Distribution Agreement - American International Group Inc.
AMERICAN INTERNATIONAL GROUP, INC.
U.S. $25,139,770,000
MEDIUM-TERM NOTES
SERIES G
SERIES AIG-FP
SERIES MP, MATCHED INVESTMENT PROGRAM
DISTRIBUTION AGREEMENT
October 12, 2006
To the Agents named in Annex VI hereto.
Ladies and Gentlemen:
American International Group, Inc., a Delaware corporation (the "COMPANY"),
proposes, subject to the terms and conditions stated herein, to issue and sell
up to U.S. $25,139,770,000 aggregate principal amount, or the equivalent of up
to U.S. $25,139,770,000 aggregate principal amount in one or more foreign or
composite currencies, of its Medium-Term Notes, Series G; Medium-Term Notes,
Series AIG-FP; and Medium-Term Notes, Series MP, Matched Investment Program
(collectively, the "SECURITIES"), 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, the Company hereby
appoints each Agent as an agent of the Company for the purpose of soliciting and
receiving offers to purchase the Securities from the Company, and the Company
and the Agents agree that whenever the Company determines to sell Securities
directly to any Agent as principal for resale to others, the Company and such
Agent will, unless otherwise agreed by them, enter into a separate agreement,
substantially in the form of Annex I hereto, relating to such sale (each, a
"TERMS AGREEMENT") or another agreement relating to such sale, which shall be
subject to the terms and conditions stated herein, in each case in accordance
with Section 2(b) hereof. The Company reserves the right to sell Securities
directly on its own behalf and to enter into agreements substantially identical
hereto with other broker-dealers as Agents. This Agreement shall not be
construed to create either an obligation on the part of the Company to sell any
Securities or an obligation of the Agents to purchase Securities as principal.
The terms and rights of the Securities shall be as specified in or
established pursuant to the Indenture, dated as of October 12, 2006 (the
"INDENTURE"), between the Company and The Bank of New York, as Trustee (the
"TRUSTEE"). The Securities shall have the maturity ranges, annual interest rates
(if any), redemption provisions and other terms set forth in the Prospectus
referred to below as it may be supplemented from time to time. The Securities
may be issued in amounts denominated in United States dollars or in amounts
denominated in foreign currencies, including the Euro, or any composite
currency. References herein to amounts stated in United States dollars shall be
deemed to refer to the equivalent amount of foreign currency or composite
currency to the extent applicable. The Securities will be issued, and the terms
thereof established,
<PAGE>
from time to time by the Company in accordance with the Indenture and the
Administrative Procedure attached hereto as Attachment A (the "PROCEDURE") and,
if applicable, such terms will be specified in a related Terms Agreement.
1. The Company represents and warrants to, and agrees with, each Agent
that:
(a) The registration statements on Form S-3 (Registration Nos.
333-106040 and 333-31024) in respect of the Securities have been filed with the
Securities and Exchange Commission (the "COMMISSION"); such registration
statements and any post-effective amendment thereto, each in the form heretofore
delivered or to be delivered to such Agent, excluding exhibits to such
registration statements, but including all documents incorporated by reference
in the prospectus included in the latest registration statement, have been
declared effective by the Commission in such form; and no stop order suspending
the effectiveness of any such registration statement has been issued and no
proceeding for that purpose has been initiated or threatened by the Commission
(any preliminary prospectus included in the latest registration statement or
filed with the Commission pursuant to Rule 424(a) of the rules and regulations
of the Commission under the Securities Act of 1933, as amended (the "ACT") is
hereinafter called a "PRELIMINARY PROSPECTUS;" the various parts of such
registration statements, including all exhibits thereto and the documents
incorporated by reference in the prospectus contained in the registration
statements at the time such part of the registration statements became effective
but excluding Form T-1, each as amended at the time such part of the
registration statements most recently became effective, are hereinafter
collectively called the "REGISTRATION STATEMENT;" the prospectus (including, if
applicable, any prospectus supplement) relating to the Securities, in the form
in which it has most recently been filed, or transmitted for filing, with the
Commission on or prior to the date of this Agreement, is hereinafter called the
"PROSPECTUS;" any reference herein to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to the applicable form under the Act, as of the date
of such 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 any documents filed after the date of such Preliminary
Prospectus or Prospectus, as the case may be, under the Securities Exchange Act
of 1934, as amended (the "EXCHANGE ACT"), and incorporated therein by reference;
any reference to any amendment to the Registration Statement shall be deemed to
refer to and include any annual report of the Company filed pursuant to Section
13(a) or 15(d) of the Exchange Act after the effective date of the Registration
Statement that is incorporated by reference in the Registration Statement; and
any reference to the "PROSPECTUS AS AMENDED OR SUPPLEMENTED," other than in
Section 1(c)(i)(B) hereof, shall be deemed to refer to and include the
Prospectus as amended or supplemented (including by the applicable Pricing
Supplement filed in accordance with Section 4(a) hereof and any other prospectus
supplement specifically referred to in such Pricing Supplement) in relation to
Securities to be sold pursuant to this Agreement, in the form filed or
transmitted for filing with the Commission pursuant to Rule 424(b) under the Act
and in accordance with Section 4(a) hereof, including any documents incorporated
by reference therein as of the date of such filing);
(b) No order preventing or suspending the use of any Preliminary
Prospectus or any "issuer free writing prospectus" as defined in Rule 433 under
the Act relating to the Securities (an "ISSUER FREE WRITING PROSPECTUS") has
been issued by the Commission, and each Preliminary Prospectus, at the time of
filing thereof, conformed in all material respects to the
2
<PAGE>
requirements of the Act and the Trust Indenture Act of 1939, as amended (the
"TRUST INDENTURE ACT"), and the rules and regulations of the Commission
thereunder, and did 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 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 therein;
(c) (i) With respect to any issue of Securities, (A) the "APPLICABLE
TIME" will be such time on the date of the applicable Terms Agreement as is
specified therein as the Applicable Time, or, if either the Terms Agreement does
not specify the Applicable Time or if such Securities are not being sold
pursuant to a Terms Agreement, the Applicable Time shall mean the time
immediately prior to the time of the first sale by an Agent (including, without
limitation, a contract of sale by an Agent) of such Securities or with respect
to Securities sold by such Agent as agent, the Applicable Time shall mean each
time of sale (including, without limitation, a contract of sale) of such
Securities, and (B) the "PRICING DISCLOSURE PACKAGE" shall mean the Prospectus
as amended or supplemented immediately prior to the Applicable Time taken
together with any Term Sheet prepared pursuant to Section 4(a) hereof in
connection with such issue of Securities and any other free writing prospectus
that the Company and such Agent shall expressly agree in writing to include as
part of the Pricing Disclosure Package with respect to such issue of Securities;
(ii) with respect to each issue of Securities, the Pricing Disclosure Package,
as of the Applicable Time, 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, in the light of the circumstances under which they are made,
not misleading; and (iii) with respect to each issue of Securities, each Issuer
Free Writing Prospectus, if any, included in the Pricing Disclosure Package,
will not conflict with the information contained in the Registration Statement,
the Prospectus or the Prospectus as amended or supplemented and, taken together
with the Pricing Disclosure Package, as of the Applicable Time, 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, in the light of the
circumstances under which they are made, not misleading; provided, however, that
the representations and warranties in clauses (ii) and (iii) of this Section
1(c) shall not apply to statements or omissions made in any Pricing Disclosure
Package or Issuer Free Writing Prospectus in reliance upon and in conformity
with information furnished in writing to the Company by any Agent expressly for
use therein;
(d) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; and any further documents so filed and incorporated by reference
in the Prospectus, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects to the
requirements of the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder and will not contain an untrue
statement of a material fact or, in the case of an Annual Report on Form 10-K,
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading or, in the case of any other document
filed under the Exchange Act, omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not
3
<PAGE>
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 specifically
for use in the Prospectus as amended or supplemented to relate to a particular
issuance of Securities, or to any statements in any such document which does not
constitute part of the Registration Statement or Prospectus pursuant to Rule 412
under the Act;
(e) The Registration Statement and the Prospectus conform, and any
amendments or supplements thereto will conform, in all material respects to the
requirements of the Act and the Trust Indenture Act, and the rules and
regulations of the Commission thereunder and do not and will not, as of the
applicable effective date as to the Registration Statement and any amendment
thereto and as of its date as to the Prospectus and any supplement thereto,
contain an untrue statement of a material fact or, in the case of the
Registration Statement, omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or, in the
case of the Prospectus, omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that this representation and warranty
shall not apply to (i) that part of the Registration Statement which constitutes
the Statement of Eligibility (Form T-1) under the Trust Indenture Act of the
Trustee, (ii) 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 and (iii) any statement which does not
constitute part of the Registration Statement or Prospectus pursuant to Rule 412
under the Act;
(f) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of Delaware, and has full power and
authority to own its properties and to conduct its business as described in the
Prospectus;
(g) Since the date of the latest audited financial statements included
or incorporated by reference in the Prospectus as amended or supplemented there
has not been (i) any material change in the capital stock (other than as
occasioned by Common Stock having been issued pursuant to the Company's employee
stock purchase plans, equity incentive option plans and upon conversion of
convertible securities), or (ii) any material adverse change in or affecting the
financial position, shareholders' equity or results of operations of the Company
and its consolidated subsidiaries considered as an entirety, in each case,
otherwise than as set forth or contemplated in such Prospectus as amended or
supplemented (any such change described in clause (ii) is referred to as a
"MATERIAL ADVERSE CHANGE");
(h) The series constituting the Securities has been duly authorized
and established in conformity with the Indenture and, when the terms of a
particular Security and of the issue and sale thereof have been duly authorized
and established by all necessary corporate action in conformity with the
Indenture and such Security has been duly completed, executed, authenticated and
issued in accordance with the Indenture, and delivered against payment therefor
as contemplated by this Agreement and any applicable Terms Agreement, such
Security will have been duly executed, authenticated, issued and delivered and
will constitute a valid and legally binding obligation of the Company entitled
to the benefits provided by the Indenture; the Indenture has been duly
authorized and qualified under the Trust Indenture Act and constitutes a valid
and legally binding obligation of the Company, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar
4
<PAGE>
laws of general applicability relating to or affecting creditors' rights and to
general equity principles; and the Indenture conforms and the Securities will
conform in all material respects to the descriptions thereof in the Prospectus
as amended or supplemented;
(i) The issue and sale of the Securities and the compliance by the
Company with all of the provisions of the Securities, the Indenture, this
Agreement and any Terms Agreement, and the consummation of the transactions
herein and therein contemplated, will not conflict with or result in a breach of
any of the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other material agreement or
instrument to which the Company is a party or by which the Company is bound or
to which any of the property or assets of the Company is subject, or result in
any violation of 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
properties, except, in each case, for such breaches, conflicts, defaults and
violations that would not have a material adverse effect on the business,
financial position, shareholders' equity or results of operations of the Company
and its subsidiaries considered as an entirety (a "MATERIAL ADVERSE EFFECT") or
affect the validity of the Securities, nor will such action result in any
violation of the provisions of the Restated Certificate of Incorporation, as
amended, or the By-Laws of the Company; and no consent, approval, authorization,
order, registration or qualification of or with any court or governmental agency
or body is required by the Company for the solicitation of offers to purchase
Securities and the issue and sale of the Securities or the consummation by the
Company of the other transactions contemplated by this Agreement, any Terms
Agreement or the Indenture, except such consents, approvals, authorizations,
orders, registrations or qualifications the failure to obtain or make would not
have a Material Adverse Effect or affect the validity of the Securities, and
such consents, approvals, authorizations, orders, registrations or
qualifications as have been, or will have been prior to the date of this
Agreement, obtained under the Act or the Trust Indenture Act and such consents,
approvals, authorizations, orders, registrations or qualifications as may be
required under state securities or Blue Sky laws (including insurance laws of
any state relating to offers and sales of securities in such state) in
connection with the solicitation by such Agent of offers to purchase the
Securities from the Company and with purchases of the Securities by such Agent
as principal, as the case may be, both in the manner contemplated hereby; and
(j) There is no action, suit or proceeding pending, or to the
knowledge of the executive officers of the Company, threatened against the
Company or any of its subsidiaries, which has, or may reasonably be expected in
the future to have, a Material Adverse Effect, except as set forth or
contemplated in the Prospectus as amended or supplemented; and, at each Time of
Delivery (as defined in Section 2(b) hereof), there will not be any action, suit
or proceeding pending, or to the knowledge of the executive officers of the
Company, threatened against the Company or any of its subsidiaries, which will
have had, or may reasonably be expected in the future to have, a Material
Adverse Effect, except as set forth or contemplated in the Prospectus as amended
or supplemented.
2. (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 herein, in the Prospectus as amended or
supplemented from time to time and in any applicable Term Sheet.
5
<PAGE>
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. Upon receipt of instructions
from the Company, the Agents will forthwith 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. During such time as the
solicitation of offers to purchase the Securities shall be suspended, the
Company shall not be required to comply with the provisions of Sections 4(g),
4(h) and 4(i).
The Company agrees to pay each Agent a commission, at the time of
settlement of each sale of Securities by the Company as a result of a
solicitation made by such Agent, in an amount to be agreed to by the Company and
such Agent at the time of solicitation, it being understood and agreed that the
commissions may not be the same for each Agent.
As Agents, you are authorized to solicit offers to purchase the
Securities only in authorized denominations as set forth in the Prospectus or
the applicable Pricing Supplement at a purchase price equal to 100% of their
principal amount unless otherwise indicated on the applicable Term Sheet, if
any, and Pricing Supplement. Each Agent shall communicate to the Company, orally
or in writing, each offer to purchase Securities other than those rejected by
such Agent. The Company shall have the sole right to accept offers to purchase
Securities and may reject any proposed purchase of Securities as a whole or in
part. The Agents shall have the right, in their discretion reasonably exercised,
to reject any offer to purchase Securities, as a whole or in part, and any such
rejection by the Agents shall not be deemed a breach of their agreements
contained herein.
(b) Unless the Company and the Agents otherwise agree, 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
Securities to, and the purchase thereof by, such Agent. A Terms Agreement may
also specify certain provisions relating to the reoffering of such Securities by
such Agent. The commitment of any Agent to purchase Securities 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
include a specification of the principal amount of Securities to be purchased by
any Agent pursuant thereto, the price to be paid to the Company for such
Securities, the currency in which such Securities are to be denominated, any
provisions relating to rights of, and default by, underwriters acting together
with such Agent in the reoffering of the Securities, and the time (each a "TIME
OF DELIVERY") and place of delivery of and payment for such Securities. Such
Terms Agreement shall also specify any requirements for officers' certificates,
opinions of counsel and accountants' letters pursuant to Section 4 hereof.
(c) Procedural details relating to the issue and delivery of
Securities, the solicitation of offers to purchase, and purchases by any Agent
as principal of, Securities, and the payment in each case therefor, are set
forth in the Procedure. Each Agent and the Company agree to perform the
respective duties and obligations specifically provided to be performed by each
of them in the Procedure as it may be amended from time to time by written
agreement between the Agents and the Company.
(d) Each Agent agrees, with respect to any Security denominated in a
currency other than U.S. dollars, as agent, directly or indirectly, not to
solicit offers to purchase, and as a principal under any Terms Agreement or
otherwise, directly or indirectly, not to offer,
6
<PAGE>
sell or deliver, such Security in, or to residents of, the country issuing such
currency (or if such Security is denominated in euros, not to residents of the
12 member states of the European Monetary Union; or if such Security is
denominated in a composite currency, not to residents in any country issuing a
currency comprising a portion of such composite currency), except, in each case,
as permitted by applicable law.
(e) Each Agent represents and agrees with the Company that it will
comply with or observe any restrictions or limitations set forth in the
Prospectus as amended or supplemented on persons to whom, or the jurisdictions
in which, or in the manner in which, the Securities may be offered, sold, resold
or delivered.
3. Any documents required to be delivered pursuant to Section 6 hereof
shall be made available to the Agents at the office of the Company's counsel,
Sullivan & Cromwell LLP, 125 Broad Street, New York, New York 10004.
4. The Company covenants and agrees with each Agent:
(a) To make no amendment or supplement (other than an amendment or
supplement as a result of the Company's filing of a report under the Exchange
Act) to the Registration Statement or the Prospectus after the date of any Terms
Agreement and prior to the related Time of Delivery which shall be disapproved
by any Agent party to such Terms Agreement promptly after reasonable notice
thereof; to prepare, with respect to any Securities to be sold by the Company
through or to such Agent pursuant to this Agreement, a Pricing Supplement and,
if applicable, a Term Sheet (as defined below) with respect to such Securities
in a form previously approved by such Agent and to file such Pricing Supplement
or Term Sheet pursuant to Rule 424(b) or Rule 433(d) under the Act within the
time required by such rule; to make no amendment or supplement to the
Registration Statement or the Prospectus, other than any Term Sheet (as defined
below), Pricing Supplement or any report filed under the Exchange Act, at any
other time prior to having afforded each Agent a reasonable opportunity to
review it; if requested by such Agent prior to the Applicable Time, to prepare
an Issuer Free Writing Prospectus that is a final term sheet relating to such
Securities in the form set forth in Annex II hereto (each a "TERM SHEET"), and
to file such term sheet pursuant to Rule 433(d) under the Act within the time
required by such rule; to file promptly all material required to be filed by the
Company pursuant to Rule 433(d) under the Act; to file promptly 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 it receives notice thereof, of the
time when any amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended Prospectus has been
filed with, or transmitted for filing to, the Commission (other than an
amendment or supplement as a result of the Company's filing of a report under
the Exchange Act or any Pricing Supplement that relates to Securities not
purchased through or by such Agent), 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, in the event of the issuance of
any such stop order or of any such order
7
<PAGE>
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 may
reasonably 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;
(c) To furnish such Agent with copies of the Registration Statement
and each amendment thereto, and with copies of the Prospectus as each time
amended or supplemented, other than any Pricing Supplement or Term Sheet (except
as provided in the Procedure) or amendment or supplement relating solely to an
offering of securities other than the Securities, in the form in which it is
filed with, or transmitted for filing to, the Commission pursuant to Rule 424
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
within 90 days after 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
as promptly as practicable and request such Agent to suspend solicitation of
offers to purchase Securities from the Company, in its capacity as agent of the
Company and, if so notified, such Agent shall forthwith cease such
solicitations; 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 which such Agent proposes to sell, upon the reasonable request of such
Agent, the Company shall promptly prepare and file with the Commission such an
amendment or supplement, the expense of such preparation and filing to be borne
by the Company if such amendment or supplement occurs within 90 days of the date
of the relevant Pricing Supplement or Term Sheet and if after such 90-day
period, by such Agent;
(d) To make generally available to its security holders as soon as
practicable, but in any event not later than 90 days after the close of the
period covered thereby, an earnings statement or statements 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) and covering each twelve-month period
beginning not later than the first day of the Company's fiscal quarter next
following the date of any sale of Securities hereunder;
8
<PAGE>
(e) That, from the date of any Terms Agreement with such Agent and
continuing to and including the earlier of (i) the termination of the trading
restrictions for the Securities purchased thereunder, as notified to the Company
by such Agent and (ii) the related Time of Delivery, the Company will not,
without the prior consent of such Agent, offer, sell, contract to sell or
otherwise dispose of any debt securities of the Company that mature more than
nine months after such Time of Delivery, have the same maturity, and are
otherwise substantially similar to the Securities. The restriction imposed by
this Section 4(e) shall not apply to an issue of debt securities denominated in
a currency other than U.S. dollars or to an issue of debt securities of which at
least 90% (based on gross offering proceeds) is offered and sold outside the
United States or to guarantees by the Company of debt securities of its
subsidiaries;
(f) That each acceptance by the Company of an offer to purchase
Securities hereunder, and each sale of Securities to such Agent 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 in all material respects as of the date of
such acceptance or of such Terms Agreement 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 at such time);
(g) That each time the Registration Statement or the Prospectus shall
be amended or supplemented as a result of the filing by the Company of its
Annual Report on Form 10-K under the Exchange Act, and each time, if so
indicated in the applicable Terms Agreement, the Company sells Securities to
such Agent as principal, the Company shall furnish or cause to be furnished
forthwith to such Agent, upon its request, a certificate of officers of the
Company satisfactory to such Agent, dated the date of such supplement, amendment
or Time of Delivery related to such sale, in form satisfactory to such Agent in
its reasonable judgment to the effect that the statements contained in the
certificate referred to in Section 6(g) hereof which were last furnished to such
Agent are true and correct, in all material respects, at such date, as though
made at and as of such date (except that such statements shall be deemed to
relate to the Registration Statement and the Prospectus as amended and
supplemented to such time) or, in lieu of such certificate, certificates of the
same tenor as the certificates referred to in said Section 6(g) but modified to
relate to the Registration Statement and the Prospectus as amended and
supplemented to such date;
(h) That each time the Registration Statement or the Prospectus shall
be amended or supplemented as a result of the filing by the Company of its
Annual Report on Form 10-K under the Exchange Act, and each time, if so
indicated in the applicable Terms Agreement, the Company sells Securities to
such Agent as principal, the Company shall furnish or cause to be furnished
forthwith to such Agent, upon its request, a written opinion and letter of
Sullivan & Cromwell LLP, counsel for the Company, and a written opinion of
Kathleen E. Shannon, Senior Vice President and Deputy General Counsel of the
Company, or, in either case, other counsel satisfactory to such Agent in its
reasonable judgment, dated the date of such amendment, supplement or Time of
Delivery relating to such sale, each in form satisfactory to such Agent in its
reasonable judgment to the effect that such Agent may rely on the opinion and
letter referred to in Section 6(c) or the opinion referred to in Section 6(d)
hereof, as the case may be, which was last furnished to such Agent to the same
extent as though it were dated the date of such letter authorizing reliance
(except that statements in such last opinion or letter shall be deemed to relate
to the Registration Statement and the Prospectus as amended and supplemented to
such date) or, in lieu of either such opinion, an opinion and letter of the same
tenor as the opinion and letter
9
<PAGE>
referred to in Section 6(c) or an opinion of the same tenor as the opinion
referred to in Section 6(d) hereof, as the case may be, but modified to relate
to the Registration Statement and the Prospectus as amended and supplemented to
such date; and
(i) That each time the Registration Statement or the Prospectus shall
be amended or supplemented as a result of the filing by the Company of its
Annual Report on Form 10-K under the Exchange Act to set forth financial
information included in or derived from the Company's consolidated financial
statements, or, if so indicated in the applicable Terms Agreement, each time the
Company sells Securities to such Agent as principal, the Company shall cause its
independent registered public accounting firm forthwith to furnish such Agent,
upon its request, a letter, dated the date of such amendment, supplement or Time
of Delivery relating to such sale, in form satisfactory to such Agent in its
reasonable judgment, of the same tenor as the letter referred to in Section 6(e)
hereof but modified to relate to the Registration Statement and the Prospectus
as amended or supplemented to the date of such letter, with such changes as may
be necessary to reflect changes in the financial statements and other
information derived from the accounting records of the Company, to the extent
such financial statements and other information are available as of a date not
more than five business days prior to the date of such letter; provided,
however, that where such amendment or supplement only sets forth unaudited
quarterly financial information, the scope of such letter may be limited to
relate to such unaudited financial information unless any other accounting or
financial information included therein is of a character that, in the reasonable
judgment of the Agents, such other information should be addressed by such
letter.
4A. (a) The Company and each Agent agree that the Agents may prepare and
use one or more preliminary term sheets relating to the Securities containing
customary information; provided that such information has been approved by the
Company in writing or orally before the first communication containing such
information is used;
(b) Each Agent represents that it has not and will not use, authorize
use of, refer to, or participate in the planning for use of, any written
communication that constitutes an offer to sell or the solicitation of an offer
to buy the Securities other than (A) any written communication permitted under
subparagraph (a) above, (B) any Term Sheet or (C) any written communication
prepared by such Agent and approved by the Company in advance in writing;
(c) Except in the case of Securities sold directly by the Company,
with respect to any particular issuance of Securities, the Company represents to
the Agent purchasing or soliciting the purchase of such Securities that it has
not and will not use, authorize use of, refer to, or participate in the planning
for use of, any written communication that constitutes an offer to sell or the
solicitation of an offer to buy such Securities other than (A) any written
communication permitted under subparagraph (a) above, (B) any Term Sheet or (C)
any written communication approved by such Agent in advance in writing;
(d) The Company represents and agrees that it has complied and will
comply with the requirements of Rule 433 under the Act applicable to any Issuer
Free Writing Prospectus, including timely filing with the Commission where
required, legending and record keeping; and
(e) With respect to any issue of Securities, the Company agrees that
if at any time following the relevant Applicable Time until and including the
related Time of Delivery any
10
<PAGE>
event occurred or occurs as a result of which an Issuer Free Writing Prospectus
included in the relevant Pricing Disclosure Package would conflict with the
information in the Registration Statement, the Prospectus, the Prospectus as
amended or supplemented or the Pricing Supplement or, taken together with the
relevant Pricing Disclosure Package, 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 then prevailing, not
misleading, the Company will give prompt notice thereof to the relevant Agents
and, if requested by such Agents, will prepare and furnish without charge to
each Agent an Issuer Free Writing Prospectus or other document which will
correct such conflict, statement or omission; provided, however, that this
representation and warranty shall not apply to any statements or omissions in an
Issuer Free Writing Prospectus made in reliance upon and in conformity with
information furnished in writing to the Company by an Agent expressly for use
therein.
5. The Company covenants and agrees with each Agent that the Company will
pay or cause to be paid the following: (i) the fees, disbursements 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, any Issuer Free Writing Prospectus and any Pricing
Supplements and all other amendments and supplements thereto and the mailing and
delivering of copies thereof to such Agent; (ii) the reasonable fees and
expenses of counsel for the Agents in connection with the transactions
contemplated hereunder; (iii) the cost of printing, word-processing 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 the Company's counsel in connection with such qualification and
in connection with the Blue Sky and legal investment surveys; (v) any fees
charged by security rating services for rating the Securities; (vi) the cost of
preparing the Securities; (vii) the fees and expenses of any Trustee and any
agent of any Trustee and the fees and disbursements of counsel for any Trustee
in connection with any Indenture and the Securities; (viii) any advertising
expenses connected with the solicitation of offers to purchase and the sale of
Securities so long as such advertising expenses have been approved by the
Company; and (ix) all other costs and expenses incident to the performance of
its obligations hereunder which are not otherwise specifically provided for in
this Section. Each Agent shall pay all other fees and expenses it incurs.
6. The obligation of any Agent, as agent of the Company, to solicit offers
to purchase the Securities and the obligation of any Agent to purchase
Securities as principal pursuant to any Terms Agreement, shall be subject, in
such Agent's reasonable discretion, to the condition that all representations
and warranties and other statements of the Company herein are true and correct,
in all material respects, at and as of the date of this Agreement, the date of
each such solicitation, any settlement date related to the acceptance of such an
offer, and each Time of Delivery, the condition that the Company shall have
performed, in all material respects, all of its obligations hereunder
theretofore in each case to be performed and the following additional
conditions, where applicable:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission or, to the knowledge of the
executive officers of the Company, shall be
11
<PAGE>
contemplated by the Commission; and all requests for additional information on
the part of the Commission shall have been complied with to the reasonable
satisfaction of such Agent;
(b) Such Agent shall have received, upon its request, from Davis Polk
& Wardwell, counsel to the Agents, such opinion, dated the date of this
Agreement and the Time of Delivery as specified in the applicable Terms
Agreement, with respect to the validity of the Securities, the Registration
Statement, the Prospectus as amended or supplemented, and other related matters
as such Agent may reasonably require, and the Company shall have furnished to
such counsel such documents as they reasonably request for the purpose of
enabling them to pass upon such matters;
(c) Such Agent shall have received an opinion and letter of Sullivan &
Cromwell LLP, counsel for the Company, or other counsel satisfactory to such
Agent in its reasonable judgment, dated the date of this Agreement and any
applicable date referred to in Section 4(h), to the effect set forth in Annex
III hereto;
(d) Such Agent shall have received an opinion of Kathleen E. Shannon,
Senior Vice President and Deputy General Counsel of the Company, or other
counsel satisfactory to such Agent in its reasonable judgment, dated the date of
this Agreement and any applicable date referred to in Section 4(i), to the
effect set forth in Annex IV hereto;
(e) At 11:00 A.M., New York City time, on the date of this Agreement
and on any applicable date referred to in Section 4(i), the independent
registered public accounting firm who have audited 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 such
applicable date, in form and substance satisfactory to such Agent, to the effect
set forth in Annex V hereto;
(f) Since the respective dates as of which information is given in the
Prospectus as amended or supplemented, there has not been any Material Adverse
Change which, in the judgment of the Agents, materially impairs the investment
quality of the Securities, otherwise than as set forth or contemplated in the
Prospectus as amended or supplemented;
(g) The Company shall have furnished or caused to be furnished to such
Agent a certificate of the Chief Executive Officer, the President, any Vice
Chairman, any Executive or Senior Vice President or any Vice President and a
principal financial or accounting officer of the Company, dated the date of this
Agreement and any applicable date referred to in Section 4(g), in which such
officers, to the best of their knowledge after reasonable investigation, shall
state that the representations and warranties of the Company in this Agreement
are true and correct, in all material respects, as of such applicable date, that
the Company has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied, in all material respects, at or prior to such
applicable date, that no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are threatened by the Commission, and that, since the
respective dates as of which information is given in the Prospectus as amended
or supplemented, there has not been any Material Adverse Change, otherwise than
as set forth or contemplated in the Prospectus as amended or supplemented; and
12
<PAGE>
(h) During the period between the date of any Terms Agreement and the
related Time of Delivery, there shall not have occurred any of the following:
(i) a suspension or material limitation in trading in securities generally on
the New York Stock Exchange if the effect of any such event, in the reasonable
judgment of such Agent, is to make it impracticable or inadvisable to proceed
with the purchase by such Agent of Securities from the Company, as principal;
(ii) a general moratorium on commercial banking activities in New York declared
by either Federal or New York State authorities; (iii) the outbreak or
escalation of hostilities involving the United States or the declaration by the
United States of a national emergency or war, other than any such outbreak,
escalation or declaration arising out of or relating to the U.S. war on
terrorism that does not represent a significant departure from the conditions
that exist on the date of any Terms Agreement, if the effect of any such event
in the reasonable judgment of such Agent is to make it impracticable or
inadvisable to proceed with the purchase of Securities by such Agent from the
Company as principal on the terms and in the manner contemplated by the
Prospectus as amended or supplemented; (iv) the suspension in trading in the
Company's common stock, par value $2.50 per share, on the New York Stock
Exchange, if the effect of such event in the reasonable judgment of such Agent
is to make it impracticable or inadvisable to proceed with the purchase of
Securities by such Agent from the Company as principal; or (v) any downgrading
in the rating accorded the Company's senior debt securities by Moody's Investors
Service, a subsidiary of Moody's Corporation, or Standard & Poor's, a division
of the McGraw-Hill Companies, Inc.
7. (a) The Company will indemnify and hold harmless each Agent and each
person, if any, who controls any of the Agents within the meaning of the Act,
against any losses, claims, damages or liabilities, joint or several, to which
such Agent or such controlling person may become subject, under the Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Preliminary Prospectus, any preliminary prospectus supplement, the
Registration Statement, the Prospectus as amended or supplemented, or any
amendment or supplement thereto or any Issuer Free Writing Prospectus, 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 and such controlling
person for any legal or other expenses reasonably incurred by it in connection
with investigating or defending any such action or claim as incurred; provided,
however, that the Company will 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, any preliminary prospectus supplement, the
Registration Statement, the Prospectus as amended or supplemented, or any such
amendment or supplement, or any Issuer Free Writing Prospectus, 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 foregoing
indemnity agreement contained in this Section 7(a), with respect to any
Preliminary Prospectus, preliminary prospectus supplement, the Registration
Statement, the Prospectus as amended or supplemented, or any amendment or
supplement thereto or any Issuer Free Writing Prospectus, shall not inure to the
benefit of any Agent from whom the person asserting any such losses, claims,
damages or liabilities purchased Securities, or any person controlling such
Agent where (i) prior to the Applicable Time the Company shall have notified
such Agent that any Preliminary Prospectus, any preliminary prospectus
supplement, the Registration Statement, the Prospectus as amended or
supplemented, or any amendment or supplement thereto or any Issuer Free Writing
Prospectus contains an untrue statement of material fact or omits to state
therein a material fact
13
<PAGE>
necessary in order to make the statements therein not misleading, (ii) such
untrue statement or omission of a material fact was corrected in a further
amendment or supplement to the Preliminary Prospectus, preliminary prospectus
supplement, Registration Statement, Prospectus as amended or supplemented or,
where permitted by law, an Issuer Free Writing Prospectus, and such corrected
Prospectus or Issuer Free Writing Prospectus was provided to such Agent prior to
the Applicable Time, (iii) such corrected Preliminary Prospectus, preliminary
prospectus supplement, Registration Statement, Prospectus or Issuer Free Writing
Prospectus (excluding any document incorporated by reference therein) was not
conveyed to such person at or prior to the contract for sale of the Securities
to such person and (iv) such loss, claim, damage or liability would not have
occurred had the corrected Preliminary Prospectus, preliminary prospectus
supplement, Registration Statement, Prospectus or Issuer Free Writing Prospectus
(excluding any document incorporated by reference therein) been conveyed to such
person as provided for in clause (iii) above.
(b) Each Agent, severally and not jointly, will indemnify and hold
harmless the Company and each person, if any, who controls the Company within
the meaning of the Act, against any losses, claims, damages or liabilities to
which the Company or such controlling person may become subject, under the Act,
the Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Preliminary Prospectus, any preliminary prospectus supplement, the
Registration Statement, the Prospectus as amended or supplemented, or any
amendment or supplement thereto, or any Issuer Free Writing Prospectus, or arise
out of or are based upon the omission or the 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, any preliminary prospectus
supplement, the Registration Statement, the Prospectus as amended or
supplemented or any such amendment or supplement, or any Issuer Free Writing
Prospectus, 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 or such controlling person in connection with investigating or defending
any such action or claim as incurred.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action is brought against any indemnified party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation.
14
<PAGE>
(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, or if the indemnified party failed to give the notice required under
subsection (c) above, 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 pro rata allocation 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 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 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.
(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. In soliciting offers by others to purchase Securities from the Company,
each Agent is acting solely as agent for the Company, and not as principal
(other than in respect of any purchase by an Agent pursuant to a Terms
Agreement). Each Agent will make reasonable efforts
15
<PAGE>
to assist the Company in obtaining performance by each purchaser whose offer to
purchase Securities from the Company has been accepted by the Company, but such
Agent shall not have any liability to the Company in the event such purchase for
any reason is not consummated. If the Company shall default on its obligation to
deliver Securities to a purchaser whose offer it has accepted, the Company shall
hold each Agent harmless against any loss, claim or damage arising from or as a
result of such default by the Company.
9. The respective indemnities, agreements, representations, warranties, and
other statements by any Agent and the Company or its officers set forth in or
made pursuant to this Agreement will remain in full force and effect, regardless
of any investigation or statement as to the results thereof made by or on behalf
of any Agent or the Company or any of its officers or directors or any
controlling person, and will survive each delivery of and payment for any of the
Securities.
10. The provisions of this Agreement relating to the solicitation of offers
to purchase the Securities 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 any such suspension or termination, with
respect to any Agent, this Agreement shall remain in full force and effect with
respect to any Agent as to which such suspension or termination has not occurred
and no party shall have any liability to the other party hereto, except as
provided in the third paragraph of Section 2(a), Section 5, Section 7, Section 8
and Section 9 and except that, if at the time of such suspension or termination,
an offer for the purchase of Securities shall have been accepted by the Company
but the delivery of the Securities relating thereto to the purchaser or his
agent shall not yet have occurred, the Company shall have the obligations
provided in subsections (g), (h) and (i) of Section 4.
11. Except as otherwise specifically provided herein or in the Procedure,
all statements, requests, notices and advices hereunder shall be in writing, or
by telephone if promptly confirmed in writing, and if to an Agent, shall be
sufficient in all respects when delivered or sent by facsimile transmission or
registered mail as set forth in Annex VI hereto under such Agent's name, and if
to the Company shall be sufficient in all respects when delivered or sent by
registered mail to 70 Pine Street, New York, New York 10270, Facsimile
Transmission No. (212) 785-1584, Attention: Corporate Secretary.
12. This Agreement and any Terms Agreement shall be binding upon, and inure
solely to the benefit of, each Agent (or the applicable Agent, in the case of a
Terms Agreement) and the Company, and to the extent provided in Section 7 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. The Company acknowledges and agrees that (i) the purchase and sale of
the Securities pursuant to this Agreement and any Terms Agreement is an
arm's-length commercial transaction between the Company, on the one hand, and
the Agents, on the other, (ii) in connection therewith and with the process
leading to such transaction each Agent is acting solely as a principal and not
the agent or fiduciary of the Company, (iii) no Agent has assumed an
16
<PAGE>
advisory or fiduciary responsibility in favor of the Company with respect to the
offering contemplated hereby or the process leading thereto (irrespective of
whether such Agent has advised or is currently advising the Company on other
matters) or any other obligation to the Company except the obligations expressly
set forth in this Agreement and (iv) the Company has consulted its own legal and
financial advisors to the extent it deemed appropriate. The Company agrees that
it will not claim that the Agent, or any of them, has rendered advisory services
of any nature or respect, or owes a fiduciary or similar duty to the Company, in
connection with such transaction or the process leading thereto.
14. This Agreement and any Terms Agreement supersede all prior agreements
and understandings (whether written or oral) between the Company and the Agents,
or any of them, with respect to the subject matter hereof.
15. This Agreement and any Terms Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
16. Time shall be of the essence in this Agreement and any Terms Agreement.
17. This Agreement and any 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 deemed to be an original, but all of such respective counterparts
shall together constitute one and the same instrument.
17
<PAGE>
If the foregoing is in accordance with your understanding, please sign and
return to us five counterparts hereof, whereupon this letter and the acceptance
by each of you thereof shall constitute a binding agreement between the Company
and each of you in accordance with its terms.
Very truly yours,
AMERICAN INTERNATIONAL GROUP, INC.
By /s/ Robert A. Gender
-------------------------------------
Name: Robert A. Gender
----------------------------------
Title: Vice President and Treasurer
---------------------------------
Accepted in New York, New York
AIG FINANCIAL SECURITIES CORP.
By /s/ Jonathan Liebergall
----------------------------------
Name: Jonathan Liebergall
-------------------------------
Title: Managing Director
------------------------------
ABN AMRO INCORPORATED
By /s/ Louis DeCaro
----------------------------------
Name: Louis DeCaro
-------------------------------
Title: Managing Director
------------------------------
BANC OF AMERICA SECURITIES LLC
By /s/ Lily Chang
----------------------------------
Name: Lily Chang
-------------------------------
Title: Principal
------------------------------
BANCA IMI S.P.A.
By /s/ Carlo Sgarbi
----------------------------------
Name: Carlo Sgarbi
-------------------------------
Title: Head of Debt Capital Markets
------------------------------
<PAGE>
BARCLAYS CAPITAL INC.
By /s/ Pamela Kendell
----------------------------------
Name: Pamela Kendell
-------------------------------
Title: Director
------------------------------
BEAR, STEARNS & CO. INC.
By /s/ Christopher O'Connor
----------------------------------
Name: Christopher O'Connor
-------------------------------
Title: Senior Managing Director
------------------------------
BMO CAPITAL MARKETS CORP.
By /s/ Norman S. Shaffer
----------------------------------
Name: Norman S. Shaffer
-------------------------------
Title: Managing Director
------------------------------
BNP PARIBAS SECURITIES CORP.
By /s/ Tim McCann
----------------------------------
Name: Tim McCann
-------------------------------
Title: Director
------------------------------
BNY CAPITAL MARKETS, INC.
By /s/ Dan Kalinger
----------------------------------
Name: Dan Kalinger
-------------------------------
Title: Managing Director
------------------------------
CALYON SECURITIES (USA) INC.
By /s/ Ronald S. Krolick
----------------------------------
Name: Ronald S. Krolick
-------------------------------
Title: Managing Director
------------------------------
<PAGE>
CITIGROUP GLOBAL MARKETS INC.
By /s/ Brian Bednarski
----------------------------------
Name: Brian Bednarski
-------------------------------
Title: Director
------------------------------
CREDIT SUISSE SECURITIES (USA) LLC
By /s/ Helena Willner
----------------------------------
Name: Helena Willner
-------------------------------
Title: Director
------------------------------
DAIWA SECURITIES AMERICA INC.
By /s/ William Cook
----------------------------------
Name: William Cook
-------------------------------
Title: Executive VP
------------------------------
DAIWA SECURITIES SMBC EUROPE LIMITED
By /s/ H. Ohara
----------------------------------
Name: H. Ohara
-------------------------------
Title: Managing Director
------------------------------
DEUTSCHE BANK SECURITIES
By /s/ Marc Fratepietro
----------------------------------
Name: Marc Fratepietro
-------------------------------
Title: Director
------------------------------
By /s/ Peter H. Burger
----------------------------------
Name: Peter H. Burger
-------------------------------
Title: Director/Debt Syndicate
------------------------------
GOLDMAN, SACHS & CO.
By /s/ GOLDMAN SACHS & CO.
----------------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE>
GREENWICH CAPITAL MARKETS, INC.
By /s/ Mark Kotasek
----------------------------------
Name: Mark Kotasek
-------------------------------
Title: Senior Vice President
------------------------------
HSBC SECURITIES (USA) INC.
By /s/ Andrew Lazerus
----------------------------------
Name: Andrew Lazerus
-------------------------------
Title: Senior Vice President
------------------------------
J.P. MORGAN SECURITIES INC.
By /s/ Robert Bottamedi
----------------------------------
Name: Robert Bottamedi
-------------------------------
Title: Vice President
------------------------------
LEHMAN BROTHERS
By /s/ John Jedlika
----------------------------------
Name: John Jedlika
-------------------------------
Title: Managing Director
------------------------------
By /s/ Martin Goldberg
----------------------------------
Name: Martin Goldberg
-------------------------------
Title: Senior Vice President
------------------------------
MCDONALD INVESTMENTS INC.
By /s/ Eric N. Peiffer
----------------------------------
Name: Eric N. Peiffer
-------------------------------
Title: Director
------------------------------
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By /s/ Scott Primrose
----------------------------------
Name: Scott Primrose
-------------------------------
Title: Managing Director
------------------------------
<PAGE>
MITSUBISHI UFJ SECURITIES
INTERNATIONAL PLC
By /s/ Kenichi Yamana
----------------------------------
Name: Kenichi Yamana
-------------------------------
Title: Managing Director
------------------------------
MORGAN STANLEY & CO. INCORPORATED
By /s/ Scott Ashby
----------------------------------
Name: Scott Ashby
-------------------------------
Title: Executive Director
------------------------------
RBC CAPITAL MARKETS CORPORATION
By /s/ Jigme Shimgsar
----------------------------------
Name: Jigme Shimgsar
-------------------------------
Title: Managing Director
------------------------------
SANTANDER INVESTMENT SECURITIES INC.
By /s/ Fuensanta Diaz Cobacho
----------------------------------
Name: Fuensanta Diaz Cobacho
-------------------------------
Title: Managing Director
------------------------------
By /s/ Andres Barbosa
----------------------------------
Name: Andres Barbosa
-------------------------------
Title: Vice President
------------------------------
SCOTIA CAPITAL (USA) INC.
By /s/ Greg Woynarski
----------------------------------
Name: Greg Woynarski
-------------------------------
Title: Managing Director & Head,
------------------------------
US Fixed Income
------------------------------
SG AMERICAS SECURITIES, LLC
By /s/ David C. Sharp
----------------------------------
Name: David C. Sharp
-------------------------------
Title: Director
------------------------------
<PAGE>
TD SECURITIES (USA) LLC
By /s/ John Brenizer
----------------------------------
Name: John Brenizer
-------------------------------
Title: VP Director Global Debt Capital Markets
---------------------------------------
UBS SECURITIES LLC
By /s/ William J. Woolfrey
----------------------------------
Name: William J. Woolfrey
-------------------------------
Title: Executive Director
------------------------------
By /s/ Michael Ravanesi
----------------------------------
Name: Michael Ravanesi
-------------------------------
Title: Director
------------------------------
WACHOVIA CAPITAL MARKETS, LLC
By /s/ Amy Kabarznick
----------------------------------
Name: Amy Kabarznick
-------------------------------
Title: Managing Director
------------------------------
<PAGE>
ANNEX I
AMERICAN INTERNATIONAL GROUP, INC.
U.S. $25,139,770,000
MEDIUM-TERM NOTES, SERIES [G][AIG-FP][MP, MATCHED INVESTMENT PROGRAM]
TERMS AGREEMENT
[Date]
[Name(s) and Address(es) of Agent(s)]
_____________________________________
_____________________________________
_____________________________________
Ladies and Gentlemen:
American International Group, Inc. (the "COMPANY") proposes, subject to the
terms and conditions stated herein and in the Distribution Agreement, dated
October __, 2006 (the "DISTRIBUTION AGREEMENT"), between the Company on the one
hand and [Name(s) of Agent(s)] (individually, an "AGENT" and collectively, the
"AGENTS") on the other, to issue and sell to [Name(s) of Agent(s)] the
securities specified in Schedule I 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 Terms 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 Terms Agreement. Each of the representations and warranties
set forth therein shall be deemed to have been made at and as of the date of
this Terms Agreement, except that each representation and warranty in Section 1
of the Distribution Agreement which makes reference to the Registration
Statement or the Prospectus shall be deemed to be a representation and warranty
as of the date of the Distribution Agreement in relation to the Registration
Statement or the Prospectus (each as therein defined), and also a representation
and warranty as of the date of this Terms Agreement in relation to the
Registration Statement or the Prospectus as amended and supplemented in relation
to the Purchased Securities.
An amendment to the Registration Statement, or a supplement to the
Prospectus, or a Term Sheet, 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.
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 [Name(s) of Agent(s)] and [Name(s) of Agent(s)] agree[s] 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 Schedule I hereto.
AI-1
<PAGE>
If the foregoing is in accordance with your understanding, please sign and
return to us [___] 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.
AMERICAN INTERNATIONAL GROUP, INC.
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Accepted:
[Name(s) of Agent(s)]
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
AI-2
<PAGE>
SCHEDULE I TO ANNEX I
Title of Purchased Securities: Medium-Term Notes, Series __________
Aggregate Principal Amount: [$_____] or units of other Specified Currency
Price to Public: ______________________________________________
Applicable Time: [time of day, month, day and year]
Purchase Price by [Name(s) ____% of the principal amount of the Purchased
of Agent(s)]: Securities[_____, plus accrued interest from
______ to ______] [and accrued amortization, if
any, from ______ to ______]
Method of and Specified Funds [By certified or official bank check or checks,
for Payment of Purchase Price: payable to the order of the Company, in [New
York] Clearing House] [immediately available]
funds]
[By wire transfer to a bank account specified
by the Company in [next day] [immediately
available] funds]
Indenture: Indenture, dated as of [___], 2006, between the
Company and The Bank of New York, as Trustee
Time of Delivery: ______________________________________________
Closing Location for Delivery
of Securities: ______________________________________________
Maturity Date: ______________________________________________
Interest Rate: [_____%]
Interest Payment Dates: [months and dates]
Regular Record Dates: [months and dates]
Documents to be Delivered: The following documents referred to in the
Distribution Agreement shall be delivered as a
condition to the Closing:
[None]
[1. The officers' certificate referred to in
Section 4(g).]
[2. The opinions of counsel to the Company
referred to in Section 4(h).]
[3. The accountants' letter referred to in
Section 4(i).]
AI-3
<PAGE>
SCHEDULE II TO ANNEX I
(a) Issuer Free Writing Prospectuses:
[Term Sheet in the form set forth in Annex II of the Distribution
Agreement, but only if the Company is requested by the Agent(s) to prepare
and file such term sheet pursuant to Section 4(a) of the Distribution
Agreement.]
(b) Additional Information in Pricing Disclosure Package:
[List any free writing prospectus, other than the Term Sheet, that the
Company and the Agent(s) have expressly agreed in writing to include as
part of the Pricing Disclosure Package]
AI-4
<PAGE>
ANNEX II
FORM OF TERM SHEET
[To be modified as appropriate and completed prior to the Applicable Time]
AMERICAN INTERNATIONAL GROUP, INC.
TITLE OF PURCHASED SECURITIES: _______________________________________________
AGGREGATE PRINCIPAL AMOUNT
OFFERED: _______________________________________________
PRICE TO PUBLIC: _______________________________________________
SETTLEMENT DATE: _______________________________________________
MANAGING UNDERWRITER(S): _______________________________________________
[UNDERWRITING DISCOUNT/
PURCHASE PRICE BY
UNDERWRITER(S):] _______________________________________________
MATURITY DATE: _______________________________________________
INTEREST RATE: _______________________________________________
INTEREST PAYMENT DATES: _______________________________________________
INTEREST RESET DATES: _______________________________________________
REDEMPTION PROVISIONS: _______________________________________________
[RATINGS/TREASURY BENCHMARK/TREASURY PRICE AND YIELD/SPREAD TO TREASURY/REOFFER
YIELD/MINIMUM DENOMINATIONS/OTHER PROVISIONS:]
The issuer has filed a registration statement (including a prospectus) with
the SEC for the offering to which this communication relates. Before you invest,
you should read the prospectus in that registration statement and other
documents the issuer has filed with the SEC for more complete information about
the issuer and this offering. You may get these documents for free by visiting
EDGAR on the SEC website at www.sec.gov. Alternately, the issuer, any
underwriter or any dealer participating in the offering will arrange to send you
the prospectus if you request it by calling toll-free ________.
AII-1
<PAGE>
ANNEX III
FORM OF OPINION OF SULLIVAN & CROMWELL LLP
[Date]
[Name of Agent(s)]
[Address(es)]
_____________________________________
_____________________________________
_____________________________________
Ladies and Gentlemen:
[USE THE FOLLOWING IF THE OPINION IS BEING DELIVERED AT COMMENCEMENT
-- In connection with the execution today by you and American International
Group, Inc., a Delaware corporation (the "Company"), of the Distribution
Agreement, dated [__], 2006 (the "Distribution Agreement"), relating to the
Company's Medium-Term Notes, Series [_____], at an initial offering price of up
to $25,139,770,000 aggregate principal amount (or, if any notes are to be issued
at original issue discount, such aggregate amount as shall result in aggregate
net proceeds not in excess of $[_____], or the equivalent of $[_____] in one or
more foreign or composite currencies)(such series of securities being
hereinafter referred to as the "Series" and any securities to be issued from
time to time as part of the Series on or after the date hereof being hereinafter
referred to individually as a "Security" and collectively as the "Securities"),
to be issued pursuant to the Indenture, dated as of [__], 2006 (the
"Indenture"), between the Company and The Bank of New York, as Trustee (the
"Trustee"),]
[USE THE FOLLOWING IF THE OPINION IS NOT BEING DELIVERED AT A TIME OF
DELIVERY -- In connection with the offering and sale from time to time by you of
the Medium-Term Notes, Series [_____] of American International Group, Inc., a
Delaware corporation (the "Company"), at an initial offering price of up to
$25,139,770,000 aggregate principal amount (or, if any notes are to be issued at
original issue discount, such aggregate amount as shall result in aggregate net
proceeds not in excess of $[_____], or the equivalent of $[_____] in one or more
foreign or composite currencies)(such series of securities being hereinafter
referred to as the "Series" and any securities to be issued from time to time as
part of the Series on or after the date hereof being hereinafter referred to
individually as a "Security" and collectively as the "Securities"), to be issued
pursuant to the Indenture, dated as of [__], 2006 (the "Indenture"), between the
Company and The Bank of New York, as Trustee (the "Trustee"),]
[USE THE FOLLOWING IF THE OPINION IS BEING DELIVERED AT A TIME OF
DELIVERY -- In connection with the [several] purchase[s] today by you [and the
other Agents named in Schedule I to][pursuant to] the Terms Agreement, dated
[__], 200[_] (the "Terms Agreement"), between American International Group,
Inc., a Delaware corporation (the Company"), and you (the "Agent[s]")(which
Terms Agreement incorporates by reference certain provisions of the Distribution
Agreement, dated [__], 2006 (the "Distribution Agreement"), between the Company
and you), of $[_____] aggregate principal amount of the Company's [_____] Notes
due [_____] (the "Securities") issued pursuant to the Indenture, dated as of
[__] 2006 (the "Indenture"), between the Company and The Bank of New York, as
Trustee (the "Trustee"),]
we, as counsel for the Company, have examined such corporate records,
certificates and other documents, and such questions of law, as we have
considered necessary or appropriate for the purposes of this opinion. Upon the
basis of such examination, it is our opinion that:
AIII-1
<PAGE>
(1) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware.
(2) The Indenture has been duly authorized, executed and
delivered by the Company and duly qualified under the Trust Indenture
Act of 1939 and constitutes a valid and legally binding obligation of
the Company enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
[USE THE FOLLOWING IF THE OPINION IS NOT BEING DELIVERED AT A
TIME OF DELIVERY -- (3) The Series has been duly authorized and
established in conformity with the Indenture and, when the terms of a
particular Security and of its issuance and sale have been duly
authorized and established by all necessary corporate action in
conformity with the Indenture, and such Security has been duly
completed, executed, authenticated and issued in accordance with the
Indenture and delivered against payment in accordance with the
Distribution Agreement, such Security will constitute a valid and
legally binding obligation of the Company enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to
general equity principles.]
[USE THE FOLLOWING IF THE OPINION IS BEING DELIVERED AT A TIME OF
DELIVERY -- (3) The Securities have been duly authorized, executed,
authenticated, issued and delivered and constitute valid and legally
binding obligations of the Company enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.]
(4) The Distribution Agreement [USE THE FOLLOWING IF THE OPINION
IS BEING DELIVERED AT A TIME OF DELIVERY -- and the Terms Agreement]
[has][have] been duly authorized, executed and delivered by the
Company.
[USE THE FOLLOWING IF THE OPINION IS NOT BEING DELIVERED AT A TIME OF
DELIVERY -- In connection with our opinion set forth in paragraph (3) above, we
have assumed that at the time of the issuance, sale and delivery of each
particular Security the authorization of the Series will not have been modified
or rescinded and, with respect to each Security, that such Security will conform
to one of the forms of Securities examined by us.
In connection with our opinion set forth in paragraph (3) above, we
have assumed that at the time of the issuance, sale and delivery of each
particular Security there will not have occurred any change in law affecting the
validity, legally binding character or enforceability of such Security and that
the issuance, sale and delivery of such Security, all of the terms of such
Security and the performance by the Company of its obligations thereunder will
comply with applicable law and with each requirement or restriction imposed by
any court or governmental body having jurisdiction over the Company and will not
result in a default under or a breach of any agreement or instrument then
binding upon the Company.]
[USE THE FOLLOWING IF THE OPINION IS NOT BEING DELIVERED AT A TIME OF
DELIVERY OR IF THE SECURITIES ARE DENOMINATED IN A NON-U.S. DOLLAR CURRENCY --
In connection with our opinion set forth in paragraph (3) above, we note that,
as of the date of this opinion, a judgment for money in an action based on
Securities denominated in foreign currencies or currency units in a Federal or
state court in the United States ordinarily would be enforced in the United
States only in U.S. dollars. The date used to determine the rate of
AIII-2
<PAGE>
conversion of the foreign currency or currency unit in which a particular
Security is denominated into U.S. dollars will depend upon various factors,
including which court renders the judgment. In the case of a Security
denominated in a foreign currency, a state court in the State of New York
rendering a judgment on such Security would be required under Section 27 of the
New York Judiciary Law to render such judgment in the foreign currency in which
the Security is denominated, and such judgment would be converted into U.S.
dollars at the exchange rate prevailing on the date of entry of the judgment.]
The foregoing opinion is limited to the Federal laws of the United
States, the laws of the State of New York and the General Corporation Law of the
State of Delaware, and we express no opinion as to the effect of the laws of any
other jurisdiction.
[USE THE FOLLOWING IF THE OPINION IS NOT BEING DELIVERED AT A TIME OF
DELIVERY -- Also, we have relied as to certain matters upon information obtained
from public officials, officers of the Company and other sources believed by us
to be responsible, and we have assumed that the Indenture has been duly
authorized, executed and delivered by the Trustee and that the signatures on all
documents examined by us are genuine, assumptions which we have not
independently verified.]
[USE THE FOLLOWING IF THE OPINION IS BEING DELIVERED AT A TIME OF
DELIVERY -- Also, we have relied as to certain matters upon information obtained
from public officials, officers of the Company and other sources believed by us
to be responsible, and we have assumed that the Indenture has been duly
authorized, executed and delivered by the Trustee, that the Securities conform
to the specimens thereof examined by us, that the Trustee's certificates of
authentication of the Securities have been manually signed by one of the
Trustee's authorized officers, and that the signatures on all documents examined
by us are genuine, assumptions which we have not independently verified.]
Very truly yours,
----------------------------------------
AIII-3
<PAGE>
FORM OF LETTER OF SULLIVAN & CROMWELL LLP
[Date]
[Name of Agent(s)]
[Address(es)]
_____________________________________
_____________________________________
_____________________________________
Ladies and Gentlemen:
This is with reference to the registration under the Securities Act of
1933 (the "Act") and offering of [USE THE FOLLOWING IF THE LETTER IS NOT BEING
DELIVERED AT A TIME OF DELIVERY -- up to $25,139,770,000 aggregate principal
amount (or, if any notes are issued at original issue discount, such aggregate
amount as shall result in aggregate net proceeds not in excess of $[_____], or
the equivalent of $[_____] in one or more foreign or composite currencies) of
Medium-Term Notes, Series [_____]][USE THE FOLLOWING IF THE LETTER IS BEING
DELIVERED AT A TIME OF DELIVERY -- $[_____] aggregate principal amount of
[_____] Notes due [_____]] (the "Securities") of American International Group,
Inc. (the "Company").
The Registration Statement relating to the Securities was filed on
Form S-3 in accordance with procedures of the Securities and Exchange Commission
(the "Commission") permitting a delayed or continuous offering of securities
pursuant thereto and, if appropriate, a post-effective amendment, document
incorporated by reference therein or prospectus supplement that provides
information relating to the terms of the securities and the manner of their
distribution. [USE THE FOLLOWING IF THE LETTER IS NOT BEING DELIVERED AT A TIME
OF DELIVERY -- The Securities will be offered by the Prospectus dated July 24,
2006 (the "Basic Prospectus"), as supplemented by the Prospectus Supplement
dated [__], 2006 (the "Prospectus Supplement"). The Basic Prospectus will be
further supplemented by pricing supplements, each of which will be dated
approximately as of the date of sale of particular Securities and will furnish
information as to the specific terms thereof.][USE THE FOLLOWING IF THE LETTER
IS BEING DELIVERED AT A TIME OF DELIVERY -- The Securities have been offered by
the Prospectus dated July 24, 2006 (the "Basic Prospectus"), as supplemented by
the Prospectus Supplement, dated [__], 2006 (the "Prospectus Supplement"), and
the Pricing Supplement No. [__], dated [__] (the "Pricing Supplement").] The
Basic Prospectus, as so supplemented, does not necessarily contain a current
description of the Company's business and affairs since, pursuant to Form S-3,
it incorporates by reference certain documents filed with the Commission that
contain information as of various dates.
As counsel to the Company, we reviewed the Registration Statement, the
Basic Prospectus [and][_____,] the Prospectus Supplement [and the Pricing
Supplement], [USE THE FOLLOWING IF THE LETTER IS BEING DELIVERED AT A TIME OF
DELIVERY - and the documents listed in Schedule A hereto (those listed
documents, taken together with the Basic Prospectus [and][_____,] the Prospectus
Supplement [and Pricing Supplement], being referred to herein as the "Pricing
Disclosure Package"),] [and] participated in discussions with your
representatives and those of the Company and its accountants. Between the date
of the [Prospectus Supplement][Pricing Supplement] and the time of delivery of
this letter, we participated in further discussions with your representatives
and those of the Company and its accountants concerning certain portions of the
Prospectus [and] reviewed certificates of certain officers of the Company
[_____, letters addressed to you from the Company's accountants] [and an opinion
addressed to you from counsel to the Company]. On the basis of the information
that we gained in the course of the performance of the services referred to
above, considered in the light of our understanding of the applicable law
(including the requirements of Form S-3 and the character of prospectus
contemplated thereby) and the experience we have gained through our practice
under the Act, we confirm to you
AIII-4
<PAGE>
that, in our opinion, each part of the Registration Statement, as of its latest
effective date, and the Basic Prospectus, as supplemented by the Prospectus
Supplement [and the Pricing Supplement], as of [USE THE FOLLOWING IF THE LETTER
IS NOT BEING DELIVERED AT A TIME OF DELIVERY -- the date and time of delivery of
this letter][USE THE FOLLOWING IF THE LETTER IS BEING DELIVERED AT A TIME OF
DELIVERY -- the date of the Pricing Supplement], appeared on their face to be
appropriately responsive, in all material respects, to the requirements of the
Act, the Trust Indenture Act of 1939 and the applicable rules and regulations of
the Commission thereunder. Further, nothing that came to our attention in the
course of such review has caused us to believe that,
(a) any part of the Registration Statement, as of its latest effective
date, contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, or
[USE THE FOLLOWING IF THE LETTER IS BEING DELIVERED AT A TIME OF
DELIVERY -- (b) the Pricing Disclosure Package, as of [__:00] [A/P].M. on [___]
(which you have informed us is prior to the time of the first sale of the
Securities by any Agent), [when considered together with the price to the public
and underwriting discount for the Securities set forth on the cover of the
Pricing Supplement and the statements made under the caption[s] ["Description of
Securities" in the Prospectus],] contained any untrue statement of a material
fact or omitted to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading or]
[(b)][(c)] the Basic Prospectus, as supplemented by the Prospectus
Supplement [and the Pricing Supplement], as of [the date of the Prospectus
Supplement][the date of the Pricing Supplement], contained any untrue statement
of a material fact or omitted to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
[USE THE FOLLOWING IF THE LETTER IS BEING DELIVERED AT A TIME OF DELIVERY -- We
also advise you that nothing that came to our attention in the course of the
procedures described in the second sentence of this paragraph has caused us to
believe that the Pricing Disclosure Package, [when considered together with the
price to the public [INSERT ONLY IF UNDERWRITING DISCOUNT IS MATERIAL -- and
underwriting discount]for the Securities set forth on the cover of the Pricing
Supplement and the statements made under the caption[s] ["Description of
Securities"] in the Prospectus,] as of the time of delivery of this letter,
contained any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements therein, in the lights
of the circumstances under which they were made, not misleading.]
The limitations inherent in the independent verification of factual
matters and the character of determinations involved in the registration process
are such, however, that we do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement, any Post-Effective Amendment thereto, the Basic Prospectus
[or][____,] the Prospectus Supplement [or][_____,][the Pricing Supplement][or
the Pricing Disclosure Package], except for those made under the captions
"Description of Debt Securities We May Offer" in the Basic Prospectus and
"Description of Notes We May Offer" in the Prospectus Supplement, in each case
insofar as they relate to provisions of the Securities, the Indenture under
which the Securities are to be issued and the Distribution Agreement relating to
the Securities therein described, and except for those made under the caption
"United States Taxation" in the Prospectus Supplement, insofar as they relate to
provisions of U.S. Federal income tax law therein described. Also, we do not
express any opinion or belief as to the financial statements or other financial
data derived from accounting records contained in the Registration Statement,
any Post-Effective Amendment thereto, the Basic Prospectus [or][_____,] the
Prospectus Supplement [or][_____,][the Pricing Supplement] [or the Pricing
Disclosure Package], or as to the report of management's assessment of the
effectiveness of internal control over financial reporting or the auditor's
AIII-5
<PAGE>
attestation report thereon, each as included in the Registration Statement, the
Basic Prospectus [or][_____,] the Prospectus Supplement [or][_____,][the Pricing
Supplement] [or the Pricing Disclosure Package], or as to the statement of the
eligibility and qualification of the Trustee under the Indenture under which the
Securities are being issued.
This letter is furnished by us, as counsel to the Company, to you[, as
Representatives of the Agents,] solely for [your][the] benefit [in your capacity
as Agent][of the Agents in their capacity as such], and may not be relied on by
any other person. This letter may not be quoted, referred to or furnished to any
purchaser or prospective purchaser of the Securities and may not be used in
furtherance of any offer or sale of the Securities.
Very truly yours,
----------------------------------------
AIII-6
<PAGE>
SCHEDULE A
[List documents other than the Basic Prospectus and the Prospectus Supplement
that are included in the Pricing Disclosure Package]
AIII-7
<PAGE>
ANNEX IV
FORM OF OPINION OF IN-HOUSE COUNSEL TO THE COMPANY
(i) The Company has an authorized capitalization as set forth in the
Prospectus as amended or supplemented;
(ii) To the best knowledge and information of such counsel, there are no
contracts or other documents required to be summarized or disclosed or filed as
exhibits to the Registration Statement other than those summarized or disclosed
in the Registration Statement or filed as exhibits thereto, and there are no
legal or governmental proceedings pending or threatened of a character required
to be disclosed in the Registration Statement and the Prospectus as amended or
supplemented, which are not disclosed and properly described therein;
(iii) The issue and sale of the Securities (provided that the terms of such
Securities shall have been established by all necessary corporate action in
conformity with the Indenture), and the compliance by the Company with all of
the provisions of the Securities, the Indenture, the Distribution Agreement and
any Terms Agreement, will not result in a breach of any of the terms or
provisions of, or constitute a default under, any [material] indenture,
mortgage, deed of trust, loan agreement, or other [material] agreement or
instrument in effect on the date of such opinion and known to such counsel, to
which the Company is a party or by which the Company may be bound or to which
any of the property or assets of the Company is subject or violate any judgment,
order or decree of any court or governmental body applicable to the Company,
except for such breaches, defaults and violations that would not have a Material
Adverse Effect or affect the validity of the Securities, nor will such action
result in any violation of the provisions of the Restated Certificate of
Incorporation, as amended, or the By-Laws of the Company in effect on the date
of such opinion; and no consent, approval, authorization, order, registration or
qualification of or with any court or any regulatory authority or other
governmental body is required for the issue and sale of the Securities or the
consummation by the Company of the other transactions contemplated by this
Agreement (and any applicable Terms Agreement) or the Indenture, except such as
have been obtained under the Act and the Trust Indenture Act and such consents,
approvals, authorizations, orders, registrations or qualifications the failure
to obtain or make would not have a Material Adverse Effect or affect the
validity of the Securities and as may be required under state securities or Blue
Sky laws (including insurance laws of any state relating to offers and sales of
securities in such state) in connection with solicitation by the Agents of the
Company of offers to purchase Securities and with purchases of Securities by the
Agents and any other firms as principals, as the case may be, both as
contemplated by this Agreement (and any applicable Terms Agreement);
(iv) Nothing which came to the attention of such counsel has caused such
counsel to believe that, insofar as relevant to the offering of the Securities,
(a) any part of the Registration Statement, when such part became
effective, contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, or
[USE THE FOLLOWING IF THE LETTER IS BEING DELIVERED AT A TIME OF
DELIVERY -- (b) the Pricing Disclosure Package, as of [__:00] [A/P].M. on [__]
(which such Agent has informed such counsel is prior to the time of the first
sale of the Securities by any Agent), [when
AIV-1
<PAGE>
considered together with the price to the public and underwriting discount for
the Securities set forth on the cover of the Pricing Supplement and the
statements made under the caption ["Description of Securities" in the
Prospectus],] contained any untrue statement of a material fact or omitted to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading or]
[(b)][(c)] the Prospectus as amended and supplemented [including by
the Pricing Supplement], as of [the date of the Pricing Supplement], contained
any untrue statement of a material fact or omitted to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or
[(c)][(d)] the Pricing Disclosure Package, [when considered together
with the price to the public and underwriting discount for the Securities set
forth on the cover of the Pricing Supplement and the statements made under the
caption[s] ["Description of Securities"] in the Prospectus,], as of the time of
delivery of this letter, contained any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the statements
therein, in the lights of the circumstances under which they were made, not
misleading; and
(v) the documents incorporated by reference in the Prospectus as amended or
supplemented, as of the date they became effective or were filed with the
Commission, as the case may be, complied as to form in all material respects
with the Act and the Exchange Act and the rules and regulations thereunder
Such counsel may state that, in rendering his or her opinion in paragraph (iv),
such counsel does not assume any responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration Statement, any
Post-Effective Amendment thereto, the Prospectus as amended and supplemented
[or][,][the Pricing Supplement][or the Pricing Disclosure Package], except for
those made under the captions "Description of Debt Securities We May Offer" in
the and "Description of Notes We May Offer" in the Prospectus as amended and
supplemented, in each case insofar as they relate to provisions of the
Securities, the Indenture under which the Securities are to be issued and the
Distribution Agreement relating to the Securities therein described. Also, in
rendering his or her opinion in paragraph (iv), such counsel need not express
any opinion or belief as to the financial statements or other financial data
derived from accounting records contained in the Registration Statement, any
Post-Effective Amendment thereto, the Prospectus as amended or supplemented
[or][,][the Pricing Supplement] [or the Pricing Disclosure Package], or as to
the statement of the eligibility and qualification of the Trustee under the
Indenture under which the Securities are being issued.
In rendering his or her opinion in paragraph (v), such counsel need not express
any opinion or belief as to the financial statements or other financial or
statistical data contained in the Prospectus as amended or supplemented.
AIV-2
<PAGE>
ANNEX V
FORM OF LETTER OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
American International Group, Inc.
and
The Agents listed on Schedule I
Ladies and Gentlemen:
We have audited:
1. the consolidated financial statements of American International Group,
Inc. (the "Company") and subsidiaries as of December 31, 2005 and 2004
and for each of the three years in the period ended December 31, 2005
included in the Company's annual report on Form 10-K/A for the year
ended December 31, 2005 (the "Form 10-K/A"),
2. the related financial statement schedules included in the Company's
annual report on Form 10-K for the year ended December 31, 2005 as
filed with the Securities Exchange Commission (the "SEC") on March 16,
2006 and in the Form 10-K/A,
3. management's assessment of the effectiveness of the Company's internal
control over financial reporting as of December 31, 2005 included in
the Company's annual report on Form 10-K for the year ended December
31, 2005 and
4. the effectiveness of the Company's internal control over financial
reporting as of December 31, 2005
The consolidated financial statements, financial statement schedules
and management's assessment referred to above are all incorporated by reference
in the registration statement (No. 333-106040) on Form S-3 filed by the Company
under the Securities Act of 1933 (the "Act"); our report (which contains an
adverse opinion on the effectiveness of internal control over financial
reporting) with respect to the audits referred to above is also incorporated by
reference in such registration statement. Such registration statement as amended
as of July 24, 2006,of which the Prospectus dated July 24, 2006 forms a part, as
supplemented by the Prospectus Supplement dated October 12, 2006 for the
offering of the Company's U.S. $25,139,770,000 Medium-Term Notes, is herein
referred to as the "Registration Statement."
In connection with the Registration Statement:
1. We are an independent registered public accounting firm with respect to the
Company within the meaning of the Act and the applicable rules and
regulations thereunder adopted by the SEC and the Public Company Accounting
Oversight Board (United States) (the "PCAOB").
2. In our opinion, the consolidated financial statements and financial
statement schedules audited by us and incorporated by reference in the
Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the Act and
AV-1
<PAGE>
the Securities Exchange Act of 1934 and the related rules and regulations
adopted by the SEC.
3. We have not audited any financial statements of the Company as of any date
or for any period subsequent to December 31, 2005; although we have
conducted an audit for the year ended December 31, 2005, the purpose (and
therefore the scope) of such audit was to enable us to express our opinion
on the consolidated financial statements as of December 31, 2005 and for
the year then ended, but not on the financial statements for any interim
period within such year. Therefore, we are unable to and do not express any
opinion on the unaudited consolidated balance sheets as of March 31, 2006
and June 30, 2006 and the unaudited consolidated statements of income, of
cash flows and of comprehensive income (loss) included in the Company's
quarterly reports on Form 10-Q for the quarters ended March 31, 2006 and
June 30, 2006, incorporated by reference in the Registration Statement, or
on the Company's financial position, results of operations or cash flows as
of any date or for any period subsequent to December 31, 2005. Also, we
have not audited the Company's internal control over financial reporting as
of any date subsequent to December 31, 2005. Therefore, we do not express
any opinion on the Company's internal control over financial reporting as
of any date subsequent to December 31, 2005.
4. For purposes of this letter, we have read the minutes of the 2006 meetings
of the Board of Directors of the Company and the Audit Committee, the
Compensation Committee, Finance Committee, the Nominating and Corporate
Governance Committee, the Public Policy and Social Responsibility Committee
and the Regulatory, Compliance and Legal Committee of the Board of
Directors and the Complex Structured Finance Transactions Committee as set
forth in the minute books at October 11, 2006. Officials of the Company
having advised us that the minutes of all such meetings through that date
were set forth therein, except for the minutes of the Audit Committee's
September 13, 2006 meeting, the Finance Committee's September 7, 2006
meeting, the Board of Directors' September 19, 2006 meeting, the
Regulatory, Compliance & Legal Committee's September 6, 2006 meeting, the
Complex Structured Finance Transactions Committee's August 8, 2006 and
September 28, 2006 meetings and the Public Policy and Social Responsibility
Committee's July 20, 2006 meeting which were not approved in final form,
for which agendas were provided to us; officials of the Company have
represented that such agendas include all the substantive actions taken at
such meetings. We have carried out other procedures to October 11, 2006
(our work did not extend to October 12, 2006) as follows:
With respect to the three-month periods ended March 31, 2006 and 2005 and
the three-month and six-month periods ended June 30, 2006 and 2005, we
have:
(i) performed the procedures (completed the procedures related to March
31, 2006 on May 10, 2006 and the procedures related to June 30, 2006
on August 9, 2006) specified by the PCAOB for a review of interim
financial information as described in SAS No. 100, Interim Financial
Information, on the unaudited consolidated financial statements as of
and for the three-month period ended March 31, 2006 and 2005, for the
three- and six-month periods ended June 30, 2006 and 2005 included in
the Company's quarterly reports on Form 10-Q for the quarters ended
March 31, 2006 and June 30, 2006, incorporated by reference in the
Registration Statement; and
AV-2
<PAGE>
(ii) inquired of certain officials of the Company who have responsibility
for financial and accounting matters whether the unaudited
consolidated financial statements referred to in (i) above comply as
to form in all material respects with the applicable accounting
requirements of the Securities Exchange Act of 1934 as it applies to
Form 10-Q and the related rules and regulations adopted by the SEC
[AND FOUND THEM TO BE ON A BASIS SUBSTANTIALLY CONSISTENT WITH THAT OF
THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS].
The foregoing procedures do not constitute an audit made in accordance
with standards of the PCAOB. Also, they would not necessarily reveal
matters of significance with respect to the comments in the following
paragraph. Accordingly, we make no representations as to the
sufficiency of the foregoing procedures for your purposes.
5. Nothing came to our attention as a result of the foregoing procedures,
however, that caused us to believe that:
(i) Any material modifications should be made to the unaudited
consolidated financial statements described in 4(i), incorporated by
reference in the Registration Statement, for them to be in conformity
with generally accepted accounting principles.
(ii) The unaudited consolidated financial statements described in 4(i) do
not comply as to form in all material respects with the applicable
accounting requirements of the Securities Exchange Act of 1934 as it
applies to Form 10-Q and the related rules and regulations adopted by
the SEC [OR WOULD NOT BE ON A BASIS SUBSTANTIALLY CONSISTENT WITH THAT
OF THE AUDITED FINANCIAL STATEMENTS, EXCEPT AS DESCRIBED IN THE NEXT
PARAGRAPH].
It should be noted that effective January 1, 2006 the Company adopted
FAS 155 "Accounting for Certain Hybrid Financial Instruments", FSP FTB
85-4-1 "Accounting for Life Settlements Contracts by Third-Party
Investors" and FAS 123R "Shared-Based Payment".
6. Company officials have advised us that no consolidated financial data as of
any date or for any period subsequent to June 30, 2006 are available;
accordingly, the procedures carried out by us with respect to changes in
financial statement items after June 30, 2006 have, of necessity, been
limited. We have inquired of certain officials of the Company who have
responsibility for financial and accounting matters as to whether (a) at
October 11, 2006 there was any change in the capital stock, increase in
long-term debt, or decrease in consolidated shareholders' equity of the
Company as compared with amounts shown in the June 30, 2006 consolidated
balance sheet incorporated by reference in the Registration Statement; or
(b) for the period from July 1, 2006 to October 11, 2006, there were any
decreases, as compared with the corresponding period in the preceding year,
in consolidated net income.
Those officials referred to above stated that due to the fact that there is
no consolidated financial data available subsequent to June 30, 2006, they
are not in a position to comment on whether there was any such change,
increase or decrease.
AV-3
<PAGE>
7. This letter is solely for the information of the addressees and to assist
the agents in conducting and documenting their investigation of the affairs
of the Company in connection with the offering of the securities covered by
the Registration Statement, and is not to be used, circulated, quoted, or
otherwise referred to within or without the underwriting group for any
other purpose, including but not limited to the registration, purchase, or
sale of securities, nor is it to be filed with or referred to in whole or
in part in the Registration Statement or any other document, except that
reference may be made to it in the distribution agreement or in any list of
closing documents pertaining to the offering of the securities covered by
the Registration Statement.
Yours very truly,
------------------------------------
AV-4
<PAGE>
Schedule I
AIG Financial Securities Corp.
ABN AMRO Incorporated
Banc of America Securities LLC
Banca IMI S.p.A.
BMO Capital Markets Corp.
Barclays Capital Inc.
Bear, Stearns & Co. Inc.
BNP Paribas Securities Corp.
BNY Capital Markets, Inc.
Calyon Securities (USA) Inc.
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Daiwa Securities America Inc.
Daiwa Securities SMBC Europe Limited
Deutsche Bank Securities
Goldman, Sachs & Co.
Greenwich Capital Markets, Inc.
HSBC Securities (USA) Inc.
J.P. Morgan Securities Inc.
Lehman Brothers Inc.
McDonald Investments Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Mitsubishi UFJ Securities International plc
Morgan Stanley & Co. Incorporated
RBC Capital Markets Corporation
Santander Investment Securities Inc.
Scotia Capital (USA) Inc.
SG Americas Securities, LLC
TD Securities (USA) LLC
UBS Securities LLC
Wachovia Capital Markets, LLC
AV-5
<PAGE>
ANNEX VI
AGENTS
AIG Financial Securities Corp.
ABN AMRO Incorporated
Banc of America Securities LLC
Banca IMI S.p.A. (Corso Matteotti 6, 20121 Milan, Italy)
BMO Capital Markets Corp.
Barclays Capital Inc. (200 Park Avenue, New York, NY, 10166, Attn: MTN Trading,
Facsimile: (212) 412-7606)
Bear, Stearns & Co. Inc.
BNP Paribas Securities Corp.
BNY Capital Markets, Inc.
Calyon Securities (USA) Inc.
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Daiwa Securities America Inc.
Daiwa Securities SMBC Europe Limited
Deutsche Bank Securities
Goldman, Sachs & Co.
Greenwich Capital Markets, Inc.
HSBC Securities (USA) Inc.
J.P. Morgan Securities Inc.
Lehman Brothers Inc.
McDonald Investments Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Mitsubishi UFJ Securities International plc
Morgan Stanley & Co. Incorporated
RBC Capital Markets Corporation
Santander Investment Securities Inc.
Scotia Capital (USA) Inc.
SG Americas Securities, LLC
TD Securities (USA) LLC
UBS Securities LLC
Wachovia Capital Markets, LLC
AVI-1
<PAGE>
ATTACHMENT A
AMERICAN INTERNATIONAL GROUP, INC.
ADMINISTRATIVE PROCEDURE
This Administrative Procedure relates to the Securities defined in the
Distribution Agreement, dated October [11], 2006 (the "DISTRIBUTION AGREEMENT"),
between American International Group, Inc. (the "COMPANY") and the Agents listed
in Annex VI (individually, an "AGENT" and collectively, the "AGENTS"), to which
this Administrative Procedure is attached as Attachment A. 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. The terms and settlement details related to a
purchase of Securities by an Agent, as principal, from the Company will be set
forth in a Terms Agreement pursuant to the Distribution Agreement, unless the
Company and such Agent otherwise agree as provided in Section 2(b) of the
Distribution Agreement, in which case the procedures to be followed in respect
of the settlement of such sale will be as set forth below. 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, other than pursuant to a Terms Agreement, 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.
Each Security will be issued only in fully registered form and will be
represented by either a global security (a "GLOBAL SECURITY") delivered to the
Trustee, as agent for The Depository Trust Company (the "DEPOSITARY") and
recorded in the book-entry system maintained by the Depositary (a "BOOK-ENTRY
SECURITY") or a certificate issued in definitive form (a "CERTIFICATED
SECURITY") delivered to a person designated by an Agent, as set forth in the
applicable Pricing Supplement. An owner of a Book-Entry Security will not be
entitled to receive a certificate representing such a Security, except as
provided in the Indenture.
Book-Entry Securities will be issued in accordance with the Administrative
Procedure set forth in Part I hereof, and Certificated Securities will be issued
in accordance with the Administrative Procedure set forth in Part II hereof.
PART I: ADMINISTRATIVE PROCEDURE FOR BOOK-ENTRY SECURITIES
In connection with the qualification of the Book-Entry Securities for
eligibility in the book-entry system maintained by the Depositary, the Trustee
will perform the custodial, document control and administrative functions
described below, in accordance with its respective obligations under a Blanket
Letter of Representations from the Company and the Trustee to the Depositary,
dated September 30, 2005, and a Medium-Term Note Certificate Agreement between
the Trustee and the Depositary, dated as of April 14, 1989 (the "CERTIFICATE
AGREEMENT"), and its obligations as a participant in the Depositary, including
the Depositary's Same-Day Funds Settlement System ("SDFS").
A-1
<PAGE>
Posting Rates by the 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 Book-Entry 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 the Company:
Each Agent will promptly advise the Company by telephone or other
appropriate means of all reasonable offers to purchase Book-Entry 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 Book-Entry Securities as a
Purchasing Agent. The Company will have the sole right to accept offers to
purchase Book-Entry Securities and may reject any such offer in whole or in
part.
The Company will promptly notify the Selling Agent or Purchasing Agent, as
the case may be, of its acceptance or rejection of an offer to purchase
Book-Entry Securities. If the Company accepts an offer to purchase Book-Entry
Securities, it will confirm such acceptance in writing to the Selling Agent or
Purchasing Agent, as the case may be, and the Trustee.
Communication of Sale Information to the Company by Agent and Settlement
Procedures:
A. After the acceptance of an offer by the Company, the Selling Agent or
Purchasing Agent, as the case may be, will communicate promptly, but in no event
later than the time set forth under "Settlement Procedure Timetable" below, 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 Book-Entry Securities to be purchased;
(2) If a Fixed Rate Book-Entry Security, the interest rate and
initial interest payment date;
(3) Trade Date;
(4) Settlement Date;
(5) Maturity Date;
(6) Specified Currency and, if the Specified Currency is other than
U.S. dollars, the applicable Exchange Rate for such Specified
Currency;
(7) Issue Price;
(8) Selling Agent's commission or Purchasing Agent's discount, as the
case may be;
(9) Net Proceeds to the Company;
(10) If a redeemable Book-Entry Security, such of the following as are
applicable:
(i) Redemption Commencement Date,
(ii) Initial Redemption Price (% of par), and
A-2
<PAGE>
(iii) Amount (% of par) that the Redemption Price shall decline
(but not below par) on each anniversary of the Redemption
Commencement Date;
(11) If a Floating Rate Book-Entry 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) Interest Calculation Dates,
(ix) Interest Determination Dates,
(x) Interest Payment Dates,
(xi) Regular Record Dates, and
(xii) Calculation Agent;
(12) Name, address and taxpayer identification number of the
registered owner(s);
(13) Denomination of certificates to be delivered at settlement;
(14) Book-Entry Security or Certificated Security; and
(15) Selling Agent or Purchasing Agent.
B. After receiving the Sale Information from the Selling Agent or
Purchasing Agent, as the case may be, the Company will communicate such Sale
Information to the Trustee by facsimile transmission or other acceptable written
means. The Trustee will assign a CUSIP number to the Global Security from a list
of CUSIP numbers previously delivered to the Trustee by the Company representing
such Book-Entry Security and then advise the Company and the Selling Agent or
Purchasing Agent, as the case may be, of such CUSIP number.
C. The Trustee will enter a pending deposit message through the
Depositary's Participant Terminal System, providing the following settlement
information to the Depositary, and the Depositary shall forward such information
to such Agent and Standard & Poor's Ratings Group:
(1) The applicable Sale Information;
(2) CUSIP number of the Global Security representing such Book-Entry
Security;
(3) Whether such Global Security will represent any other Book-Entry
Security (to the extent known at such time);
(4) Number of the participant account maintained by the Depositary on
behalf of the Selling Agent or Purchasing Agent, as the case may
be, which number will be supplied by such Selling Agent or
Purchasing Agent;
(5) The interest payment period; and
(6) Initial Interest Payment Date for such Book-Entry Security,
number of days by which such date succeeds the record date for
the Depositary's purposes (or, in the case of Floating Rate
Securities which reset daily or weekly, the date five calendar
days immediately preceding the applicable
A-3
<PAGE>
Interest Payment Date and, in the case of all other Book-Entry
Securities, the Regular Record Date, as defined in the Security)
and, if calculable at that time, the amount of interest payable
on such Interest Payment Date.
D. The Trustee will complete and authenticate the Global Security
previously delivered by the Company representing such Book-Entry Security.
E. The Depositary will credit such Book-Entry Security to the Trustee's
participant account at the Depositary.
F. The Trustee will enter an SDFS deliver order through the Depositary's
Participant Terminal System instructing the Depositary to (i) debit such
Book-Entry Security to the Trustee's participant account and credit such
Book-Entry Security 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 Book-Entry Security less such Agent's
commission or discount, as the case may be. The entry of such a deliver order
shall constitute a representation and warranty by the Trustee to the Depositary
that (a) the Global Security representing such Book-Entry Security has been
authenticated and issued and (b) the Trustee is holding such Global Security
pursuant to the Certificate Agreement.
G. Such Agent will enter an SDFS deliver order through the Depositary's
Participant Terminal System instructing the Depositary (i) to debit such
Book-Entry Security to such Agent's participant account and credit such
Book-Entry Security to the participant accounts of the Participants with respect
to such Book-Entry Security and (ii) to debit the settlement accounts of such
Participants and credit the settlement account of such Agent for an amount equal
to the price of such Book-Entry Security.
H. Transfers of funds in accordance with SDFS deliver orders described in
Settlement Procedures "F" and "G" will be settled in accordance with SDFS
operating procedures in effect on the settlement date.
I. Upon confirmation of receipt of funds, the Trustee will transfer to the
account of the Company maintained at The Bank of New York, New York, New York,
DDA Account No. [8230122580], or such other account as the Company may have
previously specified to the Trustee, in funds available for immediate use in the
amount transferred to the Trustee in accordance with Settlement Procedure "F".
J. Upon request, the Trustee will send to the Company a statement setting
forth the principal amount of Book-Entry Securities outstanding as of that date
under the Indenture.
K. Such Agent will confirm the purchase of such Book-Entry Security to the
purchaser either by transmitting to the participants with respect to such
Book-Entry Security a confirmation order or orders through the Depositary's
institutional delivery system or by mailing a written confirmation to such
purchaser.
A-4
<PAGE>
Preparation of Pricing Supplement and, if applicable, Term Sheet:
If the Company accepts an offer to purchase a Book-Entry Security, it will
prepare a Pricing Supplement reflecting the terms of such Book-Entry Security
and arrange to have delivered to the Selling Agent or Purchasing Agent, as the
case may be, at least ten copies of such Pricing Supplement, with a copy to the
Trustee, as provided under "Delivery of Confirmation and Prospectus to Purchaser
by Selling Agent" below. If applicable, the Term Sheet reflecting the terms of
such Security will be prepared by such Agent and at least 10 copies will be
delivered by such Agent to the Company, with a copy to the Trustee, as provided
under "Delivery of Confirmation and Prospectus to Purchaser by Selling Agent"
below. The Company will arrange to have the Pricing Supplement filed with, or
transmitted by a means reasonably calculated to result in filing with, the
Commission via the Commission's EDGAR System pursuant to Rule 424 under the Act
and, if applicable, will file the Term Sheet in accordance with Rule 433.
Delivery of Confirmation and Prospectus to Purchaser by Selling Agent:
The Selling Agent will deliver to the purchaser of a Book-Entry 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) and, if
applicable, the Term Sheet in relation to such Book-Entry Security prior to the
first contract for sale of the Book-Entry Security.
Date of Settlement:
The receipt by the Company of immediately available funds in payment for a
Book-Entry Security and the authentication and issuance of the Global Security
representing such Book-Entry Security shall constitute "settlement" with respect
to such Book-Entry Security. All orders of Book-Entry Securities solicited by a
Selling Agent or made by a Purchasing Agent and accepted by the Company on a
particular date (the "TRADE DATE") will be settled on a date (the "SETTLEMENT
DATE") which is the third Business Day after the Trade Date pursuant to the
"SETTLEMENT PROCEDURE TIMETABLE" set forth below, unless the Company and the
purchaser agree to settlement on another Business Day which shall be no earlier
than the next Business Day after the Trade Date.
Trustee Not to Risk Own Funds:
Nothing herein shall be deemed to require the Trustee to risk or expend its
own funds in connection with any payments to the Company, the Agents or the
Depositary or any purchaser, it being understood by all parties that payments
made by the Trustee to the Company or the Agents, or the Depositary, or any
purchaser shall be made only to the extent that funds are provided to the
Trustee for such purpose.
Settlement Procedure Timetable:
For orders of Book-Entry Securities solicited by a Selling Agent and
accepted by the Company for settlement on the third Business Day after the Trade
Date, Settlement Procedures "A" through "I" set forth above shall be completed
as soon as possible but not later than the respective times (New York City time)
set forth below:
A-5
<PAGE>
SETTLEMENT
PROCEDURE TIME
---------- -----
A 5:00 p.m. on the Business Day following the Trade Date or 10:00 a.m. on the
Business Day prior to the Settlement Date, whichever is earlier
B 12:00 noon on the second Business Day immediately preceding the Settlement Date
C 2:00 p.m. on the second Business Day immediately preceding the Settlement Date
D 9:00 a.m. on the Settlement Date
E 10:00 a.m. on the Settlement Date
F-G 2:15 p.m. on the Settlement Date
H 4:45 p.m. on the Settlement Date
I 5:00 p.m. on the Settlement Date
If the initial interest rate for a Floating Rate Book-Entry Security 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 2:00 p.m. on the second Business Day
immediately preceding the Settlement Date. Settlement Procedure "H" is subject
to extension in accordance with any extension of Fedwire closing deadlines and
in the other events specified in the SDFS operating procedures in effect on the
Settlement Date.
If settlement of a Book-Entry Security is rescheduled or canceled, the
Trustee, upon obtaining knowledge thereof, will deliver to the Depositary,
through the Depositary's Participant Terminal System, a cancellation message to
such effect by no later than 2:00 p.m. on the Business Day immediately preceding
the scheduled Settlement Date.
Failure to Settle:
If the Trustee fails to enter an SDFS deliver order with respect to a
Book-Entry Security pursuant to Settlement Procedure "F", the Trustee may
deliver to the Depositary, through the Depositary's Participant Terminal System,
as soon as practicable a withdrawal message instructing the Depositary to debit
such Book-Entry Security to the Trustee's participant account, provided that the
Trustee's participant account contains a principal amount of the Global Security
representing such Book-Entry 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
mark such Global Security "canceled", make appropriate entries in the Trustee's
records and send such canceled Global Security to the Company. The CUSIP number
assigned to such Global Security shall, in accordance with CUSIP Service Bureau
procedures, be canceled and not immediately reassigned. If a withdrawal message
is processed with respect to one or more, but not all, of the Book-Entry
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.
A-6
<PAGE>
If the purchase price for any Book-Entry Security is not timely paid to the
participants with respect to such Book-Entry Security by the beneficial
purchaser thereof (or a person, including an indirect participant in the
Depositary, acting on behalf of such purchaser), such participants and, in turn,
the Agent for such Book-Entry Security may enter deliver orders through the
Depositary's Participant Terminal System debiting such Book-Entry Security to
such participant's account and crediting such Book-Entry Security to such
Agent's account and then debiting such Book-Entry Security to such Agent's
participant account and crediting such Book-Entry Security to the Trustee's
participant account and shall notify the Company and the Trustee thereof.
Thereafter, the Trustee will (i) promptly notify the Company of such order, and
the Company shall transfer to such Agent funds available for immediate use in an
amount equal to the price of such Book-Entry Security which was credited to the
account of the Company maintained at the Trustee in accordance with Settlement
Procedure I, and (ii) 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 to perform
its obligations hereunder or under the Distribution Agreement, the Company will
reimburse such Agent on an equitable basis for the loss of its use of funds
during the period when the funds were credited to the account of the Company.
Notwithstanding the foregoing, upon any failure to settle with respect to a
Book-Entry Security, the Depositary 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, in accordance
with Settlement Procedure "D", for the authentication and issuance of a Global
Security representing the other Book-Entry Securities to have been represented
by such Global Security and will make appropriate entries in its records. The
Company will, from time to time, furnish the Trustee with a sufficient quantity
of Securities.
PART II: ADMINISTRATIVE PROCEDURE FOR CERTIFICATED SECURITIES
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 Certificated 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 Certificated 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 Certificated Securities as
a Purchasing Agent. The Company will have the sole right to accept offers to
purchase Certificated Securities and may reject any such offer in whole or in
part.
The Company will promptly notify the Selling Agent or Purchasing Agent, as
the case may be, of its acceptance or rejection of an offer to purchase
Certificated Securities. If the
A-7
<PAGE>
Company accepts an offer to purchase Certificated Securities, it will confirm
such acceptance in writing to the Selling Agent or Purchasing Agent, as the case
may be, and the Trustee.
Communication of Sale Information to Company by Agent:
After the acceptance of an offer by the Company, the Selling Agent or
Purchasing Agent, as the case may be, 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 Certificated Securities to be purchased;
(2) If a Fixed Rate Certificated Security, the interest rate and
initial interest payment date;
(3) Trade Date;
(4) Settlement Date;
(5) Maturity Date;
(6) Specified Currency and, if the Specified Currency is other than
U.S. dollars, the applicable Exchange Rate for such Specified
Currency;
(7) Issue Price;
(8) Selling Agent's commission or Purchasing Agent's discount, as the
case may be;
(9) Net Proceeds to the Company;
(10) If a redeemable Certificated 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
(but not below par) on each anniversary of the Redemption
Commencement Date;
(11) If a Floating Rate Certificated 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) Interest Calculation Dates,
(ix) Interest Determination Dates,
(x) Interest Payment Dates,
(xi) Regular Record Dates, and
(xii) Calculation Agent;
(12) Name, address and taxpayer identification number of the
registered owner(s);
(13) Denomination of certificates to be delivered at settlement;
(14) Book-Entry Security or Certificated Security; and
(15) Selling Agent or Purchasing Agent.
A-8
<PAGE>
Preparation of Pricing Supplement and, if applicable, Term Sheet:
If the Company accepts an offer to purchase a Certificated Security, it
will prepare a Pricing Supplement reflecting the terms of such Certificated
Security and arrange to have delivered to the Selling Agent or Purchasing Agent,
with a copy to the Trustee, as the case may be, at least ten copies of such
Pricing Supplement, as provided under "Delivery of Confirmation and Prospectus
to Purchaser by Selling Agent" below. If applicable, the Term Sheet reflecting
the terms of such Security will be prepared by such Agent and at least 10 copies
will be delivered by such Agent to the Company, with a copy to the Trustee, as
provided under "Delivery of Confirmation and Prospectus to Purchaser by Selling
Agent" below. The Company will arrange to have the Pricing Supplement filed
with, or transmitted by a means reasonably calculated to result in filing with,
the Commission via the Commission's EDGAR System pursuant to Rule 424 under the
Act and, if applicable, will file the Term Sheet in accordance with Rule 433.
Delivery of Confirmation and Prospectus to Purchaser by Selling Agent:
The Selling Agent will deliver to the purchaser of a Certificated 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) and, if
applicable, the Term Sheet in relation to such Certificated 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 Certificated Security.
Date of Settlement:
All offers of Certificated Securities 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
another 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.
Trustee Not to Risk Own Funds:
Nothing herein shall be deemed to require the Trustee to risk or expend its
own funds in connection with any payments to the Company, the Agents or any
purchaser, it being understood by all parties that payments made by the Trustee
to the Company or the Agents, or any purchaser shall be made only to the extent
that funds are provided to the Trustee for such purpose.
Instruction from Company to Trustee for Preparation of Certificated Securities:
After receiving the Sale Information from the Selling Agent or Purchasing
Agent, as the case may be, 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 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 immediately preceding the Settlement Date
A-9
<PAGE>
unless the Settlement Date is the date of acceptance by the Company of the offer
to purchase Certificated Securities in which case such instruction will be given
by the Company by 11:00 a.m., New York City time.
Preparation and Delivery of Certificated Securities by Trustee and Receipt of
Payment Therefor:
The Trustee will prepare each Certificated Security and appropriate
receipts that will serve as the documentary control of the transaction.
In the case of a sale of Certificated Securities to a purchaser solicited
by a Selling Agent, the Trustee will, by 2:15 p.m., New York City time, on the
Settlement Date, make available for delivery the Certificated Securities to the
Selling Agent for the benefit of the purchaser of such Certificated Securities
against delivery by the Selling Agent of a receipt therefor. On the Settlement
Date the Selling Agent will deliver payment for such Certificated Securities in
immediately available funds to the Company in an amount equal to the issue price
of the Certificated 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. The Company shall not use any proceeds
advanced by a Selling Agent to acquire securities.
In the case of a sale of Certificated Securities to a Purchasing Agent, the
Trustee will, by 2:15 p.m., New York City time, on the Settlement Date, make
available for delivery the Certificated Securities to the Purchasing Agent
against delivery of payment for such Certificated Securities in immediately
available funds to the Company in an amount equal to the issue price of the
Certificated Securities less the Purchasing Agent's discount.
Failure of Purchaser to Pay Selling Agent:
If a purchaser (other than a Purchasing Agent) 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 Certificated Security by the Trustee, the
Company will return to the Selling Agent an amount equal to the amount
previously paid to the Company in respect of such Certificated Security. The
Company will reimburse the Selling Agent on an equitable basis for its loss of
the use of funds during the period when they were credited to the account of the
Company.
The Trustee will cancel the Certificated Security in respect of which the
failure occurred and make appropriate entries in its records.
A-10