THE WALT DISNEY COMPANY
Medium-Term Notes
Due Nine Months or More from Date of Issue
DISTRIBUTION AGREEMENT
March 7, 1996
Bear, Stearns & Co. Inc.
CS First Boston Corporation
Goldman, Sachs & Co.
J.P. Morgan Securities Inc.
Lehman Brothers,
Lehman Brothers Inc.
Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
Dear Ladies and Gentlemen:
The Walt Disney Company, a Delaware corporation (the "Company"),
confirms its agreement with each of Bear, Stearns & Co. Inc., CS First Boston
Corporation, Goldman, Sachs & Co., J.P. Morgan Securities Inc., Lehman Brothers,
Lehman Brothers Inc., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Morgan Stanley & Co. Incorporated (each an "Agent" and
collectively, the "Agents") with respect to the issue and
sale by the Company of its Medium-Term Notes (the "Notes"). The Notes are to be
issued pursuant to an indenture (the "Indenture"), dated as of March 7, 1996,
between the Company and Citibank, N.A., as trustee (the "Trustee"). As of the
date hereof, the Company has authorized the issuance and sale of up to U.S.
$3,000,000,000 aggregate initial offering price (or its equivalent, based upon
the applicable exchange rate at the time of issuance, in such foreign currencies
or composite currencies as the Company shall designate in the Notes at the time
of issuance) of Notes directly or through the Agents pursuant to the terms of
this Agreement. Such Notes are in addition to other Medium Term Notes of the
Company outstanding at the date hereof. It is understood, however, that the
Company may from time to time authorize the issuance of additional Notes and
that, at the option of the Company, such Notes may be distributed through or
sold to the Agents pursuant to the terms of this Agreement, all as though the
issuance of such Notes were authorized as of the date hereof.
This Agreement provides both for the sale of Notes by the Company
directly to purchasers, in which case the Agents will act as agents of the
Company in soliciting Note purchasers, and (as may from time to time be agreed
to by the Company and one or more Agents) to such Agent or Agents as principal
for resale to purchasers.
The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (No. 33-62777) for the
registration of debt securities and other securities, including the Notes, under
the Securities Act of 1933, as amended (the "1933 Act"), and the offering
thereof from time to time in accordance with Rule 415 of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations").
Such registration statement has been declared effective by the Commission and
the Indenture has been qualified under the Trust Indenture Act of 1939, as
amended (the "1939 Act"). Such registration statement (and any further
registration statements that may be filed by the Company for the purpose of
registering additional Notes and which the Company and the Agents agree is to be
covered by this Agreement) and the prospectus constituting a part thereof,
together with any prospectus supplement relating to the Notes, including, in
each case, all Incorporated Documents (as hereinafter defined), as from time to
time amended or supplemented by the filing of documents pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"), or the 1933 Act or
otherwise, are referred to herein as the "Registration Statement" and the
"Prospectus," respectively, except that, if any revised prospectus shall be
provided to the Agents by the Company for use in connection with the offering of
the Notes which is not required to be filed by the Company pursuant to Rule
424(b) of the 1933 Act Regulations, the term "Prospectus" shall refer to such
revised prospectus from and after the time it is first provided to the Agents
for such use. The term "Prospectus" shall also include any term sheet or
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abbreviated term sheet as these terms are used in Rule 434 of the 1933 Act
Regulations (each a "Terms Sheet"). In addition, any reference herein to the
Registration Statement or the Prospectus shall be deemed to refer to and include
the documents, financial statements and schedules incorporated by reference
therein pursuant to Item 12 of Form S-3 under the 1933 Act, and any reference to
any amendment or supplement to the Registration Statement or the Prospectus
shall be deemed to refer to and include any documents, financial statements and
schedules filed by the Company with the Commission under the 1934 Act after the
date hereof, and so incorporated by reference or deemed incorporated by
reference(such incorporated documents, financial statements and schedules being
herein called the "Incorporated Documents"). Notwithstanding the foregoing, for
purposes of this Agreement any prospectus or prospectus supplement or any Term
Sheets prepared or filed with respect to an offering pursuant to the
Registration Statement of securities other than the Notes shall not be deemed to
have supplemented the Prospectus.
SECTION 1. REPRESENTATIONS AND WARRANTIES; ADDITIONAL CERTIFICATES
a. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to each Agent as of the date hereof, as of the date of each acceptance
by the Company of an offer for the purchase of Notes (whether through an Agent
as agent or from an Agent as principal), as of the date of each delivery of
Notes by the Company to the purchasers (the date of each such delivery to an
Agent as principal being hereafter referred to as a "Settlement Date"), and as
of the dates referred to in Section 6(a) hereof (each of the dates referenced
above being referred to hereafter as a "Representation Date"), as follows:
(i) The Incorporated Documents, when they became effective
or were filed (or, if an amendment with respect to any such Incorporated
Document was filed or became effective, when such amendment was filed or became
effective) with the Commission, as the case may be, complied in all material
respects with the requirements of the 1934 Act, and any Incorporated Documents
filed subsequent to the date hereof and prior to the termination of the offering
of the Notes, will, when they are filed with the Commission, comply in all
material respects with the requirements of the 1934 Act; no such Incorporated
Document, when it became effective or was filed (or, if an amendment with
respect to any such Incorporated Document was filed or became effective, when
such amendment was filed or became effective) with the Commission, contained,
and no Incorporated Document filed subsequent to the date hereof and prior to
the termination of the offering of the Notes will contain, 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.
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(ii) The Registration Statement, at the time it became
effective, complied in all material respects with the provisions of the 1933 Act
and the 1933 Act Regulations; at the applicable Representation Date, the
Registration Statement and the Prospectus, and any supplements or amendments
thereto, will comply in all material respects with the provisions of the 1933
Act and the 1933 Act Regulations; and the Registration Statement and the
Prospectus, and any such supplement or amendment thereto, at all such times did
not and will not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; except that this representation and warranty does not apply to
statements or omissions in the Registration Statement, the Prospectus or any
preliminary prospectus, or any amendment or supplement thereto, made in reliance
upon information furnished to the Company in writing by or on behalf of the
Agents expressly for use therein or to those parts of the Registration Statement
which constitute the Trustee's Statement of Eligibility and Qualification on
Form T-1 under the 1939 Act (the "Form T-1"). There is no contract or document
of a character required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement which is
not described or filed as required.
(iii) This Agreement, the Indenture, the Notes and any
applicable Terms Agreement have been duly authorized by the Company and conform
in all material respects to the descriptions thereof in the Prospectus.
(iv) The Indenture (assuming due execution and delivery
thereof by the Trustee) is, and the Notes (when executed by the Company and
authenticated in accordance with the Indenture and delivered to and paid for by
the purchasers thereof) will be, the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms, except as such enforceability may be limited by (A) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting the enforcement of creditors' rights generally,
(B) general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law), (C) requirements that a claim
with respect to any Notes denominated other than in United States dollars (or a
judgment denominated other than in United States dollars in respect of such
claim) be converted into United States dollars at a rate of exchange prevailing
on a date determined pursuant to applicable law and (D) governmental authority
to limit, delay or prohibit the making of payments outside the United States or
in a foreign currency or composite currency. The Notes (when executed by the
Company and authenticated in accordance with the terms of the Indenture and
delivered to and paid for by the purchasers thereof) will be entitled to the
benefits of the Indenture (subject to the exceptions set forth in the preceding
sentence).
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(v) The Company is a validly existing corporation in good
standing under the laws of its state of incorporation. The Company has full
corporate power and authority to own, lease and operate its properties and to
conduct its business as presently conducted and as described in the Prospectus;
and the Company is duly qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction in which such qualification is
required whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify would not have a
material adverse effect on the consolidated financial condition or earnings of
the Company and its subsidiaries, considered as one enterprise.
(vi) Each of Disney Enterprises, Inc., Capital Cities/ABC,
Inc. and Walt Disney World Co. (collectively, the "Significant Subsidiaries") is
a validly existing corporation in good standing under the laws of its state of
incorporation. Each of the Significant Subsidiaries has full corporate power
and authority to own, lease and operate its properties and to conduct its
business as presently conducted and as described in the Prospectus; and each of
the Significant Subsidiaries is duly qualified as a foreign corporation to
transact business and is in good standing in each United States jurisdiction in
which such qualification is required whether by reason of the ownership or
leasing of property or the conduct of business, except where a failure to so
qualify would not have a material adverse effect on the consolidated financial
condition or earnings of the Company and its subsidiaries, considered as one
enterprise.
(vii) Except as contemplated in the Prospectus or reflected
therein by the filing of any amendment or supplement thereto or any Incorporated
Document, since the date of the most recent consolidated financial statements
included or incorporated by reference in the Registration Statement and the
Prospectus, unless the Company has notified the Agents as provided in Section
3(d) hereof, there has not been any material adverse change in the consolidated
financial condition or earnings of the Company and its subsidiaries, considered
as one enterprise.
(viii) The Company is not in violation of its Certificate of
Incorporation or Bylaws. The execution and delivery of this Agreement by the
Company, the issuance and sale of the Notes and the performance by the Company
of its obligations under this Agreement, the Indenture and any applicable Terms
Agreement will not conflict with or constitute a breach of or a default (with
the passage of time or otherwise) under (A) the Certificate of Incorporation or
Bylaws of the Company, (B) subject to the Company's compliance with any
applicable covenants pertaining to its incurrence of unsecured indebtedness
contained therein, any contract, indenture, mortgage, loan agreement, note,
lease or other instrument to which the Company is a party or by which it may be
bound, or to which any of the properties or assets of the
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Company is subject, which breach or default would, singly or in the aggregate,
have a material adverse effect on the consolidated financial condition or
earnings of the Company and its subsidiaries, considered as one enterprise, or
(C) any applicable law, administrative regulation or administrative or court
decree. Except for orders, permits and similar authorizations required under or
by the securities or Blue Sky laws of certain jurisdictions, any securities
exchange on which any of the Notes might be listed or with respect to Notes
which are to be indexed or linked to any foreign currency, composite currency,
commodity, equity index or similar index, no consent, approval, authorization or
other order of any regulatory body, administrative agency or other governmental
body is legally required for the valid issuance and sale of the Notes. As of
the date of each acceptance by the Company of an offer for the purchase of Notes
and as of the date of each delivery of Notes by the Company, the Company by such
acceptance or delivery, as the case may be, shall be deemed to represent and
warrant to the Agents that, both immediately before and immediately after giving
effect to such acceptance or delivery, the Company shall be in compliance with
the requirements of any applicable covenants pertaining to its incurrence of
unsecured indebtedness contained in the agreements or instruments referred to in
clause (B) above.
(ix) To the best of the Company's knowledge, the
accountants who have audited and reported upon the financial statements filed
with the Commission as part of the Registration Statement and the Prospectus are
independent accountants as required by the 1933 Act. The historical financial
statements included in the Registration Statement or Prospectus or incorporated
therein by reference fairly present the consolidated financial position and
results of operations of the Company and its subsidiaries at the respective
dates and for the respective periods to which they apply. Such historical
financial statements have been prepared in accordance with generally accepted
accounting principles consistently applied, except as set forth in the
Registration Statement and Prospectus. The unaudited pro forma combined
condensed financial statements (Disney/Capital Cities/Combined Company),
together with the related notes and any supporting schedules incorporated by
reference in the Registration Statement and the Prospectus, present fairly the
information shown therein and have been compiled on a basis substantially
consistent with the audited financial statements of Disney and Capital Cities
incorporated by reference in the Registration Statement and the Prospectus; the
assumptions on which such unaudited pro forma combined condensed financial
statements have been prepared are reasonable; and such unaudited pro forma
combined condensed financial statements have been prepared, and the pro forma
adjustments set forth therein have been applied, in accordance with the
applicable accounting requirements of the 1933 Act and the 1933 Act Regulations
(including, without limitation, Regulations S-X promulgated by the Commission),
and such pro forma
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adjustments have been properly applied to the historical amounts in the
compilation of such statements.
(x) The Company has complied with, and is and will be in
compliance with, the provisions of that certain Florida act relating to
disclosure of doing business with Cuba, codified as Section 517.075 of the
Florida statutes, and the rules and regulations thereunder or is exempt
therefrom.
b. ADDITIONAL CERTIFICATIONS. Any certificate signed by any
officer of the Company and delivered to an Agent or to counsel for the Agents in
connection with an offering of Notes shall be deemed a representation and
warranty by the Company to such Agent as to the matters covered thereby on the
date of such certificate.
SECTION 2. SOLICITATIONS AS AGENTS; PURCHASES AS PRINCIPALS
a. SOLICITATIONS AS AGENTS. Subject to the terms and conditions
stated herein and subject to the reservation by the Company of the right to sell
Notes directly on its own behalf and to any person, to sell Notes through others
(provided that any other agent will execute an agreement with the Company which
contains substantially the same terms and conditions contained herein), and to
designate and select additional agents to become party to this Agreement, the
Company hereby (i) appoints each Agent as an agent of the Company for the
purpose of soliciting offers to purchase the Notes from the Company by others
and (ii) agrees that whenever the Company determines to sell Notes directly to
an Agent as principal for resale to others, it will enter into a Terms Agreement
relating to such sale in accordance with the provisions of Section 2(b) hereof.
Without the prior written consent of the Company, the Agents are not authorized
to appoint sub-agents or to engage the services of any other broker or dealer in
connection with the offer or sale of the Notes; provided, that without the
Company's consent, the Agents may solicit offers to purchase the Notes from
other brokers or dealers. In connection with the solicitation of offers to
purchase Notes, without the prior consent of the Company, the Agents are not
authorized to provide any written information relating to the Company to any
prospective purchaser other than the Prospectus and the Incorporated Documents.
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, as agent, and accepted by the Company, but such
Agent shall not have any liability to the Company in the event any such purchase
is not consummated for any reason.
The Company reserves the right, in its sole discretion, to suspend
the solicitation of offers to purchase the Notes through the Agents commencing
at any time for any period of time or permanently. Upon receipt of instructions
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from the Company, the Agents will, as soon as possible, suspend the solicitation
of offers to purchase the Notes from the Company until such time as the Company
has advised the Agents that such solicitation may be resumed.
The Company agrees to pay each Agent a commission, which such Agent
is hereby authorized to deduct from the sales proceeds of each Note sold by the
Company as a result of a solicitation made by such Agent, equal to the
applicable percentage of the principal amount of each such Note, as set forth in
Exhibit A hereto. Without the consent of the Company, no Agent, as an agent,
may reallow any portion of the commission payable pursuant hereto to dealers or
purchasers in connection with the offer and sale of any Notes.
As an agent, each Agent is authorized, except during periods of
suspension as provided in this Agreement, to solicit offers to purchase the
Notes. Each Agent shall communicate to the Company, orally or in writing, each
reasonable offer to purchase Notes received by such Agent, as agent. Each Agent
shall have the right in its discretion reasonably exercised to reject any offer
to purchase the Notes received by such Agent which it does not deem reasonable,
and any such rejection shall not be deemed a breach of such Agent's agreements
contained herein. 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, and any
such rejection shall not be deemed to be a breach of any agreement of the
Company contained herein. The purchase price, interest rate, maturity date and
other terms of the Notes agreed upon by the Company shall be set forth in a
pricing supplement to the Prospectus to be prepared following each acceptance by
the Company of an offer for the purchase of Notes (a "Pricing Supplement").
Except as may be otherwise provided in any Pricing Supplement, each Note will be
issued in the denomination of U.S. $1,000 or any amount in excess thereof which
is an integral multiple of U.S. $1,000. All Notes will be sold at 100% of their
principal amount unless otherwise agreed to by the Company. Each Agent
acknowledges and agrees that any funds which such Agent receives in respect of a
purchase of Notes, which purchase has been solicited by such Agent, as agent of
the Company, will be received, held and disposed of by such Agent, as agent of
the Company, subject to the right of such Agent to deduct from the sale proceeds
the applicable commission as set forth on Exhibit A hereto.
If requested by a prospective purchaser of Notes denominated in a
currency other than U.S. dollars, the Agent soliciting the offer to purchase
will use its reasonable efforts to arrange for the conversion of U.S. dollars
into such currency to enable the purchaser to pay for such Notes. Such requests
must be made on or before the third business day preceding the date of delivery
of the Notes, or by such other dates as determined by such Agent. Each such
conversion will be made by the relevant Agent on such terms and subject to such
conditions, limitations and charges as such Agent may from time to time
establish
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in accordance with its regular foreign exchange practice. All costs of exchange
will be borne by purchasers of the Notes.
b. PURCHASES AS PRINCIPAL. Each sale of Notes to an Agent as
principal shall be made in accordance with the terms contained herein and
pursuant to a separate agreement which will provide for the sale of such Notes
to, and the purchase and any reoffering thereof by, such Agent. Each such
separate agreement (which may be an oral agreement if confirmed within 24 hours
thereafter by an exchange of any standard form of written telecommunication
(including facsimile transmission) between the Agent and the Company) is herein
referred to as a "Terms Agreement." Unless the context otherwise requires, each
reference contained herein to "this Agreement" shall be deemed to include any
applicable Terms Agreement between the Company and the Agent. Each such Terms
Agreement, whether oral (and confirmed in writing, which confirmation may be by
facsimile transmission) or in writing shall be with respect to such information
(as applicable) as is specified in Exhibit B hereto. An Agent's commitment to
purchase Notes pursuant to any Terms Agreement shall be deemed to have been made
on the basis of the representations and warranties of the Company herein
contained and shall be subject to the terms and conditions herein set forth.
The Agents may offer the Notes they have purchased as principal to other
dealers. The Agents may sell Notes to any dealer at a discount and, unless
otherwise specified in the applicable Terms Agreement, such discount allowed to
any dealer will not be in excess of the discount to be received by such Agent
from the Company. Unless otherwise specified in the applicable Terms Agreement,
any Notes sold to an Agent as principal will be purchased by such Agent at a
price equal to 100% of the principal amount thereof less a percentage equal to
the commission applicable to any agency sale of a Note of identical maturity.
c. ADMINISTRATIVE PROCEDURES. Administrative procedures with
respect to the sale of Notes shall be agreed upon from time to time by the
Agents and the Company (the "Procedures"). The Procedures initially agreed upon
shall be those set forth in Exhibit C hereto. The Agents and the Company agree
to perform the respective duties and obligations specifically provided to be
performed by the Agents and the Company herein and in the Procedures.
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SECTION 3. COVENANTS OF THE COMPANY
The Company covenants with each Agent as follows:
a. NOTICE OF CERTAIN EVENTS. The Company will notify the
Agents promptly of (i) the designation and selection of additional agents to
become party to this Agreement, (ii) the designation and selection of additional
agents for the sale of Notes pursuant to any agreement other than this
Agreement, (iii) the effectiveness of any post-effective amendment to the
Registration Statement (other than a post-effective amendment relating solely to
an offering of debt securities other than the Notes), (iv) the transmittal to
the Commission for filing of any supplement to the Prospectus (other than a
Pricing Supplement or a supplement relating solely to an offering of securities
other than the Notes), (v) the receipt of any comments from the Commission with
respect to the Registration Statement or the Prospectus (other than any comments
relating solely to an offering of securities other than the Notes), (vi) any
request by the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information (other
than any such request relating solely to an offering of securities other than
the Notes) and (vii) the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose. The Company will make every reasonable effort to
prevent the issuance of any such stop order and, if any such stop order is
issued, to obtain the lifting thereof at the earliest possible time unless the
Company shall, in its sole discretion, determine that it is not in its best
interest to do so.
b. NOTICE OF CERTAIN PROPOSED FILINGS. At or prior to the
filing thereof, the Company will give the Agents notice of its intention to file
any additional registration statement with respect to the registration of
additional Notes to be covered by this Agreement, any amendment to the
Registration Statement or any amendment or supplement to the Prospectus (other
than a Pricing Supplement or an amendment or supplement relating solely to an
offering of debt securities other than the Notes), whether by the filing of
documents pursuant to the 1934 Act, the 1933 Act or otherwise, and will furnish
the Agents with copies of any such amendment or supplement or other documents
promptly after the filing thereof.
c. COPIES OF THE REGISTRATION STATEMENT AND THE PROSPECTUS.
The Company will deliver to the Agents one signed and as many conformed copies
of the Registration Statement (as originally filed) and of each amendment
thereto (including the Incorporated Documents and any exhibits filed therewith
or incorporated by reference therein) as the Agents may reasonably request. The
Company will furnish to the Agents as many copies of the Prospectus (as amended
or supplemented) as the Agents shall reasonably request so long as the
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Agents are required to deliver a Prospectus in connection with sales or
solicitations of offers to purchase the Notes.
d. REVISIONS OF PROSPECTUS -- MATERIAL CHANGES. So long as
the Agents are required to deliver a Prospectus in connection with sales or
solicitations of offers to purchase the Notes, if any event shall occur or
condition exist as a result of which it is necessary, in the opinion of counsel
for the Company, after consultation with counsel for the Agents, to further
amend or supplement the Prospectus in order that the Prospectus will not include
an untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein not misleading in light of the
circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel for the Company, to amend or
supplement the Registration Statement or the Prospectus in order to comply with
the requirements of the 1933 Act or the 1933 Act Regulations, prompt notice
shall be given, and confirmed in writing, to the Agents to cease the
solicitation of offers to purchase the Notes in their capacity as agents and to
cease sales of any Notes the Agents may then own as principal. In addition, if
any Agent holds Notes purchased for resale pursuant to a Terms Agreement and the
Company has given notice to the Agents pursuant to this subsection (d) within 90
days after the date of execution of such Terms Agreement, the Company will
prepare and file as soon as practicable an amendment or supplement to the
Prospectus so that the Prospectus, as amended or supplemented, will not include
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein not misleading in light of the
circumstances existing at the time it is delivered to the Agents.
e. COMPLIANCE WITH 1934 ACT; ACCOUNTANTS' CONSENTS. The
Company will (i) comply, in a timely manner, with all applicable requirements
under the 1934 Act relating to the filing with the Commission of the Company's
reports pursuant to Section 13(a), 13(c) or 15(d) of the 1934 Act and, if then
applicable, of the Company's proxy statements pursuant to Section 14 of the 1934
Act and (ii) use its best efforts to obtain the written consent of the Company's
independent accountants as to the incorporation by reference in the Registration
Statement of the audited financial statements reported on by them and contained
in the Company's annual reports on Form 10-K under the 1934 Act.
f. EARNINGS STATEMENTS. The Company will make generally
available to its security holders, in each case as soon as practicable but in
any event not later than 15 months after the acceptance by the Company of an
offer to purchase Notes hereunder, a consolidated earnings statement (which need
not be audited) covering the twelve-month period beginning after the latest 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
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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 earnings statement will satisfy the provisions of Section
11(a) of the 1933 Act (and, at the option of the Company, Rule 158 of the 1933
Act Regulations). Nothing in this Section 3(f) shall require the Company to
make such earnings statement available more frequently than once in any period
of twelve months.
g. BLUE SKY QUALIFICATIONS. The Company will endeavor, in
cooperation with the Agents, to qualify the Notes for offering and sale under
the applicable securities laws of such states and other jurisdictions of the
United States as the Agents may reasonably designate, and will maintain such
qualifications in effect for as long as may be required for the distribution of
the Notes; PROVIDED, HOWEVER, that the Company will promptly notify the
Agents of any suspension or termination of any such qualifications, and
PROVIDED, FURTHER, that the Company shall not be obligated to register or
qualify as a foreign corporation or take any action which would subject it to
general service of process in any jurisdiction where it is not now so subject.
h. SUSPENSION OF CERTAIN OBLIGATIONS. The Company shall not be
required to comply with the provisions of subsections (b), (c), (d), (e) or (g)
of this Section 3 during any period from the time the Agents shall have been
notified to suspend the solicitation of offers to purchase the Notes in their
capacity as agents or resales of Notes purchased pursuant to a Terms Agreement
to the time the Company shall determine that the solicitation of offers to
purchase the Notes through any Agent or Agents or resales as principal of Notes
purchased pursuant to a Terms Agreement by any Agent or Agents should be
resumed. Notwithstanding the foregoing, if any Agent holds Notes purchased for
resale pursuant to a Terms Agreement the Company shall comply with the
provisions of subsections (b), (c), (d), (e) and (g) of this Section 3 during
the 90 day period from and including the date of execution of such Terms
Agreement; PROVIDED, HOWEVER, that the Company shall have the right, in its
reasonable business judgment, to suspend such compliance during such 90 day
period for an aggregate of up to 45 days, in which event such 90 day period
shall be extended by the greater of (i) the number of days included in any such
period of suspension and (ii) 30 days.
SECTION 4. PAYMENT OF EXPENSES
The Company will pay all expenses incident to the performance of its
obligations under this Agreement, including:
(i) The preparation and filing of the Registration
Statement and all amendments thereto and the Prospectus and any
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amendments or supplements thereto and all Incorporated Documents;
(ii) The preparation, filing and printing of this
Agreement;
(iii) The preparation, printing, issuance and delivery of
the Notes;
(iv) The fees and disbursements of the Trustee and its
counsel, of any calculation agent or exchange rate agent and of The
Depository Trust Company;
(v) The reasonable fees and disbursements of Gibson, Dunn
& Crutcher (or such other counsel as is reasonably acceptable to the
Company), as counsel to the Agents, incurred in connection with the
execution and delivery of this Agreement and in connection with the
review of subsequent deliveries pursuant to this Agreement;
(vi) The qualification of the Notes under securities laws
in accordance with the provisions of Section 3(g) hereof, including
filing fees and the reasonable fees and disbursements of Gibson,
Dunn & Crutcher (or such other counsel as is reasonably acceptable
to the Company), as counsel to the Agents, in connection therewith
and in connection with the preparation of any Blue Sky survey;
(vii) The printing and delivery to the Agents in quantities
as hereinabove stated of copies of the Registration Statement and
any amendments thereto, and of the Prospectus and any amendments or
supplements thereto, and the delivery by the Agents of the
Prospectus and any amendments or supplements thereto in connection
with solicitations of offers to purchase, or confirmations of sales
of, the Notes;
(viii) Any fees charged by rating agencies for the rating of
the Notes;
(ix) Any advertising and other out-of-pocket expenses of
the Agents incurred with the prior written approval of the Company;
and
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(x) Reasonable fees and disbursements in connection with
the subsequent delivery of legal opinions pursuant to Section 6(b)
hereof.
SECTION 5. CONDITIONS OF OBLIGATIONS
The obligations of any Agent to solicit offers to purchase the Notes
as agent of the Company and the obligations of any Agent to purchase Notes
pursuant to any Terms Agreement will be subject at all times to the accuracy, as
of the applicable Representation Date, of the representations and warranties on
the part of the Company herein and to the accuracy, as of the date made, of the
statements of the Company's officers made in any certificate furnished pursuant
to the provisions hereof, to the performance and observance by the Company of
all covenants and agreements herein contained on its part to be performed and
observed, and to the following additional conditions precedent:
a. OPINION OF COUNSEL TO COMPANY. On the date hereof, the
Agents shall have received an opinion from Skadden, Arps, Slate, Meagher & Flom,
counsel to the Company, dated as of the date hereof and in form and substance
satisfactory to counsel for the Agents to the effect that:
(i) The Company and each of the Significant Subsidiaries
is a corporation validly existing and in good standing under the
laws of its state of incorporation.
(ii) The Company has full corporate power and corporate
authority to enter into and perform its obligations under this
Agreement and the Indenture, to borrow money as contemplated in this
Agreement and the Indenture, and to issue, sell and deliver the
Notes.
(iii) This Agreement has been duly authorized, executed and
delivered by the Company.
(iv) The Indenture has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement of the
Company enforceable against the Company in accordance with its
terms, except to the extent that (x) enforcement thereof may be
limited by (A) bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally and (B) general principles of
equity (regardless of whether enforcement is considered in a
proceeding in equity or at law) and (y) counsel may
14
state that no opinion is expressed with respect to the
enforceability or effect of the waiver contained in Section 6.12 of
the Indenture.
(v) No Governmental Approval is required in connection
with the issuance or sale of the Notes other than registration
thereof under the 1933 Act, qualification of the Indenture under the
1939 Act, and such registrations or qualifications as may be
necessary under the securities or Blue Sky laws of the various
United States jurisdictions in which the Notes are to be offered or
sold.
(vi) The Notes, when executed and authenticated in
accordance with the terms of the Indenture and delivered to and paid
for by the purchasers thereof in accordance with the terms of the
Distribution Agreement, will be valid and binding obligations of the
Company entitled to the benefits of the Indenture and enforceable
against the Company in accordance with their terms, except that (x)
the enforcement thereof may be limited by (A) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting creditors' rights
generally and (B) general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at
law) and (y) counsel may state that no opinion is expressed with
respect to the enforceability or effect of the waiver contained in
Section 6.12 of the Indenture.
(vii) The Registration Statement has become effective under
the 1933 Act and the Indenture has been qualified under the 1939
Act, and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or
are pending or contemplated.
(viii) The execution and delivery of this Agreement and the
Indenture by the Company, the issuance and sale of the Notes and the
fulfillment of this Agreement and the Indenture by the Company will
not conflict with or constitute a breach of or a default (with the
passage of time or otherwise) under (A) the Certificate of
Incorporation or Bylaws of the Company, (B) any Applicable Laws or
(C) any judgment, decree or order, known to such counsel, of any
court or Governmental Authority entered in any proceeding to which
the Company was or is now a party or by which it is bound; provided,
that such counsel may state that no
15
opinion is expressed as to the securities or Blue Sky laws of the
various jurisdictions in which the Notes are to be offered.
(ix) The Registration Statement, as of its effective date,
and the Prospectus, as of its date, appeared on their face to be
appropriately responsive in all material respects to the
requirements of the 1933 Act and the Rules and Regulations
promulgated thereunder, except that in each case (A) such counsel
need not express an opinion as to (i) the Incorporated Documents,
(ii) the financial statements, schedules and other financial data
included or incorporated by reference therein or excluded therefrom
or (iii) the exhibits to the Registration Statement, including the
Form T-1 and (B) such counsel need not assume any responsibility for
the accuracy, completeness or fairness of the statements contained
in the Registration Statement and the Prospectus except as
specifically set forth in paragraph (x) below.
(x) The statements in the Prospectus under the captions
"Description of the Debt Securities" and "Description of the Notes,"
insofar as they purport to summarize certain provisions of documents
specifically referred to therein, are in all material respects
accurate summaries of such provisions.
In rendering the opinions set forth above, such counsel may state
that (1) with respect to paragraphs (iv) and (vi), such enforcement may be
limited by (i) requirements that a claim with respect to any Notes denominated
other than in United States dollars (or a judgment denominated other than in
United States dollars in respect of such claim) be converted into United States
dollars at a rate of exchange prevailing on a date determined pursuant to
applicable law and (ii) governmental authority to limit, delay or prohibit the
making of payments outside the United States or in foreign currency or composite
currency; and (2) with respect to paragraphs (iv), (v),(vi) and (viii), no
opinion is expressed thereto with respect to any Notes that are to be indexed or
linked to any foreign currency or composite currency, commodity, equity index or
similar index.
In rendering the opinion set forth in paragraph (v) and clause (B)
and (C) of paragraph (viii) above, the term "Applicable Laws" shall mean the
Delaware General Corporation Law and those laws, rules and regulations of the
States of California and New York and of the United States of America which, in
our experience, are normally applicable to transactions of the type contemplated
by this Agreement, the term "Governmental Authority" shall mean any California,
New York, Delaware or federal executive, legislative, judicial, administrative
or regulatory body and the term "Governmental Approval" shall mean any consent,
approval, license, authorization or validation of, or filing,
16
recording or registration with, any Governmental Authority pursuant to
Applicable Laws.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company, counsel
employed by the Company, representatives of the independent accountants for the
Company, representatives of the Agents and counsel for the Agents, at which
conferences the contents of the Registration Statement and Prospectus and
related matters were discussed and, although such counsel is not passing upon,
and does not assume any responsibility for, the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus, other than to the extent covered by paragraph (x) above, and have
not made any independent check or verification thereof, on the basis of the
foregoing, no facts have come to such counsel's attention that lead them to
believe that either the Registration Statement (excluding the Incorporated
Documents) at the time such Registration Statement became effective contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or the Prospectus (excluding the Incorporated Documents) as of the date of this
Agreement (and, if the opinion is being given pursuant to Section 6(b) hereof as
a result of the Company having entered into a Terms Agreement, as of the
Settlement Date with respect to such Terms Agreement) contained an untrue
statement of a material fact or omitted to state a material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, except that such counsel need express no opinion with
respect to (i) the Incorporated Documents, (ii) the financial statements,
schedules and other financial data included or incorporated by reference therein
or excluded therefrom or (iii) the exhibits to the Registration Statement,
including the Form T-1.
b. OPINION OF COUNSEL EMPLOYED BY COMPANY. On the date hereof,
the Agents shall have received an opinion from David K. Thompson, Senior Vice
President-Assistant General Counsel or from other counsel employed by the
Company (provided that such counsel is at least a Vice President of the
Company), dated as of the date hereof and in form and substance satisfactory to
counsel for the Agents, to the effect that:
(i) Except as set forth in the Prospectus (including the
Incorporated Documents), there is not pending or, to the best of
such counsel's knowledge, after reasonable inquiry, threatened any
action, suit or proceeding against the Company or any of its
subsidiaries before or by any court or governmental agency or body,
which is likely (to the extent not covered by insurance) to have a
material adverse effect on the consolidated financial
17
condition or earnings of the Company and its subsidiaries,
considered as one enterprise.
(ii) To the best of such counsel's knowledge, after
reasonable inquiry, there is no contract or document of a character
required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration
Statement which is not described or filed as required.
(iii) To the best of such counsel's knowledge, after
reasonable inquiry, the Company is not in violation of its
Certificate of Incorporation or Bylaws.
(iv) To the best of such counsel's knowledge, after
reasonable inquiry, (x) the execution and delivery, and (y) the
performance, of this Agreement and the Indenture will not conflict
with or constitute a breach of, or default (with the passage of time
or otherwise) under, any material contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which the Company
is a party or by which it may be bound, or to which any of the
property or assets of the Company or any of its subsidiaries is
subject.
(v) The Incorporated Documents, as of the date of this
Agreement, comply as to form in all material respects with the
requirements of the 1933 Act, except that in each case such counsel
need not express an opinion as to the financial statements,
schedules and other financial data included or incorporated by
reference therein or excluded therefrom.
In addition, such counsel shall state that nothing has come to such
counsel's attention that leads him to believe that either the Registration
Statement (including the Incorporated Documents) at the time such Registration
Statement became effective contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or the Prospectus (including the
Incorporated Documents) as of the date of this Agreement (and, if the opinion is
being given pursuant to Section 6(b) hereof as a result of the Company having
entered into a Terms Agreement, as of the Settlement Date with respect to such
Terms Agreement) contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that such counsel need express no opinion with respect to
the financial statements, schedules and other financial data included or
incorporated
18
by reference therein or excluded therefrom or the exhibits to the Registration
Statement, including the Form T-1.
c. OPINION OF AGENTS' COUNSEL. On the date hereof, the Agents
shall have received an opinion from Gibson, Dunn & Crutcher, counsel to the
Agents, dated as of the date hereof and in form and substance satisfactory to
the Agents.
d. OFFICER'S CERTIFICATE. On the date hereof (and, if this
certificate is being delivered pursuant to a Terms Agreement, as of the
Settlement Date with respect to such Terms Agreement), the Agents shall have
received a certificate signed by an officer of the Company, substantially in the
form of Appendix I hereto and dated the date hereof, to the effect that (i) the
representations and warranties of the Company contained in Section 1(a) hereof
(other than Section 1(a)(vii)) are true and correct in all material respects
with the same force and effect as though expressly made at and as of the date of
such certificate, (ii) the Company has complied with all agreements and
satisfied all conditions required by this Agreement or the Indenture on its part
to be performed or satisfied at or prior to the date of such certificate, and
(iii) no stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been initiated or, to
the best of such officer's knowledge, threatened by the Commission. The
officer's certificate shall further state that except as contemplated in the
Prospectus or reflected therein by the filing of any amendment or supplement
thereto or any Incorporated Document, at the date hereof and at each Settlement
Date with respect to any Terms Agreement, there has not been, since the date of
the most recent consolidated financial statements included or incorporated by
reference in the Prospectus, any material adverse change in the consolidated
financial condition or earnings of the Company and its subsidiaries, considered
as one enterprise.
e. COMFORT LETTER. On the date hereof, the Agents shall have
received a letter from the Company's independent certified public accountants,
dated as of the date hereof and in form and substance satisfactory to the
Agents, to the effect that:
(i) They are independent public accountants with respect
to the Company and its subsidiaries within the meaning of the 1933
Act and the 1933 Act Regulations.
(ii) In their opinion, the consolidated financial
statements and supporting schedule(s) of the Company and its
subsidiaries audited and reported upon by them and incorporated by
reference in the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the
19
1933 Act and the 1933 Act Regulations with respect to registration
statements on Form S-3 and the 1934 Act and the published rules and
regulations thereunder.
(iii) They have performed specified procedures, not
constituting an audit, including a reading of the latest available
interim consolidated financial statements of the Company, a reading
of the minute books of the Company since the end of the most recent
fiscal year with respect to which an audit report has been issued,
inquiries of and discussions with certain officials of the Company
and certain of its subsidiaries responsible for financial and
accounting matters with respect to the latest available interim
unaudited consolidated financial statements of the Company, and such
other inquiries and procedures as may be specified in such letter,
and on the basis of such inquiries and procedures nothing came to
their attention that caused them to believe that: (A) the latest
available unaudited consolidated financial statements of the Company
were not fairly presented in conformity with generally accepted
accounting principles in the United States applied on a basis
substantially consistent with that of the audited financial
statements incorporated by reference therein, or (B) at a specified
date not more than five days prior to the date of such letter, there
was any change in the outstanding capital stock of the Company or
any increase in consolidated long-term debt of the Company or any
decrease in the stockholders' equity of the Company, in each case as
compared with the amounts shown on the most recent consolidated
balance sheet of the Company incorporated by reference in the
Registration Statement and Prospectus or, during the period from the
date of such balance sheet to a specified date not more than five
days prior to the date of such letter, there were any decreases, as
compared with the corresponding period in the preceding year, in
consolidated revenues or net income of the Company, except in each
such case as set forth in or contemplated by the Registration
Statement and Prospectus or except for such exceptions enumerated in
such letter as shall have been agreed to by the Agents and the
Company.
(iv) In addition to the examination referred to in their
report included or incorporated by reference in the Registration
Statement and the Prospectus, and the limited procedures referred to
in clause (iii) above, they have carried out certain other specified
procedures, not constituting an audit, with respect to certain
financial information which is included or incorporated by reference
in the Registration Statement and Prospectus, which
20
would normally be covered under auditing procedures and which are
specified by the Agents, and have found such financial information
to be in agreement with the relevant accounting, financial and other
records of the Company identified in such letter.
f. OTHER DOCUMENTS. On the date hereof and on each Settlement
Date with respect to any applicable Terms Agreement, counsel to the Agents shall
have been furnished with such documents and opinions as such counsel may
reasonably require for the purpose of enabling such counsel to pass upon the
issuance and sale of Notes as herein contemplated and related proceedings, or in
order to evidence the accuracy and completeness of any of the representations
and warranties or the fulfillment of any of the conditions herein contained.
If any condition specified in this Section 5 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by any of the Agents (as to itself only) and any Terms Agreement may be
terminated by the Agent party to such Terms Agreement by notice to the Company
at any time and any such termination shall be without liability of any party to
any other party, except that the covenants set forth in Section 3(f) hereof, the
provisions of Section 4 hereof, the indemnity and contribution agreement set
forth in Sections 7 and 8 hereof, and the provisions of Sections 9 and 13 hereof
shall remain in effect.
SECTION 6. SUBSEQUENT DOCUMENTATION REQUIREMENT OF THE COMPANY
The Company covenants and agrees that so long as Notes are
authorized for sale pursuant to this Agreement and unless the sale of Notes has
been suspended as provided in this Agreement:
a. SUBSEQUENT DELIVERY OF CERTIFICATES. Each time that the
Registration Statement or the Prospectus shall be amended or supplemented (other
than by (i) a Pricing Supplement or an amendment or other supplement providing
solely for a change in the interest rates of the Notes or changes in other terms
of the Notes or (ii) an amendment or supplement which relates exclusively to an
offering of securities other than the Notes) or there is filed with the
Commission any document incorporated by reference into the Prospectus or the
Company sells Notes to an Agent pursuant to a Terms Agreement, the terms of
which so require, the Company shall use its best efforts to furnish or cause to
be furnished to the Agents or to the Agent party to the Terms Agreement, as the
case may be, promptly following such amendment, supplement or filing or on the
Settlement Date with respect to such Terms Agreement, as the case may be, a
certificate in form satisfactory to counsel for the Agents to the effect that
the statements
21
contained in the certificate referred to in Section 5(d) hereof, which was last
furnished to the Agents, are true and correct at the time of such amendment,
supplement, filing or sale, 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 the Prospectus as amended and supplemented to such time) or, in
lieu of such certificate, a certificate of the same tenor as the certificate
referred to in said Section 5(d), modified as necessary to relate to the
Registration Statement and the Prospectus as amended and supplemented to the
time of delivery of such certificate; PROVIDED, HOWEVER, that in the case of
any such amendment or supplement that relates to Notes which are indexed or
linked to any foreign currency, composite currency, commodity, equity index or
similar index, such certificate shall state that, for purposes of such
certificate, the phrase "or with respect to Notes which are to be indexed or
linked to any currency, composite currency, commodity, equity index or similar
index" appearing in the second sentence of Section 1(a)(viii) hereof shall be
deemed not to apply with respect to such Notes.
b. SUBSEQUENT DELIVERY OF LEGAL OPINIONS. Each time that the
Registration Statement or the Prospectus shall be amended or supplemented (other
than by (i) a Pricing Supplement or an amendment or other supplement providing
solely for a change in the interest rates of the Notes or changes in other terms
of the Notes or (ii) an amendment or supplement providing primarily for the
inclusion of additional financial information, or (iii) an amendment or
supplement which relates exclusively to an offering of securities other than the
Notes) or there is filed with the Commission any document incorporated by
reference into the Prospectus (other than any Annual Report on Form 10-K,
Current Report on Form 8-K or Quarterly Report on Form 10-Q relating primarily
to financial statements or other financial information as of and for any fiscal
quarter) or the Company sells Notes to an Agent pursuant to a Terms Agreement,
the terms of which so require, the Company shall use its best efforts to furnish
or cause to be furnished promptly following such amendment, supplement or filing
or on the Settlement Date with respect to such Terms Agreement, as the case may
be, to the Agents or to the Agent party to the Terms Agreement, as the case may
be (with a copy to counsel to the Agents or counsel to such Agent, as the case
may be), letters substantially in the form of Appendix II hereto (modified, as
necessary, in the case of a Terms Agreement) from the counsel last furnishing
the opinions referred to in Sections 5(a) and 5(b) hereof or, in lieu of such
letters, letters from other counsel reasonably satisfactory to the Agents
(which, in the case of the opinions referred to in such Section 5(b), shall
include David K. Thompson, Senior Vice President - Assistant General Counsel of
the Company), dated the date of delivery of such letter and in form satisfactory
to counsel for the Agents, of the same tenor as the opinions referred to in
Sections 5(a) and 5(b) (other than, in the case of the opinion delivered
pursuant to Section 5(b) hereof, the matters covered by Sections 5(b)(i) and
5(b)(iv)(x)) hereof, but modified, as
22
necessary, to relate to the Registration Statement and the Prospectus as amended
and supplemented to the time of delivery of such opinion; PROVIDED, HOWEVER,
that (i) in the case of any such amendment or supplement that relates to Notes
which are indexed or linked to any foreign currency, composite currency,
commodity, equity index or similar index, the opinions referred to in Section
5(a) hereof shall not include the exceptions set forth in such Section 5(a) as
to Notes which are to be indexed or linked to any foreign currency, composite
currency, commodity, equity index or similar index and (ii) if reasonably
requested by the Agents, the counsel delivering such opinion shall expand the
opinion rendered pursuant to Section 5(a)(i) to include any other subsidiary of
the Company that, as a result of actions or events occurring after the date of
this Agreement is of substantially similar materiality to the Company, on a
consolidated basis, as each of the Significant Subsidiaries are as of the date
of this Agreement. The Company shall use its best efforts to furnish or cause
to be furnished to the Agents, promptly following each filing by the Company of
a Quarterly Report on Form 10-Q or an Annual Report on Form 10-K, a letter from
the counsel last furnishing the opinion referred to in Section 5(b) hereof, or
from other counsel reasonably satisfactory to the Agents, dated the date of
delivery of such letter and in form satisfactory to counsel for the Agents, of
the same tenor as the opinion referred to in Section 5(b)(i) hereof, but
modified, as necessary, to relate to the Registration Statement and Prospectus
as amended and supplemented to the time of delivery of such letter.
c. SUBSEQUENT DELIVERY OF COMFORT LETTERS. Each time that the
Registration Statement or the Prospectus shall be amended or supplemented to
include additional financial information or there is filed with the Commission
any document incorporated by reference into the Prospectus which contains
additional financial statement information relating to the Company or the
Company sells Notes pursuant to a Terms Agreement, the terms of which so
require, the Company shall use its best efforts to cause the Company's
independent public accountants promptly following such amendment, supplement or
filing or on the Settlement Date with respect to such Terms Agreement, as the
case may be, to furnish the Agents or to the Agent party to the Terms Agreement,
as the case may be, a letter, dated the date of filing of such amendment,
supplement or document with the Commission, or such Settlement Date, as the case
may be, in form satisfactory to counsel for the Agents (or such Agent), of the
same tenor as the portions of the letter referred to in clauses (i) and (ii) of
Section 5(e) hereof but modified, as necessary, to relate to the Registration
Statement and Prospectus, as amended and supplemented to the date of such
letter, and of the same general tenor as the portions of the letter referred to
in clauses (iii) and (iv) of said Section 5(e) 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 the Prospectus is amended or supplemented
primarily to include financial information
23
as of and for a fiscal quarter, the Company's independent certified public
accountants may limit the scope of such letter to the unaudited financial
statements included in such amendment or supplement.
SECTION 7. INDEMNIFICATION
a. INDEMNIFICATION OF THE AGENTS. The Company agrees to
indemnify and hold harmless each Agent and each person, if any, who controls an
Agent within the meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever (including, subject to the limitations set forth
in subsection (c) below, the reasonable fees and disbursements of
counsel chosen by the Agents), as incurred, insofar as such loss,
liability, claim, damage or expense arises out of any untrue
statement or alleged untrue statement of a material fact contained
in the Registration Statement or the omission or alleged omission
therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading, or arises
out of any untrue statement or alleged untrue statement of a
material fact contained in the Prospectus or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever (including, subject to the limitations set forth
in subsection (c) below, the reasonable fees and disbursements of
counsel chosen by the Agents), as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or
investigation or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever insofar as such
loss, liability, claim, damage or expense arises out of any such
untrue statement or omission, or any such alleged untrue statement
or omission, if such settlement is effected with the written consent
of the Company; and
(iii) against any and all expense whatsoever (including,
subject to the limitations set forth in subsection (c) below, the
reasonable fees and disbursements of counsel chosen by the Agents),
as incurred, reasonably incurred in investigating, preparing or
defending against any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or any
claim whatsoever, based upon any such untrue
24
statement or omission, or any such alleged untrue statement or
omission;
PROVIDED, HOWEVER, that this indemnity shall not apply to any loss,
liability, claim, damage or expense (A) to the extent arising out of or based
upon any untrue statement or omission or alleged untrue statement or omission
made in reliance upon the Form T-1 under the 1939 Act filed as an exhibit to the
Registration Statement; or (B) to the extent arising out of any untrue statement
or omission or alleged untrue statement or omission in the Prospectus if such
untrue statement or alleged untrue statement or omission or alleged omission is
corrected in all material respects in an amendment or supplement to the
Prospectus and if, having previously been furnished by or on behalf of the
Company with copies of the Prospectus, as so amended or supplemented, such Agent
thereafter failed to deliver such Prospectus, as so amended or supplemented,
prior to or concurrently with the sale of a Note or Notes to the person
asserting such loss, liability, claim, damage or expense who purchased such Note
or Notes which are the subject thereof from such Agent; or (C) as to which such
Agent may be required to indemnify the Company pursuant to the provisions of
subsection (b) of this Section 7.
b. INDEMNIFICATION OF THE COMPANY. Each Agent agrees to
indemnify and hold harmless the Company, its directors, each of its officers who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section 7, as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions, made
in the Registration Statement or the Prospectus in reliance upon and in
conformity with written information furnished to the Company by such Agent
expressly for use in the Registration Statement or the Prospectus.
c. GENERAL. (i) In case any action, suit or proceeding
(including any governmental or regulatory investigation or proceeding) shall be
brought against any Agent or any person controlling such Agent, based upon the
Registration Statement or the Prospectus and with respect to which indemnity may
be sought against the Company pursuant to this Section 7, such Agent or
controlling person shall promptly notify the Company in writing, and the Company
shall assume the defense thereof, including the employment of counsel (such
counsel to be reasonably acceptable to such Agent) and payment of all expenses.
Any such Agent or any such controlling person shall have the right to employ
separate counsel in any such action, suit or proceeding and to participate in
the defense thereof, but the fees and expenses of such separate counsel shall be
at the expense of such Agent or such controlling person unless (A) the
employment of such counsel shall have been specifically authorized in writing by
25
the Company, (B) the Company shall have failed to assume the defense and employ
counsel or (C) the named parties to any such action, suit or proceeding
(including any impleaded parties) shall include both such Agent or such
controlling person and the Company, and such Agent or such controlling person
shall have been advised by counsel that there may be one or more legal defenses
available to it which are different from, or additional to, those available to
the Company (in which case, if such Agent or such controlling person notifies
the Company in writing that it elects to employ separate counsel at the expense
of the Company, the Company shall not have the right to assume the defense of
such action, suit or proceeding on behalf of such Agent or such controlling
person, it being understood, however, that the Company shall not, in connection
with any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) for all such
Agents and such controlling persons, which firm shall be designated in writing
by a majority of all such Agents, on behalf of all of such Agents and such
controlling persons).
(ii) In case any action, suit or proceeding (including any
governmental or regulatory investigation or proceeding) shall be brought against
the Company, any of the Company's directors or officers, or any person
controlling the Company, with respect to which indemnity may be sought against
any Agent pursuant to this Section 7, such Agent shall have the rights and
duties given to the Company by subsection (c)(i) of this Section 7, and the
Company, the Company's directors and officers and any such controlling person
shall have the rights and duties given to the Agents by subsection (c)(i) of
this Section 7.
SECTION 8. CONTRIBUTION
In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 7 hereof
is for any reason held to be unenforceable with respect to the indemnified
parties although applicable in accordance with its terms, the Company and each
Agent shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by said indemnity agreement incurred by the
Company and the Agents, as incurred, in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and each
of the Agents participating in the offering that gave rise to such losses,
liabilities, claims, damages and expenses (a "Relevant Agent") on the other hand
from the offering of such Notes. If however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required pursuant to Section 7(c)
hereof or pursuant to the last sentence of this Section 8, then the Company and
each Agent shall contribute to such aggregate losses, liabilities, claims,
damages and expenses
26
incurred by the Company and the Agents, as incurred, in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and each Relevant Agent on the other in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and each Relevant Agent on the other hand in connection with the
offering of such Notes shall be deemed to be in the same proportion as the total
net proceeds from the sale of such Notes by such Relevant Agent received by the
Company (before deducting expenses) bear to the total commissions or other
compensation or remuneration received by such Relevant Agent in respect thereof.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or such Relevant Agent and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. If more than one Agent is a Relevant Agent in respect of
a proceeding, each Relevant Agent's obligation to contribute pursuant to this
Section 8 shall be several and not joint, and shall be in the proportion that
the principal amount of the Notes that are the subject of such proceeding and
that were offered and sold through such Relevant Agent bears to the aggregate
principal amount of the Notes that are the subject of such proceeding.
Notwithstanding the provisions of this Section 8, no Agent shall be required to
contribute any amount in excess of the amount by which the total price at which
the Notes purchased by or through it were sold exceeds the amount of any damages
which such Agent has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 8, each person,
if any, who controls an Agent within the meaning of Section 15 of the 1933 Act
shall have the same rights to contribution as such Agent, and each director of
the Company, each officer of the Company who signed the Registration Statement,
and each person, if any, who controls the Company within the meaning of Section
15 of the 1933 Act shall have the same rights to contribution as the Company.
Any party entitled to contribution pursuant to the first sentence of this
Section 8 will, promptly after receipt of notice of commencement of any action,
suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section 8,
notify such party or parties from whom contribution may be sought, but the
omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought, from any other obligation it or
they may have otherwise than under this Section 8; PROVIDED, HOWEVER, that
such notice need not be given if such party entitled to
27
contribution hereunder has previously given notice pursuant to Section 7(c)
hereof with respect to the same action, suit or proceeding.
SECTION 9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY
All representations, warranties and agreements contained in this
Agreement or any Terms Agreement, or contained in certificates of officers of
the Company submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any Agent or
any controlling person as defined in Section 15 of the 1933 Act of any 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
a. TERMINATION OF THIS AGREEMENT. This Agreement (excluding
any Terms Agreement) may be terminated by the Company (i) for any reason at any
time with respect to any Agent or Agents upon the giving of 2 business days'
written notice of such termination to each other party hereto or (ii) at any
time upon notice to each other party hereto if no Notes then remain authorized
for sale pursuant hereto. This Agreement may be terminated by any Agent (as to
itself only) either (x) upon the giving of 2 business days' written notice of
such termination to each other party hereto or (y) at any time upon notice to
the Company if the Company shall have failed to furnish or cause to be furnished
the certificates, opinions or letters referred to in Section 5 or 6 hereof or if
no Notes then remain authorized for sale pursuant hereto.
b. TERMINATION OF A TERMS AGREEMENT. An Agent party to a Terms
Agreement may terminate such Terms Agreement (as to itself only) immediately
upon notice to the Company, at any time prior to the Settlement Date relating
thereto if (i) there has been, since the date of this Agreement or since the
respective dates as of which information is given in the Registration Statement,
any material adverse change in the consolidated financial condition or earnings
of the Company and its subsidiaries, considered as one enterprise, (ii) there
has occurred any material adverse change in the financial markets in the United
States or any outbreak or escalation of hostilities or other calamity or crisis,
the effect of which is such as to make it, in the reasonable judgment of such
Agent, impracticable to market the Notes or to enforce contracts for the sale of
the Notes, (iii) if trading in any securities of the Company has been suspended
(other than pursuant to a request by the Company with respect to an announcement
by the Company of certain information not constituting a material adverse
change, since the date of this Agreement or the respective date as of which
information is given in the Registration Statement, in the consolidated
28
financial condition or earnings of the Company and its subsidiaries, considered
as one enterprise), the effect of which is such as to make it, in the reasonable
judgment of such Agent, impracticable to market the Notes or to enforce
contracts for the sale of the Notes, (iv) if trading generally on the New York
Stock Exchange has been suspended, or minimum or maximum prices for trading have
been fixed, or maximum ranges for prices for securities shall have been
required, by such exchange or by order of the Commission or any other
governmental authority, or if a banking moratorium has been declared by either
Federal or New York authorities or if a banking moratorium has been declared by
the relevant authorities in the country or countries of origin of any foreign
currency or currencies in which the Notes are denominated or payable or (v)
after the date of such Terms Agreement the rating assigned by any nationally
recognized securities rating agency to any debt securities of the Company as of
the date of such Terms Agreement shall have been lowered or any such rating
agency shall have publicly announced that it has placed any debt securities of
the Company on what is commonly termed a "watch list" with negative
implications.
c. GENERAL. In the event of any such termination, no party
will have any liability to any other party hereto, except that (i) a terminating
Agent shall be entitled to any commissions earned in accordance with the third
paragraph of Section 2(a) hereof, (ii) if at the time of termination (A) a
terminating Agent and the Company shall have entered into a Terms Agreement and
the Settlement Date with respect thereto shall not yet have occurred or (B) an
offer to purchase any of the Notes has been accepted by the Company but the time
of delivery to the purchaser or his agent of the Note or Notes relating thereto
has not occurred, the covenants set forth in Sections 3 (subject to the
provisions of Section 3(h)) and 6 hereof shall remain in effect until such
Settlement Date or until such Notes are so delivered, as the case may be, and
(iii) the covenant set forth in Section 3(f) hereof, the provisions of Section 4
hereof, the indemnity and contribution agreements set forth in Sections 7 and 8
hereof, and the provisions of Sections 10 and 13 hereof shall remain in effect.
SECTION 11. NOTICES
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, as
the case may be, to:
29
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Attention: Tim McCann
Associate Director Capital Markets, 4th Floor
CS First Boston Corporation
Park Avenue Plaza
55 East 52nd Street
35th Floor
New York, New York 10055
Attention: Joseph D. Fashano
New Issue Processing
Goldman, Sachs & Co.
85 Broad Street
18th Floor
New York, New York 10004
Attention: Registration Department
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Attention: MTN Desk, 3rd Floor
Lehman Brothers,
Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Attention: MTN Department, 9th Floor
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
World Financial Center
North Tower, 10th Floor
New York, New York 10281-1310
Attention: MTN Product Management
and
30
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10038
Attention: Michael Fusco
Financing Manager
Financing Services Group
with a copy to:
1251 Avenue of the Americas
39th Floor
New York, New York 10020
Attention: Manager, Credit Department
Notices to the Company shall be directed to it at:
500 South Buena Vista Street
Burbank, California 91521
Attention: Legal Department
SECTION 12. PARTIES
This Agreement shall inure to the benefit of and be binding upon the
Agents (and, in the case of a Terms Agreement, the Agent or Agents party
thereto) and the Company and their respective successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the parties hereto and their respective
successors and the controlling persons and officers and directors referred to in
Sections 7 and 8 hereof and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provisions herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the parties
hereto and their respective successors and said controlling persons and officers
and directors and their heirs and legal representatives, and for the benefit of
no other person, firm or corporation. No purchaser of Notes shall be deemed to
be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAWS
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES CREATED
HEREBY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH
STATE.
31
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument along with all counterparts will become a binding agreement
between the Agents and the Company in accordance with its terms.
Very truly yours,
THE WALT DISNEY COMPANY
By /s/ RICHARD D. NANULA
---------------------------------------------
Name: Richard D. Nanula
Title: Senior Executive Vice President and
Chief Financial Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
BEAR, STEARNS & CO. INC.
By /s/ TIMOTHY A. O'NEILL
-------------------------
Name: Timothy A. O'Neill
Title: Senior Managing Director
CS FIRST BOSTON CORPORATION
By /s/ MARTHA D. BAILEY
-------------------------
Name: Martha D. Bailey
Title: Vice President
GOLDMAN, SACHS & CO.
By /s/ GOLDMAN, SACHS & CO.
--------------------------
Name:
Title:
J.P. MORGAN SECURITIES INC.
By /s/ RAYMOND SCHMITT
-------------------------
Name: Raymond Schmitt
Title: Vice President
LEHMAN BROTHERS INC.
By /s/
-------------------------
Name:
Title:
MERRILL LYNCH & CO.,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By /s/ SCOTT PRIMROSE
-------------------------
Name: Scott Primrose
Title: Authorized Signatory
MORGAN STANLEY & CO. INCORPORATED
By /s/
-------------------------
Name:
Title:
EXHIBIT A
Commission
TERM(1) RATE(2)
- ------- -------
More than 9 months but less than 1 year...................0.125%
From 1 year but less than 18 months.......................0.150
From 18 months but less than 2 years......................0.200
From 2 years but less than 3 years........................0.250
From 3 years but less than 4 years........................0.350
From 4 years but less than 5 years........................0.450
From 5 years but less than 6 years........................0.500
From 6 years but less than 7 years........................0.550
From 7 years but less than 10 years.......................0.600
From 10 years but less than 15 years......................0.625
From 15 years but less than 20 years......................0.700
From 20 years but less than 30 years......................0.750
From 30 years...................To be determined by the Company
and the relevant Agent(s)
- --------------------------
(1) With respect to each Note that is subject to purchase by the Company
at the option of the holder thereof (a "Put Note"), the word "Term" as
used in this Exhibit A refers to the earliest purchase date specified
in the applicable Put Note.
WITH RESPECT TO EACH NOTE THAT IS A DISCOUNT SECURITY (AS DEFINED IN
THE INDENTURE), THE COMMISSION PAYABLE TO EACH AGENT WITH RESPECT TO
EACH SUCH NOTE SOLD AS A RESULT OF A SOLICITATION MADE BY SUCH AGENT
SHALL BE BASED ON THE PURCHASE PRICE OF SUCH NOTE.
EXHIBIT B
The following terms, if applicable, shall be agreed to by each Agent and
the Company pursuant to each Terms Agreement:
Principal Amount: $__________
(or principal amount of
foreign currency or
composite currency)
Interest Rate
If Fixed Rate Note, Interest Rate:
If Floating Rate Note:
Base Rate or Rates:
Initial Interest Rate:
Spread or Spread Multiplier, if any:
Interest Reset Dates:
Interest Payment Dates:
Index Maturity:
CMT Maturity Index, if any:
Interest Determination Dates:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Interest Reset Period:
Interest Payment Period:
Calculation Agent (if other than the
Trustee):
If Redeemable:
Earliest Redemption Date:
Redemption Price:
Stated Maturity:
Final Maturity (for Renewable Notes):
Initial Maturity (for Renewable Notes):
Purchase Price: __%
Settlement Date and Time:
Currency of Denomination (if currency is other
than U.S. dollar):
Currency of Payment (if currency is other than
U.S. dollar):
Denominations:
Additional Terms:
Also, agreement(3) as to whether the following will be required:
Officer's Certificate pursuant to Section 6(a) of the Distribution
Agreement.
Legal Opinion pursuant to Section 6(b) of the Distribution Agreement.
Comfort Letter pursuant to Section 6(c) of the Distribution Agreement.
Any restriction on the ability of the Company to sell senior debt
securities with an identical or substantially similar maturity between
the date of the Terms Agreement and the applicable Settlement Date.
Payment by the Company of legal expenses of counsel to Agent(s).
- ---------------------
(3) The following generally will not be required in connection with a sale of
less than $50,000,000 aggregate principal amount of Notes.
Appendix I
FORM OF OFFICER'S CERTIFICATE
THE WALT DISNEY COMPANY
I, [Name], [Title] of The Walt Disney Company, a Delaware corporation
(the "Company"), pursuant to Section 5(d) of the Distribution Agreement, dated
________, 1996 (the "Distribution Agreement"), between the Company and each of
(i) Bear, Stearns & Co. Inc., (ii) CS First Boston Corporation, (iii) Goldman,
Sachs & Co., (iv) J.P. Morgan Securities Inc., (v) Lehman Brothers, Lehman
Brothers Inc., (vi) Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and (vii) Morgan Stanley & Co. Incorporated (collectively, the
"Agents"), relating to the offering from time to time by the Company directly or
through the Agents of up to $3,000,000,000 aggregate principal amount of
Medium-Term Notes of the Company, hereby certify on behalf of the Company that:
1. Except as contemplated in the Prospectus (as defined in the
Distribution Agreement) or reflected therein by the filing of any amendment or
supplement thereto or any Incorporated Document (as defined in the Distribution
Agreement), since the date of the most recent consolidated financial statements
included or incorporated by reference in the Prospectus, there has not been any
material adverse change in the consolidated financial condition or earnings of
the Company and its subsidiaries, considered as one enterprise.
2. The representations and warranties of the Company contained in
Section 1(a) of the Distribution Agreement (other than Section 1(a)(vii)
thereof) are true and correct in all material respects with the same force and
effect as though expressly made at and as of the date hereof.
3. The Company has complied with all agreements and satisfied all
conditions required by the Distribution Agreement or the Indenture (as defined
in the Distribution Agreement) on its part to be performed or satisfied at or
prior to the date hereof.
4. No stop order suspending the effectiveness of the Registration
Statement (as defined in the Distribution Agreement) has been issued and no
proceedings for that purpose have been initiated or, to the best of my
knowledge, threatened by the Securities and Exchange Commission.
IN WITNESS WHEREOF, I have hereunto signed my name this ____ day of
_________, 1996.
By:__________________________
Name:
Title:
Appendix II
FORM OF RELIANCE LETTER OF COUNSEL
__________, 19__
Bear, Stearns & Co. Inc.
CS First Boston Corporation
Goldman, Sachs & Co.
J.P. Morgan Securities Inc.
Lehman Brothers,
Lehman Brothers Inc.
Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
Re: THE WALT DISNEY COMPANY MEDIUM-TERM NOTES
-----------------------------------------
Dear Sirs:
[We] [I] have delivered an opinion to you dated _________, 19__ as
counsel to The Walt Disney Company (the "Company"), pursuant to Section
[5(a)][5(b)] of the Distribution Agreement, dated as of ___________, 1996 (the
"Distribution Agreement"), between the Company and Bear, Stearns & Co. Inc., CS
First Boston Corporation, Goldman, Sachs & Co., J.P. Morgan Securities Inc.,
Lehman Brothers, Lehman Brothers Inc., Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Morgan Stanley & Co. Incorporated. You
may continue to rely upon such opinion [(other than, in the case of the opinion
delivered pursuant to Section 5(b) of the Distribution Agreement, the matters
covered by Section 5(b)(i) and 5(b)(iv)(x) thereof, as to which no opinion is
expressed)] as if it were dated as of this date, except that all statements and
opinions contained therein shall be deemed to relate to the Registration
Statement and Prospectus (as such terms are defined in the Distribution
Agreement) as amended and supplemented to this date.
This letter is delivered to you pursuant to Section 6(b) of the
Distribution Agreement.
Very truly yours,
THE WALT DISNEY COMPANY
MEDIUM TERM NOTES
ADMINISTRATIVE PROCEDURES
_______________
March 7, 1996
The administrative procedures and specific terms of the offering of
Medium-Term Notes (the "Notes") on a continuing basis by The Walt Disney Company
(the "Issuer") pursuant to the Distribution Agreement, dated March 7, 1996 (as
amended, modified or supplemented from time to time, the "Distribution
Agreement"), between the Issuer and each of Bear, Stearns & Co. Inc., CS First
Boston Corporation, Goldman, Sachs & Co., J.P. Morgan Securities Inc., Lehman
Brothers, Lehman Brothers Inc., Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Morgan Stanley & Co. Incorporated (each an
"Agent" and collectively, the "Agents") are explained below. In the
Distribution Agreement, the Agents have agreed to act as agents of the Issuer to
solicit offers to purchase the Notes. Each Agent, as principal, may purchase
Notes for its own account pursuant to the terms and settlement details of a
terms agreement entered into between the Issuer and such Agent, as contemplated
by the Distribution Agreement. In the Distribution Agreement, the Issuer
reserves the right to sell Notes directly on its own behalf and to or through
others.
Each Note will be issued under an indenture between the Issuer and
Citibank, N.A., as trustee (the "Trustee"), dated as of March 7, 1996 (the
"Indenture"), relating to senior debt securities of the Issuer. Notes will bear
interest at either fixed rates ("Fixed Rate Notes") or floating rates ("Floating
Rate Notes"). Each Note will be represented by either a Global Security (as
defined hereinafter) delivered to the Trustee, as agent for The Depository Trust
Company ("DTC"), and recorded in the book-entry system maintained by DTC (a
"Book-Entry Note") or a certificate delivered to the Holder thereof or a Person
designated by such Holder (a "Certificated Note"). Owners of beneficial
interests in a Global Security will be entitled to physical delivery of
Certificated Notes equal in principal amount to their respective beneficial
interests only under certain limited circumstances.
The Trustee will act as Paying Agent for the payment of principal of
and interest on the Notes and will perform, as Paying Agent, unless otherwise
specified in the Notes, the Indenture or herein, the other duties specified
herein. Book-Entry Notes will be issued in accordance with the administrative
procedures set forth in Part I hereof, and Certificated Notes will be issued in
accordance with the administrative procedures set forth in Part II hereof. Any
administrative responsibilities, document control and record-keeping functions
to be performed by the Issuer will be performed by its Treasury Department. To
the extent that the procedures set forth herein conflict with any provision of
the Notes (which, in the case of Book-Entry Notes shall be the related Global
Security), the Indenture or the Distribution Agreement, the relevant provisions
of
the Notes, the Indenture or the Distribution Agreement shall be controlling.
Unless otherwise defined herein, terms defined in the Indenture, the Officers'
Certificate establishing the Notes pursuant to Section 2.3(a) of the Indenture
or the Notes shall be used herein as therein defined.
PART I: ADMINISTRATIVE PROCEDURES FOR BOOK ENTRY NOTES
In connection with the qualification of the Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, the Trustee will perform
the custodial, document control and administrative functions described below, in
accordance with its respective obligations under a Letter of Representations
from the Issuer and the Trustee to DTC dated March 1,1996, and a Medium-Term
Note Certificate Agreement between the Trustee and DTC, dated October 31, 1988,
and its obligations as a participant in DTC, including DTC's Same-Day Funds
Settlement System ("SDFS").
ISSUANCE: On any date of settlement (as defined under "Settlement"
below) for one or more Book-Entry Notes, the Issuer will
issue a single global security in fully registered form
without coupons (a "Global Security") representing up to
$200,000,000 principal amount of all such Notes that
have the same Stated Maturity and Final Maturity,
Earliest Redemption Date, Redemption Price and other
redemption provisions, if any, Interest Payment Dates,
Regular Record Dates, Interest Payment Period, original
issue discount, if any, and, additionally, in the case
of Fixed Rate Notes, interest rate and, in the case of
Floating Rate Notes, Initial Interest Rate, Base Rate or
Rates, Index Maturity, Interest Reset Period, Interest
Reset Dates, Spread or Spread Multiplier, if any,
Minimum Interest Rate, if any, and Maximum Interest
Rate, if any (collectively, the "Terms"). Each Global
Security will be dated and issued as of the date of its
authentication by the Trustee. Each Global Security
will bear interest from the later of the Original Issue
Date specified therein or from the most recent Interest
Payment Date with respect to such Global Security (or
Predecessor Security) to which interest has been paid or
duly provided for (such later date being herein referred
to as a "Global Interest Accrual Date"). Book-Entry
Notes may only be denominated and payable in U.S.
dollars. No Global Security will represent any
Certificated Note.
IDENTIFICATION NUMBERS: The Issuer has arranged with the CUSIP Service Bureau
of Standard & Poor's
2
Corporation (the "CUSIP Service Bureau") for the
reservation of a series of CUSIP numbers (including
tranche numbers), which series consists of approximately
900 CUSIP numbers (of which 900 remained unassigned as
of the date hereof) and relates to Global Securities
representing the Book-Entry Notes. The Issuer has
obtained from the CUSIP Service Bureau a written list of
such series of reserved CUSIP numbers and has delivered
to the Trustee and DTC such written list of such CUSIP
numbers. The Trustee will assign CUSIP numbers to
Global Securities as described under Settlement
Procedure "B" below. DTC will notify the CUSIP Service
Bureau periodically of the CUSIP numbers that the
Trustee has assigned to Global Securities. At any time
when fewer than 100 of the reserved CUSIP numbers of a
series remain unassigned to Global Securities, the
Trustee, if it deems necessary, will reserve additional
CUSIP numbers for assignment to Global Securities
representing Book-Entry Notes. Upon obtaining such
additional CUSIP numbers, the Trustee shall deliver a
list of such additional CUSIP numbers to the Issuer and
DTC.
REGISTRATION: Each Global Security will be registered in the name of
Cede & Co., as nominee for DTC, on the register of
Securities maintained under the Indenture. The
beneficial owner of a Book-Entry Note (or one or more
indirect participants in DTC designated by such owner)
will designate one or more participants in DTC (with
respect to such Note, the "Participants") to act as
agent or agents for such owner in connection with the
book-entry system maintained by DTC, and DTC will record
in book-entry form, in accordance with instructions
provided by such Participants, a credit balance with
respect to such Note in the account of such
Participants. The ownership interest of such beneficial
owner in such Note will be recorded through the records
of such Participants or through the separate records of
such Participants and one or more indirect participants
in DTC.
TRANSFERS: Transfers of a Book-Entry Note will be accomplished by
book entries made by DTC and, in turn, by Participants
(and in certain cases, one or more indirect participants
in DTC) acting on behalf of
3
beneficial transferors and transferees of such Note.
EXCHANGES: At the request of the Issuer, the Trustee shall deliver
to DTC and the CUSIP Service Bureau at any time a
written notice of consolidation specifying (i) the CUSIP
numbers of two or more Outstanding Global Securities
that represent Book-Entry Notes having the same Terms
and for which interest has been paid to the same date,
(ii) a date, occurring at least 30 days after such
written notice is delivered and at least 30 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 Issuer, 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 the CUSIP
numbers of the exchanged Global Securities will, in
accordance with CUSIP Service Bureau customary
procedures, be cancelled and not immediately reassigned.
Notwithstanding the foregoing, if the Global Securities
to be exchanged exceed $200,000,000 in aggregate
principal amount, one Global Security will be
authenticated and issued to represent each $200,000,000
of principal amount of the exchanged Global Securities
and an additional Global Security will be authenticated
and issued to represent any remaining principal amount
of such Global Securities (see "Denominations" below).
MATURITIES: Each Book-Entry Note will mature on a date nine months
or more after the settlement date for such Note.
4
NOTICE OF REDEMPTION
DATES: In the case of a full redemption of all Book-Entry Notes
represented by a single Global Security, the Trustee
will notify DTC, not more than 60 but not less than 30
days prior to the Redemption Date with respect to such
Global Security, of the CUSIP number of such Global
Security, the Redemption Date and the Redemption Price.
In the case of a redemption of less than all Book-Entry
Notes represented by a single Global Security, the
Trustee will notify DTC not more than 2 Business Days
before 60 days, but not less than 2 Business Days before
30 days, prior to the Redemption Date with respect to
such Global Security, of the CUSIP number of such Global
Security, the Redemption Date and the Redemption Price.
DENOMINATIONS: Book-Entry Notes will be sold in denominations of $1,000
and any amount in excess thereof that is an integral
multiple of $1,000. Global Securities will be issued in
denominations of $1,000 and any amount in excess thereof
that is an integral multiple of $1,000, up to a maximum
denomination of $200,000,000. If one or more Book-Entry
Notes having an aggregate principal amount in excess of
$200,000,000 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 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 Global Interest Accrual Date with respect to
the Global Security representing such Note and will be
paid on the Interest Payment Dates of the Global
Security representing such Book-Entry Note. In the case
of a Global Security originally issued between a Regular
Record Date and the related Interest Payment Date or on
an Interest Payment Date, the first interest payment
will be made on the Interest Payment Date immediately
following the next Regular Record Date. Each payment of
interest on a Global Security will include interest
accrued to but excluding the Interest
5
Payment Date or Maturity. See "Calculation of Interest"
below. Interest payable at the Maturity of a Book-Entry
Note will be payable to the Person to whom the principal
of such Note is payable. Standard & Poor's Corporation
will use the information received in the pending deposit
message described under Settlement Procedure "C" below
in order to include the amount of any interest payable
and certain other information regarding any Global
Security in the appropriate weekly supplement to the
Corporate Registered Bond Interest Record published by
Standard & Poor's Corporation.
REGULAR RECORD DATES. Except as otherwise provided
with respect to any Book-Entry Note as specified in the
related Global Security, the Regular Record Date with
respect to Fixed Rate Book-Entry Notes shall be the
January 15 or July 15, as the case may be, next
preceding the applicable Interest Payment Date. Except
as otherwise provided with respect to any Book-Entry
Note as specified in the related Global Security, the
Regular Record Date with respect to any Interest Payment
Date for Floating Rate Book-Entry Notes shall be the
fifteenth day (whether or not a Business Day) next
preceding such Interest Payment Date.
FIXED RATE BOOK-ENTRY NOTES. Except as otherwise
provided with respect to any Book-Entry Note as
specified in the related Global Security, interest
payments on Fixed Rate Book-Entry Notes will be made
semiannually on February 1 and August 1 of each year and
at Maturity, subject to the exceptions specified in
"Payments of Principal and Interest" below.
FLOATING RATE BOOK-ENTRY NOTES. Except as otherwise
provided with respect to any Book-Entry Note as
specified in the related Global Security, interest
payments will be made on Floating Rate Book-Entry Notes
monthly, quarterly, semiannually or annually of each
year, as specified in the related Global Security, and
at Stated Maturity. Except as otherwise provided with
respect to any Book-Entry Note as specified in the
related Global Security, subject to the exceptions
specified in "Payments of Principal and Interest" below,
interest will be payable, in the case of Floating Rate
Book-Entry Notes which pay interest (i)
6
monthly, on the third Wednesday of each month; (ii)
quarterly, on the third Wednesday of each March, June,
September and December of each year, (iii) semiannually,
on the third Wednesday of each of the two months
specified in the Global Security representing the
applicable Book-Entry Note; and (iv) annually, on the
third Wednesday of the month specified in the Global
Security representing the applicable Book-Entry Note.
NOTICE OF INTEREST PAYMENT AND REGULAR RECORD DATES.
On the first Business Day of January, April, July and
October of each year, the Trustee will deliver to the
Issuer and DTC a written list of Regular Record Dates
and Interest Payment Dates (to the extent then
determinable by the Trustee) that will occur with
respect to each Global Security during the six-month
period beginning on such first Business Day. Promptly
after each Interest Determination Date for Floating Rate
Notes, the calculation agent (the "Calculation Agent")
will notify Standard & Poor's Corporation of the
interest rates determined on such Interest Determination
Date.
CALCULATION OF
INTEREST: FIXED RATE BOOK-ENTRY NOTES. Interest on Fixed Rate
Book-Entry Notes (including interest for partial
periods) will be calculated on the basis of a 360-day
year of twelve 30-day months.
FLOATING RATE BOOK-ENTRY NOTES. Interest rates on
Floating Rate Book-Entry Notes will be determined as set
forth in the Global Security representing the applicable
Floating Rate Book-Entry Notes. Interest will be
calculated in the case of (a) Commercial Paper Rate
Notes, LIBOR Notes, CD Rate Notes, Federal Funds Rate
Notes and Prime Rate Notes, on the basis of the actual
number of days in the interest period and a 360-day
year; and (b) Treasury Rate Notes and CMT Rate Notes, on
the basis of the actual number of days in the interest
period and the actual number of days in the year.
PAYMENTS OF PRINCIPAL
AND INTEREST PAYMENTS OF INTEREST ONLY. Promptly after each
Regular Record Date, the Trustee will deliver to the
Issuer and DTC a written notice specifying by CUSIP
number the amount of interest to be paid on each Global
7
Security on the following Interest Payment Date (other
than an Interest Payment Date coinciding with Stated
Maturity) and the total of such amounts. DTC will check
the amount payable on each Global Security on such
Interest Payment Date as shown in the appropriate weekly
supplements to the Corporate Registered Bond Interest
Record published by Standard & Poor's Corporation. On
such Interest Payment Date, the Issuer will pay to the
Trustee the total amount of interest due on such
Interest Payment Date (other than at Stated Maturity),
and the Trustee will pay such amount to DTC at the times
and in the manner set forth below under "Manner of
Payment."
If any Interest Payment Date for a Fixed Rate Book-Entry
Note is scheduled to occur on a day that is not a
Business Day with respect to such Fixed Rate Book-Entry
Note, the payment due on such Interest Payment Date will
be made on the following day that is a Business Day with
respect to such Fixed Rate Book-Entry Note, and no
interest shall accrue on the amount payable on such
Interest Payment Date for the period from and after such
Interest Payment Date to such following day that is a
Business Day.
If any Interest Payment Date for a Floating Rate
Book-Entry Note is scheduled to occur on a day that is
not a Business Day with respect to such Floating Rate
Book-Entry Note, such interest Payment Date will be the
following day that is a Business Day with respect to
such Floating Rate Book-Entry Note, except that in the
case of a Floating Rate Book-Entry Note that is a LIBOR
Note (or a Floating Rate Book-Entry Note for which LIBOR
is the applicable Base Rate), if such Business Day is in
the next succeeding calendar month, such Interest
Payment Date will be the immediately preceding day that
is a Business Day.
PAYMENTS AT MATURITY. On or about the first Business
Day of each month, the Trustee will deliver to the
Issuer and DTC a written list of principal and interest
to be paid on each Global Security maturing either at
Stated Maturity or on a Redemption Date occurring in the
following month (to the extent then determinable by the
Trustee). The Issuer, the Trustee and DTC will confirm
the amounts of such principal and interest payments with
8
respect to each such Global Security on or about the
fifth Business Day preceding the Maturity of such Global
Security. The Issuer will pay to Citibank, N.A., as the
Paying Agent, the principal amount of such Global
Security, together with interest due at such Maturity.
Citibank, N.A. will pay such amounts to DTC at the times
and in the manner set forth under "Manner of Payment"
below. If any Maturity of a Global Security
representing Book-Entry Notes is not a Business Day, the
payment due on such day shall be made on the next
succeeding Business Day and no interest shall accrue on
such payment for the period from and after such
Maturity. Promptly after payment to DTC of the
principal and interest due at the Stated Maturity of
such Global Security, the Trustee will cancel such
Global Security in accordance with the terms of the
Indenture, deliver to the Issuer an appropriate debit
advice and a certificate of destruction relating to all
such cancelled Global Securities. On the first Business
Day of each month, the Trustee will deliver to the
Issuer by facsimile transmission a written statement,
indicating the total principal amount of Outstanding
Global Securities for which it serves as trustee 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 shall be debited from an
account of the Issuer maintained at the Trustee with
funds available for immediate use in the amount required
for such payment. The Trustee will pay by separate wire
transfer (using Fedwire message entry instructions in a
form previously specified by DTC) to an account at the
Federal Reserve Bank of New York previously specified by
DTC, in funds available for immediate use by DTC, each
payment of interest and principal due on a Global
Security on such date. On each Interest Payment Date,
interest payments shall be made to DTC in same day funds
in accordance with existing arrangements between the
Trustee and DTC. Thereafter on each such date, DTC will
pay, in accordance with its SDFS operating procedures
then in effect, such amounts in funds available for
immediate use to the respective Participants in whose
names the Book-Entry Notes represented by such Global
Securities are
9
recorded in the book-entry system maintained by DTC.
Neither the Issuer (either as Issuer or as Paying Agent)
nor the Trustee shall have any responsibility or
liability for the payment by DTC to such Participants of
the principal of and interest on the Book-Entry Notes.
WITHHOLDING TAXES. The amount of any taxes required
under applicable law to be withheld from any interest
payment on a Book-Entry Note will be determined and
withheld by the Participant, indirect participant in DTC
or other Person responsible for forwarding payments and
materials directly to the beneficial owner of such Note.
ACCEPTANCE AND
REJECTION OF OFFERS: The Issuer has the sole right to accept offers to
purchase Book-Entry Notes and may reject any such offer
in whole or in part. Each Agent may, in its discretion
reasonably exercised, reject any offer to purchase
Book-Entry Notes received by it in whole or in part.
Each Agent will advise the Issuer promptly by telephone
or by facsimile transmission of all offers to purchase
Book-Entry Notes received by such Agent, other than
those rejected by it.
SETTLEMENT: The receipt by the Issuer of immediately available funds
in payment for a Book-Entry Note and the authentication
and issuance of the Global Security representing such
Note shall constitute "settlement" with respect to such
Note. Each offer accepted by the Issuer will be settled
on the third Business Day (or, if acceptance by the
Issuer occurs after 4:30 p.m., New York time, on the
fourth Business Day) following acceptance of such offer
pursuant to the timetable for settlement set forth
below, unless the Issuer and the purchaser agree to
settlement on another day which shall be no earlier than
the Business Day following acceptance of such offer.
SETTLEMENT PROCEDURES: In the event of a purchase of Book-Entry Notes by one or
more of the Agents, as principal, appropriate settlement
details, if different from those set forth below, will
be set forth in an applicable Terms Agreement to be
entered into between such Agent or Agents and the Issuer
pursuant to the Distribution Agreement. Settlement
Procedures with regard to each Book-Entry
10
Note sold by the Issuer through an Agent, as agent,
shall be as follows:
A. Such Agent will advise the Issuer by facsimile
transmission or orally (if confirmed within 24
hours by written telecommunication) of the
following settlement information:
1. Principal amount.
2. Stated Maturity.
3. If such Note is a Fixed Rate Note, the
interest rate. If such Note is a Floating
Rate Note, the following:
a. Base Rate or Base Rates;
b. Initial Interest Rate;
c. Spread or Spread Multiplier, if any;
d. Interest Reset Dates;
e. Interest Reset Period;
f. Interest Payment Dates;
g. Index Maturity;
h. Interest Payment Period;
i. Calculation Agent (if other than
Citibank, N.A.);
j. Maximum Interest Rate, if any;
k. Minimum Interest Rate, if any;
l. Interest Determination Dates; and
m. Index Currency, if applicable.
4. Earliest Redemption Date, Redemption Price
and other redemption provisions, if any.
5. Settlement date.
11
6. Original Issue Price.
7. Original issue discount, if any.
8. Agent's commission, determined as provided in
Section 2 of the Distribution Agreement
between the Issuer and such Agent.
9. Additional terms or provisions of such Note,
if any.
10. Net Proceeds to the Issuer.
11. Commission.
12. Discount.
13. Initial Maturity Date (for Renewable Notes).
14. Final Maturity Date (for Renewable Notes).
B. The Issuer will advise the Trustee by telephone
(confirmed in writing signed by an authorized
person at any time on the same date) or facsimile
transmission signed by an authorized person of the
information set forth in Settlement Procedure "A"
above and the name of such Agent.
C. The Trustee will assign a CUSIP number to the
Global Security representing such Note. The
Trustee will notify the Issuer and the Agent of
such CUSIP number by telephone as soon as
practicable.
D. The Trustee will enter a pending deposit message
through DTC's Participant Terminal System,
providing the following settlement information to
DTC, such Agent, and Standard & Poor's
Corporation.
1. The information set forth in Settlement
Procedure "A" above.
2. Numbers of the participant accounts
maintained by DTC on behalf of the Trustee
and the Agent.
12
3. Identification as a Fixed Rate Book-Entry
Note or a Floating Rate Book-Entry Note.
4. Initial Interest Payment Date for such Note,
Regular Record Date and amount of interest
payable on such Interest Payment Date.
5. Interest Payment Period.
6. CUSIP number of the Global Security
representing such Note.
7. Whether such Global Security will represent
any other Book-Entry Note (to the extent
known at such time).
E. The Issuer will deliver to the Trustee a
pre-printed Global Security to represent such
Note, in a form that has been approved by the
Issuer, the Agents and the Trustee.
F. The Trustee will complete and authenticate the
Global Security representing such Note.
G. DTC will credit such Note to the Trustee's
participant account at DTC.
H. The Trustee will enter an SDFS deliver order
through DTC's Participant Terminal System
instructing DTC to (i) debit such Note to the
Trustee's participant account and credit such
Note to such Agent's participant account and (ii)
debit such Agent's settlement account and credit
the Trustee's settlement account for an amount
equal to the price of such Note less such Agent's
commission. The entry of such a deliver order
shall constitute a representation and warranty by
the Trustee to DTC that (i) the Global Security
representing such Book-Entry Note has been issued
and authenticated and (ii) the Trustee is holding
such Global Security pursuant to the Medium-Term
Note Certificate Agreement between the Trustee and
DTC.
I. Such Agent will enter an SDFS deliver order
through DTC's Participant
13
Terminal System instructing DTC (i) to debit such
Note to such Agent's participant account and
credit such Note to the participant accounts of
the Participants with respect to such Note and
(ii) to debit the settlement accounts of such
Participants and credit the settlement account of
such Agent for any amount equal to the price of
such Note.
J. Transfers of funds in accordance with SDFS deliver
orders described in Settlement Procedures "G" and
"H" above will be settled in accordance with SDFS
operating procedures in effect on the settlement
date.
K. The Trustee will credit to an account of the
Issuer maintained at the Trustee funds available
for immediate use in the amount transferred to the
Trustee in accordance with Settlement Procedure
"G" above.
L. The Trustee will retain the Global Security
representing such Note and will send a photocopy
thereof to the Issuer by first-class mail. The
Trustee will send to the Issuer, at the request of
the Issuer, a written statement setting forth (i)
the principal amount of Notes Outstanding under
the Indenture as of the date of such report, (ii)
a brief description of any sales of which the
Issuer has advised the Trustee but which have not
yet been settled and (iii) a description of
issuances and retirements of, payment on and other
activity relating to the Notes during the related
month.
M. Such Agent will confirm the purchase of such Note
to the purchaser either by transmitting to the
Participants with respect to such Note a
confirmation order or orders through DTC's
institution delivery system or by mailing a
written confirmation to such purchaser.
SETTLEMENT PROCEDURES
TIMETABLE: For orders of Book-Entry Notes solicited by an Agent, as
agent, and accepted by the Issuer for settlement on the
first Business
14
Day after the sale date, Settlement Procedure "A"
through "L" above shall be completed as soon as possible
but not later than the respective times (New York City
time) set forth below:
SETTLEMENT
PROCEDURE TIME
--------- ----
A . . . . . . . 11:00 a.m. on the sale date
B . . . . . . . 12:00 noon on the sale date
C . . . . . . . 2:00 p.m. on the sale date
D . . . . . . . 3:00 p.m. on the sale date
E . . . . . . . 9:00 a.m. on settlement date
F . . . . . . . 10:00 a.m. on settlement date
G-I . . . . . . 2:00 p.m. on settlement date
J-M . . . . . . 5:00 p.m. on settlement date
If a sale is to be settled more than one Business Day
after the sale date, Settlement Procedure "A" shall be
completed as soon as practicable but no later than 11:00
a.m. on the first Business Day after the sale date and
Settlement Procedures "B" and "C" shall be completed as
soon as practicable but no later than 12:00 noon and
2:00 p.m., respectively, 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 no later than
12:00 noon and 2:00 p.m., respectively, on the second
Business Day before the settlement date. Settlement
Procedures "D" through "L" shall be completed as soon as
possible thereafter but not later than the respective
times (New York City time) set forth in the preceding
table, except that Settlement Procedures "I" through "L"
are subject to extension in accordance with any
extension of Fedwire closing deadlines and in the other
events specified in the SDFS operating procedures in
effect on the settlement date.
If settlement of a Book-Entry Note is rescheduled or
cancelled, 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.
15
FAILURE TO SETTLE: If the Trustee fails to enter an SDFS deliver order with
respect to a Book-Entry Note pursuant to Settlement
Procedure "G," the Trustee may deliver to DTC, through
DTC's Participant Terminal System, as soon as
practicable, a withdrawal message instructing DTC to
debit such Note to the Trustee's participant account.
DTC will process the withdrawal message, provided that
the Trustee's participant account contains a principal
amount of the Global Security representing such Note
that is at least equal to the principal amount to be
debited. If a withdrawal message is processed with
respect to all the Book-Entry Notes represented by a
Global Security, the Trustee will mark such Global
Security "cancelled," make appropriate entries in the
Trustee's records and send such cancelled Global
Security to the Issuer. The CUSIP number assigned to
such Global Security shall, in accordance with CUSIP
Service Bureau customary procedures, be cancelled and
not immediately reassigned. If a withdrawal message is
processed with respect to one or more, but not all, of
the Book-Entry Notes represented by a Global Security,
the Trustee will exchange the Global Security for two
Global Securities, one of which shall represent such
Book-Entry Note or Notes for which such withdrawal
message has been processed and shall be cancelled
immediately after issuance and the other of which shall
represent the remaining 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 applicable Participants with respect
to such Note by the beneficial purchaser thereof (or a
Person, including an indirect participant in DTC, acting
on behalf of such purchaser), such Participants and, in
turn, the Agent for such Note, may enter SDFS deliver
orders through DTC's Participant Terminal System
reversing the orders entered pursuant to Settlement
Procedures "H" and "G," respectively. Thereafter, the
Trustee will deliver the withdrawal message and take the
related actions described in the preceding paragraph.
If such failure shall have occurred for any reason other
than default by the applicable Agent in the performance
of its obligations hereunder or under the Distribution
16
Agreement, the Issuer will pay to such Agent an amount
equal to the interest earned by the Issuer with respect
to such funds during the period when the funds were
credited to the account of the Issuer.
Notwithstanding the foregoing, upon any failure to
settle with respect to a Book-Entry Note, DTC may take
such actions as it deems appropriate in accordance with
its SDFS operating procedures then in effect in order to
reverse the orders entered into DTC's Participant
Terminal System pursuant to Settlement Procedures "H"
and "G," respectively. 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 Procedures "D" and "E," for the
authentication and issuance of a Global Security
representing the other Book-Entry Notes to have been
represented by such Global Security and will make
appropriate entries in its records.
PROCEDURE FOR POSTINGS: The Issuer will periodically contact one or more Agents
for recommended interest rates, coupons or spreads
("postings") with respect to Notes being offered. When
the Issuer has determined or changed its postings with
respect to Notes being offered, it will promptly advise
the Agents. At such times as the Issuer is not posting,
the Agents will not solicit firm offers but may record
"indications of interest" only.
PRICING SUPPLEMENTS: Within five Business Days after any sale of Notes, the
Issuer will file or transmit for filing with the
Securities and Exchange Commission (the "Commission"),
in compliance with Rule 424(b)(3) of the rules and
regulations of the Commission promulgated under the
Securities Act of 1933, as amended, a copy of a pricing
supplement to the Prospectus (as defined in the
Distribution Agreement) relating to such Notes that
reflects the applicable interest rates and other terms
(the "Pricing Supplement") and will deliver a copy of
such Pricing Supplement to each of the Agents and to the
Trustee.
SUSPENSION OF
SOLICITATION,
AMENDMENT OR
17
SUPPLEMENT: The Issuer may instruct the Agents to suspend
solicitation of offers to purchase Book-Entry Notes at
any time. Upon receipt of such instructions, each Agent
will as soon as possible suspend such solicitations
until such time as it has been advised by the Issuer
that such solicitations may be resumed. The Issuer
will, consistent with its obligations under the
Distribution Agreement, promptly advise each Agent and
the Trustee whether orders outstanding at the time such
Agent suspends solicitation may be settled and whether
copies of the Prospectus, as in effect at the time of
the suspension, together with the appropriate Pricing
Supplement, may be delivered in connection with the
settlement of such orders. The Issuer will have the
sole responsibility for such decision and for any
arrangements that may be made in the event that the
Issuer determines that such orders may not be settled or
that copies of such Prospectus and Pricing Supplement
may not be so delivered.
DELIVERY OF PROSPECTUS: A copy of the most recent Prospectus and of the
applicable Pricing Supplement, if any, must be provided
to a purchaser by the applicable Agent prior to or at
the time of the earlier of (a) the written confirmation
of a sale sent to a purchaser of Book-Entry Notes or his
Agent, and (b) the date of settlement of any such
Book-Entry Notes (see "Settlement Procedures").
ADVERTISING COSTS: The Issuer will determine with the Agents the amount and
nature of advertising that may be appropriate in
offering the Notes. Advertising expenses approved in
writing by the Issuer in connection with the
solicitation of purchases of the Notes from the Issuer
will be paid by the Issuer.
PART II: ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES
The Trustee will serve as Registrar in connection with the
Certificated Notes.
ISSUANCE: Each Certificated Note will be dated and issued as of
the date of its authentication by the Trustee. Each
Certificated Note will bear interest from the later of
the Original Issue Date specified therein or from the
most recent Interest Payment Date with respect to such
Certificated Note (or Predecessor Security) to which
interest has been paid or
18
duly provided for (such later date being herein referred
to as a "Certificated Interest Accrual Date").
REGISTRATION: Certificated Notes will be issued only in fully
registered form without coupons.
TRANSFERS AND
EXCHANGES: A Certificated Note may be presented for transfer or
exchange at the Corporate Trust office of the Trustee.
Certificated Notes will be exchangeable for other
Certificated Notes having identical terms but different
denominations without service charge. Certificated
Notes will not be exchangeable for Book-Entry Notes.
MATURITIES: Each Certificated Note will mature on a date nine months
or more from the settlement date for such Note.
DENOMINATIONS: Certificated Notes will be issued in denominations of
$1,000 or any amount in excess thereof that is an
integral multiple of $1,000.
INTEREST: GENERAL. Interest on each Certificated Note will
accrue from the Certificated Interest Accrual Date of
such Note. In the case of a Certificated Note
originally issued between a Regular Record Date and the
related Interest Payment Date or on an Interest Payment
Date, the first interest payment will be made on the
Interest Payment Date following the next Regular Record
Date. Each payment of interest on a Certificated Note
will include interest accrued to but excluding the
Interest Payment Date or Maturity. See "Calculation of
Interest" below. Interest will be payable to the person
in whose name a Certificated Note is registered on the
register of Securities at the close of business on the
Regular Record Date next preceding the applicable
Interest Payment Date; PROVIDED, HOWEVER, interest
payable at Maturity will be payable to the Person to
whom principal of such Certificated Note is payable.
REGULAR RECORD DATE. The Regular Record Date with
respect to Fixed Rate Certificated Notes shall be the
January 15 or July 15, as the case may be, next
preceding the applicable Interest Payment Date. The
Regular Record Date with respect to any Interest Payment
Date for Floating Rate Certificated Notes
19
shall be the fifteenth day (whether or not a Business
Day) next preceding such Interest Payment Date.
FIXED RATE CERTIFICATED NOTES. Interest payments on
Fixed Rate Certificated Notes will be made semiannually
on February 1 and August 1 of each year and at Maturity,
subject to the exceptions specified in "Payments of
Principal and Interest" below.
FLOATING RATE CERTIFICATED NOTES. Interest payments
will be made on Floating Rate Certificated Notes
monthly, quarterly, semiannually or annually of each
year, as specified in the related Note, and at maturity.
Subject to the exceptions specified in "Payments of
Principal and Interest" below, interest will be payable,
in the case of Floating Rate Certificated Notes which
pay interest (i) monthly, on the third Wednesday of each
month; (ii) quarterly, on the third Wednesday of March,
June, September and December of each year; (iii)
semiannually, on the third Wednesday of each of the two
months specified in the applicable Certificated Note;
and (iv) annually, on the third Wednesday of the month
specified in the applicable Certificated Note.
CALCULATION OF
INTEREST: FIXED RATE CERTIFICATED NOTES. Interest on Fixed Rate
Certificated Notes (including interest for partial
periods) will be calculated on the basis of a 360-day
year of twelve 30-day months.
FLOATING RATE CERTIFICATED NOTES. Interest rates on
Floating Rate Certificated Notes will be determined as
set forth in the applicable Notes. The Issuer and the
Trustee will confirm the amount of the initial interest
payment due on any Floating Rate Certificated Note for
which the initial Interest Period is shorter or longer
than the Index Maturity. Promptly after each Interest
Determination Date for Floating Rate Certificated Notes,
the Calculation Agent will notify Standard & Poor's
Corporation of the interest rates determined on such
Interest Determination Date. Interest will be
calculated in the case of (a) Commercial Paper Rate
Notes, LIBOR Notes, CD Rate Notes, Federal Funds Rate
Notes and Prime Rate Notes on the basis of the actual
number of days in the interest period and a 360-day
year; and
20
(b) Treasury Rate Notes and CMT Rate Notes, on the basis
of the actual number of days in the interest period and
the actual number of days in the year.
PAYMENTS OF PRINCIPAL
AND INTEREST: The Trustee will pay the principal amount of each
Certificated Note at Maturity upon presentation of such
Note to the Trustee. Such payment, together with
payment of interest due at Maturity of such Note, will
be made in funds available for immediate use by the
Holder of such Note. Certificated Notes presented to
the Trustee at Maturity for payment will be cancelled by
the Trustee in accordance with the terms of the
Indenture and returned to the Issuer. All interest
payments on a Certificated Note (other than interest due
at Maturity) will be made by check drawn on the Trustee
(or another Person appointed by the Trustee) and mailed
by the Trustee to the Person entitled thereto as
provided in such Note. Following each Regular Record
Date and Special Record Date, the Trustee will furnish
the Issuer with a list of interest payments to be made
on the following Interest Payment Date for each
Certificated Note and in total for all Certificated
Notes. Interest at Maturity will be payable to the
Person to whom the payment of principal is payable. The
Trustee will provide monthly to the Issuer lists of
principal and interest to be paid on Certificated Notes
maturing in the next month. The Trustee will be
responsible for withholding taxes on interest paid on
Certificated Notes as required by applicable law. On
the first Business Day of each month, the Trustee will
deliver to the Issuer by facsimile transmission a
written statement, indicating the total principal amount
of Outstanding Certificated Notes for which it serves as
trustee as of the immediately preceding Business Day.
If any Interest Payment Date for a Fixed Rate
Certificated Note is scheduled to occur on a day that is
not a Business Day with respect to such Fixed Rate
Certificated Note, the payment due on such Interest
Payment Date will be made on the following day that is a
Business Day with respect to such Fixed Rate
Certificated Note, and no interest shall accrue on the
amount payable on such Interest Payment Date for the
period from and after
21
such Interest Payment Date to such following day that is
a Business Day.
If any Interest Payment Date for a Floating Rate
Certificated Note is scheduled to occur on a day that is
not a Business Day with respect to such Floating Rate
Certificated Note, such Interest Payment Date will be
the following day that is a Business Day with respect to
such Floating Rate Certificated Note; PROVIDED,
HOWEVER, that in the case of a Floating Rate
Certificated Note that is a LIBOR Note (or a Floating
Rate Certificated Note for which LIBOR is the applicable
Base Rate), if such Business Day is in the next
succeeding calendar month, such Interest Payment Date
will be the immediately preceding day that is a Business
Day.
If the date of Maturity of a Certificated Note is
scheduled to occur on a day that is not a Business Day
with respect to such Certificated Note, the payment due
at Maturity will be made on the following day that is a
Business Day with respect to such Certificated Note, and
no interest shall accrue on the amount payable at
Maturity for the period from and after the date of
Maturity.
ACCEPTANCE AND
REJECTION OF OFFERS: The Issuer has the sole right to accept offers to
purchase Certificated Notes and may reject any offer in
whole or in part. Each Agent may, in its discretion
reasonably exercised, reject any offer to purchase
Certificated Notes received by it in whole or part.
Each Agent will advise the Issuer promptly by telephone
or facsimile transmission of all offers to purchase
Certificated Notes received by such Agent, other than
those rejected by it.
SETTLEMENT: The receipt by the Issuer of immediately available funds
in exchange for an authenticated Certificated Note
delivered to the selling Agent and such Agent's delivery
of such Note against receipt of immediately available
funds shall constitute "settlement" with respect to such
Note. Each offer accepted by the Issuer will be settled
on the third Business Day (or, if acceptance by the
Issuer occurs after 4:30 p.m., New York time, on the
fourth Business Day) following acceptance of such offer
pursuant to the timetable for settlement set forth
below,
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unless the Issuer and the purchaser agree to settlement
on another day; PROVIDED, HOWEVER, that the Issuer
will notify the Trustee at least twenty-four hours prior
to the time of settlement.
SETTLEMENT PROCEDURES: In the event of a purchase of Certificated Notes by one
or more of the Agents, as principal, appropriate
settlement details, if different from those set forth
below, will be set forth in an applicable Terms
Agreement to be entered into between such Agent or
Agents and the Issuer pursuant to the Distribution
Agreement.
Settlement Procedures with regard to each Certificated
Note sold by the Issuer through an Agent, as agent,
shall be as follows:
A. Such Agent will advise the Issuer by facsimile
transmission or orally (if confirmed within 24
hours by written telecommunication) of the
following settlement information:
1. Name in which such Note is to be registered
(the "Registered Owner").
2. Address of the Registered Owner and address
for payment of principal and interest.
3. Taxpayer identification or Social Security
number of the Registered Owner (if
available).
4. Principal amount.
5. Stated Maturity.
6. If such Note is Fixed Rate Note, the interest
rate.
If such Note is a Floating Rate Note, the
following:
a. Base Rate or Base Rates;
b. Initial Interest Rate;
c. Spread or Spread Multiplier, if any;
d. Interest Reset Dates;
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e. Interest Reset Period;
f. Interest Payment Dates;
g. Index Maturity;
h. Interest Payment Period;
i. Calculation Agent (if other than
Citibank, N.A.);
j. Maximum Interest Rate, if any;
k. Minimum Interest Rate, if any;
l. Interest Determination Dates; and
m. Index Currency, if applicable.
7. Earliest Redemption Date, Redemption Price
and other redemption provisions, if any.
8. Settlement date.
9. Original Issue Price.
10. Original issue discount, if any.
11. Agent's commission, determined as provided in
Section 2 of the Distribution Agreement
between the Issuer and such Agent.
12. Additional terms or provisions of such Note,
if any.
13. Net Proceeds to the Issuer.
14. Commission.
15. Discount.
16. Initial Maturity Date (for Renewable Notes).
17. Final Maturity Date (for Renewable Notes).
B. The Issuer will advise the Trustee by telephone
(confirmed in writing signed by an authorized
person at any time on the same date) or facsimile
transmission signed by an authorized person of the
information set forth in
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Settlement Procedure "A" above and the name of
such Agent.
C. The Issuer will deliver (if not previously
delivered) to the Trustee a preprinted four-ply
packet for such Note, which packet will contain
the following documents in forms that have been
approved by the Issuer, the Agents and the
Trustee:
1. Note with customer confirmation.
2. Stub One - for the Trustee.
3. Stub Two - for the Agent.
4. Stub Three - for the Issuer.
D. The Trustee will complete and authenticate such
Note and deliver it (with the confirmation) and
Stubs One and Two to such Agent, and such Agent
will acknowledge receipt of the Note by stamping
or otherwise marking Stub One and returning it to
the Trustee. Such delivery will be made only
against such acknowledgement of receipt and
evidence that instructions have been given by such
Agent for payment to the account of the Issuer at
the Trustee, in funds available for immediate use,
of an amount equal to the price of such note less
Agent's commission. In the event that the
instructions given by such Agent for payment to
the account of the Issuer are revoked, the Issuer
will, as promptly as possible, wire transfer to
the account of such Agent an amount of immediately
available funds equal to the amount of such
payment and such Agent will return such Note to
the Trustee.
E. Such Agent will deliver such Note (with
confirmation) to the customer against payment in
immediately available funds. Such Agent will
obtain the acknowledgment of receipt of such Note
by retaining Stub Two.
F. The Trustee will retain Stub One and will send
Stub Three to the Issuer by first-class mail.
Monthly, the Trustee will send to the Issuer a
written statement, setting forth (i) the
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principal amount of the Notes Outstanding under
the Indenture as of the date of such report, (ii)
a brief description of any sales of which the
Issuer has advised the Trustee but which have not
yet been settled and (iii) a description of
issuances and retirements of, payments on and
other activity relating to the Notes during the
related month.
SETTLEMENT PROCEDURES
TIMETABLE: For offers of Certificated Notes solicited by an
Agent, as agent, and accepted by the Issuer,
Settlement Procedures "A" through "F" set forth
above shall be completed on or before the
respective times (New York City time) set forth
below:
SETTLEMENT
PROCEDURE TIME
---------
A . . . 3:00 p.m. on day before settlement date
B . . . 4:00 p.m. on day before settlement date
C-D . . 2:15 p.m. on settlement date
E . . . 3:00 p.m. on settlement date
F . . . 5:00 p.m. on settlement date
FAILURE TO SETTLE: If a purchaser fails to accept delivery of and make
payment for any Certificated Note, the selling Agent
will notify the Issuer and the Trustee by telephone and
return such Note to the Trustee. Upon receipt of such
Note, the Issuer will immediately wire transfer to the
account of the Agent an amount equal to the amount
previously credited thereto in respect of such Note.
Such wire transfer will be made on the settlement date,
if possible, and in any event not later than the day
following the settlement date. If the failure shall
have occurred for any reason other than a default by the
applicable Agent in the performance of its obligations
hereunder and under the Distribution Agreement, the
Issuer will pay to such Agent an amount equal to the
interest earned by the Issuer with respect to such funds
during the period when they were credited to the account
of the Issuer. Immediately upon receipt of the
Certificated Note in respect of which such failure
occurred, the Trustee will mark such Note "cancelled,"
make appropriate
26
entries in the Trustee's records and send such cancelled
Note to the Issuer.
PROCEDURE FOR POSTINGS: The Issuer will periodically contact one or more Agents
for recommended postings with respect to Certificated
Notes being offered. When the Issuer has determined or
changed its postings with respect to Certificated Notes
being offered, it will promptly advise the Agents. At
such times as the Issuer is not posting, the Agents will
not solicit firm offers but may record "indications of
interest" only.
PRICING SUPPLEMENTS: Within five Business Days after any sale of Certificated
Notes, the Issuer will file or transmit for filing with
the Commission in compliance with Rule 424(b)(3) of the
rules and regulations of the Commission promulgated
under the Securities Act of 1933, as amended, a copy of
a Pricing Supplement to the Prospectus relating to such
Notes that reflects the applicable interest rates and
other terms and will deliver a copy of such Pricing
Supplement to each of the Agents and the Trustee.
SUSPENSION OF
SOLICITATION,
AMENDMENT OR
SUPPLEMENT: The Issuer may instruct the Agents to suspend
solicitation of offers to purchase Certificated Notes at
any time. Upon receipt of such instructions, each Agent
will as soon as possible suspend such solicitations
until such time as it has been advised by the Issuer
that such solicitations may be resumed. The Issuer
will, consistent with its obligations under the
Distribution Agreement, promptly advise each Agent and
the Trustee whether orders outstanding at the time such
Agent suspends solicitation may be settled and whether
copies of the Prospectus, as in effect at the time of
the suspension, together with the appropriate Pricing
Supplement, may be delivered in connection with the
settlement of such orders. The Issuer will have the
sole responsibility for such decision and for any
arrangements that may be made in the event that the
Issuer determines that such orders may not be settled or
that copies of such Prospectus and Pricing Supplement
may not be so delivered.
DELIVERY OF PROSPECTUS: A copy of the most recent Prospectus and of the
applicable Pricing Supplement, if any,
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must be provided to a purchaser by the applicable Agent
prior to or at the time of the earlier of (a) the
written confirmation of a sale sent to a purchaser of
Certificated Notes or his agent and (b) the delivery of
any such Certificated Notes to a purchaser or his agent
(see Settlement Procedures).
ADVERTISING COSTS: The Issuer will determine with the Agents the amount and
nature of advertising that may be appropriate in
offering the Certificated Notes. Advertising expenses
approved in writing by the Issuer in connection with the
solicitation of purchases of Certificated Notes from the
Issuer will be paid by the Issuer.
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