<PAGE>
Page 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
(Mark One)*
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended June 30, 1994 or [ ] Transition
-------------
report pursuant to section 13 or 15(d) of the Securities Exchange Act of
1934 for the transition period from to
-------- --------
Commission file number 0-20405
---------------------------------------------------------
ALCO CAPITAL RESOURCE, INC.
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 23-2493042
- - ------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1738 Bass Road, Macon, Georgia 31210
- - --------------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(912) 471-2300
- - --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
NONE
- - --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes No X
--- ---
* Applicable only to issuers involved in bankruptcy proceedings during the
preceding five years:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
--- ---
* Applicable only to corporate issuers:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of July 31, 1994.
Common Stock, $.01 par value per share 1,000 shares
The registrant meets the conditions set forth in General Instruction H(1)(a) and
(b) of Form 10-Q and is, therefore, filing with the reduced disclosure format
contemplated thereby.
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Page 2
INDEX
ALCO CAPITAL RESOURCE, INC.
PART I. FINANCIAL INFORMATION
- - ------------------------------
Item 1. Financial Statements (Unaudited)
Balance Sheets--June 30, 1994 and
September 30, 1993
Statements of Income--Three months ended
June 30, 1994 and June 30, 1993; Nine months
ended June 30, 1994 and June 30, 1993
Statements of Cash Flows--Nine months ended
June 30, 1994 and June 30, 1993
Notes to Financial Statements--June 30, 1994
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
- - ---------------------------
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
- - ----------
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Page 3
PART I. FINANCIAL INFORMATION
-----------------------------
Item 1: Financial Statements
- - ----------------------------
Alco Capital Resource, Inc.
Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
June 30 September 30
1994 1993
----------- ------------
(Unaudited)
<S> <C> <C>
Assets
Investments in leases:
Direct financing leases $ 587,849 $ 467,199
Less: Unearned income (82,824) (71,703)
--------- --------
505,025 395,496
Funded leases 88,225 76,499
--------- --------
593,250 471,995
Accounts receivable 13,647 9,863
Due from Alco Standard Corporation 552
Prepaid income taxes and other expenses 2,861 282
Property and equipment at cost, less accumulated
depreciation of: 6/94 - $1,848 and 9/93 - $1,572 1,306 677
--------- --------
Total assets $ 611,064 $ 483,369
========= ========
Liabilities and shareholder's equity
Liabilities:
Accounts payable and accrued expenses $ 5,028 $ 2,866
Accrued interest 3,882 5,337
Due to Alco Standard Corporation 32,912
Notes payable 466,000 395,000
Deferred income taxes 19,151 14,209
--------- --------
Total liabilities 526,973 417,412
Shareholder's equity:
Common Stock - $.01 par value, 1,000 shares
authorized, issued, and outstanding
Contributed capital 53,415 45,115
Retained earnings 30,676 20,842
--------- --------
Total shareholder's equity 84,091 65,957
--------- --------
Total liabilities and shareholder's equity $ 611,064 $ 483,369
========= ========
</TABLE>
See accompanying notes.
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Page 4
Alco Capital Resource, Inc.
Statements of Income
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30 June 30
-------------------------- --------------------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Lease finance income $ 15,780 $ 12,097 $ 44,028 $ 34,006
Interest on Alco income tax deferrals 960 689 2,610 1,934
Other income 808 609 2,216 1,703
------- ------ ------- -------
17,548 13,395 48,854 37,643
Expenses:
Interest 6,246 5,745 18,453 16,862
General and administrative 5,402 3,479 14,509 9,850
------- ------ ------- -------
11,648 9,224 32,962 26,712
------- ------ ------- -------
Income before income taxes and
cumulative effect of change in
accounting principle 5,900 4,171 15,892 10,931
Provision for income taxes:
Current 419 298 1,116 775
Deferred 1,909 1,370 5,082 3,595
------- ------ ------- -------
2,328 1,668 6,198 4,370
------- ------ ------- -------
Income before cumulative effect of
change in accounting principle 3,572 2,503 9,694 6,561
Cumulative effect of change in
accounting for income taxes 140
------- ------ ------- -------
Net income $ 3,572 $ 2,503 $ 9,834 $ 6,561
======= ====== ======= =======
</TABLE>
See accompanying notes.
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Page 5
Alco Capital Resource, Inc.
Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
June 30
-----------------
1994 1993
---- ----
<S> <C> <C>
Operating activities
Net income $ 9,834 $ 6,561
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 276 285
Cumulative effect of change in accounting
principle (140)
Provision for deferred taxes 5,082 3,595
Changes in operating assets and liabilities:
Accounts receivable (3,784) (754)
Prepaid income taxes and other expenses (2,579) (3,097)
Accounts payable and accrued expenses 2,162 601
Accrued interest (1,455) (371)
-------- --------
Net cash provided by operating activities 9,396 6,820
Investing activities
Purchases of property and equipment, net (905) (95)
Direct financing leases:
Additions (306,235) (211,457)
Cancellations 46,008 31,504
Collections 150,698 90,082
Funded leases:
Additions (42,625) (20,365)
Cancellations 8,119 7,200
Collections 22,780 23,826
-------- --------
Net cash used by investing activities (122,160) (79,305)
Financing activities
Proceeds from bank borrowings 148,000 135,000
Payments on bank borrowings (77,000) (60,000)
Contributed capital 8,300
-------- --------
Net cash provided by financing activities 79,300 75,000
-------- --------
Increase in amounts due to Alco (33,464) 2,515
Due (to) from Alco at beginning of period 552 (9,549)
-------- --------
Due to Alco at end of period $(32,912) $ (7,034)
======== ========
</TABLE>
See accompanying notes.
<PAGE>
Page 6
Alco Capital Resource, Inc.
Notes to Financial Statements
June 30, 1994
Note 1: Accounting Change
-----------------
Effective October 1, 1993, the Company adopted the provisions of SFAS No.
109, "Accounting for Income Taxes". The cumulative effect of adopting SFAS No.
109 was to increase net income by $140,000 in the first quarter of fiscal 1994.
Note 2: The 1994 Support Agreement
--------------------------
The Company and Alco have entered into a new agreement (the "1994 Support
Agreement"), dated as of June 1, 1994. The Company intends to covenant with
noteholders and other lenders after June 1, 1994 that it will not amend the 1994
Support Agreement except under certain circumstances.
The 1994 Support Agreement provides that Alco will make a cash payment to
the Company (or an investment in the form of equity or subordinated notes) as
needed to comply with two requirements: i) that the Company will maintain a pre-
tax interest coverage ratio (income before interest expense and taxes divided by
interest expense) so that the Company's pre-tax income plus interest expense
will not be less than 1.25 times interest expense, and ii) that the Company will
maintain a minimum tangible net worth of $1.00. The 1994 Support Agreement
further provides that Alco may not assign, amend or terminate the 1994 Support
Agreement unless: (a) all the outstanding debt of the Company is repaid or (b)
both Moody's Investors Service and Standard & Poor's Ratings Group confirm in
writing prior to the effectiveness of any such assignment, amendment or
termination that the Company's debt rating would not be downgraded as a result
of such assignment.
Unlike the Company's 1991 Maintenance and Operating Agreement (which
governs the debt incurred by the Company prior to June 1, 1994), the 1994
Support Agreement does not contain a requirement that the AOP dealers repurchase
all defaulted lease contracts. The 1994 Support Agreement does not include the
repurchase requirement because the Company and Alco wish to preserve the
flexibility, on a prospective basis, to allow the credit risk for defaulted
contracts to remain with the Company. In such event, the credit decision and
reserves for defaulted contracts would also become the responsibility of the
Company. If the Company were responsible for the credit risk and costs
associated with defaulted contracts, the Company would increase its current
lease rates in order to offset these increased costs. Consequently, the Company
believes that the impact of any future shift of the credit risk from the AOP
dealers to the Company would not be material to the Company's future results of
operations. The Company's (and Alco's) present intention, however, is to
continue the repurchase arrangement with the AOP dealers as currently in effect.
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Page 7
Alco Capital Resource, Inc.
Notes to Financial Statements
June 30, 1994
Note 3: Medium Term Note Program
------------------------
As of July 1, 1994, the Company may offer from time to time Medium Term
Notes having an aggregate initial offering price not exceeding $500 million or
the equivalent thereof in foreign currency. These notes will be offered at
varying maturities of nine months or more from their dates of issue and may be
subject to redemption at the option of the Company or repayment at the option of
the Holder, in whole or in part, prior to the maturity date in conjunction with
meeting specified provisions. Interest rates will be determined based on market
conditions at the time of issuance.
Note 4: Supplemental Information to Statements of Cash Flows
----------------------------------------------------
Interest paid for the nine months ended June 30, 1994 and 1993 was
$19,908,000 and $17,233,000, respectively. Cash paid for income taxes was
$2,715,000 and $2,909,000 for the nine months ended June 30, 1994 and 1993,
respectively.
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Page 8
Item 2. Management's Discussion and Analysis of
---------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
Pursuant to General Instruction H(2)(a) of Form 10-Q, the following
analysis of the results of operations is presented in lieu of Management's
Discussion and Analysis of Financial Condition and Results of Operations.
Three Months Ended June 30, 1994 compared with the
Three Months Ended June 30, 1993
--------------------------------------------------
Comparative summarized results of operation for the three months ended June
30, 1994 and 1993 are set forth in the table below. This table also shows the
increase in the dollar amounts of major revenue and expense items between
periods, as well as the related percentage increase.
<TABLE>
<CAPTION>
(dollars in thousands) Three Months
Ended June 30 Increase
---------------- ---------
1994 1993 Amount Percent
------- ------- ------ ---------
<S> <C> <C> <C> <C>
Revenues
Lease Finance Income $15,780 $12,097 $3,683 30.4%
Interest on Alco Income Tax
Deferral 960 689 271 39.3
Other Income 808 609 199 32.7
------- ------- ------
17,548 13,395 4,153 31.0
Expenses
Interest 6,246 5,745 501 8.7
General & Administrative 5,402 3,479 1,923 55.3
------- ------- ------
Income Before Income Taxes 5,900 4,171 1,729 41.4
Income Taxes 2,328 1,668 660 39.6
------- ------- ------
Net Income $ 3,572 $ 2,503 $1,069 42.7%
======= ======= ======
</TABLE>
Revenues
- - --------
Total revenues increased $4.1 million or 31% from the three month period ended
June 30, 1993 to the three month period ended June 30, 1994. This increase was
primarily due to the improvement in lease finance income, reflecting the
continued growth of the lease portfolio, which increased 34% from June 1993 to
June 1994. Comparing the three months ended June 1994 to the three months ended
June 1993, new lease fundings increased $66 million of which $55 million was
originated through existing AOP dealers, while $11 million was originated
through AOP dealers recently acquired by Alco.
The Company charges Alco interest at a 6% rate on the benefit Alco receives for
income tax deferrals associated with the Company's leasing transactions. Due to
an increase in the deferred tax base upon which these payments are calculated,
interest earned on deferred taxes rose $271,000 or 39.3% when comparing the
third quarter of fiscal 1993 to the third quarter of fiscal 1994.
Other income, which consists primarily of late payments and various billing fees
also increased because of the larger portfolio upon which these fees are based.
Overall, fee income from these sources grew by $199,000 or 32.7%.
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Page 9
Expenses
- - --------
Average borrowings to finance the lease portfolio grew by 34.7%, from $357.7
million during the third quarter of fiscal 1993 to $482 million during the third
quarter of fiscal 1994. As a result, interest expense on these borrowings also
increased by $501,000 or 8.7%.
The Company has experienced favorable incremental borrowing rates during the
twelve months preceding June 30, 1994. The weighted average interest rate
applicable to all outside borrowings decreased from 6.33% at June 30, 1993 to
5.46% at June 30, 1994. This reduction in the weighted average rate allowed
interest expense to increase at a slower pace than the growth in borrowings.
General and administrative expenses include the dealer lease bonus program which
represents special bonus payments to Alco Office Products companies based on
their lease volume. For the three months ended June 30, 1994, the lease bonus
payments were $2.3 million as compared to $1.6 million for the three months
ended June 30, 1993, an increase of 43.8%.
Excluding the effect of the lease bonus program, general and administrative
expenses grew $1.2 million or 63.2% when comparing the third quarter of fiscal
1993 to the third quarter of fiscal 1994. The increase in general and
administrative expenses is indicative of the continued growth of the lease
portfolio and the related rise in the portfolio servicing costs of the Company.
Also reflected in general and administrative expenses are costs related to
several initiatives, including facility expansion, a reengineering of the
leasing computer software and the development of several new products such as
cost per copy leasing, credit scoring, and automation of the lease input
process. Such costs amounted to approximately $500,000 for the third quarter of
fiscal 1994 as compared to $200,000 for the third quarter of fiscal 1993.
Income Before Taxes
- - -------------------
Income before taxes for the quarter ended June 30, 1994 grew by $1.7 million or
41.4%, as compared to the third quarter of fiscal 1993. This increase in income
before taxes is essentially the net effect of higher earnings on a larger lease
portfolio.
Taxes on Income
- - ---------------
The $660,000 or 39.6% increase in income taxes from the three month period ended
June 30, 1993 to the three month period ending June 30, 1994 is directly
attributable to the higher income before taxes in fiscal 1994 as compared to
fiscal 1993.
<PAGE>
Page 10
Nine Months Ended June 30, 1994 compared with the
Nine Months Ended June 30, 1993
-------------------------------------------------
Comparative summarized results of operation for the nine months ended June
30, 1994 and 1993 are set forth in the table below. This table also shows the
increase in the dollar amounts of major revenue and expense items between
periods, as well as the related percentage increase.
<TABLE>
<CAPTION>
(dollars in thousands) Nine Months
Ended June 30 Increase
---------------- ---------
1994 1993 Amount Percent
------- ------- ------- ---------
<S> <C> <C> <C> <C>
Revenues
Lease Finance Income $44,028 $34,006 $10,022 29.5%
Interest on Alco Income Tax
Deferral 2,610 1,934 676 35.0
Other Income 2,216 1,703 513 30.1
------ ------ ------
48,854 37,643 11,211 29.8
Expenses
Interest 18,453 16,862 1,591 9.4
General & Administrative 14,509 9,850 4,659 47.3
------ ------ ------
Income Before Income Taxes and
Cumulative Effect of Change
in Accounting Principle 15,892 10,931 4,961 45.4
Income Taxes 6,198 4,370 1,828 41.8
------ ------ ------
Income Before Cumulative Effect
of Change in Accounting
Principle 9,694 6,561 3,133 47.7
Cumulative Effect of Change
in Accounting Principle for
Income Taxes 140 140
------ ------ ------
Net Income $ 9,834 $ 6,561 $ 3,273 49.9%
====== ====== ======
</TABLE>
Revenues
- - --------
Total revenues increased $11.2 million or 29.8% in the nine month period ended
June 30, 1993 as compared to the nine month period ended June 30, 1994. This
increase was principally a result of the $10 million or 29.5% growth in lease
finance income during the first nine months of fiscal 1994 as compared to fiscal
1993, because of a $151 million or 34% increase in the net lease portfolio.
Comparing the nine months ended June 1993 to the nine months ended June 1994,
new lease fundings increased $117 million, of which $98 million was originated
through existing AOP dealers, while $19 million was originated by AOP dealers
recently acquired by Alco.
There was a $676,000 or 35% increase in the interest income that the Company
earns from Alco on the tax deferrals associated with the Company's leasing
transactions. This increase resulted from further growth in the deferred tax
balance upon which the payments are based.
Other income, which is primarily late payment charges and various billing fees,
grew due to the lease portfolio growth and increased $513,000 or 30.1% during
the first nine months of fiscal 1994 over the same period of fiscal 1993.
<PAGE>
Page 11
Expenses
- - --------
Average borrowings to finance the lease portfolio grew by 32.7%, from $334.2
million during the first nine months of fiscal 1993 to $443.6 million during the
first nine months of fiscal 1994. As a result, interest expense also grew by
$1.6 million or 9.4% during these comparative nine month periods.
Because of lower incremental borrowing rates during fiscal 1994 versus fiscal
1993, the growth rate of interest expense was measurably less than the growth
rate in average borrowings.
Total general and administrative expenses were $14.5 million for the first nine
months of fiscal 1994. This represents a $4.6 million or 47.3% increase over the
comparative nine months of fiscal 1993. Of this increase, $1.5 million was due
to increased lease bonus payments to AOP dealers which resulted from increased
new lease funding.
Excluding the lease bonus program, the remaining general and administrative
expenses rose $3.1 million or 56.4%, when comparing the first nine months of
fiscal 1994 to fiscal 1993. The growth in expenses continues to be indicative
of the overall growth of the lease portfolio and its effects on the operations
of the Company. Also reflected in general and administrative expenses are costs
related to several initiatives, including facility expansion, a reengineering of
the leasing computer software and the development of several new products such
as cost per copy leasing, credit scoring, and automation of the lease input
process. Such costs amounted to approximately $1,300,000 for the first nine
months of fiscal 1994 as compared to $300,000 for the first nine months of
fiscal 1993.
The Company and Alco have entered into a new agreement (the "1994 Support
Agreement"), dated as of June 1, 1994. The Company intends to covenant with
noteholders and other lenders after June 1, 1994 that it will not amend the 1994
Support Agreement except under certain circumstances.
The 1994 Support Agreement provides that Alco will make a cash payment to the
Company (or an investment in the form of equity or subordinated notes) as needed
to comply with two requirements: i) that the Company will maintain a pre-tax
interest coverage ratio (income before interest expense and taxes divided by
interest expense) so that the Company's pre-tax income plus interest expense
will not be less than 1.25 times interest expense, and ii) that the Company will
maintain a minimum tangible net worth of $1.00. The 1994 Support Agreement
further provides that Alco may not assign, amend or terminate the 1994 Support
Agreement unless: (a) all the outstanding debt of the Company is repaid or (b)
both Moody's Investors Service and Standard & Poor's Ratings Group confirm in
writing prior to the effectiveness of any such assignment, amendment or
termination that the Company's debt rating would not be downgraded as a result
of such assignment.
<PAGE>
Page 12
Unlike the Company's 1991 Maintenance and Operating Agreement (which governs the
debt incurred by the Company prior to June 1, 1994), the 1994 Support Agreement
does not contain a requirement that the AOP dealers repurchase all defaulted
lease contracts. The 1994 Support Agreement does not include the repurchase
requirement because the Company and Alco wish to preserve the flexibility, on a
prospective basis, to allow the credit risk for defaulted contracts to remain
with the Company. In such event, the credit decision and reserves for defaulted
contracts would also become the responsibility of the Company. If the Company
were responsible for the credit risk and costs associated with defaulted
contracts, the Company would increase its current lease rates in order to offset
these increased costs. Consequently, the Company believes that the impact of
any future shift of the credit risk from the AOP dealers to the Company would
not be material to the Company's future results of operations. The Company's
(and Alco's) present intention, however, is to continue the repurchase
arrangement with the AOP dealers as currently in effect.
Income Before Taxes
- - -------------------
Income before taxes increased $5 million or 45.4%, when comparing the first nine
months of fiscal 1994 to the first nine months of fiscal 1993. This increase is
essentially the net effect of higher earnings on a larger lease portfolio.
Taxes on Income/Accounting Changes
- - ----------------------------------
The increase of $1.8 million in income taxes was attributable to the increased
income before taxes for the first nine months of fiscal 1994 as compared to the
first nine months of fiscal 1993.
In the first quarter of fiscal 1994, the Company adopted the provisions of SFAS
No. 109, "Accounting for Income Taxes", which resulted in an increase in net
income of $140,000 in the first nine months of fiscal 1994. This amount
represented the cumulative effect of this accounting change recorded in the
first quarter of fiscal 1994.
<PAGE>
Page 13
PART II. OTHER INFORMATION
---------------------------
Item 6. Exhibits and Reports on Form 8-K
- - -----------------------------------------
(a) The following Exhibits are furnished pursuant to
Item 601 of Regulation S-K:
Exhibit No. (1) Distribution agreement dated July 1, 1994
with respect to the Company's Medium-
Term Note Program
Exhibit No. (4) Form of Fixed Rate Note and Floating Rate
Note with respect to the Company's
Medium-Term Note Program
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Page 14
BASIS OF PRESENTATION
---------------------
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10Q and Rule 10-01 of Regulation
S-X. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's report on Form 10 for
the year ended September 30, 1993.
Date August 12, 1994 /s/ Robert M. Kearns II
--------------------- ----------------------------------
Robert M. Kearns II
Vice President
SIGNATURES
----------
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. This report has also been signed by the
undersigned in his capacity as the chief accounting officer of the Registrant.
ALCO STANDARD CORPORATION
Date August 12, 1994 /s/ Robert M. Kearns II
--------------------- ---------------------------------
Robert M. Kearns II
Vice President
(Chief Accounting Officer)
<PAGE>
Page 15
Index to Exhibits
-----------------
Exhibit Number
- - --------------
(1) Distribution agreement dated July 1, 1994 with
respect to the Company's Medium-Term Note Program
(4) Form of Fixed Rate Note and Floating Rate Note
with respect to the Company's Medium-Term Note
Program
<PAGE>
Exhibit 1
U.S. $500,000,000
ALCO CAPITAL RESOURCE, INC.
MEDIUM-TERM NOTES, SERIES A
DISTRIBUTION AGREEMENT
July 1, 1994
Lehman Brothers Inc.
3 World Financial Center, 9th Floor,
New York, New York 10285
Chase Securities, Inc.
One Chase Manhattan Plaza
New York, New York 10081
Goldman, Sachs & Co.
85 Broad Street,
New York, New York 10004
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281
Dear Sirs:
Alco Capital Resource, Inc., a Delaware corporation (the "Company"), confirms
its agreement with each of you (individually, an "Agent" and collectively, the
"Agents") (which terms shall, for all purposes of this Agreement, include Lehman
Special Securities Inc., an affiliate of Lehman Brothers Inc.) with respect to
the issuance and sale by the Company of up to an aggregate of $500,000,000 in
gross proceeds of its Medium-Term Notes, Series A (the "Notes"). The Notes are
to be issued from time to time pursuant to an indenture, dated as of June 15,
1994 (as it may be supplemented or amended from time to time, the "Indenture"),
between the Company and NationsBank of Georgia, National Association, as trustee
(the "Trustee").
The Notes shall have the maturity ranges, applicable interest rates or
interest rate formulas, specified currency, issue price, redemption and
repayment provisions and other terms set forth in the Prospectus referred to in
Section 1(a) as it may be amended or supplemented from time to time, including
any supplement providing for the interest rate, maturity and other terms of any
Note (a "Pricing Supplement"). The Notes will be issued, and the terms thereof
established, from time to time, by the Company in accordance with the Indenture
and the Procedures referred to below. This Agreement shall
<PAGE>
only apply to sales of the Notes and not to sales of any other securities or
evidences of indebtedness of the Company and only on the specific terms set
forth herein.
Subject to the terms and conditions stated herein and to the reservation by
the Company of the right to sell its Notes directly on its own behalf, the
Company hereby (i) appoints each of the Agents as the agent of the Company for
the purpose of soliciting and receiving offers to purchase Notes from the
Company and (ii) agrees that whenever the Company determines to sell Notes
directly to an Agent as principal it will enter into a separate agreement (each
a "Purchase Agreement"). Each such Purchase Agreement, whether oral (and
confirmed in writing, which may be by facsimile transmission) or in writing,
shall be with respect to such information (as applicable) as specified in
Exhibit C hereto, relating to such sale in accordance with Section 2(e) hereof.
Section 1. Representations and Warranties
The Company represents and warrants to each Agent as of the date hereof, as
of the Closing Date (defined herein) and as of the times referred to in Sections
6(a) and 6(b) hereof (the Closing Date and each such time being hereinafter
sometimes referred to as a "Representation Date"), as follows:
(a) General. A registration statement on Form S-3 with respect to the Notes
has been prepared and filed by the Company in conformity with the requirements
of the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder, and has become effective under the
Act. The Indenture has been qualified under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). As used in this Agreement (i) "Registration
Statement" means such registration statement when it became effective under the
Act, and as from time to time amended or supplemented thereafter (if any post-
effective amendment to such registration statement has been filed with the
Commission prior to the execution and delivery of this Agreement, the time the
most recent such amendment has been declared effective by the Commission); (ii)
"Basic Prospectus" means the prospectus (including all documents incorporated
therein by reference) included in the Registration Statement; and (ii)
"Prospectus" means the Basic Prospectus (together with all documents
incorporated therein by reference) and any amendments or supplements thereto
(including the applicable Pricing Supplement) relating to the Notes, as filed
with the Commission pursuant to paragraph (b) of Rule 424 of the Rules and
Regulations. The Commission has not issued any order preventing or suspending
the use of the Prospectus. Any reference in this Agreement to amending or
supplementing the Prospectus shall be deemed to include the filing of materials
incorporated by reference in the Prospectus after the Closing Date (defined
herein) and any reference in this Agreement to any amendment or supplement to
the Prospectus shall be deemed to include any such materials incorporated by
reference in the Prospectus after the Closing Date (defined herein).
(b) Registration Statement, Prospectus and Indenture: Contents. The
Registration Statement and each Prospectus conformed, and the Registration
Statement and each Prospectus will conform as of the applicable Representation
Date and at all times during each period during which, in the opinion of counsel
for the Agents, a prospectus relating to the Notes is required to be delivered
under the Act (each a "Marketing Period"), in all respects to the requirements
of the Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the Trust Indenture Act, and the rules and regulations of the Commission
under such Acts; the Indenture, including any amendments and supplements
thereto, conforms with the requirements of the Trust Indenture Act and the rules
and regulations of the Commission thereunder; and the Registration Statement and
each Prospectus do not, and will not as of the applicable Representation Date
and at all times during each Marketing Period, contain any untrue statement of a
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material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading; provided, however,
that the Company makes no representation or warranty as to information contained
in or omitted from the Registration Statement or any Prospectus in reliance upon
and in conformity with written information furnished to the Company by the
Agents specifically for inclusion therein or to any statements in or omissions
from the statement of eligibility and qualification on Form T-1 (the "Form T-1")
of the Trustee under the Trust Indenture Act.
(c) No Defaults. The Company is not in violation of its corporate charter
or by-laws or in default under any agreement, indenture or instrument, the
effect of which violation or default would be material to the Company; the
execution, delivery and performance of this Agreement, the Indenture, the Notes,
the Support Agreement, dated June 1, 1994 (the "New Support Agreement") between
the Company and Alco Standard Corporation ("Alco Standard"), and each
applicable Purchase Agreement, if any, and compliance by the Company with the
provisions of the Notes and the Indenture have been duly authorized by all
necessary corporate action and will not conflict with, result in the creation or
imposition of any lien, charge or encumbrance upon any of the assets of the
Company pursuant to the terms of, or constitute a default under, any agreement,
indenture or instrument, or result in a violation of the corporate charter or
by-laws of the Company or any order, rule or regulation of any court or
governmental agency having jurisdiction over the Company or its properties; and
except as required by the Act, the Trust Indenture Act, the Exchange Act and
applicable state securities laws, no consent, authorization or order of, or
filing or registration with, any court or governmental agency is required for
the execution, delivery and performance of the transactions contemplated by this
Agreement, the Notes, the New Support Agreement, each applicable Purchase
Agreement, if any, or the Indenture. The Company has no subsidiaries within the
meaning of Rule 405 of the Rules and Regulations.
(d) Material Changes or Material Transactions. Except as described in the
Registration Statement and each Prospectus, (i) there has not been any material
adverse change in, or any adverse development which materially affects, the
business, properties, condition (financial or other), results of operations or
prospects of the Company, and (ii) there has been no material transaction
entered into by the Company other than those in the ordinary course of business.
(e) Accountants. Ernst & Young, whose report appears in the Company's
Registration Statement on Form 10, which is incorporated by reference in each
Prospectus, are independent public accountants with respect to the Company as
required by the Act and the Rules and Regulations.
(f) Validity of the Indenture and the Notes. (i) The Indenture has been
duly authorized, executed and delivered by the Company and constitutes the valid
and legally binding obligation of the Company, enforceable in accordance with
its terms; (ii) the Notes have been validly authorized for issuance and sale
pursuant to this Agreement and, when the terms of the Notes and of their issue
and sale have been duly established in accordance with the Indenture and this
Agreement so as not to violate any applicable law or agreement or instrument
binding on the Company, and the Notes have been duly executed, authenticated,
delivered and paid for as provided in this Agreement and the Indenture, the
Notes will be validly issued and outstanding, and will constitute valid and
legally binding obligations of the Company entitled to the benefits of the
Indenture and enforceable in accordance with their terms and the terms of the
Indenture; and (iii) the Notes and the Indenture conform to the descriptions
thereof contained in each Prospectus. The validity, enforceability and legally
binding nature of the Indenture and the Notes are subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
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(g) Due Incorporation and Qualification. The Company has been duly
incorporated, is validly existing and in good standing under the laws of its
jurisdiction of incorporation, is duly qualified to do business and in good
standing as a foreign corporation in each jurisdiction in which its ownership of
properties or the conduct of its businesses requires such qualification (except
where the failure to obtain such qualification would not have a material adverse
effect on the Company), and has the power and authority necessary to own or hold
its properties and to conduct the businesses in which it is engaged, as
described in each Prospectus.
(h) Validity of the Support Agreements. (i) Each of the New Support
Agreement, and the Maintenance Agreement, dated August 15, 1991 (the
"Maintenance Agreement") and the Operating Agreement dated August 15, 1991 (the
"Operating Agreement") between the Company and Alco Standard has been duly
authorized, executed and delivered by each of the Company and Alco Standard and
constitutes the valid and legally binding obligation of the Company and Alco
Standard and, enforceable in accordance with its terms; and (ii) such agreements
conform to the descriptions thereof contained in each Prospectus. The validity,
enforceability and legally binding nature of such agreements are subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing.
(i) Ownership of Property. The Company owns, or has valid rights to use,
all items of real and personal property which are material to the business of
the Company, free and clear of all liens, encumbrances and claims which may
materially interfere with the business, properties, financial condition or
results of operations of the Company.
(j) Legal Proceedings. Except as described in each Prospectus, there is no
material litigation or governmental proceeding pending or, to the knowledge of
the Company, threatened against the Company which might result in any material
adverse change in the condition (financial or other), results of operations,
business, property, or prospects of the Company or which is required to be
disclosed in the Registration Statement.
(k) Financial Statements. The audited financial statements included or
incorporated by reference in each Prospectus present and will present as of the
applicable Representation Date and at all times during each Marketing Period,
fairly, the financial condition, results of operations, changes in shareholder's
equity and case flows of the entities purported to be shown thereby in
conformity with generally accepted accounting principles, at the dates and for
the periods indicated, and have been, and will be as of the applicable
Representation Date and at all times during each Marketing Period, prepared in
conformity with generally accepted accounting principles applied on a consistent
basis throughout the period or periods involved; and the supporting schedules
included or incorporated by reference in each Prospectus present, and will
present as of the applicable Representation Date and at all times during each
Marketing Period, fairly the information required to be stated therein. The
unaudited financial statements of the Company, if any, and the related notes,
included or incorporated by reference in each Prospectus present fairly and will
present fairly at all times during each period specified in Section 3(c) hereof
the financial position of the Company at the dates and for the periods indicated
in conformity with generally accepted accounting principles (except for the
absence of notes) applied on a consistent basis throughout the periods shown,
subject to normally recurring changes, and prepared in accordance with the
instructions to Form 10-Q.
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(l) Documents Incorporated by Reference. The documents incorporated by
reference into any Prospectus have been, and will be as of the applicable
Representation Date and at all times during each Marketing Period, prepared by
the Company in conformity with the applicable requirements of the Act and the
Rules and Regulations and the Exchange Act and the rules and regulations of the
Commission thereunder; and none of such documents contained, or will contain as
of the applicable Representation Date and at all times during each Marketing
Period, an untrue statement of a material fact or omitted, or will omit, to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and such documents have been, or will be, as
of the applicable Representation Date and at all times during each Marketing
Period, timely filed as required thereby.
(m) Exhibits to Registration Statement. There are no contracts or other
documents which are required to be filed as exhibits to the Registration
Statement by the Act or by the Rules and Regulations, or which were required to
be filed as exhibits to any document incorporated by reference in any Prospectus
by the Exchange Act or the rules and regulations of the Commission thereunder,
which have not been filed as exhibits to the Registration Statement or to such
document or incorporated therein by reference as permitted by the Rules and
Regulations or the rules and regulations of the Commission under the Exchange
Act, as the case may be.
(n) Licenses, Approvals and Consents. The Company has all licenses,
approvals and consents for the conduct of its business the failure of which to
have would have a material adverse effect on the business, properties, financial
condition or results of operations of the Company.
(o) Investment Company Act. The Company is not required to register under
the provisions of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and no action need be taken with respect to or under
the Investment Company Act by reason of the issuance of the Notes by the
Company.
(p) Rating. The Notes have been rated by a "nationally recognized
statistical rating agency" (as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Act), including one or both of Moody's
Investor Services, Inc. and Standard & Poor's Corporation.
(q) Doing Business with Cuba. The Company confirms as of the date hereof,
and each acceptance by the Company of an offer to purchase Notes will be deemed
to be an affirmation, that the Company is in compliance with all provisions of
Section 1 of Laws of Florida, Chapter 92-198, An Act Relating to Disclosure of
Doing Business with Cuba, and the Company further agrees that if it commences
engaging in business with the government of Cuba or with any person or affiliate
located in Cuba after the date the Registration Statement becomes or has become
effective with the Commission or with the Florida Department of Banking and
Finance (the "Department"), whichever date is later, or if the information
reported in the Prospectus, if any, concerning the Company's business with Cuba
or with any person or affiliate located in Cuba changes in any material way, the
Company will provide the Department notice of such business or change, as
appropriate, in a form acceptable to the Department.
(r) True and Complete Documents. The certificates delivered pursuant to
paragraph (f) of Section 5 hereof and all other documents delivered by the
Company or its representatives in connection with the issuance and sale of the
Notes were on the dates on which they were delivered, or will be on the dates on
which they are to be delivered, true and complete in all material respects.
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<PAGE>
Section 2. Solicitations as Agent; Purchases as Principal
(a) Appointment. Subject to the terms and conditions stated herein, the
Company hereby appoints each of the Agents as the agent of the Company for the
purpose of soliciting or receiving offers to purchase the Notes from the Company
by others. On the basis of the representations and warranties contained herein,
but subject to the terms and conditions herein set forth, each Agent agrees, as
the agent of the Company, to use its reasonable efforts to solicit offers to
purchase the Notes upon the terms and conditions set forth in the Prospectus.
The Company may offer the Notes for sale from time to time otherwise than
through an Agent. However, so long as this Agreement is in effect the Company
shall not solicit offers to purchase Notes through any agent without (i)
amending this Agreement to appoint such agent as an additional Agent hereunder
on the same terms and conditions as provided herein for the Agents (the consent
of the then current Agents shall not be necessary for such purpose) and (ii)
delivering 2 days prior written notice thereof to the Agents. The Company may,
however, accept offers to purchase Notes through an agent other than an Agent,
provided that (i) the Company shall not have solicited such offers, (ii) the
Company and such agent shall have executed an agreement with respect to such
purchases having the same terms and conditions (including, without limitation,
commission and discount rates) as those which would apply to such purchases
under this Agreement if such agent were an Agent (which may be accomplished by
incorporating by reference in such agreement the terms and conditions of this
Agreement) and (iii) the Company shall provide the Agents with a copy of such
agreement promptly following the execution thereof. Each Agent may also purchase
Notes from the Company as principal for purposes of resale, as more fully
described in paragraph (e) of this Section.
(b) Suspension of Solicitation. The Company reserves the right, in its sole
discretion, to suspend solicitation of offers to purchase the Notes commencing
at any time for any period of time or indefinitely. Upon receipt of at least one
business day's prior written notice from the Company, the Agents will forthwith
suspend solicitation of offers to purchase Notes from the Company until such
time as the Company has advised the Agents that such solicitation may be
resumed. For the purpose of the foregoing sentence, "business day" shall mean
any day which is not a Saturday or Sunday and which is not a day on which (i)
banking institutions are generally authorized or obligated by law to close in
The City of New York and (ii) the New York Stock Exchange, Inc. is closed for
trading.
Upon receipt of notice from the Company as contemplated by Section 3(c)
hereof, each Agent shall suspend its solicitation of offers to purchase Notes
until such time as the Company shall have furnished it with an amendment or
supplement to the Registration Statement or the Prospectus, as the case may be,
contemplated by Section 3(c) and shall have advised such Agent that such
solicitation may be resumed.
(c) Agent's Commission. Promptly upon the closing of the sale of any Notes
sold by the Company as a result of a solicitation made by or offer to purchase
received by an Agent, the Company agrees to pay such Agent a commission, in the
form of a discount, in accordance with the schedule set forth in Exhibit A
hereto.
(d) Solicitation of Offers. The Agents are authorized to solicit offers to
purchase the Notes only in denominations as are specified in the Prospectus at a
purchase price as shall be specified by the Company. Each Agent shall
communicate to the Company, orally or in writing, each reasonable offer to
purchase Notes received by it as an Agent. The Company shall have the sole right
to accept offers to purchase the Notes and may reject any such offer in whole or
in part. Each Agent shall have the right, in its discretion reasonably exercised
without advising the Company, to reject any offer to purchase the Notes received
by it, in whole or in part, and any such rejection shall not be deemed a breach
of its agreement contained herein.
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<PAGE>
No Note which the Company has agreed to sell pursuant to this Agreement shall
be deemed to have been purchased and paid for, or sold by the Company, until
such Note shall have been delivered to the purchaser thereof against payment by
such purchaser.
(e) Purchases as Principal. Each sale of Notes to any Agent as principal,
for resale to one or more investors or to another broker-dealer (acting as
principal for purposes of resale), shall be made in accordance with the terms of
this Agreement and a Purchase Agreement whether oral (and confirmed in writing
by such Agent to the Company, which may be by facsimile transmission) or in
writing, which will provide for the sale of such Notes to, and the purchase
thereof by, such Agent. A Purchase Agreement may also specify certain provisions
relating to the reoffering of such Notes by such Agent. The commitment of any
Agent to purchase Notes from the Company as principal shall be deemed to have
been made on the basis of the representations and warranties of the Company
herein contained and shall be subject to the terms and conditions herein set
forth. Each Purchase Agreement shall specify the principal amount and terms of
the Notes to be purchased by an Agent, the time and date (each such time and
date being referred to herein as a "Time of Delivery") and place of delivery of
and payment for such Notes and such other information (as applicable) as is set
forth in Exhibit C hereto. The Company agrees that if any Agent purchases Notes
as principal for resale such Agent shall receive such compensation, in the form
of a discount or otherwise, as shall be indicated in the applicable Purchase
Agreement or, if no compensation is indicated therein a commission in accordance
with Exhibit A hereto. Any Agent may utilize a selling or dealer group in
connection with the resale of such Notes. In addition, any Agent may offer the
Notes it has purchased as principal to other dealers. Any Agent may sell Notes
to any dealer at a discount and, unless otherwise specified in the applicable
Pricing Supplement, such discount allowed to any dealer will not be in excess of
66 2/3% of the discount to be received by such Agent from the Company. Such
Purchase Agreement shall also specify any requirements for delivery of opinions
of counsel, accountant's letters and officers' certificates pursuant to Section
5 hereof.
(f) Administrative Procedures. Administrative procedures respecting the
sale of Notes (the "Procedures") are set forth in Exhibit B hereto and may be
amended in writing from time to time by the Agents and the Company. Each Agent
and the Company agree to perform the respective duties and obligations
specifically provided to be performed by each of them herein and in the
Procedures. The Procedures shall apply to all transactions contemplated
hereunder including sales of Notes to any Agent as principal pursuant to a
Purchase Agreement, unless otherwise set forth in such Purchase Agreement.
(g) Delivery of Documents. The documents required to be delivered by
Section 5 hereof shall be delivered at the offices of Sullivan & Cromwell, 125
Broad Street, New York, New York 10004, not later that 10:00 A.M., New York City
time, on the date of this Agreement or at such later time as may be mutually
agreed upon by the Company and the Agents, which in no event shall be later than
the time at which the Agents commence solicitation of offers to purchase Notes
hereunder (the "Closing Date").
Section 3. Covenants of the Company
The Company covenants and agrees:
(a) Delivery of Signed Registration Statement. To furnish promptly to the
Agents and to their counsel a signed copy of the Registration Statement as
originally filed and each amendment or supplement thereto.
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<PAGE>
(b) Delivery of Other Documents. To deliver promptly to the Agents, and in
such number as they may request, each of the following documents: (i) conformed
copies of the Registration Statement (excluding exhibits other than the
computation of the ratio of earnings to fixed charges, the Indenture, this
Agreement and such other exhibits that the Agents may request), (ii) the Basic
Prospectus, (iii) each Prospectus and (iv) any documents incorporated by
reference in the Prospectus.
(c) Revisions to Prospectus - Material Changes. If, during any Marketing
Period, any event occurs as a result of which the Prospectus would include an
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein not misleading, or if it is necessary at any time
to amend any Prospectus to comply with the Act, to notify the Agents promptly,
in writing, to suspend solicitation of purchases of the Notes; and if the
Company shall decide to amend or supplement the Registration Statement or any
Prospectus, to promptly advise the Agents by telephone (with confirmation in
writing) and to promptly, in writing, prepare and file with the Commission an
amendment or supplement which will correct such statement or omission or an
amendment which will effect such compliance; provided, however, that if during
the period referred to above the any Agent shall own any Notes which it has
purchased from the Company as principal with the intention of reselling them,
the Company shall promptly prepare and timely file with the Commission any
amendment or supplement to the Registration Statement or any Prospectus that
may, in the judgment of the Company or the Agents, be required by the Act or
requested by the Commission.
(d) Commission Filings. To timely file with the Commission during any
Marketing Period, all documents (and any amendments to previously filed
documents) required to be filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act.
(e) Copies of Filings with Commission. Prior to filing with the Commission
during any Marketing Period, (i) any amendment or supplement to the Registration
Statement, (ii) any amendment or supplement to any Prospectus or (iii) any
document incorporated by reference in any of the foregoing or any amendment of
or supplement to any such incorporated document, to furnish a copy thereof to
the Agents.
(f) Notice to Agent of Certain Events. To advise the Agents immediately (i)
when any post-effective amendment to the Registration Statement relating to or
covering the Notes becomes effective, (ii) of any request or proposed request by
the Commission for an amendment or supplement to the Registration Statement, to
any Prospectus, to any document incorporated by reference in any of the
foregoing or for any additional information and the Company will afford the
Agents a reasonable opportunity to comment on any such proposed amendment or
supplement, (iii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or any part thereof or any order
directed to any Prospectus or any document incorporated therein by reference or
the initiation or threat of any stop order proceeding or of any challenge to the
accuracy or adequacy of any document incorporated by reference in any
Prospectus, (iv) of receipt by the Company of any notification with respect to
the suspension of the qualification of the Notes for sale in any jurisdiction or
the initiation or threat of any proceeding for that purpose, (v) of any
downgrading in the rating of the Notes or any other debt securities of the
Company, or any proposal to downgrade the rating of the Notes or any other debt
securities of the Company, by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act), or any
public announcement that any such organization has under surveillance or review
its rating of any debt securities of the Company (other than an announcement
with positive implications of a possible upgrading, and no implication of a
possible downgrading of such rating) as soon as the Company learns of any such
downgrading, proposal to downgrade or public announcement and (vi) of the
happening of any event which makes untrue any statement of material fact
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<PAGE>
made in the Registration Statement or any Prospectus or which requires the
making of a change in the Registration Statement or any Prospectus in order to
make any material statement therein not misleading.
(g) Stop Orders. If, during any Marketing Period, the Commission shall
issue a stop order suspending the effectiveness of the Registration Statement,
to make every reasonable effort to obtain the lifting of that order at the
earliest possible time.
(h) Earnings Statements. As soon as practicable, but not later than 18
months, after the date of each acceptance by the Company of an offer to purchase
Notes hereunder, to make generally available to its security holders an earnings
statement covering a period of at least 12 months beginning after the later of
(i) the effective date of the Registration Statement, (ii) the effective date of
the most recent post-effective amendment to the Registration Statement to become
effective prior to the date of such acceptance and (iii) the date of the
Company's most recent Annual Report on Form 10-K filed with the Commission prior
to the date of such acceptance which will satisfy the provisions of Section
11(a) of the Act (including, at the option of the Company, Rule 158 of the Rules
and Regulations under the Act).
(i) Copies of Reports, Releases and Financial Statements. So long as any of
the Notes are outstanding, to furnish to the Agents, not later than the time the
Company makes the same available to others, copies of all public reports or
releases and all reports and financial statements furnished by the Company to
any securities exchange on which the Notes are listed pursuant to requirements
of or agreements with such exchange or to the Commission pursuant to the
Exchange Act or any rule or regulation of the Commission thereunder.
(j) Blue Sky Qualifications. To endeavor, in cooperation with the Agents,
to qualify the Notes for offering and sale under the securities laws of such
jurisdictions as the Agents may designate, and to maintain such qualifications
in effect for as long as may be required for the distribution of the Notes; and
to file such statements and reports as may be required by the laws of each
jurisdiction in which the Notes have been qualified as above provided.
(k) Holdback. Between the date of a Purchase Agreement and the date of
delivery of the Notes with respect thereto, the Company will not offer or sell,
or enter into any agreement to sell, any of its debt securities, other than
borrowings under the Company's revolving credit agreements and lines of credit,
the private placement of securities and issuances of its commercial paper.
(l) Pricing Supplement. To prepare, with respect to any Notes to be sold
through or to the Agents pursuant to this Agreement, a Pricing Supplement with
respect to such Notes in a form previously approved by the Agents and to file
such Pricing Supplement timely pursuant to Rule 424 under the Act with the
Commission.
Section 4. Payment of Expenses
The Company will pay:
(i) the costs incident to the authorization, issuance, sale and
delivery of the Notes and any taxes payable in that connection,
(ii) the costs incident to the preparation, printing and filing under
the Act of the Registration Statement and any amendments and exhibits
thereto,
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<PAGE>
(iii) the costs incident to the preparation, printing and filing of any
document and any amendments and exhibits thereto required to be filed by the
Company under the Exchange Act,
(iv) the costs of distributing the Registration Statement as
originally filed, and each amendment and post-effective amendment thereof
(including exhibits), the Basic Prospectus, each Prospectus, any supplement
or amendment to any Prospectus and any documents incorporated by reference in
any of the foregoing documents,
(v) the fees and disbursements of the Trustee, any paying agent, any
calculation agent, any exchange agent and any other agents appointed by the
Company, and their respective counsel,
(vi) the costs and fees in connection with the listing of the Notes
on any securities exchange,
(vii) the cost and fees in connection with any filings with the
National Association of Notes Dealers, Inc.,
(viii) the fees and disbursements of counsel to the Company and
counsel to the Agents,
(ix) the fees paid to rating agencies in connection with the rating
of the Notes,
(x) the fees and expenses of qualifying the Notes under the
securities laws of the several jurisdictions as provided in Section 3(j)
hereof and of preparing and printing a Blue Sky Memorandum and a memorandum
concerning the legality of the Notes as an investment (including fees and
expenses of counsel for the Agents in connection therewith),
(xi) all advertising expenses in connection with the offering of the
Notes incurred with the consent of the Company, and
(xii) all other costs and expenses arising out of the transactions
contemplated hereunder and incident to the performance of the Company's
obligations under this Agreement or otherwise in connection with the
activities of the Agents under this Agreement.
Section 5. Conditions of Obligations of Agent
The obligation of the Agents, as agents of the Company, under this Agreement
to solicit offers to purchase the Notes, the obligation of any person who has
agreed to purchase Notes to make payment for and take delivery of Notes, and the
obligation of any Agent to purchase Notes pursuant to any Purchase Agreement, is
subject to the accuracy, on each Representation Date, of the representations and
warranties of the Company contained herein, to the accuracy of the statements of
the Company's officers made in any certificate furnished pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder, and to each of the following additional terms and conditions:
(a) Registration Statement. The Prospectus as amended or supplemented
(including the Pricing Supplement) with respect to such Notes shall have been
filed with the Commission pursuant to Rule 424(b) under the Act within the
applicable time period prescribed for such filing by the Rules and Regulations
and in accordance with Section 3(1) hereof; no stop order suspending the
effectiveness of the Registration Statement or any part thereof nor any order
directed to any document incorporated by refer-
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<PAGE>
ence in any Prospectus have been issued and no stop order proceeding shall have
been initiated or threatened by the Commission and no challenge shall have been
made to the accuracy or adequacy of any document incorporated by reference in
any Prospectus; any request of the Commission for inclusion of additional
information in the Registration Statement or any Prospectus or otherwise shall
have been complied with; and the Company shall not have filed with the
Commission any amendment or supplement to the Registration Statement or any
Prospectus (or any document incorporated by reference therein) without the
consent of the Agents.
(b) No Suspension of Sale of the Notes. No order suspending the sale of the
Notes in any jurisdiction designated by the Agents pursuant to Section 3(j)
hereof shall have been issued, and no proceeding for that purpose shall have
been initiated or threatened.
(c) No Material Omissions or Untrue Statements. The Agents shall not have
discovered and disclosed to the Company that the Registration Statement or any
Prospectus contains an untrue statement of a fact which, in the opinion of
counsel for the Agents, is material or omits to state a fact which, in the
opinion of such counsel, is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(d) Legal Matters Satisfactory to Counsel. All corporate proceedings and
other legal matters incident to the authorization, form and validity of this
Agreement, the Notes, the Indenture, the form of the Registration Statement,
each Prospectus (other than financial statements and other financial data) and
all other legal matters relating to this Agreement and the transactions
contemplated hereby shall be satisfactory in all respects to counsel for the
Agents and the Company shall have furnished to such counsel all documents and
information that they may reasonably request to enable them to pass upon such
matters.
(e) Opinion of Company Counsel. At the Closing Date, the Agents shall have
received the opinion, addressed to the Agents and dated the Closing Date, of J.
Kenneth Croney, General Counsel of Alco Standard Corporation, in form and
substance satisfactory to the Agents and counsel, to the effect that:
(i) The Company has been duly incorporated and is validly existing
and in good standing under the laws of its jurisdiction of incorporation, is
duly qualified to do business and in good standing as a foreign corporation
in all jurisdictions in which its ownership of properties or the conduct of
its businesses requires such qualification (except where the failure to so
qualify would not have a material adverse effect on the Company), and has all
power and authority necessary to own its properties and conduct the
businesses in which it is engaged, as described in the Prospectus;
(ii) Such counsel has no reason to believe that the Registration
Statement, as of its effective date, 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, or the
Prospectus contains any untrue statement of a material fact or omits to state
a 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, it being understood that such counsel need express no opinion
as to the financial statements or other financial information contained or
incorporated therein or omitted therefrom, or the Form T-1 that is an exhibit
to the Registration Statement;
(iii) Such counsel does not know, after reasonable investigation, of
any litigation or any governmental proceeding pending or threatened against
the Company which would affect the subject
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<PAGE>
matter of this Agreement or is required to be disclosed in the Prospectus
which is not disclosed and correctly summarized therein;
(iv) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the
transactions contemplated herein except such as have been obtained under the
Act and such as may be required under the blue sky laws of any jurisdiction
in connection with the sale of the Notes as contemplated by this Agreement
and such other approvals (specified in such opinion) as have been obtained;
(v) Such counsel does not know, after reasonable investigation, of
any contracts or other documents which are required to be filed as exhibits
to the Registration Statement by the Act or by the Rules and Regulations, or
which are required to be filed by the Exchange Act or the rules and
regulations of the Commission thereunder as exhibits to any document
incorporated by reference in the Prospectus, which have not been filed as
exhibits to the Registration Statement or to such document or incorporated
therein by reference as permitted by the Rules and Regulations or the rules
and regulations of the Commission under the Exchange Act;
(vi) To the best of such counsel's knowledge, the Company is not in
violation of its corporate charter or by-laws, or in default (except where
such default would not have a material adverse effect upon the Company) under
any agreement, indenture or instrument;
(vii) The execution, delivery and performance of this Agreement, the
New Support Agreement and the Purchase Agreements, if any, and compliance by
the Company with the provisions of the Notes and the Indenture will not
conflict with, or result in the creation or imposition of any lien, charge or
encumbrance upon any of the assets of the Company pursuant to the terms of,
or constitute a default under, any agreement, indenture or instrument known
to such counsel, or result in a violation of the corporate charter or by-laws
of the Company (as in effect on the date of such opinion) or any order, rule
or regulation (also as in effect on the date of such opinion) of any court or
governmental agency having jurisdiction over the Company or its properties;
and no consent, authorization or order of, or filing or registration with,
any court or governmental agency is required for the execution, delivery and
performance by the Company of this Agreement, the New Support Agreement and
the Purchase Agreements, if any, except such as may be required by the Act,
the Trust Indenture Act, the Exchange Act or state securities laws;
(viii) The Indenture has been duly authorized by the Company, duly
executed and delivered by the Company and the Trustee and duly qualified
under the Trust Indenture Act and is a valid and legally binding obligation
of the Company enforceable in accordance with its terms;
(ix) The Notes are in a form contemplated by the Indenture and have
been duly authorized by all necessary corporate action and, when the terms of
the Notes and of their issue and sale have been duly established in
accordance with the Indenture and this Agreement so as not to violate any
applicable law or agreement or instrument then binding on the Company, and
when the Notes have been duly executed and authenticated as specified in the
Indenture and delivered against payment therefor in accordance with this
Agreement, the Notes will be legal, valid and binding obligations of the
Company enforceable in accordance with their terms, and entitled to the
benefits of the Indenture;
(x) The Notes and the Indenture conform to the statements concerning
each of them in the Registration Statement and the Prospectus;
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(xi) Each of the New Support Agreement, the Operating Agreement and
the Maintenance Agreement has been duly authorized, executed and delivered by
each of the Company and Alco Standard and constitutes the valid and legally
binding obligation of the Company and Alco Standard in accordance with its
terms; and (ii) such agreements conform to the descriptions thereof contained
in each Prospectus.
(xii) The Registration Statement has become effective under the Act
and, to the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceeding
for that purpose is pending or threatened by the Commission;
(xiii) To the knowledge of such counsel, after reasonable investigation,
no order directed to any document incorporated by reference in the Prospectus
has been issued and no challenge has been made to the accuracy or adequacy of
any such document; and they have no reason to believe that any of such
documents, when they became effective or were so filed, as the case may be,
contained, in the case of a registration statement which became effective
under the Act, an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and, in the case of other documents which
were filed under the Act or the Exchange Act with the Commission, an untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made when such documents were so filed, not misleading;
(xiv) The Registration Statement and the Prospectus (except that no
opinion need be expressed as to the financial statements and other financial
data contained therein or the Form T-1 that is an exhibit thereto) comply as
to form in all material respects with the requirements of the Act and the
Trust Indenture Act and the rules and regulations of the Commission under
said Acts and the documents incorporated by reference in the Prospectus
(except that no opinion need be expressed as to the financial statements and
other financial data contained therein) comply as to form in all material
respects with the applicable requirements of the Exchange Act and the rules
and regulations of the Commission thereunder;
(xv) The statements made in the Prospectus under the captions
"Description of Debt Securities" and "Description of Notes," insofar as they
purport to summarize the provisions of documents or agreements specifically
referred to therein, fairly present the information called for with respect
thereto by Form S-3;
(xvi) The Company has the corporate power and authority necessary to
execute and deliver this Agreement and the New Support Agreement, and to
perform its obligations (including the sale and delivery of the Notes under
this Agreement) thereunder; and this Agreement has been duly authorized,
executed and delivered by the Company;
(xvii) The Company is not required to register under the provisions
of the Investment Company Act, and no action need be taken with respect to or
under the Investment Company Act by reason of the issuance of the Notes by
the Company; and
(xviii) The description contained in the Prospectus under the heading
"Certain United States Federal Income Tax Consequences" while not purporting
to discuss all possible income tax ramifications of the proposed issuance, is
correct in all material respects.
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The opinions set forth in paragraphs (viii), (ix) and (xi) above are subject
to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing.
(f) Officers' Certificate. The Company shall have furnished to the Agents
on the Closing Date a certificate, dated the Closing Date, of its President or a
Vice President and its Treasurer or an Assistant Treasurer stating that:
(i) The representations, warranties and agreements of the Company in
Section 1 hereof are true and correct as of the Closing Date; the Company has
complied with all its agreements contained herein; and the conditions set
forth in Sections 5(a) and 5(b) hereof have been fulfilled; and
(ii) They have carefully examined the Registration Statement and the
Prospectus and, in their opinion, (A) the Registration Statement, as of its
effective date, did not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, (B) the Prospectus does not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and (C) since the effective date of the Registration
Statement there has not occurred any event required to be set forth in an
amended or supplemented prospectus which has not been so set forth.
(g) Accountant's Letter. The Company shall have furnished to the Agents on
the Closing Date a letter of Ernst & Young, addressed jointly to the Company and
the Agents and dated the Closing Date, of the type described in the American
Institute of Certified Public Accountants' Statement on Auditing Standards No.
72, in form and substance reasonably satisfactory to the Agents confirming that
they are independent accountants within the meaning of the Act and the
applicable published Rules and Regulations thereunder and stating in effect
that:
(i) In their opinion, the financial statements and schedules examined
by them and included in the prospectus contained in the Registration
Statement comply in form in all material respects with the applicable
accounting requirements of the Act and the related published Rules and
Regulations;
(ii) They have made a review of any unaudited financial statements
included in the Prospectus in accordance with standards established by the
American Institute of Certified Public Accountants, as indicated in their
report or reports attached to such letter;
(iii) On the basis of the review referred to in (ii) above and a
reading of the latest available interim financial statements of the Company,
inquiries of officials of the Company who have responsibility for financial
and accounting matters and other specified procedures, nothing came to their
attention that caused them to believe that:
(A) the unaudited financial statements, if any, included in the
Prospectus do not comply in form in all material respects with the
applicable accounting requirements of the Act and the related published
Rules and Regulations or are not in conformity with generally accepted
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accounting principles applied on a basis substantially consistent with
that of the audited financial statements included in the Prospectus;
(B) the unaudited capsule information, if any, included in the
Prospectus does not agree with the amounts set forth in the unaudited
consolidated financial statements from which it was derived or was not
determined on a basis substantially consistent with that of the audited
financial statements included in the Prospectus;
(C) at the date of the latest available balance sheet read by such
accountants, or at a subsequent specified date not more than five days
prior to the Closing Date, there was any change in the capital stock, any
increase in short-term indebtedness or long-term debt of the Company and
consolidated subsidiaries or, at the date of the latest available balance
sheet read by such accountants, there was any decrease in consolidated net
current assets or net assets as compared with amounts shown on the latest
balance sheet included in the Prospectus; or
(D) for the period from the date of the latest income statement
included in the Prospectus to the closing date of the latest available
income statement read by such accountants there were any decreases, as
compared with the corresponding period of the previous year in
consolidated revenues, income before income taxes of cumulative effect of
accounting charge, or net income, or in the ratio of earnings to fixed
charges;
except in all cases set forth in clauses (C) and (D) above for changes,
increases or decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(iv) They have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information contained
in the Prospectus (in each case to the extent that such dollar amounts,
percentages and other financial information are derived from the general
accounting records of the Company and its subsidiaries subject to the
internal controls of the Company's accounting system or are derived directly
from such records by analysis or computation) with the results obtained from
inquiries, a reading of such general accounting records and other procedures
specified in such letter and have found such dollar amounts, percentages and
other financial information to be in agreement with such results, except as
otherwise specified in such letter.
All financial statements and schedules included in material incorporated by
reference into the Prospectus shall be deemed included in the Prospectus for
purposes of this subsection.
(h) The Agents shall have received from Sullivan & Cromwell, counsel to the
Agents, such opinion or opinions, dated the Closing Date, with respect to the
issuance and sale of the Notes, the Indenture, the Registration Statement, the
Prospectus and other related matters as the Agents may reasonably require, and
the Company shall have furnished to such counsel such documents as they may
request for the purpose of enabling them to pass upon such matters.
(i) Additional Conditions. There shall not have occurred: (i) any change
in the capital stock or long-term debt of the Company or any of its Subsidiaries
or any change, or any development involving a prospective change, in or
affecting the general affairs, management, shareholder's equity, business,
properties, condition (financial or other), results of operations or prospects
of the Company which in the opinion of the Agents materially impairs the
investment quality of the Notes; (ii) a suspension or material limitation in
trading in securities generally on the New York Stock Exchange, the American
Stock
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Exchange or the over-the-counter market or the establishment of minimum prices
on such exchanges or such market by the Commission, by such exchange or by any
other regulatory body or governmental authority having jurisdiction; (iii) a
general moratorium on commercial banking activities declared by Federal, or New
York State authorities; (iv) any downgrading in the rating accorded the
Company's debt securities by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act), or any
public announcement that any such organization has under surveillance or review
its rating of any debt securities of the Company (other than an announcement
with positive implications of a possible upgrading, and no implication of a
possible downgrading, of such rating); (v) any outbreak or escalation of major
hostilities in which the United States is involved, any declaration of war by
Congress or any other substantial national calamity or emergency; or (vi) any
material adverse change in the existing financial, political or economic
conditions in the United States, including any effect of international
conditions on the financial markets in the United States, that in the judgment
of the Agents makes it impracticable or inadvisable to proceed with the
solicitation of offers to purchase Notes or the purchase of Notes from the
Company as principal pursuant to the applicable Purchase Agreement, as the case
may be.
(j) Other Information and Documentation. Prior to the Closing Date, the
Company shall have furnished to the Agents such further information,
certificates and documents as the Agents or counsel to the Agents may reasonably
request.
All opinions, letters, evidence and certificates mentioned above or elsewhere
in this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in the form and substance satisfactory to counsel for the
Agents.
Section 6. Additional Covenants of the Company
The Company covenants and agrees that:
(a) Acceptance of Offer Affirms Representations and Warranties. Each
acceptance by it of an offer for the purchase of Notes shall be deemed to be an
affirmation that the representations and warranties of the Company contained in
this Agreement and in any certificate theretofore given to the Agents pursuant
hereto are true and correct at the time of such acceptance, and an undertaking
that such representations and warranties will be true and correct at the time of
delivery to the purchaser or his agent of the Notes relating to such acceptance
as though made at and as of each such time (and such representations and
warranties shall relate to the Registration Statement and the Prospectus as
amended or supplemented to each such time).
(b) Subsequent Delivery of Officers' Certificates. The Company agrees that
during each Marketing Period, each time that the Registration Statement or any
Prospectus shall be amended or supplemented (other than by a Pricing Supplement
providing solely for the interest rates or maturities of the Notes or the
principal amount of Notes remaining to be sold or similar changes), each time
the Company sells Notes to an Agent as principal and the applicable Purchase
Agreement specifies the delivery of an officers' certificate under this Section
6(b) as a condition to the purchase of Notes pursuant to such Purchase Agreement
or the Company files with the Commission any document incorporated by reference
into any Prospectus, the Company shall submit to the Agents a certificate, (i)
as of the date of such amendment, supplement, Time of Delivery relating to such
sale or filing or (ii) if such amendment, supplement or filing was not filed
during a Marketing Period, as of the first day of the next succeeding Marketing
Period, representing that the statements contained in the certificate referred
to in Section 5(f)
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hereof which was last furnished to the Agents are true and correct at the time
of such amendment, supplement or filing, as the case may be, as though made at
and as of such time (except that such statements shall be deemed to relate to
the Registration Statement and each Prospectus as amended and supplemented to
such time).
(c) Subsequent Delivery of Legal Opinions. The Company agrees that during
each Marketing Period, each time that the Registration Statement or any
Prospectus shall be amended or supplemented (other than by a Pricing Supplement
providing solely for the interest rates or maturities of the Notes or the
principal amount of Notes remaining to be sold or similar changes), each time
the Company sells Notes to an Agent as principal and the applicable Purchase
Agreement specifies the delivery of a legal opinion under this Section 6(c) as a
condition to the purchase of Notes pursuant to such Purchase Agreement or the
Company files with the Commission any document incorporated by reference into
any Prospectus, the Company shall, (i) concurrently with such amendment,
supplement, Time of Delivery relating to such sale or filing or (ii) if such
amendment, supplement or filing was not filed during a Marketing Period, on the
first day of the next succeeding Marketing Period, furnish the Agents and their
counsel with the written opinions of the General Counsel of the Company, each
addressed to the Agents and dated the date of delivery of such opinion, in form
satisfactory to the Agents, of the same effect as the opinions referred to in
Section 5(e) hereof, but modified, as necessary, to relate to the Registration
Statement and each Prospectus as amended or supplemented to the time of delivery
of such opinion; provided, however, that in lieu of such opinion, such counsel
may furnish the Agents with a letter to the effect that the Agents may rely on
such prior opinion to the same extent as though it was dated the date of such
letter authorizing reliance (except that statements in such prior opinion shall
be deemed to relate to the Registration Statement and each Prospectus as amended
or supplemented to the time of delivery of such letter authorizing reliance).
(d) Subsequent Delivery of Accountant's Letters. The Company agrees that
during each Marketing Period, each time that the Registration Statement or any
Prospectus shall be amended or supplemented to include additional financial
information, each time the Company sells Notes to an Agent as principal and the
applicable Purchase Agreement specifies the delivery of a letter under this
Section 6(d) as a condition to the purchase of Notes pursuant to such Purchase
Agreement or the Company files with the Commission any document incorporated by
reference into any Prospectus which contains additional financial information,
the Company shall cause Ernst & Young (or other independent accounts of the
Company acceptable to the Agents) to furnish the Agents, (i) concurrently with
such amendment, supplement, Time of Delivery relating to such sale or filing or
(ii) if such amendment, supplement, or filing was not filed during a Marketing
Period, on the first day of the next succeeding Marketing Period, a letter,
addressed jointly to the Company and the Agents and dated the date of delivery
of such letter, in form and substance reasonably satisfactory to the Agents, of
the same effect as the letter referred to in Section 5(g) hereof but modified to
relate to the Registration Statement and each Prospectus, as amended and
supplemented to the date of such letter, with such changes as may be necessary
to reflect changes in the financial statements and other information derived
from the accounting records of the Company; provided, however, that if the
Registration Statement or any Prospectus is amended or supplemented solely to
include financial information as of and for a fiscal quarter, such accountants
may limit the scope of such letter to the unaudited financial statements
included in such amendment or supplement unless there is contained therein any
other accounting, financial or statistical information that, in the reasonable
judgment of the Agents, should be covered by such letter, in which event such
letter shall also cover such other information.
(e) Opinion on Settlement Date. On any settlement date for the sale of
Notes, the Company shall, if requested by the Agent that solicited or received
the offer to purchase any Notes being delivered on
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such settlement date, furnish such Agent with a written opinion of the General
Counsel of the Company, dated such settlement date, in form satisfactory to such
Agent, to the effect set forth in Section 5(e) hereof, but modified, as
necessary, to relate to the Prospectus relating to the Notes to be delivered on
such settlement date; provided, however, that in lieu of such opinion, such
counsel may furnish the Agents with a letter to the effect that the Agents may
rely on such prior opinion to the same extent as though it was dated such
settlement date (except that statements in such prior opinion shall be deemed to
relate to the Registration Statement and such Prospectus as amended or
supplemented to the time of delivery of such letter authorizing reliance).
Section 7. Indemnification and Contribution
(a) Indemnification of Agents. The Company shall indemnify and hold
harmless each Agent and each person, if any, who controls any Agent within the
meaning of the Act from and against any loss, claim, damage or liability, joint
or several, and any action in respect thereof, to which such Agent or
controlling person may become subject, under the Act, the Exchange Act or other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus, or arises out of, or
is based upon, the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and shall reimburse each Agent and controlling person for any legal
and other expenses reasonably incurred by such Agent or controlling person in
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue statement or
alleged untrue statement or omission or alleged omission made in the Form T-1 or
made in the Registration Statement or the Prospectus in reliance upon and in
conformity with written information furnished to the Company by the Agents
specifically for inclusion therein; provided further, that as to any prospectus
included in the Registration Statement before it became effective under the Act
(a "Preliminary Prospectus") this indemnity agreement shall not inure to the
benefit of any Agent on account of any loss, claim, damage, liability or action
arising from the sale of Notes to any person by that Agent if that Agent failed
to send or give a copy of the Prospectus, as the same may be amended or
supplemented, to that person within the time required by the Act, and the untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact in such Preliminary Prospectus was corrected
in the Prospectus, unless such failure resulted from non-compliance by the
Company with Section 3(b). The foregoing indemnity agreement is in addition to
any liability which the Company may otherwise have to any Agent or controlling
person.
(b) Indemnification of the Company. Each Agent shall indemnify and hold
harmless the Company, each of its directors, each of its officers who signed the
Registration Statement and any person who controls the Company within the
meaning of the Act from and against any loss, claim, damage or liability, joint
or several, and any action in respect thereof, to which the Company or any such
director, officer or controlling person may become subject, under the Act, the
Exchange Act or federal or state statutory law or regulation, at common law or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus, or
arises out of, or is based upon, the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the extent that the
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity
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with written information furnished to the Company by such Agent specifically for
inclusion therein, and shall reimburse the Company or any such director, officer
or controlling person for any legal and other expenses reasonably incurred by
such indemnified party in investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action. The foregoing
indemnity agreement is in addition to any liability which any Agent may
otherwise have to the Company or any of its directors, officers or controlling
persons.
(c) Notice. Promptly after receipt by an indemnified party under this
Section of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section, notify the indemnifying party in writing
of the claim or the commencement of action; provided, however, that the failure
to notify the indemnifying party shall not relieve it from any liability which
it may have to an indemnified party otherwise than under this Section. If any
such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein, and, to the extent that it wishes, jointly with any
other similarly notified indemnifying party, to assume the defense thereof with
counsel satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Agents shall have the right to employ counsel to represent the Agents who
may be subject to liability arising out of any claim in respect of which
indemnity may be sought by the Agents against the Company under this Section if,
in the reasonable judgment of the Agents, it is advisable for the Agents to be
represented by separate counsel, and in that event the fees and expenses of such
counsel shall be paid by the Company. The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel, the indemnifying party 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 party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) Contribution. If the indemnification provided for in this Section 7
shall for any reason be unavailable to an indemnified party under Section 7(a)
or 7(b) hereof in respect of any loss, claim, damage or liability, or any action
in respect thereof, referred to therein, then each indemnifying party shall, in
lieu of indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage or
liability, or action in respect thereof, (i) in such proportion as shall be
appropriate to reflect the relative benefits received by the Company on the one
hand and any Agents on the other from the offering of the Notes 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 any Agents on the other with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable
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considerations. The relative benefits received by the Company on the one hand
and any Agents on the other with respect to such offering shall be deemed to be
in the same proportion as the total net proceeds from the offering of the Notes
(before deducting expenses) received by the Company bears to the total
commissions received by the such Agent with respect to such offering. The
relative fault shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or any Agent, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Agents agree that it would not be just and equitable if contributions
pursuant to this Section 7(d) were to be determined by pro rata allocation (even
if the Agents were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 7(d) shall be deemed to include, for
purposes of this Section 7(d), any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7(d), no Agent
shall be required to contribute any amount in excess of the amount by which the
total price at which the Notes sold through such Agent and distributed to the
public were offered to the public exceeds the amount of any damages which such
Agent has otherwise paid or become liable to pay by reason of any 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 Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
Section 8. Status of Each Agent
In soliciting offers to purchase the Notes from the Company pursuant to this
Agreement (other than in respect of any Purchase Agreement), each Agent is
acting individually and not jointly and is acting solely as agent for the
Company and not as principal. Each Agent will make reasonable efforts to assist
the Company in obtaining performance by each purchaser whose offer to purchase
Notes from the Company has been solicited by such Agent and accepted by the
Company but such Agent shall have no liability to the Company in the event any
such purchase is not consummated for any reason. If the Company shall default in
its obligations to deliver Notes to a purchaser whose offer it has accepted, the
Company shall (i) hold the Agents harmless against any loss, claim or damage
arising from or as a result of such default by the Company and (ii), in
particular, pay to the Agents any commission to which they would be entitled in
connection with such sale.
Section 9. Representations, Warranties and Obligations to Survive Delivery
The respective indemnities, agreements, representations, warranties and other
statements of the Company and the Agents contained in this Agreement, or made by
or on behalf of them, respectively, pursuant to this Agreement, shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of any Agent or any person controlling such Agent or by or on
behalf of the Company, and shall survive each delivery of and payment for any of
the Notes.
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Section 10. Termination
This Agreement may be terminated for any reason with respect to any party
hereto, at any time, by any party hereto upon the giving of one day's written
notice of such termination to the other parties hereto; provided, however, if
such terminating party is an Agent, such termination shall be effective only
with respect to such terminating party. If, at the time of a termination, an
offer to purchase any of the Notes has been accepted by the Company but the time
of delivery to the purchaser has not occurred, the provisions of this Agreement
shall remain in effect until such Notes are delivered. The provisions of
Sections 2(c), 3(d), 3(h), 3(i), 4, 7, 8 and 9 hereof shall survive any
termination of this Agreement.
Section 11. Sales of Notes Denominated in a Foreign Currency and Indexed
Notes
If at any time the Company and any of the Agents shall determine to issue and
sell Notes denominated in a currency or currency unit other than U.S. Dollars,
which other currency may include a composite currency, or with respect to which
an index is used to determine the amounts of payments of principal and any
premium or interest, the Company and any such Agent shall execute and deliver an
Amendment (a "Foreign Currency Amendment" or "Indexed Note Amendment," as the
case may be) in the form attached hereto as Exhibit D. Such amendment shall
establish, as appropriate additions and modifications that shall apply to the
sales, whether offered on an agency or principal basis, of the Notes covered
thereby. The Agents are authorized to solicit offers to purchase Notes with
respect to which an index is used to determine the amounts of payments of
principal and any premium and interest, and the Company shall agree to any sales
of such Notes (whether offered on an agency or principal basis), only in a
minimum aggregate amount of $2,500,000.
Section 12. Notices
Except as otherwise provided herein, all notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to the
Agents shall be directed to them as follows: Lehman Brothers Inc., 3 World
Financial Center, New York, New York 10285-1200, Attention: Medium Term Note
Department, 12th Floor, Telephone No.: (212) 526-2040, Telecopy No.: (212) 528-
1718; Chase Securities, Inc., MTN Origination, 1 Chase Manhattan Plaza - 35th
Floor, New York, New York 10081, Attention: Peter Todd/Tom Wilson, Telephone
No.: (212) 552-6621 or 2737, Telecopy No.: (212) 552-1594; Goldman, Sachs &
Co., MTN Desk, 85 Broad Street, New York, New York 10004, Attention: Karen
Robertson, Telephone No.: (212) 902-1482, Telecopy No.: (212) 902-6658; Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, World Financial
Center, North Tower, 10th Floor, New York, New York 10281-1310, Attention: MTN
Product Management, Telephone No.: (212) 449-7476, Telecopy No.: (212) 449-2234;
notices to the Company shall be directed to it as follows: Alco Capital
Resource, Inc., c/o Alco Standard Corporation, 825 Duportail Road, Wayne, PA
19087, Attention: Kathleen Burns, Telephone No.: (215) 296-8000, Telecopy No.:
(215) 296-8419.
-21-
<PAGE>
Section 13. Binding Effect; Benefits
This Agreement shall be binding upon each Agent, the Company, and their
respective successors. This Agreement and the terms and provisions hereof are
for the sole benefit of only those persons, except that (a) the representations,
warranties, indemnities and agreements of the Company contained in this
Agreement shall also be deemed to be for the benefit of the person or persons,
if any, who control any Agent within the meaning of Section 15 of the Act, and
(b) the indemnity agreement of the Agents contained in Section 7 hereof shall be
deemed to be for the benefit of directors of the Company, officers of the
Company who have signed the Registration Statement and any person controlling
the Company. Nothing in this Agreement is intended or shall be construed to give
any persons other than the person referred to in this Section, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision contained herein.
Section 14. Governing Law; Counterparts
This Agreement shall be governed by and construed in accordance with the laws
of the State of New York. This Agreement may be executed in counterparts and the
executed counterparts shall together constitute a single instrument.
Section 15. Paragraph Headings
The paragraph headings used in this Distribution Agreement are for
convenience of reference only, and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
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<PAGE>
If the foregoing correctly sets forth our agreement, please indicate your
acceptance hereof in the space provided for that purpose below.
Very truly yours,
ALCO CAPITAL RESOURCE, INC.
By: [unreadable signature appears here]
-------------------------------
Authorized Signatory
CONFIRMED AND ACCEPTED
as of the date first above written:
LEHMAN BROTHERS INC.
By: /s/ Herbert McDade
------------------------------
Authorized Signatory
Name: Herbert McDade
Title: Managing Director
CHASE SECURITIES, INC.
By: /s/ Irwin Rogers
------------------------------
GOLDMAN, SACHS & CO.
By: /s/ Goldman Sachs & Co.
------------------------------
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Scott G. Primrose
------------------------------
Scott G. Primrose
Authorized Signatory
-23-
<PAGE>
Exhibit A
ALCO CAPITAL RESOURCE, INC.
Medium-Term Notes, Series A
SCHEDULE OF PAYMENTS
The Company agrees to pay each Agent a commission equal to the following
percentage of the aggregate U.S. dollar equivalent of the principal amount of
Notes sold by it:
<TABLE>
<CAPTION>
================================================================
Term Commission Rate
<S> <C>
================================================================
9 months to less than 12 months .125%
12 months to less than 18 months .150%
18 months to less than 2 years .200%
2 years to less than 3 years .250%
3 years to less than 4 years .350%
4 years to less than 5 years .450%
5 years to less than 6 years .500%
6 years to less than 7 years .550%
7 years to less than 10 years .600%
10 years to less than 15 years .625%
15 years to less than 20 years .650%
20 years to 30 years .750%
More than 30 years Determined at time of issue
===============================================================
</TABLE>
<PAGE>
Exhibit B
ALCO CAPITAL RESOURCE, INC.
Medium-Term Notes, Series A
Administrative Procedures
Medium-Term Notes, Series A, with maturities of nine months or more from date
of issue (the "Notes") are to be offered on a continuing basis by Alco Capital
Resource, Inc. (the "Company"). Lehman Brothers Inc., Goldman, Sachs & Co.,
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Chase Securities, Inc., as agents (each an "Agent" and collectively, the
"Agents", which shall include Lehman Special Securities Inc., an affiliate of
Lehman Brothers Inc.), have each agreed to use their reasonable best efforts to
solicit offers to purchase the Notes. The Notes are being sold pursuant to a
Distribution Agreement between the Company and the Agents dated July 1, 1994 (as
it may be supplemented or amended from time to time, the "Distribution
Agreement") to which these administrative procedures are attached as an exhibit.
The Notes will be issued under the Company's Indenture, dated as of June 15,
1994 between the Company and NationsBank of Georgia, National Association, as
trustee (the "Trustee"), as heretofore supplemented. The Notes will rank equally
with all other unsecured and unsubordinated indebtedness of the Company and will
have been registered with the Securities and Exchange Commission (the
"Commission"). Terms defined in the Prospectus relating to the Notes (the
"Prospectus," which term shall include any Prospectus Supplement relating to the
Notes and any Pricing Supplement relating to an applicable Note) and in the
Distribution Agreement shall have the same meaning when used in this exhibit.
The Notes will be issued either (a) in certificated form (each, a
"Certificated Note") delivered to the purchaser thereof or a person designated
by such purchaser or (b) in book-entry form (each, a "Book-Entry Note")
represented by one or more fully registered global Notes (each, a "Global
Security") delivered to the Trustee, as agent for The Depository Trust Company
("DTC"), and recorded in the book-entry system maintained by DTC. Owners of
beneficial interests in Book-Entry Notes will be entitled to physical delivery
of Certificated Notes equal in principal amount to their respective beneficial
interests only in certain limited circumstances described in the Prospectus.
General procedures relating to the issuance of all Notes are set forth in
Part I hereof. Certificated Notes will be issued in accordance with the
procedures set forth in Part II, as supplemented, in the case of Certificated
Notes denominated other than in U.S. dollars ("Multi-Currency Notes"), by Part
III. Book-Entry Notes will be issued in accordance with the procedures set forth
in Part IV.
Administrative responsibilities, document control and record-keeping
functions to be performed by the Company will be performed by its Treasurer.
Administrative procedures for the offering are explained below.
PART I: Procedures of General Applicability
Price to Public
Each Note will be issued at 100% of principal amount, unless otherwise
determined by the Company.
<PAGE>
Date of Issuance
Each Note will be dated and issued as of the date of its authentication by
the Trustee.
Maturities
Each Note will mature on a day at least nine months or more from the date of
issuance selected by the purchaser and agreed upon by the Company. Each Floating
Rate Note (as defined below) will mature on an Interest Payment Date (as defined
below).
Registration
Notes will be issued only in fully registered form as either a Book-Entry
Note or a Certificated Note.
Interest Payments
Each Note bearing interest at a fixed rate (a "Fixed Rate Note") will bear
interest from its issue date at the annual rate stated on the face thereof,
payable in the case of Fixed Rate Notes other than Amortizing Notes, unless
otherwise specified in an applicable Pricing Supplement, on June 15 and December
15 of each year (each an "Interest Payment Date" with respect to such Fixed Rate
Note) and at Stated Maturity or upon redemption, if applicable.
Special provisions are set forth in the Prospectus relating to Notes bearing
interest at a rate or rates determined by reference to an interest rate formula
("Formula Rate Notes") at a rate determined pursuant to the formula stated on
the face thereof, payable in arrears on such dates as are specified therein
(each an "Interest Payment Date" with respect to such Floating Rate Note).
Unless otherwise specified in an applicable Pricing Supplement, interest on
Fixed Rate Notes will be calculated and paid on the basis of a 360-day year of
twelve 30-day months. Unless otherwise specified in an applicable Pricing
Supplement, interest will be payable to the person in whose name such Note is
registered at the close of business on May 31 or November 30 (whether or not a
Business Day) with respect to Fixed Rate Notes other than Amortizing Notes (as
hereinafter defined) or the fifteenth day (whether or not a Business Day) next
preceding an Interest Payment Date with respect to Floating Rate Notes (the
"Record Dates"); provided, however, that interest payable at Stated Maturity
will be payable to the person to whom principal shall be payable. Payments of
principal and interest on Notes for which payments of principal and interest are
made in equal installments over the life of the security ("Amortizing Notes")
will be made either quarterly on each February 1, May 1, August 1 and November 1
or semiannually on each May 1 and November 1 as set forth in the applicable
Pricing Supplement, and at maturity or upon earlier redemption or repayment.
Payments with respect to Amortizing Notes will be applied first to interest due
and payable thereon and then to the reduction of the unpaid principal amount
thereof. A table setting forth repayment information in respect of each
Amortizing Note will be provided to the original purchaser and will be
available, upon request, to subsequent Holders. Any payment of principal and
interest on any such Note required to be paid on an Interest Payment Date or at
Stated Maturity or upon redemption, if applicable, which is not a Business
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<PAGE>
Day shall be postponed to the next day which is a Business Day. The first
payment of interest on any Note originally issued between a Record Date and an
Interest Payment Date will be made on the Interest Payment Date following the
next succeeding Record Date. All interest payments (and, in the case of
Amortizing Notes, principal payments) excluding interest payments and, in the
case of Amortizing Notes, principal payments made at Stated Maturity or upon
redemption, if applicable, will be made by check mailed to the person entitled
thereto as provided above, 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, the holder of $10 million or more in aggregate
principal amount of Notes of like tenor and terms with the same Interest Payment
Date may request payment by wire transfers.
On the fifth Business Day immediately preceding each Interest Payment Date,
the Trustee will furnish the Company with the total amount of the interest
payments and, in the case of Amortizing Notes, principal payments, to be made on
such Interest Payment Date. The Trustee (or any duly selected paying agent) will
provide monthly to the Company's Treasury Department a list of the principal and
interest to be paid on Notes maturing in the next succeeding month. The Company
will provide to the Trustee not later than the payment date sufficient moneys to
pay in full all principal and interest payments due on such payment date. The
Trustee will assume responsibility for withholding taxes on interest paid as
required by law.
Acceptance and Rejection of Offers
The Company shall have the sole right to accept offers to purchase Notes and
may reject any such offer in whole or in part. Each Agent shall promptly
communicate to the Company, orally or in writing, each reasonable offer to
purchase Notes from the Company received by it other than those rejected by such
Agent. Each Agent shall have the right, in its discretion reasonably exercised
without advising the Company, to reject any offers in whole or in part.
Settlement
The receipt of immediately available funds in U.S. dollars by the Company in
payment for a Note (less the applicable commission) and the authentication and
issuance of such Note shall, with respect to such Note, constitute "Settlement."
All offers accepted by the Company will be settled from one to five Business
Days from the date of acceptance by the Company pursuant to the timetable for
Settlement set forth below unless the Company and the purchaser agree to
Settlement on a later date; provided, however, that the Company will so notify
the Trustee of any such later date on or before the Business Day immediately
prior to the Settlement date.
Procedures for Establishing the Terms of the Notes
The Company and the Agents will discuss from time to time the rates to be
borne by the Notes that may be sold as a result of the solicitation of offers by
the Agents. Once any Agent has recorded any indication of interest in Notes upon
certain terms, and communicated with the Company, if the Company accepts an
offer to purchase Notes upon such terms, it will prepare a Pricing Supplement in
the form previously approved by the Agents, reflecting the terms of such Notes
and, after approval from the Presenting Agent, will arrange to have 10 copies of
such Pricing Supplement (together with the
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<PAGE>
Prospectus, if amended or supplemented) filed with the Commission and will
supply an appropriate number of copies of the Prospectus, as then amended or
supplemented, together with such Pricing Supplement, to the Presenting Agent.
See "Delivery of Prospectus." No settlements with respect to Notes upon such
terms may occur prior to such filing and the Presenting Agent will not, prior to
such filing, mail confirmations to customers who have offered to purchase Notes
upon such terms. After such filing, sales, mailing of confirmations and
settlements may occur with respect to Notes upon such terms, subject to the
provisions of "Delivery of Prospectus" below.
If the Company decides to post rates and a decision has been reached to
change interest rates, the Company will promptly notify each Agent. Each Agent
will forthwith suspend solicitation of purchases. At that time, the Agents will
recommend and the Company will establish rates to be so "posted." Following
establishment of posted rates and prior to the filing described in the following
sentence, the Agents may only record indications of interest in purchasing Notes
at the posted rates. Once any Agent has recorded any indication of interest in
Notes at the posted rates and communicated with the Company, if the Company
accepts an offer at the posted rate, it will prepare a Pricing Supplement
reflecting such posted rates and, after approval from the Presenting Agent, will
arrange to have 10 copies of such Pricing Supplement (together with the
Prospectus if amended or supplemented) filed with the Commission and will supply
an appropriate number of copies of the Prospectus, as then amended or
supplemented, to the Presenting Agent. See "Delivery of Prospectus." No
settlements at the posted rates may occur prior to such filing and the
Presenting Agent will not, prior to such filing, mail confirmations to customers
who have offered to purchase Notes at the posted rates. After such filing,
sales, mailing of confirmations and settlements may resume, subject to the
provisions of "Delivery of Prospectus" below.
Suspension of Solicitation; Amendment or Supplement
In the event that at the time the Agents, at the direction of the Company,
suspend solicitation of offers to purchase from the Company there shall be any
orders outstanding which have not been settled, the Company will promptly advise
the Agents and the Trustee whether such orders may be settled and whether copies
of the Prospectus as theretofore amended and/or supplemented as in effect at the
time of the suspension may be delivered in connection with the settlement of
such orders. The Company will have the sole responsibility for such decision and
for any arrangements which may be made in the event that the Company determines
that such orders may not be settled or that copies of such Prospectus may not be
so delivered.
Delivery of Prospectus
A copy of the Prospectus as most recently amended or supplemented on the date
of delivery thereof, together with the applicable Pricing Supplement, must be
delivered to a purchaser prior to or together with the earlier of the delivery
by the Agents of (i) the written confirmation of a sale sent to a purchaser or
his agent and (ii) any Note purchased by such purchaser. The Company shall
ensure that the Presenting Agent receives copies of the Prospectus and each
amendment or supplement thereto (including the applicable Pricing Supplement) in
such quantities and within such time limits as will enable the Presenting Agent
to deliver such confirmation or Note to a purchaser as contemplated by these
procedures and in compliance with the preceding sentence. Copies of Pricing
Supplements should be delivered by 11:00 A.M. on the Business Day following the
applicable trade date by telecopy to (i) Lehman Brothers Inc., c/o Smith Barney
Shearson Inc., Prospectus Delivery Department, 140 58th Street, Brooklyn, NY
11220,
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<PAGE>
Attention: Andrea Springer, Telecopy: (718) 921-8472 and by hand to Lehman
Brothers Inc., 3 World Financial Center, 9th Floor, New York, NY 10285-0900,
Attention: Brunnie Vazquez, Telephone: (212) 526-8400; (ii) Chase Securities,
Inc., One Chase Manhattan Plaza, 35th Floor, New York, New York 10081,
Attention: MTN Desk/Peter Todd, Telephone No.: (212) 552-7597, Telecopy No.:
(212) 552-1594; (iii) Goldman, Sachs & Co., MTN Desk, 85 Broad Street, New York,
New York 10004, Attention: Karen Robertson, Telephone No.: (212) 902-1482,
Telecopy No.: (212) 902-6658; or (iv) Merrill Lynch & Co. - Tritech Services, 4
Corporate Place, Corporate Park 287, Piscataway, New Jersey 08854; Attention:
Final Prospectus Unit/Nachman Kimerling, Telephone No.: (908) 878-6525/26/27,
Telecopy No.: (908) 878-6530; also, for record keeping purposes, send a copy to:
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith, Incorporated,
Merrill Lynch World Headquarters, World Financial Center, North Tower 10th
Floor, 250 Vesey Street, New York, New York 10281-1310, Attention: MTN Product
Management. If, since the date of acceptance of a purchaser's offer, the
Prospectus shall have been supplemented solely to reflect any sale of Notes on
terms different from those agreed to between the Company and such purchaser or a
change in posted rates not applicable to such purchaser, such purchaser shall
not receive the Prospectus as supplemented by such new supplement, but shall
receive the Prospectus as supplemented to reflect the terms of the Notes being
purchased by such purchaser and otherwise as most recently amended or
supplemented on the date of delivery of the Prospectus. The Company will make
all such deliveries with respect to all Notes sold directly by the Company.
Redemption and Repayment
Unless one or more Redemption Dates are specified in the applicable Pricing
Supplement, the Notes will not be redeemable prior to their Stated Maturity. If
one or more Redemption Dates are so specified with respect to any Note, the
applicable Pricing Supplement will also specify one or more redemption prices
(expressed as a percentage of the principal amount of such Note) ("Redemption
Prices") and the redemption period or periods ("Redemption Periods") during
which such Redemption Prices shall apply. Unless otherwise specified in the
Pricing Supplement, any such Note shall be redeemable at the option of the
Company at the specified Redemption Price applicable to the Redemption Period
during which such Note is to be redeemed, together with interest accrued to the
Redemption Date. Unless otherwise specified in the applicable Pricing
Supplement, the Notes will not be subject to any sinking fund. The Company may
redeem any of the Notes that are redeemable and remain outstanding either in
whole or from time to time in part, upon not less than 30 nor more than 60 days'
notice. In the event of a redemption in part of any Note, a new Note for the
amount of the unredeemed portion shall be issued in the name of the Holder upon
cancellation of the redeemed Note.
The Pricing Supplement relating to each Note will indicate either that such
Note cannot be repaid prior to Stated Maturity or that such Note will be
repayable at the option of the holder on a date or dates specified prior to
Stated Maturity at a price or prices set forth in the applicable Pricing
Supplement, together with accrued interest to the date of repayment.
In order for a Note that is subject to repayment at the option of the Holder
to be repaid, the Paying Agent must receive at least 30 days but not more than
45 days prior to the repayment date (a) appropriate wire instructions and (b)
either (i) the Note with the form entitled "Option to Elect Repayment" attached
to the Note 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 trust company in
the United States setting forth the name of the Holder of the Note, the
principal
B-5
<PAGE>
amount of the Note, the portion of the principal amount of the Notes to be
repaid, the certificate number or a description of the tenor and terms of the
Note, a statement that the option to elect repayment is being exercised thereby
and a guarantee that the Note to be repaid with the form entitled "Option to
Elect Repayment" attached to the Note 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 such Note and form duly completed
must be received by the Paying Agent by such fifth Business Day. Exercise of the
repayment option by the Holder of a Note shall be irrevocable, except as
otherwise described under "Interest Rate Reset" and "Extension of Maturity" in
the Prospectus Supplement. The repayment option may be exercised by the Holder
of a Note for less than the entire principal amount of the Note provided that
the principal amount of the Note remaining outstanding after repayment is an
authorized denomination. No transfer or exchange of any Note (or, in the event
that any Note is to be repaid in part, the portion of the Note to be repaid)
will be permitted after exercise of a repayment option. All questions as to the
validity, eligibility (including time of receipt) and acceptance of any Note for
repayment will be determined by the Company, whose determination will be final,
binding and non-appealable.
If a Note is represented by a Global Security, the Depositary's nominee will
be the Holder of such Note and therefore will be the only entity that can
exercise a right to repayment. In order to ensure that the Depositary's nominee
will timely exercise a right to repayment with respect to a particular Note, the
beneficial owner of such Note must instruct the broker or other direct or
indirect participant through which it holds an interest in such Note to notify
the Depositary of its desire to exercise a right to repayment. Different firms
have different cut-off times for accepting instructions from their customers
and, accordingly, each beneficial owner should consult the broker or other
direct or indirect participant through which it holds an interest in a Note in
order to ascertain the cut-off time by which such an instruction must be given
in order for timely notice to be delivered to the Depositary.
Unless otherwise specified in the applicable Pricing Supplement, if a Note is
an Original Issue Discount Note, the amount payable on such Note in the event of
redemption or repayment prior to its Stated Maturity shall be the Amortized Face
Amount of such Note, as specified in the applicable Pricing Supplement, as of
the Redemption Date or the date of repayment, as the case may be.
Authenticity of Signatures
The Company will cause the Trustee to furnish the Agents from time to time
with the specimen signatures of each of the Trustee's officers, employees and
agents who have been authorized by the Trustee to authenticate Notes, but the
Agents will have no obligation or liability to the Company or the Trustee in
respect of the authenticity of the signature of any officer, employee or agent
of the Company or the Trustee on any Note.
Advertising Costs
The Company will determine with the Agents the amount and nature of
advertising that may be appropriate in offering the Notes. Advertising expenses
incurred with the consent of the Company will be paid by the Company.
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<PAGE>
Business Day
"Business Day" shall mean, with respect to any particular location, each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in such location are authorized or required by law,
regulation or executive order to close.
PART II: Procedures For Certificated Notes
Currency
Certificated Notes will be denominated in U.S. dollars or in one or more
foreign currencies or foreign currency units, as specified in the applicable
Pricing Supplement For special procedures relating to Multi-Currency Notes, see
Part III hereof.
Registration
Certificated Notes may be presented for registration of transfer or exchange
at the Trustee's drop facility in The City of New York.
Denominations
Except as provided in the applicable Pricing Supplement, Certificated Notes
will be issued and payable in U.S. dollars in the denomination of $1,000 and any
larger denomination which is an integral multiple of $1,000.
Maturity
Upon presentation of each Certificated Note at Maturity the Trustee (or any
duly appointed Paying Agent) will pay the principal amount thereof, together
with accrued interest due at maturity. Such payment shall be made in immediately
available funds in U.S. dollars, provided that the Certificated Note is
presented to the Trustee (or any such Paying Agent) in time for the Trustee (or
such Paying Agent) to make payments in such funds in accordance with its normal
procedures. The Company will provide the Trustee (and any such Paying Agent)
with funds available for immediate use for such purpose. Certificated Notes
presented at Maturity will be cancelled by the Trustee as provided in the
Indenture.
Settlement Procedures
In the event of a purchase of Certificated Notes by an Agent, as principal,
appropriate Settlement details will be as set forth below unless such details
are set forth in the applicable Purchase Agreement to be entered into between
such Agent and the Company pursuant to the Distribution Agreement.
In the event of the sale of a Certified Note that is a Multi-Currency Note or
an Indexed Note, whether the sale is through an Agent or to an Agent, as
principal, additional or different Settlement
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<PAGE>
details may be set forth in an amendment to these administrative procedures to
be entered into between such Agent and the Company.
Other than as contemplated above, settlement procedures with regard to each
Certificated Note sold through each Agent shall be as follows:
A. Such Agent (the "Presenting Agent") will advise the Company by telephone,
telex or facsimile, of the following Settlement information:
1. Exact name in which the Note is to be registered ("Registered Owner").
2. Exact address of the Registered Owner and address for payment of
principal and interest, if any.
3. Taxpayer identification number of the Registered Owner.
4. Principal amount of the Note (and, if multiple Notes are to be issued,
denominations thereof).
5. Settlement date.
6. Stated Maturity and, if the Company has the option to extend the
Stated Maturity, the Extension Periods and the Final Maturity Date.
7. Issue Price and any OID information.
8. Trade Date/Original Issue Date.
9. If such Note is a Fixed Rate Note, whether such Note is an Amortizing
Note.
10. Interest rate (including, if appropriate, such interest rate
information applicable to any Extension Period):
(a) Fixed Rate Certificated Notes:
(i) interest rate
(ii) interest payment dates, if other than as specified above
(iii) date or dates, if any, on which the interest rate may be
reset and the basis or formula, if any, for such resetting
(iv) overdue rate, if any
(b) Floating Rate Certificated Notes:
(i) interest rate basis
(ii) initial interest rate
(iii) spread or spread multiplier, if any
(iv) date or dates, if any, on which the spread or spread
multiplier may be reset and the basis or formula, if any, for
such resetting
B-8
<PAGE>
(v) interest rate reset periods
(vi) interest payment dates
(vii) index maturity
(viii) maximum and minimum interest rates, if any
(ix) record dates
(x) interest determination dates
(xi) overdue rate, if any
11. The date on or after which the Certificated Notes are redeemable at
the option of the Company or are to be repaid at the option of the
Holder, and additional redemption or repurchase provisions, if any.
12. Wire transfer information.
13. Presenting Agent's commission (to be paid in the form of a discount
from the proceeds remitted to the Company upon Settlement).
14. That the Note will be a Certificated Note.
B. The Company will confirm the above Settlement information to the Trustee
by telephone, telex or facsimile, and the Trustee will assign a Note number to
the transaction. If the Company rejects an offer, the Company will promptly
notify the Presenting Agent and the Trustee by telephone.
C. The Trustee will complete the first page of the preprinted 4-ply
Certificated Note packet, the form of which was previously approved by the
Company, the Agents and the Trustee.
D. The Trustee will deliver the Certificated Note (with the attached white
confirmation) and the yellow and blue stubs to the Presenting Agent at one of
the following addresses: (i) Lehman Brothers Government Securities Inc., One
Battery Park Plaza, 2nd Floor, New York, New York 10004, Attn: Eddie Steffens;
(ii) Chase Securities, Inc., One Chase Manhattan Plaza, Level 4B, Window II, New
York, New York 10081, Attention: Sean Martin; (iii) Goldman, Sachs & Co., 85
Broad Street, 6th Floor, New York, New York, 10004, Attention: Edward Bissoth;
or Merrill Lynch, Pierce, Fenner & Smith Incorporated, Money Market Clearance -
MTNs, 75 Barclay Street, Window C, New York, New York 10080, Attention: Kevin
Brennan. The Presenting Agent will acknowledge receipt of the Certificated Note
by completing the yellow stub and returning it to the Trustee.
E. The Presenting Agent will cause to be wire transferred to a bank account
designated by the Company immediately available funds in U.S. dollars in the
amount of the principal amount of the Certificated Note, less the applicable
commission or discount, if any.
F. The Presenting Agent will deliver the Certificated Note (with the white
confirmation) to the purchaser against payment in immediately available funds in
the amount of the principal amount of the Certificated Note. The Presenting
Agent will deliver to the purchaser a copy of the most recent Prospectus
applicable to the Certificated Note with or prior to any written offer of
Certificated Notes, delivery of the Certificated Note and the confirmation and
payment by the purchaser for the Certificated Note.
B-9
<PAGE>
G. The Presenting Agent will obtain the acknowledgment of receipt for the
Certificated Note and Prospectus by the purchaser through the purchaser's
completion of the blue stub.
H. The Trustee will mail the pink stub to the Company's Treasurer.
Settlement Procedures Table
For offers to purchase Certificated Notes accepted by the Company, Settlement
procedures "A" through "H" set forth above shall be completed on or before the
respective times set forth below:
<TABLE>
<CAPTION>
================================================================
Settlement
Procedure Time (New York)
================================================================
<S> <C>
A 5 PM on the Trade Date
B 3 PM on the Business Day prior to Settlement Date
C-D 12 Noon on the Settlement Date
E 2:15 PM on the Settlement Date
F-G 3 PM on the Settlement Date
H 5 PM on the Business Day after the Settlement Date
================================================================
</TABLE>
Fails
In the event that a purchaser of a Certificated Note shall either fail to
accept delivery of or make payment for such Certificated Note on the date fixed
by the Company for Settlement, the Presenting Agent will immediately notify the
Trustee and the Company's Treasurer by telephone, confirmed in writing, of such
failure and return the Certificated Note to the Trustee. Upon the Trustee's
receipt of the Certificated Note from the Presenting Agent, the Company will
promptly return to the Presenting Agent an amount of immediately available funds
in U.S. dollars equal to any amount previously transferred to the Company in
respect of the Certificated Note pursuant to advances made by the Agent. Such
returns will be made on the Settlement Date, if possible, and in any event not
later than 12 noon (New York City time) on the Business Day following the
Settlement Date. The Company will reimburse the Presenting Agent on an equitable
basis for its loss of the use of the funds during the period when the funds were
credited to the account of the Company. Upon receipt of the Certificated Note in
respect of which the default occurred, the Trustee will mark the Certificated
Note "cancelled," make appropriate entries in its records and deliver the
Certificated Note to the Company with an appropriate debit advice. The
Presenting Agent will not be entitled to any commission with respect to any
Certificated Note which the purchaser does not accept or make payment for.
B-10
<PAGE>
PART III: Special Administrative Procedures For
Multi-Currency Notes
Unless otherwise set forth in an applicable Foreign Currency Amendment, the
following procedures and terms shall apply to Multi-Currency Notes in addition
to, and to the extent inconsistent therewith in replacement of, the procedures
and terms set forth above.
Denominations
The authorized denominations of any Multi-Currency Note will be the amount of
the Specified Currency for such Multi-Currency Note equivalent, at the noon
buying rate in the City of New York for cable transfers for such Specified
Currency (the "Market Exchange Rate") on the first Business Day in the City of
New York and the country issuing such currency (or, in the case of ECUs,
Brussels) next preceding the date on which the Company accepts the offer to
purchase such Multi-Currency Note, to U.S. $1,000 (rounded down to an integral
multiple of 10,000 units of such Specified Currency) and any greater amount that
is an integral multiple of 10,000 units of such Specified Currency.
Currencies
Unless otherwise specified in the applicable Pricing Supplement, payments of
principal of (and premium, if any) and interest on all Multi-Currency Notes will
be made in the applicable Specified Currency, provided, however, that payments
of principal of (and premium, if any) and interest on Multi-Currency Notes
denominated in other than U.S. dollars will nevertheless be made in U.S. dollars
(i) at the option of the Holders thereof under the procedures described below
and (ii) at the option of the Company in the case of imposition of exchange
controls or other circumstances beyond the control of the Company as described
below.
Payment of Principal and Interest
If so specified in the applicable Pricing Supplement, except as provided in
the next paragraph, payments of interest and principal (and premium, if any)
with respect to any Multi-Currency Note will be made in U.S. dollars if the
Holder of such Note on the relevant Regular Record Date or at Maturity, as the
case may be, has transmitted a written request for such payment in U.S. dollars
to the Trustee at its Corporate Trust Office on or prior to such Regular Record
Date or the date 15 days prior to Maturity, as the case may be. Such request may
be in writing (mailed or hand delivered) or by cable, telex or other form of
facsimile transmission. Any such request made with respect to any Multi-Currency
Note by a Holder will remain in effect with respect to any further payments of
interest and principal (and premium, if any) with respect to such Multi-Currency
Note payable to such Holder, unless such request is revoked on or prior to the
relevant Regular Record Date or the date 15 days prior to Maturity, as the case
may be. Holders of Multi-Currency Notes denominated in other than U.S. dollars
whose Notes are registered in the name of a broker or nominee should contact
such broker or nominee to determine whether and how an election to receive
payments in U.S. dollars may be made.
The U.S. dollar amount to be received by a Holder of a Multi-Currency Note
who elects to receive payments in U.S. dollars will be based on the highest bid
quotation in The City of New York received
B-11
<PAGE>
by the Currency Determination Agent (as defined below) as of noon New York City
time on the third Business Day next preceding the applicable payment date from
three recognized foreign exchange dealers (one of which may be the Currency
Determination Agent) for the purchase by the quoting dealer of the Specified
Currency for U.S. dollars for settlement on such payment date in the aggregate
amount of the Specified Currency payable to all Holders of Multi-Currency Notes
electing to receive U.S. dollar payments and at which the applicable dealer
commits to execute a contract. If three such bid quotations are not available on
the third Business Day preceding the date of payment of principal (and premium,
if any) or interest with respect to any such Multi-Currency Note, such payment
will be made in the Specified Currency. All currency exchange costs associated
with any payment in U.S. dollars on any such Multi-Currency Note will be borne
by the Holder thereof by deductions from such payment. Unless otherwise provided
in the applicable Pricing Supplement, Lehman Brothers Inc. will be the Currency
Determination Agent (the "Currency Determination Agent") with respect to the
Multi-Currency Notes.
Payment Currency
If the principal of (and premium, if any) or interest on any Multi-Currency
Note is payable in any currency other than U.S. dollars and such Specified
Currency is not available due to the imposition of exchange controls or other
circumstances beyond the control of the Company, the Company will be entitled to
satisfy its obligations to Holders of the Multi-Currency Notes by making such
payment in U.S. dollars on the basis of the Market Exchange Rate on the last
date such Specified Currency was available (the "Conversion Date"). Any payment
made under such circumstances in U.S. dollars where the required payment is in
other than U.S.dollars will not constitute an Event of Default under the
Indenture.
If payment in respect of a Note is required to be made in any currency unit
(e.g., ECU) and such currency unit is unavailable due to the imposition of
exchange controls or other circumstances beyond the Company's control, then all
payments in respect of such Multi-Currency Note shall be made in U.S. dollars
until such currency unit is again available. The amount of each payment in U.S.
dollars shall be computed on the basis of the equivalent of the currency unit in
U.S. dollars, which shall be determined by the Company or its agent on the
following basis. The component currencies of the currency unit for this purpose
(the "Component Currencies") shall be the currency amounts that were components
of the currency unit as of the Conversion Date for such currency unit. The
equivalent of the currency unit in U.S. dollars shall be calculated by
aggregating the U.S. dollar equivalents of the Component Currencies. The U.S.
dollar equivalent of each of the Component Currencies shall be determined by the
Company or such agent on the basis of the Market Exchange Rate for each such
Component Currency that is available as of the third Business Day prior to the
date on which the relevant payment is due and for each such Component Currency
that is unavailable, if any, as of the Conversion Date for such Component
Currency.
If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of that currency as a Component
Currency shall be divided or multiplied in the same proportion, if two or more
Component Currencies are consolidated into a single currency, the amounts of
those currencies as Component Currencies shall be replaced by an amount in such
single currency equal to the sum of the amounts of the consolidated Component
Currencies expressed in such single currency. If any Component Currency is
divided into two or more currencies, the amount of the original Component
Currency shall be replaced by the amounts of such two or more currencies, the
sum of which shall be equal to the amount of the original Component Currency.
B-12
<PAGE>
Outstanding Multi-Currency Notes
For purposes of calculating the principal amount of any Multi-Currency Note
for any purpose under the Indenture, the principal amount of such Multi-Currency
Note at any time Outstanding shall be deemed to be the U.S. dollar equivalent at
the Market Exchange Rate, determined as of the date of the original issuance of
such Multi-Currency Note, of the principal amount of such Multi-Currency Note.
Details for Settlement of Multi-Currency Notes
In addition to the Settlement information specified in "Settlement
Procedures" above, the Presenting Agent shall communicate to the Company in the
manner set forth in "Settlement Procedures" the following information:
1. Specified Currency
2. Denominations
3. Wire transfer and overseas bank account information (if holder has elected
payment in a Specified Currency).
Whether the sale is through an Agent or to the Agent, as principal,
additional or different Settlement details may be set forth in an amendment to
these administrative procedures to be agreed to by the Agent and the Company.
PART IV: Special Administrative Procedures for Book-Entry Notes
In connection with the qualification of the Book-Entry Notes for eligibility
in the book-entry system maintained by DTC, the Trustee will perform or cause to
be performed the custodial, document control and administrative functions
described below, in accordance with its respective obligations under a Letter of
Representations from the Company and the Trustee to DTC and a Medium-Term Note
Certificate Agreement previously entered into between the Trustee and DTC, and
its obligations as a participant in DTC, including DTC's Same-Day Funds
Settlement System ("SDFS"). Except as otherwise set forth in this Exhibit B,
Book-Entry Notes will be issued in accordance with the administrative procedures
set forth below.
Issuance
On any date of settlement (as defined under "Settlement" below) for one or
more Fixed Rate Book-Entry Notes, the Company will issue a single Global
Security in fully registered form without coupons representing up to
$150,000,000 principal amount, or the equivalent thereof in any Specified
Currency, other than U.S. dollars, at the Market Exchange Rate used to determine
the denomination of such Book-Entry Note as described below (rounded down to an
integral multiple of 10,000 units of such Specified Currency), of all of such
Notes that have the same original issuance date, interest rate, redemption or
repayment provisions and Stated Maturity. Similarly, on any settlement date for
one or more Floating Rate Book-Entry Notes, the Company will issue a single
Global Security representing up to $150,000,000 principal amount, or the
equivalent thereof in any Specified Currency, other than U.S. dollars, at the
Market Exchange Rate used to determine the denomination of such Book-Entry Note
as described below
B-13
<PAGE>
(rounded down to an integral multiple of 10,000 units of such Specified
Currency), of all of such Notes that have the same interest rate formula,
original issuance date, Initial Interest Rate, Interest Payment Dates, Index
Maturity, Spread, Spread Multiplier, minimum interest rate (if any), maximum
interest rate (if any), redemption or repayment provisions and Stated Maturity.
Each Global Security will be dated and issued as of the date of its
authentication by the Trustee. Each Global Security will have an interest
accrual date (the "Interest Accrual Date"), which will be (i) with respect to an
original Global Security (or any portion thereof), its original issuance date
and (ii) with respect to any Global Security (or portion thereof) issued
subsequently upon exchange of a Global Security or in lieu of a destroyed, lost
or stolen Global Security, the most recent Interest Payment Date to which
interest has been paid or duly provided for on the predecessor Global Security
or Securities (or if no such payment or provision has been made, the original
issuance date of the predecessor Global Security), regardless of the date of
authentication of such subsequently issued Global Security. No Global Security
will represent (i) both Fixed Rate and Floating Rate Book-Entry Notes or (ii)
any Certificated Note.
Identification Numbers
The Company will arrange, on or prior to commencement of a program for the
offering of Book-Entry Notes,with the CUSIP Service Bureau of Standard & Poor's
Corporation (the "CUSIP Service Bureau") for the reservation of a series of
CUSIP numbers (including tranche numbers), consisting of approximately 900 CUSIP
numbers and relating to Global Securities representing the Book-Entry Notes. The
Company will obtain a written list of such series of reserved CUSIP numbers and
will deliver to the Trustee and DTC such written list of 900 CUSIP numbers of
such series. The Company will assign CUSIP numbers to Global Securities as
described below under Settlement Procedure "B." DTC will notify the CUSIP
Service Bureau periodically of the CUSIP numbers that the Company has assigned
to Global Securities. When fewer than 100 of the reserved CUSIP numbers remain
unassigned to Global Securities, and if it deems necessary, the Company will
reserve additional CUSIP numbers for assignment to Global Securities
representing Book-Entry Notes. Upon obtaining such additional CUSIP numbers the
Company shall deliver such additional CUSIP numbers to the Trustee and DTC.
Registration
Each Global Security will be registered in the name of Cede & Co., as nominee
for DTC, on the Securities Register maintained under the Indenture governing
such Global Security. The beneficial owner of a Book-Entry Note (or one or more
indirect participants in DTC designated by such owner) will designate one or
more participants in DTC with respect to such Book-Entry Note (the
"Participants") to act as agent or agents for such owner in connection with the
book-entry system maintained by DTC, and DTC will record in book-entry form, in
accordance with instructions provided by such Participants, a credit balance
with respect to such Book-Entry Note in the account of such Participants. The
ownership interest of such beneficial owner in such Book-Entry Note will be
recorded through the records of such Participants or through the separate
records of such Participants and one or more indirect participants in DTC.
B-14
<PAGE>
Voting
In the event of any solicitation of consents from or voting by holders of the
Book-Entry Notes, the Company or the Trustee shall establish a record date for
such purposes (with no provision for revocation of consents or votes by
subsequent holders) and shall, to the extent possible, send notice of such
record date to DTC not less than 15 calendar days in advance of such record
date.
Transfers
Transfers of a Book-Entry Note will be accomplished by book entries made by
DTC and, in turn, by Participants (and in certain cases, one or more indirect
participants in DTC ) acting on behalf of beneficial transferors and transferees
of such Book-Entry Note.
Consolidation and Exchange
The Trustee may deliver to DTC and the CUSIP Service Bureau at any time a
written notice of consolidation specifying (i) the CUSIP numbers of two or more
Outstanding Global Securities that represent (A) Fixed Rate Book-Entry Notes
having the same original issuance date, interest rate, redemption and repayment
provisions and Stated Maturity and with respect to which interest has been paid
to the same date or (B) Floating Rate Book-Entry Notes having the same interest
rate formula, original issuance date, Initial Interest Rate, Interest Payment
Dates, Index Maturity, Spread or Spread Multiplier, minimum interest rate (if
any), maximum interest rate (if any), redemption and repayment provisions and
with respect to which interest has been paid to the same date, (ii) a date,
occurring at least thirty days after such written notice is delivered and at
least thirty days before the next Interest Payment Date for such Book-Entry
Notes, on which such Global Securities shall be exchanged for a single
replacement Global Security and (iii) a new CUSIP number, obtained from the
Company, to be assigned to such replacement Global Security. Upon receipt of
such a notice, DTC will send to its Participants (including the Trustee) a
written reorganization notice to the effect that such exchange will occur on
such date. Prior to the specified exchange date, the Trustee will deliver to the
CUSIP Service Bureau a written notice setting forth such exchange date and the
new CUSIP number and stating that, as of such exchange date, the CUSIP numbers
of the Global Securities to be exchanged will no longer be valid. On the
specified exchange date, the Trustee will exchange such Global Securities for a
single Global Security bearing the new CUSIP number and a new Interest Accrual
Date, and the CUSIP numbers of the exchanged Global Securities will, in
accordance with CUSIP Service Bureau procedures, be cancelled and not
immediately reassigned. Notwithstanding the foregoing, if the Global Securities
to be exchanged exceed $150,000,000 (or the equivalent thereof in any Specified
Currency other than U.S. dollars at the Market Exchange Rate used to determine
the denomination of such Book-Entry Note as described below (rounded down to an
integral multiple of 10,000 units of such Specified Currency)) in aggregate
principal amount, one Global Security will be authenticated and issued to
represent each $150,000,000 (or the equivalent thereof in any Specified Currency
other than U.S. dollars at the Market Exchange Rate used to determine the
denomination of such Book-Entry Note as described below (rounded down to an
integral multiple of 10,000 units of such Specified Currency)) of principal
amount of the exchanged Global Securities and an additional Global Security will
be authenticated and issued to represent any remaining principal amount of such
global Securities (see "Denominations" below).
B-15
<PAGE>
Notice of Redemption and Repayment Dates
The Trustee will give notice to DTC prior to each redemption date or
repayment date (as specified in the Book-Entry Note), if any, at the time and in
the manner set forth in the letter of representation.
Denominations
Book-Entry Notes denominated in U.S. dollars will be issued in principal
amounts of $1,000 or any amount in excess thereof that is an integral multiple
of $1,000. The authorized denomination of any Book-Entry Notes denominated in
other than U.S. dollars will be the amount of the Specified Currency for such
Book-Entry Note equivalent, at the Market Exchange Rate on the first Business
Day in the City of New York and the country issuing such currency (or, in the
case of ECUs, Brussels) next preceding the date on which the Company accepts the
offer to purchase such Book-Entry Note, to U.S. $1,000 (rounded down to an
integral multiple of 10,000 units of such Specified Currency) and any greater
amount that is an integral multiple of 10,000 units of such Specified Currency.
Global Securities representing one or more Book-Entry Notes will be denominated
in principal amounts not in excess of $150,000,000, or the equivalent thereof in
any Specified Currency other than U.S. dollars at the Market Exchange Rate used
to determine the denomination of such Book-Entry Note (rounded down to an
integral multiple of 10,000 units of such Specified Currency). If one or more
Book-Entry Notes having an aggregate principal amount in excess of $150,000,000
(or the equivalent thereof in any Specified Currency other than U.S. dollars at
the Market Exchange Rate used to determine the denomination of such Book-Entry
Note down to an integral multiple of 10,000 units of such Specified Currency))
would, but for the preceding sentence, be represented by a single Global
Security, then one Global Security will be issued to represent each $150,000,000
principal amount, or the equivalent thereof in any Specified Currency other than
U.S. dollars at the Market Exchange Rate used to determine the denomination of
such Book-Entry Note (rounded down to an integral multiple of 10,000 units of
such Specified Currency), of such Book-Entry Note or Notes and an additional
Global Security will be issued to represent any remaining principal amount of
such Book-Entry Note or Notes. In such a case, each of the Global Securities
representing such Book-Entry Note or Notes shall be assigned the same CUSIP
number.
Interest
General. Interest on each Book-Entry Note will accrue from the date of issue
of the Global Security representing such Note or from and including the last
date in respect of which interest has been paid or duly provided for. Each
payment of interest on a Book-Entry Note will include interest accrued through
the day preceding, as the case may be, the Interest Payment Date or the date of
Maturity, redemption or repayment; provided, however, that if the Interest Reset
Dates with respect to any such Note are daily or weekly, interest payable on any
Interest Payment Date, other than interest payable on any date on which
principal for such Note is payable, will include interest accrued from the date
of issue of the Global Security, or from and including the last Interest Payment
Date as the case may be, to and including the regular record date immediately
preceding the applicable Interest Payment Date except that at the Stated
Maturity the interest payments will include accrued interest from and including
the date of issue, or from and including the last day in respect of which
interest has been paid or duly provided for, as the case may be, to, but
excluding, the Stated Maturity. Interest payable at the Maturity or upon earlier
redemption or repayment of a Book-Entry Note will be payable to the Person to
whom the principal of such Note is payable. Standard & Poor's Corporation will
use the information received in the pending
B-16
<PAGE>
deposit message described under Settlement Procedure "C" below in order to
include the amount of any interest payable and certain other information
regarding the related Global Security in the appropriate weekly bond report
published by Standard & Poor's Corporation.
Floating Rate Note Notices. On the first Business Day of January, April,
July and October of each year, the Trustee will deliver to the Company and DTC a
written list of Regular Record Dates and Interest Payment Dates that will occur
with respect to Floating Rate Book-Entry Notes during the six-month period
beginning on such first Business Day. Promptly after each Interest Determination
Date (as defined in Appendix A hereto) for Floating Rate Notes, the Company will
notify the Trustee, and the Trustee in turn will notify Standard & Poor's
Corporation, of the interest rates determined on such Interest Determination
Date.
Payments of Principal and Interest
Payments of Interest Only. Promptly after each Regular Record Date, the
Trustee will deliver to the Company and DTC a written notice specifying by CUSIP
number the amount of interest to be paid on each Global Security on the
following Interest Payment Date (other than an Interest Payment Date coinciding
with Maturity or an earlier redemption or repayment date) and the total of such
amounts. DTC will confirm the amount payable on each Global Security on such
Interest Payment Date by reference to the daily bond reports published by
Standard & Poor's Corporation. The Company will pay to the Trustee, as paying
agent, the total amount of interest due on such Interest Payment Date (other
than at Maturity), and the Trustee will pay such amount to DTC at the times and
in the manner set forth below under "Manner of Payment." Promptly after each
Interest Determination Date for Floating Rate Book-Entry Notes, the Calculation
Agent will notify the Trustee and Standard & Poor's Corporation of the interest
rates determined on such Interest Determination Date.
Payments at Maturity or Upon Redemption or Repayment. On or about the first
Business Day of each month, the Trustee will deliver to the Company and DTC a
written list of principal and interest to be paid on each Global Security
maturing either at maturity or any redemption or repayment date in the following
month. The Company, the Trustee and DTC will confirm the amounts of such
principal and interest payments with respect to each such Global Security on or
about the fifth Business Day preceding the Maturity or redemption or repayment
date of such Global Security. The Company will pay to the Trustee, as the paying
agent, the principal amount of such Global Security, together with interest due
at such Maturity or redemption or repayment date, as the case may be. The
Trustee will pay such amount to DTC at the times and in the manner set forth
below under "Manner of Payment."
Promptly after payment to DTC of the principal and interest due at the
Maturity of such Global Security, the Trustee will cancel such Global Security
and deliver it to the Company with an appropriate debit advice. On the first
Business Day of each month, the Trustee will prepare a written statement
indicating the total principal amount of Outstanding Global Securities for which
it serves as paying agent as of the immediately preceding Business Day.
Manner of Payment. The total amount of any principal and interest due on
global Securities on any Interest Payment Date or at Maturity or upon redemption
or repayment shall be paid by the Company to the Trustee in funds available for
use by the Trustee as of 9:30 A.M. (New York City time) on such date. The
Company will make such payment on such Global Securities by instructing the
Trustee to withdraw funds from an account maintained by the Company at the
Trustee. For maturity, redemption
B-17
<PAGE>
or any other principal payments: prior to 10 A.M. (New York City time) on such
date or as soon as possible thereafter, the Trustee will make such payments to
DTC in same day funds in accordance with DTC's Same Day Funds Settlement Paying
Agent Operating Procedures. For interest payments: the Trustee will make such
payments to DTC in accordance with existing arrangements between DTC and the
Trustee. DTC will allocate such payments to its Participants in accordance with
its existing operating procedures. Neither the Company, the Trustee (as Trustee
or as Paying Agent nor any other Paying Agent) shall have any direct
responsibility or liability for the payment by DTC to such Participants of the
principal of and interest on the Book-Entry Notes.
Withholding Taxes. The amount of any taxes required under applicable law to
be withheld from any interest payment on a Book-Entry Note will be determined
and withheld by the Participant, indirect participant in DTC or other Person
responsible for forwarding payments and materials directly to the beneficial
owner of such Note.
Settlement Procedures
In the event of a purchase of Book-Entry Notes by an Agent, as principal,
Settlement details will be as set forth below unless such details are set forth
in the applicable Purchase Agreement to be entered into between such Agent and
the Company pursuant to the Distribution Agreement.
In the event of a sale of a Book-Entry Note that is a Multi-Currency Note or
an Indexed Note, whether the sale is through an Agent or to an Agent, as
principal, additional or different Settlement details may be set forth in an
amendment to the administrative procedures to be entered into between the such
Agent and the Company.
Other than as contemplated above, settlement procedures with regard to each
Book-Entry Note sold by the Company through an Agent, as agent, shall be as
follows:
A. The Presenting Agent will advise the Company by telephone, telex or
facsimile, of the following settlement information:
1. Principal amount of the Book-Entry Note (and, if multiple Notes are to
be issued, denominations thereof).
2. Settlement date.
3. Stated Maturity and, if the Company has the option to extend the
Stated Maturity, the Extension Periods and the Final Maturity Date.
4. Issue Price and any OID information.
5. Trade date.
6. If such Book-Entry Note is a Fixed Rate Note, whether such Note is an
Amortizing Note.
7. The DTC Participant account number of such Agent.
B-18
<PAGE>
8. Interest rate (including, if appropriate, such interest rate
information applicable to any Extension Period):
(a) Fixed Rate Notes:
(i) interest rate
(ii) interest payment dates, if other than as specified above
(iii) date or dates, if any, on which the interest rate may be
reset and the basis or formula, if any, for such resetting
(iv) overdue rate, if any
(b) Floating Rate Notes:
(i) interest rate basis
(ii) initial interest rate
(iii) spread or spread multiplier, if any
(iv) date or dates, if any, on which the spread or spread
multiplier may be reset and the basis or formula, if any, for
such resetting
(v) interest rate reset periods
(vi) interest payment dates
(vii) index maturity
(viii) maximum and minimum interest rates, if any
(ix) record dates
(x) interest determination dates
(xi) overdue rate, if any
9. The date on or after which the Book-Entry Notes are redeemable at the
option of the Company or are to be repaid at the option of the Holder,
and additional redemption or repurchase provisions, if any.
10. Wire transfer information.
11. Presenting Agent's commission (to be paid in the form of a discount
from the proceeds remitted to the Company upon settlement).
12. That the Note will be a Book-Entry Note.
B. The Company will assign a CUSIP number to the Global Security representing
such Note and then advise the Trustee by telephone (confirmed in writing at any
time on the same date) or electronic transmission of the information set forth
in Settlement Procedure "A" above, such CUSIP number and the name of such Agent.
C. The Trustee will enter a pending deposit message through DTC's Participant
Terminal System, providing the following settlement information to DTC, the
Presenting Agent, Standard & Poor's Corporation and, upon request, the Trustee
under the Indenture pursuant to which such Note is to be issued:
1. The information set forth in Settlement Procedure "A."
B-19
<PAGE>
2. Identification as a Fixed Rate Book-Entry Note or a Floating Rate
Book-Entry Note.
3. Initial Interest Payment Date for such Note, number of days by which
such date succeeds the related "DTC Record Date" (which term means the
Regular Record Date except in the case of floating rate notes which
reset daily or weekly in which case it means the date 5 calendar days
immediately preceding the Interest Payment Date) and amount of
interest payable on such Interest Payment Date.
4. Frequency of interest payments (monthly, semiannually, quarterly,
etc.).
5. CUSIP number of the Global Security representing such Book-Entry Note.
6. Whether such Global Security will represent any other Book-Entry Note
(to the extent known at such time).
7. The number of Participant accounts to be maintained by DTC on behalf
of the Agents or the Trustee.
D. The Trustee, as Trustee will complete and authenticate the note
certificate evidencing the Global Security representing such Book-Entry Note.
E. DTC will credit such Book-Entry Note to the Trustee's participant account
at DTC.
F. The Trustee will enter an SDFS deliver order through DTC's Participant
Terminal System instructing DTC to (i) debit such Book-Entry Note to the
Trustee's participant account and credit such Note to the Presenting Agent's
participant account and (ii) debit the Presenting Agent's settlement account and
credit the Trustee's settlement account for an amount equal to the price of such
Book-Entry Note less the Presenting Agent's commission.
G. The Presenting Agent will enter an SDFS deliver order through DTC's
Participant Terminal System instructing DTC (i) to debit such Book-Entry Note to
the Presenting Agent's participant account and credit such Note to the
participant accounts of the Participants with respect to such Book-Entry Note
and (ii) to debit the settlement accounts of such Participants and credit the
settlement account of the Presenting Agent for an amount equal to the price of
such Note.
H. Transfers of funds in accordance with SDFS deliver orders described in
Settlement Procedures "F" and "G" will be settled in accordance with SDFS
operating procedures in effect on the settlement date.
I. The Trustee will credit to an account of the Company maintained at the
Trustee funds available for immediate use in the amount transferred to the
Trustee in accordance with Settlement Procedure "F."
J. The Presenting Agent will deliver to the purchaser a copy of the most
recent Prospectus applicable to the Book-Entry Note with or prior to any written
offer of Book-Entry Notes and the confirmation and payment by the purchaser of
the Book-Entry Note.
B-20
<PAGE>
The Presenting Agent will confirm the purchase of such Book-Entry Note to the
purchaser either by transmitting to the Participants with respect to such Book-
Entry Note a confirmation order or orders through DTC's institutional delivery
system or by mailing a written confirmation to such purchaser.
Settlement Procedures Timetable
For offers to purchase Book-Entry Notes solicited by an Agent, as agent, and
accepted by the Company for settlement, Settlement Procedures "A" through "J"
set forth above shall be completed as soon as possible but not later than the
respective times (New York City time) set forth below:
<TABLE>
<CAPTION>
============================================================
Settlement
Procedures Time
============================================================
<S> <C>
A-B 11:00 A.M. on the Sale date
C 2:00 P.M. on the Sale date
D 3:00 P.M. on date before Settlement date
E 10:00 A.M. on Settlement date
F-G 2:00 P.M. on Settlement date
H 4:45 P.M. on Settlement date
I-J 5:00 P.M. on Settlement date
============================================================
</TABLE>
If a sale is to be settled more than one Business Day after the sale date,
Settlement Procedures "A," "B" and "C" shall be completed as soon as practicable
but no later than 11:00 A.M., 11:00 A.M. and 2:00 P.M., as the case may be, on
the first Business Day after the sale date. If the initial interest rate for a
Floating Rate Book-Entry Note has not been determined at the time that
Settlement Procedure "A" is completed, Settlement Procedures "B" and "C" shall
be completed as soon as such rate has been determined but not later than 11:00
A.M. and 12:00 Noon, respectively, on the second Business Day before the
settlement date. Settlement Procedure "I" is subject to extension in accordance
with any extension of Fedwire closing deadlines and in the other events
specified in the SDFS operating procedures in effect on the settlement date.
If settlement of a Book-Entry Note is rescheduled or canceled, the Trustee
will deliver to DTC, through DTC's Participant Terminal System, a cancellation
message to such effect by no later than 2:00 P.M. on the Business day
immediately preceding the scheduled settlement date.
Failure To Settle
If the Trustee fails to enter an SDFS deliver order with respect to a Book-
Entry Note pursuant to Settlement Procedure "F," the Trustee may deliver to DTC,
through DTC's Participant Terminal System, as soon as practicable a withdrawal
message instructing DTC to debit such Book-Entry Note to the Trustee's
participant account. DTC will process the withdrawal message, provided that the
Trustee's
B-21
<PAGE>
participant account contains a principal amount to be debited. If a withdrawal
message is processed with respect to all the Book-Entry Notes represented by a
Global Security, the Trustee will mark such Global Security "canceled," make
appropriate entries in the Trustee's records and send such canceled Global
Security to the Company. The CUSIP number assigned to such Global Security
shall, in accordance with CUSIP Service Bureau procedures, be canceled and not
immediately reassigned, If a withdrawal message is processed with respect to one
or more, but not all, of the Book-Entry Notes represented by a Global Security,
the Trustee will exchange such Global Security for two Global Securities, one of
which shall represent such Book-Entry Note or Notes and shall be canceled
immediately after issuance and the other of which shall represent the other
Book-Entry Notes previously represented by the surrendered Global Security and
shall bear the CUSIP number of the surrendered Global Security.
If the purchase price for any Book-Entry Note is not timely paid to the
Participants with respect to such Book-Entry Note by the beneficial purchaser
thereof (or a Person, including an indirect participant in DTC, acting on behalf
of such purchaser), such Participants and, in turn, the Agent for such Book-
Entry Note may enter SDFS deliver orders through DTC's Participant Terminal
System reversing the orders entered pursuant to Settlement Procedures "F" and
"G," respectively. Thereafter, the Trustee will deliver the withdrawal message
and take the related actions described in the preceding paragraph.
Notwithstanding the foregoing, upon any failure to settle with respect to a
Book-Entry Note, DTC may take any actions in accordance with its SDFS operating
procedures then in effect. In the event of a failure to settle with respect to
one or more, but not all, of the Book-Entry Notes to have been represented by a
Global Security, the Trustee will provide, in accordance with Settlement
Procedure "D," for the authentication and issuance of a Global Security
representing the other Book-Entry Notes to have been represented by such Global
Security and will make appropriate entries in its records.
B-22
<PAGE>
Exhibit C
PURCHASE AGREEMENT
ALCO CAPITAL RESOURCE, INC. [Date]
1738 Bass Road
Macon, Georgia 31210
Attention: Treasurer
The undersigned agrees to purchase the following principal amount of the
Notes described in the Distribution Agreement dated July 1, 1994 (as it may be
supplemented or amended from time to time, the "Distribution Agreement"):
Principal Amount: $__________
Specified Currency:
Denominated and Indexed Currencies:
Interest Rate: ____%
Discount: ____% of Principal Amount
Aggregate Price to be Paid to $__________
Company (in immediately available
Funds):
Settlement Date:
Other Terms:
Terms defined in the Prospectus relating to the Notes and in the Distribution
Agreement shall have the same meaning when used herein.
[In the case of Notes issued in a Specified Currency other than U.S. dollars,
payments of principal of (and premium, if any) and interest on all Notes will be
made in the applicable Specified Currency, provided, however, that payments of
principal of (and premium, if any) and interest on Notes denominated in other
than U.S. dollars will nevertheless be made in U.S. dollars (i) at the option of
the Holders thereof; (ii) at the option of the Company in the case of imposition
of exchange controls or other circumstances beyond the control of the Company as
described below; or (iii) if so specified in the applicable Pricing Supplement.
The U.S. dollar amount to be received by a Holder of a Note denominated in
other than U.S. dollars who elects to receive payments in U.S. dollars will be
based on the highest bid quotation in The City of New York received by the
Currency Determination Agent (as defined below) as of noon New York City time on
the third Business Day next preceding the applicable payment date from three
recognized foreign exchange dealers (one of which may be the Currency
Determination Agent) for the purchase by the quoting dealer of the Specified
Currency for U.S. dollars for settlement on such payment date in the aggregate
amount of the Specified Currency payable to all Holders of Notes electing to
receive U.S. dollar payments and at which the applicable dealer commits to
execute a contract. If three such bid quotations are not available on the third
Business Day preceding the date of payment of principal (and premium, if any) or
interest with respect to any Note, such payment will be made in the Specified
<PAGE>
Currency. All currency exchange costs associated with any payment in U.S.
dollars on any such Note will be borne by the Holder thereof by deductions from
such payment.]
Our obligation to purchase Notes hereunder is subject to the continued
accuracy of your representations and warranties contained in the Distribution
Agreement and to your performance and observance of all applicable covenants and
agreements contained therein, including, without limitation, your obligations
pursuant to Section 7 thereof. Our obligation hereunder is subject to the
further condition that we shall receive (a) the opinions required to be
delivered pursuant to Sections 5(e) and 5(h) of the Distribution Agreement, (b)
the certificate required to be delivered pursuant to Section 5(f) of the
Distribution Agreement, (c) the letter referred to in Section 5(g) of the
Distribution Agreement in each case dated as of the above Settlement Date and
(d) [insert other conditions as appropriate].
In further consideration of our agreement hereunder, you agree that between
the date hereof and the above Settlement Date, you will not offer or sell, or
enter into any agreement to sell, any debt securities of the Company [, other
than borrowings under your revolving credit agreements and lines of credit, the
private placement of securities and issuances of your commercial paper].
We may terminate this Agreement, immediately upon notice to you, at any time
prior to the Settlement Date, if prior thereto there shall have occurred: (i)
any change, or any development involving a prospective change, in or affecting
the general affairs, management, shareholder's equity, business, properties,
condition (financial or other), results of operations or prospects of the
Company which in our opinion materially impairs the investment quality of the
Notes; (ii) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or the
over-the-counter market, or the establishment of minimum prices on such
exchanges or such markets; (iii) a general moratorium on commercial banking
activities declared by Federal or New York State authorities; (iv) any
downgrading in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization," as that term is defined
by the Commission for purposes of Rule 436(g)(2) under the Act or any public
announcement that any such organization has under surveillance or review its
rating of any debt securities of the Company (other than an announcement with
positive implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); (v) any outbreak or escalation of major
hostilities in which the United States is involved, any declaration of war by
Congress or any other substantial national calamity or emergency; or (vi) any
material adverse change in the existing financial, political or economic
conditions in the United States, including the effect of international
conditions on the financial markets in the United States, or you are unable to
provide any of the opinions, certificates or letters referred to in the second
preceding paragraph. In the event of such termination, no party shall have any
liability to the other party hereto, except as provided in Sections 4, 7 and 13
of the Distribution Agreement.
C-2
<PAGE>
This Agreement shall be governed by and construed in accordance with the laws
of New York.
[Insert Name[s] of Agent[s]]
By:____________________________________
[Title]
Accepted: ,
ALCO CAPITAL RESOURCE, INC.
By:____________________________________
[Authorized Signatory]
C-3
<PAGE>
Exhibit D
[INDEXED NOTE]
AMENDMENT NO. ___
TO DISTRIBUTION AGREEMENT DATED JULY 1, 1994, AS AMENDED
[Insert Title of the Denominated
and Indexed Currencies]
The undersigned hereby agree that for the purposes of the issue and sale of
Notes denominated in [title of currency or currency unit] (the "Denominated
Currency") and indexed to [title of currency or currency unit] (the "Indexed
Currency") pursuant to the Distribution Agreement, dated July 1, 1994, as it may
be amended (the "Distribution Agreement"), the following additions and
modifications shall be made to the Distribution Agreement. The additions and
modifications adopted hereby shall be of the same effect for the sale under the
Distribution Agreement of all Notes denominated in the Denominated Currency and
indexed to the Indexed Currency, whether offered on an agency or principal
basis, but shall be of no effect with respect to Notes denominated in any
currency or currency unit other than the Applicable Foreign Currency.
Except as otherwise expressly provided herein, all terms used herein which
are defined in the Distribution Agreement shall have the same meanings as in the
Distribution Agreement. The terms Agent or Agents, as used in the Distribution
Agreement, shall be deemed to refer [only] to the undersigned Agents for
purposes of this Amendment.
[Insert appropriate additions and modifications to the Distribution
Agreement, for example, to opinions of counsel, conditions to obligation and
settlement procedures, etc.]
_________________, 19__
Alco Capital Resource, Inc.
By:_______________________________________
Name:
Title:
[Name(s) of Agent(s) Participating
In the Offering of the Indexed Notes]
By:_______________________________________
Name:
Title:
<PAGE>
Exhibit 4.1
CUSIP NO.
REGISTERED NO. FLR PRINCIPAL AMOUNT:
---------------------
ALCO CAPITAL RESOURCE, INC.
MEDIUM-TERM NOTE, SERIES A
Due Nine Months or More from Date of Issue
(Floating Rate)
[INSERT IF THE SECURITY IS TO BE A GLOBAL SECURITY -- THIS SECURITY IS A
GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND
IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS
GLOBAL SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY
(OTHER THAN A TRANSFER OF THIS SECURITY 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) MAY BE REGISTERED EXCEPT IN SUCH LIMITED
CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY
ISSUED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR, OR IN LIEU OF, THIS
SECURITY IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.]
IF APPLICABLE, THE "TOTAL AMOUNT OF OID", "YIELD TO
MATURITY" AND "INITIAL ACCRUAL PERIOD OID" (COMPUTED
UNDER THE APPROXIMATE METHOD BELOW) WILL BE
COMPUTED SOLELY FOR PURPOSES OF APPLYING THE
FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES
<PAGE>
THE FOLLOWING SUMMARY OF TERMS IS SUBJECT TO THE INFORMATION SET FORTH ON
THE REVERSE HEREOF:
ISSUE PRICE:
ORIGINAL ISSUE DATE: INITIAL INTEREST RATE: Stated Maturity :
SPECIFIED CURRENCY: OPTION TO ELECT AUTHORIZED DENOMINATIONS
PAYMENT IN U.S.
DOLLARS (only
applicable if
Specified Currency is (if Specified Currency
other than U.S. is U.S. dollars):
dollars):
$1,000 and any integral
[_] Yes [_] No multiple of $1,000 in
excess thereof
INDEXED CURRENCY
(if Specified Currency
is other than U.S.
dollars):
CURRENCY DETERMINATION THIS SECURITY IS A:
AGENT:
[_] Global Security
[_] Certificated Security
(only applicable if
Specified Currency is
other than U.S. dollars)
INTEREST RESET PERIOD: INTEREST RESET DATES: INTEREST DETERMINATION
DATES:
CALCULATION DATES: ACCRUED INTEREST
FACTOR:
INTEREST PAYMENT PERIOD: INTEREST PAYMENT DATES:
INDEX MATURITY: SPREAD (plus or minus): SPREAD MULTIPLIER:
MAXIMUM RATE: MINIMUM RATE:
CALCULATION AGENT: BASE RATE: (check one)
[_] Commercial Paper Rate
[_] Federal Funds Rate
[_] CD Rate
[_] 11th District Cost of
Funds Rate
[_] Kenny Rate
[_] LIBOR
-2-
<PAGE>
EXCHANGE RATE AGENT: [_] LIBOR REUTERS
[_] LIBOR TELERATE
[_] Prime Rate
[_] Treasury Rate
[_] CMT Rate
[_] Other _____________
(see attached)
OPTIONAL REDEMPTION: INITIAL REDEMPTION REDEMPTION PRICES(S):
[_] Yes [_] No DATE: Initially ___% of
Principal Amount and
declining by ___% of
the Principal Amount on
each anniversary of the
Initial Redemption Date
until the Redemption
Price is 100% of the
Principal Amount
OPTION TO ELECT REPAYMENT: OPTIONAL REPAYMENT OPTIONAL REPAYMENT
[_] Yes [_] No DATE(S): PRICE(S):
REPAYMENT PROVISIONS:
EXTENDIBLE MATURITY NOTE: AMORTIZING NOTE: DISCOUNTED SECURITY:
[_] Yes [_] No
DEPOSITARY: OTHER PROVISIONS:
If this Security was issued with "original issue discount" for purposes of
Section 1273 of the Internal Revenue Code of 1986, as amended, the following
shall be completed:
ORIGINAL ISSUE DISCOUNT TOTAL AMOUNT OF OID: ISSUE PRICE (expressed as
SECURITY: a percentage of aggregate
principal amount):
[_] Yes [_] No
YIELD TO MATURITY: INITIAL ACCRUAL PERIOD METHOD USED TO DETERMINE
OID: YIELD FOR INITIAL ACCRUAL
PERIOD:
[_] Appropriate [_] Exact
-3-
<PAGE>
ALCO CAPITAL RESOURCE, INC., a corporation duly authorized and existing
under the laws of Delaware (herein called the "Company", which term includes any
successor Person under the Indenture referred to on the reverse hereof), for
value received, hereby promises to pay to _____________________________________
_________________________________________________, or registered assigns, the
principal sum of ______________________________________________________________
_______ on the Stated Maturity shown above, and to pay interest thereon from
and including the Original Issue Date shown above or from and including the last
date in respect of which interest has been paid, as the case may be, to, but
excluding the next succeeding Interest Payment Date; provided, however, that if
this Note has a daily or weekly Interest Reset Period, as shown above, such
interest will be paid from and including the Original Issue Date shown above or
from and including the last date in respect of which interest has been paid, as
the case may be, to and including the regular record date immediately preceding
the applicable Interest Payment Date, except that at maturity 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. Interest will
be paid on the Interest Payment Dates shown above, commencing with the first
such Interest Payment Date next succeeding the Original Issue Date shown above
(except as provided below), at the rate per annum determined in accordance with
the provisions on the reverse hereof, depending on the Base Rate specified above
and the Spread, if any, or Spread Multiplier, if any, until the principal hereof
is paid or made available for payment, and interest shall accrue on any overdue
principal and on any overdue installment of interest (to the extent that the
payment of such interest shall be legally enforceable) at the rate per annum in
effect at the time such principal or installment of interest, as the case may
be, was due and payable. The interest so payable and punctually paid or duly
provided for on an Interest Payment Date will, as provided in such Indenture, be
paid to the Person in whose name this Note (or one or predecessors Notes) is
registered at the close of business on the regular record rate for such
interest, which shall be the fifteenth day (whether or not a Business Day, as
defined) next preceding such Interest Payment Date; provided, however, that
interest payable at the Stated Maturity or upon earlier redemption or repayment
will be payable to the Person to whom principal shall be payable. Payments of
principal and interest on Notes for which payments of principal and interest are
made in equal installments over the life of the security ("Amortizing Notes"),
will be made either quarterly on each March 15, June 15, September 15 and
December 15 or semiannually on each June 15 and December 15 as set forth in the
applicable Pricing Supplement, and at maturity or upon earlier redemption or
repayment. If this Note was originally issued between a regular record date and
an Interest Payment Date, the first payment of interest on this Note will be
made on the Interest Payment Date following the next succeeding regular record
date to the registered owner of this Note on such next succeeding regular record
date. Any interest not punctually paid or duly provided for shall be payable as
provided in the Indenture.
If this Note is denominated in a Specified Currency other than U. S.
dollars, then the Holder may, by delivery of a written request to the Paying
Agent at its principal office on or prior to the applicable record date or at
least 15 days prior to the Stated Maturity, as the case may be, elect to receive
all such payments in U.S. dollars. Such election will remain in effect until
revoked by written notice received by the Paying Agent not later than on or
prior to the applicable record date or at least 15 days prior to the Stated
Maturity, as the case may be (but no such revocation may be made with respect to
payments made on this Note if an Event of Default has occurred with respect
thereto or upon the giving of a notice of redemption). In addition, if bid
quotations for U.S. dollars of the type specified on the reverse side hereof are
not available, the Currency Determination Agent will be unable to exchange the
Specified Currency for U.S. dollars and payments of principal and interest will
be made in the Specified Currency. If the Specified Currency is unavailable due
to the imposition of exchange controls or to other circumstances beyond the
Company's control, payments will be made in U.S. dollars as described on the
reverse side hereof.
-4-
<PAGE>
Payments in U.S. dollars of interest on this Note (other than interest
payable at the Stated Maturity or upon earlier redemption or repayment) will be
made by mailing a check to the Holder at the address of the Holder appearing in
the security register on the applicable record date. Principal and interest
payable in U.S. dollars at the Stated Maturity or upon earlier redemption or
repayment in respect of this Note will be paid in immediately available funds
upon surrender of this Note at the principal office of the Paying Agent in
Atlanta, Georgia, in either case, accompanied by wire transfer instructions.
Payments in a Specified Currency other than U.S. dollars of interest and
principal on this Note will be made by wire transfer to an account with a bank
located in the country issuing the Specified Currency (or with respect to Notes
denominated in European Currency Units, or "ECUs," Brussels), as shall have been
designated by filing the appropriate information with the Trustee at its
Corporate Trust Office at least 15 days prior to the Interest Payment Date or
Stated Maturity, as the case may be, by the Holder, provided that, in the case
of payment of principal of (and premium, if any) and any interest due at the
Stated Maturity, the Note is presented to the Paying Agent in time for the
Paying Agent to make such payments in such funds in accordance with its normal
procedures.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof and such further provisions shall for all purposes have
the same effect as though fully set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof, directly or through an Authenticating
Agent, by manual signature of an authorized signatory, this Note shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
-5-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under is corporate seal.
Dated: ALCO CAPITAL RESOURCE, INC.
Corporate Seal By: _________________________________________
Title
ATTEST:
By: _________________________________________
Trustee's Certificate of Authentication
This is one of the Securities of the
series described herein and referred
to in the within-mentioned Indenture.
NationsBank of Georgia, National Association,
As Trustee
By______________________________
Authorized Signatory
-6-
<PAGE>
[REVERSE SIDE OF SECURITIES]
ALCO CAPITAL RESOURCE, INC.
MEDIUM-TERM NOTE, SERIES A
(Floating Rate)
Section 1. General. This Note is one of a duly authorized issue of
-------
debentures, notes, bonds or other evidences of indebtedness of the Company
(herein called the "Securities"), of the series hereinafter specified, all
issued or to be issued under and pursuant to an indenture, dated as of June 15,
1994, between the Company and NationsBank of Georgia, National Association, as
Trustee (the "Indenture"), to which Indenture and all indentures supplemental
thereto reference is hereby made for a description of the rights, limitations of
rights, obligations, duties and immunities thereunder of the Trustee, the
Company and the Holders of the Notes. The Securities may be issued in one or
more series, which different series may be issued in various aggregate principal
amounts, may mature at different times, may bear interest, if any, at different
rates, may be subject to different redemption provisions, if any, may be subject
to different sinking, purchase or analogous funds, if any, and may otherwise
vary as in the Indenture provided. This Note is one of a series designated as
"Medium-Term Notes, Series A" of the Company, limited in aggregate principal
amount to U.S. $500,000,000, or its equivalent at the time of issue in foreign
currencies or currency units, or in such lesser amount as may be reduced by the
sale of Securities of another series. References herein to "Notes" shall mean
the Notes of said Series A.
Section 2. Payments. (a) Interest on this Note will be payable
--------
monthly, quarterly, semiannually or annually (the "Interest Payment Period") as
shown on the face hereof. Except as provided below or on the face hereof, the
date or dates on which interest will be payable (each an "Interest Payment
Date") will be, (i) if this Note has a daily, weekly or monthly Interest Reset
Date, the third Wednesday of each month or on the third Wednesday of March,
June, September and December of each year; (ii) if this Note has a quarterly
Interest Reset Date, the third Wednesday of March, June, September and December
of each year; (iii) if this Note has a semiannual Interest Reset Date, the third
Wednesday of each of the two months of each year specified on the face hereof;
and (iv) if this Note has an annual Interest Reset Date, the third Wednesday of
one month of each year specified on the face hereof. Unless otherwise specified
on the face hereof, if any Interest Reset Date for this Note would otherwise be
a day that is not a Business Day, such Interest Payment Date shall be postponed
to the next day that is a Business Day except that, if the Base Rate indicated
on the face of this Note is LIBOR and if such Business Day is in the next
succeeding calendar month, such Interest Payment Date shall be the immediately
preceding Business Day.
The rate of interest on this Note will be reset daily, weekly,
monthly, quarterly, semiannually or annually (an "Interest Reset Date"), as
specified on the face hereof. Unless otherwise specified on the face hereof,
the Interest Reset Date will be, if the rate of interest on this Note resets
daily, each Business Day; if the rate of interest on this Note (other than
Treasury Rate Notes) resets weekly, Wednesday of each week; in the case of the
Treasury Rate Notes that reset weekly, Tuesday of each week (except as provided
below); if the rate of interest on this Note resets monthly, the third Wednesday
of each month (with the exception of monthly reset 11th District Cost of Funds
Rate Notes, which will reset on the first calendar day of the month); if the
rate of interest on this Note resets quarterly, the third Wednesday of March,
June, September and December; if the rate of interest on this Note resets
semiannually, the third Wednesday of each of the two months of each year
specified on the face hereof; and if the rate of interest on this Note resets
annually, the third Wednesday of the month of each year specified on the face
hereof. If any Interest Reset Date for this Note would otherwise be a day that
is not a Business Day, such Interest Reset Date shall be postponed
<PAGE>
to the next succeeding Business Day, except that if the Base Rate indicated on
the face of this Note is LIBOR and such Business Day is in the next succeeding
calendar month, such Interest Reset Date shall be the next preceding Business
Day. If the Base Rate indicated on the face of this Note is the Treasury Rate
and if an auction of Treasury bills (as hereinafter defined) falls on a day that
is an Interest Reset Date for this Note, the Interest Reset Date shall be the
following day that is a Business Day.
As used herein, "Business Day", means any Monday, Tuesday, Wednesday,
Thursday or Friday, that in the Place of Payment is not a day on which banking
institutions are authorized or obligated by law or executive order to close and,
with respect to Notes as to which LIBOR is an applicable Base Rate, is also a
London Business Day. As used herein, "London Business Day" means any day (a) on
which dealings in deposits in the Specified Currency are transacted in the
London interbank market, (b) if the Designated LIBOR Currency is other than the
ECU, on which dealings in deposits in such Designated LIBOR Currency are
transacted in the London interbank market or (c) if the Designated LIBOR
Currency is the ECU, that is not designated as an ECU Non-Settlement Day by the
ECU Banking Association in Paris or otherwise generally regarded in the ECU
interbank market as a day on which payments on ECUs shall not be made.
(b) If this Note is denominated in other than U.S. dollars and if the
Holder has made the election described in paragraph (c) below, payment in
respect of this Note shall be made in U.S. dollars based on the highest
indicated bid quotation for the purchase of U.S. dollars for the Specified
Currency obtained by the Currency Determination Agent at approximately 11:00
A.M., New York City time, on the Second Business Day next preceding the
applicable payment date (the "Conversion Date") from the bank composite or
multi-contributor pages of the Quoting Source for three (or two if three are not
available) major banks in The City of New York. The first three (or two) such
banks selected by the Currency Determination Agent which are offering quotes on
the Quoting Source will be used. If fewer than two such bid quotations are
available at 11:00 A.M., New York City time, on the second Business Day next
preceding the applicable payment date, such payment will be based on the noon
buying rate in the City of New York for cable transfers for such Specified
Currency as certified for customs purposes by the Federal Reserve Bank of New
York (the "Market Exchange Rate") as of the second Business Day next preceding
the applicable payment date. If the Market Exchange Rate for such date is not
then available, such payment will be made in the Specified Currency, unless such
Specified Currency is unavailable due to the imposition of exchange controls or
to other circumstances beyond the Company's control, in which case payment will
be made as described in paragraph (d) below. As used herein, the "Quoting
Source" means Reuters Monitor Foreign Exchange Service, or if the Currency
Determination Agent determines that such service is not available, Telerate
Monitor Foreign Exchange Service, or if the Currency Determination Agent
determines that neither service is available, such comparable display or other
comparable manner of obtaining quotations as shall be agreed between the Company
and the Currency Determination Agent. All currency exchange costs associated
with any payment in U.S. dollars on this Note shall be borne by the Holder
hereof by deductions from such payments.
(c) If this Note is denominated in other than U.S. dollars, the
Holder of this Note may elect to receive all such payments in U.S. dollars as
described in paragraph (b) above by delivery of a written request to the Paying
Agent at its principal office, which must be received by the Paying Agent on or
prior to the applicable record date or at least 15 calendar days prior to the
Stated Maturity, as the case may be. Such election shall remain in effect
unless and until revoked by written notice to the Paying Agent, but the Paying
Agent must receive written notice of any such revocation on or prior to the
applicable record date or at least 15 calendar days prior to the Stated
Maturity, as the case may be (but no such revocation may be made with respect to
payments made on this Note if an Event of Default has occurred with respect
hereto or upon the giving of a notice of redemption). In the absence
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of manifest error, all determinations by the Currency Determination Agent shall
be final and binding on the Company and the Holder of this Note.
(d) If payment of this Note is required to be made in a Specified
Currency (e.g. ECUs) other than U.S. dollars and on a payment date with respect
to this Note such currency is unavailable, in the good faith judgment of the
Company, due to the imposition of exchange controls or other circumstances
beyond the Company's control, than all payments in respect of this Note shall be
made in U.S. dollars until such currency unit is again available. Any payment
made under such circumstances in U.S. dollars where the required payment is in a
Specified Currency other than U.S. dollars will not constitute an Event of
Default under the Indenture. The amount of each payment of U.S. dollars shall
be computed on the basis of the equivalent of the currency unit in U.S. dollars,
which shall be determined by the Currency Determination Agent on the following
basis. The component currencies of the currency unit for this purpose (the
"Component Currencies") shall be the currency amounts that were components of
the currency unit as of the Conversion Date. The equivalent of the currency
unit in U.S. dollars shall be calculated by aggregating the U.S. dollar
equivalents of the Component Currencies. The U.S. dollar equivalent of each of
the Component Currencies shall be determined by the Currency Determination Agent
on the basis of the Market Exchange Rate for each such Component Currency as of
the Conversion Date.
If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of that currency as a Component
Currency shall be divided or multiplied in the same proportion. If two or more
Component Currencies are consolidated into a single currency, the amounts of
those currencies as Component Currencies shall be replaced by an amount in such
single currency equal to the sum of the amounts of the consolidated Component
Currencies expressed in such single currency. If any Component Currency is
divided into two or more currencies, the amount of the original Component
Currency shall be replaced by the amounts of such two or more currencies, the
sum of which shall be equal to the amount of the original Component Currency.
All determinations referred to above made by the Currency
Determination Agent shall be at its sole discretion (except to the extent
expressly provided herein or on the face hereof that any determination is
subject to approval by the Company) and, in the absence of manifest error, shall
be conclusive for all purposes and binding on the Holder of this Note and the
Company, and the Currency Determination Agent shall have no liability therefor.
(e) Interest payments on each Interest Payment Date for this Note
(except if the rate of interest on this Note 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 or duly
provided for, as the case may be, to, but excluding, such Interest Payment Date
or Stated Maturity. If the rate of interest on this Note resets daily or
weekly, 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 regular record
date immediately preceding the applicable Interest Payment Date, except that at
the Stated Maturity the interest payments will include accrued interest from and
including the Issue Date, or from and including the last day in respect of which
interest has been paid, as the case may be, to, but excluding, the Stated
Maturity.
Accrued interest shall be calculated by multiplying the principal
amount of this Note by an accrued interest factor. Such accrued interest factor
will be computed by adding the interest factors calculated for each day in the
period for which accrued interest is being calculated. Unless otherwise set
forth on the face hereof, the interest factor (rounded upward, if necessary, to
the next higher one hundred-thousandth of a percent) for each such day is
computed by dividing the interest rate applicable
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to such day by 360, if the Base Rate indicated on the face hereof is the
Commercial Paper Rate, the Federal Funds Rate, the CD Rate, the Prime Rate, the
11th District Cost of Funds Rate or LIBOR or by the actual number of days in the
year, if the Base Rate indicated on the face hereof is the Treasury Rate or the
CMT Rate, or by 365 days if the Base Rate on the face hereof is the Kenny Rate.
The interest rate applicable to any date that is an Interest Reset Date is the
interest rate for such Interest Reset Date. The interest rate applicable to any
other day is the interest rate for the immediately preceding Interest Reset Date
(or, if none, the Initial Interest Rate, as described below). Notwithstanding
the foregoing, the interest rate hereon shall not be greater than the Maximum
Interest Rate, if any, or less than the Minimum Interest Rate, if any, shown on
the face hereof. In addition, the interest rate hereon shall in no event be
higher than the maximum interest rate permitted by New York law as the same may
be modified by United States law of general application.
(f) The interest rate in effect with respect to this Note from the
Issue Date to the first Interest Reset Date (the "Initial Interest Rate") will
be specified on the face hereof. The interest rate for each subsequent Interest
Reset Date will be determined by the Calculation Agent as follows:
Determination of Commercial Paper Rate. If the Base Rate is the
--------------------------------------
Commercial Paper Rate as indicated on the face hereof, the "Commercial
Paper Rate" for each Interest Reset Date will be determined by the
Calculation Agent as of the second Business Day prior to such Interest
Reset Date (a "Commercial Paper Interest Determination Date") and shall be
the Money Market Yield (as defined below) on such date of the rate for
commercial paper having the Index Maturity as indicated on the face hereof,
as such rate shall be published by the Board of Governors of the Federal
Reserve System in "Statistical Release H.15(519), Selected Interest Rates",
or any successor publication ("H.15(519)"), under the heading "Commercial
Paper." In the event that such rate is not published prior to 9:00 A.M.,
New York City time, on the Calculation Date (as defined below), then the
Commercial Paper Rate shall be the Money Market Yield on such Commercial
Paper Interest Determination Date of the rate for commercial paper of the
specified Index Maturity 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 by 3:30 P.M, New York City time, on such
Calculation Date such rate is not yet published in Composite Quotations,
then the Commercial Paper Rate for such Commercial Paper Interest
Determination Date shall be the Money Market Yield of the arithmetic mean
of the offered rates as of 11:00 A.M., New York City time, on such
Commercial Paper Interest Determination Date of three leading dealers of
commercial paper in The City of New York selected by the Calculation Agent
for commercial paper of the specified Index Maturity, placed for an
industrial issuer whose bond rating is "AA", or the equivalent, from a
nationally recognized securities rating agency; provided, however, that if
the dealers selected as aforesaid by the Calculation Agent are not quoting
offered rates as mentioned in this sentence, the Commercial Paper Rate with
respect to such Commercial Paper Interest Determination Date will be the
Commercial Paper Rate in effect on such Commercial Paper Interest
Determination Date.
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
Money Market Yield = D X 360 X 100
---------------
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper
quoted on a bank discount basis and expressed as a decimal, and "M" refers
to the actual number of days in the interest period for which interest is
being calculated.
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<PAGE>
The Calculation Date pertaining to a Commercial Paper Interest
Determination Date shall be the earlier of (i) the tenth calendar day after
such Commercial Paper Interest Determination Date or, if such day is not a
Business Day, the next succeeding Business Day, or (ii) the Business Day
preceding the applicable Interest Payment Date or Maturity Date, as the
case may be.
The interest rate for each such Interest Reset Date shall be the
Commercial Paper Rate applicable to such Interest Reset Date plus or minus
the Spread and/or multiplied by the Spread Multiplier, as indicated on the
face hereof; however, the interest rate in effect for the period from the
Original Issue Date to the first Interest Reset Date will be the Initial
Interest Rate and the interest rate in effect for the 10 days immediately
prior to the Maturity Date or earlier redemption or repayment will be that
in effect on the tenth day preceding such Maturity Date or earlier
redemption or repayment. If an Interest Reset Date would otherwise be a
day that is not a Business Day, the Interest Reset Date shall be postponed
to the next day that is a Business Day.
Determination of Federal Funds Rate. If the Base Rate is the Federal
------------------------------------
Funds Rate as indicated on the face hereof, the "Federal Funds Rate" means,
with respect to any Federal Funds Interest Determination Date, the rate on
such date for Federal funds as published in H.15(519) under the heading
"Federal Funds (Effective)," or, if not so published by 9:00 A.M., New York
City time, on the Calculation Date pertaining to such Federal Funds
Interest Determination Date, the Federal Funds Rate will be the rate on
such Federal Funds Interest Determination Date as published in the
Composite Quotations under the heading "Federal Funds/Effective Rate." If
such rate is not yet published in either H.15(519) or the Composite
Quotations by 3:00 P.M., New York City time, on the Calculation Date
pertaining to such Federal Funds Interest Determination Date, the Federal
Funds Rate for such Federal Funds Interest Determination Date will be
calculated by the Calculation Agent and will be the arithmetic mean of the
rates for the last transaction in overnight Federal funds, as of 9:00 A.M.,
New York City time, on such Federal Funds Interest Determination Date,
arranged by three leading brokers of Federal funds transactions in The City
of New York selected by the Calculation Agent; provided, however, that if
the brokers selected as aforesaid by the Calculation Agent are not quoting
as set forth above, the Federal Funds Rate with respect to such Federal
Funds Interest Determination Date will be the Federal Funds Rate in effect
on such Federal Funds Interest Determination Date.
The Federal Funds Interest Determination Date shall be the second
Business Day prior to such Interest Reset Date. The Calculation Date
pertaining to a Federal Funds Interest Determination Date shall be the
earlier of (i) the tenth calendar day after such Federal Funds Interest
Determination Date or, if such day is not a Business Day, the next
succeeding Business Day, or (ii) the Business Day preceding the applicable
Interest Payment Date or Maturity Date, as the case may be.
The interest rate for each such Interest Reset Date shall be the
Federal Funds Rate plus or minus the Spread and/or multiplied by the Spread
Multiplier as indicated on the face hereof; provided, however, the interest
rate in effect for the period from the Issue Date to the first Interest
Reset Date will be the Initial Interest Rate and the interest rate in
effect for the 10 days immediately prior to the Maturity Date or earlier
redemption or repayment will be that in effect on the tenth day preceding
such Maturity Date or earlier redemption or repayment. If an Interest
Reset Date would otherwise be a day that is not a Business Day, the
Interest Reset Date shall be postponed to the next day that is a Business
Day.
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<PAGE>
Determination of CD Rate. If the Base Rate is the CD Rate as
-------------------------
indicated on the face hereof, the "CD Rate" means, with respect to any CD
Rate Interest Determination Date, the rate on such date for negotiable
certificates of deposit having the Index Maturity as designated on the face
hereof as published in H.15(519) under the heading "CDs (Secondary
Market)," or, if not so published by 9:00 A.M., New York City time, on the
Calculation Date pertaining to such CD Rate Interest Determination Date,
the CD Rate will be the rate on such CD Rate Interest Determination Date
for negotiable certificates of deposit of the Index Maturity designated on
the face hereof as published by the Federal Reserve Bank of New York in the
Composite Quotations under the heading "Certificates of Deposit." If such
rate is not yet published by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such CD Rate Interest Determination Date,
the CD Rate for such CD Rate 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 CD Rate
Interest Determination Date, for certificates of deposit in the
denomination of $5,000,000 with a remaining maturity closest to the Index
Maturity designated on the face hereof of three leading nonbank dealers in
negotiable U.S. dollar certificates of deposit in The City of New York
selected by the Calculation Agent for negotiable certificates of deposit of
major United States money center banks of the highest credit standing (in
the market for negotiable certificates of deposit); provided, however, that
if the dealers selected as aforesaid by the Calculation Agent are not
quoting as set forth above, the CD Rate with respect to such CD Rate
Interest Determination Date will be the CD Rate in effect on such CD Rate
Interest Determination Date.
The CD Rate Interest Determination Date shall be the second Business
Day prior to such Interest Reset Date. The Calculation Date pertaining to
a CD Rate Interest Determination Date shall be the earlier of (i) the tenth
calendar day after such CD Rate Interest Determination Date or, if such day
is not a Business Day, the next succeeding Business Day, or (ii) the
Business Day preceding the applicable Interest Payment Date or Maturity
Date, as the case may be.
The interest rate for each such Interest Reset Date shall be the CD
Rate plus or minus the Spread and/or multiplied by the Spread Multiplier as
indicated on the face hereof; provided, however, the interest rate in
effect for the period from the Issue Date to the first Interest Reset Date
will be the Initial Interest Rate and the interest rate in effect for the
10 days immediately prior to the Maturity Date or earlier redemption or
repayment will be that in effect on the tenth day preceding such Maturity
Date or earlier redemption or repayment. If an Interest Reset Date would
otherwise be a day that is not a Business Day, the Interest Reset Date
shall be postponed to the next day that is a Business Day.
Determination of 11th District Cost of Funds Rate. If the Base Rate
--------------------------------------------------
is the 11th District Cost of Funds Rate as indicated on the face hereof,
the "11th District Cost of Funds Rate" means, with respect to any 11th
District Interest Determination Date, the rate equal to the monthly
weighted average cost of funds for the calendar month preceding such 11th
District Interest Determination Date as set forth under the caption "11th
District" on Telerate Page 7058 as of 11:00 A.M., San Francisco time, on
such 11th District Interest Determination Date. If such rate does not
appear on Telerate Page 7058 on any related 11th District Interest
Determination Date, the 11th District Rate for such 11th District Cost of
Funds Interest Determination Date shall be the monthly weighted average
cost of funds paid by member institutions of the Eleventh Federal Home Loan
Bank District that was most recently announced (the "Index") by the Federal
Home Loan Bank of San Francisco (the "FHLB of San Francisco") as such cost
of funds for the calendar month preceding the date of such announcement.
If the FHLB of San Francisco fails to announce such rate for the calendar
month next preceding such
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<PAGE>
11th District Interest Determination Date, then the 11th District Cost of
Funds Rate for such 11th District Interest Determination Date will be the
11th District Cost of Funds Rate then in effect on such 11th District
Interest Determination Date.
The 11th District Interest Determination Date shall be the last
business day of the month immediately preceding such Interest Reset Date on
which the FHLB of San Francisco publishes the Index. The Calculation Date
pertaining to an 11th District Interest Determination Date shall be the
earlier of (i) the tenth calendar day after such 11th District Interest
Determination Date or, if such day is not a Business Day, the next
succeeding Business Day, or (ii) the Business Day preceding the applicable
Interest Payment Date or Maturity Date, as the case may be.
The interest rate for each such Interest Reset Date shall be the 11th
District Cost of Funds Rate plus or minus the Spread and/or multiplied by
the Spread Multiplier as indicated on the face hereof; provided, however,
the interest rate in effect for the period from the Issue Date to the first
Interest Reset Date will be the Initial Interest Rate and the interest rate
in effect for the 10 days immediately prior to the Maturity Date or earlier
redemption or repayment will be that in effect on the tenth day preceding
such Maturity Date or earlier redemption or repayment. If an Interest
Reset Date would otherwise be a day that is not a Business Day, the
Interest Reset Date shall be postponed to the next day that is a Business
Day.
Determination of Kenny Rate. If the Base Rate is the Kenny Rate as
----------------------------
indicated on the face hereof, the "Kenny Rate" means, with respect to any
Kenny Rate Interest Determination Date, the high grade weekly index (the
"Weekly Index") on such date made available by Kenny Information Systems
("Kenny") to the Calculation Agent. The Weekly Index is, and shall be,
based upon 30 day yield evaluations at par of bonds, the interest on which
is exempt from Federal income taxation under the Internal Revenue Code of
1986, as amended, of not less than five high grade component issuers
selected by Kenny which shall include, without limitation, issuers of
general obligation bonds. The specific issuers included among the
component issuers may be changed from time to me by Kenny in its
discretion. The bonds on which the Weekly Index is based shall not include
any bonds on which the interest is subject to a minimum tax or similar tax
under the Internal Revenue Code of 1986, as amended, unless all tax-exempt
bonds are subject to such tax. In the event Kenny ceases to make available
such Weekly Index, a successor indexing agent will be selected by the
Calculation Agent, such index to reflect the prevailing rate for bonds
rated in the highest short-term rating category by Moody's Investors
Service, Inc. and Standard & Poor's Corporation in respect of issuers most
closely resembling the high grade component issuers selected by Kenny for
its Weekly Index, the interest on which is (A) variable on a weekly basis,
(B) exempt from Federal income taxation under the Internal Revenue Code of
1986, as amended, and (c) not subject to a minimum tax or similar tax under
the Internal Revenue Code of 1986, as amended, unless all tax-exempt bonds
are subject to such tax. If such successor indexing agent is not
available, the rate for any Kenny Rate Interest Determination Date shall be
67% of the rate determined if the Treasury Rate option had been originally
selected.
The Kenny Rate Interest Determination Date shall be the second
Business Day prior to such Interest Reset Date. The Calculation Date
pertaining to a Kenny Rate Interest Determination Date shall be the earlier
of (i) the tenth calendar day after such Kenny Rate Interest Determination
Date or, if such day is not a Business Day, the next succeeding Business
Day, or (ii) the Business Day preceding the applicable Interest Payment
Date or Maturity Date, as the case may be.
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<PAGE>
The interest rate for each such Interest Reset Date shall be the Kenny
Rate plus or minus the Spread and/or multiplied by the Spread Multiplier as
indicated on the face hereof; provided, however, the interest rate in
effect for the period from the Issue Date to the first Interest Reset Date
will be the Initial Interest Rate and the interest rate in effect for the
10 days immediately prior to the Maturity Date or earlier redemption or
repayment will be that in effect on the tenth day preceding such Maturity
Date or earlier redemption or repayment. If an Interest Reset Date would
otherwise be a day that is not a Business Day, the Interest Reset Date
shall be postponed to the next day that is a Business Day.
Determination of LIBOR. If the Base Rate is LIBOR as indicated on the
-----------------------
face hereof, "LIBOR" for each such Interest Reset Date will be determined
as follows:
(i) On the second London Business Day prior to the Interest Reset
Date (a "LIBOR Interest Determination Date") relating to a LIBOR
Note, either, as specified on the face hereof: (a) if "LIBOR
Reuters" is specified on the face hereof, the arithmetic mean of
the offered rates for deposits in the Designated LIBOR Currency
having the Index Maturity specified on the face hereof,
commencing on the second London Business Day immediately
following the LIBOR Interest Determination Date, which appear on
the Reuters Screen LIBO Page as of 11:00 A.M., London time, on
the LIBOR Interest Determination Date, if at least two such
offered rates appear on the Reuters Screen LIBO Page ("LIBOR
Reuters"), or (b) if "LIBOR Telerate" is specified on the face
hereof, the rate for deposits in the Designated LIBOR Currency
having the Index Maturity specified on the face hereof,
commencing on the second London Business Day immediately
following such LIBOR Interest Determination Date, that appears on
the Telerate Page 3750 as of 11:00 A.M., London time, on that
LIBOR Interest Determination Date ("LIBOR Telerate"). Unless
otherwise indicated on the face hereof, "Reuters Screen LIBO
Page" means the display designated as Page "LIBO" on the Reuters
Monitor Money Rate Service (or such other page as may replace the
LIBO page on that service for the purpose of displaying London
interbank offered rates of major banks). "Telerate Page 3750"
means the display designated as page "3750" on the Telerate
Service (or such other page as may replace the 3750 page on that
service or such other service or services as may be nominated by
the British Bankers' Association (the "Association") for the
purpose of displaying London interbank offered rates for U.S.
dollar deposits). In the case where (a) above applies, if fewer
than two offered rates appear on the Reuters Screen LIBO Page,
LIBOR in respect of that Interest Reset Date will be determined
as if the parties had specified the rate described in (ii) below
(unless the specified Reuters Screen LIBO Page by its terms
provides only for a single rate, in which case such single rate
shall be used), or, in the case where (b) above applies if no
rate appears on the Telerate Page 3750, as applicable, LIBOR in
respect of that Interest Reset Date will be determined as if the
parties had specified the rate described in (ii) below.
(ii) With respect to any LIBOR Interest Determination Date on which
this provision applies, the Calculation Agent will request the
principal London office of each of four major banks in the London
interbank market selected by the Calculation Agent to provide the
Calculation Agent with its offered rate quotation for deposits in
the Designated LIBOR Currency for the period of the Index
Maturity specified on the face hereof, commencing on the second
London Business Day immediately following such LIBOR Interest
Determination Date, to prime banks
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<PAGE>
in the London interbank market as of 11:00 A.M., London time, on
such LIBOR Interest Determination Date and in a principal amount
that is representative for a single transaction in such
Designated LIBOR Currency in such market at such time. If at
least two such quotations are provided, LIBOR for such LIBOR
Interest Determination Date will be the arithmetic mean of such
quotations. If fewer than two quotations are provided, LIBOR for
such Interest Determination Date will be the arithmetic means of
the rates quoted as of 11:00 A.M. in the applicable Principal
Financial Center, on such LIBOR Interest Determination Date by
three major banks in such Principal Financial Center selected by
the Calculation Agent for loans in the Designated LIBOR Currency
to leading banks having the specified Index Maturity designated
on the face hereof in a principal amount that is representative
for a single transaction in such Designated LIBOR Currency 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 on such LIBOR
Interest Determination Date will be LIBOR then in effect on such
LIBOR Interest Determination Date.
The Calculation Date pertaining to a LIBOR Interest Determination Date
shall be the earlier of (i) the tenth calendar day after the LIBOR Interest
Determination Date or, if such day is not a Business Day, the next succeeding
Business Day, or (ii) the Business Day preceding the applicable Interest Payment
Date or Maturity Date, as the case may be.
The interest rate for each such Interest Reset Date shall be LIBOR plus or
minus the Spread and/or multiplied by the Spread Multiplier as indicated on the
face hereof; provided, however, the interest rate in effect for the period from
the Issue Date to the first Interest Reset Date will be the Initial Interest
Rate and the interest rate in effect for the 10 days immediately prior to the
Maturity Date or earlier redemption or repayment will be that in effect on the
tenth day preceding such Maturity Date or earlier redemption or repayment. If
an Interest Reset Date would otherwise be a day that is not a Business Day, the
Interest Reset Date shall be postponed to the next day that is a Business Day,
except that, in the case of a LIBOR Note, if such Business Day is in the next
succeeding calendar month, such Interest Reset Date shall be the immediately
preceding Business Day.
"Designated LIBOR Currency" means, as with respect to any LIBOR Note, the
currency (including a composite currency), if any, designated on this Note and
the applicable Pricing Supplement as the Designated LIBOR Currency. If no such
currency is designated on this Note and the applicable Pricing Supplement, the
Designated LIBOR Currency shall be U.S. dollars.
"Principal Financial Center" means, as with respect to any LIBOR Note,
unless otherwise specified in this Note and the applicable Pricing Supplement,
the capital city of the country that issues as its legal tender the Designated
LIBOR Currency of this Note, except that with respect to U.S. dollars and ECUs,
the Principal Financial Center shall be the City of New York and Brussels,
respectively.
Determination of Prime Rate. If the Base Rate is the Prime Rate as
---------------------------
indicated on the face hereof, the "Prime Rate" means, with respect to any Prime
Rate Interest Determination Date, the rate set forth in H.15(519) for such date
opposite the caption "Bank Prime Loan." If such rate is not yet published by
9:00 A.M., New York City time, on the Calculation Date pertaining to such Prime
Rate Interest Determination Date, the Prime Rate will be calculated by the
Calculation Agent and will be the arithmetic mean of the rates of interest
publicly announced by each bank named on the Reuters Screen NYMF Page (as
defined below) as such bank's prime rate or base lending rate as in effect for
such Prime Rate Interest Determination Date as quoted on the Reuters Screen NYMF
Page on such Prime Rate Interest Determination Date, or, if fewer than four such
rates appear on the Reuters Screen NYMF
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<PAGE>
Page for such Prime Rate Interest Determination Date, the 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 Prime Rate
Interest Determination Date by at least two of the three major money center
banks in The City of New York selected by the Calculation Agent from which
quotations are requested. If fewer than two quotations are provided, the Prime
Rate for such Prime Rate Interest Determination Date shall be calculated by the
Calculation Agent and shall be determined as the arithmetic mean on the basis of
the prime rates in The City of New York on such date by the appropriate number
of substitute banks or trust companies organized and doing business under the
laws of the United States, or any state thereof, in each case having total
equity capital of at least U.S. $500 million and being subject to supervision or
examination by 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" with respect to
such Prime Rate Interest Determination Date will be the interest rate otherwise
in effect on such Prime Rate Interest Determination Date. "Reuters Screen NYMF
Page" means the display designated as page "NYMF" on the Reuters Monitor Money
Rates Service (or such other page as may replace the page NYMF on that service
for the purpose of displaying prime rates or base lending rates of major United
States banks).
The Prime Rate Interest Determination Date shall be the Second Business Day
prior to such Interest Reset Date. The Calculation Date pertaining to a Prime
Rate Interest Determination Date shall be the earlier of (i) the tenth calendar
day after such Prime Rate Interest Determination Date or, if such day is not a
Business Day, the next succeeding Business Day, or (ii) the Business Day
preceding the applicable Interest Payment Date or Maturity Date, as the case may
be.
The interest rate for each such Interest Reset Date shall be the Prime Rate
plus or minus the Spread and/or multiplied by the Spread Multiplier as indicated
on the face hereof; provided, however, the interest rate in effect for the
period from the Issue Date to the first Interest Reset Date will be the Initial
Interest Rate and the interest rate in effect for the 10 days immediately prior
to the Maturity Date or earlier redemption or repayment will be that in effect
on the tenth day preceding such Maturity Date or earlier redemption or
repayment. If an Interest Reset Date would otherwise be a day that is not a
Business Day, the Interest Reset Date shall be postponed to the next day that is
a Business Day.
Determination of Treasury Rate. If the Base Rate is the Treasury Rate as
------------------------------
indicated on the face hereof, the "Treasury Rate" with respect to any Treasury
Rate Interest Determination Date shall be the rate for the most recent auction
of direct obligations of the United States ("Treasury bills") having the Index
Maturity specified on the Note representing this Treasury Rate Note as published
in H.15(519) under the heading "Treasury bills--auction average (investment)"
or, if not so published by 3:00 P.M., New York City time, on the Calculation
Date pertaining to such Treasury Rate Interest Determination Date, the auction
average rate (expressed as a bond equivalent, rounded upwards, if necessary, to
the next higher one hundred-thousandth of a percent, 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 specified Index Maturity
are not made available by the Federal Reserve Board or published or reported as
provided above by 3:00 P.M., New York City time, on such Calculation Date or if
no such auction is held in a particular week, then the Treasury Rate shall be
calculated by the Calculation Agent and shall be a yield to maturity (expressed
as a bond equivalent, rounded upwards, if necessary, to the next higher one
hundred-thousandth of a percent, 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 Treasury Rate Interest Determination Date, of three leading primary
United States government securities dealers selected by the Calculation Agent
for the issue of Treasury bills with a remaining maturity closest to the
applicable Index Maturity; provided, however,
-10-
<PAGE>
that if the dealers selected as aforesaid by the Calculation Agent are not
quoting as mentioned in this sentence, the Treasury Rate for such Treasury Rate
Interest Determination Date will be the Treasury Rate in effect on such date.
The Treasury Rate Interest Determination Date shall be the day of the week
in which such Interest Reset Date falls on which Treasury bills would usually be
auctioned. Treasury bills are usually sold at auction on Monday of each week,
unless that day is a legal holiday, in which case the auction is usually held on
the following Tuesday, except that such auction may be held on the preceding
Friday. If, as a result of a legal holiday, an auction is so held on the
preceding Friday, such Friday will be the Treasury Rate Interest Determination
Date pertaining to the Interest Reset Date commencing in the next succeeding
week. If an auction date shall fall on any Interest Reset Date for a Treasury
Rate Note, then such Interest Reset Date shall instead be the first Business Day
immediately following such auction date. The Calculation Date pertaining to a
Treasury Rate Interest Determination Date will be the earlier of (i) the tenth
calendar day after such Treasury Rate Interest Determination Date or, if such
day is not a Business Day, the next succeeding Business Day, or (ii) the
Business Day preceding the applicable Interest Payment Date or Maturity Date, as
the case may be.
The interest rate for each such Interest Reset Date shall be the Treasury
Rate plus or minus the Spread and/or multiplied by the spread Multiplier as
indicated on the face hereof; provided, however, the interest rate in effect for
the period from the Issue Date to the first Interest Reset Date will be the
Initial Interest Rate and the interest rate in effect for the 10 days
immediately prior to the Maturity Date or earlier redemption or repayment will
be that in effect on the tenth day preceding such Maturity Date or earlier
redemption or repayment. If an Interest Reset Date would otherwise be a day
that is not a Business Day, the Interest Reset Date shall be postponed to the
next day that is a Business Day.
Determination of CMT Rate. If the Base Rate is the CMT Rate as indicated
-------------------------
on the face hereof, the "CMT Rate" means, with respect to any CMT Interest
Determination Date, the rate displayed on the Designated CMT Telerate Page (as
defined below) under the caption "...Treasury Constant Maturities ... Federal
Reserve Board Release H.15 ... Mondays Approximately 3:45 P.M.," under the
column for the Designated CMT Maturity Index (as defined below) for (i) if the
Designated CMT Telerate Page is 7055, the rate on such CMT Interest
Determination Date and (ii) if the Designated CMT Telerate Page is 7052, the
week, or the month, as applicable, ended immediately preceding the week in which
the applicable CMT Interest Determination Date occurs. If such rate is no longer
displayed on the relevant page, or if not displayed by 3:00 P.M., New York City
time, on the Calculation Date pertaining to such CMT Interest Determination
Date, then the CMT Rate for such CMT Interest Determination Date will be such
treasury constant maturity rate for the Designated CMT Maturity Index as
published in the relevant H. 15(519). If such rate is no longer published, or
if not published by 3:00 P.M., New York City time, on the Calculation Date
pertaining to such CMT Interest Determination Date, then the CMT Rate for such
CMT Interest Determination Date will 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 the CMT Interest Determination Date with
respect to such Interest Reset 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). If such information is not provided by 3:00 P.M., New York
City time, on the Calculation Date pertaining to such CMT Interest Determination
Date, then the CMT Rate for the CMT 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 the CMT Interest Determination
Date reported, according to their written records, by three leading primary
United States government securities dealers (each, a "Reference Dealer") in The
City of New York selected by the Calculation Agent (from five such
-11-
<PAGE>
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 cannot obtain three
such Treasury Note quotations, the CMT Rate for such CMT 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 offer side prices as of
approximately 3:30 P.M., New York City time, on the CMT Interest Determination
Date of three Reference Dealers in The City of New York (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
Designated CMT Maturity Index and in an amount of at least $100,000,000. If
three or four (and not five) of such Reference Dealers are quoting as described
above, then the CMT Rate will be based on the arithmetic mean of the offer
prices obtained and neither the highest nor the lowest of such quotes will be
eliminated; provided however, that if fewer than three Reference Dealers
selected by the Calculation Agent are quoting as described herein, the CMT Rate
will be the CMT Rate in effect on such CMT Interest Determination Date. If two
Treasury Notes with an original maturity as described in the third preceding
sentence, have remaining terms to maturity equally close to the Designated CMT
Maturity Index, the quotes for the CMT Rate Note with the shorter remaining term
to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
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 published in H.15(519)), for the purpose of
displaying Treasury Constant Maturities as published 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 Treasury Notes (either one, two, three, five, seven, ten, twenty or thirty
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.
The CMT Interest Determination Date shall be the Second Business Day prior
to such Interest Reset Date. The Calculation Date pertaining to a CMT Interest
Determination Date shall be the earlier of (i) the tenth calendar day after such
CMT Interest Determination Date or, if such day is not a Business Day, the next
succeeding Business Day, or (ii) the Business Day preceding the applicable
Interest Payment Date or Maturity Date, as the case may be.
The interest rate for each such Interest Reset Date shall be the CMT Rate
plus or minus the Spread and/or multiplied by the Spread Multiplier as indicated
on the face hereof; provided, however, the interest rate in effect for the
period from the Issue Date to the first Interest Reset Date will be the Initial
Interest Rate and the interest rate in effect for the 10 days immediately prior
to the Maturity Date or earlier redemption or repayment will be that in effect
on the tenth day preceding such Maturity Date or earlier redemption or
repayment. If an Interest Reset Date would otherwise be a day that is not a
Business Day, the Interest Reset Date shall be postponed to the next day that is
a Business Day.
-12-
<PAGE>
The Trustee shall be the initial Calculation Agent. At the request of the
Holder hereof, the Calculation Agent will provide the interest rate then in
effect and, if determined, the interest rate which will become effective on the
next Interest Reset Date with respect to this Note.
All percentages resulting from any calculations under this Note will be
rounded, if necessary, to the nearest one hundred thousandth of a percentage
point (with five one-millionths of a percentage point being rounded upward), all
dollar amounts used in or resulting from such calculation will be rounded to the
nearest cent (with one-half cent being rounded upward), and all currency or
currency unit amounts used in or resulting from any such calculation in respect
of the Notes will be rounded to the nearest one-hundredth of a unit (with five
one-thousandths being rounded upward).
(g) Until the Notes are paid or payment thereof is duly provided for, the
Company will, at all times, maintain a paying agent (the "Paying Agent") capable
of performing the duties described herein to be performed by the Paying Agent.
The Company has initially appointed the Trustee as the Paying Agent. The
Company will notify the Holders of such Notes, in accordance with the Indenture,
of any change in the Paying Agent or its address.
Section 3. Redemption. If so specified on the face hereof, the Company
----------
may at its option redeem this Note in whole or from time to time in part on or
after the date designated as the Initial Redemption Date on the face hereof at
prices declining from a premium specified on the face hereof, if any, to par
together with accrued interest to the date of redemption. The Company may
exercise such option by causing a notice of such redemption to be mailed to each
Holder by first class mail, postage prepaid, at least 30 but not more than 60
days prior to the date of redemption. In the event of redemption of this Note
in part only, a new Note or Notes for the unredeemed portion hereof shall be
issued in the name of the Holder hereof upon the cancellation hereof. If less
than all of the Notes with like tenor and terms to this Note are to be redeemed,
the Notes to be redeemed shall be selected by the Trustee by such method as the
Trustee shall deem fair and appropriate.
Section 4. Repayment. If so specified on the face hereof, this Note will
---------
be repayable prior to the Stated Maturity at the option of the Holder on the
Optional Repayment Dates shown on the face hereof at a price equal to 100% of
the principal amount hereof or, if this Note is a Discounted Security (as
specified on the face hereof), at the applicable Optional Repayment Price shown
on the face hereof, together with accrued interest to the date of repayment.
Section 5. Sinking Fund. The Notes will not be subject to any Sinking
------------
Fund.
Section 6. Original Issue Discount Notes. Notwithstanding anything herein
-----------------------------
to the contrary, if this Note is an Original Issue Discount Note, the amount
payable in the event of redemption or repayment, or declaration of acceleration
following an Event of Default, prior to the Maturity Date hereof in lieu of the
principal amount due at the Maturity Date hereof shall be the Amortized Face
Amount of this Note as of the redemption date, the date of repayment, or the
date of declaration of acceleration, as the case may be. The "Amortized Face
Amount" of this Note shall be the amount equal to (a) the Issue Price (as set
forth on the face hereof) plus (b) that portion of the difference between the
Issue Price and the principal amount hereof that has accrued at the Yield to
Maturity (as set forth on the face hereof)(computed in accordance with generally
accepted United States bond yield computation principles) at the date as of
which the Amortized Face Amount is calculated but in no event shall the
Amortized Face Amount of this Note exceed its principal amount.
Section 7. Events of Default. In case an Event of Default, as defined in
-----------------
the Indenture, with respect to the Notes shall have occurred and be continuing,
the Trustee or Holders of at least 25% in principal amount of the Notes
outstanding may declare the principal amount of all the Notes, and upon
-13-
<PAGE>
such declaration such principal amount of all the Notes, shall become, due and
payable, in the manner, with the effect and subject to the conditions provided
in the Indenture.
Section 8. Modifications and Waivers. 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
Notes of each series to be affected under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of not less than 66 2/3%
in principal amount of the Notes at the time Outstanding of each series to be
affected. The Indenture also contains provisions permitting, with certain
exceptions as therein provided, the Holders of not less than a majority in
principal amount of the Notes of each series at the time Outstanding, on behalf
of the Holders of all Notes of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. 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.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the right of the Holder of this Note, which
is absolute and unconditional, to receive payment of the principal of (and
premium, if any) and interest on this Note at the times, places and rate, and in
the coin or currency, herein prescribed.
Section 9. Authorized Denominations. Notes are issuable in registered
------------------------
form without coupons in the minimum denomination of $1,000, or the equivalent
thereof in the Specified Currency, and in any larger amount that is an integral
multiple of $1,000. Notes may be exchanged by the Holder hereof without charge
except for any tax or other governmental charge imposed in connection therewith,
for a like aggregate principal amount of Notes of other authorized denominations
in the manner and subject to the limitations provided in the Indenture at the
office or agency to be maintained by the Company in The City of New York, New
York, or at such other location or locations as may be provided for in the
Indenture.
Section 10. Registration of Transfer. Upon due presentment for
------------------------
registration of transfer of this Note at the office or agency of the Company
maintained for such purpose, one or more new Notes of authorized denominations,
for an equal aggregate principal amount, will be issued to the transferee in
exchange therefor subject to the limitations provided in the Indenture, without
charge except for any tax or other governmental charge imposed in connection
therewith.
If this Note is a global Note (as specified on the face hereof), this Note
is exchangeable only if (w) the Depositary notifies the Company and the Trustee
in writing that it is unwilling or unable to continue as Depositary for this
global Note or if at any time the Depositary ceases to be a clearing agency
registered under the Securities Exchange Act of 1934, as amended, and a
successor Depositary is not appointed by the Company within 90 days, (x) the
Company in its sole discretion determines that this Note shall be exchangeable
for certificated Notes in registered form and delivers to the Trustee a written
order as described in the Indenture that this Note shall be so exchangeable, or
(y) there shall have occurred and be continuing an Event of Default or an event
which, with the lapse of time or the giving of notice, or both, would constitute
an Event of Default with respect to the global Notes represented hereby or (z)
there shall exist such other circumstances, if any, as specified for this
purpose as contemplated by Section 301 of the Indenture, provided that this
permanent global Note shall be surrendered by the Depositary, or such other
depositary as shall have been specified as provided in the Indenture, to the
Trustee, as the agent for such purpose, to be exchanged, in whole or in part,
for definitive Securities without charge, and the Trustee shall authenticate and
deliver, in
-14-
<PAGE>
exchange for each portion of this permanent global Note, an equal aggregate
principal amount of definitive Securities, executed by the Company, of the same
series of authorized denominations and of like tenor as the portion of this
global Note to be exchanged, which shall be in the form of registered Securities
as provided in the Company's written order as described in the Indenture.
Every Security authenticated and delivered upon registration of transfer
of, or in exchange for or in lieu of, this global Note other than pursuant to
clauses (w), (x), (y) or (z) above, shall be authenticated and delivered in the
form of, and shall be, a Global Security. Except as provided above, owners of
beneficial interests in this permanent global Note will not be entitled to
receive physical delivery of Notes in certificated registered form and will not
be considered the Holders thereof for any purpose under the Indenture.
Section 11. Owners. Prior to due presentment for registration of transfer
------
of this Note, the Company, the Trustee, any Paying Agent and the Security
Registrar may deem and treat the registered Holder hereof as the absolute owner
of this Note (whether or not this Note shall be overdue and notwithstanding any
notation of ownership or other writing hereon), for the purpose of receiving
payment of, or on account of, the principal hereof, and, subject to the
provisions on the face hereof, interest hereon, and for all other purposes, and
neither the Company nor the Trustee nor any Paying Agent nor any Security
Registrar shall be affected by any notice to the contrary.
Section 12. Defeasance; Proceedings. The Indenture contains provisions,
-----------------------
which apply to this Note, for defeasance of (i) the entire indebtedness of this
Note and (ii) certain restrictive covenants, subject in either case to
compliance by the Company with conditions set forth in the Indenture.
As provided in and subject to the provisions of the Indenture, the Holder
of this Note shall not have the right to institute any proceeding with respect
to the Indenture or for the appointment of a receiver or trustee or for any
other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Notes of this series, the Holders of not less than 10% in principal amount of
the Notes of this series at the time Outstanding shall have made written request
to the Trustee to institute proceedings in respect of such Event of Default as
Trustee and offered the Trustee reasonable indemnity, and the Trustee shall not
have received from the Holders of a majority in principal amount of Notes of
this series at the time Outstanding a direction inconsistent with such request,
and shall have failed to institute any such proceeding, for 60 days after
receipt of such notice, request and offer of indemnity. The foregoing shall not
apply to any suit instituted by the Holder of this Note for the enforcement of
any payment of principal hereof or any premium or interest hereon on or after
the respective due dates expressed herein.
Section 13. Definitions. All terms used in this Note which are defined in
-----------
the Indenture shall have the meanings assigned to them therein.
Section 14. Governing Law. This Note shall be governed and construed in
-------------
accordance with the law of the State of New York.
-15-
<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned owner of this Note hereby irrevocably elects to have the
Company repay the principal amount of this Note or portion hereof below
designated at the Optional Repayment Price indicated on the face hereof.
Dated:_________________________ ____________________________________________
Signature
Sign exactly as name appears on the front of
this Security [SIGNATURE GUARANTEE -
required only if Securities are to be issued
and delivered to the other than the
registered holder]
Principal amount to be repaid, Fill in for registration of Securities if to
if amount to be repaid is less be issued otherwise than to the then
the principal amount of this registered holder:
Security (principal amount
remaining must be an authorized Name:___________________________________
denomination)
Address:________________________________
$______________________________ ________________________________
(Please print name and address
including zip code)
SOCIAL SECURITY OR OTHER TAXPAYER ID NUMBER
________________________________________
-16-
<PAGE>
_______________________
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in
common
UNIF GIFT MIN ACT - ................Custodian...................
(Cust) (Minor)
Under Uniform Gifts to Minors Act
_________________________________
(State)
Additional abbreviations may also be used though not in the above list.
-------------------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
---------------------------
/ /
_______________________________________________________
________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL
ZIP CODE OF ASSIGNEE
________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing _____________ attorney to transfer said Note on the books of the
Company, with full power of substitution in the premises.
Dated: _________________________
Signature
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE WITHIN INSTRUMENT IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
-17-
<PAGE>
Exhibit 4.2
CUSIP NO.
REGISTERED NO. FIXR. PRINCIPAL AMOUNT:
ALCO CAPITAL RESOURCE, INC.
MEDIUM-TERM NOTE, SERIES A
Due Nine Months or More from Date of Issue
(Fixed Rate)
[INSERT IF THE SECURITY IS TO BE A GLOBAL SECURITY -- THIS SECURITY IS
A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY.
THIS GLOBAL SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY
(OTHER THAN A TRANSFER OF THIS SECURITY 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) MAY BE REGISTERED EXCEPT IN SUCH LIMITED
CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY
ISSUED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR, OR IN LIEU OF, THIS
SECURITY IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.]
THE FOLLOWING SUMMARY OF TERMS IS SUBJECT TO THE INFORMATION SET FORTH ON THE
REVERSE HEREOF:
PRINCIPAL AMOUNT:
ORIGINAL ISSUE DATE: INTEREST RATE: STATED MATURITY:
SPECIFIED CURRENCY: OPTION TO ELECT AUTHORIZED DENOMINATIONS
PAYMENT IN U.S.
DOLLARS (only (if Specified Currency is
applicable if U.S. dollars):
Specified Currency is
other than U.S. $1,000 and any integral
dollars): multiple
$1,000 in excess thereof
[ ] Yes [ ] No
INDEXED CURRENCY:
<PAGE>
(if Specified Currency
is other than U.S.
dollars):
CURRENCY DETERMINATION
AGENT: THIS SECURITY IS A:
[ ] Global Security
[ ] Certificated Security
(only applicable if
Specified Currency is
other than U.S. dollars)
INTEREST PAYMENT DATES:
OPTIONAL REDEMPTION: INITIAL REDEMPTION DATE: REDEMPTION PRICE(S):
Initially ___% of
[ ] Yes [ ] No Principal Amount and
declining by ___% of the
Principal Amount on each
anniversary of the
Initial Redemption Date
until the Redemption
Price is 100% of the
Principal Amount
OPTION TO ELECT REPAYMENT: OPTIONAL REPAYMENT OPTIONAL REPAYMENT
DATE(S): PRICE(S):
[ ] Yes [ ] No
REPAYMENT PROVISIONS:
If this Security was issued with "original issue discount" for
purposes of Section 1273 of the Internal Revenue Code of 1986, as amended, the
following shall be completed:
ORIGINAL ISSUE DISCOUNT TOTAL AMOUNT OF OID: ISSUE PRICE (expressed as
SECURITY: a percentage of aggregate
principal amount):
[ ] Yes [ ] No
YIELD TO MATURITY: INITIAL ACCRUAL PERIOD METHOD USED TO DETERMINE
OID: YIELD FOR INITIAL ACCRUAL
PERIOD:
[ ] Approximate [ ] Exact
-2-
<PAGE>
ALCO CAPITAL RESOURCE, INC., a corporation duly organized and existing
under the laws of Delaware (herein called the "Company", which term includes any
successor Person under the Indenture referred to on the reverse hereof), for
value received, hereby promises to pay to __________________________ or
registered assigns, the principal sum of _____________________________ on the
Stated Maturity shown above, and to pay interest thereon from and including the
Original Issue Date shown above or from and including the last date in respect
of which interest has been paid, as the case may be, to, but excluding, the next
succeeding Interest Payment Date. Interest will be paid on the Interest Payment
Dates shown above, commencing with the first such Interest Payment Date next
succeeding the Original Issue Date shown above (except as provided below), at
the rate per annum specified above, until the principal hereof is paid or made
available for payment, and interest shall accrue on any overdue principal and on
any overdue installment of interest (to the extent that the payment of such
interest shall be legally enforceable) at the rate per annum in effect at the
time such principal or installment of interest, as the case may be, was due and
payable. The interest so payable and punctually paid or duly provided for on
any Interest Payment Date will, as provided in such Indenture, 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 regular record date for such interest, which
shall be the May 31 or November 30 (whether or not a Business Day, as defined),
as the case may be, next preceding such Interest Payment Date; provided,
however, that interest payable at the Stated Maturity or upon earlier redemption
or repayment will be payable to the Person to whom principal shall be payable.
Payments of principal and interest on Notes for which payments of principal and
interest are made in equal installments over the life of the security
("Amortizing Notes"), will be made either quarterly on each March 15, June 15,
September 15 and December 15 or semiannually on each June 15 and December 15 as
set forth in the applicable Pricing Supplement, and at maturity or upon earlier
redemption or repayment. Such payments will be payable to the person in whose
name such Amortizing Note is registered at the close of business on the
fifteenth day (whether or not a Business Day) next preceding the respective
Interest Payment Date. If this Note was originally issued between a regular
record date and an Interest Payment Date, the first payment of interest on this
Note will be made on the Interest Payment Date following the next succeeding
regular record date to the registered owner of this Note on such next succeeding
regular record date. Any interest not punctually paid or duly provided for
shall be payable as provided in the Indenture.
If this Note is denominated in a Specified Currency other than U.S.
dollars, then the Holder may, be delivery of a written request to the Paying
Agent (as defined) at its principal office on or prior to the applicable record
date or at least 15 days prior to the Stated Maturity, as the case may be, elect
to receive all such payments in U.S. dollars. Such election will remain in
effect until revoked by written notice received by the Paying Agent not later
than the applicable record date or at least 15 days prior to the Stated
Maturity, as the case may be (but no such revocation may be made with respect to
payments made on this Note if an Event of Default has occurred with respect
hereto or upon the giving of a notice of redemption). In addition, if bid
quotations for U.S. dollars of the type specified on the reverse side hereof are
not available, the Currency Determination Agent (which shall be the Company
unless otherwise as set forth above) will be unable to exchange the Specified
Currency for U.S. dollars and payments of principal and interest will be made in
the Specified Currency. If the Specified Currency is unavailable due to the
imposition of exchange controls or to other circumstances beyond the Company's
control, payments will be made in U.S. dollars as described on the reverse side
hereof.
Payments in U.S. dollars of interest on this Note (other than interest
payable at the Stated Maturity or upon earlier redemption or repayment) will be
made by mailing a check to the Holder at the address of the Holder appearing in
the security register on the applicable record date. Principal and interest
payable in U.S. dollars at the Stated Maturity or upon earlier redemption or
repayment
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<PAGE>
in respect of this Note will be paid in immediately available funds upon
surrender of this Note at the principal office of the Paying Agent in Atlanta,
Georgia accompanied by wire transfer instructions. Payments in a Specified
Currency other than U.S. dollars of interest and principal on this Note will be
made by wire transfer to an account with a bank located in the country issuing
the Specified Currency (or with respect to Notes denominated in European
Currency Units, or "ECUs," Brussels), as shall have been designated by filing
the appropriate information with the Trustee at its Corporate Trust Office at
least 15 days prior to the Interest Payment Date or Stated Maturity, as the case
may be, by the Holder, provided that, in the case of payment principal of (and
premium, if any) and any interest due at the Stated Maturity, the Note is
presented to the Paying Agent in time for the Paying Agent to make such payments
in such funds in accordance with its normal procedures.
Interest will be computed on the basis of a 360-day year of twelve
30-day months.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof and such further provisions shall for all purposes
have the same effect as though fully set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof, directly or through an
Authenticating Agent, by manual signature of an authorized signatory, this Note
shall not be entitled to any benefit under the Indenture of be valid or
obligatory for any purpose.
-4-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
Dated:
ALCO CAPITAL RESOURCE, INC.
By:
-------------------------
Title:
(Corporate Seal)
Attest:
By:
-------------------------
Trustee's Certificate of Authentication
This is one of the Securities of the
series described herein and referred
to in the within-mentioned Indenture.
NATIONSBANK OF GEORGIA,
NATIONAL ASSOCIATION, As Trustee
By:
-------------------------
Authorized Signatory
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<PAGE>
[REVERSE SIDE OF SECURITIES]
ALCO CAPITAL RESOURCE, INC.
MEDIUM-TERM NOTE, SERIES A
(Fixed Rate)
Section 1. General. This Note is one of a duly authorized issue of
-------
debentures, notes, bonds or other evidences of indebtedness of the Company
(herein called the "Securities"), of the series hereinafter specified, all
issued or to be issued under and pursuant to an indenture, dated as of June 15,
1994, between the Company and NationsBank of Georgia, National Association, as
Trustee (the "Indenture"), to which Indenture and all indentures supplemental
thereto reference is hereby made for a description of the rights, limitations of
rights, obligations, duties and immunities thereunder of the Trustee, the
Company and the Holders of the Notes. The Securities may be issued in one or
more series, which different series may be issued in various aggregate principal
amounts, may mature at different times, may bear interest, if any, at different
rates, may be subject to different redemption provisions, if any, may be subject
to different sinking, purchase or analogous funds, if any, and may otherwise
vary as in the Indenture provided. This Note is one of a series designated as
"Medium-Term Notes, Series A" of the Company, limited in aggregate principal
amount to U.S. $500,000,000, or its equivalent at the time of issue in foreign
currencies or currency units, or in such lesser amount as may be reduced by the
sale of Securities of another series. References herein to "Notes" shall mean
the Notes of said Series A.
Section 2. Payments. (a) Interest on this Note will be payable semi-
--------
annually each June 15 and December 15 or as otherwise set forth herein (the
"Interest Payment Dates") and at the Stated Maturity or upon earlier redemption
or repayment.
Interest payments on each Interest Payment Date for this Note 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, except that at the Stated
Maturity 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.
(b) If this Note is denominated in other than U.S. dollars and if the
Holder has made the election described in paragraph (c) below, payment in
respect of this Note shall be made in U.S. dollars based on the highest
indicated bid quotation for the purchase of U.S. dollars for the Specified
Currency obtained by the Currency Determination Agent at approximately 11:00
A.M., New York City Time, on the second Business Day next preceding the
applicable date (the "Conversion Date") from the bank composite or multi-
contributor pages of the Quoting Source for three (or two if three are not
available) major banks in The City of New York. The first three (or two) such
banks selected by the Currency Determination Agent which are offering quotes on
the Quoting Source will be used. If fewer than two such bid quotations are
available at 11:00 A.M., New York City time, on the second Business Day next
preceding the applicable payment date, such payment will be based on the noon
buying rate in The City of New York for cable transfers for such Specified
Currency as certified for customs purposes by the Federal Reserve Bank of New
York (the "Market Exchange Rate") as of the second Business Day next preceding
the applicable payment date. If the Market Exchange Rate for such date is not
then available, such payment will be made in the Specified Currency, unless such
Specified Currency is unavailable due to the imposition of exchange controls or
to other circumstances beyond the Company's control, in which case payment will
be made as described in paragraph (d) below. As used herein, the "Quoting
Source"
<PAGE>
means Reuters Monitor Foreign Exchange Service, or if the Currency Determination
Agent determines that such service is not available, Telerate Monitor Foreign
Exchange Service, or if the Currency Determination Agent determines that neither
service is available, such comparable display or other comparable manner of
obtaining quotations as shall be agreed between the Company and the Currency
Determination Agent. All currency exchange costs associated with any payment in
U.S. dollars on this Note shall be borne by the Holder hereof by deductions from
such payments.
As used herein, "Business Day", means any Monday, Tuesday, Wednesday,
Thursday or Friday that in the Place of Payment is not a day on which banking
institutions are authorized or required by law, regulation or executive order to
close.
(c) If this Note is denominated in other than U.S. dollars, the Holder of
this Note may elect to receive all such payments in U.S. dollars as described in
paragraph (b) above by delivery of a written request to the Paying Agent at its
principal office which must be received by the Paying Agent on or prior to the
applicable record date or at least 15 calendar days prior to the Stated
Maturity, as the case may be. Such election shall remain in effect unless and
until revoked by written notice to the Paying Agent, but the Paying Agent must
receive written notice of any such revocation on or prior to the applicable
record date or at least 15 calendar days prior to the Stated Maturity, as the
case may be (but no such revocation may be made with respect to payments made on
this Note if an Event of Default has occurred with respect hereto or upon the
giving of a notice of redemption). In the absence of manifest error, all
determinations by the Currency Determination Agent shall be final and binding on
the Company and the Holder of this Note.
(d) If payment of this Note is required to be made in a Specified Currency
(e.g. ECUs) other than U.S. dollars and on a payment date with respect to this
Note such currency is unavailable, in the good faith judgment of the Company,
due to the imposition of exchange controls or other circumstances beyond the
Company's control, then all payments in respect of this Note shall be made in
U.S. dollars until such currency unit is again available. Any payment made
under such circumstances in U.S. dollars where the required payment is in a
Specified Currency other than U.S. dollars will not constitute an Event of
Default under the Indenture. The amount of each payment of U.S. dollars shall
be computed on the basis of the equivalent of the currency unit in U.S. dollars,
which shall be determined by the Currency Determination Agent on the following
basis. The component currencies of the currency unit for this purpose (the
"Component Currencies") shall be the currency amounts that were components of
the currency unit as of the Conversion Date. The equivalent of the currency
unit in U.S. dollars shall be calculated by aggregating the U.S. dollar
equivalents of the Component Currencies. The U.S. dollar equivalent of each of
the Component Currencies shall be determined by the Currency Determination Agent
on the basis of the Market Exchange Rate for each such Component Currency that
is available as of the third Business Day prior to the date on which the
relevant payment is due and for each such Component Currency that is
unavailable, if any, as of the Conversion Date for such Component Currency.
If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of that currency as a Component
Currency shall be divided or multiplied in the same proportion. If two or more
Component Currencies are consolidated into a single currency, the amounts of
those currencies shall be replaced by an amount in such single currency equal to
the sum of the amounts of the consolidated Component Currencies expressed in
such single currency. If any Component Currency is divided into two or more
currencies, the amount of the original Component Currency shall be replaced by
the amounts of such two or more currencies, the sum of which shall be equal to
the amount of the original Component Currency.
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<PAGE>
All determinations referred to above made by the Currency Determination
Agent shall be at its sole discretion (except to the extent expressly provided
herein or on the face hereof that any determination is subject to approval by
the Company) and, in the absence of manifest error, shall be conclusive for all
purposes and binding on the Holder of this Note and the Company, and the
Currency Determination Agent shall have no liability therefor.
(e) All percentages resulting from any calculations under this Note will
be rounded, if necessary, to the nearest one hundred thousandth of a percentage
point (with five one-millionths of one percentage point being rounded upward)
and all currency unit amounts used in or resulting from any such calculation in
respect of the Notes will be rounded to the nearest one-hundredth of a unit
(with five one-thousandths being rounded upward).
(f) Until the Notes are paid or payment is duly provided for, the Company
will, at all times, maintain a paying agent (the "Paying Agent") capable of
performing the duties described herein to be performed by the Paying Agent. The
Company has initially appointed the Trustee as the Paying Agent. The Company
will notify the Holders of such Notes, in accordance with the Indenture, of any
change in the Paying Agent or its address.
3. Redemption. If so specified in the face hereof, the Company may at its
----------
option redeem this Note in whole or from time to time in part on or after the
date designated as the Initial Redemption Date on the face hereof at prices
declining from a premium specified on the face hereof, if any, to par together
with accrued interest to the date of redemption. The Company may exercise such
option by causing a notice of such redemption to be mailed to each Holder by
first class mail, postage prepaid, at least 30 but not more than 60 days prior
to the date of redemption. In the event of redemption of this Note in part
only, a new Note or Notes for the unredeemed portion hereof shall be issued in
the name of the Holder hereof upon the cancellation hereof. If less than all of
the Notes with like tenor and terms to this Note are to be redeemed, the Notes
to be redeemed shall be selected by the Trustee by such method as the Trustee
shall deem fair and appropriate.
Section 4. Repayment. If so specified on the face hereof, this Note will
---------
be repayable prior to the Stated Maturity at the option of the Holder on the
Optional Repayment Dates shown on the face hereof at a price equal to 100% of
the principal amount hereof or, if this Note is a Discounted Security (as
specified on the face hereof), at the applicable Option Repayment Price shown on
the face hereof, together with accrued interest to the date of repayment.
5. Sinking Fund. The Notes will not be subject to any sinking fund.
------------
6. Original Issue Discount Notes. Notwithstanding anything herein to the
-----------------------------
contrary, if this Note is an Original Issue Discount Note, the amount payable in
the event of redemption or repayment, or declaration of acceleration following
an Event of Default, prior to the Stated Maturity hereof in lieu of the
principal amount due at the Stated Maturity hereof shall be the Amortized Face
Amount of this Note as of the redemption date, the date of repayment or the date
of declaration of acceleration, as the case may be. The "Amortized Face Amount"
of this Note shall be the amount equal to (a) the Issue Price (as set forth on
the face hereof) plus (b) that portion of the difference between the Issue Price
and the principal amount hereof that has accrued at the Yield to Maturity (as
set forth on the face hereof) (computed in accordance with generally accepted
United States bond yield computation principles) at the date as of which the
Amortized Face Amount is calculated but in no event shall the Amortized Face
Amount of this Note exceed its principal amount.
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<PAGE>
Section 7. Events of Default. In case an Event of Default, as defined in
-----------------
the Indenture, with respect to the Notes shall have occurred and be continuing,
the Trustee or Holders of at least 25% in principal amount of the Notes
outstanding may declare the principal amount of all the Notes, and upon such
declaration such principal amount of all the Notes shall become, due and
payable, in the manner, with the effect and subject to the conditions provided
in the Indenture.
Section 8. Modifications and Waivers. 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
Notes of each series to be affected under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of not less than 66 2/3%
in principal amount of the Notes at the time Outstanding of each series to be
affected. The Indenture also contains provisions permitting, with certain
exceptions as therein provided, the Holders of not less than a majority in
principal amount of the Notes of each series at the time Outstanding, on behalf
of the Holders of all Notes of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. 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.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the right of the Holder of this Note, which
is absolute and unconditional, to receive payment of the principal of (and
premium, if any) and interest on this Note at the times, places and rate, and in
the coin or currency, herein prescribed.
Section 9. Authorized Denominations. Notes are issuable in registered form
------------------------
without coupons in the minimum denomination of $1,000, or the equivalent thereof
in the Specified Currency, and in any larger amount that is an integral multiple
of $1,000. Notes may be exchanged by the Holder hereof without charge except
for any tax or other governmental charge imposed in connection therewith, for a
like aggregate principal amount of Notes of other authorized denominations in
the manner and subject to the limitations provided in the Indenture at the
office or agency to be maintained by the Company for such purpose.
Section 10. Registration of Transfer. Upon due presentment for
------------------------
registration of transfer of this Note at the office or agency of the Company
maintained for such purpose one or more new Notes of authorized denominations,
for an equal aggregate principal amount, will be issued to the transferee in
exchange therefor subject to the limitations provided in the Indenture, without
charge except for any tax or other governmental charge imposed in connection
therewith.
If this Note is a global Note (as specified on the face hereof), this Note
is exchangeable only if (w) the Depositary notifies the Company and the Trustee
in writing that it is unwilling or unable to continue as Depositary for this
global Note or if at any time the Depositary ceases to be a clearing agency
registered under the Securities Exchange Act of 1934, as amended, and a
successor Depositary is not appointed by the Company within 90 days, (x) the
Company in its sole discretion determines that this Note shall be exchangeable
for certificated Notes in registered form and delivers to the Trustee a written
order as described in the Indenture that this Note shall be so exchangeable, or
(y) there shall have occurred and be continuing an Event of Default or an event
which, with the lapse of time or the giving of notice, or both, would constitute
an Event of Default with respect to the global Notes represented hereby or (z)
there shall exist such other circumstances, if any, as specified for this
purpose as contemplated by Section 301 of the Indenture, provided that this
permanent global Note shall be surrendered by the Depositary, or such
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<PAGE>
other depositary as shall have been specified as provided in the Indenture, to
the Trustee, as the agent for such purpose, to be exchanged, in whole or in
part, for definitive Securities without charge, and the Trustee shall
authenticate and deliver, in exchange for each portion of this permanent global
Note, an equal aggregate principal amount of definitive Securities, executed by
the Company, of the same series of authorized denominations and of like tenor as
the portion of this global Note to be exchanged, which shall be in the form of
registered Securities as provided in the Company's written order as described in
the Indenture.
Every Security authenticated and delivered upon registration of transfer
of, or in exchange for or in lieu of, this global Note other than pursuant to
clauses (w), (x), (y) or (z) above, shall be authenticated and delivered in the
form of, and shall be, a Global Security. Except as provided above, owners of
beneficial interests in this permanent global Note will not be entitled to
receive physical delivery of Notes in certificated registered form and will not
be considered the Holders thereof for any purpose under the Indenture.
Section 11. Owners. Prior to due presentment for registration of transfer
------
of this Note, the Company, the Trustee, any Paying Agent and the Security
Registrar may deem and treat the registered Holder hereof as the absolute owner
of this Note (whether or not this Note shall be overdue and notwithstanding any
notation of ownership or other writing hereon), for the purpose of receiving
payment of, or on account of, the principal hereof, and, subject to the
provisions on the face hereof, interest hereon, and for all other purposes, and
neither the Company nor the Trustee nor any Paying Agent nor any Security
Registrar shall be affected by any notice to the contrary.
Section 12. Defeasance; Proceedings. The Indenture contains provisions,
-----------------------
which apply to this Note, for defeasance of (i) the entire indebtedness of this
Note and (ii) certain restrictive covenants, subject in either case to
compliance by the Company with conditions set forth in the Indenture.
As provided in and subject to the provisions of the Indenture, the Holder
of this Note shall not have the right to institute any proceeding with respect
to the Indenture or for the appointment of a receiver or trustee or for any
other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Notes of this series, the Holders of not less than 10% in principal amount of
the Notes of this series at the time Outstanding shall have made written request
to the Trustee to institute proceedings in respect of such Event of Default as
Trustee and offered the Trustee reasonable indemnity, and the Trustee shall not
have received from the Holders of a majority in principal amount of Notes of
this series at the time Outstanding a direction inconsistent with such request,
and shall have failed to institute any such proceeding, for 60 days after
receipt of such notice, request and offer of indemnity. The foregoing shall not
apply to any suit instituted by the Holder of this Note for the enforcement of
any payment of principal hereof or any premium or interest hereon on or after
the respective due dates expressed herein.
Section 13. Definitions. All terms used in this Note which are defined in
-----------
the Indenture shall have the meanings assigned to them therein.
Section 14. Governing Law. This Note shall be governed and construed in
-------------
accordance with the law of the State of New York.
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<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned owner of this Note hereby irrevocably elects to have the
Company repay the principal amount of this Note or portion hereof designated at
the Optional Repayment Price indicated on the face hereof.
Dated:
------------ ------------------------------
Signature
Sign exactly as name appears on the front of
this Security [SIGNATURE GUARANTEE - required
only if Securities are to be issued and
delivered to other than the registered
holder].
Principal amount to be repaid, Fill in for registration of Securities if to
if amount to be repaid is be issued otherwise than to the then
less principal amount of this registered holder:
Security (principal amount
remaining must be an
authorized denomination)
Name:
-------------------------
Address:
----------------------
-------------------------
$ (Please print name and address
--------------- including zip code)
SOCIAL SECURITY OR OTHER TAXPAYER ID
NUMBER
---------------
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<PAGE>
------------------------
ABBREVIATIONS
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT -.................Custodian.......................
(Cust) (Minor)
Under Uniform Gifts to Minors Act
...........................................
(state)
Additional abbreviations may also be used though not in the above list.
-----------------------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
======================================================================
======================================================================
-------------
-----------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF
ASSIGNEE
-----------------------------------------------------------------------
the within Note and all rights thereunder, hereby irrevocably constituting
and appointing ______________ attorney to transfer said Note on the books
of the Company, with full power of substitution in the premises.
Dated:
------------------------------
Signature
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<PAGE>
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE WITHIN INSTRUMENT IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
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