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
Date of Report (Date of earliest event reported):
March 3, 1998
AMERICAN STORES COMPANY
(Exact name of registrant as specified in charter)
Delaware
(State or other jurisdiction
of incorporation)
1-5392 87-0207226
(Commission File No.) (IRS Employer
Identification No.)
709 East South Temple Street, Salt Lake City, Utah 84102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(801) 539-0112
<PAGE>
ITEM 5. OTHER EVENTS
On March 3, 1998, the Company announced its 1997 fourth quarter and
fiscal year sales and earnings. A copy of the Company's press release dated
March 3, 1998 is attached hereto as Exhibit 1 and is incorporated herein by
reference.
Attached hereto as Exhibit 2 and incorporated herein by reference is
the presentation and calculation of basic and diluted earnings per share as of
the end of each of the last five fiscal years as required by Statement of
Financial Accounting Standards No. 128, Earnings Per Share.
On March 6, 1998, the Company filed a Prospectus Supplement with the
Commission with respect to its Medium Term Note Program, Series B. The purpose
of Exhibits 3, 4 and 5 hereto is to file with the Commission the Distribution
Agreement, Form of Fixed Rate Note and Form of Floating Rate Note in connection
with such program.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
1. Press Release dated March 3, 1998, issued by American Stores Company.
2. Presentation and calculation of earnings per share in accordance with
Statement of Financial Accounting Standards No. 128.
3. Distribution Agreement dated as of March 5, 1998, among American Stores
Company and the agents named therein.
4. Form of Fixed Rate Medium Term Note, Series B.
5. Form of Floating Rate Medium Term Note, Series B.
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 thereunto duly authorized.
Dated: March 6, 1998
AMERICAN STORES COMPANY
By: /s/ Kathleen E. McDermott
Name: Kathleen E. McDermott
Title: Chief Legal Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. Title
1. Press Release dated March 3, 1998, issued by American Stores
Company.
2. Presentation and calculation of Earnings Per Share in accordance
with Statement of Financial Accounting Standards No. 128.
3. Distribution Agreement dated as of March 5, 1998, among American
Stores Company and the agents named therein.
4. Form of Fixed Rate Medium Term Note, Series B.
5. Form of Floating Rate Medium Term Note, Series B.
EXHIBIT 1
Investor and Media Contact Dan Zvonek
Director - Investor and Public Relations
(801) 539-0112
AMERICAN STORES COMPANY ANNOUNCES
FOURTH QUARTER 1997 SALES AND EARNINGS
SALT LAKE CITY, UTAH - March 3, 1998 - American Stores Company (NYSE: ASC) today
announced fourth quarter 1997 diluted earnings per share of $0.35 compared to
$0.22 in the fourth quarter of 1996. Diluted earnings per share for the 1997
fiscal year ended January 31, 1998, were $1.01 compared to $0.98 per share in
the prior year. The current fiscal year includes non-recurring charges of $0.14
per share related to the secondary offering of shares owned by former chairman
L.S. Skaggs and related parties and the sale of a communications subsidiary. The
prior year fourth quarter and full year results reflect special charges related
primarily to the implementation of certain Delta re-engineering initiatives
aggregating $100 million before taxes or $0.21 per share.
Comparable store sales increased 0.2 percent during the fourth quarter of 1997
and 0.9 percent for the year. Total sales increased 1.4 percent to $5.0 billion
for the quarter and 2.5 percent to $19.1 billion for the year. Comparable sales
in the Company's pharmacies increased 11.7 percent for the fourth quarter and
11.5 percent for the year.
Interest expense increased to $54.8 million for the fourth quarter from $46.1
million in the prior year due to higher debt levels primarily due to the
Company's financing of the repurchase of shares from former chairman L.S. Skaggs
and related parties as well as increased capital expenditures.
Victor L. Lund, chairman and chief executive officer of American Stores Company,
said, "I am pleased with our control over operating expenses this quarter. We
achieved a slight reduction in expenses as a percent of sales in spite of
pressures from many new store openings and strong competition. I am also pleased
with our increase of $357 million in cash flows from operating activities. This
reflects our focused efforts to improve working capital."
Regarding the Company's drug stores, Mr. Lund went on to say, "Our initiatives
to improve operating profit by focusing on increasing margins and reducing
expenses in our drug stores are proceeding well on track."
<PAGE>
The Company opened or acquired 41 new stores, completed 17 remodels and closed
25 stores during the quarter. For the year, the Company opened or acquired 96
new stores, completed 65 remodels and closed or sold 68 stores. Compared to the
end of the prior year, retail square footage increased by 7.9 percent before
closures and 4.2 percent on a net basis after closures.
American Stores Company is one of the nation's largest food and drug retailers.
It operates 1,557 stores in 26 states including 263 food and drug combination
stores, 543 supermarkets and 751 stand-alone drug stores. The Company operates
1,104 pharmacies within its stores. Its principal retail operations include Acme
Markets, Jewel Food Stores, Lucky Northern California Division, Lucky Southern
California Division, Jewel Osco Southwest, Osco Drug and Sav-on.
Cautionary Note: This press release may contain certain forward-looking
statements about the future performance of the Company which are based on
management's assumptions and beliefs in light of the information currently
available to it. The Company assumes no obligation to update the information
contained herein. These forward-looking statements are subject to uncertainties
and other factors that could cause actual results to differ materially from such
statements including, but not limited to: competitive practices and pricing in
the food and drug industries generally and particularly in the Company's
principal markets; the implementation of the Company's re-engineering
initiatives in accordance with the currently contemplated schedule and budget;
the Company's relationship with its employees and the terms of future collective
bargaining agreements; the costs and other effects of legal and administrative
cases and proceedings; the nature and extent of continued consolidation of the
food and drug industry; changes in the financial markets related to the cost of
the Company's capital; the ability of the Company to access the public debt and
equity markets to refinance indebtedness and fund the Company's capital
expenditure program on satisfactory terms; supply or quality control problems
with the Company's vendors; and changes in economic conditions which affect the
buying patterns of the Company's customers.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN STORES COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
13 WEEKS ENDED 52 WEEKS ENDED
JAN 31, 1998 FEB 1, 1997 (3) JAN 31, 1998 FEB 1, 1997 (3)
<S> <C> <C> <C> <C>
SALES $4,980,597 $4,909,673 $19,138,880 $18,678,129
Cost of merchandise sold (3,664,500) (3,593,757) (14,036,830) (13,701,743)
LIFO credit (provision) 11,567 10,592 (2,433) (11,408)
------------- ------------- ------------- -------------
GROSS PROFIT 1,327,664 1,326,508 5,099,617 4,964,978
26.7% 27.0% 26.6% 26.6%
Operating expense (1,100,442) (1,090,273) (4,317,576) (4,220,187)
-22.1% -22.2% -22.6% -22.6%
Restructuring and impairment 0 (77,151) (13,400) (1) (77,151)
------------- ------------- ------------- -------------
TOTAL OPERATING EXPENSE (1,100,442) (1,167,424) (4,330,976) (4,297,338)
-22.1% -23.8% -22.6% -23.0%
OPERATING PROFIT 227,222 159,084 768,641 667,640
4.6% 3.2% 4.0% 3.6%
Interest income 1,538 3,456 5,647 8,470
Interest expense (54,773) (46,067) (216,710) (171,558)
Other 0 0 (33,913) (2) 0
------------- ------------- ------------- -------------
Earnings before income taxes 173,987 116,473 523,665 504,552
Federal & state income taxes (77,824) (52,378) (243,045) (217,331)
------------- ------------- ------------- -------------
NET EARNINGS $96,163 $64,095 $280,620 $287,221
============= ============= ============= =============
Average shares outstanding (4) 273,573 291,658 276,409 291,776
Basic earnings per share (4) $0.35 $0.22 $1.02 $0.98
Average shares - diluted (4) 274,607 292,762 277,769 292,651
Diluted earnings per share (4) $0.35 $0.22 $1.01 $0.98
Dividends per share (4) $0.09 $0.08 $0.35 $0.32
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED CONDENSED BALANCE SHEETS
JAN 31, 1998 FEB 1, 1997
<S> <C> <C>
ASSETS
Inventory $1,714,229 $1,725,542
Other current assets 547,551 440,954
Property, plant and equipment and capital
leases, net 4,260,921 3,653,713
Goodwill, net 1,611,812 1,665,242
Other assets 401,502 395,954
------------ ------------
$8,536,015 $7,881,405
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current maturities of long-term debt
and capital leases $100,935 $66,003
Accounts payable 1,186,845 851,285
Other current liabilities 833,554 884,393
Long-term debt and obligations under capital
leases, less current maturities 3,201,970 2,613,144
Other liabilities 903,629 931,153
Shareholders' equity 2,309,082 2,535,427
------------ ------------
$8,536,015 $7,881,405
============ ============
Shares issued and outstanding 273,607 291,829 (4)
============ ============
<FN>
(1) Charges related to the sale of the Company's communications subsidiary.
(2) Charges related to the secondary stock offering of shares held by L.S.
Skaggs and related parties.
(3) Includes special charges of $100.0 million, pre-tax ($.21 per share, after
tax) included in the cost of merchandise sold ($10.0 million), operating
expenses ($12.9 million) and restructuring and impairment ($77.1 million).
(4) Restated as necessary to reflect the July 1997 two-for-one stock split.
</FN>
</TABLE>
Prior financial information has been reclassified to conform to the current year
presentation.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN STORES COMPANY
CONSOLIDATED CONDENSED CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
52 WEEKS ENDED
JAN 31, 1998 FEB 1, 1997
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $280,620 $287,221
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 468,869 440,445
Net (gain) loss on asset sales (772) 265
Changes in operating assets and liabilities 106,314 (230,166)
--------------- ---------------
Net cash provided by operating activities 855,031 497,765
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of assets 39,447 47,670
Capital expenditures (1) (996,288) (943,080)
--------------- ---------------
Net cash (used in) investing activities (956,841) (895,410)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
New debt 500,000 350,000
Other increases in borrowing 119,101 88,979
Cash dividends (97,042) (93,351)
Repurchase of common stock (454,086) (2) (37,798)
Other changes in equity 44,164 24,860
--------------- ---------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 112,137 332,690
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 10,327 (64,955)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 37,467 102,422
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $47,794 $37,467
=============== ===============
<FN>
(1) Total capital expenditures, including the present value of new leases, were
$380.7 million for the quarter and $1,157 million for the fiscal year ended
January 31, 1998, and $324.6 million for the quarter and $1,065 million for
the fiscal year ended February 1, 1997.
(2) Repurchased 24.4 million shares from the family of Mr. L.S. Skaggs and
certain family and charitable trusts and issued 4.6 million shares for
overallotments related to the secondary offering in April 1997.
</FN>
</TABLE>
<TABLE>
<CAPTION>
STORE COUNT
STORES STORES
BEGINNING OF OPENED/ CLOSED/ END OF
QUARTER ENDED JANUARY 31, 1998 QUARTER ACQUIRED SOLD QUARTER REMODELS
- ------------------------------- ------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Supermarkets 553 1 (11) 543 6
Stand-alone drug stores 740 23 (12) 751 9
Combination food & drug stores 248 17 (2) 263 2
------------- ----------- ------------ ------------ ------------
Net store count 1,541 41 (25) 1,557 17
============= =========== ============ ============ ============
STORES STORES
BEGINNING OF OPENED/ CLOSED/ 1997
YEAR-TO-DATE JANUARY 31, 1998 YEAR ACQUIRED SOLD YEAR-TO-DATE REMODELS
- ------------------------------ ------------- ----------- ------------ ------------ ------------
Supermarkets 576 7 (40) 543 20
Stand-alone drug stores 721 56 (26) 751 26
Combination food & drug stores 232 33 (2) 263 19
------------- ----------- ------------ ------------ ------------
Net store count 1,529 96 (68) 1,557 65
============= =========== ============ ============ ============
</TABLE>
EXHIBIT 2
<TABLE>
<CAPTION>
EARNINGS PER SHARE - LAST FIVE FISCAL YEARS
The following table presents basic and diluted earnings per share as of the end
of each of the last five fiscal years restated to comply with Statement of
Financial Accounting Standards No.128, Earnings per Share:
February 1, February 3, January 28, January 29, January 30,
In thousands, except per 1997 1996 1995 1994 1993
share data
- ------------------------------- ------------ -------------- --------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
Net earnings $287,221 $316,809 $345,184 $247,090 $207,466
Basic EPS $0.98 $1.08 $1.21 $0.87 $0.74
Diluted EPS $0.98 $1.08 $1.17 $0.85 $0.72
Basic average shares 291,776 293,887 285,534 284,403 280,626
Diluted average shares 292,651 294,465 301,889 301,190 297,879
</TABLE>
<TABLE>
<CAPTION>
EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per
share for the last three fiscal years:
February 1, February 3, January 28,
1997 1996 1995
<S> <C> <C> <C>
Numerator:
Numerator for basic earnings per share -
income available to common $287,221 $316,809 $345,184
======== ======== ========
Effect of dilutive securities - Convertible debentures - - 7,612
-------- -------- --------
Numerator for diluted earnings per share -
income available to common stockholders $287,221 $316,809 $352,796
======== ======== ========
Denominator:
Denominator for basic earnings per share -
weighted-average shares 291,776 293,887 285,534
Effect of dilutive securities:
Employee stock options 875 578 800
Convertible debentures - - 15,555
-------- -------- --------
Dilutive potential common shares 875 578 16,355
Denominator for diluted earnings
per share - adjusted weighted-average
shares and assumed conversions 292,651 294,465 301,889
======== ======== ========
Basic Earnings Per Share $0.98 $1.08 $1.21
======== ======== ========
Diluted Earnings Per Share $0.98 $1.08 $1.17
======== ======== ========
</TABLE>
AMERICAN STORES COMPANY
$500,000,000
MEDIUM-TERM NOTES, SERIES B
Due 9 Months or More from Date of Issue
Distribution Agreement
March 5, 1998
J.P. Morgan Securities Inc.
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
Salomon Brothers Inc
c/o J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
American Stores Company, a Delaware corporation (the "COMPANY"),
confirms its agreement with each of you with respect to the issue and sale from
time to time by the Company of its Medium-Term Notes, Series B due 9 months or
more from date of issue (the "SECURITIES") in an aggregate initial offering
price of up to $500,000,000 (or the equivalent thereof in one or more foreign
currencies or composite currencies), as such amount shall be reduced by the
aggregate initial offering price of any other securities issued by the Company,
whether within or without the United States ("OTHER SECURITIES") pursuant to the
registration statement referred to below after the initial issuance of
$500,000,000 of securities outside of this program, and agrees with each of you
(individually, an "AGENT", and collectively, the "AGENTS", which term shall
include any additional agents appointed pursuant to Section 13 hereof) as set
forth in this Agreement. The Securities will be issued under an indenture dated
as of May 1, 1995 (the "INDENTURE") between the Company and The First National
Bank of Chicago, as Trustee (the "TRUSTEE"). The Securities shall have the
maturities, interest rates, redemption provisions, if any, and other terms set
forth in the Prospectus referred to below as it may be amended or supplemented
from time to time. The
<PAGE>
Securities will be issued, and the terms and rights thereof established, from
time to time by the Company in accordance with the Indenture.
On the basis of the representations and warranties herein contained, but
subject to the terms and conditions stated herein and to the reservation by the
Company of the right to sell Securities directly to investors (other than
broker-dealers) on its own behalf, the Company hereby (i) appoints the Agents as
the exclusive agents of the Company (subject to Section 13 hereof) for the
purpose of soliciting and receiving offers to purchase Securities from the
Company by others pursuant to Section 2(a) hereof and (ii) agrees that, except
as otherwise contemplated herein, whenever it determines to sell Securities
directly to any Agent as principal, it will enter into a separate agreement
(each such agreement a "TERMS AGREEMENT"), substantially in the form of Exhibit
A hereto, relating to such sale in accordance with Section 2(b) hereof.
The Company has prepared and filed with the Securities and Exchange
Commission (the "COMMISSION") in accordance with the provisions of Securities
Act of 1933, as amended, and the rules and regulations of the Commission
thereunder (collectively, the "SECURITIES ACT"), a registration statement (the
file number of which is 333-43251) on Form S-3, relating to the Securities to be
issued from time to time by the Company. The Company also has filed with, or
proposes to file with, the Commission pursuant to Rule 424 under the Securities
Act a prospectus supplement describing certain terms of the Securities. The
registration statement as amended to the date of this Agreement is hereinafter
referred to as the "REGISTRATION STATEMENT" and the related prospectus covering
the Securities and the Other Securities included in the Registration Statement
is hereinafter referred to as the "BASIC PROSPECTUS". The Basic Prospectus as
supplemented by the prospectus supplement specifically relating to the
Securities in the form first used to confirm sales of the Securities is
hereinafter referred to as the "PROSPECTUS". If at any time the Company has
filed an abbreviated registration statement pursuant to Rule 462(b) under the
Securities Act (the "RULE 462 REGISTRATION STATEMENT"), then any reference
herein to the term "REGISTRATION STATEMENT" shall be deemed to include such Rule
462 Registration Statement. Any reference in this Agreement to the Registration
Statement, the Basic Prospectus, any preliminary form of Prospectus (a
"PRELIMINARY PROSPECTUS") previously filed with the Commission pursuant to Rule
424 or the Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the
Securities Act which were filed under the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder
(collectively, the "EXCHANGE ACT") on or before the date of this Agreement or
the date of the Basic Prospectus, any preliminary prospectus or the Prospectus,
as the case may be; and any reference to "amend", "amendment" or "supplement"
with respect to the Registration Statement, the
2
<PAGE>
Basic Prospectus, any preliminary prospectus or the Prospectus, including any
supplement to the Prospectus that sets forth only the terms of a particular
issue of the Securities (a "PRICING SUPPLEMENT"), shall be deemed to refer to
and include any documents filed under the Exchange Act after the date of this
Agreement, or the date of the Basic Prospectus, any preliminary prospectus or
the Prospectus, as the case may be, which are deemed to be incorporated by
reference therein.
1. Representations. The Company represents and warrants to, and agrees
with, each Agent as of the Commencement Date (as hereinafter defined), as of
each date on which the Company accepts an offer to purchase Securities
(including any purchase by an Agent as principal pursuant to a Terms Agreement
or otherwise), as of each date the Company issues and sells Securities and as of
each date the Registration Statement or the Prospectus is amended or
supplemented, as follows (it being understood that such representations and
warranties shall be deemed to relate to the Registration Statement, the Basic
Prospectus and the Prospectus, each as amended or supplemented to each such
date):
(a) the Registration Statement has been declared effective by the
Commission under the Securities Act; 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
the Company, threatened by the Commission; and the Registration
Statement and Prospectus (as amended or supplemented, if applicable)
comply, or will comply, as the case may be, in all material respects
with the Securities Act and the Trust Indenture Act of 1939, as amended,
and the rules and regulations of the Commission thereunder
(collectively, the "TRUST INDENTURE ACT"), and do not and will not, as
of the applicable effective date as to the Registration Statement and
any amendment or supplement thereto and as of the date of the Prospectus
and any amendment or supplement thereto, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; except that
the foregoing representations and warranties shall not apply to (i) that
part of the Registration Statement which constitutes the Statement of
Eligibility and Qualification (Form T-1) under the Trust Indenture Act
of the Trustee, and (ii) statements or omissions in the Registration
Statement or the Prospectus made in reliance upon and in conformity with
information relating to any Agent furnished to the Company in writing by
such Agent expressly for use therein;
(b) except for statements in such documents which do not
constitute part of the Registration Statement or the Prospectus pursuant
to
3
<PAGE>
Rule 412 of Regulation C under the Securities Act and after
substituting therefor any modifying or superseding statements, the
documents incorporated by reference in the Prospectus, when they were
filed with the Commission, or if applicable, became effective, conformed
in all material respects to the requirements of the Securities Act or
the Exchange Act, as applicable, and none of such documents contained an
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and any
further documents so filed and incorporated by reference in the
Prospectus, or any further amendment or supplement thereto, when such
documents become effective or are filed with the Commission, as the case
may be, will conform in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and will not contain
an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(c) the financial statements, and the related notes thereto,
included or incorporated by reference in the Registration Statement and
the Prospectus present fairly, in all material respects, the financial
position of the Company and its consolidated subsidiaries as of the
dates indicated and the results of their operations and the changes in
their consolidated cash flows for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis, and the supporting
schedules included or incorporated by reference in the Registration
Statement present fairly, in all material respects, the information
required to be stated therein as of the dates indicated; and the pro
forma financial information, and the related notes thereto, if any,
included or incorporated by reference in the Registration Statement and
the Prospectus has been prepared in accordance with the applicable
requirements of the Securities Act and the Exchange Act, as applicable
and is based upon good faith estimates and assumptions believed by the
Company to be reasonable;
(d) since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not been any
material adverse change in the business, business prospects, financial
position, shareholders' equity or results of operations of the Company
and its subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Prospectus;
(e) the Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of
4
<PAGE>
Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, and
has been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, other than where the
failure to be so qualified or in good standing would not have a material
adverse effect on the Company and its subsidiaries taken as a whole;
(f) each Significant Subsidiary (as defined in Regulation S-X
promulgated by the Commission) of the Company has been duly incorporated
and is validly existing as a corporation under the laws of its
jurisdiction of incorporation, with power and authority (corporate and
other) to own its properties and conduct its business as described in
the Prospectus, and has been duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of
each other jurisdiction in which it owns or leases properties, or
conducts any business so as to require such qualification, other than
where the failure to be so qualified or in good standing would not have
a material adverse effect on the Company and its subsidiaries taken as a
whole; and all of the outstanding shares of capital stock of each
Significant Subsidiary have been duly authorized and validly issued, are
fully-paid and non-assessable, and are owned by the Company, directly or
indirectly, free and clear of all liens, encumbrances, security
interests and claims;
(g) each of this Agreement and any other applicable Terms
Agreement has been duly authorized, executed and delivered by the
Company;
(h) the Securities have been duly authorized, and when validly
authenticated and when issued and delivered in accordance with the
Indenture and sold to the Agents pursuant to this Agreement and any
applicable Terms Agreement, will have been duly executed, issued and
delivered by the Company and will constitute valid and binding
obligations of the Company entitled to the benefits provided by the
Indenture; the Indenture has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding instrument
of the Company; the Indenture has been duly qualified under the Trust
Indenture Act; and the Indenture conforms, and the Securities of any
particular issuance of Securities will conform, to the descriptions
thereof in the Prospectus as amended or supplemented to relate to such
issuance of Securities;
5
<PAGE>
(i) neither the Company nor any Significant Subsidiary is, or with
the giving of notice or lapse of time or both would be, in violation of
or in default under, its Certificate of Incorporation or By-Laws or any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any Significant Subsidiary is a party
or by which it or any of them or any of their respective properties is
bound or to which any of the property or assets of the Company or any
Significant Subsidiary is subject, except for violations and defaults
which individually and in the aggregate would not have a material
adverse effect on the Company and its subsidiaries taken as a whole; the
issue and sale of the Securities and the performance by the Company of
all of the provisions of its obligations under the Securities, the
Indenture, this Agreement and any applicable Terms Agreement or other
agreement pursuant to which an Agent purchases Securities as principal,
and the consummation of the transactions herein and therein
contemplated, will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any material
indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument to which the Company or any Significant
Subsidiary is a party or by which the Company or any Significant
Subsidiary is bound or to which any of the property or assets of the
Company or any Significant Subsidiary is subject, nor will any such
action result in any violation of the provisions of the Restated
Certificate of Incorporation or the By-Laws of the Company or any
material violation of any applicable law or statute or any order, rule
or regulation of any court or governmental agency or body having
jurisdiction over the Company, any Significant Subsidiary or any of
their respective properties; and no consent, approval, authorization,
order, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the
Securities or the consummation by the Company of the transactions
contemplated by this Agreement, any applicable Terms Agreement or the
Indenture, except such consents, approvals, authorizations,
registrations or qualifications as have been obtained under the
Securities Act or the Trust Indenture Act and as may be required under
the applicable securities or Blue Sky Laws of the various states and
other jurisdictions in connection with the issue, sale and distribution
of the Securities;
(j) other than as set forth or contemplated in the Prospectus,
there are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened to which the Company or any
Significant Subsidiary is or may be a party or to which any property of
the Company or any Significant Subsidiary is or may be the subject that
are required to be described in the Registration Statement or the
Prospectus
6
<PAGE>
that are not so described; and there are no contracts or
other documents of a character required to be filed as an exhibit to the
Registration Statement or required to be described in the Registration
Statement or the Prospectus which are not filed or described as
required;
(k) Ernst & Young LLP who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Securities Act; and
(l) immediately after any sale of Securities by the Company
hereunder or under any applicable Terms Agreement, (i) the aggregate
amount of Securities which shall have been issued and sold by the
Company hereunder or under any Terms Agreement taken together with any
other securities of the Company (other than the Securities) that shall
have been issued and sold pursuant to the Registration Statement will
not exceed the amount of debt securities registered under the
Registration Statement and (ii) the aggregate initial offering price of
Securities which shall have been issued and sold by the Company
hereunder or under any Terms Agreement will not exceed $500,000,000.
2. Solicitations as Agent; Purchases as Principal.
(a) Solicitations as Agent. On the basis of the representations
and warranties herein contained, but subject to the terms and conditions
herein set forth, each of the Agents hereby severally and not jointly
agrees, as agent of the Company, to use its reasonable efforts to
solicit offers to purchase the Securities from the Company upon the
terms and conditions set forth in the Prospectus as amended or
supplemented from time to time. So long as this Agreement shall remain
in effect with respect to any Agent, the Company shall not, without the
consent of such Agent, solicit or accept offers to purchase, or sell,
Securities or any other debt securities with a maturity at the time of
original issuance of 9 months or more except pursuant to this Agreement
and any Terms Agreement, or except pursuant to a private placement not
constituting a public offering under the Securities Act or except in
connection with a firm commitment underwriting pursuant to an
underwriting agreement that does not provide for a continuous offering
of medium-term debt securities. However, the Company reserves the right
to sell, and may solicit and accept offers to purchase, Securities
directly on its own behalf to investors (other than broker-dealers).
The Company reserves the right, in its sole discretion, to
instruct the Agents to suspend at any time, for any period of time or
permanently,
7
<PAGE>
the solicitation of offers to purchase Securities. Upon
notice from the Company, each Agent will, as promptly as practicable,
but in no event later than one business day following such notice,
suspend solicitation of offers to purchase Securities from the Company
until such time as the Company has advised such Agent or Agents that
such solicitation may be resumed. During the period of time that such
solicitation is suspended, the Company shall not be required to deliver
any opinions, letters or certificates in accordance with Sections 4(i),
4(j) and 4(k) hereof; provided that if the Registration Statement or
Prospectus is amended or supplemented during the period of suspension
(other than by an amendment or supplement providing solely for a change
in the interest rates, redemption provisions, amortization schedules or
maturities offered for the Securities or for a change that the Agents
deem to be immaterial), no Agent shall be required to resume soliciting
offers to purchase Securities until the Company has delivered such
opinions, letters and certificates as such Agent may reasonably request.
The Company agrees to pay each Agent, as consideration for the
sale of each Security resulting from a solicitation made or an offer to
purchase received by such Agent, a commission in the form of a discount
from the purchase price of such Security in an amount equal to the
following applicable percentage of the principal amount of such Security
sold:
RANGE OF MATURITIES COMMISSION (PERCENTAGE
OF AGGREGATE PRINCIPAL
AMOUNT OF SECURITIES SOLD)
From 9 months to less than 1 year................ .125%
From 12 months to less than 18 months............ .150%
From 18 months to less than 2 years.............. .200%
From 2 years to less than 3 years................ .250%
From 3 years to less than 4 years................ .350%
From 4 years to less than 5 years................ .450%
From 5 years to less than 6 years................ .500%
From 6 years to less than 7 years................ .550%
From 7 years to less than 10 years............... .600%
From 10 years to less than 15 years.............. .625%
From 15 years to less than 20 years.............. .700%
From 20 years to and including 30 years.......... .750%
Greater than 30 years............................ to be negotiated
8
<PAGE>
The Agents are authorized to solicit offers to purchase
Securities only in the principal amount of $1,000 (or, in the case of
Securities not denominated in U.S. dollars, the equivalent thereof in
the applicable foreign currency or composite currency, rounded down to
the nearest 1,000 units of such foreign currency or composite currency)
or any amount in excess thereof which is an integral multiple of $1,000
(or, in the case of Securities not denominated in U.S. dollars, 1,000
units of such foreign currency or composite currency). Each Agent shall
communicate to the Company, orally or in writing, each reasonable offer
to purchase Securities received by such Agent as agent. The Company
shall have the sole right to accept offers to purchase the Securities
and may reject any such offer in whole or in part. Each Agent shall have
the right, in its discretion reasonably exercised without advising the
Company, to reject any offer to purchase Securities, as a whole or in
part, that it considers to be unacceptable and any such rejection shall
not be deemed a breach of its agreements herein contained. The
procedural details relating to the issue and delivery of Securities sold
by an Agent as agent and the payment therefor are set forth in the
Administrative Procedures (as hereinafter defined). Each Agent agrees
that it will not solicit an offer to purchase Securities or deliver any
of the Securities in any jurisdiction outside the United States of
America except under circumstances that will not result in a violation
of the applicable laws thereof. Each Agent understands that no action
has been taken to permit a public offering in any jurisdiction outside
the United States of America where action would be required for such
purpose. The Agents further understand that in connection with the
distribution of Securities denominated in any foreign currency or
currency unit, they will as agent, directly or indirectly, not solicit
offers to purchase and as principal pursuant to a Terms Agreement or
otherwise, directly or indirectly, not offer, sell or deliver, such
Securities in, or to residents of, the country issuing such currency,
except as permitted by applicable law.
(b) Purchase as Principal. Each sale of Securities to any Agent as
principal shall be made in accordance with the terms of this Agreement
and (unless such Agent shall otherwise agree) a Terms Agreement which
will provide for the sale of such Securities to, and the purchase
thereof by, such Agent. A Terms Agreement will be substantially in the
form of Exhibit A hereto but may take the form of an exchange of any
standard form of written telecommunication between an Agent and the
Company and may also specify certain provisions relating to the
reoffering of such Securities by such Agent or may be an oral agreement
confirmed by a Terms Agreement or other written telecommunication, as
the case may be. The commitment of any Agent to purchase securities as
principal, whether pursuant to any Terms Agreement or otherwise, shall
be deemed to have
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<PAGE>
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 and in the applicable Terms Agreement set
forth. Each agreement by an Agent to purchase Securities as principal
(pursuant to a Terms Agreement or otherwise) shall specify the principal
amount of Securities to be purchased by such Agent pursuant thereto, the
price to be paid to the Company for such Securities, the maturity date
of such Securities, the interest rate or interest rate basis, if any,
applicable to such Securities, any other terms of such Securities, the
time and date and place of delivery of and payment for such Securities
(the time and date of any and each such delivery and payment, the "TIME
OF DELIVERY"), any provisions relating to rights of, and default by,
underwriters acting together with such Agent in the reoffering of
Securities, and shall also specify any requirements for opinions of
counsel, accountants' letters and officers' certificates pursuant to
Section 4 hereof. Unless otherwise specified in a Terms Agreement, the
procedural details relating to the issue and delivery of Securities
purchased by an Agent as principal and the payment therefor shall be as
set forth in the Administrative Procedures.
(c) Obligations Several. The Company acknowledges that the
obligations of the Agents are several and not joint and, subject to the
provisions of this Section 2, each Agent shall have complete discretion
as to the manner in which it solicits purchasers for the Securities and
as to the identity thereof.
(d) Administrative Procedures. The Agents and the Company agree to
perform their respective duties and obligations specifically provided to
be performed in the Medium-Term Notes Administrative Procedures (the
"ADMINISTRATIVE PROCEDURES") attached hereto as Exhibit B, as the same
may be amended from time to time. The Administrative Procedures may be
amended only by written agreement of the Company and the Agents.
(e) Other Securities. The Company agrees to notify each Agent of
sales by the Company of Other Securities.
3. Commencement Date. The documents required to be delivered pursuant to
Section 6 hereof on the Commencement Date (as defined below) shall be delivered
to the Agents at the offices of Davis Polk & Wardwell, New York, New York, at
11:00 a.m., New York City time, on the date of this Agreement, which date and
time of such delivery may be postponed by agreement between the Agents and the
Company but in no event shall be later than the day prior to the date on which
solicitation of offers to purchase Securities is commenced or the
10
<PAGE>
first date on which the Company accepts an offer by any Agent to purchase
Securities as principal (such time and date being referred to herein as the
"COMMENCEMENT DATE").
4. Covenants of the Company. The Company covenants and agrees with each
Agent:
(a) (i) to make no amendment or supplement to the Registration
Statement or the Prospectus (A) prior to the Commencement Date which
shall be disapproved by any Agent promptly after reasonable notice
thereof, or (B) after the date of any Terms Agreement or other agreement
by an Agent to purchase any particular series of Securities as principal
and prior to the related Time of Delivery which shall be disapproved by
any Agent party to such Terms Agreement or so purchasing as principal
promptly after reasonable notice thereof, provided, however, that the
foregoing shall not apply to any of the Company's periodic filings with
the Commission described in clause 4(a)(iv) below, copies of which
filings the Company will cause to be delivered to the Agents promptly
upon request after their transmission to the Commission for filing; (ii)
subject to the foregoing clause 4(a)(i), promptly to cause each
Prospectus Supplement to be filed with or transmitted for filing to the
Commission in accordance with Rule 424(b) under the Securities Act and
to prepare, with respect to any Securities to be sold through or to such
Agent pursuant to this Agreement, a Pricing Supplement with respect to
such Securities in a form previously approved by such Agent and to file
such Pricing Supplement in accordance with Rule 424(b) under the
Securities Act; (iii) to make no amendment or supplement to the
Registration Statement or Prospectus, other than any Pricing Supplement,
at any time prior to having afforded each Agent a reasonable opportunity
to review and comment on it, provided however, that the foregoing shall
not apply to any of the Company's periodic filings with the Commission
described in clause 4(a)(iv) below, copies of which filings the Company
will cause to be delivered to the Agents promptly upon request after
their transmission to the Commission for filing; and (iv) promptly to
file all reports and any definitive proxy or information statements
required to be filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act for so long as the
delivery of a prospectus is required in connection with the offering or
sale of the Securities. The Company will promptly advise each Agent (A)
of the filing of any amendment or supplement to the Basic Prospectus or
any amendment to the Registration Statement and of the effectiveness of
any such amendment to the Registration Statement, (B) of the issuance by
the Commission of any stop order suspending the effectiveness of the
11
<PAGE>
Registration Statement or any order preventing or suspending the use of
any prospectus relating to the Securities or the initiation or
threatening of any proceeding for that purpose, or of any request by the
Commission for any amendment or supplement of the Registration Statement
or Prospectus or for additional information; and (C) of the receipt by
the Company of any notification with respect to any suspension of the
qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceeding for
any such purpose. The Company agrees to use its best efforts to prevent
the issuance of any such stop order or of any such order preventing or
suspending the use of any such prospectus or of any notification
suspending any such qualification and, if issued, to use promptly its
best efforts to obtain withdrawal thereof as soon as possible. No Agent
shall be obligated to solicit offers to purchase Securities so long as
it is not reasonably satisfied with the Prospectus as then amended or
supplemented;
(b) to endeavor to qualify the Securities for offer and sale under
the securities or Blue Sky laws of such jurisdictions as the Agents
shall reasonably request and to continue such qualification in effect so
long as reasonably required in connection with the distribution of the
Securities; provided that the Company shall not be obligated to subject
itself to any material additional tax or other liabilities, to qualify
as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or required to file a
general consent to service of process in any jurisdiction;
(c) to furnish each Agent and counsel to the Agents, at the
expense of the Company, a signed copy of the Registration Statement (as
originally filed) and each amendment thereto, in each case including
exhibits and documents incorporated by reference therein and, during the
period mentioned in Section 4(d) below, to furnish each Agent as many
copies of the Prospectus (including all amendments and supplements
thereto) and documents incorporated by reference therein as such Agent
may reasonably request;
(d) if at any time when a prospectus relating to the Securities is
required to be delivered under the Securities Act, any event shall occur
as a result of which the Prospectus, as then amended or supplemented,
would include an untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in
the light of the circumstances when such Prospectus is delivered to a
purchaser, not misleading, or if it is necessary at any time to amend or
supplement the Prospectus to comply with law, to immediately notify the
Agents by
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<PAGE>
telephone (with confirmation in writing) and request each
Agent (i) in its capacity as agent of the Company, to suspend
solicitation of offers to purchase Securities from the Company (and, if
so notified, such Agent shall cease such solicitations and cease using
the Prospectus as soon as practicable, but in any event not later than
one business day later); and (ii) to cease sales of any Securities such
Agent may then own as principal. If the Company shall decide to amend or
supplement the Registration Statement or the Prospectus, as then amended
or supplemented, it shall so advise each Agent promptly by telephone
(with confirmation in writing) and, at its expense, shall prepare and
cause to be filed promptly with the Commission an amendment or
supplement to the Registration Statement or the Prospectus, as then
amended or supplemented, that will correct such statement or omission or
effect such compliance and will supply such amended or supplemented
Prospectus to the Agents in such quantities as they may reasonably
request. If such amendment or supplement and the documents, opinions,
letters and certificates, if any, furnished to the Agents pursuant to
Sections 4(e), 4(i), 4(j) and 4(k) in connection with the preparation
and filing of such amendment or supplement are reasonably satisfactory
to the Agents, then upon the filing with the Commission of such
amendment or supplement to the Prospectus or upon the effectiveness of
an amendment to the Registration Statement, the Agents will resume the
solicitation of offers to purchase Securities hereunder. Notwithstanding
any other provision of this Section 4(d), if during such period an Agent
continues to own Securities purchased from the Company by such Agent as
principal or in the event such Agent is otherwise required to deliver a
prospectus in respect of a transaction in the Securities, if any event
described in this Section 4(d) occurs the Company will, at its own
expense, promptly prepare and file with the Commission an amendment or
supplement, reasonably satisfactory in all material respects to such
Agent, that will correct such statement or omission or effect such
compliance, will supply such amended or supplemented Prospectus to such
Agent in such quantities as such Agent may reasonably request and shall
furnish to such Agent pursuant to Sections 4(e), 4(i), 4(j) and 4(k)
such documents, certificates, opinions and letters as it may reasonably
request in connection with the preparation and filing of such amendment
or supplement;
(e) to notify the Agents promptly in writing of any downgrading,
or on its receipt of any notice of (i) any intended downgrading or (ii)
any formal review or formal indication of a possible negative change in
the rating accorded any of the senior unsecured debt securities of, or
guaranteed by, the Company by any "nationally recognized statistical
13
<PAGE>
rating organization", as such term is defined for purposes of Rule
436(g)(2) under the Securities Act;
(f) to make generally available to its security holders and to the
Agent as soon as practicable after the "EFFECTIVE DATE" (as defined in
Rule 158 of the Commission promulgated under the Securities Act) of the
Registration Statement with respect to each sale of Securities earnings
statements which shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 covering periods of at least twelve months
beginning in each case with the first fiscal quarter of the Company
occurring such effective date;
(g) so long as any Securities are outstanding, to furnish to such
Agent copies of all reports or other communications (financial or other)
furnished to holders of Securities and promptly upon request copies of
any reports and financial statements furnished to or filed with the
Commission or any national securities exchange on which any class of
securities of the Company is listed;
(h) that, from the date of any applicable Terms Agreement with an
Agent or other agreement by an Agent to purchase Securities as principal
and continuing to and including the business day following the related
Time of Delivery, not to offer, sell, contract to sell or otherwise
dispose of any debt securities of or guaranteed by the Company which
both mature more than 9 months after such Time of Delivery and are
substantially similar to the Securities, without the prior written
consent of such Agent;
(i) that each time the Registration Statement or the Prospectus
shall be amended or supplemented (other than by an amendment or
supplement providing solely (i) for a change in the interest rates,
redemption provisions, amortization schedules or maturities offered on
the Securities, (ii) for a change which the Agents deem to be immaterial
or (iii) for an offering of securities other than the Securities) and
each time the Company sells Securities to such Agent as principal
pursuant to a Terms Agreement or other agreement and such Terms
Agreement or other agreement specifies the delivery of an opinion under
this Section 4(i) as a condition to the purchase of Securities pursuant
to such Terms Agreement or other agreement, the Company shall furnish or
cause to be furnished forthwith to such Agent a written opinion of
Wachtell, Lipton, Rosen & Katz, or other counsel for the Company
reasonably satisfactory to such Agent, dated the date of such amendment
or supplement, or the related Time of Delivery relating to such sale, as
the case may be, in form
14
<PAGE>
reasonably satisfactory to such Agent, of the same tenor as the opinion
referred to in Section 6(b) hereof but modified to relate to the
Registration Statement and the Prospectus as amended and supplemented
to the date of such opinion; provided, however, that in lieu of such
opinion, counsel last furnishing such an opinion, may furnish to the
Agents a letter to the effect that such Agent may rely on the opinion
of such counsel which was last furnished to such Agent to the same
extent as though it were dated the date of such letter (except that the
statements in such last opinion shall be deemed to relate to the
Registration Statement and the Prospectus as amended or supplemented
to date of delivery of such letter);
(j) that each time the Registration Statement or the Prospectus
shall be amended or supplemented to include or incorporate amended or
supplemented financial information and each time the Company sells
Securities to such Agent as principal pursuant to a Terms Agreement or
other agreement and such Terms Agreement or other agreement specifies
the delivery of a letter under this Section 4(j) as a condition to the
purchase of Securities pursuant to such Terms Agreement or other
agreement, the Company shall cause the independent certified public
accountants who have certified the financial statements of the Company
and its subsidiaries included or incorporated by reference in the
Registration Statement (or other independent accountants of the Company
acceptable to the Agents) forthwith to furnish such Agent a letter,
dated the date of such amendment or supplement or the related Time of
Delivery relating to such sale, as the case may be, in form reasonably
satisfactory to such Agent, of the same tenor as the letter referred to
in Section 6(e) hereof but modified to relate to the Registration
Statement and the Prospectus as amended or supplemented to the date of
such letter with such changes as may be necessary to reflect such
amended or supplemented financial information included or incorporated
by reference in the Registration Statement or the Prospectus as amended
or supplemented, provided, however, that, with respect to any financial
information or other matter, such letter may reconfirm as true and
correct at such date, as though made at and as of such date, rather than
repeat statements with respect to such financial information or other
matters made in the letter referred to in Section 6(e) hereof which was
last furnished to such Agent;
(k) that each time the Registration Statement or the Prospectus
shall be amended or supplemented (other than by an amendment or
supplement providing solely (i) for a change in the interest rates,
redemption provisions, amortization schedules or maturities offered on
the Securities, (ii) for a change which the Agents deem to be immaterial
or
15
<PAGE>
(iii) for an offering of securities other than Securities), and each
time the Company sells Securities to such Agent as principal and the
applicable Terms Agreement or other agreement specifies the delivery of
a certificate under this Section 4(k) as a condition to the purchase of
Securities pursuant to such Terms Agreement or other agreement, the
Company shall furnish or cause to be furnished forthwith to such Agent a
certificate signed by an executive officer of the Company, dated the
date of such amendment or supplement or the related Time of Delivery
relating to such sale, as the case may be, in form reasonably
satisfactory to such Agent, of the same tenor as the certificates
referred to in Section 6(f) but modified to relate to the Registration
Statement and the Prospectus as amended and supplemented to the date of
delivery of such certificate or to the effect that the statements
contained in the certificate referred to in Section 6(f) hereof which
was last furnished to such Agent are true and correct at such date as
though made at and as of such date (except that such statements shall be
deemed to relate to the Registration Statement and the Prospectus as
amended or supplemented to such date).
5. Costs and Expenses. The Company covenants and agrees with each Agent
that the Company will, whether or not any sale of Securities is consummated, pay
or cause to be paid all costs and expenses incident to the performance of its
obligations hereunder and under any applicable Terms Agreement, including
without limiting the generality of the foregoing, all costs and expenses: (i)
incident to the preparation, issuance, execution, authentication and delivery of
the Securities, including any expenses of the Trustee, its counsel and any
Paying Agent, Authenticating Agent or Calculation Agent for the Notes, (ii)
incident to the preparation, printing and filing under the Securities Act of the
Registration Statement, the Prospectus and any preliminary prospectus (including
in each case all exhibits, amendments and supplements thereto), (iii) in
connection with the listing of the Securities on any stock exchange, (iv)
related to any filing with NASD Regulation, Inc., (v) in connection with the
printing (including word processing and duplication costs) and delivery of this
Agreement and the Indenture and the furnishing to the Agents and dealers of
copies of the Registration Statement and the Prospectus, including mailing and
shipping to the Agents, as herein provided, (vi) payable to rating agencies in
connection with the rating of the Securities, (vii) the reasonable fees and
disbursements of counsel for the Agents incurred in connection with the offering
and sale of the Securities, including any opinions to be rendered by such
counsel hereunder and (viii) any advertising expenses incurred by the Agents
with the consent of the Company.
6. Conditions. The obligation of any Agent, as agent of the Company, at
any time ("SOLICITATION TIME") to solicit offers to purchase the Securities, the
obligation of any Agent to purchase Securities as principal pursuant to any
Terms
16
<PAGE>
Agreement or otherwise, and the obligation of any other purchaser to purchase
Securities shall in each case be subject (1) to the condition that all
representations and warranties of the Company herein and all statements of
officers of the Company made in any certificate furnished pursuant to the
provisions hereof are true and correct, in all material respects (i) in the case
of an Agent's obligation to solicit offers to purchase Securities, at and as of
such Solicitation Time and (ii) in the case of any Agent's or any other
purchaser's obligation to purchase Securities, at and as of the time the Company
accepts the offer to purchase such Securities and, as the case may be, at and as
of the related Time of Delivery or time of purchase; (2) to the condition that
at or prior to such Solicitation Time, time of acceptance, Time of Delivery or
time of purchase, as the case may be, the Company shall have complied in all
material respects with all its agreements and all conditions on its part to be
performed or satisfied hereunder; and (3) to the following additional conditions
when and as specified:
(a) Prior to such Solicitation Time or corresponding Time of
Delivery or time of purchase, as the case may be:
(i) the Prospectus as amended or supplemented (including,
if applicable, the Pricing Supplement) with respect to such
Securities shall have been filed with the Commission pursuant to
Rule 424(b) under the Securities Act within the applicable time
period prescribed for such filing by the rules and regulations
under the Securities Act; no stop order suspending the
effectiveness of the Registration Statement shall be in effect
and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional
information on the part of the Commission shall have been
complied with to the reasonable satisfaction of such Agent;
(ii) subsequent to the execution and delivery of this
Agreement and prior to the Commencement Date or Time of Delivery
there shall not have occurred any downgrading, nor shall any
notice have been given of (A) downgrading, (B) any intended
downgrading or (C) any formal review or formal indication of a
possible negative change in the rating accorded any senior
unsecured debt securities of or guaranteed by the Company by any
"nationally recognized statistical rating organization", as such
term is defined by the Commission for purposes of Rule 436(g)(2)
under the Securities Act;
(iii) there shall not have been since the respective dates
as to which information is given in the Prospectus, any material
17
<PAGE>
adverse change in the business, business prospects, financial
position, shareholders' equity or results of operations of the
Company and its subsidiaries, taken as a whole, the effect of
which in the judgment of the applicable Agent makes it
impracticable or inadvisable to proceed with the solicitation by
such Agent of offers to purchase Securities from the Company or
the purchase by such Agent of Securities from the Company as
principal, as the case may be, on the terms and in the manner
contemplated in the Prospectus, as so amended or supplemented;
and
(iv) (A) trading generally shall not have been suspended or
materially limited on or by the New York Stock Exchange, (B)
trading of any securities of or guaranteed by the Company shall
not have been suspended on any exchange or in any
over-the-counter market, (C) a general moratorium on commercial
banking activities in New York shall not have been declared by
either Federal or New York State authorities, or (D) there shall
not have occurred any outbreak or escalation of hostilities or
calamity or crisis (including a crisis in the financial markets)
that, in the case of any of the foregoing clauses (A) through
(D), in the judgment of such Agent or Agents or of such other
purchaser, is material and adverse and which in the judgment of
such Agent or Agents or of such other purchaser makes it
impracticable to proceed with the solicitation by such Agent of
offers to purchase Securities from the Company or the purchase by
such Agent of Securities from the Company as principal, as the
case may be, on the terms and in the manner contemplated in the
Prospectus as amended or supplemented at the Solicitation Time or
at the time such offer to purchase was made.
(b) On the Commencement Date, and in the case of a purchase of
Securities by an Agent as principal pursuant to a Terms Agreement or
otherwise, if required by the applicable Terms Agreement or other
agreement, at the corresponding Time of Delivery, Wachtell, Lipton,
Rosen & Katz, counsel for the Company, shall have furnished to the
relevant Agent or Agents their written opinion, dated the Commencement
Date or Time of Delivery, as the case may be, in form and substance
reasonably satisfactory to such Agent or Agents, to the effect that:
(i) this Agreement and any applicable Terms Agreement have
been duly authorized, executed and delivered by the Company;
18
<PAGE>
(ii) the Securities are in a form contemplated by the
Indenture, and have been duly authorized, and when validly
authenticated and when issued and delivered in accordance with
the terms of the Indenture and delivered to and paid for by any
purchaser of Securities sold through an Agent as agent in
accordance with this Agreement or any Agent as principal pursuant
to any Terms Agreement or other agreement, will constitute valid
and binding obligations of the Company entitled to the benefits
provided by the Indenture, subject to the effect of (A)
bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights of creditors
generally and (B) the application of general principles of equity
(regardless of whether enforcement is considered in proceedings
at law or in equity);
(iii) the Indenture has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding
instrument of the Company, subject to the effect of (A)
bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights of creditors
generally and (B) the application of general principles of equity
(regardless of whether enforcement is considered in proceedings
at law or in equity); and the Indenture has been duly qualified
under the Trust Indenture Act;
(iv) the issue and sale of the Securities and the
performance by the Company of all of the provisions of its
obligations under the Securities, the Indenture, this Agreement
and any applicable Terms Agreement or other agreement pursuant to
which an Agent purchases Securities as principal, and the
consummation of the transactions herein and therein contemplated,
will not (a) conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument set forth on a Schedule previously
furnished to the Agents (such counsel may assume compliance with
the financial covenants contained therein), (b) result in any
violation of the provisions of the Restated Certificate of
Incorporation or the By-Laws of the Company or (c) violate the
federal securities laws or regulations, the Delaware General
Corporation Law or any law, statute, order, rule or regulation
known to such counsel (without independent investigation) of any
court or governmental agency or body of the State of New York
having jurisdiction over the Company, any Significant Subsidiary
or any of their respective
19
<PAGE>
properties, except, in the case of clauses (a) and (c), for
conflicts, breaches, defaults or violations which would not
have a material adverse effect on the financial condition,
results of operations, assets or business of the Company and
its subsidiaries taken as a whole;
(v) no consent, approval, authorization, order,
registration or qualification of or with any court or
governmental agency or body is required for the issue and sale of
the Securities, except such consents, approvals, authorizations,
registrations or qualifications as have been obtained under the
Securities Act or the Trust Indenture Act and as may be required
under the securities or Blue Sky laws of the various states and
other jurisdictions in connection with the issue, sale and
distribution of the Securities;
(vi) the Securities and the Indenture conform in all
material respects to the descriptions thereof in the Prospectus;
and
(vii) (A) each document incorporated by reference in the
Registration Statement and the Prospectus (except for the
financial statements and related schedules and notes or other
financial or statistical data included or incorporated by
reference therein as to which such counsel need express no
opinion) complied when filed as to form, in all material
respects, with the Exchange Act; (B) based upon the review
described in the last paragraph of this Section 6(b), no facts
have come to such counsel's attention which lead such counsel to
believe that (except for the financial statements and related
schedules and notes or other financial or statistical data
included or incorporated by reference therein as to which such
counsel need express no belief and except for that part of the
Registration Statement which constitutes the Form T-1 of the
Trustee under the Trust Indenture Act) any part of the
Registration Statement (including the documents incorporated by
reference therein), when such part became effective contained,
any 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; (C) the Registration
Statement and the Prospectus as amended or supplemented (except
for the financial statements and related schedules and notes or
other financial or statistical data included or incorporated by
reference therein as to which such counsel need express no
opinion) comply as to form in all material respects with the
requirements of the Securities Act and the Trust Indenture Act;
and (D) based upon the
20
<PAGE>
review described in the last paragraph of this Section 6(b),
no facts have come to such counsel's attention which lead
such counsel to believe that (except for the financial
statements and related schedules and notes or other financial or
statistical data included or incorporated by reference therein as
to which such counsel need express no belief) the Prospectus, as
amended or supplemented, if applicable, as of the date such
opinion is delivered does not contain any untrue statement of a
material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that in the
case of an opinion delivered on the Commencement Date or pursuant
to Section 4(i), the opinion and belief set forth in clauses
6(b)(vii)(C) and 6(b)(vii)(D) above shall be deemed not to cover
information concerning an offering of particular Securities to
the extent such information will be set forth in a supplement to
the Basic Prospectus. In rendering such opinions, such counsel
may rely (x) upon the opinion furnished to the Agents pursuant to
Section 6(c); (y) upon oral advice of the staff of the
Commission; and (z) as to matters of fact, to the extent such
counsel deems proper, on certificates of responsible officers of
the Company and certificates or other written statements of
officials of jurisdictions having custody of documents respecting
the corporate existence or good standing of the Company.
With respect to the matters to be covered in subparagraph (vii)
above counsel may state their opinion is based upon their participation
in the preparation of the Registration Statement and the Prospectus and
any amendment or supplement thereto (excluding any documents
incorporated by reference thereto, in which case such opinion is based
upon their review of such documents) and discussions with
representatives of the Company and its auditors (including discussions
in which the Agents and their counsel participated) but is without
independent check or verification except as specified. Such counsel may
further state that such counsel have not verified, and are not passing
upon and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus (other than those statements referred to in
subparagraph (vi) above). In connection with the opinion contained in
subparagraph (iv)(a), the Schedule referred to therein shall have been
updated to include all material agreements and instruments of a similar
tenor, as in effect on such date.
(c) On the Commencement Date, and in the case of a purchase of
Securities by an Agent as principal pursuant to a Terms Agreement or
21
<PAGE>
otherwise, if required by the applicable Terms Agreement or other
agreement, at the corresponding Time of Delivery, Kathleen E. McDermott,
Chief Legal Officer and Assistant Secretary of the Company, shall have
furnished to the relevant Agent or Agents her written opinion, dated the
Commencement Date or Time of Delivery, as the case may be, in form and
substance reasonably satisfactory to such Agent or Agents, to the effect
that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware, with power and authority (corporate and other)
to own its properties and conduct its business as described in
the Prospectus;
(ii) the Company has been duly qualified as a foreign
corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it
owns or leases properties, or conducts any business, so as to
require such qualification, other than where the failure to be so
qualified or in good standing would not have a material adverse
effect on the Company and its subsidiaries taken as a whole;
(iii) each Significant Subsidiary has been duly incorporated
and is validly existing as a corporation under the laws of its
jurisdiction of incorporation, with power and authority
(corporate and other) to own its properties and conduct its
business as described in the Prospectus, and has been duly
qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts
any business, so as to require such qualification, other than
where the failure to be so qualified or in good standing would
not have a material adverse effect on the Company and its
subsidiaries taken as a whole; and all of the outstanding shares
of capital stock of each Significant Subsidiary have been duly
authorized and validly issued, are fully paid and non-assessable,
and are owned by the Company, directly or indirectly, free and
clear of all material liens, encumbrances, security interests and
claims;
(iv) other than as set forth or contemplated in the
Prospectus, such counsel does not know of any legal or
governmental proceedings pending to which the Company or any
Significant Subsidiary is a party or to which any property of the
22
<PAGE>
Company or any Significant Subsidiary is the subject which are
required to be described in the Prospectus as amended or
supplemented which are not described as required; and such
counsel does not know of any contracts or other documents of a
character required to be filed as an exhibit to the Registration
Statement or required to be described in the Registration
Statement or the Prospectus which are not filed or described as
required; and
(v) the statements in the Prospectus incorporated by
reference from Item 3 of Part I of the Company's Annual Report on
Form 10-K for the year ended February 1, 1997, as modified or
amended by any subsequent documents incorporated by reference in
the Registration Statement or the Prospectus, insofar as such
statements constitute a summary of the legal matters, documents
or proceedings referred to therein, fairly present the
information called for with respect to such legal matters,
documents or proceedings.
(d) On the Commencement Date, and in the case of a purchase of
Securities by an Agent as principal pursuant to a Terms Agreement or
otherwise, if required by the applicable Terms Agreement or other
agreement, at the corresponding Time of Delivery, Davis Polk & Wardwell,
counsel to the Agents, shall have furnished to the relevant Agent or
Agents such opinion or opinions, dated the Commencement Date or Time of
Delivery, as the case may be, with respect to the validity of the
Indenture, the Securities, the Registration Statement, the Prospectus as
amended or supplemented and other related legal matters relating to this
Agreement and the transactions contemplated hereby as such Agent or
Agents may reasonably request, and in each case such counsel shall have
received such papers and information as they may reasonably request to
enable them to pass upon such matters.
(e) On the Commencement Date, and in the case of a purchase of
Securities by an Agent as principal pursuant to a Terms Agreement or
otherwise, if required by the applicable Terms Agreement or other
agreement, at the corresponding Time of Delivery, the Company's
independent certified public accountants who have certified the
financial statements of the Company (or other independent accountants
for the Company acceptable to the Agents) and its subsidiaries included
or incorporated by reference in the Registration Statement and
Prospectus, as then amended or supplemented, shall have furnished to the
relevant Agent or Agents a letter, dated the Commencement Date or Time
of Delivery, as the case may be, in form and substance reasonably
satisfactory to such
23
<PAGE>
Agent or Agents, containing statements and information of the
type ordinarily included in accountants' "COMFORT LETTERS" to
underwriters with respect to the financial statements and certain
financial information relating to the Company contained in or
incorporated by reference in the Registration Statement and the
Prospectus, as then amended or supplemented.
(f) On the Commencement Date, and in the case of a purchase of
Securities by an Agent as principal pursuant to a Terms Agreement or
otherwise, if required by the applicable Terms Agreement or other
agreement, at the corresponding Time of Delivery, the relevant Agent or
Agents shall have received a certificate or certificates signed by an
executive officer of the Company, dated the Commencement Date or Time of
Delivery, as the case may be, to the effect set forth in Sections
6(a)(i) and 6(a)(ii) above and to the further effect that (1) the
representations and warranties of the Company contained herein are true
and correct in all material respects on and as of the Commencement Date
or Time of Delivery, as the case may be, as if made on and as of such
date, (2) the Company has complied in all material respects with all
agreements and all conditions on its part to be performed or satisfied
hereunder or under the applicable Terms Agreement or other agreement at
or prior to the Commencement Date or Time of Delivery, as the case may
be, and (3) there has not been any material adverse change in the
business, business prospects, financial position, shareholders' equity
or results of operations of the Company and its subsidiaries, taken as a
whole, from that set forth in or contemplated by the Registration
Statement or the Prospectus as so amended or supplemented.
7. Indemnification and Contribution. (a) The Company agrees to indemnify
and hold harmless each Agent and each person, if any, who controls such Agent,
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, from and against any and all losses, claims, damages and
liabilities (including without limitation the reasonable legal fees and other
expenses incurred in connection with investigating, preparing to defend or
defending any suit, action or proceeding or any claim asserted which shall be
reimbursed as such legal fees and other expenses are incurred) arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any amendment thereof or the
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) or any preliminary prospectus, or arising out
of or based upon any omission or alleged omission to state therein a material
fact required to be stated therein or, in case of the Registration Statement or
the Prospectus (as amended or supplemented), necessary to make the statements
24
<PAGE>
therein not misleading or, in the case of any preliminary prospectus, necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, except 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 made in reliance upon and in conformity
with information furnished to the Company in writing by such Agent expressly for
use therein; provided that the foregoing indemnity with respect to any
preliminary prospectus shall not inure to the benefit of any Agent (or to the
benefit of any person controlling such Agent) for any such losses, claims,
damages or liabilities (a) resulting solely from the Agent having sold
Securities to a person to whom there was not sent or given, if required by law,
at or prior to the time of written confirmation of such sale, a copy of the
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) or (b) if such losses, claims, damages or
liabilities result from an untrue statement or omission or alleged untrue
statement or omission made in such preliminary prospectus that is eliminated or
remedied in the Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) and, if required by law, a copy
of the Prospectus (as so amended or supplemented) shall not have been furnished
to such person at or prior to the written confirmation of the sale of such
Securities to such person.
(b) Each Agent agrees, severally and not jointly, to indemnify and hold
harmless the Company, its directors, its officers and each person who controls
the Company within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, to the same extent as the foregoing indemnity
from the Company to each Agent, but only with reference to any untrue statement
or omission or alleged untrue statement or omission made in reliance upon and in
conformity with information furnished to the Company in writing by such Agent
expressly for use in the Registration Statement, the Prospectus, any amendment
or supplement thereto, or any preliminary prospectus.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "INDEMNIFIED PERSON") shall promptly
notify the person against whom such indemnity may be sought (the "INDEMNIFYING
PERSON") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees
and
25
<PAGE>
expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary, (ii) the Indemnifying Person has failed within
a reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It is
understood that the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed as they are incurred. Any such separate firm for the Agents, and
such control persons of the Agents shall be designated in writing by J.P. Morgan
Securities Inc. or, if J.P. Morgan Securities Inc. is not an Indemnified Party,
by the Agents that are Indemnified Parties and any such separate firm for the
Company, its directors, its officers and such control persons of the Company or
authorized representatives shall be designated in writing by the Company. The
Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the Indemnifying Person agrees to
indemnify any Indemnified Person from and against any loss or liability by
reason of such settlement or judgment to the extent set forth in this Section 7.
Notwithstanding the foregoing sentence, if at any time an Indemnified Person
shall have requested an Indemnifying Person to reimburse the Indemnified Person
for fees and expenses of counsel as contemplated by the third sentence of this
paragraph, the Indemnifying Person agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such Indemnifying
Person of the aforesaid request and (ii) such Indemnifying Person shall not have
reimbursed the Indemnified Person in accordance with such request prior to the
date of such settlement. No Indemnifying Person shall, without the prior written
consent of the Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement includes an unconditional release of
such Indemnified Person from all liability on claims that are the subject matter
of such proceeding.
(d) If the indemnification provided for in Section 7(a) or 7(b) is
unavailable to an Indemnified Person or insufficient in respect of any losses,
claims, damages or liabilities referred to herein in connection with any
offering of Securities, then each Indemnifying Person under such paragraph, in
lieu of indemnifying such Indemnified Person thereunder, shall contribute to the
amount
26
<PAGE>
paid or payable by such Indemnified Person as a result of such losses,
claims, damages or liabilities (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and each
Agent on the other from the offering of the Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and each Agent on the other in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and each Agent on the other in connection with the
offering of such Securities shall be deemed to be in the same respective
proportion as the net proceeds from the offering of such Securities (before
deducting expenses) received by the Company and the total discounts and
commissions received by each Agent in respect thereof bear to the aggregate
offering price of such Securities. The relative fault of the Company on the one
hand and of each Agent on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by such Agent and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and each Agent agrees that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by pro
rata allocation (even if all Agents were treated as one entity for such purpose)
or by any other method of allocation that does not take account of the equitable
considerations referred to above in this Section 7(d). The amount paid or
payable by an Indemnified Person as a result of the losses, claims, damages and
liabilities referred to above in this Section 7 shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses incurred
by such Indemnified Person in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section 7, in no
event shall an Agent be required to contribute any amount in excess of the
amount by which the total price at which the Securities referred to in Section
7(d) that were sold by or through such Agent exceeds the amount of any damages
that such Agent has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The obligation of each Agent to
contribute pursuant to this Section 7(d) is several (in the proportion that the
principal amount of the Securities the sale of which by or through such Agent
gave rise to such losses, claims, damages or liabilities bears to the aggregate
principal amount of the
27
<PAGE>
Securities the sale of which by or through any Agent gave rise to such losses,
claims, damages or liabilities) and is not joint.
(e) The indemnity and contribution agreements contained in this Section 7
are in addition to any liability which the Indemnifying Persons may otherwise
have to the Indemnified Persons referred to above.
8. Termination. (a) This Agreement may be terminated at any time (i) by
the Company with respect to any or all of the Agents or (ii) by any Agent with
respect to itself only, in each case upon the giving of written notice of such
termination to each other party hereto. Any Terms Agreement shall be subject to
termination in the absolute discretion of the Agent or Agents that are parties
thereto on the terms set forth or incorporated by reference therein. The
termination of this Agreement shall not require termination of any agreement by
an Agent to purchase Securities as principal (whether pursuant to a Terms
Agreement or otherwise) and the termination of such an agreement shall not
require termination of this Agreement. In the event this Agreement is terminated
with respect to any Agent, (x) this Agreement shall remain in full force and
effect with respect to any Agent as to which such termination has not occurred,
(y) this Agreement shall remain in full force and effect with respect to the
rights and obligations of any party which have previously accrued or which
relate to Securities which are already issued, agreed to be issued and (z) in
any event, the provisions of the fourth paragraph of Section 2(a), Section 2(c),
the last sentence of Section 4(d) and Sections 4(f), 4(g), 5, 7, 9, 10, 12 and
15 shall survive; provided that if at the time of termination an offer to
purchase Securities has been accepted by the Company but the time of delivery to
the purchaser or its agent of such Securities has not yet occurred, the
provisions of Sections 2(b), 2(d), 4(a) through 4(e), 4(h) through 4(k) and 6
shall also survive. If any Terms Agreement is terminated (whether as a result of
the consummation of the transactions contemplated thereby, or otherwise), the
provisions of the last sentence of Section 4(d) and Sections 2(b), 2(d), 5, 6,
7, 8(b), 10, 11, 12 and 15 (which shall have been incorporated by reference in
such Terms Agreement) shall survive.
(b) If this Agreement or any Terms Agreement shall be terminated by an
Agent or Agents because of any failure or refusal on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement or
any Terms Agreement or if for any reason the Company shall be unable to perform
its obligations under this Agreement or any Terms Agreement or any condition of
any Agent's obligations cannot be fulfilled, the Company agrees to reimburse
each Agent or such Agents as have so terminated this Agreement with respect to
themselves, severally, for all out-of-pocket expenses (including the reasonable
fees and expenses of their counsel) reasonably incurred by such Agent or Agents
in connection with this Agreement or the offering of Securities.
28
<PAGE>
9. Position of the Agents. Each Agent, in soliciting offers to purchase
Securities from the Company and in performing the other obligations of such
Agent hereunder (other than in respect of any purchase by an Agent as principal,
pursuant to a Terms Agreement or otherwise), is acting solely as agent for the
Company and not as principal and does not assume any obligation towards or
relationship of agency or trust with any purchaser of Securities. Each Agent
will make reasonable efforts to assist the Company in obtaining performance by
each purchaser whose offer to purchase Securities from the Company was solicited
by such Agent and has been accepted by the Company, but such Agent shall not
have any liability to the Company in the event such purchase is not consummated
for any reason. If the Company shall default on its obligation to deliver
Securities to a purchaser whose offer it has accepted, the Company shall (i)
hold the relevant Agent harmless against any loss, claim, damage or liability
arising from or as a result of such default by the Company and (ii)
notwithstanding such default, pay to the Agent that solicited such offer any
commission to which it would be entitled in connection with such sale.
10. Representations and Indemnities to Survive. The respective
indemnities and contribution agreements, representation, warranties and other
statements of the Company, its officers and the Agents set forth in or made
pursuant to this Agreement or any agreement by an Agent to purchase Securities
as principal shall remain in full force and effect regardless of any termination
of this Agreement or any such agreement, any investigation made by or on behalf
of any Agent or any controlling person of any Agent, or the Company, or any
officer or director or any controlling person of the Company, and shall survive
each delivery of and payment for any of the Securities.
11. Notices. Except as otherwise specifically provided herein or in the
Administrative Procedures, all statements, requests, notices and advices
hereunder shall be in writing and effective only on receipt, and will be
delivered by hand, by mail (postage prepaid), by telegram (charges prepaid) or
by telex. Communications to the Agents will be sent, in the case of J.P. Morgan
Securities Inc., to 60 Wall Street, New York, New York 10260, Attention:
Transaction Execution Group, (Fax: (212) 648-5151); in the case of Merrill Lynch
& Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, to Merrill Lynch &
Co., Merrill Lynch World Headquarters, North Tower, World Financial Center, 250
Vesey St., 10th Floor, New York, New York 10281-1310, Attention: Product
Management (Fax: (212) 449-2234); in the case of Morgan Stanley & Co.
Incorporated, to Morgan Stanley & Co. Incorporated, 1585 Broadway, 2nd Floor,
New York, New York 10036, Attention: Manager Continuously Offered Products (Fax:
(212) 761-8846), with a copy to: Morgan Stanley & Co. Incorporated, 1585
Broadway, 2nd Floor, New York, New York 10036,
29
<PAGE>
Attention: Peter Cooper, Investment Banking Information Center (Fax: (212)
761-0260); in the case of Salomon Brothers Inc, to Salomon Smith Barney, 7 World
Trade Center, 32nd Floor, New York, New York 10048, Attention: Marriane Spinelli
(Fax: (212) 783-2274); and, if sent to the Company, to it at 709 East South
Temple, Salt Lake City, Utah 84102 (Fax: (801) 537-7808); Attention: Kathleen E.
McDermott.
12. Successors. This Agreement and any Terms Agreement shall be binding
upon, and inure solely to the benefit of, each Agent and the Company, and their
respective successors and the officers, directors and controlling persons
referred to in Section 7 and (to the extent expressly provided in Section 6) the
purchasers of Securities, and no other person shall acquire or have any right or
obligation under or by virtue of this Agreement or any Terms Agreement. No
purchaser of Securities through or from any Agent shall be deemed a successor by
reason merely of such purchase.
13. Amendments. This Agreement may be amended or supplemented if, but
only if, such amendment or supplement is in writing and is signed by the Company
and each Agent; provided that the Company may from time to time, upon one
business day's prior written notice to the Agents but without the consent of any
Agent, (i) amend this Agreement to add as a party hereto one or more other
persons, partnerships or corporations ("Additional Agents") to act as its agent
to solicit offers for the purchase of Securities pursuant to this Agreement or
(ii) execute an agreement substantially identical in form to this Agreement with
such Additional Agent, whereupon each such Additional Agent shall become an
Agent hereunder on the same terms and conditions as the other Agents that are
parties hereto. The Agents shall sign any amendment or supplement giving effect
to the addition of any such firm as an Agent under this Agreement.
14. Business Day. Time shall be of the essence in this Agreement and any
Terms Agreement. As used herein, the term "BUSINESS DAY" shall mean any day
which is not a Saturday or Sunday or legal holiday or a day on which banks in
New York City are required or authorized by law or executive order to close.
15. Applicable Law. This Agreement and any Terms Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York, without giving effect to the conflict of laws provisions thereof.
16. Counterparts. This Agreement and any Terms Agreement may be signed in
counterparts, each of which shall be an original, and all of which together
shall constitute one and the same instrument.
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<PAGE>
17. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
If the foregoing is in accordance with your understanding, please sign
and return to us eight counterparts hereof, whereupon this letter and the
acceptance by each of you thereof shall constitute a binding agreement between
the Company and each of you in accordance with its terms.
Very truly yours,
AMERICAN STORES COMPANY
By: /s/ J. Greg Spencer
Name: J. Greg Spencer
Title: Senior Vice President,
Treasurer and Assistant
Secretary
Accepted in New York, New York, as of the date first above written:
J.P. MORGAN SECURITIES INC.
By: /s/ Robert D. Post
Name: Robert D. Post
Title: Managing Director
MORGAN STANLEY & CO. INCORPORATED
By: /s/ Kirsten Feldman
Name: Kirsten Feldman
Title: Managing Director
31
<PAGE>
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
By: /s/ Scott G. Primrose
Name: Scott G. Primrose
Title: Authorized Signatory
SALOMON BROTHERS INC
By: /s/ Dominick LePore
Name: Dominick LePore
Title: Vice President
32
<PAGE>
EXHIBIT A
AMERICAN STORES COMPANY
MEDIUM TERM NOTES, SERIES A
TERMS AGREEMENT
------, ----
AMERICAN STORES COMPANY
709 East South Temple
Salt Lake City, Utah 84102
Attention: Kathleen E. McDermott
Re: DISTRIBUTION AGREEMENT DATED AS OF MARCH __ , 1998 (THE
"DISTRIBUTION AGREEMENT")
The undersigned agrees to purchase your Medium-Term Notes, Series A
having the following terms:
Specified Currency:
---------------------------------------
Principal Amount:
---------------------------------------
Original Issue Date:
---------------------------------------
Settlement Date, Time and Place:
---------------------------------------
Maturity Date:
---------------------------------------
Purchase Price: [ ]% of Principal Amount, plus
accrued interest, if any, from
Settlement Date
Price to Public: [ ]% of Principal Amount, plus
accrued interest, if any, from
Settlement Date
Redemption Date(s): [ ], commencing
Initial Redemption Price:
---------------------------------------
<PAGE>
Annual Redemption Price Decrease:
---------------------------------------
Repayment Date(s):
---------------------------------------
Repayment Price:
---------------------------------------
Initial Accrual Period OID:
---------------------------------------
Original Yield to Maturity
---------------------------------------
[(For Fixed Rate Notes)
Interest Rate:
---------------------------------------
Applicability of modified payment upon
acceleration:
---------------------------------------
If yes, state issue price:
---------------------------------------
Amortization Schedule: ]
---------------------------------------
*[(For Floating Rate Notes)
Initial Interest Rate:
---------------------------------------
Interest Rate Basis (Commercial paper,
LIBOR, Treasury, _________):
---------------------------------------
Index Maturity (30, 60, 90 days,
6 months, 1 year, other):
---------------------------------------
Interest Reset Period (monthly,
quarterly, semiannually,
annually):
---------------------------------------
Interest payment Period (monthly,
quarterly, semiannually,
annually):
---------------------------------------
Spread: points (+/-)
---------------------------------------
Spread Multiplier: %
---------------------------------------
- --------
*See Prospectus Supplement dated ____________ for explanation of terms.
2
<PAGE>
Maximum Interest Rate: %
---------------------------------------
Minimum Interest Rate: %
---------------------------------------
Initial Interest Reset Date:
---------------------------------------
Interest Reset Dates:
---------------------------------------
Interest Determination Dates:
---------------------------------------
Interest Payment Dates:
---------------------------------------
Calculation Agent: ]
---------------------------------------
Other terms of Securities:
---------------------------------------
Provisions relating to underwriter
default; if any:
---------------------------------------
The provisions of Sections 1, 2(b), 2(d), 4 through 8, 10, 11, 12, and
15 of the Distribution Agreement and the related definitions are incorporated by
reference herein and shall be deemed to have the same force and effect as if set
forth in full herein.
This Agreement is subject to termination in our absolute discretion on
the terms incorporated by reference herein and, if after the execution and
delivery of this Agreement and prior to the Time of Delivery (i) trading
generally shall have been suspended or materially limited on or by the New York
Stock Exchange, (ii) trading of any securities of the Company shall have been
suspended on any exchange or in any over-the-counter market, (iii) a general
moratorium on commercial banking activities in New York shall have been declared
by either Federal or New York State authorities, or (iv) there shall have
occurred any outbreak or escalation of hostilities or other calamity or crisis
(including a crisis in the financial markets) the effect of which, in the case
of any of the foregoing clauses (i) through (iv), is so material and adverse as
to make it, in our judgment, impracticable to market the Securities on the terms
and in the manner contemplated in the Prospectus Supplement, and as otherwise
agreed by the Company and us. If this Agreement is so terminated, the provisions
set forth in the last sentence of Section 8(a) of the Distribution Agreement
shall survive for the purpose of this Agreement.
3
<PAGE>
[The certificate referred to in Section 4(k) of the Distribution
Agreement, the opinion referred to in Section 4(i) of the Distribution Agreement
and the accountants' letter referred to in Section 4(j) of the Distribution will
be required.]
[Agent]
By:
Name:
Title:
Accepted:
AMERICAN STORES COMPANY
By:
Name:
Title:
4
[FORM OF FACE OF NOTE]
AMERICAN STORES COMPANY
MEDIUM-TERM NOTE, SERIES B
REGISTERED (FIXED RATE) REGISTERED
No. FXR
CUSIP No.
If this Note is registered in the name of The Depository Trust Company, a
New York corporation (the "Depositary") (55 Water Street, New York, New
York) or its nominee, the following legend applies:
UNLESS AND UNTIL THIS NOTE IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE REGISTERED FORM, THIS NOTE 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 DEPOSITARY TO THE COMPANY 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 DEPOSITARY (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
- ------------------------------------------------------------------------------
PRINCIPAL AMOUNT:
ISSUE PRICE:
ORIGINAL ISSUE DATE:
STATED MATURITY DATE:
INTEREST RATE PER ANNUM:
INTEREST PAYMENT DATES:
RECORD DATES:
REDEMPTION PROVISIONS, IF ANY:
INITIAL REDEMPTION DATE:
INITIAL REDEMPTION PRICE:
ANNUAL REDEMPTION PRICE REDUCTION:
REPAYMENT PROVISIONS, IF ANY:
REPAYMENT DATE(S):
REPAYMENT PRICE(S):
AMORTIZATION FORMULA:
AMORTIZATION PAYMENT DATE(S):
OTHER PROVISIONS:
<PAGE>
If applicable, the following will be completed solely for
purposes of applying the United States federal income tax Original
Issue Discount rules: Issue Price (for each $1,000 principal amount):
$ ; Total Original Issue Discount (for each $1,000 principal
amount): $ ; Yield To Maturity: ; Comparable
Yield: ________; Projected Payment Schedule: .
AMERICAN STORES COMPANY, a Delaware corporation (herein called the
"Company," which term includes the Company's successors and assigns under the
Indenture, as hereinafter defined), for value received, hereby promises to pay
to
, or registered assigns, the principal sum set forth above on the Stated
Maturity Date set forth above (except to the extent redeemed or repaid prior to
maturity), and to pay interest on said principal sum at the interest rate per
annum set forth above, until payment of said principal sum has been made or duly
provided for, semiannually in arrears on each Interest Payment Date set forth
above, in each year commencing on the first Interest Payment Date next
succeeding the Original Issue Date set forth above and at maturity or upon
redemption or repayment; provided, however, that if the Original Issue Date is
between a Record Date set forth above and the following respective Interest
Payment Date, interest payments will commence on the Interest Payment Date
following the next succeeding Record Date to the registered Holder on such next
succeeding Record Date; provided, further, that interest paid at maturity or
upon redemption or repayment will be paid to the person to whom said principal
sum is payable. Interest on this Note will accrue from the most recent Interest
Payment Date to which interest has been paid or duly provided for or, if no
interest has been paid, from the Original Issue Date, until the principal hereof
has been paid or duly made available for payment. The interest so payable and
punctually paid or duly provided for on any Interest Payment Date will be paid
to the person in whose name this Note (or one or more predecessor Notes) is
registered at the close of business on the Record Date immediately preceding
such Interest Payment Date; provided, however, that if the Company shall default
in the payment of the interest due on such Interest Payment Date, such defaulted
interest shall then cease to be payable to the Holder on such Record Date by
virtue of having been such Holder, and shall be paid to the person in whose name
this Note is registered at the close of business on a subsequent record date
(which shall be not less than five Business Days prior to the date of payment of
such defaulted interest) for the payment of such defaulted interest established
by notice given by mail by or on behalf of the Company to Holders not less than
15 days preceding such subsequent record date. Any payment otherwise required to
be made in respect of this Note on a date that is not a Business Day (as defined
below) 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. "Business
Day" means any day, other than a Saturday or Sunday, that is not a day on which
banking institutions are authorized or required by law or regulation to be
closed in New York City.
Unless this Note is registered in the name of the Depositary or its
nominee, payment of the principal of, premium, if any, and interest payable at
maturity (or upon redemption or repayment) will be made at the office or agency
of the Company maintained for
2
<PAGE>
that purpose in New York City in immediately available funds (provided that this
Note is presented and surrendered to such office or agency in time for such
office or agency to make such payments in such funds in accordance with its
normal procedures). Unless this Note is registered in the name of the Depositary
or its nominee, interest (other than interest payable at maturity or upon
redemption or repayment) will be paid by check mailed to the address of the
person entitled thereto as it appears on the registry books of the Company on
the applicable Record Date or, at the option of the Company, by wire transfer to
an account maintained by such person with a bank located in the United States.
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 Paying
Agent not less than 15 calendar days prior to the applicable Interest Payment
Date. If this Note is registered in the name of the Depositary or its nominee,
payments of principal of, premium, if any, and interest on this Note will be
made in accordance with a written agreement between the Company, the Paying
Agent, its agent and the Depositary.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF, 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 executed by
the Trustee referred to on the reverse hereof or by any authenticating agent by
manual signature, this Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
AMERICAN STORES COMPANY
By:
---------------------------
Title:
ATTEST:
By:
---------------------------
Title:
3
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein and referred to in
the within-mentioned Indenture.
- ------------------------------------------------------------------------------
Date of authentication:
-----------------
The First National Bank of Chicago,
as Trustee
By:
--------------------------
Authorized Officer
4
<PAGE>
[FORM OF REVERSE OF NOTE]
AMERICAN STORES
MEDIUM-TERM NOTE, SERIES B
(FIXED RATE)
This Note is one of a duly authorized series of Securities (herein
called the "Securities") of the Company designated as "Medium-Term Notes, Series
B" (herein called the "Notes"), issued under an Indenture (herein called the
"Indenture") dated as of May 1, 1995 between the Company and The First National
Bank of Chicago, as trustee (herein called the "Trustee", which term includes
any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Notes and of the terms upon
which the Notes are, and are to be, authenticated and delivered. The Notes are
initially limited in aggregate initial offering price to $500,000,000 (or the
equivalent thereof in other currencies or currency units); provided, however,
that the Company may from time to time authorize an increase in the aggregate
initial offering price of Notes to be sold, which Notes will constitute a part
of this series. The Notes of this series may be issued from time to time at
varying maturities, interest rates and other terms as may be designated with
respect to a Note. To the extent not inconsistent herewith the terms of the
Indenture are hereby incorporated herein. The Company has initially appointed
The First National Bank of Chicago to act as Paying Agent and Registrar (the
"Paying Agent") for the Notes.
This Note and all obligations of the Company hereunder are unsecured
obligations of the Company and rank pari passu with all other unsecured and
unsubordinated indebtedness of the Company.
Each payment of interest with respect to an Interest Payment Date
will include interest accrued to but excluding such Interest Payment Date, and
interest payable at maturity or upon earlier redemption or repayment will
include interest to but excluding the date of maturity, redemption or repayment,
as the case may be. Interest payments for this Note shall be computed on the
basis of a 360-day year of twelve 30-day months.
Unless otherwise provided on the face hereof this Note will not be
subject to any sinking fund and, unless otherwise provided on the face hereof in
accordance with the provisions of the following two paragraphs, will not be
redeemable or subject to repayment at the option of the Holder prior to
maturity.
If so indicated on the face of this Note, this Note may be redeemed,
at the option of the Company, on any date on or after the Initial Redemption
Date, if any, set forth on the face hereof, either in whole or from time to time
in part at the applicable Redemption Price (as defined below), together with
interest accrued and unpaid thereon to the redemption date. Notice of redemption
to the Holders of the Notes to be redeemed shall be given by mailing to such
Holders a notice of such redemption by first class mail, postage prepaid, at
least 30 days and not more than 60 days prior to the date fixed for redemption,
at their last addresses as they shall appear upon the registry books (provided
that, if the Holder of this Note is the Depositary or a nominee of the
Depositary, notice of such redemption shall be given in accordance with any
<PAGE>
applicable provisions of such written agreement between the Company, the Paying
Agent, its agent and the Depositary). If less than all of the Notes having the
same terms (except as to principal amount and date of issuance) are to be
redeemed, the Notes to be redeemed shall be selected by the Paying Agent (or, if
there is no Paying Agent appointed pursuant to Section 3.4 of the Indenture, the
Trustee) by lot, pro rata or such other method as it shall deem appropriate and
fair. The "Redemption Price" shall initially be the Initial Redemption Price,
specified on the face hereof, expressed as a percentage of the principal amount
of this Note to be redeemed and shall decline at each anniversary of the Initial
Redemption Date, specified on the face hereof, by the Annual Redemption Price
Reduction, if any, specified on the face hereof, expressed as a percentage of
the principal amount to be redeemed, until the Redemption Price is 100% of such
principal amount.
Unless otherwise indicated on the face of this Note, this Note shall
not be subject to repayment at the option of the Holder prior to maturity. If so
indicated on the face of this Note, this Note will be subject to repayment at
the option of the Holder on the date or dates and at the price or prices
specified on the face hereof, together with interest accrued and unpaid hereon
to the date of repayment. For this Note to be repaid at the option of the Holder
hereof, the Paying Agent must receive at least 30 but not more than 60 days
prior to the repayment date (a) appropriate wire instructions and (b) either (i)
this Note with the form entitled "Option to Elect Repayment" below duly
completed or (ii) a telegram, telex, facsimile transmission or 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 setting forth the name of the Holder of this Note, the principal amount
hereof, the portion of the principal amount to be repaid, the certificate number
of this Note or a description of this Note's tenor and terms, a statement that
the option to elect repayment is being exercised thereby and a guarantee that
this Note, together with the form below entitled "Option to Elect Repayment"
duly completed, will be received by the Paying Agent not later than five
Business Days after the date of such telegram, telex, facsimile transmission or
letter and this Note and form duly completed are received by the Paying Agent by
such fifth Business Day. Exercise of such repayment option by the Holder hereof
shall be irrevocable. The repayment option may be exercised by a Holder of this
Note for less than the entire principal amount of this Note; provided that the
principal amount of this Note remaining outstanding after repayment is an
authorized denomination. No transfer or exchange of this Note (or, in the event
that this Note is to be repaid in part, the portion of this Note to be repaid)
will be permitted after exercise of a repayment option. In the event of
repayment of this Note in part only, a new Note or Notes for the amount of the
unpaid portion hereof shall be issued in the name of the Holder hereof upon the
cancellation thereof. All questions as to the validity, eligibility (including
time of receipt) and acceptance of this Note for repayment will be determined by
the Company, whose determination will be final, binding and nonappealable.
In case an Event of Default, as defined in the Indenture, shall
occur and be continuing with respect to the Notes, the principal amount of all
Notes then outstanding under the Indenture may be declared or may become due and
payable upon the conditions and in the manner and with the effect provided in
the Indenture. The Indenture provides that such declaration may in certain
events be annulled by the Holders of a majority in principal amount of the Notes
outstanding.
2
<PAGE>
If the face hereof indicates that this Note is issued with original
issue discount, then if the principal of this Note is declared to be due and
payable as described in the preceding paragraph, the amount of principal due and
payable with respect to this Note shall be limited to the Amortized Face Amount
(as defined below) of this Note as of the date of such declaration. "Amortized
Face Amount" shall be an amount equal to the aggregate principal amount hereof
multiplied by the sum of (i) the Issue Price set forth on the face hereof plus
(ii) the portion of the difference between the Issue Price and the principal
amount of this Note that has accrued at the yield to maturity set forth on the
face hereof (computed in accordance with generally accepted United States bond
yield computation principles) to such date of declaration, but in no event shall
the Amortized Face Amount exceed the principal amount of this Note.
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 of any series then
Outstanding and affected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of not less than a majority in principal
amount of the Securities at the time Outstanding of any series affected thereby.
The Indenture also contains provisions permitting the Holders of not less than a
majority in principal amount of the Outstanding Securities of each such series
to waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. 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 registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Note.
As set forth in, and subject to, the provisions of the Indenture, no
Holder of any Note of this series will have any right to institute any
proceeding with respect to the Indenture or for any remedy thereunder, unless
such Holder shall have previously given to the Trustee written notice of a
continuing Event of Default with respect to this series, the Holders of not less
than 25% in principal amount of the Outstanding Notes of this series shall have
made written request to the Trustee to institute such proceeding in respect of
such Event of Default in its own name as Trustee under the Indenture, and
offered to the Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request and the Trustee shall
not have received from the Holders of a majority in principal amount of the
Outstanding Notes of this series a direction inconsistent with such request and
shall have failed to institute such proceeding within 60 days of receipt of such
notice, request and offer of indemnity; provided, however, that such limitations
do not apply to a suit instituted by the Holder for the enforcement of payment
of the principal of, premium, if any, or interest on this Note on or after the
respective due date expressed herein.
No reference herein to the Indenture and no provisions 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, premium, if any, and
interest on this Note at the times, place and manner herein prescribed.
This Note is transferable or exchangeable by the registered Holder
hereof or by his attorney duly authorized in writing at the office or agency of
the Company in New York City (which initially will be the office of the Paying
Agent) or any other office or agency maintained
3
<PAGE>
for such purpose, without charge except for any tax or other governmental charge
imposed in relation thereto, but only in the manner and subject to the
limitations provided in the Indenture and upon surrender of this Note. Upon any
such transfer or exchange a Note or Notes of authorized denominations for a like
aggregate principal amount and bearing a number not contemporaneously
outstanding will be issued in exchange herefor.
The Notes of this series are issuable only in registered form
without coupons and will be represented by either (i) one or more global notes
(each a "Global Note") registered in the name of a nominee of the Depositary or
(ii) certificated notes issued in definitive form ("Certificated Notes"). Global
Notes or Certificated Notes are issuable in denominations of $1,000 or any
amount in excess thereof which is an integral multiple of $1,000. As provided in
the Indenture and subject to certain limitations set forth therein, Notes of
this series are exchangeable for a like aggregate principal amount of Notes of
like tenor of a different authorized denomination, as requested by the Holder
surrendering the same.
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.
The Company, the Trustee and any agent of the Company or the Trustee
may deem and treat the registered Holder hereof as the absolute owner hereof
(whether or not this Note be overdue and notwithstanding any notation of
ownership or other writing thereon) for the purpose of receiving payment of or
on account of the principal hereof and interest hereon and for all other
purposes, and neither the Company, the Trustee nor any such agent shall be
affected by any notice to the contrary. All such payments shall be valid and
effectual to satisfy and discharge the liability upon this Note to the extent of
the sum or sums so paid.
No recourse shall be had for the payment of the principal of or the
interest on this Note or for any claim based hereon or otherwise in any manner
in respect hereof, or in respect of the Indenture, against any incorporator,
shareholder, employee, officer or director, past, present or future, of the
Company or of any predecessor or successor corporation, whether by virtue of any
constitutional provision or statute or rule of law, or by the enforcement of any
assessment or penalty or in any other manner, all such liability being expressly
waived and released by the acceptance hereof and as part of the consideration
for the issue hereof. In any event of any sale or transfer of all or
substantially all of the assets to a successor corporation and the assumption of
the obligations and covenants under the Notes and the Indenture by the successor
corporation, the predecessor corporation may be dissolved and liquidated as more
fully set forth in the Indenture.
THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
4
<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the
Company to repay $ principal amount of the within Note, pursuant to
its terms, on the "Optional Repayment Date" first occurring after the date of
receipt of the within Note as specified below, together with interest thereon
accrued to the date of repayment, to the undersigned at
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Please Print or Type Name and Address of the Undersigned)
and to issue to the Undersigned, pursuant to the terms of the Indenture, a new
Note or Notes representing the remaining principal amount of this Note, if any.
For this Option to Elect Repayment to be effective, this Note with
this Option to Elect Repayment duly completed must be received by the Company
within the relevant time period set forth above at the office of The First
National Bank of Chicago in New York City, located initially at 14 Wall Street,
8th Floor, New York, New York.
Dated: _______________
--------------------------------------------------
(Signature)
Note: The signature to this Option to Elect
Repayment must correspond with the name as
written upon the within Note in every
particular without alteration or enlargement
or any change whatsoever. [SIGNATURE
GUARANTEED -- required only if Notes are to
be issued and delivered to other than the
registered holder]
Fill in for registration of Notes if to be
issued otherwise than to the registered
holder:
Name:_______________________________________
Address:_____________________________________
--------------------------------------------
(Please print name and address
including zip code)
Social Security or Other Taxpayer ID Number:
---------------------------------------------
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription above,
shall be construed as though they were written out in full according to
applicable laws or regulations.
TEN COM -- as tenants in common
UNIF GIFT MIN ACT -- Custodian
------------------------------
(Minor)
Under Uniform Gifts to Minors Act
-------------------------------
(State)
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship
and not as tenants in common
Additional abbreviations may also be used though not in the above
list.
<PAGE>
ASSIGNMENT FORM
TO ASSIGN THIS NOTE, FILL IN THE FORM BELOW:
---------------------------------------------
I or we assign and transfer Insert Assignee's Social Security or Tax I.D.
this Note to or Tax I.D. No.:
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or Type Assignee's Name, Address and Zip Code)
and irrevocably appoint
------------------------------------------------------
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
--------------------------------------------
Signature of Assignor
(Sign exactly as name appears on the face
of the Note)
Date:
----------------------------
[FORM OF FACE OF NOTE]
AMERICAN STORES COMPANY
MEDIUM-TERM NOTE, SERIES B
REGISTERED (FLOATING RATE) REGISTERED
NO. FLR
CUSIP No.
If this Note is registered in the name of The Depository Trust Company, a New
York corporation, (the "Depositary") (55 Water Street, New York, New York) or
its nominee, the following legend applies:
UNLESS AND UNTIL THIS NOTE IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE REGISTERED FORM, THIS NOTE 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 DEPOSITARY TO THE COMPANY 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 DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
- ------------------------------------------------------------------
PRINCIPAL AMOUNT:
ISSUE PRICE:
ORIGINAL ISSUE DATE:
STATED MATURITY DATE:
INDEX MATURITY:
INITIAL INTEREST RATE: %
MAXIMUM INTEREST RATE: %
MINIMUM INTEREST RATE: %
SPREAD MULTIPLIER: %
SPREAD:
FIRST INTEREST RESET DATE:
INTEREST RESET PERIOD:
(Daily, Weekly, Monthly, Quarterly,
Semiannually, or Annually)
INTEREST PAYMENT PERIOD:
(Monthly, Quarterly, Semiannually or
Annually)
REDEMPTION PROVISION, IF ANY:
INITIAL REDEMPTION DATE:
INITIAL REDEMPTION PRICE:
ANNUAL REDEMPTION PRICE
REDUCTION:
INTEREST CATEGORY:
(Regular Floating Rate Note, Floating
Rate/Fixed Rate Note, or Inverse Floating
Rate Note)
- ----------------------------------------------
FIXED RATE COMMENCEMENT DATE:
FIXED INTEREST RATE:
REPAYMENT PROVISIONS, IF ANY:
OPTIONAL REPAYMENT DATE(S):
OPTIONAL REPAYMENT PRICE(S):
AMORTIZATION FORMULA:
AMORTIZATION PAYMENT DATE(S)
CALL OPTION PROVISIONS:
OTHER PROVISIONS:
- ----------------------------------------------
BASE RATE: (check one)
/ / Commercial Paper Rate
/ / Federal Funds Rate
/ / Prime Rate
/ / CD Rate
/ / LIBOR
/ / Treasury Rate
/ / CMT Rate
/ / Other _______ (see below)
- ----------------------------------------------
<PAGE>
If applicable, the following will be completed solely
for purposes of applying the United States federal income tax
Original Issue Discount rules: Issue Price (for each $1,000
principal amount): $ ; Total Original Issue
Discount (for each $1,000 principal amount): $ ; Yield To
Maturity: , Comparable Yield ; and Projected
Payment Schedule: .
AMERICAN STORES COMPANY, a Delaware corporation (herein called the
"Company," which term includes the Company's successors and assigns under the
Indenture, as hereinafter defined), for value received, hereby promises to pay
to
, or registered assigns, the principal sum set forth above on the Stated
Maturity Date set forth above (except to the extent redeemed or repaid prior to
maturity), and to pay interest thereon at a rate per annum equal to the Initial
Interest Rate specified above until the first Interest Reset Date specified
above and thereafter at a rate determined in accordance with the provisions of
this Note, depending upon the Base Rate specified above, until payment of said
principal sum has been made or duly provided for. The Company will pay interest
in arrears monthly, quarterly, semiannually or annually as set forth above as
the Interest Payment Period on each Interest Payment Date (as defined below),
commencing with the first Interest Payment Date next succeeding the Original
Issue Date set forth above and at maturity or upon redemption or repayment;
provided, however, that, if the Original Issue Date is between a Record Date (as
defined below) and the following respective Interest Payment Date, interest
payments will commence on the Interest Payment Date following the next
succeeding Record Date to the registered Holder on such next succeeding Record
Date; provided, further, that if an Interest Payment Date other than the Stated
Maturity Date for any Floating Rate Note would otherwise be a day that is not a
Business Day, such Interest Payment Date will be postponed to the next
succeeding Business Day, except that in the case of a Floating Rate Note as to
which LIBOR is an applicable Base Rate and such Business Day falls in the next
succeeding calendar month, such Interest Payment Date will be the immediately
preceding Business Day. If the Stated Maturity Date falls on a day that is not a
Business Day, the required payment of principal, premium, if any, and interest
will be made on the next succeeding Business Day with the same force and effect
as if made on the date such payment was due, and no interest will accrue on such
payment for the period from and after the Stated Maturity Date to the date of
such payment on the next succeeding Business Day. "Business Day" means any day,
other than a Saturday or Sunday, (i) that is not a day on which banking
institutions are authorized or required by law or regulation to be closed in New
York City and (ii) with respect to Notes which have a Base Rate of LIBOR, a
London Banking Day (as defined below). "London Banking Day" means any day on
which dealings in deposits in U.S. dollars are transacted on the London
interbank market.
Except as otherwise specified above, interest will be payable on the
third Wednesday of each month if the Interest Payment Period specified above is
monthly; on the third
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Wednesday of March, June, September and December if the Interest Payment Period
specified above is quarterly; on the third Wednesday of the two months specified
above under Interest Payment Dates if the Interest Payment Period specified
above is semiannual; and on the third Wednesday of the month specified above
under Interest Payment Dates if the Interest Payment Period specified above is
annual (each, an "Interest Payment Date"), and in each case at maturity or upon
redemption or repayment. The interest so payable and punctually paid or duly
provided for on any Interest Payment Date will be paid to the person in whose
name this Note (or one or more predecessor Notes) is registered at the close of
business on the date (whether or not a Business Day) (the "Record Date") 15
calendar days (unless otherwise specified above) immediately preceding such
Interest Payment Date; provided, however, that if the Company shall default in
the payment of the interest due on such Interest Payment Date, such defaulted
interest shall then cease to be payable to the Holder on such Record Date by
virtue of having been such Holder, and shall be paid to the person in whose name
this Note is registered at the close of business on a subsequent record date
(which shall be not less than five Business Days prior to the date of payment of
such defaulted interest) for the payment of such defaulted interest established
by notice given by mail by or on behalf of the Company to Holders not less than
15 days preceding such subsequent record date; and provided, further, that
interest payable at maturity or upon redemption or repayment will be payable to
the person to whom the principal hereof is payable.
Unless this Note is registered in the name of the Depositary or its
nominee, payment of the principal of, premium, if any, and interest payable at
maturity (or upon redemption or repayment) will be made at the office or agency
of the Company maintained for that purpose in New York City in immediately
available funds (provided that this Note is presented and surrendered to such
office or agency in time for such office or agency to make such payments in such
funds in accordance with its normal procedures). Unless this Note is registered
in the name of the Depositary or its nominee, interest (other than interest
payable at maturity or upon redemption or repayment) will be paid by check
mailed to the address of the person entitled thereto as it appears on the
registry books of the Company on the applicable Record Date or, at the option of
the Company, by wire transfer to an account maintained by such person with a
bank located in the United States. 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 Paying Agent not less than 15 calendar days prior to the
applicable Interest Payment Date. If this Note is registered in the name of the
Depositary or its nominee, payments of principal of, premium, if any, and
interest on this Note will be made in accordance with a written agreement
between the Company, the Paying Agent, its agent and the Depositary.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
3
<PAGE>
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof or by any authenticating agent by
manual signature, this Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
AMERICAN STORES COMPANY
By:_________________________________
Title:
ATTEST:
By:_________________________________
Title:
4
<PAGE>
- ----------------------------------------------------------------------------
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein and referred to in
the within-mentioned Indenture.
Date of authentication: __________________
The First National Bank of
Chicago, as Trustee
By:___________________________
Authorized Officer
- ----------------------------------------------------------------------------
5
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[FORM OF REVERSE OF NOTE]
AMERICAN STORES COMPANY
MEDIUM-TERM NOTES, SERIES B
(FLOATING RATE)
This Note is one of a duly authorized series of Securities (herein
called the "Securities") of the Company designated as "Medium-Term Notes, Series
B" (herein called the "Notes"), issued under an Indenture (herein called the
"Indenture") dated as of May 1, 1995 between the Company and The First National
Bank of Chicago, as trustee (herein called the "Trustee," which term includes
any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Notes and of the terms upon
which the Notes are, and are to be, authenticated and delivered. The Notes are
initially limited in aggregate initial offering price to $500,000,000 (or the
equivalent thereof in other currencies or currency units); provided, however,
that the Company may from time to time authorize an increase in the aggregate
initial offering price of Notes to be sold, which Notes will constitute a part
of this series. The Notes of this series may be issued from time to time at
varying maturities, interest rates and other terms as may be designated with
respect to a Note. To the extent not inconsistent herewith the terms of the
Indenture are hereby incorporated herein. The Company has initially appointed
The First National Bank of Chicago to act as Paying Agent and Registrar (the
"Paying Agent") for the Notes.
This Note and all obligations of the Company hereunder are unsecured
obligations of the Company and rank pari passu with all other unsecured and
unsubordinated indebtedness of the Company.
Unless otherwise provided on the face hereof, this Note will not be
subject to any sinking fund and, unless otherwise provided on the face hereof in
accordance with the provisions set forth below, will not be redeemable or
subject to repayment at the option of the Holder prior to maturity.
If so indicated on the face of this Note, this Note may be redeemed,
at the option of the Company, on any date on or after the Initial Redemption
Date, if any, set forth on the face hereof, either in whole or from time to time
in part at the applicable Redemption Price (as defined below), together with
interest accrued and unpaid thereon to the redemption date. Notice of redemption
to the Holders of the Notes to be redeemed shall be given by mailing to such
Holders a notice of such redemption by first class mail, postage prepaid, at
least 30 days and not more than 60 days prior to the date fixed for redemption,
at their last addresses as they shall appear upon the registry books (provided
that, if the Holder of this Note is the Depositary or a nominee of the
Depositary, notice of such redemption shall be given in accordance with any
applicable provisions of such written agreement between the Company, the Paying
Agent, its agent and the Depositary). If less than all of the Notes having the
same terms (except as to principal amount and date of issuance) are to be
redeemed, the Notes to be redeemed shall be selected by the Paying Agent (or if
there is no Paying Agent appointed pursuant to Section 3.4 of
<PAGE>
the Indenture, the Trustee) by lot, pro rata or such other method as it shall
deem appropriate and fair. The "Redemption Price" shall initially be the Initial
Redemption Price, specified on the face hereof, expressed as a percentage of the
principal amount of this Note to be redeemed and shall decline at each
anniversary of the Initial Redemption Date, specified on the face hereof, by the
Annual Redemption Price Reduction, if any, specified on the face hereof,
expressed as a percentage of the principal amount to be redeemed, until the
Redemption Price is 100% of such principal amount.
Unless otherwise indicated on the face of this Note, this Note shall
not be subject to repayment at the option of the Holder prior to maturity. If so
indicated on the face of this Note, this Note will be subject to repayment at
the option of the Holder on the date or dates and at the price or prices
specified on the face hereof, together with interest accrued and unpaid hereon
to the date of repayment. For this Note to be repaid at the option of the Holder
hereof, the Paying Agent must receive at least 30 but not more than 60 days
prior to the repayment date (a) appropriate wire instructions and (b) either (i)
this Note with the form entitled "Option to Elect Repayment" below duly
completed or (ii) a telegram, telex, facsimile transmission or 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 setting forth the name of the Holder of this Note, the principal amount
hereof, the portion of the principal amount to be repaid, the certificate number
of this Note or a description of this Note's tenor and terms, a statement that
the option to elect repayment is being exercised thereby and a guarantee that
this Note, together with the form below entitled "Option to Elect Repayment"
duly completed, will be received by the Paying Agent not later than five
Business Days after the date of such telegram, telex, facsimile transmission or
letter and this Note and form duly completed are received by the Paying Agent by
such fifth Business Day. Exercise of such repayment option by the Holder hereof
shall be irrevocable. The repayment option may be exercised by a Holder of this
Note for less than the entire principal amount of this Note; provided that the
principal amount of this Note remaining outstanding after repayment is an
authorized denomination. No transfer or exchange of this Note (or, in the event
that this Note is to be repaid in part, the portion of this Note to be repaid)
will be permitted after exercise of a repayment option. In the event of
repayment of this Note in part only, a new Note or Notes for the amount of the
unpaid portion hereof shall be issued in the name of the Holder hereof upon the
cancellation thereof. All questions as to the validity, eligibility (including
time of receipt) and acceptance of this Note for repayment will be determined by
the Company, whose determination will be final, binding and nonappealable.
If so indicated on the face of this Note, certain parties may have
the right to purchase this Note (in whole and not in part) from the holder as
described below (such right, the "Call Option") at a price equal to 100% of the
principal amount of this Note (the "Face Value") and subject to such persons
giving notice of their intention to purchase such Note (a "Call Notice").
To exercise the Call Option with respect to any Interest Reset Date,
such persons must give a Call Notice to the Holder of this Note. In the event a
Call Notice is duly given, the Holder thereof will be obligated to sell to such
persons, and such persons will be obligated to purchase from such Holder, at the
Face Value on the applicable Interest Reset Date, this Note
2
<PAGE>
held of record by such Holder on the Interest Reset Date. Such sale and purchase
will be effected through the facilities of the Depositary, with such Holder of
this Note being deemed to have automatically tendered this Note for sale to such
persons on the applicable Interest Reset Date in accordance with applicable
Depositary procedures. The Holder's automatic tender of this Note will be
subject to the Holder's receipt of payment of the Face Value of this Note from
such persons on the Interest Reset Date. Until purchased or paid by the Company,
this Note will remain outstanding notwithstanding any exercise of the Call
Option by such persons.
If so specified on the face of this Note, the Holder of this Note
may have the right to require the Company to repurchase this Note (in whole and
not in part) (such right, its "Put Option") at a price equal to 100% of the
principal amount of this Note (the "Put Price"). The accrued and unpaid interest
that becomes payable on the applicable (or any prior) Interest Reset Date will
be payable by the Company to the Holder of record as provided on the face of
this Note and the Indenture. If for any reason payment of the Put Price is not
made when due, the accrued interest from the Interest Reset Date to the date
payment is made would be payable by the Company as part of the Put Price.
This Note will bear interest from its Original Issue Date at rates
determined by reference to the Base Rate plus or minus the Spread, if any,
and/or multiplied by the Spread Multiplier, if any (each as specified on the
face hereof) until the principal hereof has been paid or payment thereof is duly
provided for. The interest rate borne by this Note will be determined as
follows:
(i) Unless the Interest Category of this Note is designated on the
face hereof as a "Floating Rate/Fixed Rate Note," or an "Inverse Floating Rate
Note" or as otherwise specified as "Other Provisions" on the face hereof or in
an Addendum hereto, this Note shall be designated as a "Regular Floating Rate
Note" and, except as set forth below or specified on the face hereof or in an
Addendum hereto shall bear interest at the rate determined by reference to the
applicable Base Rate (a) plus or minus the applicable Spread, if any, and/or (b)
multiplied by the applicable Spread Multiplier, if any. Commencing on the
initial Interest Reset Date, the rate at which interest on this Note shall be
payable shall be reset as of each Interest Reset Date specified on the face
hereof; provided, however, that the interest rate in effect for the period, if
any, from the Original Issue Date to the initial Interest Reset Date shall be
the initial Interest Rate.
(ii) If the Interest Category of this Note is designated on the face
hereof as a "Floating Rate/Fixed Rate Note," then, except as described below or
specified on the face hereof or in an Addendum hereto, this Note shall bear
interest at the rate determined by reference to the applicable Base Rate (a)
plus or minus the applicable Spread, if any, and/or (b) multiplied by the
applicable Spread Multiplier, if any. Commencing on the initial Interest Reset
Date, the rate at which interest on such Floating Rate/Fixed Rate Note shall be
payable shall be reset as of each Interest Reset Date; provided, however, that
(y) the interest rate in effect for the period, if any, from the Original Issue
Date to the initial Interest Reset Date shall be the Initial Interest Rate and
(z) the interest rate in effect for the period commencing on the Fixed Rate
Commencement Date specified on the face hereof to the Stated Maturity Date shall
be the Fixed Interest Rate specified
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<PAGE>
on the face hereof or, if no such Fixed Interest Rate is specified,
the interest rate in effect thereon on the day immediately preceding the Fixed
Rate Commencement Date.
(iii) If the Interest Category of this Note is designated on the
face hereof as an "Inverse Floating Rate Note," then, except as described below
or specified on the face hereof or in an Addendum hereto, this Note shall bear
interest at the Fixed Interest Rate minus the rate determined by reference to
the applicable Base Rate or Base Rates (a) plus or minus the applicable Spread,
if any, and/or (b) multiplied by the applicable Spread Multiplier, if any;
provided, however, that unless otherwise specified on the face hereof or in an
Addendum hereto, the interest rate hereon shall not be less than zero.
Commencing on the initial Interest Reset Date, the rate at which interest on
this Note shall be payable shall be reset as of each Interest Reset Date;
provided, however, that the interest rate in effect for the period, if any, from
the Original Issue Date to the initial Interest Reset Date will be the Initial
Interest Rate.
The Base Rate shall be the rate determined in accordance with the
applicable provisions below. Commencing on the initial Interest Reset Date, the
rate at which interest on this Note is payable shall be reset as of each
Interest Reset Date specified on the face hereof based upon the applicable
Interest Determination Date (as defined below). Unless otherwise specified on
the face hereof, the Interest Reset Date will be each Business Day if the
Interest Reset Period specified on the face is daily; Wednesday of each week if
the Interest Reset Period is weekly, unless the Base Rate is the Treasury Rate
in which case it will be Tuesday of each week, except as provided below; the
third Wednesday of each month if the Interest Reset Period is monthly; the third
Wednesday of March, June, September and December if the Interest Reset Period is
quarterly; the third Wednesday of the two months specified on the face hereof
under Interest Payment Dates if the Interest Reset Period is semiannually; and
the third Wednesday of the month specified on the face hereof under Interest
Payment Dates if the Interest Reset Period is annual. 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, if the Base
Rate is LIBOR, if such Business Day is in the next succeeding calendar month,
such Interest Reset Date shall be the immediately preceding Business Day.
Interest payments on each Interest Payment Date (except in the case
of a Note that resets daily or weekly) 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. If this Note resets daily or weekly, unless otherwise
specified on the face of this Note, interest payments 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,
and including, the Record Date immediately preceding the applicable Interest
Payment Date, and at maturity, redemption or repayment the interest payments
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, the Stated Maturity Date or the redemption or
repayment date.
Accrued interest will be calculated by multiplying the face amount
hereof by an accrued interest factor. Such accrued interest factor will be
computed by adding the interest
4
<PAGE>
factors calculated for each day in the period for which accrued interest is
being calculated. The interest factor (expressed as a decimal) for each such day
will be computed by dividing the interest rate applicable to such day by 360, in
the case of Notes having as their Base Rate the Commercial Paper Rate, Federal
Funds Rate, Prime Rate, CD Rate and LIBOR, or by the actual number of days in
the year, in the case of Notes having as their Base Rate the Treasury Rate or
the CMT Rate. The interest rate in effect on each day will be (i) if such day is
an Interest Reset Date, the interest rate with respect to the Interest
Determination Date (as defined below) pertaining to such Interest Reset Date, or
(ii) 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, subject in either case to any Maximum Interest Rate or Minimum
Interest Rate limitation and to any adjustment by a Spread or Spread Multiplier
in each case referred to on the face hereof; provided, however, that the
interest rate in effect for the period from the Original Issue Date to the first
Interest Reset Date will be the Initial Interest.
The "Interest Determination Date" pertaining to the Commercial Paper
Rate, Federal Funds Rate, Prime Rate, CD Rate, or CMT Rate will be the second
Business Day preceding the Interest Reset Date. The Interest Determination Date
with respect to LIBOR will be the second London Banking Day preceding such
Interest Reset Date. The Interest Determination Date with respect to the
Treasury Rate will be the day of the week in which such Interest Reset Date
falls on which Treasury bills of the Index Maturity specified on the face of
this Note are auctioned. If, as the result of a legal holiday, an auction is so
held on the Friday of the week preceding the Interest Reset Date, such Friday
will be the Interest Determination Date pertaining to the Interest Reset Date
occurring in the next succeeding week. If an auction date shall fall on any
Interest Reset Date with respect to the Treasury Rate, then such Interest Reset
Date shall instead be the first Business Day immediately following such auction
date.
The "Calculation Date," where applicable and unless otherwise
specified on the face of this Note, pertaining to an Interest Determination Date
will be the first to occur of either (a) the tenth Business Day after such
Interest Determination Date or (b) the second Business Day preceding the date
any payment is required to be made for any period following the applicable
Interest Reset Date.
Unless otherwise specified on the face hereof, the Paying Agent
shall be the calculation agent (in such capacity, the "Calculation Agent") with
respect to this Note. Upon request of the Holder of this Note, the Calculation
Agent will provide the interest rate then in effect and, if determined, the
interest rate that will become effective on the next Interest Reset Date with
respect to this Note.
Determination of Commercial Paper Rate. If the Base Rate on this
Note is the Commercial Paper Rate, the interest rate with respect to this Note
shall equal, with respect to any Interest Determination Date, the Money Market
Yield (calculated as described below) of the rate on such date for commercial
paper having the Index Maturity specified in the applicable Pricing Supplement
as such rate is 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 such Board of Governors ("H.15(519)"), under the
heading "Commercial Paper--Nonfinancial." If
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<PAGE>
such rate is not published by 3:00 P.M., New York City time, on the Calculation
Date pertaining to such Interest Determination Date, the Commercial Paper Rate
shall be the Money Market Yield of the rate on such Interest Determination Date
for commercial paper having the Index Maturity specified in the applicable
Pricing Supplement (with an Index Maturity of one month or three months being
deemed to be equivalent to an Index Maturity of 30 days or 90 days,
respectively) 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" ("Composite Quotations") under the heading "Commercial Paper." If
such rate is not published in either H.15(519) or Composite Quotations by 3:00
P.M., New York City time, on such Calculation Date, the Commercial Paper Rate
for such Interest Determination Date shall be calculated by the Calculation
Agent and shall be the Money Market Yield of the arithmetic mean of the offered
rates of three leading dealers of commercial paper in New York City (which may
include any of the Agents or their affiliates) selected by the Calculation Agent
as of 11:00 A.M., New York City time, on such Interest Determination Date, for
commercial paper having the Index Maturity specified in the applicable Pricing
Supplement placed for an industrial issuer whose bond rating is "AA," or the
equivalent, from a nationally recognized rating agency; provided, however, that,
if the dealers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the Commercial Paper Rate determined as of such
Interest Determination Date shall be the Commercial Paper Rate in effect on such
Interest Determination Date.
"Money Market Yield" means a yield (expressed as a percentage)
calculated in accordance with the following formula:
Money Market Yield = D X 360 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 Index Maturity.
Determination of Federal Funds Rate. If the Base Rate on this Note
is the Federal Funds Rate, the interest rate payable with respect to this Note
shall equal, with respect to any Interest Determination Date, the rate on such
Interest Determination Date for Federal Funds as published in H.15(519) under
the heading "Federal Funds (Effective)" or, if not published by 3:00 P.M., New
York City time, on the Calculation Date pertaining to such Interest
Determination Date, the Federal Funds Rate shall be the interest rate on such
Interest Determination Date as published in Composite Quotations under the
heading "Federal Funds/Effective Rate." If such rate is not published in either
H.15(519) or Composite Quotations by 3:00 P.M., New York City time, on such
Calculation Date, the Federal Funds Rate for such Interest Determination Date
shall be calculated by the Calculation Agent and shall be the arithmetic mean of
the rates for the last transaction in overnight Federal Funds, arranged by three
leading brokers of Federal Funds transactions in New York City (which may
include any of the Agents or their affiliates) selected by the Calculation Agent
as of 11:00 A.M., New York City time, on such Interest Determination Date;
provided, however, that, if the brokers selected as
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<PAGE>
aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, the Federal Funds Rate determined as of such Interest Determination
Date shall be the Federal Funds Rate in effect on such Interest Determination
Date.
Determination of Prime Rate. If the Base Rate on this Note is the
Prime Rate, the interest rate payable with respect to this Note shall equal,
with respect to any Interest Determination Date, the rate on such date as is
published in H.15(519) under the heading "Bank Prime Loan." If such rate is not
published by 3:00 P.M., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, the Prime Rate shall be the arithmetic mean
of the rates of interest publicly announced by each bank that appears on the
display specified as page USPRIME1 on the Reuters Monitor Money Rates Service
(or any successor service) or such other page as may replace the USPRIME1 page
on the Reuters Monitor Money Rates Service (or any successor service) for the
purpose of displaying prime rates or base lending rates of major United States
banks ("Reuters Screen USPRIME1 Page") as such bank's prime rate or base lending
rate as in effect for such Interest Determination Date. If fewer than four such
rates appear on the Reuters Screen USPRIME1 Page for such Interest Determination
Date, the Prime Rate shall be the arithmetic mean of the prime rates (quoted on
the basis of the actual number of days in the year divided by 360) as of the
close of business on such Interest Determination Date by four major money center
banks in New York City selected by the Calculation Agent. If fewer than four
such quotations are so provided, the Prime Rate shall be the arithmetic mean of
four prime rates (quoted on the basis of the actual number of days in the year
divided by 360) as furnished in New York City by the major money center banks,
if any, that have provided such quotations and by a reasonable number of
substitute banks or trust companies to obtain four such prime rate quotations;
provided that such substitute banks or trust companies are organized and doing
business under the laws of the United States, or any State thereof, having total
equity capital of at least U.S. $500 million and being subject to supervision or
examination by a United States Federal or State authority, selected by the
Calculation Agent to quote such rate or rates; provided, however, that if the
Prime Rate is not published in H.15(519) and the banks or trust companies
selected as aforesaid are not quoting as mentioned in this sentence, the Prime
Rate determined as of such Interest Determination Date shall be the Prime Rate
in effect on such Interest Determination Date.
Determination of CD Rate. If the Base Rate on this Note is the CD
Rate, the interest rate payable with respect to this Note shall equal, with
respect to any Interest Determination Date, the rate on such Interest
Determination Date for negotiable certificates of deposit having the Index
Maturity specified in the applicable Pricing Supplement as such rate is
published in H.15(519) under the heading "CDs (Secondary Market)." If such rate
is not published by 3:00 P.M., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the CD Rate shall be the rate on
such Interest Determination Date for negotiable U.S. dollar certificates of
deposit of the Index Maturity specified in the applicable Pricing Supplement as
published in Composite Quotations under the heading "Certificate of Deposit." If
such rate is not published in either H.15(519) or Composite Quotations by 3:00
P.M., New York City time, on such Calculation Date, the CD Rate for such
Interest Determination Date will be calculated by the Calculation Agent and will
be the arithmetic mean of the secondary market offered rates as of 10:00 A.M.,
New York City time, on such Interest
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<PAGE>
Determination Date of three leading nonbank dealers in negotiable U.S. dollar
certificates of deposit in New York City (which may include any of the Agents or
their affiliates) selected by the Calculation Agent for negotiable U.S. dollar
certificates of deposit in the denomination of $5,000,000 of major United States
money center banks of the highest credit standing in the market for negotiable
U.S. dollar certificates of deposit with a remaining maturity closest to the
Index Maturity specified in the applicable Pricing Supplement. However, if such
dealers are not quoting as mentioned in this sentence, the CD Rate determined as
of such Interest Determination Date shall be the CD Rate in effect on such
Interest Determination Date.
Determination of LIBOR. If the Base Rate on this Note is LIBOR, the
interest rate payable with respect to this Note will be determined by the
Calculation Agent in accordance with the following provisions:
(i) With respect to an Interest Determination Date, LIBOR will
be determined on the basis of either (a) if "LIBOR Reuters" is
specified in the applicable Pricing Supplement, the arithmetic mean
of the offered rates (unless the Designated LIBOR Page by its terms
provides only for a single rate, in which case such single rate
shall be used) for deposits in U.S. dollars for the period of the
applicable Index Maturity which appear (or, if only a single rate is
required as aforesaid, appears) on the Designated LIBOR Page at
approximately 11:00 A.M., London time, on such Interest
Determination Date or (b) if "LIBOR Telerate" is specified in the
applicable Pricing Supplement or if neither "LIBOR Reuters" nor
"LIBOR Telerate" is specified in the applicable Pricing Supplement
as the method for calculating LIBOR, the rate for deposits in U.S.
dollars for the period of the applicable Index Maturity that appears
on the Designated LIBOR Page as of 11:00 A.M., London time, on such
Interest Determination Date. If fewer than two such offered rates
appear, or if no such rate appears, as applicable, LIBOR in respect
of such Interest Determination Date shall be determined as if the
parties had specified the rate described in (ii) below.
(ii) With respect to an Interest Determination Date on which
fewer than two offered rates appear, or no rate appears, as the case
may be, on the Designated LIBOR Page as described in clause (i),
LIBOR will be determined on the basis of the rates at which deposits
in U.S. dollars having the Index Maturity designated in the
applicable Pricing Supplement are offered at approximately 11:00
A.M., London time, on such Interest Determination Date by four major
banks in the London interbank market selected by the Calculation
Agent (the "Reference Banks") to prime banks in the London interbank
market in a principal amount equal to an amount of not less than
$1,000,000 that is representative for a single transaction in such
market at such time. The Calculation Agent will request the
principal London office of each of the Reference Banks to provide a
quotation of its rate. If at least two such quotations are provided,
LIBOR in respect of such Interest Determination Date will be the
arithmetic mean of such quotations. If fewer than two quotations are
provided, LIBOR in respect of such Interest Determination Date will
be the arithmetic mean of the rates quoted at
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<PAGE>
approximately 11:00 A.M., New York City time, on such Interest
Determination Date by three major banks in New York City selected by
the Calculation Agent for loans in U.S. dollars to leading European
banks having the Index Maturity designated in the applicable Pricing
Supplement in a principal amount equal to an amount of not less than
$1,000,000 that is representative for a single transaction in such
market at such time; provided, however, that if the banks selected
as aforesaid by the Calculation Agent are not quoting as mentioned
in this sentence, LIBOR determined as of such Interest Determination
Date shall be LIBOR in effect on such Interest Determination Date.
(iii) "Designated LIBOR Page" means (a) if "LIBOR Reuters" is
specified in the applicable Pricing Supplement, the display on the
Reuters Monitor Money Rates Service (or any successor service) on
the page specified in such Pricing Supplement (or any other page as
may replace such page or such service (or any successor service))
for the purpose of displaying the London interbank rates of major
banks for U.S. dollars, or (b) if "LIBOR Telerate" is specified in
the applicable Pricing Supplement or if neither "LIBOR Reuters" nor
"LIBOR Telerate" is specified in the applicable Pricing Supplement
as the method for calculating LIBOR, the display on the Dow Jones
Telerate Service (or any successor service) on the page specified in
such Pricing Supplement (or any other page as may replace such page
or such service (or any successor service)) for the purpose of
displaying the London interbank rates of major banks for U.S.
dollars.
Determination of Treasury Rate. If the Base Rate with respect to
this Note is the Treasury Rate, the interest rate payable with respect to this
Note shall equal, with respect to any Interest Determination Date, the rate from
the auction held on such Interest Determination Date (the "Auction") of direct
obligations of the United States ("Treasury bills") having the Index Maturity
specified in the applicable Pricing Supplement as such rate is published in
H.15(519) under the heading "U.S. Government Securities--Treasury bills--auction
average (investment)" or, if such rate is not published by 3:00 P.M., New York
City time, on the Calculation Date pertaining to such Interest Determination
Date, the Treasury Rate shall be the auction average rate of such Treasury bills
(expressed as 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 the event that the results of the Auction
of Treasury bills having the Index Maturity specified in the applicable Pricing
Supplement are not 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 (or
on the preceding Friday, if applicable), the Treasury Rate for such Interest
Determination Date 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 (which may include any of the Agents or
their affiliates) selected by the Calculation Agent, for the issue of Treasury
bills with a remaining maturity closest to the Index Maturity specified in the
applicable Pricing Supplement; provided, however, that if the dealers selected
as aforesaid by the Calculation Agent are not
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<PAGE>
quoting as mentioned in this sentence, the Treasury Rate determined as of such
Interest Determination Date shall be the Treasury Rate in effect on such
Interest Determination Date.
Determination of the CMT Rate. If the Base Rate with respect to this
Note is the CMT Rate, the interest rate payable with respect to this Note shall
equal with respect to any Interest Determination Date, the rate displayed on the
Designated CMT Telerate Page under the heading ". . . Treasury Constant
Maturities . . . Federal Reserve Board Release H.15 . . . Mondays Approximately
3:45 P.M.," or any successor heading, under the column for the Designated CMT
Maturity Index for (i) if the Designated CMT Telerate Page is 7055, the rate on
such Interest Determination Date and (ii) if the Designated CMT Telerate Page is
7052, the weekly or monthly average, as specified in the applicable Pricing
Supplement, for the week or the month, as applicable, ended immediately
preceding the week or month, as applicable, in which the related Interest
Determination Date occurs. In the event such rate is no longer displayed on the
relevant page, or is not displayed prior to 3:00 P.M., New York City time, on
the related Calculation Date, the CMT Rate for such Interest Determination Date
shall be such treasury constant maturity rate for the Designated CMT Maturity
Index as published in the relevant H.15(519) or any successor publication. If
such rate is no longer published, or is not published by 3:00 P.M., New York
City time, on the related Calculation Date, the CMT Rate for such Interest
Determination Date shall be such treasury constant maturity rate for the
Designated CMT Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for such Interest Determination Date as may then
be published by either the Board of Governors of the Federal Reserve System or
the United States Department of the Treasury that the Calculation Agent
determines to be comparable to the rate formerly displayed on the Designated CMT
Telerate Page and published in the relevant H.15(519) or any successor
publication. If such information is not provided by 3:00 P.M., New York City
time, on the related Calculation Date, then the CMT Rate for such Interest
Determination Date will be calculated by the Calculation Agent and will be a
yield to maturity, based on the arithmetic mean of the secondary market closing
offer side prices as of approximately 3:30 P.M., New York City time, on such
Interest Determination Date reported, according to their written records, by
three leading primary United States government securities dealers (each, a
"Reference Dealer") in New York City (which may include any of the Agents or
their affiliates) selected by the Calculation Agent (from five such Reference
Dealers selected by the Calculation Agent and eliminating the highest quotation
(or, in the event of equality, one of the highest) and the lowest quotation (or,
in the event of equality, one of the lowest)), for the most recently issued
direct noncallable fixed rate obligations of the United States ("Treasury
Notes") with an original maturity of approximately the Designated CMT Maturity
Index and a remaining term to maturity of not less than such Designated CMT
Maturity Index minus one year. If the Calculation Agent is unable to obtain
three such Treasury Note quotations, the CMT Rate for such Interest
Determination Date shall be calculated by the Calculation Agent and will be a
yield to maturity based on the arithmetic mean of the secondary market offer
side prices as of approximately 3:30 P.M., New York City time, on such Interest
Determination Date of three Reference Dealers in New York City (from five such
Reference Dealers selected by the Calculation Agent and eliminating the highest
quotation (or, in the event of equality, one of the highest) and the lowest
quotation (or, in the event of equality, one of the lowest)), for Treasury Notes
with an original maturity of the number of years that is the next highest to the
Designated CMT Maturity Index and a remaining term to maturity closest to the
10
<PAGE>
Designated CMT Maturity Index and in an amount of at least $100 million. If
three or four (and not five) of such Reference Dealers are quoting as described
above, then the CMT Rate shall be based on the arithmetic mean of the offer
prices obtained and neither the highest nor the lowest of such quotes shall be
eliminated; provided, however, that if fewer than three Reference Dealers
selected by the Calculation Agent are quoting as mentioned herein, the CMT Rate
determined as of such Interest Determination Date shall be the CMT Rate in
effect on such Interest Determination Date. If two Treasury Notes with an
original maturity as described in the second preceding sentence have remaining
terms to maturity equally close to the Designated CMT Maturity Index, the
Calculation Agent shall obtain quotations for the Treasury Note with the shorter
remaining term to maturity and shall use such quotations to calculate the CMT
Rate as set forth above.
"Designated CMT Telerate Page" means the display on the Dow Jones
Telerate Service, or any successor service, on the page specified in the
applicable Pricing Supplement (or any other page as may replace such page on
that service for the purpose of displaying Treasury Constant Maturities as
reported in H.15(519)), for the purpose of displaying Treasury Constant
Maturities as reported in H.15(519). If no such page is specified in the
applicable Pricing Supplement, the Designated CMT Telerate Page shall be 7052,
for the most recent week.
"Designated CMT Maturity Index" means the original period to
maturity of the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30
years) specified in the applicable Pricing Supplement with respect to which the
CMT Rate will be calculated. If no such maturity is specified in the applicable
Pricing Supplement, the Designated CMT Maturity Index shall be two years.
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. The Calculation Agent shall
calculate the interest rate on this Note in accordance with the foregoing on
each Interest Determination Date.
The interest rate on this Note will in no event be higher than the
maximum rate permitted by New York law as the same may be modified by United
States law of general applicability.
In case an Event of Default, as defined in the Indenture, shall
occur and be continuing with respect to the Notes, the principal amount of all
Notes then outstanding under the Indenture may be declared or may become due and
payable upon the conditions and in the manner and with the effect provided in
the Indenture. The Indenture provides that such declaration may in certain
events be annulled by the Holders of a majority in principal amount of the Notes
outstanding.
If the face hereof indicates that this Note is issued with original
issue discount, then if the principal of this Note is declared to be due and
payable as described in the preceding paragraph, the amount of principal due and
payable with respect to this Note shall be limited to the Amortized Face Amount
(as defined below) of this Note as of the date of such declaration. "Amortized
Face Amount" shall be an amount equal to the aggregate principal amount hereof
11
<PAGE>
multiplied by the sum of (i) the Issue Price set forth on the face hereof plus
(ii) the portion of the difference between the Issue Price and the principal
amount of this Note that has accrued at the yield to maturity set forth on the
face hereof (computed in accordance with generally accepted Untied States bond
yield computation principles) to such date of declaration, but in no event shall
the Amortized Face Amount exceed the principal amount of this Note.
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 of any series then
Outstanding and affected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of not less than a majority in principal
amount of the Securities at the time Outstanding of any series affected thereby.
The Indenture also contains provisions permitting the Holders of not less than a
majority in principal amount of the Outstanding Securities of each such series
to waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. 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 registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Note.
As set forth in, and subject to, the provisions of the Indenture, no
Holder of any Note of this series will have any right to institute any
proceeding with respect to the Indenture or for any remedy thereunder, unless
such Holder shall have previously given to the Trustee written notice of a
continuing Event of Default with respect to this series, the Holders of not less
than 25% in principal amount of the Outstanding Notes of this series shall have
made written request to the Trustee to institute such proceeding in respect of
such Event of Default in its own name as Trustee under the Indenture, and
offered to the Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request and the Trustee shall
not have received from the Holders of a majority in principal amount of the
Outstanding Notes of this series a direction inconsistent with such request and
shall have failed to institute such proceeding within 60 days of receipt of such
notice, request and offer of indemnity; provided, however, that such limitations
do not apply to a suit instituted by the Holder for the enforcement of payment
of the principal of, premium, if any, or interest on this Note on or after the
respective due date expressed herein.
No reference herein to the Indenture and no provisions 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, premium, if any, and
interest on this Note at the times, place and manner herein prescribed.
This Note is transferable or exchangeable by the registered Holder
hereof or by his attorney duly authorized in writing at the office or agency of
the Company in New York City (which initially will be the office of the Paying
Agent) or any other office or agency maintained for such purpose, without charge
except for any tax or other governmental charge imposed in relation thereto, but
only in the manner and subject to the limitations provided in the Indenture and
upon surrender of this Note. Upon any such transfer or exchange a Note or Notes
of
12
<PAGE>
authorized denominations for a like aggregate principal amount and bearing a
number not contemporaneously outstanding will be issued in exchange herefor.
The Notes of this series are issuable only in registered form
without coupons and will be represented by either (i) one or more global notes
(each a "Global Note") registered in the name of a nominee of the Depositary or
(ii) certificated notes issued in definitive form ("Certificated Notes"). Global
Notes or Certificated Notes are issuable in denominations of $1,000 or any
amount in excess thereof which is an integral multiple of $1,000. As provided in
the Indenture and subject to certain limitations set forth therein, Notes of
this series are exchangeable for a like aggregate principal amount of Notes of
like tenor of a different authorized denomination, as requested by the Holder
surrendering the same.
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.
The Company, the Trustee and any agent of the Company or the Trustee
may deem and treat the registered Holder hereof as the absolute owner hereof
(whether or not this Note be overdue and notwithstanding any notation of
ownership or other writing thereon) for the purpose of receiving payment of or
on account of the principal hereof and interest hereon and for all other
purposes, and neither the Company, the Trustee nor any such agent shall be
affected by any notice to the contrary. All such payments shall be valid and
effectual to satisfy and discharge the liability upon this Note to the extent of
the sum or sums so paid.
No recourse shall be had for the payment of the principal of or the
interest on this Note or for any claim based hereon or otherwise in any manner
in respect hereof, or in respect of the Indenture, against any incorporator,
shareholder, employee, officer of director, past, present or future, of the
Company or of any predecessor or successor corporation, whether by virtue of any
constitutional provision or statute or rule of law, or by the enforcement of any
assessment or penalty or in any other manner, all such liability being expressly
waived and released by the acceptance hereof and as part of the consideration
for the issue hereof. In any event of any sale or transfer of all or
substantially all of the assets to a successor corporation and the assumption of
the obligations and covenants under the Notes and the Indenture by the successor
corporation, the predecessor corporation may be dissolved and liquidated as more
fully set forth in the Indenture.
THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
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<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the
Company to repay $ principal amount of the within Note, pursuant to
its terms, on the "Optional Repayment Date" first occurring after the date of
receipt of the within Note as specified below, together with interest thereon
accrued to the date of repayment, to the undersigned at
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print or Type Name and Address of the Undersigned)
and to issue to the Undersigned, pursuant to the terms of the Indenture, a new
Note or Notes representing the remaining principal amount of this Note, if any.
For Option to Elect Repayment to be effective, this Note with Option
to Elect Repayment duly completed must be received by the Company within the
relevant time period set forth above at the office of The First National Bank of
Chicago in New York City, located initially at 14 Wall Street, 8th Floor, New
York, New York 10005.
Dated:_____________________
-----------------------------------------------
(Signature)
Note: The signature to this Option to Elect
Repayment must correspond with the name as
written upon the within Note in every
particular without alteration or enlargement
or any change whatsoever. [SIGNATURE
GUARANTEED -- required only if Notes are
to be issued and delivered to
other than the registered holder]
Fill in for registration of Notes if to be
issued otherwise than to the registered holder:
Name:_______________________________________
Address:_____________________________________
----------------------------------
(Please print name and address
including zip code)
Social Security or Other Taxpayer ID Number:
----------------------------------
14
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription above,
shall be construed as though they were written out in full according to
applicable laws or regulations.
TEN COM -- as tenants in common
UNIF GIFT MIN ACT -- Custodian
-----------------------------------
(Minor)
Under Uniform Gifts to Minors Act
--------------------------
(State)
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship
and not as tenants in common
Additional abbreviations may also be used though not in the above
list.
15
<PAGE>
ASSIGNMENT FORM
TO ASSIGN THIS NOTE, FILL IN THE FORM BELOW:
I or we assign and transfer -----------------------------------------
Insert Assignee's Social Security or
this Note to Tax I.D. No.:
-----------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or Type Assignee's Name, Address and Zip Code)
and irrevocably appoint ______________________________________________________
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
------------------------------------------
Signature of Assignor
(Sign exactly as name appears on the face
of the Note)
Date:
-------------------------
16
