<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 14, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
IKON CAPITAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 23-2493042
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) NUMBER)
1738 BASS ROAD, MACON, GEORGIA 31210
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
912-471-2300
(REGISTRANT'S TELEPHONE NUMBER)
----------------
WILLIAM F. DRAKE, JR.
GENERAL COUNSEL
IKON OFFICE SOLUTIONS, INC.
P.O. BOX 834
VALLEY FORGE, PA 19482
610-296-8000
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
----------------
COPIES TO:
ROBERT E. BUCKHOLZ, JR.
SULLIVAN & CROMWELL
125 BROAD STREET
NEW YORK, NEW YORK 10004
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time as determined by market conditions after the effective date of this
Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
--------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE AMOUNT TO OFFERING PRICE OFFERING REGISTRATION
REGISTERED BE REGISTERED PER UNIT(1) PRICE(1) FEE
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<S> <C> <C> <C> <C>
Debt Securities......... $2,000,000,000 100% $2,000,000,000 $606,061
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee; or
if any Debt Securities are issued (i) with a principal amount denominated in
a foreign currency, such principal amount as shall result in an aggregate
initial offering price equivalent to $2,000,000,000 at the time of initial
offering, or (ii) at an original issue discount, such greater principal
amount as shall result in proceeds to the registrant of $2,000,000,000.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO
SECTION 8(a), MAY DETERMINE.
PURSUANT TO RULE 429 OF THE GENERAL RULES AND REGULATIONS UNDER THE
SECURITIES ACT OF 1933, THE PROSPECTUS WHICH IS A PART OF THIS REGISTRATION
STATEMENT IS A COMBINED PROSPECTUS WHICH ALSO COVERS AN AGGREGATE OF
$73,250,000 OF SIMILAR, UNISSUED SECURITIES REGISTERED UNDER REGISTRATION
STATEMENT NO. 33-59227, AS PREVIOUSLY FILED BY THE REGISTRANT ON FORM S-3,
DECLARED EFFECTIVE ON MAY 18, 1995.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION, OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MAY 14, 1997
PRELIMINARY PROSPECTUS
$2,073,250,000
IKON CAPITAL, INC.
DEBT SECURITIES
------------
IKON Capital, Inc. (the "Company") may from time to time offer its Debt
Securities consisting of debentures, notes and/or other unsecured evidences of
indebtedness in one or more series at an aggregate initial offering price not
to exceed $2,073,250,000. The terms of the Debt Securities, including, where
applicable, the specific designation, aggregate principal amount,
denominations, which may include securities denominated in U.S. dollars, in any
other currency or in composite currencies such as the European Currency Unit,
date or dates on which principal is payable, interest rate or rates (which may
be fixed or variable) and time of payment of interest, if any, terms for
redemption at the option of the Company, terms for any repayment of principal
amount at the option of the holder (which option may be conditional), terms for
any sinking fund payments, the initial public offering price, the names of any
underwriters or agents, the principal amounts, if any, to be purchased by
underwriters and the compensation of such underwriters or agents and the other
terms in connection with the offering and sale of the Debt Securities in
respect of which this Prospectus is being delivered, are set forth in the
accompanying Prospectus Supplement. The Debt Securities are solely the
obligations of the Company and are not guaranteed by the Company's parent
corporation, IKON Office Solutions, Inc. This Prospectus may not be used to
consummate the sale of Debt Securities unless accompanied by a Prospectus
Supplement.
The Company may sell Debt Securities to or through one or more underwriters
for public offering and sale by them or may sell Debt Securities to investors
directly or through agents. See "Plan of Distribution." Such underwriters or
agents may include one or more of Lehman Brothers, Lehman Brothers Inc., Chase
Securities Inc., Goldman, Sachs & Co. and Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated or a group represented by one or more of
such firms or by one or more other firms.
------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------
The date of this Prospectus is May , 1997.
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF DEBT SECURITIES,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH
DEBT SECURITIES, AND THE IMPOSITION OF A PENALTY BID, DURING AND AFTER THE
OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "PLAN OF DISTRIBUTION."
AVAILABLE INFORMATION
The Company and IKON Office Solutions, Inc. ("IKON"), which owns 100% of the
outstanding common stock of the Company, are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "1934
Act"), and in accordance therewith file reports, proxy material (IKON only)
and other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy materials and other information can be
inspected and copied at the offices of the Commission at 450 Fifth Street,
N.W., Washington, D.C., as well as Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois, and 7 World Trade Center, Suite 1300, New York,
New York and copies can be obtained by mail from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. The Registration Statement has been, and amendments thereto
will be, filed with the Commission through the Electronic Data Gathering,
Analysis and Retrieval ("EDGAR") system. The Commission also maintains a site
on the World Wide Web, the address of which is http://www.sec.gov, that
contains reports, proxy statements and other information regarding issuers,
such as the Company and IKON, that file electronically with the Commission.
Reports, proxy material and other information concerning IKON can also be
inspected at the offices of the New York, Philadelphia and Chicago Stock
Exchanges.
The Company is not required to deliver an annual report to its security
holders pursuant to Section 14 of the 1934 Act, nor does it currently intend
to deliver to holders of its debt securities any other report that contains
financial information relating to the Company that has been examined and
reported upon, with an opinion expressed by, an independent accountant. Such
information, however, is contained in the Company's Annual Report on Form 10-K
and in other periodic reports filed with the Securities and Exchange
Commission that the Company will provide without charge (without exhibits),
upon request, to any such security holder.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended September 30,
1996, the Company's Quarterly Reports on Form 10-Q for the periods ended
December 31, 1996 and March 31, 1997, and the Company's reports on Form 8-K
dated April 14, 1997 and April 23, 1997 filed with the Commission pursuant to
the 1934 Act are hereby incorporated in this Prospectus by reference.
All other documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the 1934 Act (i) after the date of the initial Registration
Statement and prior to the effectiveness of the Registration Statement, and
(ii) from and after the date of such effectiveness and prior to the
termination of the offering of the Debt Securities shall be deemed to be
incorporated by reference in this Prospectus. This Prospectus does not contain
all information set forth in the Registration Statement and Exhibits thereto
which the Company has filed with the Commission and to which reference is
hereby made.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, upon the written or oral
request of such person, a copy of any or all of the documents referred to
above which have been or may be incorporated in this Prospectus by reference,
other than exhibits to such documents. Requests for such copies should be
directed to Communications Department, IKON Office Solutions, Inc., P.O. Box
834, Valley Forge, PA 19482; telephone number 610-296-8000.
2
<PAGE>
FORWARD-LOOKING INFORMATION
This Prospectus contains, and other materials filed or to be filed by the
Company with the Commission which are incorporated by reference herein, as
well as information included in oral statements or other written statements
made or to be made by the Company, contain or will contain or include,
disclosures which are forward-looking statements relating to the Company or
its parent, IKON, within the meaning of Section 27A of the Securities Act of
1933, as amended (the "Securities Act"), and Section 21E of the 1934 Act. Such
forward-looking statements address, among other things, strategic initiatives
(including plans for enhancing the Company's or IKON's business through new
acquisitions, information technology systems, sales strategies, market growth
plans and acquisition and margin enhancement initiatives, capital expenditure
requirements and financing sources). Such forward-looking information is based
upon managament's current plans or expectations and is subject to a number of
uncertainties and risks that could significantly affect the Company's and/or
IKON's current plans, anticipated actions and future financial condition and
results. These uncertainties and risks include, but are not limited to, those
relating to IKON's successful management of an aggressive program to acquire
and integrate new companies, including companies with technical services and
products that are relatively new to IKON, and also including companies outside
the United States, which present additional risks relating to international
operations; risks and uncertainties (applicable to both the Company and IKON)
relating to conducting operations in a competitive environment; delays,
difficulties, technological changes and employment issues (applicable to both
the Company and IKON) associated in a large-scale transformation project; debt
service requirements (applicable to both the Company and IKON) including
sensitivity to fluctuation in interest rates; and general economic conditions.
As a consequence, current plans, anticipated actions and future financial
condition and results may differ from those expressed in any forward-looking
statements made by or on behalf of the Company or IKON.
THE COMPANY
The Company's principal executive offices are located at 1738 Bass Road,
Macon, Georgia 31210; telephone number: 912-471-2300.
RELATIONSHIP WITH IKON OFFICE SOLUTIONS, INC.
The Company, as a captive finance subsidiary of IKON, derives its customer
base from the business sourced by IKON locations throughout the United States.
There are several agreements and programs between the Company and IKON, which
are described below.
SUPPORT AGREEMENTS
The Company and IKON are parties to an agreement (the "1996 Support
Agreement") dated as of October 22, 1996, which contains a requirement that
IKON maintain 100% ownership of the Company. The Company's agreements with
noteholders and other lenders (the "Debtholders") generally include covenants
that it will not assign, amend or terminate the 1996 Support Agreement unless
either (i) all the outstanding debt of the company is repaid or (ii) the
approval of at least two-thirds of the Company's Debtholders is obtained (for
all outstanding amounts covered by the 1996 Support Agreement). (See "1996
Support Agreement" below).
The Company and IKON were previously parties to the 1994 Support Agreement,
dated as of June 1, 1994, which contained terms identical to those contained
in the 1996 Support Agreement, except that the 1994 Support Agreement did not
require that IKON (i) maintain 100% ownership of the Company and (ii) obtain
the consent of two-thirds of the Debtholders (for all outstanding amounts
covered by the 1996 Support Agreement) as a condition to assignment, amendment
and termination. Except for these two new requirements, which are included in
the 1996 Support Agreement, all of the other provisions of the 1994 Support
Agreement remain in effect in the 1996 Support Agreement. The 1994 Support
Agreement was replaced by the 1996 Support Agreement after the Company
obtained in writing from Moody's Investors Services and Standard & Poor's
Rating Services confirmation that the Company's debt rating would not be
downgraded as a result of the foregoing new requirements.
3
<PAGE>
The Company and IKON are also parties to a Maintenance Agreement, dated
August 15, 1991 (the "1991 Maintenance Agreement"), and an Operating
Agreement, dated August 15, 1991 (the "1991 Operating Agreement", and together
with the 1991 Maintenance Agreement, the "1991 Maintenance and Operating
Agreements"), which are further described below. The Company has agreed with
its Debtholders pursuant to loan agreements entered into before June 1, 1994
that it will not amend or terminate the 1991 Maintenance and Operating
Agreement without each such Debtholder's consent. Such loan agreements will
mature over the next several years, with the latest maturity occurring in
August 1998, at which time the Company and IKON may terminate the 1991
Maintenance and Operating Agreements.
THE 1996 SUPPORT AGREEMENT
The 1996 Support Agreement between the Company and IKON provides that IKON
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 (together with cash payments
from IKON) 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 agreement
also provides that IKON will maintain 100% direct or indirect ownership of the
Company.
Unlike the 1991 Operating Agreement, the 1996 Support Agreement does not
contain a requirement that the IKON operating locations repurchase all
defaulted lease contracts. The 1996 Support Agreement does not include the
repurchase requirement because the Company and IKON 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 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 IKON operating locations to the Company would not be material to the
Company's future results of operations. The Company's (and IKON's) present
intention, however, is to continue the repurchase arrangement with the IKON
operating locations as currently in effect.
THE 1991 MAINTENANCE AND OPERATING AGREEMENTS
The 1991 Maintenance Agreement provides that IKON will make a cash payment
to the Company (or an investment in the form of equity or subordinated notes)
as needed in amounts sufficient to meet a specified minimum fixed charge
coverage ratio and a maximum debt-to-equity ratio. Earnings before fixed
charges (primarily interest) must be at least 1.3 times fixed charges. The
Company has satisfied this requirement independently (without requiring
payment or an investment from IKON). The Company's debt-to-equity ratio is
limited to 6 to 1 according to the terms of the 1991 Maintenance Agreement.
The Company must also maintain minimum tangible net worth of not less than
$1.00.
Pursuant to the terms of the 1991 Maintenance Agreement, the Company
received capital contributions from IKON of $19 million in the first six
months of fiscal 1997, $30 million in fiscal 1996, $29 million in fiscal 1995
and $8.3 million in fiscal 1994.
The 1991 Operating Agreement requires the IKON operating locations to
repurchase all defaulted lease contracts. A default is defined in the 1991
Operating Agreement as any receivable which is past due for 120 days or is
otherwise reasonably declared uncollectible by the Company. The repurchase
amount is defined as the net book value of a lease on the default date.
The 1991 Maintenance and Operating Agreements provide for modification or
amendment with both parties' consent and provide for cancellation by either
party upon 90 days written notice. The Company has generally agreed with its
Debtholders pursuant to loan agreements entered into prior to June 1, 1994,
however, that it will not amend the 1991 Maintenance and Operating Agreements
without each such Debtholder's consent. Such loan agreements are scheduled to
expire over the next several years, with the latest maturity occurring in
August 1998, at which time the Company and IKON may terminate the 1991
Maintenance and Operating Agreements.
4
<PAGE>
CASH MANAGEMENT PROGRAM
The Company participates in IKON's domestic Cash Management program. Under
this program, the Company has an account with IKON through which cash in
excess of current operating requirements is temporarily placed on deposit.
Similarly, amounts are periodically borrowed from IKON. Interest is paid (or
charged) by IKON on these amounts. The Company (i) was in a net deposit
condition with IKON during the first six months of fiscal 1997 and the fiscal
years of 1996 and 1995 and (ii) earned interest income of approximately $2.0
million, $2.9 million and $1.5 million, respectively. The Company was a net
borrower in 1994 incurring net interest costs of $496,000 under this program.
MANAGEMENT FEE
The Company is charged a management fee by IKON to cover certain corporate
overhead expenses. These charges are included as general and administrative
expenses in the Company's financial statements and amounted to $276,000 in the
first six months of fiscal 1997, $552,000 in the fiscal years of 1996 and
1995, and $396,000 in the fiscal year of 1994.
FEDERAL INCOME TAX ALLOCATION AGREEMENT
IKON and the Company participate in a Federal Income Tax Allocation
Agreement dated June 30, 1989, in which the Company consents to the filing of
consolidated federal income tax returns with IKON. IKON agrees to collect from
or pay to the Company its allocated share of any consolidated federal income
tax liability or refund applicable to any period for which the Company is
included in IKON's consolidated federal income tax return.
INTEREST ON INCOME TAX DEFERRALS
The Company provides substantial tax benefits to IKON through the use of the
installment sales method on equipment financed through the Company. Taxes
deferred by IKON due to this tax treatment totaled a cumulative amount of
approximately $235 million at the end of fiscal 1996. IKON pays the Company
interest on the portion of these tax deferrals (approximately $157 million at
the end of fiscal 1996) which arise from tax deferrals on intercompany sales.
In fiscal 1996 and 1995, interest was earned by the Company at a rate
consistent with the Company's weighted average outside borrowing rate of
interest. Under this method, the Company earned interest at an average rate of
6.8% in 1996 totaling $8.7 million and at an average rate of 6.7% in 1995
totaling $5.9 million. In fiscal 1994, interest was earned by the Company at a
rate of 6.0% and totaled $3.8 million.
LEASE BONUS PROGRAM
The Company sponsored a lease bonus subsidy program which provided
incentives to IKON operating locations when IKON customers lease equipment
from the Company. Payments under this program can be reduced or eliminated at
any time by joint agreement of the Company and IKON. During fiscal 1996, 1995
and 1994, bonus payments were calculated on the basis of the IKON locations'
increase in the percentage of equipment sales leased through the Company, and
totaled $6.9 million, $7.3 million and $8.8 million, respectively. Effective
October 1, 1996, the Company changed the focus of the bonus subsidy program to
reimburse IKON for third party lease payoffs incurred when buying out the
equipment leases of a competitor.
5
<PAGE>
IKON CAPITAL, INC.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
SIX MONTHS ENDED SEPTEMBER 30,
---------------- ------------------------
MARCH 31, 1997 1996 1995 1994 1993 1992
---------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges.... 1.8 1.9 1.8 2.0 1.7 1.5
</TABLE>
IKON OFFICE SOLUTIONS, INC. AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
SIX MONTHS ENDED SEPTEMBER 30,
---------------- ------------------------
MARCH 31, 1997 1996 1995 1994 1993 1992
---------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges.... 2.1(1) 3.1 3.3 3.7 3.1 3.1
</TABLE>
- --------
(1) Excluding the effect of the extraordinary loss on early extinguishment of
debt, the ratio of earnings to fixed charges for the six months ended
March 31, 1997 is 2.4.
IKON OFFICE SOLUTIONS, INC. AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
(EXCLUDING CAPTIVE FINANCE SUBSIDIARIES)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
SIX MONTHS ENDED SEPTEMBER 30,
---------------- ------------------------
MARCH 31, 1997 1996 1995 1994 1993 1992
---------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges.... 2.7(2) 4.8 4.9 5.3 4.5 4.7
</TABLE>
- --------
(2) Excluding the effect of the extraordinary loss on early extinguishment of
debt, the ratio of earnings to fixed charges (excluding captive finance
subsidiaries) for the six months ended March 31, 1997 is 3.3.
For purposes of computing the ratio of earnings to fixed charges, earnings
represent pretax income from continuing operations plus fixed charges (net of
capitalized interest). Fixed charges represent interest (whether expensed or
capitalized) and one-third (the proportion deemed representative of the
interest factor) of rents of continuing operations.
USE OF PROCEEDS
The net proceeds from the sale of the Debt Securities offered hereby will be
used by the Company for the financing of future sales and leasing transactions
with IKON customers, and for other corporate purposes. The Company expects to
incur additional indebtedness in connection with its financing operations.
However, the amount, timing and precise nature of such indebtedness have not
yet been determined and will depend upon the volume of the Company's business,
the availability of credit and general market conditions.
6
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The following description sets forth the material terms and provisions of
the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement
and the extent, if any, to which the general provisions described below may
apply to the Debt Securities so offered will be described in the Prospectus
Supplement relating to such Debt Securities.
Offered Debt Securities (as defined below) are to be issued under an
Indenture, dated as of June 30, 1995, and a First Supplemental Indenture,
dated May , 1997, between the Company and The Chase Manhattan Bank (formerly
Chemical Bank), as Trustee (together, the "Indenture"). The statements under
this caption relating to the Debt Securities and the Indenture are summaries
and do not purport to be complete. Such summaries make use of terms defined in
the Indenture and are qualified in their entirety by express reference to the
Indenture and the cited provisions thereof, a copy of which is filed as an
exhibit to the Registration Statement.
GENERAL
The Debt Securities will be unsecured obligations of the Company. The
Indenture does not limit the aggregate principal amount of Debt Securities
which may be issued thereunder and provides that Debt Securities may be issued
thereunder from time to time in one or more series.
Reference is made to the Prospectus Supplement relating to the particular
Debt Securities offered thereby (the "Offered Debt Securities") for the
following terms of the Offered Debt Securities: (1) the title of the Offered
Debt Securities; (2) any limit on the aggregate principal amount of the
Offered Debt Securities; (3) the person to whom any interest shall be payable,
if other than the person in whose name the Offered Debt Security is registered
on the regular record date for such interest; (4) the date or dates on which
the principal of the Offered Debt Securities will be payable; (5) the rate or
rates per annum at which the Offered Debt Securities will bear interest, if
any, or the formula pursuant to which such rate or rates shall be determined,
and the date or dates from which such interest will accrue; (6) the dates on
which such interest, if any, will be payable and the regular record dates for
such interest payment dates; (7) the place or places where principal or (and
premium, if any) and interest on Offered Debt Securities shall be payable; (8)
any mandatory or optional sinking fund or analogous provisions; (9) if
applicable, the price at which, the periods within which, and the terms and
conditions upon which the Offered Debt Securities may, pursuant to any
optional or mandatory redemption provisions, be redeemed at the option of the
Company; (10) if applicable, the terms and conditions upon which the Offered
Debt Securities may be repayable prior to final maturity at the option of the
holder thereof (which option may be conditional); (11) the portion of the
principal amount of the Offered Debt Securities, if other than the principal
amount thereof, payable upon acceleration of maturity thereof; (12) the
currency or currencies, including composite currencies, in which principal of
(and premium, if any) and interest may be payable (which may be other than
those in which the Offered Debt Securities are stated to be payable); (13) any
index pursuant to which the amount of payments of principal of (and premium,
if any) or interest may be determined; (14) whether all or any part of the
Offered Debt Securities will be issued in the form of a Global Security or
Securities and, if so, the Depositary for, and other terms relating to, such
Global Security or Securities; and (15) any other terms of the Offered Debt
Securities. (Section 301)
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Offered Debt Securities are to be issued as registered securities without
coupons in denominations of $1,000 or any integral multiple of $1,000.
(Section 302) No service charge will be made for any transfer or exchange of
such Offered Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or governmental charge payable in connection
therewith. (Section 305)
The applicable Prospectus Supplement will describe any Special United States
federal tax consequences and any other special considerations with respect to
the Offered Debt Securities.
7
<PAGE>
CERTAIN RESTRICTIONS
1996 Support Agreement. The Indenture provides that the Company (1) will
observe and perform in all material respects all covenants or agreements of
the Company contained in the 1996 Support Agreement; (2) to the extent
possible, will cause IKON to observe and perform in all material respects all
covenants or agreements of IKON contained in the 1996 Support Agreement; and
(3) will not waive compliance under, amend in any material respect or
terminate the 1996 Support Agreement; provided, however, that the 1996 Support
Agreement may be amended or terminated if either (i) all the outstanding debt
of the Company is repaid or (ii) the approval of holders of not less than 66
2/3% in principal amount of the Outstanding Securities of each series issued
under the Indenture is obtained. (Section 1004A)
Restrictions on Liens and Encumbrances. The Company will not create, assume
or guarantee any Secured Debt (as defined below) without making effective
provision for securing the Debt Securities (and, if the Company shall so
determine, any other indebtedness of or guaranteed by the Company), equally
and ratably with such Secured Debt. The term "Secured Debt" shall mean
indebtedness for money borrowed which is secured by a mortgage, pledge, lien,
security interest or encumbrance on any property of any character of the
Company. This covenant does not apply to debt secured by (i) certain
mortgages, pledges, liens, security interests or encumbrances in connection
with the acquisition, construction or improvement of any fixed asset or other
physical or real property by the Company, (ii) mortgages, pledges, liens,
security interests or encumbrances on property existing at the time of
acquisition thereof, whether or not assumed by the Company, (iii) mortgages,
pledges, liens, security interests or encumbrances on property of a
corporation existing at the time such corporation is merged into or
consolidated with the Company or at the time of sale, lease or other
disposition of the properties of a corporation or firm as an entirety or
substantially as an entirety to the Company, (iv) mortgages, including
mortgages, pledges, liens, security interests or encumbrances, on property of
the Company in favor of the United States of America, any state thereof, or
any other country, or any agency, instrumentality or political subdivision
thereof, to secure certain payments pursuant to any contract or statute or to
secure certain payments pursuant to any contract or statute or to secure
indebtedness incurred for the purpose of financing all or any part of the
purchase price or the cost of construction or improvement of the property
subject to such mortgages, (v) any extension, renewal or replacement (or
successive extensions, renewals or replacements), in whole or in part, of any
mortgage, pledge, lien or encumbrance referred to in the foregoing clauses (i)
to (iv), inclusive or (vi) any mortgage, pledge, lien, security interest, or
encumbrance securing indebtedness owing by the Company to one or more wholly
owned Subsidiaries. Notwithstanding the above, the Company may, without
securing the Debt Securities, create, assume or guarantee Secured Debt which
would otherwise be subject to the foregoing restrictions, provided that, after
giving effect thereto, the aggregate amount of all Secured Debt then
outstanding (not including Secured Debt permitted under the foregoing
exceptions) at such time does not exceed 5% of the Consolidated Net Tangible
Assets. (Sections 101 and 1005)
The Indenture provides that no consolidation or merger of the Company and no
sale, conveyance or lease of the property of the Company, substantially as an
entirety, shall be made with or to another corporation if as a result thereof
any properties or assets of the Company would become subject to a lien or
mortgage not permitted by the terms of the Indenture unless effective
provision shall be made to secure the Debt Securities equally and ratably with
(or prior to) all indebtedness thereby secured. (Section 801)
The term "Consolidated Net Tangible Assets" shall mean as of any particular
time the aggregate amount of assets after deducting therefrom (a) all current
liabilities (excluding any such liability that by its terms is extendable or
renewable at the option of the obligor thereon to a time more than 12 months
after the time as of which the amount thereof is being computed) and (b) all
goodwill, excess of cost over assets acquired, patents, copyrights,
trademarks, trade names, unamortized debt discount and expense and other like
intangibles, all as shown in the most recent consolidated financial statements
of the Company and its Subsidiaries prepared in accordance with generally
accepted accounting principles. The term "Subsidiary" with respect to any
Person means any corporation of which more than 50% of the outstanding stock
having ordinary voting power to elect directors is owned directly or
indirectly by such Person or by one or more other corporations more than 50%
of such stock of which is similarly owned or controlled. (Section 101)
8
<PAGE>
THE TRUSTEE
The Indenture contains certain limitations on the right of the Trustee, as a
creditor of the Company, to obtain payment of claims in certain cases, or to
realize on certain property received in respect of any such claim as security
or otherwise. (Section 613) In addition, the Trustee may be deemed to have a
conflicting interest and may be required to resign as Trustee if at the time
of a default under the Indenture it is a creditor of the Company.
The Chase Manhattan Bank, the Trustee under the Indenture, maintains a
banking relationship with the Company and IKON.
EVENTS OF DEFAULT AND NOTICE THEREOF
The following events are defined in the Indenture as "Events of Default"
with respect to Debt Securities of any series: (a) failure to pay principal of
or premium, if any, on any Debt Securities of that series when due; (b)
failure to pay any interest on any Debt Securities of that series when due,
continued for 30 days; (c) failure to deposit any sinking fund payment, when
due, in respect of any Debt Securities of that series; (d) default in the
performance, or breach, of any term or provision of the covenant described
under "Certain Restrictions--1996 Support Agreement"; (e) failure to perform
any other covenant of the Company in the Indenture (other than a covenant
included in the Indenture solely for the benefit of a series of Debt
Securities other than that series), continued for 60 days after written notice
given to the Company by the Trustee or the holders of at least 10% in the
principal amount of the Debt Securities outstanding and affected thereby; (f)
default in payment of principal in excess of $15,000,000 or acceleration of
any indebtedness for money borrowed in excess of $15,000,000 by the Company
(including a default with respect to Debt Securities of any series other than
that series), if such indebtedness has not been discharged or become no longer
due and payable or such acceleration has not been rescinded or annulled,
within 10 days after written notice given to the Company by the Trustee or the
holders of at least 10% in principal amount of the outstanding Debt Securities
of such series; (g) certain events in bankruptcy, insolvency or reorganization
of the Company; (h) certain events in bankruptcy, insolvency or reorganization
of IKON or one of its subsidiaries if such event affects any significant part
of the assets of the Company or any of its subsidiaries; and (i) any other
Event of Default provided with respect to Debt Securities of such series.
(Section 501)
If an Event of Default with respect to Debt Securities of any series at the
time outstanding shall occur and be continuing, either the Trustee or the
holders of at least 25% in principal amount of the outstanding Debt Securities
of that series may declare the principal amount (or, if the Debt Securities of
that series are Original Issue Discount Securities (as defined in the
Indenture), such portion of the principal amount as may be specified in the
terms of that series) of all Debt Securities to be due and payable
immediately; provided, however, that under certain circumstances the holders
of a majority in aggregate principal amount or outstanding Debt Securities of
that series may rescind and annul such declaration and its consequences.
(Section 502)
Reference is made to the Prospectus Supplement relating to any series of
Offered Debt Securities which are Original Issue Discount Securities for the
particular provisions relating to the principal amount of such Original Issue
Discount Securities due upon acceleration upon the occurrence of an Event of
Default and the continuation thereof.
The Indenture provides that the Trustee, within 90 days after the occurrence
of a default with respect to any series of Debt Securities, shall give to the
holders of Debt Securities of that series notice of all uncured defaults known
to it (the term default to mean the events specified above without grace
periods), provided that, except in the case of default in the payment of
principal of (or premium, if any) or interest, if any, on any Debt Securities,
the Trustee shall be protected in withholding such notice if it in good faith
determines that the withholding of such notice is in the interest of the
holders of Debt Securities. (Section 602)
The Company will be required to furnish to the Trustee annually a statement
by certain officers of the Company to the effect that to the best of their
knowledge the Company is not in default in the fulfillment of any of its
obligations under the Indenture or, if there has been a default in the
fulfillment of any such obligation, specifying each such default. (Section
1006)
9
<PAGE>
The holders of a majority in principal amount of the outstanding Debt
Securities of any series affected will have the right, subject to certain
limitations, to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, exercising any trust or power
conferred on the Trustee with respect to the Debt Securities of such series,
and to waive certain defaults. (Sections 512 and 513)
Under the Indenture, record dates may be set for Acts of the holders with
respect to Events of Default, declaring an acceleration, or rescission and
annulment thereof, the direction of the time, method and place of conducting
any proceeding for any remedy available to the Trustee, exercising any trust
or power conferred on the Trustee, or waiving any default. (Sections 501, 502,
512 and 513)
The Indenture provides that in determining whether the holders of the
requisite principal amount of the outstanding Debt Securities have given any
request, demand, authorization, direction, notice, consent or waiver
thereunder (i) the principal amount of an Original Issue Discount Security
that shall be deemed to be outstanding shall be the amount of the principal
thereof that would be due and payable as of the date of such determination
upon acceleration of the maturity thereof, and (ii) the principal amount of a
Debt Securities denominated in a foreign currency or a composite currency
shall be the U.S. dollar equivalent, determined on the basis of the rate of
exchange on the business day immediately preceding the date of original
issuance of such Debt Securities by the Company in good faith, of the
principal amount of such Debt Securities (or, in the case of an Original Issue
Discount Security, the U.S. dollar equivalent, determined based on the rate of
exchange prevailing on the business day immediately preceding the date of
original issuance of such Debt Securities, of the amount determined as
provided in (i) above). (Section 101)
The Indenture provides that in case an Event of Default shall occur and be
continuing, the Trustee shall exercise such of its rights and powers under the
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of
his own affairs. (Section 601) Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the
Indenture at the request of any of the holders of Debt Securities unless they
shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request. (Section 603)
The covenants contained in the Indenture and the Debt Securities would not
necessarily afford Holders of the Debt Securities protection in the event of a
highly leveraged or other transaction involving the Company that may adversely
affect Holders.
MODIFICATION OF THE INDENTURE
Modifications and amendments of the Indenture may be made by the Company and
the Trustee, with the consent of the holders of not less than 66 2/3% in
aggregate principal amount of each series of the Outstanding Securities issued
under the Indenture which are affected by the modification or amendment,
provided that no such modification or amendment may, without a consent of each
holder of such Securities affected thereby: (1) change the stated maturity
date of the principal of (or premium, if any) or any installment of interest,
if any, on any such Securities; (2) reduce the principal amount of (or
premium, if any) or the interest, if any, on any such Securities or the
principal amount due upon acceleration of an Original Issue Discount Security;
(3) change the place or currency of payment of principal of (or premium, if
any) or interest, if any, on any such Securities; (4) impair the right to
institute suit for the enforcement of any such payment on or with respect to
any such Securities; (5) reduce the above-stated percentage of holders of
Securities necessary to modify or amend the Indenture; or (6) modify the
foregoing requirements or reduce the percentage of Outstanding Securities
necessary to waive compliance with certain provisions of the Indenture or for
waiver of certain defaults. A record date may be set for any Act of the
holders with respect to consenting to any amendment. (Section 902)
10
<PAGE>
PLAN OF DISTRIBUTION
The Company may sell Debt Securities to or through one or more underwriters
or dealers and also may sell Debt Securities to other investors directly or
through agents. Any such underwriter or agent involved in the offer and sale
of the Debt Securities will be named in the Prospectus Supplement. The
underwriters or agents may include one or more of Lehman Brothers Inc., Chase
Securities Inc., Goldman, Sachs & Co. and Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated or a group of underwriters represented by
one or more of such firms or may be one or more other firms.
Underwriters or agents may offer and sell the Debt Securities at a fixed
price or prices, which may be changed, or from time to time at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. In connection with the sale of the Debt
Securities, underwriters or agents may be deemed to have received compensation
from the Company in the form of underwriting discounts or commissions and may
also receive commissions from purchasers of the Debt Securities for whom they
may act as agent. Underwriters or agents may sell the Debt Securities to or
through dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters or commissions
from the purchasers for whom they may act as agent.
The Company does not expect to list the Debt Securities. The Debt
Securities, when first issued, will have no established trading market. Any
underwriters or agents to or through whom Debt Securities are sold by the
Company for public offering and sale may make a market in such Debt
Securities, but such underwriters or agents will not be obligated to do so and
may discontinue any market making at any time without notice. No assurance can
be given as to the liquidity of the trading market for any Debt Securities.
Any underwriters or agents participating in the distribution of the Debt
Securities may be deemed to be underwriters, and any discounts and commissions
received by them and any profit realized by them on resale of the Debt
Securities may be deemed to be underwriting discounts and commissions, under
the Securities Act. Underwriters or agents may be entitled, under agreements
entered into with the Company, to indemnification against or contribution
toward certain civil liabilities under the Securities Act.
During and after an offering, underwriters may purchase and sell the Debt
Securities in the open market. These transactions may include overallotment
and stabilizing transactions and purchases to cover syndicate short positions
created in connection with the offering. Stabilizing transactions consist of
certain bids or purchases for the purpose of preventing or retarding a decline
in the market price of the Debt Securities, and syndicate short positions
involve the sale by the underwriters of a greater number of Debt Securities
than they are required to purchase from the Company in the offering.
Underwriters also may impose a penalty bid, whereby selling concessions
allowed to syndicate members or other broker-dealers in respect of the Debt
Securities sold in the offering for their account may be reclaimed by the
syndicate if such securities are repurchased by the syndicate in stabilizing
or covering transactions. These activities may stabilize, maintain or
otherwise affect the market price of the Debt Securities, which may be higher
than the price that might otherwise prevail in the open market.
Certain of the underwriters or agents and their associates may be customers
of, engage in transactions with and perform services for, the Company in the
ordinary course of business.
VALIDITY OF DEBT SECURITIES
The validity of the Debt Securities will be passed upon for the Company by
William F. Drake, Jr., General Counsel of IKON, and for any underwriters or
agents by Sullivan & Cromwell, 125 Broad Street, New York, New York 10004. As
of April 30, 1997, Mr. Drake beneficially owned 157,037 shares of Common Stock
of IKON, including 741 shares over which he has the right to acquire
beneficial ownership through the exercise of stock options granted under
IKON'S stock option plans. Sullivan & Cromwell from time to time performs
legal services for IKON.
11
<PAGE>
EXPERTS
The financial statements of IKON Capital, Inc. appearing in IKON Capital,
Inc.'s Annual Report (Form 10-K) for the year ended September 30, 1996 have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
financial statements are incorporated herein by reference in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
12
<PAGE>
------------------------------------
------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE ISSUER, BY THE AGENTS OR BY ANY OTHER PERSON. THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR
SOLICITATION MAY NOT LAWFULLY BE MADE. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT OR ANY PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAD BEEN NO CHANGE
IN THE AFFAIRS OF THE ISSUER SINCE THE DATE HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
Prospectus Supplement
<S> <C>
Description of Notes....................................................... S-3
Important Currency Information............................................. S-22
Currency Risks............................................................. S-22
Certain United States Federal Income
Tax Consequences.......................................................... S-24
Supplemental Plan of Distribution.......................................... S-32
Prospectus
Available Information...................................................... 2
Incorporation of Certain Documents
by Reference.............................................................. 2
Forward-Looking Information................................................ 3
The Company................................................................ 3
Relationship with IKON Office
Solutions, Inc............................................................ 3
Use of Proceeds............................................................ 6
Description of Debt Securities............................................. 7
Plan of Distribution....................................................... 11
Validity of Debt Securities................................................ 11
Experts.................................................................... 12
</TABLE>
------------------------------------
------------------------------------
------------------------------------
------------------------------------
$2,073,250,000
IKON CAPITAL, INC.
MEDIUM-TERM NOTES, SERIES C
WITH MATURITIES OF NINE
MONTHS OR MORE FROM
DATE OF ISSUE
------------------
PROSPECTUS
Dated May , 1997
AND
PROSPECTUS SUPPLEMENT
Dated May , 1997
------------------
LEHMAN BROTHERS
CHASE SECURITIES INC.
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
------------------------------------
------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION:*
The following is an itemized statement of expenses of the Company in
connection with the issue of the Debt Securities.
<TABLE>
<S> <C>
Registration fee.............................................. $ 606,061
Rating Agency fees............................................ $ 435,000
Fees and expenses of Trustee.................................. $ 10,000
Printing expenses............................................. $ 50,000
Accountants' fees and expenses................................ $ 15,000
Counsel fees and expenses..................................... $ 60,000
Blue Sky qualification and legal investment survey............ $ 10,000
Miscellaneous................................................. $ 10,000
----------
Total....................................................... $1,196,061
==========
</TABLE>
- --------
* All amounts are estimates except for the registration fee.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by Delaware law, under which the Company is incorporated, the
Company's Articles of Incorporation and By-Laws provide that officers and
directors of the Company shall be indemnified for expenses (including
attorneys' fees) reasonably incurred in the successful defense of a suit or
proceeding brought by reason of such persons being officers or directors of
the Company.
If unsuccessful in defense of a third-party civil suit or a criminal suit,
or if such a suit is settled, such a person shall be indemnified under the By-
Laws against both (1) expenses (including attorneys' fees) and (2) judgments,
fines and amounts paid in settlement if he acted in good faith and in a manner
he reasonably believed to be in, or not opposed to, the best interests of the
Company, and with respect to any criminal action, if he had no reasonable
cause to believe his conduct was unlawful.
If unsuccessful in defense of a suit brought by or in the right of the
Company, or if such suit is settled, such a person shall be indemnified under
such law only against expenses (including attorneys' fees) incurred in the
defense or settlement of such suit if he acted in good faith and in a manner
he reasonably believed to be in, or not opposed to, the best interests of the
Company except that if such a person is adjudged to be liable in such a suit
for negligence or misconduct in the performance of his duty to the Company, he
cannot be indemnified unless specific court approval is obtained.
The Company has purchased liability insurance policies covering its
directors and officers to provide protection where the Company cannot legally
indemnify a director or officer and where a claim arises under the Employee
Retirement Income Security Act of 1974 against a director or officer based
upon an alleged breach of fiduciary duty or other wrongful act.
ITEM 16. EXHIBITS.
1 --Form of Distribution Agreement.
4.1 --Indenture between the Registrant and The Chase Manhattan Bank
(formerly Chemical Bank), as Trustee (filed as Exhibit 4 to the
Company's Registration Statement on Form S-3, file no. 33-59227).
4.2 --Form of First Supplemental Indenture between the Registrant and The
Chase Manhattan Bank, as Trustee.
II-1
<PAGE>
<TABLE>
<C> <S>
5 --Opinion of William F. Drake, Jr. as to legality of the Debt
Securities being registered.
12.1 --IKON Capital, Inc. Statement Setting Forth Computation of Ratio of
Earnings to Fixed Charges.
12.2 --IKON Office Solutions, Inc. and Subsidiaries Statement Setting Forth
Computation of Ratio of Earnings to Fixed Charges.
12.3 --IKON Office Solutions, Inc. and Subsidiaries Statement Setting Forth
Computation of Ratio of Earnings to Fixed Charges (Excluding Captive
Finance Subsidiaries).
23.1 --Consent of William F. Drake, Jr. (included in Exhibit 5).
23.2 --Consent of Ernst & Young LLP.
25 --Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of The Chase Manhattan Bank.
</TABLE>
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes the following (as set forth in
paragraphs (1) through (5) below):
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; and
(iii) To include any material information, with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) That for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) For purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 (and where
applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions described
in Item 15 hereof, or otherwise, (but that term shall not include the
insurance policies referred to in Item 15) the
II-2
<PAGE>
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will
be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Valley Forge, Pennsylvania, on the 14th day of May, 1997.
IKON CAPITAL, INC.
/s/ Harry G. Kozee
By: _________________________________
HARRY G. KOZEE
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on the 14th day of May, 1997.
SIGNATURE
TITLE
/s/ Richard P. Maier President (Principal Executive
- --------------------------------- Officer)
RICHARD P. MAIER
/s/ Harry G. Kozee Vice President (Principal
- --------------------------------- Accounting and Financial
HARRY G. KOZEE Officer)
/s/ Kurt E. Dinkelaker Director
- ---------------------------------
KURT E. DINKELAKER
II-4
<PAGE>
EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
------- ------- ------------
<C> <S> <C>
1 --Form of Distribution Agreement
4.1 --Indenture between the Registrant and The Chase
Manhattan Bank (formerly Chemical Bank), as Trustee
(filed as Exhibit 4 to the Company's Registration
Statement on Form S-3, file no 33-59227).
4.2 --Form of First Supplemental Indenture between the
Registrant and The Chase Manhattan Bank, as Trustee.
5 --Opinion of William F. Drake, Jr., General Counsel of
IKON Office Solutions, Inc., as to legality of the
Debt Securities being registered.
12.1 --IKON Capital, Inc. Statement Setting Forth
Computation of Ratio of Earnings to Fixed Charges.
12.2 --IKON Office Solutions, Inc. and Subsidiaries
Statement Setting Forth Computation of Ratio of
Earnings to Fixed Charges.
12.3 --IKON Office Solutions, Inc. and Subsidiaries
Statement Setting Forth Computation of Ratio of
Earnings to Fixed Charges (Excluding Captive Finance
Subsidiaries).
23.1 --Consent of William F. Drake, Jr., General Counsel of
IKON Office Solutions, Inc. (included in Exhibit 5).
23.2 --Consent of Ernst & Young LLP.
25 --Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of The Chase Manhattan Bank.
</TABLE>
<PAGE>
EXHIBIT 1
Draft of 5/12/97
U.S. [$2,073,250,000]
IKON CAPITAL, INC.
MEDIUM-TERM NOTES, SERIES C
DISTRIBUTION AGREEMENT
_________, 1997
Lehman Brothers
Lehman Brothers Inc.
3 World Financial Center, 12th Floor
New York, New York 10285-1200
Chase Securities Inc.
270 Park Avenue
New York, New York 10017
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:
IKON Capital, Inc., a Delaware corporation (the "Company"), confirms its
agreement with each of you (individually, an "Agent" and collectively, the
"Agents") with respect to the issuance and sale by the Company of up to an
aggregate of [$2,073,250,000] in gross proceeds of its Medium-Term Notes, Series
C (the "Notes"). The Notes are to be issued from time to time pursuant to an
indenture, dated as of June 30, 1995, and a first supplemental indenture, dated
as of ________, 1997 (together, and as supplemented or amended from time to
time, the "Indenture"), between the Company and The Chase Manhattan Bank, 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
<PAGE>
Agreement shall 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. Registration statements (No. 33-53779 and No. 333- ) on
Form S-3 with respect to the Notes have 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 have
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 statements when
they became effective under the Act, and as from time to time amended or
supplemented thereafter (if any post-effective amendment to such registration
statements have 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 (iii) "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,
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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 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 October 22, 1996 (the "1996 Support Agreement")
between the Company and IKON Office Solutions, Inc. ("IKON"), 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 1996 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 LLP, whose report appears in the Company's
Annual Report on Form 10-K 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
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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.
(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 1996 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 IKON has been duly authorized,
executed and delivered by each of the Company and IKON and constitutes the valid
and legally binding obligation of the Company and IKON, 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 fairly, as
of the applicable Representation Date and at all times during each Marketing
Period, the financial condition, results of operations, changes in shareholder's
equity and cash flows of the entities purported to be shown thereby in
conformity with generally accepted accounting principles, at the dates and for
the periods
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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, if
applicable, 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.
(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,
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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.
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.
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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.
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
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.
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(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.
(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 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.
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(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 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).
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(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,
(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,
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(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 reference 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
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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 William F. Drake, Jr., General Counsel of IKON, 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 matter of
this Agreement or is required to be disclosed in the Prospectus which is
not disclosed and correctly summarized therein;
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(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 1996 Support Agreement and the Purchase Agreements, if any, and
compliance by the Company with the provisions of the Notes and the
Indenture did not and 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 was or is required for the execution, delivery and
performance by the Company of this Agreement, the 1996 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
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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;
(xi) Each of the 1996 Support Agreement, the Operating Agreement
and the Maintenance Agreement has been duly authorized, executed and
delivered by each of the Company and IKON and constitutes the valid and
legally binding obligation of the Company and IKON 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 to perform its
obligations (including the sale and
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delivery of the Notes under this Agreement) hereunder; 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.
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 LLP, 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 examined by them
and incorporated by reference in the prospectus contained in the
Registration Statement comply
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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 incorporated by reference in the Prospectus in accordance with
standards established by the American Institute of Certified Public
Accountants;
(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, incorporated by
reference 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 accounting principles applied on a basis
substantially consistent with that of the audited financial statements
incorporated by reference 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
financial statements from which it was derived or was not determined
on a basis substantially consistent with that of the audited financial
statements incorporated by reference 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 or, at the date of the latest available balance sheet read
by such accountants, there was any decrease in net assets as compared
with amounts shown on the latest balance sheet incorporated by
reference 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
revenues, income before income taxes and cumulative effect of
accounting change, 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 subject to
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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 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 docu ments 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 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 Agree ment 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.
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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) 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
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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 LLP (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 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
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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 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
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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 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
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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. The obligations of each of the Agents under this
subsection (d) to contribute are several in proportion to the respective
purchases made by or through it to which loss, claim, damage or liability (or
action in respect thereof) relates and are not joint.
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.
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.
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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., 270 Park Avenue - 8th Floor, New York, New York
10017, Attention: Medium-Term Note Desk, Telephone No.: (212) 834-4421, Telecopy
No.: (212) 834-6081; 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: IKON Capital, Inc., c/o IKON Office Solutions, Inc., P.O. Box
834, Valley Forge, PA 19482, Attention: Treasury Department, Telephone No.:
(610) 296-8000, Telecopy No.: (610) 296-3248.
Section 13. Binding Effect; Benefits
This Agreement shall be binding upon each Agent, the Company, and their
respective suc cessors. 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
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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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If the foregoing correctly sets forth our agreement, please indicate your
acceptance hereof in the space provided for that purpose below.
Very truly yours,
IKON CAPITAL, INC.
By:
------------------------------------
Authorized Signatory
CONFIRMED AND ACCEPTED
as of the date first above written:
LEHMAN BROTHERS INC.
By:
----------------------------------
Authorized Signatory
CHASE SECURITIES INC.
By:___________________________
GOLDMAN, SACHS & CO.
By:__________________________
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:___________________________
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<PAGE>
Exhibit A
IKON CAPITAL, INC.
Medium-Term Notes, Series C
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
IKON CAPITAL, INC.
Medium-Term Notes, Series C
Administrative Procedures
Medium-Term Notes, Series C, with maturities of nine months or more from
date of issue (the "Notes") are to be offered on a continuing basis by IKON
Capital, Inc. (the "Company"). Lehman Brothers, 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"), 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
______, 1997 (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 30, 1995 between the Company and The Chase Manhattan Bank, 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 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. 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
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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 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 on the third
Business Day next succeeding such date of acceptance, unless the Company accepts
an offer to purchase Notes after 4:30 p.m. on such date in which case Settlement
will occur on the fourth Business Day next succeeding such date of acceptance,
pursuant to the timetable for Settlement set forth below, unless otherwise
agreed to by the Company and the purchaser; provided, however, that the Company
will so notify the Trustee of any such other date on or before the Business Day
immediately prior to the Settlement date.
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<PAGE>
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 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.
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<PAGE>
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 ADP, Prospectus Services, 536 Broad Hollow Road, Melville, New York 11747,
Attention: Eric Johnson, Telephone: (516) 254-7106, Telecopy: (516) 249-7942 and
by hand to Lehman Brothers Inc., 3 World Financial Center, 9th Floor, New York,
New York 10285-0900, Attention: Brunie Vazquez, Telephone: (212) 526-8400; (ii)
Chase Securities Inc., 270 Park Ave., 8th Floor, New York, New York 10017,
Attention: Medium-Term Note Desk, Telephone No.: (212) 834-4421, Telecopy No.:
(212) 834-6081; (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
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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 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 registration of, 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.
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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.
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 and trust companies in such location are authorized or
required by law, regulation or executive order to close and, with respect to
Notes as to which LIBOR is an applicable Base Rate, is also a London Banking Day
(as defined in the Prospectus).
PART II: Procedures For Certificated Notes
Prior to any issuance of Certificated Notes, the Company will deliver to
the Trustee an adequate supply of 4-ply notes meeting the specifications set
forth herein.
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.
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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 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.
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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
(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-9
<PAGE>
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) [The Chase Manhattan Bank, Four New York Plaza,
Ground Floor, Physical Delivery Window, SAO Lehman Brothers]; (ii) Chase
Securities Inc., 55 Water Street, 2nd floor, Room 226, Windows 17 and 18, New
York, New York 10004, Attention: Receive and Deliver; (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.
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 Time (New York)
Procedure
<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
</TABLE>
B-10
<PAGE>
<TABLE>
<S> <C>
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.
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.
B-11
<PAGE>
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 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
B-12
<PAGE>
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.
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
B-13
<PAGE>
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
$200,000,000 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 $200,000,000 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 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.
B-14
<PAGE>
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
Ratings Services (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.
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.
B-15
<PAGE>
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 $200,000,000 (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 $200,000,000 (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).
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 representations.
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
B-16
<PAGE>
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 $200,000,000, 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 $200,000,000 (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 $200,000,000 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 Ratings Services
will use the information received in the pending deposit message described under
Settlement Procedure "C" below in order to include the amount of any interest
payable and certain other information regarding the related Global Security in
the appropriate weekly bond report published by Standard & Poor's Ratings
Services.
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
Ratings Services of the interest rates determined on such Interest Determination
Date.
B-17
<PAGE>
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 Ratings Services. 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 Ratings Services
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
in accordance with the Indenture and deliver to the Company 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 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
B-18
<PAGE>
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.
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
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<PAGE>
(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 Ratings Services 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."
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
B-20
<PAGE>
case it means the date five (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.
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.
B-21
<PAGE>
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 Time
Procedures
<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 (1) 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 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
B-22
<PAGE>
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-23
<PAGE>
Exhibit C
PURCHASE AGREEMENT
IKON CAPITAL, 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 _______, 1997 (as it may be
supplemented or amended from time to time, the "Distribution Agreement"):
<TABLE>
<S> <C>
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:
</TABLE>
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)
<PAGE>
or interest with respect to any 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 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: ,
IKON CAPITAL, INC.
By:
------------------------------------
[Authorized Signatory]
C-3
<PAGE>
Exhibit D
[INDEXED NOTE]
AMENDMENT NO. ___
TO DISTRIBUTION AGREEMENT DATED ________, 1997, 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 ________, 1997, 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__
IKON Capital, Inc.
By:_______________________________________
Name:
Title:
[Name(s) of Agent(s) Participating
In the Offering of the Indexed Notes]
By:_______________________________________
Name:
Title:
<PAGE>
EXHIBIT 4.2
Draft of May 13, 1997
================================================================================
IKON CAPITAL, INC.
TO
THE CHASE MANHATTAN BANK,
Trustee
______________
FIRST SUPPLEMENTAL INDENTURE
Dated as of May __, 1997
TO
INDENTURE
Dated as of June 30, 1995
______________
================================================================================
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of May __, 1997, between IKON
Capital, Inc. (formerly known as "Alco Capital Resource, Inc."), a corporation
duly organized and existing under the laws of the State of Delaware (herein
called the "Company"), having its principal office at 1738 Bass Road, Macon,
Georgia, and The Chase Manhattan Bank (formerly known as "Chemical Bank"), a
banking corporation duly organized and existing under the laws of the State of
New York, as Trustee (herein called the "Trustee").
Recitals of the Company
The Company has duly heretofore executed and delivered to the Trustee an
Indenture, dated as of June 30, 1995 (the "Indenture"), providing for the
issuance from time to time of its unsecured debentures, notes or other evidences
of indebtedness (herein and therein called the "Securities"), to be issued in
one or more series as in the Indenture provided. All terms used in this First
Supplemental Indenture which are defined in the Indenture shall have the same
meanings assigned to them in the Indenture.
Section 901(2) of the Indenture provides that, without the consent of any
Holders, the Company, when authorized by a Board Resolution, and the Trustee, at
any time and from time to time, may enter into one or more indentures
supplemental hereto, in form satisfactory to the Trustee, to add to the
covenants of the Company for the benefit of the Holders of all or any series of
Securities.
On October 22, 1996, the Company and IKON Office Solutions, Inc. ("IKON")
(formerly known as "Alco Standard Corporation") entered into a Support
Agreement.
All things necessary to make this First Supplemental Indenture a valid
agreement of the Company, and a valid supplement to the Indenture, have been
done.
Now, Therefore, This First Supplemental Indenture Witnesseth:
For and in consideration of the premises, it is mutually agreed, for the
equal and proportionate benefit of all Holders of the Securities or of series
thereof, as follows:
1. The following definition is hereby added to Section 101 of the
Indenture:
""1996 Support Agreement" means the Amended and Restated 1996 Support
Agreement, dated as of October 22, 1996, between Alco Standard and the Company,
as it may from time to time be amended pursuant to the applicable provisions
hereof or thereof."
-2-
<PAGE>
2. A new Section 1004A is hereby inserted into the Indenture to read in
its entirety as follows:
"Section 1004A. Maintenance of 1996 Support Agreement.
The Company covenants that it:
(1) will observe and perform in all material respects all covenants or
agreements of the Company contained in the 1996 Support Agreement;
(2) to the extent possible, will cause Alco Standard to observe and perform
in all material respects all covenants or agreements of Alco Standard contained
in the 1996 Support Agreement; and
(3) will not waive compliance under, amend in any material respect or
terminate the 1996 Support Agreement; provided, however, that the 1996 Support
Agreement may be amended or terminated if either (i) all the outstanding debt of
the Company is repaid or (ii) approval of Holders of not less than 66 2/3% in
principal amount of the Outstanding Securities of each series is obtained."
3. This First Supplemental Indenture shall be construed in accordance with
the laws of the State of New York without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.
4. The Trustee shall not be responsible in any manner whatsoever for or in
respect of the validity or sufficiency of this First Supplemental Indenture or
for or in respect of the recitals contained herein, all of which recitals are
made solely by the Company.
-3-
<PAGE>
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
In Witness Whereof, the parties hereto have caused this First Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
IKON Capital, Inc.
By...................................
Attest:
...........................
The Chase Manhattan Bank, as Trustee
By....................................
Attest:
...........................
-4-
<PAGE>
State of New York )
) ss.:
County of New York )
On the ..... day of ............, ...., before me personally came
.........................., to me known, who, being by me duly sworn, did depose
and say that he is ..................... of ......................., one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation; and that he signed his name thereto by like
authority.
........................................
State of New York )
) ss.:
County of New York )
On the ..... day of ..........., ...., before me personally came
......................., to me known, who, being by me duly sworn, did depose
and say that he is a ..................... of ......................., one of
the corporations described in and which executed the foregoing instrument; that
he knows the seal of said corporation; that the seal affixed to said instrument
is such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation; and that he signed his name thereto by like
authority.
........................................
-5-
<PAGE>
EXHIBIT 5
May 14, 1997
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
I am General Counsel of IKON Office Solutions, Inc. and have acted as
counsel to IKON Capital, Inc. ("IKON Capital") in connection with IKON Capital's
registration statement under the Securities Act of 1933, as amended, on Form S-3
of its debt securities (the "Debt Securities") to be issued in one or more
series from time to time under an indenture (as it may be supplemented or
amended from time to time, the "Indenture"), between IKON Capital and The Chase
Manhattan Bank, as Trustee. In such connection, I have reviewed such documents
and made such investigation as I have deemed necessary under the circumstances
to render the following opinion.
Based upon such review and investigation, it is my opinion that the Debt
Securities, when duly authorized by all necessary corporate action, and when
issued in accordance with the Indenture, will constitute valid and legally
binding obligations of IKON Capital, enforceable in accordance with their terms,
subject to the laws concerning bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors' rights and to
general equity principles.
I hereby consent to the filing of this opinion as an exhibit to the
registration statement filed by IKON Capital to effect such registration and the
reference to me therein under the heading "Validity of Debt Securities".
Sincerely,
/s/William F. Drake, Jr.
William F. Drake, Jr.
1
<PAGE>
EXHIBIT 12.1
IKON CAPITAL, INC.
RATIO OF EARNINGS TO FIXED CHARGES
(dollars in thousands)
<TABLE>
<CAPTION>
Six Months
Ended Fiscal Year Ended September 30
-------------- -----------------------------------------------------------
March 31, 1997 1996 1995 1994 1993 1992
-------------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Earnings
Income from continuing operations $19,421 $31,512 $17,860 $15,631 $9,336 $6,547
Add:
Provision for income taxes 13,496 23,150 14,476 9,794 6,218 4,033
Fixed charges 39,518 63,538 38,263 25,673 22,807 20,146
------------ -------- -------- -------- -------- --------
Earnings, as adjusted (A) $72,435 $118,200 $70,599 $51,098 $38,361 $30,726
============ ======== ======== ======== ======== ========
Fixed charges
Other interest expense, including
interest on capital leases $39,266 $63,125 $37,945 $25,559 $22,701 $20,068
Estimated interest component of
rental expense 252 413 318 114 106 78
------------ ------- ------- -------- ------- -------
Total fixed charges (B) $39,518 $63,538 $38,263 $25,673 $22,807 $20,146
============ ======= ======= ======== ======= =======
Ratio of earnings to fixed charges
(A) divided by (B) 1.8 1.9 1.8 2.0 1.7 1.5
============ ======== ======== ======== ======== ========
</TABLE>
<PAGE>
EXHIBIT 12.2
IKON OFFICE SOLUTIONS, INC. AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
(dollars in thousands)
<TABLE>
<CAPTION>
Six Months
Ended Fiscal Year Ended September 30
----------------------------------------------------------------
March 31, 1997 1996 1995 1994 1993 1992
-------------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Earnings
Income from continuing operations $ 47,118 $ 164,893 $ 115,011 $ 1,996 $ 61,276 $ 51,612
Add:
Loss from unconsolidated
affiliate 117,158 2,538
Provision for income taxes 37,501 107,984 75,501 41,315 40,093 33,488
Fixed charges 76,373 127,557 82,354 60,367 49,418 39,761
------------- ---------- ---------- ----------- ---------- ------------
Earnings, as adjusted (A) $ 160,992 $ 400,434 $ 272,866 $ 220,836 $ 153,325 $ 124,861
============= ========== ========== =========== ========== ============
Fixed charges
Other interest expense, including
interest on capital leases $ 63,187 $ 105,222 $ 61,888 $ 44,096 $ 39,044 $ 30,923
Estimated interest component of
rental expense 13,186 22,335 20,466 16,271 10,374 8,838
------------- ---------- ---------- ----------- ---------- ------------
Total fixed charges (B) $ 76,373 $ 127,557 $ 82,354 $ 60,367 $ 49,418 $ 39,761
============= ========== ========== =========== ========== ============
Ratio of earnings to fixed charges
(A) divided by (B) 2.1 * 3.1 3.3 3.7 3.1 3.1
--- --- --- --- --- ---
</TABLE>
* Excluding the effect of the extraordinary loss, the ratio of earnings to fixed
charges for the six months ended 3/31/97 is 2.4.
<PAGE>
EXHIBIT 12.3
IKON OFFICE SOLUTIONS, INC. AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES (EXCLUDING CAPTIVE FINANCE SUBSIDIARIES)
(dollars in thousands)
<TABLE>
<CAPTION>
Six Months
Ended Fiscal Year Ended September 30
----------------------------------------------------------
March 31, 1997 1996 1995 1994 1993 1992
-------------- -------- --------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Earnings
Income (loss) from continuing
operations $ 30,381 $ 140,656 $ 100,539 $ (11,351) $ 53,174 $ 45,557
Add:
Loss from unconsolidated
affiliate 117,158 2,538
Provision for income taxes 25,871 85,512 63,938 32,904 34,621 29,777
Fixed charges 32,987 59,514 42,138 32,389 25,707 20,188
------------- --------- --------- --------- ---------- ----------
Earnings, as adjusted (A) $ 89,239 $ 285,682 $ 206,615 $ 171,100 $ 116,040 $ 95,522
============= ========= ========= ========= ========== ==========
Fixed charges
Other interest expense, including
interest on capital leases $ 19,801 $ 37,179 $ 21,672 $ 16,118 $ 15,382 11,400
Estimated interest component of
rental expense 13,186 22,335 20,466 16,271 10,325 8,788
------------- --------- --------- -------- ---------- ----------
Total fixed charges (B) $ 32,987 $ 59,514 $ 42,138 $ 32,389 $ 25,707 $ 20,188
============= ========= ========= ======== ========== ==========
Ratio of earnings to fixed charges
(A) divided by (B) 2.7 * 4.8 4.9 5.3 4.5 4.7
--- --- --- --- --- ---
</TABLE>
* Excluding the effect of the extraordinary loss, the ratio of earnings to fixed
charges (excluding finance subsidiaries) for the six months ended 3/31/97 is
3.3.
<PAGE>
EXHIBIT 23.2
Consent of Ernst & Young LLP, Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of IKON Capital, Inc.
for the registration of $2,000,000,000 of debt securities and to the
incorporation by reference therein of our report dated October 16, 1996, with
respect to the financial statements of IKON Capital, Inc. included in its Annual
Report (Form 10-K) for the year ended September 30, 1996, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
May 13, 1997
<PAGE>
EXHIBIT 25
------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
___________________________________________
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2)
--------
________________________________________
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
_____________________________________________
IKON CAPITAL, INC
(Exact name of obligor 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)
-----------------------------------------
DEBT SECURITIES
(Title of the indenture securities)
------------------------------------------------------------------
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
New York State Banking Department, State House, Albany, New York 12110.
Board of Governors of the Federal Reserve System, Washington, D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New
York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of Eligibility.
1. A copy of the Articles of Association of the Trustee as now in effect,
including the Organization Certificate and the Certificates of Amendment dated
February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996,
in connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being contained
in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-
50010, which is incorporated by reference. On July 14, 1996, in connection with
the merger of Chemical Bank and The Chase Manhattan Bank (National Association),
Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 12TH day of MAY, 1997.
THE CHASE MANHATTAN BANK
By: /s/ T. J. Foley
--------------------
T. J. Foley
Vice President
- 3 -
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business December 31, 1996, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN MILLIONS
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ........................................................ $ 11,509
Interest-bearing balances ................................................ 8,457
Securities: ................................................................
Held to maturity securities................................................. 3,128
Available for sale securities............................................... 40,534
Federal Funds sold and securities purchased under
agreements to resell in domestic offices of the
bank and of its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds sold........................................................ 9,222
Securities purchased under agreements to resell........................... 422
Loans and lease financing receivables:
Loans and leases, net of unearned income $133,935
Less: Allowance for loan and lease losses 2,789
Less: Allocated transfer risk reserve............. 16
--------
Loans and leases, net of unearned income,
allowance, and reserve.................................................... 131,130
Trading Assets.............................................................. 49,876
Premises and fixed assets (including capitalized
leases)................................................................... 2,877
Other real estate owned..................................................... 290
Investments in unconsolidated subsidiaries and
associated companies...................................................... 124
Customer's liability to this bank on acceptances
outstanding............................................................... 2,313
Intangible assets........................................................... 1,316
Other assets................................................................ 11,231
--------
TOTAL ASSETS................................................................ $272,429
========
</TABLE>
<PAGE>
LIABILITIES
<TABLE>
<CAPTION>
Deposits
<S> <C>
In domestic offices..................................................... $ 87,006
Noninterest-bearing............................ $35,783
Interest-bearing............................... 51,223
In foreign offices, Edge and Agreement
subsidiaries, and IBF's................................................ 73,206
Noninterest-bearing ............................. $ 4,347
Interest-bearing............................... 68,859
Federal funds purchased and securities sold
under agreements to repurchase in domestic offices of the
bank and of its Edge and Agreement subsidiaries, and in
IBF's Federal funds purchased............................................ 14,980
Securities sold under agreements to repurchase........................... 10,125
Demand notes issued to the U.S. Treasury.................................. 1,867
Trading liabilities....................................................... 34,783
Other Borrowed money:
With a remaining maturity of one year or less........................... 14,639
With a remaining maturity of more than one year........................... 425
Mortgage indebtedness and obligations under
capitalized leases....................................................... 40
Bank's liability on acceptances executed and
outstanding.............................................................. 2,267
Subordinated notes and debentures......................................... 5,471
Other liabilities......................................................... 11,343
TOTAL LIABILITIES......................................................... 256,152
--------
Limited-Life Preferred stock and related surplus 550
</TABLE>
EQUITY CAPITAL
<TABLE>
<CAPTION>
<S> <C>
Common stock.............................................................. 1,251
Surplus................................................................... 10,243
Undivided profits and capital reserves.................................... 4,526
Net unrealized holding gains (Losses)
on available-for-sale securities.......................................... (309)
Cumulative foreign currency translation adjustments....................... 16
TOTAL EQUITY CAPITAL...................................................... 15,727
--------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED
STOCK AND EQUITY CAPITAL................................................ $272,429
========
</TABLE>
I, Joseph L. Sclafani, S.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the in-structions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
EDWARD D. MILLER )DIRECTORS
THOMAS G. LABRECQUE )
