1
EXHIBIT B-3
CONECTIV
$-----------
Medium-Term Notes, Series __
DISTRIBUTION AGREEMENT
[insert date]
[insert names and addresses of agents]
Ladies and Gentlemen:
Conectiv, a Delaware corporation (the "Company"), proposes to issue and
sell from time to time its Medium Term Notes, Series __ (the "Securities"), in
an aggregate amount up to [insert aggregate principal amount] and agrees with
each of you (individually, an "Agent", and collectively, the "Agents") as set
forth in this Agreement.
Subject to the terms and conditions stated herein and to the reservation
by the Company of the right to sell Securities directly on its own behalf, the
Company hereby (i) appoints each Agent as an agent of the Company for the
purpose of soliciting and receiving offers to purchase Securities from the
Company pursuant to Section 2(a) hereof and (ii) agrees that, except as
otherwise contemplated herein, whenever it determines to sell Securities
directly to any Agent, as principal, it will enter into a separate agreement
(each a "Terms Agreement") in accordance with Section 2(b) hereof.
The Securities will be issued under an Indenture, dated as of [insert
date], as it may be supplemented and amended (the "Indenture"), between the
Company and [insert name of trustee], as Trustee (the "Trustee"). The Securities
shall have the maturity ranges, interest rates, redemption provisions and other
terms set forth in the Prospectus referred to below as it may be amended or
supplemented from time to time. The Securities will be issued, and the terms and
rights thereof established, from time to time by the Company in accordance with
the Indenture.
1. Representations and Warranties of the Company. The Company represents and
warrants to, and agrees with, each Agent that:
(a) A registration statement (No. ), together with amendments thereto, if
any, with respect to the Securities has been prepared by the Company and
filed with the Securities
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and Exchange Commission (the "Commission") in conformity with the rules,
regulations and releases of the Commission (the "Rules and Regulations")
under the Securities Act of 1933, as amended (the "Act"). 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 "Trust Indenture Act"). Copies of such registration
statement, together with all amendments thereto, if any, have heretofore
been delivered to each Agent, and copies of any amendments thereto,
including the exhibits filed therewith, which shall be filed subsequent
to the date hereof also will be delivered to each Agent. Such
registration statement, including all exhibits thereto but excluding the
Statement of Eligibility of the Trustee, as amended at the time it became
effective, is hereinafter called the "Registration Statement" (any
preliminary prospectus included in such registration statement being
hereinafter called a "Preliminary Prospectus"); the prospectus
(including, if applicable, any prospectus supplement) relating to the
Securities, in the form in which it most recently has been filed with the
Commission on or prior to the date of this Agreement is hereinafter
called the "Prospectus"; any reference herein to the Registration
Statement, any Preliminary Prospectus or the Prospectus shall be deemed
to refer to and include the documents filed by the Company under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and
incorporated by reference therein (the "Incorporated Documents") as of
the date of such Registration Statement, Preliminary Prospectus or
Prospectus, as the case may be; any reference to any amendment or
supplement to any Preliminary Prospectus or the Prospectus, including any
supplement to the Prospectus that sets forth only the terms of a
particular issue of the Securities (a "Pricing Supplement"), shall be
deemed to refer to and include the Incorporated Documents as of the date
of such amendment or supplement; and any reference to the Prospectus as
amended or supplemented shall be deemed to refer to and include the
Prospectus as then amended or supplemented (including the applicable
Pricing Supplement) in relation to a particular issue of Securities, in
the form filed with the Commission pursuant to Rule 424(b) under the Act,
including any Incorporated Documents as of the date of such filing.
(b) No stop order suspending the effectiveness of the Registration Statement
nor any order preventing or suspending use of the Prospectus nor any
order directed to the adequacy or accuracy of any Incorporated Document
has been issued by the Commission, and no proceeding for any such purpose
has been initiated or is pending or, to the knowledge of the Company, is
contemplated by the Commission.
(c) On the date hereof and at and as of any Solicitation Time (as defined in
Section 6) and any Time of Delivery (as defined in Section 2), (i) the
Registration Statement and the Prospectus contain, and any amendment or
supplement thereto will contain, all statements and information which are
required to be included therein by the Act and the Rules and Regulations
and the Registration Statement and the Prospectus conform, and any
amendment of supplement thereto will conform, in all material respects,
to the requirements of the Act and the Rules and Regulations; (ii) the
Indenture conforms, and any amendment or supplement thereto will conform,
in all material respects, to the
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requirements of the Trust Indenture Act; (iii) the Registration Statement
does not, and any amendment thereto will not, include any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading; and (iv) the Prospectus does not, and any amendment or
supplement thereto will not, include any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that this representation
and warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in writing to
the Company by any Agent expressly for use in the Prospectus as amended
or supplemented to relate to a particular issuance of Securities or to
any statement in or omissions from the Statement of Eligibility of the
Trustee under the Indenture. There are no contracts or documents of the
Company or of any Subsidiary (as defined below) which are required to be
filed as exhibits to the Registration Statement by the Act or by the
Rules and Regulations which have not been filed as required.
(d) The Company has filed timely all reports and all definitive proxy and
information statements required to be filed by the Company with the
Commission pursuant to the Exchange Act and the rules and regulations of
the Commission thereunder. Each of the Incorporated Documents, when it
and when any amendment thereto was filed with the Commission, complied as
to form in all material respects to the requirements of the Exchange Act,
and the rules and regulations of the Commission thereunder, and any
Incorporated Document and any amendment thereto, when filed with the
Commission, will comply as to form in all material respects to the
requirements of the Exchange Act and the rules and regulations of the
Commission thereunder; and none of such documents includes or will
include any untrue statement of a material fact or omits or will omit to
state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(e) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of Delaware, with all
corporate power and other authority, including franchises, necessary to
own or lease its properties and conduct its business as described in the
Registration Statement and the Prospectus and to issue and sell the
Securities. The Company is not qualified to do business as a foreign
corporation or in any other jurisdiction and the conduct of its business
or its ownership or leasing of properties requires no such qualification.
(f) The issue and sale of the Securities, the compliance by the Company with
all of the provisions of the Securities, the Indenture, this Agreement,
the Administrative Procedure (as defined in Section 2 hereof) and any
Terms Agreement, and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, the Indenture or any indenture, mortgage, deed of trust, loan
agreement or other agreement or
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instrument to which the Company is a party or by which it is bound or to
which any of its property or assets is subject, or the Company's Articles
of Incorporation or the By-Laws, or any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its property.
(g) The Company has full power and lawful authority to authorize, issue and
sell the Securities on the terms and conditions herein set forth; has
taken all corporate action necessary therefor; and has obtained every
consent, approval, authorization and other order of any regulatory body
which is required for such authorization, issue or sale, except as may be
required under state securities laws; and such consents, approvals,
authorizations and other orders are in full force and effect and are not
subject to appeal.
(h) The Company is not an "investment company" or an entity "controlled" by
an "investment company" as such terms are defined in the Investment
Company Act of 1940, as amended.
(i) Immediately after any sale of Securities by the Company hereunder or
under any Terms Agreement, the aggregate amount of Securities which shall
have been issued and sold by the Company hereunder or under any Terms
Agreement will not exceed the amount of Securities registered under the
Act.
(j) This Agreement has been, and any Terms Agreement will have been, duly
authorized and entered into by the Company.
2. Obligations of the Agents and the Company.
(a) On the basis of the representations and warranties and subject to the
terms and conditions herein set forth, each of the Agents hereby
severally and not jointly agrees, as agent of the Company, to use its
best efforts to solicit and receive offers to purchase the Securities
from the Company upon the terms and conditions set forth in the
Prospectus as amended or supplemented from time to time. So long as this
Agreement shall remain in effect with respect to any Agent, the Company
shall not, without the consent of such Agent, solicit or accept offers to
purchase, or sell, any debt securities with a maturity at the time of
original issuance of 9 months to 40 years except pursuant to this
Agreement, any Terms Agreement or a private placement not constituting a
public offering under the Act, or except in connection with a firm
commitment underwriting pursuant to an underwriting agreement that does
not provide for a continuous offering of medium-term debt securities.
However, the Company reserves the right to sell, and may solicit and
accept offers to purchase, Securities directly on its own behalf, and, in
the case of any such sale not resulting from a solicitation made by any
Agent, no commission will be payable with respect to such sale. These
provisions shall not limit Section 4(f) hereof or any similar provision
included in any Terms Agreement.
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Procedural details relating to the issue and delivery of Securities, the
solicitation of offers to purchase Securities and the payment therefor
shall be as set forth in the Administrative Procedure attached hereto as
Annex II as it may be amended from time to time by written agreement
between the Agents and the Company (the "Administrative Procedure"). The
provisions of the Administrative Procedure shall apply to all
transactions contemplated hereunder other than those made pursuant to a
written Terms Agreement. Each Agent and the Company agree to perform the
respective duties and obligations specifically provided to be performed
by each of them in the Administrative Procedure. The Company will furnish
to the Trustee a copy of the Administrative Procedure as from time to
time in effect.
The Company reserves the right, in its sole discretion, to instruct the
Agents to suspend at any time, for any period of time or permanently, the
solicitation of offers to purchase the Securities. As soon as
practicable, but in any event not later than one business day, after
receipt of notice from the Company, the Agents will suspend solicitation
of offers to purchase Securities 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, at the time of
settlement of any sale of a Security by the Company as a result of a
solicitation made by such Agent, in an amount equal to the following
applicable percentage of the principal amount of such Security sold
(except that the Company and such Agent may agree in writing to a higher
commission for maturities in excess of 30 years):
COMMISSION
(PERCENTAGE OF
AGGREGATE
PRINCIPAL AMOUNT)
RANGE OF MATURITIES OF SECURITIES SOLD
From 9 months to less than 1 year..............................
From 1 year to less than 18 months.............................
From 18 months to less than 2 years............................
From 2 years to less than 3 years..............................
From 3 years to less than 4 years..............................
From 4 years to less than 5 years..............................
From 5 years to less than 6 years..............................
From 6 years to less than 7 years..............................
From 7 years to less than 10 years.............................
From 10 years to less than 15 years............................
From 15 years to less than 20 years............................
20 years and more..............................................
(b) Each sale of Securities to any Agent as principal shall be made in
accordance with the terms of this Agreement and a Terms Agreement which
will provide for the sale of such
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Securities to, and the purchase thereof by, such Agent. A Terms Agreement
may be either (i) a written agreement between one or more of the Agents
and the Company, which may be substantially in the form of Annex I
hereto, or (ii) an oral agreement between any Agent and the Company
confirmed in writing by such Agent. Each Terms Agreement shall contain
the information specified in the Administrative Procedure under the
caption, "Communication of Sale Information to Company by Agent", and may
specify certain terms of the reoffering of the Securities. The commitment
of any Agent to purchase Securities as principal pursuant to any Terms
Agreement shall be deemed to have been made on the basis of the
representations and warranties of the Company herein contained and shall
be subject to the terms and conditions herein set forth.
Each Terms Agreement shall specify the time and date and place of delivery
of and payment for such Securities. Unless otherwise specified in a Terms
Agreement, the procedural details relating to the issue and delivery of such
Securities and payment therefor shall be as set forth in the Administrative
Procedure.
Each time and date of delivery of and payment for Securities to be
purchased by an Agent as principal, whether set forth in a Terms Agreement or
in accordance with the Administrative Procedure, is referred to herein as a
"Time of Delivery".
Unless otherwise specified in a Terms Agreement, an Agent purchasing
Securities as principal may resell such Securities to dealers. Any such sales
may be at a discount, which shall not exceed the amount set forth in the
Pricing Supplement relating to such Securities.
3. Commencement. The documents required to be delivered pursuant to Section 6
hereof on the Commencement Date (as defined below) shall be delivered to the
Agents at the offices [insert place of closing] at or before 12:00 noon, New
York City time, on the date of this Agreement, which date and time of such
delivery may be postponed by agreement between the Agents and the Company but
in no event shall be later than the day prior to the date on which
solicitation of offers to purchase Securities is commenced or on which any
Terms Agreement is executed (such time and date being referred to herein as
the "Commencement Date").
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4. Covenants of the Company. The Company covenants and agrees with each Agent:
(a) (i) To make no amendment or supplement to the Registration Statement or
the Prospectus (A) prior to the Commencement Date, to which any Agent
shall reasonably object after reasonable notice thereof or (B) after the
date of any Terms Agreement by an Agent to purchase Securities as
principal and prior to the related Time of Delivery, to which any Agent
party to such Terms Agreement or so purchasing as principal shall
reasonably object after reasonable notice thereof; (ii) to prepare, with
respect to each particular issue of Securities to be sold through or to
such Agent pursuant to this Agreement, a Pricing Supplement with respect
to such Securities in a form previously approved by such Agent and to
file such Pricing Supplement pursuant to Rule 424(b) under the Act; (iii)
to make no amendment or supplement to the Registration Statement or
Prospectus, other than any Pricing Supplement, at any time prior to
having afforded each Agent a reasonable opportunity to review and comment
on it; (iv) to file timely all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act for so long as the delivery of a prospectus is required in connection
with the offering or sale of the Securities, and during such same period
to advise such Agent, promptly after the Company receives notice thereof,
of the time when any amendment to the Registration Statement has been
filed or has become effective or any supplement to the Prospectus or any
amended Prospectus (other than any Pricing Supplement that relates to
Securities not purchased through or by such Agent) has been filed with
the Commission, of the issuance by the Commission of any stop order or of
any order preventing or suspending the use of any prospectus relating to
the Securities, of the suspension of the qualification of the Securities
for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any request by
the Commission for the amendment or supplement of the Registration
Statement or Prospectus or for additional information; and (v) in the
event of the issuance of any such stop order or of any such order
preventing or suspending the use of any such prospectus or suspending any
such qualification, to use promptly its best efforts to obtain its
withdrawal;
(b) Promptly, from time to time, to take such action as such Agent reasonably
may request to qualify the Securities for offering and sale under the
securities laws of such jurisdictions as such Agent may request and to
comply with such laws so as to permit the continuance of sales and
dealings therein for as long as may be necessary to complete the
distribution or sale of the Securities; provided, however, that in
connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process in
any jurisdiction or to submit to any requirements which it deems unduly
burdensome;
(c) To furnish such Agent with copies of the Registration Statement and each
amendment thereto, and with copies of the Prospectus as amended or
supplemented, other than any
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Pricing Supplement (except as provided in the Administrative Procedure),
in the form in which it is filed with the Commission pursuant to Rule
424(b) under the Act, both in such quantities as such Agent may
reasonably request from time to time; and, if the delivery of a
prospectus is required at any time in connection with the offering or
sale of the Securities (including Securities purchased from the Company
by such Agent as principal) and if at such time any event shall have
occurred as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made
when such Prospectus is delivered, not misleading, or, if for any other
reason it shall be necessary during such same period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the
Act, the Exchange Act or the Trust Indenture Act, to notify such Agent
and request such Agent, in its capacity as agent of the Company, to
suspend solicitation of offers to purchase Securities from the Company
(and, if so notified, such Agent shall cease such solicitations as soon
as practicable, but in any event not later than one business day later);
and if the Company shall decide to amend or supplement the Registration
Statement or the Prospectus as then amended or supplemented, to so advise
such Agent promptly by telephone (with confirmation in writing) and to
prepare and cause to be filed promptly with the Commission an amendment
or supplement to the Registration Statement or the Prospectus as then
amended or supplemented that will correct such statement or omission or
effect such compliance; provided, however, that if during such same
period such Agent continues to own Securities purchased from the Company
by such Agent as principal or such Agent is otherwise required to deliver
a prospectus in respect of transactions in the Securities, the Company
shall promptly prepare and file with the Commission such an amendment or
supplement;
(d) To make generally available to its security holders as soon as
practicable, but in any event not later than eighteen months after (i)
the effective date of the Registration Statement, (ii) the effective date
of each post-effective amendment to the Registration Statement, and (iii)
the date of each filing by the Company with the Commission of an Annual
Report on Form 10-K that is incorporated by reference in the Registration
Statement, an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Act and
the rules and regulations of the Commission thereunder (including, at the
option of the Company, Rule 158);
(e) For a period of five years from the date any Securities are sold by the
Company pursuant to an offer solicited by such Agent under this
Agreement, to deliver to such Agent (i) as soon as available, a copy of
each report of the Company mailed to security holders or filed with the
Commission and (ii) from time to time such other information concerning
the Company as such Agent shall reasonably request. If at any time, the
Company shall have a majority-owned subsidiary or subsidiaries which is
or are "significant" within the meaning of Regulation S-X of the
Commission, the financial statements contained in the documents referred
to in (i) shall be furnished in consolidated form, if such consolidation
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is required under such Regulation S-X, for the Company and such
subsidiary or subsidiaries;
(f) That, between the date of any Terms Agreement with an Agent and the
related Time of Delivery, the Company will not, without the prior written
consent of such Agent, offer, sell, contract to sell or otherwise dispose
of any debt securities of the Company substantially similar to the
Securities (other than (i) Securities that are to be sold pursuant to
such Terms Agreement, (ii) Securities previously agreed to be sold by the
Company and (iii) commercial paper issued in the ordinary course of
business), except as may otherwise be provided in such Terms Agreement;
(g) That each acceptance by the Company of an offer to purchase Securities
hereunder (including any purchase by such Agent as principal pursuant to
a Terms Agreement) shall be deemed to be an affirmation to such Agent
that the representations and warranties of the Company contained in or
made pursuant to this Agreement are true and correct as of the date of
such acceptance as though made at and as of such date, and an undertaking
that such representations and warranties will be true and correct as of
the settlement date for the Securities relating to such acceptance or as
of the Time of Delivery relating to such purchase pursuant to a Terms
Agreement, as the case may be, as though made at and as of such date
(except that such representations and warranties shall be deemed to
relate to the Registration Statement and the Prospectus as amended and
supplemented relating to such Securities);
5. Payment of Expenses. The Company covenants and agrees with each Agent that
the Company will pay or cause to be paid the following: (i) the fees and
expenses of the Company's counsel and accountants in connection with the
registration of the Securities under the Act and all other expenses in
connection with the preparation, printing and filing of the Registration
Statement, any Preliminary Prospectus, the Prospectus and any Pricing
Supplement and all other amendments and supplements thereto and the mailing
and delivering of copies thereof to such Agent; (ii) the fees and expenses of
counsel for the Agents in connection with the establishment of the program
contemplated hereby, any opinions to be rendered by such counsel hereunder
and the continuing advice and services of such counsel in connection with the
transactions contemplated hereunder; (iii) the cost of printing, preparing by
word processor or reproducing this Agreement, any Terms Agreement, any
Indenture, any Blue Sky and Legal Investment Memoranda and any other
documents in connection with the offering, purchase, sale and delivery of the
Securities; (iv) all expenses in connection with the qualification of the
Securities for offering and sale under state securities laws as provided in
Section 4(b) hereof, including fees and disbursements of counsel for the
Agents in connection with such qualification and in connection with the Blue
Sky and legal investment surveys; (v) any fees charged by securities rating
services for rating the Securities; (vi) any filing fees incident to any
required review by the National Association of Securities Dealers, Inc. of
the terms of the sale of the Securities; (vii) the cost of preparing the
Securities; (viii) the fees and expenses of any Trustee and any agent of any
Trustee and any
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transfer or paying agent of the Company and the fees and disbursements of
counsel for any Trustee or such agent in connection with any Indenture and
the Securities; (ix) the out-of-pocket expenses of the Agents incurred in
connection with the implementation of the program for the offer and sale of
the Securities; and (x) all other costs and expenses incident to the
performance of the Company's obligations hereunder which are not otherwise
specifically provided for in this Section. Except as provided in Sections 7
and 8 hereof, each Agent shall pay all other expenses it incurs.
6. Conditions of Agents' Obligations. The obligation of any Agent, as agent of
the Company, at any time ("Solicitation Time") to solicit offers to purchase
the Securities and the obligation of any offeree to purchase Securities or of
any Agent to purchase Securities as principal, pursuant to any Terms
Agreement, shall in each case be subject, in such offeree's or Agent's
discretion, to the condition that all representations and warranties and
other statements of the Company herein (and, in the case of an obligation of
an Agent under a Terms Agreement, contained in or incorporated in such Terms
Agreement by reference) are true and correct at and as of the Commencement
Date and any applicable date that is on or prior to such Solicitation Time or
Time of Delivery, as the case may be, and at and as of such Solicitation Time
or Time of Delivery, as the case may be, the condition that on or prior to
such Solicitation Time or Time of Delivery, as the case may be, the Company
shall have performed all of its obligations hereunder theretofore to be
performed, and the following additional conditions:
(a) (i) With respect to any Securities sold at or prior to such Solicitation
Time or Time of Delivery, as the case may be, the Prospectus as amended
or supplemented (including the Pricing Supplement) with respect to such
Securities shall have been filed with the Commission pursuant to Rule
424(b) under the Act within the applicable time period prescribed for
such filing by the rules and regulations under the Act and in accordance
with Section 4(a) hereof; (ii) no stop order suspending the effectiveness
of the Registration Statement shall have been issued and shall remain in
effect and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and (iii) all requests for additional
information on the part of the Commission shall have been complied with
to the reasonable satisfaction of such Agent;
(b) Counsel to the Agents shall have furnished to such Agent (i) such opinion
or opinions, dated the Commencement Date, with respect to the
incorporation of the Company, the validity of the Indenture, the
Securities, the Registration Statement and the Prospectus as amended or
supplemented and (ii) if and to the extent requested by such Agent, on or
prior to such Solicitation Time or Time of Delivery, as the case may be,
a letter, dated such applicable date, to the effect that such Agent may
rely on the opinion or opinions which were last furnished to such Agent
pursuant to this Section 6(b) to the same extent as though it or they
were dated the date of such letter authorizing reliance (except that the
statements in such letter shall be deemed to relate to the Registration
Statement and the Prospectus as amended and supplemented to such date)
or, in any case, in lieu of such a letter, an opinion or opinions of the
same tenor as the opinion or opinions referred to in
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clause (i) but modified to relate to the Registration Statement and the
Prospectus as amended and supplemented to such date; and in each case
such counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters;
(c) General Counsel for the Company, or other counsel for the Company
satisfactory to such Agent, shall have furnished to such Agent his
written opinions, dated the Commencement Date and each applicable date
that is on or prior to such Solicitation Time or Time of Delivery, as the
case may be, in form and substance satisfactory to such Agent and the
Company.
(d) The independent certified public accountants who have certified the
financial statements of the Company and its subsidiaries included or
incorporated by reference in the Registration Statement shall have
furnished to such Agent a letter, dated the Commencement Date and each
applicable date that is on or prior to such Solicitation Time or Time of
Delivery, as the case may be, in form and substance satisfactory to such
Agent to the effect set forth in Annex III hereto;
(e) There shall not have occurred any:
(i) change, or any development involving a prospective change, in the
condition, financial or otherwise, or in the earnings, business or
operations, of the Company and its subsidiaries, taken as a whole,
from that set forth in the Prospectus, as amended or supplemented
at such Solicitation Time or Time of Delivery, as the case may be,
that, in such Agent's judgment, is material and adverse and that
makes it, in such Agent's judgment, impracticable to market the
Securities on the terms and in the manner contemplated by the
Prospectus, as so amended or supplemented;
(ii) suspension or material limitation of trading generally on or by, as
the case may be, the New York Stock Exchange, the American Stock
Exchange, the National Association of Securities Dealers, Inc., the
Chicago Board Options Exchange, the Chicago Mercantile Exchange or
the Chicago Board of Trade, (B) suspension of trading of any
securities of the Company on any exchange or in any
over-the-counter market, (C) declaration of a general moratorium on
commercial banking activities in New York by either Federal or New
York State authorities or (D) any outbreak or escalation of
hostilities or any change in financial markets or any calamity or
crisis that, in such Agent's judgment, is material and adverse and,
in the case of any of the events described in clauses (A) through
(D), such event, singly or together with any other such event,
makes it, in such Agent's judgment, impracticable to market the
Securities on the terms and in the manner contemplated by the
Prospectus, as amended or supplemented at such Solicitation Time or
Time of Delivery, as the case may be; and
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(iii) downgrading in the rating accorded any of the Company's securities
by any "nationally recognized statistical rating organization," as
such term is defined for purposes of Rule 436(g)(2) under the
Securities Act;
Except, in each case, as disclosed to such Agent in writing by the Company
prior to such Solicitation Time, or unless in each case described in (ii)
above, the relevant event shall have occurred and been known to such Agent
prior to such Solicitation Time, as the case may be.
(f) The Company shall have furnished or caused to be furnished to such Agent
certificates of officers of the Company dated the Commencement Date and
each applicable date that is on or prior to such Solicitation Time or
Time of Delivery, as the case may be, in such form and executed by such
officers of the Company as shall be satisfactory to such Agent, as to the
accuracy of the representations and warranties of the Company herein at
and as of the Commencement Date or such applicable date, as the case may
be, as to the performance by the Company of all of its obligations
hereunder to be performed at or prior to the Commencement Date or such
applicable date, as the case may be, as to the matters set forth in
subsections (a) and (e) of this Section 6, and as to such other matters
as such Agent may reasonably request.
7. Indemnification.
(a) The Company will indemnify and hold harmless each Agent, and each person,
if any, who controls such Agent within the meaning of the Act, against
any losses, claims, damages or liabilities, joint or several, to which
such Agent may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement, the Prospectus, the Prospectus as
amended or supplemented or any other prospectus relating to the
Securities, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse such Agent for any
legal or other expenses reasonably incurred by it in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable in any
such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement, the Prospectus, the Prospectus as
amended or supplemented or any other prospectus relating to the
Securities, or any such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by such
Agent expressly for use therein, and provided, further, that the
indemnity agreement contained in this paragraph in respect of any
Preliminary Prospectus shall not inure to the benefit of either Agent on
account of any such losses, claims, damages or liabilities arising from
the sale of the Securities to any offeree if such Agent failed to send or
give a copy of the Prospectus as amended or supplemented
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(excluding documents incorporated therein by reference), if any
amendments or supplements thereto shall have been furnished, at or prior
to the time of written confirmation of the sale involved, to such offeree
with or prior to the written confirmation of such sale.
(b) Each Agent will indemnify and hold harmless the Company against any
losses, claims, damages or liabilities to which the Company may become
subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement, the Prospectus, the Prospectus as amended or supplemented or
any other prospectus relating to the Securities, or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was
made in any Preliminary Prospectus, the Registration Statement, the
Prospectus, the Prospectus as amended or supplemented or any other
prospectus relating to the Securities, or any such amendment or
supplement, in reliance upon and in conformity with written information
furnished to the Company by such Agent expressly for use therein; and
will reimburse the Company for any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending any
such action or claim as such expenses are incurred.
(c) In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be
sought pursuant to either paragraph (a) or (b) above, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in
such proceeding and shall pay the reasonable fees and disbursements of
such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii)
the named parties to any such proceeding (including any impleaded
parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them; provided, however, that the indemnifying party shall only be
responsible for the fees of such counsel to the extent they are
reasonably incurred. It is understood that the indemnifying party shall
not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel) for all such indemnified
parties and that all such fees and expenses, to the extent they are
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reasonable, shall be reimbursed as they are incurred. Such firm shall be
designated in writing by the Agents, in the case of parties indemnified
pursuant to paragraph (a) above, and by the Company, in the case of
parties indemnified pursuant to paragraph (b) above. The indemnifying
party shall not be liable for any settlement of any proceeding effected
without its written consent, but if settled with such consent or if there
be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which
any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of such
proceeding.
(d) If the indemnification provided for in this Section 7 is unavailable to
or insufficient to hold harmless an indemnified party under subsection
(a) or (b) above in respect of any losses, claims, damages or liabilities
(or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company on
the one hand and each Agent on the other from the offering of the
Securities to which such loss, claim, damage or liability (or action in
respect thereof) relates. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law, then
each indemnifying party shall contribute to such amount paid or payable
by such indemnified party 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 Agent on the other in connection with
the statements or omissions which resulted in such losses, claims,
damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received
by the Company on the one hand and each Agent on the other shall be
deemed to be in the same proportion as the total net proceeds from the
sale of Securities (before deducting expenses) received by the Company
bear to the total commissions or discounts received by such 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 required to be stated therein or necessary in order to make the
statements therein not misleading relates to information supplied by the
Company on the one hand or by any Agent on the other and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and each Agent
agree that it would not be just and equitable if contribution pursuant to
this subsection (d) were determined by per capita allocation (even if all
Agents were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to above in this subsection (d). The amount paid
or payable by an indemnified party as a result of the losses, claims,
damages
15
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or liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), an Agent shall not be required to
contribute any amount in excess of the amount by which the total public
offering price at which the Securities 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 Act) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The obligations of each of the Agents under
this subsection (d) to contribute are several in proportion to the
respective purchases made by or through it to which such loss, claim,
damage or liability (or action in respect thereof) relates and are not
joint.
(e) The obligations of the Company under this Section 7 shall be in addition
to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls
any Agent within the meaning of the Act; and the obligations of each
Agent under this Section 7 shall be in addition to any liability which
such Agent may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company and to each
person, if any, who controls the Company within the meaning of the Act.
8. Nonperformance. Each Agent, in soliciting offers to purchase Securities from
the Company and in performing the other obligations of such Agent hereunder
(other than in respect of any purchase by an Agent as principal, pursuant to
a Terms Agreement or otherwise), is acting solely as agent for the Company
and not as principal. Each Agent will make reasonable efforts to assist the
Company in obtaining performance by each purchaser whose offer to purchase
Securities from the Company was solicited by such Agent and has been accepted
by the Company, but such Agent shall not have any liability to the Company in
the event such purchase is not consummated for any reason. If the Company
shall default on its obligation to deliver Securities to a purchaser whose
offer it has accepted, the Company shall (i) hold each Agent harmless against
any loss, claim or damage arising from or as a result of such default by the
Company and (ii) notwithstanding such default, pay to the Agent that
solicited such offer any commission to which it would be entitled in
connection with such sale.
9. Survival of Agreement. The respective indemnities, agreements,
representations, warranties and other statements by any Agent and the Company
set forth in or made pursuant to this Agreement shall remain in full force
and effect regardless of any investigation (or any statement as to the
results thereof) made by or on behalf of any Agent or any controlling person
of any Agent or the Company, or any officer or director or any controlling
person of the Company, and shall survive each delivery of and payment for any
of the Securities.
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10. Suspension or Termination. The provisions of this Agreement relating to the
solicitation of offers to purchase Securities from the Company may be
suspended or terminated at any time by the Company as to any Agent or by any
Agent as to such Agent upon the giving of written notice of such suspension
or termination to such Agent or the Company, as the case may be. In the
event of such suspension or termination with respect to any Agent, (i) this
Agreement shall remain in full force and effect with respect to any Agent as
to which such suspension or termination has not occurred, (ii) this
Agreement shall remain in full force and effect with respect to the rights
and obligations of any party which have previously accrued or which relate
to Securities which are already issued, agreed to be issued or the subject
of a pending offer at the time of such suspension or termination and (iii)
in any event, this Agreement shall remain in full force and effect insofar
as the fourth paragraph of Section 2(a), Section 4(d), Section 4(e), Section
5, Section 7, Section 8 and Section 9 hereof are concerned.
11. Notices. Except as otherwise specifically provided herein or in the
Administrative Procedure, all statements, requests, notices and advices
hereunder shall be in writing, or by telephone if promptly confirmed in
writing, and if to _____________________, shall be sufficient in all
respects when delivered or sent by facsimile transmission or registered mail
to ______________________________________________________________,
Attention: _________________________________, Facsimile Transmission No.
_____________, and if to ___________________________, shall be sufficient in
all respects when delivered or sent by facsimile transmission or registered
mail to __________________________________, Facsimile Transmission No.
_______________________, Attention: _______________________________, and if
to the Company shall be sufficient in all respects when delivered or sent by
facsimile transmission or registered mail to Conectiv, 000 Xxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000, Facsimile Transmission No. (000) 000-0000,
Attention: Treasurer.
12. Benefit of Agreement. This Agreement and any Terms Agreement shall be
binding upon, and inure solely to the benefit of, each Agent and the
Company, and to the extent provided in Section 7, Section 8 and Section 9
hereof, the officers and directors of the Company and any person who
controls any Agent or the Company, and their respective personal
representatives, successors and assigns, and no other person shall acquire
or have any right under or by virtue of this Agreement or any Terms
Agreement. No purchaser of any of the Securities through or from any Agent
hereunder shall be deemed a successor or assign by reason of such purchase.
13. Definition of Business Day. Time shall be of the essence in this Agreement
and any Terms Agreement. As used herein, the term "business day" shall mean
any day when the office of the Commission in Washington, D.C. and banks
located in the City of New York are normally open for business.
14. Governing Law. This Agreement and any Terms Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York without
regard to the conflict of law provisions thereof.
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15. Execution in Counterparts. This Agreement and any written Terms Agreement
may be executed by any one or more of the parties hereto and thereto in any
number of counterparts, each of which shall be an original, but all of such
respective counterparts shall together constitute one and the same
instrument.
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If the foregoing is in accordance with your understanding, please sign
and return to us two counterparts hereof, whereupon this letter and the
acceptance by each of you thereof shall constitute a binding agreement between
the Company and each of you in accordance with its terms.
Very truly yours,
CONECTIV
By:
----------------------------------
Title:
-------------------------------
Accepted in New York, New York,
as of the date hereof:
[AGENT]
By
----------------------------------
Title:
------------------------------
[AGENT]
By:
---------------------------------
Title:
------------------------------
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ANNEX I
CONECTIV
MEDIUM TERM NOTES, SERIES __
TERMS AGREEMENT
___________, 199_
[Agent]
Dear Sirs:
Conectiv (the "Company") proposes, subject to the terms and conditions
stated herein and in the Distribution Agreement, dated __________, 199_ (the
"Distribution Agreement"), between the Company, on the one hand, and
_____________________________________________________(the "Agents") on the
other, to issue and sell to _________________________ the securities specified
in the Schedule hereto (the "Purchased Securities"). Each of the provisions of
the Distribution Agreement not specifically related to the solicitation by the
Agents, as agents of the Company, of offers to purchase Securities is
incorporated herein by reference in its entirety, and shall be deemed to be part
of this Agreement to the same extent as if such provisions had been set forth in
full herein. Nothing contained herein or in the Distribution Agreement shall
make any party hereto an agent of the Company or make such party subject to the
provisions therein relating to the solicitation of offers to purchase securities
from the Company, solely by virtue of its execution of this Agreement. Each of
the representations and warranties set forth in the Distribution Agreement shall
be deemed to have been made at and as of the date of this Agreement, except that
each representation and warranty in Section 1 of the Distribution Agreement
which makes reference to the Prospectus shall be deemed to be a representation
and warranty as of the date of the Distribution Agreement in relation to the
Prospectus (as therein defined), and also a representation and warranty as of
the date of this Agreement in relation to the Prospectus as amended and
supplemented to relate to the Purchased Securities.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Purchased Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
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Subject to the terms and conditions set forth herein and in the
Distribution Agreement incorporated herein by reference, the Company agrees to
issue and sell to ____________________________ and
______________________________________ agrees to purchase from the Company the
Purchased Securities, at the time and place, in the principal amount and at the
purchase price set forth in the Schedule hereto.
If the foregoing is in accordance with your understanding, please sign
and return to us two counterparts hereof, and upon acceptance hereof by you this
letter and such acceptance hereof, including those provisions of the
Distribution Agreement incorporated herein by reference, shall constitute a
binding agreement between you and the Company.
CONECTIV
By:
-------------------------------------
Title:
----------------------------------
Accepted in New York, New York,
as of the date hereof:
[PURCHASING AGENT]
By:
-----------------------------------
Title:
--------------------------------
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SCHEDULE TO ANNEX I
Title of Purchased Securities:
Aggregate Principal Amount:
Price to Public:
Purchase Price:
Method of and Specified Funds for Payment of Purchase Price:
[By certified or official bank check or checks, payable to the order of
the Company, in immediately available funds]
[By wire transfer to a bank account specified by the Company in
immediately available funds]
Time of Delivery:
Closing Location:
Maturity:
Interest Rate:
Interest Payment Dates:
Initial Interest Payment Date:
Redemption Provisions:
Repayment Provisions:
Documents to be Delivered:
The following documents referred to in the Distribution Agreement shall
be delivered as a condition to the Closing:
[(1) The opinion or opinions of counsel to the Agents referred to in
Section 6(b).]
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[(2) The opinion of counsel to the Company referred to in Section 6(c).]
[(3) The accountants' letter referred to in Section 6(d).]
[(4) The officers' certificate referred to in Section 6(f).]
Other Provisions (including Syndicate Provisions, if applicable):
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ANNEX II
CONECTIV
ADMINISTRATIVE PROCEDURE
This Administrative Procedure relates to the Securities defined in the
Distribution Agreement, dated [insert date] (the "Distribution Agreement"),
between Conectiv (the "Company") and [insert names of agents] (together, the
"Agents"), to which this Administrative Procedure is attached as Annex II.
Defined terms used herein and not defined herein shall have the meanings given
such terms in the Distribution Agreement, the Prospectus as amended or
supplemented or the Indenture.
The procedures to be followed with respect to the settlement of sales of
Securities directly by the Company to purchasers solicited by an Agent, as
agent, are set forth below. Such procedures shall also be followed with respect
to sales of Securities by the Company to an Agent, as principal, unless the
Company and such Agent agree to follow different procedures pursuant to a
written Terms Agreement. An Agent, in relation to a purchase of a Security by a
purchaser solicited by such Agent, is referred to herein as the "Selling Agent"
and, in relation to a purchase of a Security by such Agent as principal as the
"Purchasing Agent".
The Company will advise each Agent in writing of those persons with whom
such Agent is to communicate regarding offers to purchase Securities and the
related settlement details.
Posting Rates by Company:
The Company and the Agents will discuss from time to time the rates of
interest per annum to be borne by and the maturity of Securities that may be
sold as a result of the solicitation of offers by an Agent. The Company may
establish a fixed set of interest rates and maturities for an offering period
("posting"). If the Company decides to change already posted rates, it will
promptly advise the Agents to suspend solicitation of offers until the new
posted rates have been established with the Agents.
Acceptance of Offers by Company:
Each Agent will promptly advise the Company by telephone or other
appropriate means of all reasonable offers to purchase Securities, other than
those rejected by such Agent. Each Agent may, in its discretion reasonably
exercised, reject any offer received by it in whole or in part. Each Agent also
may make offers to the Company to purchase Securities as a Purchasing Agent.
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The Company will have the sole right to accept offers to purchase Securities and
may reject any such offer in whole or in part.
The Company will promptly notify the Agent of its acceptance or rejection
of an offer to purchase Securities. If the Company accepts an offer to purchase
Securities, it will confirm such acceptance in writing to the Agent and the
Trustee.
Communication of Sale Information to Company by Agent:
After the acceptance of an offer by the Company, the Agent will
communicate the following details of the terms of such offer (the "Sale
Information") to the Company by telephone (confirmed in writing) or by facsimile
transmission or other acceptable written means:
(1) Principal amount of Securities to be purchased;
(2) If a Fixed Rate Security, the interest rate;
(3) Maturity Date;
(4) Issue Price;
(5) Selling Agent's commission or Purchasing Agent's discount, as the
case may be;
(6) Net proceeds to the Company;
(7) Settlement Date;
(8) If a redeemable Security, such of the following as are applicable:
(i) Redemption Commencement Date,
(ii) Initial Redemption Price (% of par), and
(iii) Amount (% of par) that the Redemption Price shall decline on
each anniversary of the Redemption Commencement Date;
[(9) If a Floating Rate Security, such of the following as are
applicable:
(i) Interest Rate Basis,
(ii) Index Maturity,
(iii) Spread or Spread Multiplier,
(iv) Maximum Rate,
(v) Minimum Rate,
(vi) Initial Interest Rate,
(vii) Interest Reset Dates,
(viii) Calculation Dates,
(ix) Interest Determination Dates,
(x) Interest Payment Dates,
(xi) Regular Record Dates, and
(xii) Calculation Agent;]
(10) Name, address and taxpayer identification number of the registered
owner;
(11) Denomination of certificates to be delivered at settlement;
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(12) Whether such Security is a Book-Entry Security or a Certificated
Security; and
(13) Whether such Agent is acting as Selling Agent or Purchasing Agent.
Preparation of Pricing Supplement by Company:
If the Company accepts an offer to purchase a Security, it will prepare a
Pricing Supplement. The Company will arrange to have ten Pricing Supplements
filed with the Commission not later than the close of business of the Commission
on the fifth business day following the date on which such Pricing Supplement is
first used, and will promptly deliver copies of such Pricing Supplement to the
Agent no later than 11:00 a.m. on the day following the Trade Date via next day
mail or telecopy at the following locations:
Delivery of Confirmation and Prospectus to Purchaser by Selling Agent:
The Selling Agent will deliver to the purchaser of a Security a written
confirmation of the sale and delivery and payment instructions. In addition, the
Selling Agent will deliver to such purchaser or its agent the Prospectus as
amended or supplemented (including the Pricing Supplement) in relation to such
Security prior to or together with the earlier of the delivery to such purchaser
or its agent of (a) the confirmation of sale or (b) the Security.
Date of Settlement:
All offers solicited by a Selling Agent or made by a Purchasing Agent and
accepted by the Company will be settled on a date (the "Settlement Date") which
is the third business day after the date of acceptance of such offer, unless the
Company and the purchaser agree to settlement (a) on any other business day
after the acceptance of such offer or (b) with respect to an offer accepted by
the Company prior to 10:00 a.m., New York City time, on the date of such
acceptance.
Instruction from Company to Trustee for Preparation of Securities,
Preparation and Delivery of Securities by Trustee and Receipt of Payment
Therefor:
After receiving the Sale Information from the Agent, the Company will
communicate such Sale Information to the Trustee by telephone (confirmed in
writing) or by facsimile transmission or other acceptable written means. The
Trustee will prepare each Security and appropriate receipts that will serve as
the documentary control of the transaction. Each Security will be represented by
either a Global Security (as defined below) 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 Security") or a certificate delivered to the
holder thereof or a person designated by such holder (a "Certificated
Security"). Except as set forth in the Prospectus, as
26
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amended or supplemented, an owner of a Book-Entry Security will not be entitled
to receive a Certificated Security.
A. PROCEDURES FOR BOOK-ENTRY SECURITIES
In connection with the qualification of Book-Entry Securities 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 Representation from
the Company and the Trustee to DTC, dated as of[insert date] (the "Letter of
Representation"), and a Medium-Term Note Certificate Agreement between the
Trustee and DTC dated [insert date], and its obligations as a participant in
DTC, including DTC's Same-Day Funds Settlement System ("SDFS").
On any Settlement Date for one or more Book-Entry Securities, the Company
will issue a single global security in fully registered form without coupons (a
"Global Security") representing up to U.S. $250,000,000 principal amount of all
such Securities that have the same Original Issue Date, Maturity Date and other
terms. Each Global Security will be dated and issued as of the date of its
authentication by the Trustee. Each Global Security will bear an "Interest
Accrual Date," which will be (i) with respect to an original Global Security (or
any portion thereof), its original issuance date and (ii) with respect to any
Global Security (or any portion thereof) issued subsequently upon exchange of a
Global Security, or in lieu of a destroyed, lost or stolen Global Security, the
most recent Interest Payment Date to which interest has been paid or duly
provided for on the predecessor Global Security or Securities (or if no such
payment or provision has been made, the original issuance date of the
predecessor Global Security), regardless of the date of authentication of such
subsequently issued Global Security. Book-Entry Securities may be payable only
in U.S. dollars. No Global Security will represent any Certificated Security.
Upon receipt of the Sale Information from the Company, the Trustee will
then assign a CUSIP number to the Global Security representing such Security and
will notify the Company and the Agent of such CUSIP number by telephone as soon
as practicable.
The Trustee will enter a pending deposit message through DTC's
Participant Terminal System providing the following settlement information to
DTC, the Agent and Standard & Poor's Corporation:
1. The Sale Information.
2. The Initial Interest Payment Date for such Security, the number of days by
which such date succeeds the related DTC Record Date (which shall be the
Record Date as defined in the Security) and, if known, amount of interest
payable on such Initial Interest Payment Date.
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3. The CUSIP number of the Global Security representing such Security.
4. Whether such Global Security will represent any other Book-Entry Security (to
the extent known at such time).
By 9:00 a.m. on the Settlement Date, the Trustee will complete and
authenticate the Global Security representing such Security. By 10:00 a.m. on
the Settlement Date, DTC will credit such Security to the Trustee's participant
account at DTC.
By 2:00 p.m. on the Settlement Date, the Trustee will enter an SDFS
deliver order through DTC's Participant Terminal System instructing DTC to (i)
debit such Security to the Trustee's participant account and credit such
Security to the Agent's participant account and (ii) debit the Agent's
settlement account and credit the Trustee's settlement account for an amount
equal to the price of such Security less the Agent's commission, if any. The
entry of such a deliver order shall constitute a representation and warranty by
the Trustee to DTC that (a) the Global Security representing such Book-Entry
Security has been issued and authenticated and (b) the Trustee is holding such
Global Security pursuant to the Medium-Term Note Certificate Agreement between
the Trustee and DTC.
Unless the Agent is the end purchaser of such Security, the Agent will
enter an SDFS deliver order through DTC's Participant Terminal System
instructing DTC (i) to debit such Security to the Agent's participant account
and credit such Security to the participant accounts of the Participants with
respect to such Security and (ii) to debit the settlement accounts of such
Participants and credit the settlement account of the Agent for an amount equal
to the price of such Security.
By 4:45 p.m. on the Settlement Date transfers of funds in accordance with
SDFS deliver orders described in the two preceding paragraphs will be settled in
accordance with SDFS operating procedures in effect on the Settlement Date.
By 5:00 p.m. on the Settlement Date, the Trustee will credit to the
account of the Company maintained with the Trustee in funds available for
immediate use in the amount transferred to the Trustee by the Agent.
Unless the Agent is the end purchaser of such Security, the Agent will
confirm the purchase of such Security to the purchaser either by transmitting to
the Participants with respect to such Security a confirmation order or orders
through DTC's institutional delivery system or by mailing a written confirmation
to such purchaser.
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If settlement of a Book-Entry Security is rescheduled or canceled, the
Trustee, after receiving notice from the Company or the Agent, 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.
The Company will instruct the Trustee by facsimile transmission or other
acceptable written means to authenticate and deliver the Certificated Securities
no later than 2:15 p.m., New York City time, on the Settlement Date. Such
instruction will be given by the Company prior to 3:00 p.m., New York City time,
on the business day prior to the Settlement Date unless the Settlement Date is
the date of acceptance by the Company of the offer to purchase Securities in
which case such instruction will be given by the Company by 11:00 a.m., New York
City time.
B. PROCEDURES FOR CERTIFICATED SECURITIES
In the case of a sale of Certificated Securities to a purchaser solicited
by an Agent, the Trustee will, by 2:15 p.m., New York City time, on the
Settlement Date, deliver the Securities to the Selling Agent for the benefit of
the purchaser of such Securities against delivery by the Selling Agent of a
receipt therefor. On the Settlement Date, the Selling Agent will deliver payment
for such Securities in immediately available funds to the Trustee in an amount
equal to the issue price of the Securities less the Selling Agent's commission;
provided that the Selling Agent reserves the right to withhold payment for which
it has not received funds from the purchaser.
In the case of a sale of Securities to a Purchasing Agent, the Trustee
will, by 2:15 p.m., New York City time, on the Settlement Date, deliver the
Securities to the Purchasing Agent against delivery of payment for such
Securities in immediately available funds to the Trustee in an amount equal to
the issue price of the Securities less the Purchasing Agent's discount.
In either case, promptly upon receipt of such funds from the Agent, the
Trustee will wire an amount equal thereto to, or upon the order of, the Company
in immediately available funds.
The Trustee shall deliver Certificated Securities to:
Failure to Settle:
A. PROCEDURES FOR BOOK-ENTRY SECURITIES
If the Trustee fails to enter an SDFS deliver order with respect to a
Book-Entry Security, the Trustee may deliver to DTC, through DTC's Participant
Terminal System, as soon as practicable a withdrawal message instructing DTC to
debit such Security to the Trustee's participant account, provided that the
Trustee's participant account contains a principal amount of
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the Global Security representing such Security 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 Securities represented by a Global Security, the
Trustee will xxxx such Global Security "canceled," make appropriate entries in
the Trustee's records and send such canceled Global Security to the Company. The
CUSIP number assigned to such Global Security shall, in accordance with the
procedures of the CUSIP Service Bureau of Standard & Poor's Corporation, be
canceled and not immediately reassigned. If a withdrawal message is processed
with respect to one or more, but not all, of the Book-Entry Securities
represented by a Global Security, the Trustee will exchange such Global Security
for two Global Securities, one of which shall represent such Book-Entry Security
or Securities and shall be canceled immediately after issuance and the other of
which shall represent the remaining Book-Entry Securities 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 Security is not timely paid to
the Participants with respect to such Security 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 may enter SDFS
deliver orders through DTC's Participant Terminal System reversing the orders
entered. Thereafter, the Trustee will deliver the withdrawal message and take
the related actions described in the preceding paragraph.
Notwithstanding the foregoing, upon any failure to settle with respect to
a Book-Entry Security, DTC may take any actions in accordance with its SDFS
operating procedures then in effect.
In the event of a failure to settle with respect to one or more, but not
all, of the Book-Entry Securities to have been represented by a Global Security,
the Trustee will provide for the authentication and issuance of a Global
Security representing the Book-Entry Securities to be represented by such Global
Security and will make appropriate entries in its records.
B. PROCEDURES FOR CERTIFICATED SECURITIES
If a purchaser fails to make payment to the Selling Agent for a
Certificated Security, the Selling Agent will promptly notify the Trustee and
the Company thereof by telephone (confirmed in writing) or by facsimile
transmission or other acceptable written means. The Selling Agent will
immediately return the Certificated Security to the Trustee. Immediately upon
receipt of such Security by the Trustee, the Trustee will debit the account of
the Company in an amount equal to the amount previously credited thereto in
respect of such Security and will return such funds to the Selling Agent. The
Company will reimburse the Selling Agent on an equitable basis for its loss of
the use of funds at the then prevailing broker-loan rate during the period when
they were credited to the account of the Company.
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The Trustee will cancel the Certificated Security in respect of which the
failure occurred, make appropriate entries in its records and, unless otherwise
instructed by the Company, destroy the Security.
