Distribution Agreement - American International Group Inc.
Execution Copy
AIG PROGRAM FUNDING, INC.
U.S. $20,000,000,000
MEDIUM-TERM NOTES
SERIES A (PF)
SERIES AIG-FP (PF)
SERIES MP, MATCHED INVESTMENT PROGRAM (PF)
DISTRIBUTION AGREEMENT
November 9, 2007
To the Agents named in Annex VI hereto.
Ladies and Gentlemen:
AIG Program Funding, Inc., a Delaware corporation (the "COMPANY"),
proposes, subject to the terms and conditions stated herein, to issue and sell
at an aggregate initial offering price of up to U.S. $20,000,000,000 or the
equivalent thereof in one or more foreign or composite currencies or currency
units, of its Medium-Term Notes, Series A (PF); Medium-Term Notes, Series AIG-FP
(PF); and Medium-Term Notes, Series MP, Matched Investment Program (PF)
(collectively, the "SECURITIES"), each of which will be fully and
unconditionally guaranteed by American International Group, Inc. (the
"GUARANTOR"), and agrees with each of you (individually, an "AGENT", and
collectively, the "AGENTS") as set forth in this Agreement. The Company may
increase the aggregate amount of Securities that the Company may offer and sell
under this Agreement at any time as provided in Section 15(c) hereof.
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 either a separate
agreement, substantially in the form of Annex I hereto, relating to such sale,
or another agreement (which may be oral and confirmed in writing) relating to
the purchase by such Agent as principal (each, a "TERMS AGREEMENT"), in each
case in accordance with Section 4(b) hereof. The Company reserves the right to
sell Securities directly on its own behalf and to enter into agreements with
other broker-dealers as Agents as contemplated by Section 15(b) hereof. 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 November 9, 2007 (the
"INDENTURE") among the Company, the Guarantor and The Bank of New York, as
Trustee (the "TRUSTEE"). Each Security will be entitled to the benefit of the
guarantee of the Guarantor (the "GUARANTEES") and 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
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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,
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.
For the avoidance of doubt, none of the provisions of this Agreement shall
apply to any securities issued or guaranteed by the Guarantor other than the
Guarantor's guarantees of the Securities.
1. The Company and the Guarantor (each severally as to itself and not
jointly) represents and warrants to, and agrees with, each Agent that:
(a) The registration statements on Form S-3 (Registration No.
333-143992-01 and No. 333-106040) in respect of the Securities and the
Guarantees have been filed with the Securities and Exchange Commission (the
"COMMISSION"); such registration statements and each post-effective amendment
thereto, if any, 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 (including the Basic
Prospectus or the Prospectus (as hereinafter defined), as the case may be, as
supplemented by any preliminary prospectus supplement) 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 and the
Guarantees, 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 Guarantor 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
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applicable Pricing Supplement filed in accordance with Section 6(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 6(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 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 or the Guarantor 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 6(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 or the Guarantor by any
Agent expressly for use therein; and
(d) 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
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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 or the Guarantor
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.
2. The Company represents and warrants to, and agrees with, each Agent
that:
(a) 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;
(b) 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 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; and
(c) 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 the
Company's 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 Guarantor 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 Certificate of Incorporation 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
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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.
3. The Guarantor represents and warrants to, and agrees with, each Agent
that:
(a) 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 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 or the Guarantor
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;
(b) The Guarantor 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;
(c) 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 Guarantor'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
Guarantor and its consolidated subsidiaries considered as an entirety, in each
case, otherwise than as set forth or
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contemplated in such Prospectus as amended or supplemented (any such change
described in clause (ii) is referred to as a "MATERIAL ADVERSE CHANGE");
(d) The Guarantees have 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 of the Company in conformity with the Indenture and
is a valid and binding obligation of the Company, the Guarantee of such Security
has been duly completed, executed, authenticated and affixed to such Security in
accordance with the Indenture, and delivered as contemplated by this Agreement
and any applicable Terms Agreement, such Guarantee will constitute a valid and
legally binding obligation of the Guarantor; and the Guarantees will conform in
all material respects to the descriptions thereof in the Prospectus as amended
or supplemented;
(e) The issue of the Guarantees and the compliance by the Guarantor
with all of the provisions of the Guarantees, 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
Guarantor is a party or by which the Guarantor is bound or to which any of the
property or assets of the Guarantor 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 Guarantor or any of the Guarantor's
properties, except, in each case, for such breaches, conflicts, defaults and
violations that would not have a Material Adverse Effect or affect the validity
of the Guarantees, 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 Guarantor; and no consent, approval, authorization, order,
registration or qualification of or with any court or governmental agency or
body is required by the Guarantor for the issue of the Guarantees or the
consummation by the Guarantor 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 Guarantees; and
(f) There is no action, suit or proceeding pending, or to the
knowledge of the executive officers of the Guarantor, threatened against the
Guarantor 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 4(b) hereof), there will not be any action, suit
or proceeding pending, or to the knowledge of the executive officers of the
Guarantor, threatened against the Guarantor 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.
4. (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.
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Each of the Company and the Guarantor 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 or the Guarantor, the Agents will
forthwith suspend solicitation of offers to purchase Securities from the Company
until such time as the Company or the Guarantor 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, neither the Company nor the
Guarantor shall be required to comply with the provisions of Sections 7(d), 7(e)
and 7(f).
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, unless the Company and such Agent shall otherwise agree,
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. Unless
the Company and such Agent shall otherwise agree, 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, and 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 7 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.
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(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, 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.
(f) Upon the delivery of Securities to an Agent by the Company, such
Agent proposes to offer such Securities for sale in the manner set forth in the
Prospectus as amended or supplemented.
5. Any documents required to be delivered pursuant to Section 11 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.
6. The Company and the Guarantor (each severally as to itself and not
jointly) covenants and agrees with each Agent:
(a) To make no amendment or supplement (other than an amendment or
supplement as a result of the Guarantor'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
Guarantor 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 Guarantor's filing of a
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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 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) If the Company shall have suspended solicitations of Securities
pursuant to Section 7(a), and if the Company and the Guarantor shall decide to
amend or supplement the Registration Statement or the Prospectus as then amended
or supplemented, the Company shall 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 and the Guarantor 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; and
(c) 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
and the Guarantor by such Agent and (ii) the related Time of Delivery, the
Company and the Guarantor will not, without the prior consent of such Agent,
offer, sell, contract to sell or otherwise dispose of any debt securities of the
Company or the Guarantor that mature more than nine months after such Time of
Delivery, have the same maturity, and are otherwise substantially similar to the
Securities. For the avoidance of doubt, securities issued by the Guarantor or
its affiliates that provide for principal protection will not be deemed to be
substantially similar to the Securities and will not be subject to any of the
restrictions set forth in the previous sentence. The restriction imposed by this
Section 6(c) 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.
(d) 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;
7. The Company covenants and agrees with each Agent:
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(a) 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;
(b) 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);
(c) That each time the Registration Statement or the Prospectus shall
be amended or supplemented as a result of the filing by the Guarantor 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 (as
promptly as reasonably practicable in the case of any such amendment or
supplement) to such Agent, upon its request, a certificate of officers of the
Company and a certificate of officers of the Guarantor, satisfactory to such
Agent, dated a date which is as soon as reasonably practicable after the date of
such amendment or supplement, or dated the Time of Delivery related to such
sale, in either case in form satisfactory to such Agent in its reasonable
judgment to the effect that the statements contained in the certificates
referred to in Sections 11(g) and 11(h) 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 certificates, certificates of the
same tenor as the certificates referred to in said Sections 11(g) and 11(h) but
modified to relate to the Registration Statement and the Prospectus as amended
and supplemented to such date;
(d) That each time the Registration Statement or the Prospectus shall
be amended or supplemented as a result of the filing by the Guarantor 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 (as
promptly as reasonably practicable in the case of any such amendment or
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supplement) to such Agent, upon its request, a written opinion and letter of
Sullivan & Cromwell LLP, counsel for the Company and the Guarantor, and a
written opinion of Kathleen E. Shannon, Senior Vice President and Deputy General
Counsel of the Guarantor and counsel to the Company, or, in either case, other
counsel satisfactory to such Agent in its reasonable judgment, dated a date
which is as soon as reasonably practicable after the date of such amendment or
supplement, or dated the Time of Delivery relating to such sale, in either case
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 11(c) or
the opinion referred to in Section 11(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
referred to in Section 11(c) or an opinion of the same tenor as the opinion
referred to in Section 11(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
(e) That each time the Registration Statement or the Prospectus shall
be amended or supplemented as a result of the filing by the Guarantor of its
Annual Report on Form 10-K under the Exchange Act to set forth financial
information included in or derived from the Guarantor'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 the
Guarantor's independent registered public accounting firm to furnish (as
promptly as reasonably practicable in the case of any such amendment or
supplement) to such Agent, upon its request, a letter, dated a date which is as
soon as reasonably practicable after the date of such amendment or supplement,
or a letter, dated the Time of Delivery relating to such sale, in either case in
form satisfactory to such Agent in its reasonable judgment, of the same tenor as
the letter referred to in Section 11(e) hereof but modified to relate to the
Registration Statement and the Prospectus as amended or supplemented to the date
of such amendment or supplement or Terms Agreement, as the case may be, with
such changes as may be necessary to reflect changes in the financial statements
and other information derived from the accounting records of the Guarantor, 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.
8. The Guarantor covenants and agrees with each Agent:
(a) That the Guarantor will make generally available to the Company's
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 Guarantor 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 Guarantor, Rule 158) and
covering each twelve-month period beginning not later than the first day of the
Guarantor's fiscal quarter next following the date of any sale of Securities
hereunder; and
(b) That the issuance of each Guarantee affixed to Securities by the
Guarantor, and each sale of such Securities to an Agent pursuant to a Terms
Agreement, shall be
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deemed to be an affirmation to such Agent that the representations and
warranties of the Guarantor 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).
9. (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 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 or the Guarantor by an Agent expressly for use therein.
10. The Company covenants and agrees with each Agent that the Company will
pay or cause to be paid the following: (i) the respective fees, disbursements
and expenses of the Company's and the Guarantor's counsel and the Guarantor's
accountants in connection with the
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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 6(d) 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.
11. 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 and the Guarantor 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 and the Guarantor 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 or the Guarantor, shall be 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 and the Guarantees,
the Registration Statement, the Prospectus as amended or supplemented, and other
related matters as such Agent may reasonably require, and the Company and the
Guarantor 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 and the Guarantor, or other counsel
satisfactory to such
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Agent in its reasonable judgment, dated the date of this Agreement and any
applicable date referred to in Section 7(d), 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 Guarantor and counsel to
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 7(d), 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 7(e), the independent
registered public accounting firm who have audited the financial statements of
the Guarantor 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 7(c), 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;
(h) The Guarantor 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 Guarantor, dated the date of
this Agreement and any applicable date referred to in Section 7(c), in which
such officers, to the best of their knowledge after reasonable investigation,
shall state that the representations and warranties of the Guarantor in this
Agreement are true and correct, in all material respects, as of such applicable
date and that the Guarantor 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; and
(i) 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
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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 Guarantor'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 Guarantor'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.
12. (a) The Company and the Guarantor (each severally as to itself and not
jointly) 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 and
the Guarantor 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 or the
Guarantor by such Agent expressly for use therein; and provided, further, that
the foregoing indemnity agreement contained in this Section 12(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 or the
Guarantor 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 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
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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, the Guarantor and each person, if any, who controls the
Company or the Guarantor within the meaning of the Act, against any losses,
claims, damages or liabilities to which the Company, the Guarantor 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 or the Guarantor by
such Agent expressly for use therein; and will reimburse the Company and the
Guarantor for any legal or other expenses reasonably incurred by the Company,
the Guarantor 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.
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(d) If the indemnification provided for in this Section 12 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 or the Guarantor 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 or the Guarantor 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,
the Guarantor 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 and the Guarantor under this
Section 12 shall be in addition to any liability which the Company or the
Guarantor 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 12 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 the Guarantor and to each person, if any, who controls the Company or the
Guarantor within the meaning of the Act.
13. 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
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purchase by an Agent pursuant to a Terms Agreement). Each Agent will make
reasonable efforts 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.
14. The respective indemnities, agreements, representations, warranties,
and other statements by any Agent, the Company or the Guarantor 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, the Company or the Guarantor or any of its
officers or directors or any controlling person, and will survive each delivery
of and payment for any of the Securities.
15. (a) 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 4(a), Section 10, Section 12, Section
13 and Section 14 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 (c), (d) and (e) of Section 7.
(b) The Company or the Guarantor, each in its sole discretion, may appoint
one or more additional parties to act as Agents hereunder from time to time. Any
such appointment shall be made in a writing signed by the Company or the
Guarantor and the party so appointed. Such appointment shall become effective in
accordance with its terms after the execution and delivery of such writing by
the Company or the Guarantor and such other party. When such appointment is
effective, such other party shall be deemed to be one of the Agents referred to
in, and to have the rights and obligations of an Agent under, this Agreement,
subject to the terms and conditions of such appointment.
(c) The Company, in its sole discretion, may increase the aggregate initial
offering price of the Securities from time to time without consent of, or notice
to, any Agent.
(d) The Company, the Guarantor and any Agent may amend, eliminate or
otherwise change any provision of this Agreement with respect to such Agent
without consent of, or notice to, any other Agent. Any such amendment,
elimination or change shall be made in a writing signed by the Company, the
Guarantor and each Agent that is a party to such amendment, elimination or
change. In the event of such amendment, elimination or change, this Agreement
shall remain in full force and effect with respect to any Agent that is not a
party to such amendment, elimination or change (without giving effect to such
amendment, elimination or change with respect to such Agent) unless suspended or
terminated with respect to such Agent pursuant to clause (a) of this Section 15.
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<PAGE>
16. 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 or the Guarantor 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.
17. 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), the Company and the Guarantor, and to the extent provided in
Section 12 and Section 14 hereof, the officers and directors of the Company and
the Guarantor and any person who controls any Agent, the Company or the
Guarantor, 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.
18. 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 or the Guarantor, (iii) no Agent has
assumed an advisory or fiduciary responsibility in favor of the Company or the
Guarantor 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 or the Guarantor on other matters) or any other obligation
to the Company or the Guarantor except the obligations expressly set forth in
this Agreement and (iv) the Company and the Guarantor has consulted its own
legal and financial advisors to the extent it deemed appropriate. The Company
and the Guarantor agree that they 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 or the Guarantor, in connection with such
transaction or the process leading thereto.
19. This Agreement and any Terms Agreement supersede all prior agreements
and understandings (whether written or oral) between the Company, the Guarantor
and the Agents, or any of them, with respect to the subject matter hereof. For
the avoidance of doubt, the foregoing sentence shall not apply to the Amended
and Restated Distribution Agreement of American International Group, Inc., dated
July 13, 2007, and any Terms Agreements or other instruments, documents or
agreements related thereto.
20. This Agreement and any Terms Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
21. Time shall be of the essence in this Agreement and any Terms Agreement.
22. 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.
19
<PAGE>
23. Notwithstanding anything herein to the contrary, the Company and the
Guarantor are authorized to disclose to any persons the U.S. federal and state
income tax treatment and tax structure of any potential transaction and all
materials of any kind (including tax opinions and other tax analyses) provided
to the Company relating to that treatment and structure, without any Agent
imposing any limitation of any kind. However, any information relating to the
tax treatment and tax structure shall remain confidential (and the foregoing
sentence shall not apply) to the extent necessary to enable any person to comply
with securities laws. For this purpose, "tax structure" is limited to any facts
that may be relevant to the U.S. federal and state income tax treatment of the
potential transaction.
20
<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,
AIG PROGRAM FUNDING, INC.
By /s/ Robert A. Gender
-------------------------------------
Name: Robert A. Gender
Title: President
AMERICAN INTERNATIONAL GROUP, INC.
(GUARANTOR)
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: President
ABN AMRO INCORPORATED
By /s/ Louis DeCaro
----------------------------------
Name: Louis De Caro
Title: Managing Director
ANZ SECURITIES, INC.
By /s/ Ann Lu Macclelland
----------------------------------
Name: Ann Lu McClelland
Title: President
BANC OF AMERICA SECURITIES LLC
By /s/ Lily Chang
----------------------------------
Name: Lily Chang
Title: Principal
<PAGE>
BANCA IMI S.P.A.
By [/s/ Pantanzo Cuciunta /s/ Vannella Mardorne]
---------------------------------- ----------------------------------------
Name: Pantanzo Cuciuntaa Vannella Mardorne
Title: Head of Debt Capital Markets Head of DCM-Financial Institutions
BARCLAYS CAPITAL INC.
By /s/ Pamela Kendall
----------------------------------
Name: Pamela Kendall
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/ Hugo Sueiro
----------------------------------
Name: Hugo Sueiro
Title: Authorized Signatory
<PAGE>
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
CIBC WORLD MARKETS CORP.
By /s/ Paul Hadlow
----------------------------------
Name: Paul Hadlow
Title: Managing Director
CITIGROUP GLOBAL MARKETS INC.
By /s/ Jack. D. McSpadden, Jr.
----------------------------------
Name: Jack. D. McSpadden, Jr.
Title: Managing Director
CREDIT SUISSE SECURITIES (USA) LLC
By /s/ Sharon Harrison
----------------------------------
Name: Sharon Harrison
Title: Director
DAIWA SECURITIES AMERICA INC.
By /s/ William J. Cook
----------------------------------
Name: William J. Cook
Title: Executive Vice President
<PAGE>
DAIWA SECURITIES SMBC EUROPE LIMITED
By /s/ Hidnobu Shirota
----------------------------------
Name: Hidenobu Shirota
Title: Executive Director
DEUTSCHE BANK SECURITIES INC.
By /s/ Matthew J. Siracuse /s/ Marc Frateipietro
---------------------------------- ----------------------------------------
Name: Matthew J. Siracuse Marc Frateipietro
Title: Director, Debt Syndicate Managing Director
GOLDMAN, SACHS & CO.
By /s/ Goldman Sachs & Co.
----------------------------------
Name:
Title:
GREENWICH CAPITAL MARKETS, INC.
By /s/ Robert Fahrbach
----------------------------------
Name: Robert Fahrbach
Title: Managing Director
HSBC SECURITIES (USA) INC.
By /s/ Karen L. Glee
----------------------------------
Name: Karen L. Glee
Title: Vice President
J.P. MORGAN SECURITIES INC.
By /s/ Robert Bottamedi
----------------------------------
Name: Robert Bottamedi
Title: Vice President
<PAGE>
KEYBANC CAPITAL MARKETS INC.
By /s/ Audrey J. Saccardo
----------------------------------
Name: Audrey J. Saccardo
Title: Vice President
LEHMAN BROTHERS INC.
By /s/ William H. Gartland
----------------------------------
Name: William H. Gartland
Title: Managing Director
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By /s/ Diane Kenna
----------------------------------
Name: Diane Kenna
Title: Authorized Signatory
MITSUBISHI UFJ SECURITIES
INTERNATIONAL PLC
By /s Yasutaka Suehiro
----------------------------------
Name: Yasutaka Suehiro
Title: Managing Director
MIZUHO SECURITIES USA INC.
By /s/ Hitoshi Shimoyama
----------------------------------
Name: Hitoshi Shimoyama
Title: Deputy President
MORGAN STANLEY & CO. INCORPORATED
By /s/ Yurij Slyz
----------------------------------
Name: Yurij Slyz
Title: Vice President
<PAGE>
NABCAPITAL SECURITIES, LLC
By /s/ Melissa Gribble
----------------------------------
Name: Melissa Gribble
Title: Head of Capital Markets
Origination, North America
RBC CAPITAL MARKETS CORPORATION
By /s/ John Yonnger
----------------------------------
Name: John Yonnger
Title: Managing Director
SANTANDER INVESTMENT SECURITIES INC.
By /s/ Dan Vallimaresco
----------------------------------
Name: Dan Vallimaresco
Title: Managing Director
SCOTIA CAPITAL (USA) INC.
By /s/ Greg Greco
----------------------------------
Name: Greg Greco
Title: Manging Director
SG AMERICAS SECURITIES, LLC
By /s/ Alfred M. Capra
----------------------------------
Name: Alfred M. Capra
Title: Managing Director
TD SECURITIES (USA) LLC
By /s/ John C. Brenizer
----------------------------------
Name: John C. Brenizer
Title: Managing Director, Global Debt
Capital Markets
<PAGE>
UBS SECURITIES LLC
By /s/ Spencer Haimes
----------------------------------
Name: Spencer Haimes
Title: Executive Director, Debt
Capital Markets
By /s/ Tom Curran
----------------------------------
Name: Tom Curran
Title: Executive Director
WACHOVIA CAPITAL MARKETS, LLC
By /s/ Jeremy Schwartz
----------------------------------
Name: Jeremy Schwartz
Title: Vice President
<PAGE>
ANNEX I
AIG PROGRAM FUNDING, INC.
U.S. $__________
MEDIUM-TERM NOTES, SERIES [A (PF)][AIG-FP (PF)][MP, MATCHED INVESTMENT PROGRAM
(PF)]
TERMS AGREEMENT
[Date]
[Name(s) and Address(es) of Agent(s)]
Ladies and Gentlemen:
AIG Program Funding, Inc. (the "COMPANY") proposes, subject to the terms
and conditions stated herein and in the Distribution Agreement, dated November
9, 2007 (the "DISTRIBUTION AGREEMENT"), between the Company and American
International Group, Inc. (the "Guarantor") 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 Sections 1, 2 or 3 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, the Company and the Guarantor.
AIG PROGRAM FUNDING, INC.
By
-------------------------------------
Name:
Title:
AMERICAN INTERNATIONAL GROUP, INC.,
AS GUARANTOR
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 [A
(PF)][AIG-FP (PF)][MP, Matched
Investment Program (PF)]
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 _____% of the principal amount of the
Agent(s)]: Purchased Securities[, plus accrued
interest from ______ to ______] [and
accrued amortization, if any, from
______ to ______]
Method of and Specified Funds for [By certified or official bank check or
Payment of Purchase Price: checks, 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 November 9, 2007,
as amended or supplemented, among the
Company, the Guarantor 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]
AI-3
<PAGE>
Documents to be Delivered: The following documents referred to in
the Distribution Agreement shall be
delivered as a condition to the Closing:
[None]
or
[1. The officers' certificates referred
to in Section 7(c).]
[2. The opinions of counsel to the
Company and the Guarantor referred
to in Section 7(d).]
[3. The accountants' letter referred to
in Section 7(e).]
AI-4
<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 6(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-5
<PAGE>
ANNEX II
FORM OF TERM SHEET
[To be modified as appropriate and completed prior to the Applicable Time]
AIG PROGRAM FUNDING, INC.
TITLE OF PURCHASED SECURITIES: _________________________________________________
AGGREGATE PRINCIPAL AMOUNT OFFERED: ____________________________________________
GUARANTOR: _____________________________________________________________________
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: _________________________________________________________
[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 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 AIG Program Funding, Inc., a
Delaware corporation (the "Company"), at an aggregate initial offering price of
up to $[__________] or the equivalent thereof in one or more foreign or
composite currencies or currency units (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 [__________], 2007 (the
"[Original] Indenture"), [list any Supplemental Indentures and include the
following -- (the Original Indenture as so supplemented, the "Indenture")],
[each] among the Company, American International Group, Inc., as guarantor (the
"Guarantor"), 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"), among AIG Program Funding, Inc.,
a Delaware corporation (the "Company"), American International Group, Inc. (the
"Guarantor") and you (the "Agent[s]")(which Terms Agreement incorporates by
reference certain provisions of the Distribution Agreement, dated [__________],
2007 (the "Distribution Agreement"), among the Company, the Guarantor and you),
of $[__________] aggregate principal amount of the Company's [__________] Notes
due [__________] (the "Securities") issued pursuant to the Indenture, dated as
of [__________], 2007 (the "[Original] Indenture"), [list any Supplemental
Indentures and include the following -- (the Original Indenture as so
supplemented, the "Indenture")], [each] between the Company, the Guarantor and
The Bank of New York, as Trustee (the "Trustee"),]
we, as counsel for the Company and the Guarantor, 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:
(1) The Company and the Guarantor have been duly incorporated and are
existing corporations 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 the Guarantor and duly qualified under the Trust Indenture
Act of 1939 and constitutes a valid and legally binding obligation of the
Company and the Guarantor 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.
AIII-1
<PAGE>
[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.
(4) The issuance of the Guarantees has been duly authorized, 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, 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,
and the Guarantee endorsed on such Security has been duly executed in
accordance with the Indenture, such Guarantee will constitute a valid and
legally binding obligation of the Guarantor 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 and the Guarantees have been duly
authorized, executed, authenticated, issued and delivered and constitute
valid and legally binding obligations of the Company and the Guarantor,
respectively, 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)][(5)] 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 and the Guarantor.
[USE THE FOLLOWING IF THE OPINION IS NOT BEING DELIVERED AT A TIME OF
DELIVERY -- In connection with our opinion set forth in paragraphs (3) and (4)
above, we have assumed that at the time of the issuance, sale and delivery of
each particular Security, the authorization of the Series and the Guarantees
will not have been modified or rescinded and, with respect to each Security and
the Guarantee endorsed thereon, that such Security and such Guarantee will
conform to one of the forms of Securities and Guarantees examined by us.
In connection with our opinion set forth in paragraphs (3) and (4) 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 the
Guarantee 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
under such Security and by the Guarantor of its obligations under such Guarantee
will comply with applicable law and with each requirement or restriction imposed
by any court or governmental body having jurisdiction over the Company or the
Guarantor and will not result in a default under or a breach of any agreement or
instrument then binding upon the Company or the Guarantor.]
AIII-2
<PAGE>
[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 paragraphs (3) and (4) 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 or the
Guarantees thereof 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 conversion of the foreign currency or currency unit in
which a particular Security or Guarantee thereof 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 or a
Guarantee thereof, a state court in the State of New York rendering a judgment
on such Security or Guarantee 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 the Guarantor 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 the Guarantor 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]
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 -- Medium-Term Notes, Series [__________](the
"Securities"), of AIG Program Funding, Inc. (the "Company") and the related
guarantee thereof by American International Group, Inc. (the "Guarantor"), at an
aggregate initial offering price of up to $[__________] or the equivalent
thereof in one or more foreign or composite currencies or currency units.] [USE
THE FOLLOWING IF THE LETTER IS BEING DELIVERED AT A TIME OF DELIVERY --
$[__________] aggregate principal amount of [__________] Notes due [__________]
(the "Securities") of AIG Program Funding, Inc. (the "Company") and the related
guarantees thereof of American International Group, Inc. (the "Guarantor").]
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 [__________], 2007 (the
"Basic Prospectus"), as supplemented by the Prospectus Supplement dated
[__________], 2007 (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 [__________], 2007 (the "Basic Prospectus"), as
supplemented by the Prospectus Supplement, dated [__________], 2007 (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 or the Guarantor'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, those of the Company and those of the Guarantor 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, those of the Company and those of the Guarantor and
its accountants concerning certain portions of the Prospectus [and] reviewed
certificates of certain officers of the Company and the Guarantor [, letters
addressed to you from the Guarantor's accountants] [and an opinion addressed to
you from counsel to the Company and the Guarantor]. 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
AIII-4
<PAGE>
(including the requirements of Form S-3 and the character of the prospectus
contemplated thereby) and the experience we have gained through our practice
under the Act, we confirm to you 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 the filing of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 20__ --Describe other
triggering filing, if applicable][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 Pricing Supplement] [and [any other disclosure added ][in
the Pricing Supplement][to the final 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 (a) the Prospectus, as supplemented by the Pricing Supplement, or
(b) 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
Pricing Supplement] [and [any other disclosure added ][in the Pricing
Supplement][to the final 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 light 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 AIGPF May Offer" and "Description of AIG Guarantees" 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.
AIII-5
<PAGE>
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 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 and Guarantor, 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 AND THE GUARANTOR
(i) The Guarantor 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 Certificate of Incorporation 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 the Distribution 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 the Distribution
Agreement (and any applicable Terms Agreement);
(iv) The issue of the Guarantees and the compliance by the Guarantor with
all of the provisions of 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 Guarantor is a party or
by which the Guarantor may be bound or to which any of the property or assets of
the Guarantor is subject or violate any judgment, order or decree of any court
or governmental body applicable to the Guarantor, except for such breaches,
defaults and violations that would not have a Material Adverse Effect or affect
the validity of the Guarantees, nor will such action result in any violation
AIV-1
<PAGE>
of the provisions of the Restated Certificate of Incorporation, as amended, or
the By-Laws of the Guarantor in effect on the date of such opinion;
(v) 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 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 Pricing Supplement] [and [any other
disclosure added ][in the Pricing Supplement][to the final 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 Pricing Supplement] [and [any
other disclosure added ][in the Pricing Supplement][to the final 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
(vi) 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 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 AIGPF
May Offer" and "Description of AIG Guarantees" 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. Also, in rendering his or her opinion in
paragraphs (v) and (vi), such counsel need not express any opinion or belief as
to
AIV-2
<PAGE>
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][,] [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 attestation report thereon, each as included 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 statement of the eligibility and
qualification of the Trustee under the Indenture under which the Securities are
being issued.
AIV-3
<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, 2006 and 2005
and for each of the three years in the period ended December 31, 2006
included in the Company's annual report on Form 10-K for the year
ended December 31, 2006 (the "Form 10-K"),
2. the related financial statement schedules included in the Form 10-K,
3. management's assessment of the effectiveness of the Company's internal
control over financial reporting as of December 31, 2006 included in
the Company's annual report on Form 10-K for the year ended December
31, 2006 and
4. the effectiveness of the Company's internal control over financial
reporting as of December 31, 2006
The consolidated financial statements, financial statement
schedules and management's assessment referred to above are all incorporated by
reference in the registration statement (Registration No. 333-143992) 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 __________, 2007, of which the
Prospectus dated July 13, 2007 forms a part, as supplemented by the Prospectus
Supplement dated __________, 2007 for the offering of AIG Program Funding,
Inc.'s U.S. $20,000,000,000 Medium-Term Notes to be fully and unconditionally
guaranteed by the Company, 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 Securities and Exchange Commission
(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, 2006; although we have
conducted an audit for the year ended December 31, 2006, 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, 2006 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, 2007,
June 30, 2007 and September 30, 2007 and the unaudited consolidated
statements of income, of cash flows and of comprehensive income included in
the Company's quarterly reports on Form 10-Q for the quarters ended March
31, 2007, June 30, 2007, and September 30, 2007, 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, 2006. Also, we have not audited the Company's
internal control over financial reporting as of any date subsequent to
December 31, 2006. Therefore, we do not express any opinion on the
Company's internal control over financial reporting as of any date
subsequent to December 31, 2006.
4. For purposes of this letter, we have read the minutes of the 2007 meetings
of the shareholders, the Board of Directors and Committees of the Board of
Directors of the Company as set forth in the minute books at __________,
2007, 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 meetings listed below 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 substantive actions taken at such
meetings:
We have carried out other procedures to __________, 2007 (our work did not
extend to __________, 2007) as follows:
With respect to the three-month periods ended March 31, 2007 and 2006, the
three-month and six-month periods ended June 30, 2007 and 2006, and the
three-month and nine month periods ended September 30, 2007 and 2006, we
have
(i) performed the procedures (completed the procedures related to March
31, 2007 on __________, 2007, the procedures related to June 30, 2007
on __________, 2007, and the procedures related to September 30, 2007
on __________, 2007) 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 periods ended March 31, 2007 and 2006, as of
and for the three-month and six-month periods ended June 30, 2007 and
2006, and as of and for the three-month and nine month periods ended
September 30, 2007 and 2006 included in the Company's quarterly
reports on Form 10-Q for the quarters ended March 31, 2007, June 30,
2007, and September 30, 2007, incorporated by reference in the
Registration Statement; and
(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
AV-2
<PAGE>
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.
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.
6. Company officials have advised us that no consolidated financial data as of
any date or for any period subsequent to September 30, 2007 are available;
accordingly, the procedures carried out by us with respect to changes in
financial statement items after September 30, 2007 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
__________, 2007 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 September 30, 2007
consolidated balance sheet incorporated by reference in the Registration
Statement; or (b) for the period from October 1, 2007 to __________, 2007,
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 September 30, 2007,
they are not in a position to comment on whether there was any such change,
increase or decrease.
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-3
<PAGE>
Schedule I
AIG Financial Securities Corp.
ABN AMRO Incorporated
ANZ Securities, Inc.
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.
CIBC World Markets Corp.
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.
KeyBanc Capital Markets Inc.
Lehman Brothers Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Mitsubishi UFJ Securities International plc
Mizuho Securities USA Inc.
Morgan Stanley & Co. Incorporated
nabCapital Securities, LLC
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-4
<PAGE>
ANNEX VI
AGENTS
NAME: CONTACT INFORMATION:
----- --------------------
AIG Financial Securities Corp. 50 Danbury Road
Wilton, Connecticut 06897-4444
Attention: Chief Financial Officer and
copy to the General Counsel at the above
address
Facsimile No.: (203) 222-4780
Telephone No: (203) 222-4700
ABN AMRO Incorporated 55 East 52nd Street, 6th Floor
New York, NY 10055
Attn: Louis DeCaro
Fax: 212-409-7862
Phone: 212-409-1843
ANZ Securities, Inc. 1177 Avenue of the Americas, 6th Floor
New York, NY 10038
Attn: Ann Varalli
Fax: 212-801-9163
Banc of America Securities LLC 40 West 57th Street NY1-040-27-03
New York, NY 10019
Attn: High Grade Debt Capital
Markets Transaction Management
Fax: 212-901-7881
Banca IMI S.p.A. Corso Matteotti 6, 20121
Milan, Italy
Attn: Debt Capital Markets
Fax: 0039-02-7751-2181/2182
BMO Capital Markets Corp. 3 Times Square, 28th Floor
New York, NY 10036
Attn: Norm Shaffer/ Maya Patel
Fax: 212-702-1885
Barclays Capital Inc. 200 Park Avenue
New York, NY, 10166
Attn: MTN Trading
Fax: 212-412-7305
Bear, Stearns & Co. Inc. 383 Madison Avenue
New York, New York 10179
AVI-1
<PAGE>
BNP Paribas Securities Corp. 787 Seventh Avenue
New York, NY 10019
Attn: Capital Markets Legal
Tel: 1.212.841.3487
Fax: 1.212.841.356
BNY Capital Markets, Inc. One Wall Street, 18th floor
New York, NY 10286
Attn: Dan Klinger
Calyon Securities (USA) Inc. 1301 Avenue of the Americas
New York, NY 10017
Attn: DCM-Origination
Fax: (212) 261-3311
CIBC World Markets Corp. 300 Madison Avenue, 5th Floor
New York, NY 10017
Attn.: Paul Hadlow
Fax: 212-885-4314
Citigroup Global Markets Inc. 388 Greenwich Street-34th Floor
New York, NY. 10013
Attn: Transaction Execution Group
Phone: 212-816-1135
Fax: 646-291-5407
Credit Suisse Securities (USA) LLC 11 Madison Avenue
New York, NY 10010
Attn: Short and Medium Term Product Group
Fax: 212-743-5825
Daiwa Securities America Inc. Financial Square 32 Old Slip, 12th Floor
New York, NY 10005
Attn: Bill Cook, Investment Banking
Fax: 212-612-7120
Daiwa Securities SMBC Europe Limited 5 King William Street
London EC4N 7AX
Attn: Manager, Transaction Management
Tel: +44 (0) 7597 8000
Fax: +44 (0) 7597 8644
Deutsche Bank Securities, Inc. 60 Wall Street
New York, NY 10005
Attn: Debt Capital Markets
Fax: (212) 797-2202
AVI-2
<PAGE>
Goldman, Sachs & Co. 85 Broad Street
New York, NY 10004
Attention: Maurice Michaane
Phone: 212-357-8979
Fax: 212-346-3594
Greenwich Capital Markets, Inc. 600 Steamboat Road
Greenwich, CT 06830
Attention: Debt Capital Markets Syndicate
Fax: 203-422-4534
HSBC Securities (USA) Inc. 452 Fifth Avenue, 3rd Floor
New York, NY 10018
Attn: Transaction Management Group
Fax: 212-525-0238
J.P. Morgan Securities Inc. 270 Park Avenue
New York, NY 10017
Attn: Medium-Term Note Desk
Fax. (212) 834-6081.
KeyBanc Capital Markets Inc. 127 Public Square Cleveland
Ohio 44114
Attn: Ann Schiavone or David Blue
Fax: 216-689-4233
Lehman Brothers Inc. 745 Seventh Avenue
New York, NY 10019
Attention: Debt Capital Markets, Financial
Institutions Group
Merrill Lynch, Pierce, Fenner & 4 World Financial Center, Floor 11
Smith Incorporated New York, NY 10080
Attn: Transaction Management Group
Fax: 212-449-2234
Mitsubishi UFJ Securities 6 Broadgate
International plc London EC2M 2AA
Attn: New Issues/Transaction Management
Tel: (+44 20) 7577 2808
Fax: (+44 20) 7577 2872
Mizuho Securities USA Inc. 1251 Avenue of the Americas - 33rd Floor
New York, NY 10020
Attention: Debt Capital Markets Syndicate
Tel: (212) 209-9443
Fax: (917) 512-7166
AVI-3
<PAGE>
Morgan Stanley & Co. Incorporated 1585 Broadway, 29th Floor
New York, NY 10036
Attn: Investment Banking Division
Phone: 212 761 6691
Fax: 212 507 8999
nabCapital Securities, LLC 245 Park Avenue, 28th Floor
New York, NY 10167
Attn: Melissa Gribble, Debt Capital Markets
Ph: 212 916 9688
Fax: 212 949 9515
RBC Capital Markets Corporation 165 Broadway, 2nd Floor
New York, NY 10006
Attn: Debt Capital Markets
Ph: 212 858 7201
Fax: 212 428 3018
Santander Investment Securities Inc. 45 East 53rd Street
New York, NY 10021
Attn: Syndicate Desk
Scotia Capital (USA) Inc. Scotia Plaza, 68th Floor 40 King Street West
Box 4085, Station "A"
Toronto, Ontario M5W 2X6 Canada
SG Americas Securities, LLC 1221 Avenue of the Americas
New York, NY 10020
Attn: CMS Group/ Audrey Sebban
Fax: (212) 278 7532
TD Securities (USA) LLC 31 West 52nd Street
New York, NY, 10019-6101
Attn: John Brenizer
Fax: 212-827-7284
UBS Securities LLC 677 Washington Boulevard
Stamford, CT 06901
Attention: Fixed Income Syndicate
Fax: 203-719-0495
Tel: 203-719-1088
Wachovia Capital Markets, LLC 301 South College Street, NC0613
Charlotte, NC 28288
Attn: Jeremy Schwartz
AVI-4
<PAGE>
ATTACHMENT A
AMERICAN INTERNATIONAL GROUP, INC.
ADMINISTRATIVE PROCEDURE
This Administrative Procedure relates to the Securities defined in the
Distribution Agreement, dated November 9, 2007 (the "DISTRIBUTION AGREEMENT"),
among AIG Program Funding, Inc. (the "COMPANY"), American International Group,
Inc. (the "GUARANTOR") 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 4(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 November 9, 2007, and a Medium-Term Note Certificate Agreement between the
Trustee and the Depositary, dated August 17, 1989 (the "CERTIFICATE AGREEMENT"),
and its obligations as a participant in the Depositary, including the
Depositary's Same-Day Funds Settlement System ("SDFS").
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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
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(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
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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 such
funds to an account that the Company shall 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.
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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:
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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.
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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
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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.
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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
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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.
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