set forth, this Note is transferable on the Securities
Register of the Company, upon surrender of this Note for registration of
transfer at the office or agency of the Company to be maintained for that
purpose in The City of New York or at any other office or agency of the Company
maintained for that purpose. Every Note presented for registration of transfer
shall (if so required by the Company, the Trustee or the Securities Registrar)
be duly endorsed, or accompanied by a written instrument or transfer in form
satisfactory to the Company, the Trustee and the Securities Registrar duly
executed, by the Holder hereof or its attorney duly authorized in writing, and
thereupon one or more new Notes of like tenor and terms of authorized
denominations and for the same aggregate principal amount, will be issued to
designated transferee or transferees.
The Company shall not be required (i) to issue, register the
transfer of or exchange Notes to be redeemed for a period of 15 days preceding
the date of the mailing of the notice of redemption, or (ii) to register the
transfer of or to exchange any such Note or portion thereof selected for
redemption, except the unredeemed portion of any such Note being redeemed in
part.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of a Note for registration of transfer, the Company,
the Trustee and any agent of the Company or the Trustee may treat the person
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<PAGE> 11
in whose name a Note is registered as the owner hereof for all purposes whether
or not such Note be overdue and neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.
11. Unless otherwise defined herein, all terms used in
this Note which are defined in the Indenture shall have the meanings assigned
to them in the Indenture.
12. The Indenture and this Note shall for all purposes be
governed by, and construed in accordance with, the laws of the State of New
York.
13. If indicated on the face hereof that this Note is a
Global Security, no holder of any beneficial interest in this Note held on its
behalf by a Depositary or a nominee of such Depositary shall have any rights
under the Indenture with respect to such Global Security, and such Depositary
or nominee may be treated by the Company, the Trustee, and any agent of the
Company or the Trustee as the owner of such Global Security for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall impair, as
between a Depositary and such holders of beneficial interests, the operation of
customary practices governing the exercise of the rights of the Depositary as
holder of any Security.
14. If not indicated on the face hereof that this Note is
a Global Security, this Note is exchangeable for a like aggregate principal
amount of Notes of a different authorized denomination, as requested by the
Holder surrendering the same, as provided in the Indenture and subject to
certain limitations therein set forth. If indicated on the face hereof that
this Note is a Global Security, it is exchangeable, in whole but not in part,
for Notes registered in the names of Persons other than the Depositary or its
nominee or in the name of a successor to the Depositary or a nominee of such
successor depositary only if (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for this Note or if at any time
such Depositary shall no longer be eligible or in good standing under the
Securities Exchange Act of 1934, as amended, or other applicable statute or
regulation, and, in either case, a successor depositary is not appointed by the
Company within 90 days of the receipt by the Company of such notice or of the
Company becoming aware of such ineligibility, or (ii) the Company in its
discretion at any time determines not to have all of the Notes represented by
one or more Global Security or Securities. If this Note is exchangeable
pursuant to the preceding sentence, it shall be exchangeable for Notes of like
tenor and terms in definitive form in aggregate principal amount equal to the
principal amount of the Global Security. Subject to the foregoing, if this
Note is a Global Security it is not exchangeable, except for a Note or Notes of
the same aggregate denominations to be registered in the name of such
Depositary or its nominee or in the name of a successor to the Depositary or a
nominee of such successor depositary.
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<PAGE> 12
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
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Please print or typewrite name and address of assignee
- --------------------------------------------------------------------------------
the within Note of AVCO FINANCIAL SERVICES, INC. and hereby does irrevocably
constitute and appoint
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attorney to transfer the said Note on the books of the within-mentioned
Company, with full power of substitution in the premises.
Dated
--------------------- ---------------------------------------------
NOTICE: The signature to this assignment must
correspond with the name as written upon the
face of the Note in every particular without
alteration or enlargement or any change
whatsoever.
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OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Company
to repay the within Note (or portion hereof specified below) pursuant to its
terms at a price equal to the applicable Repayment Price thereof together with
interest to the Repayment Date, to the undersigned at
-------------------------
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(Please print or typewrite name and address of the undersigned)
If less than the entire principal amount of the within Note is to be
repaid, specify the portion thereof which the Holder elects to have repaid
; and specify the denomination or denominations
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(which shall be in authorized denominations) of the Notes to be issued to the
Holder for the portion of the within Note not being repaid (in the absence of
any such specification, one such Note will be issued for the portion not being
repaid): .
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