<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
AUGUST 1, 1996
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(DATE OF REPORT)
UGI UTILITIES, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
PENNSYLVANIA 1-1398 23-1174060
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(STATE OR OTHER JURISDICTION (COMMISSION FILE (IRS EMPLOYER
INCORPORATION) NUMBER) ID NUMBER)
100 KACHEL BOULEVARD
GREEN HILLS CORPORATE CENTER, SUITE 400
READING, PENNSYLVANIA 19607
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(610) 796-3400
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
<PAGE>
UGI Utilities, Inc. Form 8-K
Page 2 August 1, 1996
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
(1) Form of Agency Agreement between UGI Utilities, Inc. and
Donaldson, Lufkin & Jenrette Securities Corporation
(4) Instruments defining the rights of security holders,
including indentures
(i) Form of fixed rate Series B Medium-Term Note
(ii) Form of floating rate Series B Medium-Term Note
(iii) Form of Calculation Agent Agreement dated
August 1, 1996 between UGI Utilities, Inc. and
First Union National Bank
(iv) Form of Officers' Certificate establishing series
under the Indenture
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UGI Utilities, Inc.
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(REGISTRANT)
By: /s/ John C. Barney
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John C. Barney
Vice President -
Finance and Accounting
Date: August 1, 1996
<PAGE>
UGI Utilities, Inc. Form 8-K
Page 3 August 1, 1996
EXHIBIT INDEX
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<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
(c)(1) Form of Agency Agreement between UGI Utilities,
Inc. and Donaldson, Lufkin & Jenrette Securities
Corporation
(c)(4)(i) Form of fixed rate Series B Medium-Term Note
(c)(4)(ii) Form of floating rate Series B Medium-Term Note
(c)(4)(iii) Form of Calculation Agent Agreement dated August
1, 1996 between UGI Utilities, Inc. and First
Union National Bank
(c)4(iv) Form of Officers' Certificate establishing series
under the Indenture
</TABLE>
<PAGE>
Exhibit (1)
$75,000,000
UGI UTILITIES, INC.
SERIES B MEDIUM-TERM NOTES
AGENCY AGREEMENT
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August 1, 1996
Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Dear Sirs:
1. INTRODUCTION. UGI Utilities, Inc., a Pennsylvania corporation
(the "Issuer"), confirms its agreement with you (the "Agent") with respect to
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the issue and sale from time to time by the Issuer of up to $75,000,000
aggregate offering price of its Series B Medium-Term Notes Due More Than Nine
Months from Date of Issue registered under the registration statement referred
to in Section 2(a) (any such Series B Medium-Term Notes being hereinafter
referred to as the "Securities," which term shall, if the context so requires,
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include any permanent global Security). Securities may be sold pursuant to
Section 3 of this Agreement or as contemplated by Section 11 of this Agreement
in an aggregate amount not to exceed the amount of Registered Securities (as
defined in Section 2(a) hereof) registered pursuant to such registration
statement reduced by the aggregate amount of any other Registered Securities
sold otherwise than pursuant to Sections 3 and 11 of this Agreement. The
Securities will be issued under an Indenture, dated as of August 1, 1993 (the
"Indenture"), between the Issuer and First Union National Bank, as successor to
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First Fidelity Bank, National Association, as trustee (the "Trustee").
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The Securities shall have the terms described in the Prospectus
referred to in Section 2(a) as it may be amended or supplemented from time to
time, including any supplement to the Prospectus that sets forth only the terms
of a particular issue of the Securities (a "Pricing Supplement"). Securities
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will be issued, and the terms thereof established, from time to time by the
Issuer in accordance with the Indenture and the Procedures (as defined in
Section 3(d) hereof).
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2
2. REPRESENTATIONS AND WARRANTIES OF THE ISSUER. The Issuer
represents and warrants to, and agrees with, the Agent as follows:
(a) The Issuer meets the requirements for use of Form S-3 under the
Securities Act of 1933, as amended (the "Act"), and the rules and
---
regulations ("Rules and Regulations") of the Securities and Exchange
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Commission (the "Commission") and has filed with the Commission a
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registration statement on such form (No. 333-04288), including a
prospectus, relating to debt securities of the Issuer, including the
Securities (the "Registered Securities"), which has become effective under
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the Act. Such registration statement, as amended as of the Closing Date
(as defined in Section 3(e) hereof), is hereinafter referred to as the
"Registration Statement," and the prospectus included in such Registration
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Statement, as supplemented as of the Closing Date, including all material
incorporated by reference therein, is hereinafter referred to as the
"Prospectus." Any reference in this Agreement to amending or supplementing
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the Prospectus or the Registration Statement shall be deemed to include the
filing of materials incorporated by reference in the Prospectus after the
Closing Date, and any reference in this Agreement to any amendment or
supplement to the Prospectus or the Registration Statement shall be deemed
to include any such materials incorporated by reference in the Prospectus
after the Closing Date. The Registration Statement, as it may be amended
or supplemented, meets the requirements set forth in Rule 415(a)(1)(x) and
(a)(2) under the Act and complies in all material respects with said Rule.
(b) On the effective date of the registration statement relating to
the Registered Securities, such registration statement conformed in all
material respects with the requirements of the Act, the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"), and the Rules and
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Regulations and did not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, and on the Closing Date and
at each of the times of acceptance and of delivery referred to in Section
6(a) hereof and at each of the times of amendment or supplementing referred
to in Section 6(b) hereof (the Closing Date and each such time being herein
sometimes referred to as a "Representation Date"), (i) the Registration
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Statement and the Prospectus as then amended or supplemented will conform
in all material respects to the requirements of the Act, the Trust
Indenture Act and the Rules and Regulations; (ii) the Registration
Statement, as then amended or supplemented, will not contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading; and (iii) the Prospectus will not contain an untrue statement
of a material fact or omit to state a material fact necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that the representations and
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warranties in this subsection shall not apply to
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3
statements in or omissions from any of such documents based upon written
information furnished to the Issuer by the Agent specifically for use
therein or to that portion of the Registration Statement which constitutes
the Trustee's Statement of Eligibility and Qualification under the Trust
Indenture Act (the Form T-1). The Indenture, including any amendment and
supplements thereto, pursuant to which the Securities will be issued,
conforms in all material respects with the requirements of the Trust
Indenture Act and the rules and regulations of the Commission thereunder.
(c) The Issuer has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the Commonwealth of
Pennsylvania with full power (corporate and other) and authority to own its
properties and conduct its business as described in the Prospectus; the
Issuer is not qualified as a foreign corporation for the transaction of
business in any other jurisdiction, and does not own or lease properties or
conduct any business so as to require such qualification in any
jurisdiction, other than where the failure to be so qualified would not
have a material adverse effect on the Issuer and its subsidiaries taken as
a whole; and the Issuer does not have any subsidiary that is a "significant
subsidiary" within the meaning of Rule 1-02 of Regulation S-X.
(d) The Issuer is not a "holding company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended (the "PUHCA"). The
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Issuer is a "subsidiary company" of a "holding company" within the meaning
of the PUHCA, but UGI Corporation, the "holding company," is exempt from
all the rules and regulations promulgated thereunder, other than Section
9(a)(2) thereof, by virtue of its filing of a Form U-3A-2 with the
Commission.
3. APPOINTMENT AS AGENT; AGREEMENT OF AGENT; SOLICITATIONS AS AGENT.
(a) Subject to the terms and conditions stated herein, the Issuer
hereby appoints the Agent as an agent of the Issuer for the purpose of
soliciting or receiving offers to purchase the Securities from the Issuer
by others. Notwithstanding anything to the contrary contained herein, the
Issuer may authorize any other person, partnership or corporation (an
"Additional Agent") to act as temporary agent to solicit offers for the
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purchase of all or part of the Securities of the Issuer solely for the
purpose of a single transaction upon reasonable prior notice to the Agent,
provided, however, that any such Additional Agent (i) is a member of the
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National Association of Securities Dealers, Inc. and (ii) shall execute an
agency agreement substantially in the form and substance of this Agreement,
including, if such Additional Agent is acting as principal, a Purchase
Agreement substantially in the form of Exhibit C hereto, except that such
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agency agreement shall be expressly limited by its terms to the transaction
for which it was executed. At such time, the Additional Agent shall
specify its requirements for the delivery of certificates, letters and
opinions as are set
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4
forth in Section 5 hereof. Subject to all of the terms and conditions of
this Agreement and any agreement contemplated by Section 11 hereof, the
foregoing shall not be construed to prevent the Issuer from selling at any
time any Registered Securities in a firm commitment underwriting pursuant
to an underwriting agreement that does not provide for a continuous
offering of such Registered Securities.
(b) On the basis of the representations and warranties contained
herein, but subject to the terms and conditions herein set forth, the Agent
agrees, as agent of the Issuer, to use its reasonable best efforts when
requested by the Issuer to solicit offers to purchase the Securities upon
the terms and conditions set forth in the Prospectus and in the
administrative procedures attached hereto as Exhibit B, as from time to
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time amended or supplemented. So long as this Agreement shall be in
effect, the Issuer shall not (except as otherwise provided in this
Agreement) solicit or accept offers to purchase Securities through any
agents other than the Agent.
Upon receipt of notice from the Issuer as contemplated by Section 4(b)
hereof, the Agent shall suspend its solicitation of offers to purchase
Securities as soon as reasonably practicable, but in any event not later
than one Business Day after receipt of notice from the Issuer, until such
time as the Issuer shall have furnished it with an amendment or supplement
to the Registration Statement or the Prospectus, as the case may be,
contemplated by Section 4(b) and shall have advised the Agent that such
solicitation may be resumed. For purposes of this Agreement, "Business
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Day" shall mean any day that is not a Saturday or Sunday, and that in The
---
City of New York is not a day on which banking institutions generally are
authorized or obligated by law or executive order to close.
The Issuer reserves the right, in its sole discretion, to instruct the
Agent to suspend solicitation of offers to purchase the Securities
commencing at any time for any period of time or permanently. As soon as
reasonably practicable, but in any event not later than one Business Day
after receipt of notice from the Issuer, the Agent will forthwith suspend
solicitation of offers to purchase Securities from the Issuer until such
time as the Issuer has advised the Agent that such solicitation may be
resumed.
The Agent is authorized to solicit offers to purchase Securities as
described in the Prospectus, as amended or supplemented, and only in a
minimum aggregate amount of $100,000. The Agent shall communicate to the
Issuer, orally or in writing, each reasonable offer to purchase Securities
received by it as agent; provided, however, that if the Issuer has informed
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the Agent that it is not interested in having the Agent communicate any
offers to it (whether or not reasonable), the Agent shall be under no
obligation to communicate any offers to the Issuer. The Issuer shall have
the sole right to accept offers to purchase the Securities and may reject
any such
<PAGE>
5
offer, in whole or in part. The Agent shall have the right, without notice
to the Issuer, to reject any offer to purchase Securities received by it,
in whole or in part, if the Agent deems such offer unreasonable, and any
such rejection shall not be deemed a breach of its agreement contained
herein.
No Security which the Issuer has agreed to sell pursuant to this
Agreement shall be deemed to have been purchased and paid for, or sold by
the Issuer, until such Security shall have been delivered to the purchaser
thereof against payment by such purchaser.
(c) At the time of delivery of, and payment for, any Securities sold
by the Issuer as a result of a solicitation made by, or offer to purchase
received by, the Agent, the Issuer agrees to pay the Agent a commission in
accordance with the schedule set forth in Exhibit A hereto.
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(d) Administrative procedures respecting the sale of Securities (the
"Procedures") shall be agreed upon from time to time by the Agent and the
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Issuer. The initial Procedures, which are set forth in Exhibit B hereto,
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shall remain in effect until changed by agreement between the Issuer and
the Agent promptly confirmed in writing. The Agent and the Issuer agree to
perform the respective duties and obligations specifically provided to be
performed by each of them herein and in the Procedures. The Issuer will
furnish to the Trustee a copy of the Procedures as from time to time in
effect, and will furnish the Trustee a copy of the Procedures promptly
after any change therein.
(e) The documents required to be delivered by Section 5 hereof shall
be delivered at the office of Shearman & Sterling, 599 Lexington Avenue,
New York, New York 10022, not later than 10:00 A.M., New York City time, on
the date of this Agreement or at such later time as may be mutually agreed
by the Issuer and the Agent, which in no event shall be later than the time
at which the Agent commences solicitation of purchases of Securities
hereunder, such time and date being herein called the "Closing Date."
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(f) The Agent agrees to keep and maintain confidential any
information provided by the Issuer pursuant to the third sentence of
Section 4(c) and known by the Agent to be non-public, until such
information is announced or otherwise disclosed to the general public.
4. CERTAIN AGREEMENTS OF THE ISSUER. The Issuer agrees with the
Agent that it will furnish to Shearman & Sterling, counsel for the Agent, one
(1) signed copy of the registration statement relating to the Registered
Securities, including all exhibits, in the form
<PAGE>
6
that it became effective and of all amendments thereto and that, in connection
with each offering of Securities:
(a) The Issuer will advise the Agent promptly of any proposal to
amend or supplement the Registration Statement or the Prospectus (other
than by an amendment or supplement that is a document filed with the
Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) and will afford the
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Agent a reasonable opportunity to comment on any such proposed amendment or
supplement. The Issuer will also advise the Agent of the filing and
effectiveness of any such amendment or supplement and of the institution by
the Commission of any stop order proceedings in respect of the Registration
Statement or of any part thereof and, during a Marketing Time (as defined
in Section 4(b) below), will use its best efforts to prevent the issuance
of any such stop order and to obtain as soon as possible its lifting, if
issued.
(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act and no suspension of solicitation of
offers to purchase Securities pursuant to Section 3(b) or this Section 4(b)
shall be in effect (any such time and any time either (i) when the Agent
shall own any Securities with the intention of reselling them, but only for
the time period specified in the Purchase Agreement relating to the
purchase of such Securities from the Issuer in the event that a Purchase
Agreement is entered into, or such other time period as to which the Issuer
and the Agent may agree, in the event that a Purchase Agreement is not
entered into, or (ii) when the Issuer has accepted an offer to purchase
Securities but the related settlement has not occurred being referred to
herein as a "Marketing Time"), any event occurs as a result of which the
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Prospectus as then amended or supplemented would contain an untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, or if it is necessary at any
such time to amend the Prospectus to comply with the Act, the Issuer will
promptly notify the Agent to suspend solicitation of offers to purchase the
Securities; and if the Issuer shall decide to amend or supplement the
Registration Statement or the Prospectus, it will promptly advise the Agent
by telephone (with confirmation in writing) and, subject to the provisions
of subsection (a) of this Section, will promptly prepare and file with the
Commission an amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance and will supply
any such amended or supplemented Prospectus to the Agent in such quantities
as the Agent may reasonably request. Notwithstanding the foregoing, if, at
the time any such event occurs or it becomes necessary to amend the
Prospectus to comply with the Act, either (i) the Agent shall own any
Securities with the intention of reselling them, but only for the time
period specified in the Purchase Agreement relating to the purchase of such
Securities from the Issuer in the event that a Purchase
<PAGE>
7
Agreement is entered into, or such other time period as to which the Issuer
and the Agent may agree, in the event that a Purchase Agreement in not
entered into, or (ii) the Issuer has accepted an offer to purchase
Securities but the related settlement has not occurred, the Issuer, subject
to the provisions of subsection (a) of this Section, will promptly prepare
and file with the Commission an amendment or supplement that will correct
such statement or omission or an amendment that will effect such compliance
and will supply any such amended or supplemented Prospectus to the Agent in
such quantities as the Agent may reasonably request. Neither the Agent's
consent to, nor its delivery of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 5.
(c) The Issuer will file promptly all documents required to be filed
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act. The Issuer will advise the Agent of the filing of any
document pursuant to the periodic reporting requirements of the Exchange
Act on the day of such filing and will furnish one copy of such document to
the Agent no later than one Business Day after the day of such filing. In
addition, on or prior to the date on which the Issuer makes any press
release or announcement to the general public concerning earnings or
concerning any other event which is required to be described, or which the
Issuer proposes to describe, in a document filed pursuant to the Exchange
Act, the Issuer will furnish the information contained or to be contained
in such press release or announcement to the Agent and will furnish the
Agent with copies of all such press releases or announcements. The Issuer
will promptly notify the Agent of the Issuer's receipt of written or oral
notice of any downgrading in the rating of the Securities or any other debt
securities of the Issuer or any proposal to downgrade the rating of the
Securities or any other debt securities of the Issuer by any "nationally
recognized statistical rating organization" (as defined for purposes of
Rule 436(g) under the Act), or any public announcement that any such
organization has under surveillance or review its rating of any debt
securities of the Issuer (other than an announcement with positive
implications of a possible upgrading, and no implication of a possible
downgrading of such rating).
(d) As soon as practicable, after the date of each acceptance by the
Issuer of an offer to purchase Securities hereunder, but in any event not
later than the Applicable Availability Date (as defined below), the Issuer
will make generally available to its security-holders earnings statements
(as such term is defined in Rule 158 under the Act) covering a period of at
least 12 months beginning after the Applicable Effective Date (as defined
below) which will satisfy the provisions of Section 11(a) of the Act and
Rule 158 thereunder. For the purpose of the preceding sentence only,
"Applicable Effective Date" means the latest of (i) the effective date of
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the registration statement relating to the Registered Securities, (ii) the
effective date of the most recent post-effective amendment to such
registration statement to become
<PAGE>
8
effective prior to the date of such acceptance, and (iii) the date of
filing of the Issuer's most recent Annual Report on Form 10-K filed with
the Commission prior to the date of such acceptance, and "Applicable
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Availability Date" means (A) the 45th day after the end of the fourth
-----------------
fiscal quarter following the fiscal quarter that includes the Applicable
Effective Date or (B), if such fourth fiscal quarter is the last quarter of
the Issuer's fiscal year, the 90th day after the end of such fourth fiscal
quarter.
(e) The Issuer will furnish to the Agent copies of the Registration
Statement, including all exhibits, the Prospectus and all amendments and
supplements to such documents (including any Pricing Supplement), in each
case as soon as available and in such quantities as are reasonably
requested.
(f) The Issuer will endeavor, in cooperation with the Agent, to
arrange for the qualification of the Securities for sale and the
determination of their eligibility for investment under the laws of such
jurisdictions as the Agent and the Issuer agree upon and will continue such
qualifications in effect so long as required for the distribution of the
Securities; provided, however, that in connection therewith the Issuer
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shall not be required to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified other than
the State of New York or to file general consent to service of process in
any jurisdiction.
(g) So long as any Securities are outstanding, the Issuer will
furnish to the Agent, (i) promptly after they are available, a copy of each
report or definitive proxy statement of the Issuer filed with the
Commission under the Exchange Act or mailed to stockholders, and (ii) from
time to time, such other publicly released information concerning the
Issuer as the Agent may reasonably request; provided, however, that the
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Issuer need furnish exhibits to the reports specified in clause (i) only to
the extent requested by the Agent.
(h) The Issuer will pay all expenses incident to the performance of
its obligations under this Agreement or any agreement contemplated by
Section 11 hereof and will reimburse the Agent for any reasonable expenses
(including reasonable fees and disbursements of counsel) incurred by it in
connection with qualification of the Securities for sale and determination
of their eligibility for investment under the laws of such jurisdictions as
the Agent and the Issuer agree upon and the printing of memoranda relating
thereto, for any fees charged by investment rating agencies for the rating
of the Securities, for any filing fee of the National Association of
Securities Dealers, Inc. relating to the Securities, for reasonable
expenses incurred by the Agent in distributing the Prospectus and all
supplements thereto (including any Pricing Supplement), for previously
approved costs incurred by the Agent in advertising any offering of
Securities and for the Agent's reasonable expenses (including the
<PAGE>
9
reasonable fees and disbursements of counsel to the Agent) incurred in
connection with the establishment of the program contemplated by this
Agreement.
5. CONDITIONS OF OBLIGATIONS. The obligation of the Agent, as agent
of the Issuer, under this Agreement at any time to solicit offers to purchase
the Securities is subject to the accuracy, on the date hereof, on each
Representation Date and on the date of each such solicitation, of the
representations and warranties of the Issuer herein, to the accuracy, on each
such date, of the statements of the Issuer's officers made pursuant to the
provisions hereof, the performance, on or prior to each such date, by the Issuer
of its obligations hereunder, and to each of the following additional conditions
precedent:
(a) The Prospectus, as amended or supplemented as of any
Representation Date or date of such solicitation, as the case may be, shall
have been filed with the Commission in accordance with the Rules and
Regulations, and no stop order suspending the effectiveness of the
Registration Statement or of any part thereof shall have been issued and no
proceedings for that purpose shall have been instituted or, to the
knowledge of the Issuer or the Agent, shall be contemplated by the
Commission.
(b) Neither the Registration Statement nor the Prospectus, as amended
or supplemented as of any Representation Date or date of such solicitation,
as the case may be, shall contain any untrue statement of fact which, in
the opinion of counsel for the Agent, is material or omit to state a fact
which, in the opinion of counsel for the Agent, is material and is required
to be stated therein or is necessary to make the statements therein not
misleading, other than any statement contained in, or other matter omitted
from, the Registration Statement or Prospectus in reliance upon, and in
conformity with, information furnished in writing by the Agent to the
Issuer expressly for use in the Registration Statement or Prospectus.
(c) There shall not have occurred since the date of the most recent
amendment or supplement to the Prospectus (i) any change in the financial
condition, results of operations, business or prospects of the Issuer and
its subsidiaries taken as a whole that, in the reasonable judgment of the
Agent, makes it impracticable to proceed with the soliciting of offers to
purchase the Securities as contemplated by the Registration Statement or
the Prospectus, (ii) any downgrading in the rating of the Securities or any
other debt securities of the Issuer by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g)
under the Act), or any public announcement that any such organization has
under surveillance or review its rating of any debt securities of the
Issuer (other than any announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of such
rating); (iii) any suspension or limitation of trading in securities
generally on the New York Stock Exchange, or any setting of minimum prices
for trading on such exchange, or any suspension of trading of any
securities of the Issuer
<PAGE>
10
on any exchange or in the over-the-counter market if, in the judgment of
the Agent, any such event or any condition giving rise thereto or existing
concurrently therewith makes it impracticable to proceed with the
solicitation of offers to purchase, or sales of, Securities on the terms
and in the manner contemplated by the applicable Pricing Supplement and the
Prospectus; (iv) any banking moratorium declared by Federal or New York
authorities; or (v) any declaration of war by Congress or any other
substantial national or international calamity or emergency if, in the
judgment of the Agent, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical to proceed with
solicitations of offers to purchase, or sales of, Securities on the terms
and in the manner contemplated by the applicable Pricing Supplement and the
Prospectus.
(d) At the Closing Date, the Agent shall have received an opinion,
dated the Closing Date, of Brendan P. Bovaird, general counsel for the
Issuer, to the effect that:
(i) (A) The Issuer has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized, with full
corporate power and authority to own its properties and conduct its
business as described in the Prospectus; and (B) the Issuer is not
qualified as a foreign corporation for the transaction of business in
any other jurisdiction, and the Issuer does not own or lease
properties or conduct any business so as to require such qualification
in any jurisdiction, other than where the failure to be so qualified
would not have a material adverse effect on the Issuer and its
subsidiaries taken as a whole;
(ii) The Indenture has been duly authorized, executed and
delivered by the Issuer and has been duly qualified under the Trust
Indenture Act, and constitutes a valid and legally binding obligation
of the Issuer enforceable in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization or other similar laws affecting enforcement
of creditors' rights generally and except as enforcement thereof is
subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law);
(iii) The Securities have been duly authorized and, when executed
by the Issuer and authenticated by the Trustee in accordance with the
Indenture and delivered against payment therefor as contemplated by
this Agreement, such Securities will be duly issued and delivered by
the Issuer and constitute valid and legally binding obligations of the
Issuer, entitled to the benefits of the Indenture and enforceable in
accordance with their terms, except as
<PAGE>
11
enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization or other similar laws affecting enforcement
of creditors' rights generally and except as enforcement thereof is
subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law); and
the Securities, when so issued and delivered, will conform in all
material respects to the description thereof contained in the
Prospectus;
(iv) To the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding before any court or governmental
agency, authority or body or any arbitrator involving the Issuer or
any of its subsidiaries of a character required to be disclosed in the
Registration Statement by Item 103 of Regulation S-K which is not
disclosed in the Prospectus;
(v) The Registration Statement has become effective under the
Act, and, to the knowledge of such counsel, no stop order suspending
the effectiveness of the Registration Statement or of any part thereof
has been issued, and, to the knowledge of such counsel, no proceedings
for that purpose have been instituted or are pending or contemplated
under the Act, and the registration statement relating to the
Registered Securities, as of its effective date, the Registration
Statement and the Prospectus, as of the Closing Date, and any
amendment or supplement thereto, as of its date, complied as to form
in all material respects with the requirements of the Act, the Trust
Indenture Act and the Rules and Regulations; nothing has come to the
attention of such counsel that leads them to believe that the
Registration Statement relating to the Registered Securities, as of
its effective date and as of the Closing Date, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus, or any amendment or
supplement thereto, as of its respective effective or issue date and
as of the Closing Date, contained or contains any untrue statement of
a material fact or omitted or omits to state a material fact necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading (it being understood that
such counsel need express no opinion as to the financial statements or
schedules or other financial or statistical information included or
incorporated by reference in the Registration Statement or the
Prospectus);
(vi) Except for the registration of the securities certificate
relating to the Securities by the Pennsylvania Public Utility
Commission, which registration has been obtained by corrected order
dated May 9, 1996, no consent, approval, authorization or order of any
court or governmental agency
<PAGE>
12
or body is required for the consummation of the transactions
contemplated by this Agreement in connection with the issuance and
sale of the Securities by the Issuer, except such as have been
obtained and made under the Act and the Trust Indenture Act and as may
be required under state securities laws;
(vii) The execution, delivery and performance of the Indenture
or this Agreement, the issue and sale of the Securities, the
consummation of the other transactions herein contemplated or the
fulfillment of the terms hereof will not conflict with, result in a
breach of, or constitute a default under the charter or by-laws of the
Issuer or the terms, except any of the financial covenants, of any
indenture or other agreement or instrument known to such counsel to
which the Issuer or any of its subsidiaries is a party or bound, or
any statute, rule, order or regulation known to such counsel and
applicable to the Issuer or any of its subsidiaries of any court,
regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over the Issuer or any of its
subsidiaries; and the Issuer has full power and authority to
authorize, issue and sell the Securities as contemplated by this
Agreement;
(viii) This Agreement has been duly authorized, executed and
delivered by the Issuer;
(ix) The Issuer and its subsidiaries have all necessary
franchises or permits for gas and electric operations in all
communities now served, except as set forth in the Registration
Statement and except where, in the opinion of such counsel, the
failure to be so authorized by franchise or permit does not materially
affect the right of the Issuer or such subsidiary to the use of its
properties or the conduct of its business; and the franchises of the
Issuer and its subsidiaries referred to in the Registration Statement
are good and valid except for and subject only to such defects as may
be set forth or referred to in the Registration Statement, and such
others as do not, in the opinion of such counsel, materially affect
the right of the Issuer or such subsidiary to the use of its
properties or the conduct of its business, and said franchises impose
no materially burdensome restrictions; and
(x) The Issuer is not a "holding company" within the meaning
of the PUHCA. The Issuer is a "subsidiary company" of a "holding
company" within the meaning of the PUHCA, but UGI Corporation, the
"holding company," is exempt from all the rules and regulations
promulgated thereunder, other than Section 9(a)(2) thereof, by virtue
of its filing of a Form U-3A-2 with the Commission.
<PAGE>
13
In rendering such opinion, such counsel may rely as to matters of
fact, to the extent they deem proper, on certificates of responsible
officers of the Issuer and public officials.
(e) At the Closing Date, the Agent shall have received a certificate,
dated the Closing Date, of the President or any Vice President and a
principal financial or accounting officer of the Issuer in which such
officers shall state that (i) the representations and warranties of the
Issuer in this Agreement are true and correct, (ii) the Issuer has complied
with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date, (iii) no
stop order suspending the effectiveness of the Registration Statement or of
any part thereof has been issued and, to their knowledge, no proceedings
for that purpose have been instituted or are contemplated by the
Commission, and (iv) subsequent to the date of the most recent financial
statements included or incorporated by reference in the Prospectus, there
has been no material adverse change in the financial position, results of
operations, business or prospects of the Issuer and its subsidiaries taken
as a whole, except as set forth in or contemplated by the Prospectus.
(f) At the Closing Date, the Agent shall have received a letter,
dated the Closing Date, of Coopers & Lybrand L.L.P., confirming that they
are independent public accountants within the meaning of the Act and the
applicable published Rules and Regulations thereunder and stating in effect
that:
(i) In their opinion, the financial statements and schedules
examined by them and included in the Registration Statement and
Prospectus comply in form in all material respects with the applicable
accounting requirements of the Act and the related published Rules and
Regulations;
(ii) On the basis of a reading of the latest available interim
financial statements of the Issuer, inquiries of officials of the
Issuer who have responsibility for financial and accounting matters
and other specified procedures, nothing came to their attention that
caused them to believe that:
(A) the unaudited financial statements, if any, included
in the Prospectus do not comply in form in all material respects
with the applicable accounting requirements of the Act and the
related published Rules and Regulations or any material
modification should be made to the unaudited consolidated
financial statements for them to be in conformity with generally
accepted accounting principles;
(B) the unaudited capsule information, if any, included
in the Prospectus does not agree with the amounts set forth in
the unaudited
<PAGE>
14
consolidated financial statements from which such capsule
information was derived or was not determined on a basis
substantially consistent with that of the audited financial
statements included in the Prospectus;
(C) at the date of the latest available balance sheet
read by such accountants, or at a subsequent specified date not
more than five days prior to the Closing Date, there was any
change in the capital stock or any increase in short-term
indebtedness or long-term debt of the Issuer and consolidated
subsidiaries or, at the date of the latest available balance
sheet read by such accountants, there was any increase in
consolidated net current liabilities or any decrease in
consolidated net assets, as compared with amounts shown on the
latest balance sheet included in the Prospectus; or
(D) for the period from the date of the latest income
statement included in the Prospectus to the closing date of the
latest available income statement read by such accountants there
were any decreases, as compared with the corresponding period of
the previous year, in consolidated operating revenues, utility
operating income, or net income, or, where the comparison is of
fiscal quarters, in the ratio of earnings to fixed charges;
except in all cases set forth in clauses (C) and (D) above for
changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(iii) They have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information contained in the Prospectus (in each case to the extent
that such dollar amounts, percentages and other financial information
are derived from the general accounting records of the Issuer and its
subsidiaries subject to the internal controls of the Issuer's
accounting system or are derived directly from such records by
analysis or computation) with the results obtained from inquiries, a
reading of such general accounting records and other procedures
specified in such letter and have found such dollar amounts,
percentages and other financial information to be in agreement with
such results, except as otherwise specified in such letter.
All financial statements and schedules included in material
incorporated by reference into the Prospectus shall be deemed included in
the Prospectus for purposes of this subsection.
<PAGE>
15
(g) The Agent shall have received from Shearman & Sterling, counsel
for the Agent, such opinion or opinions, dated the Closing Date, with
respect to the incorporation of the Issuer, the validity of the Securities,
the Registration Statement, the Prospectus and other related matters as
they may require, and the Issuer shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon
such matters. In rendering such opinion, Shearman & Sterling may rely as to
the matters relating to the laws of the Commonwealth of Pennsylvania upon
the opinion of Brendan P. Bovaird, general counsel for the Issuer.
(h) Subsequent to the execution of this Agreement (1) the Issuer
shall not have received notice that either Moody's Investors Service Inc.
("Moody's") or Standard & Poor's Corporation ("S&P") intends to reduce, or
-------- ---
is considering a reduction in, the ratings of any of the Issuer's debt
securities unless Moody's or S&P's intention to so reduce or consideration
of such a reduction is then publicly known and (2) the Issuer's debt
securities shall be rated as investment grade debt by Moody's and S&P.
The Issuer will furnish the Agent with such conformed copies of such
opinions, certificates, letters and documents as it may reasonably request.
6. ADDITIONAL COVENANTS OF THE ISSUER. The Issuer agrees that:
(a) Each acceptance by the Issuer of an offer for the purchase of
Securities shall be deemed to be an affirmation that its representations
and warranties contained in this Agreement are true and correct at the time
of such acceptance and a covenant that such representations and warranties
will be true and correct at the time of delivery to the purchaser of the
Securities as though made at and as of each such time, it being understood
that such representations and warranties shall relate to the Registration
Statement and the Prospectus as amended or supplemented at each such time.
Each such acceptance by the Issuer of an offer for the purchase of
Securities shall be deemed to constitute an additional representation,
warranty and agreement by the Issuer that, as of the settlement date for
the sale of such Securities, after giving effect to the issuance of such
Securities, of any other Securities to be issued on or prior to such
settlement date and of any other Registered Securities to be issued and
sold by the Issuer on or prior to such settlement date, the aggregate
amount of Registered Securities (including any Securities) which have been
issued and sold by the Issuer will not exceed the amount of Registered
Securities registered pursuant to the Registration Statement.
(b) Each time that the Registration Statement or the Prospectus shall
be amended or supplemented (other than by a Pricing Supplement), the Issuer
shall, (A) concurrently with such amendment or supplement, if such
amendment or
<PAGE>
16
supplement shall occur during a Marketing Time, or (B) at or immediately
prior to commencement of the next Marketing Time if such amendment or
supplement shall not occur during a Marketing Time, furnish the Agent with
a certificate, dated the date of delivery thereof, of the President or any
Vice President and a principal financial or accounting officer of the
Issuer, in the form of Exhibit D hereto, to the effect that the statements
---------
contained in the certificate covering the matters set forth in Section 5(e)
hereof which was last furnished to the Agent are true and correct at the
time of such amendment or supplement, as though made at and as of such time
or, in lieu of such certificate, a certificate of the same tenor as the
certificate referred to in Section 5(e); provided, however, that any
-------- -------
certificate furnished under this Section 6(b) shall relate to the
Registration Statement and the Prospectus as amended or supplemented at the
time of delivery of such certificate and, in the case of the matters set
forth in clause (ii) of Section 5(e), to the time of delivery of such
certificate.
(c) At each Representation Date referred to in Section 6(b), the
Issuer shall (A) concurrently if such Representation Date shall occur
during a Marketing Time, or (B) at or immediately prior to commencement of
the next Marketing Time if such Representation Date shall not occur during
a Marketing Time, furnish the Agent with a written opinion or opinions,
dated the date of such Representation Date, of general counsel for the
Issuer and/or other counsel for the Issuer, in form satisfactory to the
Agent, to the effect set forth in Section 5(d) hereof; provided, however,
-------- -------
that to the extent appropriate such opinion or opinions may reconfirm
matters set forth in a prior opinion delivered under Section 5(d) or this
Section 6(c); provided further, however, that any opinion or opinions
-------- ------- -------
furnished under this Section 6(c) shall relate to the Registration
Statement and the Prospectus as amended or supplemented at the time of
delivery of such opinion or opinions.
(d) At each Representation Date referred to in Section 6(b) on which
the Registration Statement or the Prospectus shall be amended or
supplemented to include additional financial information, the Issuer shall
cause Coopers & Lybrand (A) forthwith if such Representation Date shall
occur during a Marketing Time, or (B) at or immediately prior to
commencement of the next Marketing Time if such Representation Date shall
not occur during a Marketing Time, to furnish the Agent with a letter,
addressed jointly to the Issuer and the Agent and dated the date of
delivery of such letter, in form and substance satisfactory to the Agent,
to the effect set forth in Section 5(f) hereof; provided, however, that to
-------- -------
the extent appropriate such letter may reconfirm matters set forth in a
prior letter delivered by Coopers & Lybrand pursuant to Section 5(f) or
this Section 6(d); provided further, however, that any letter furnished
-------- ------- -------
under this Section 6(d) shall relate to the Registration Statement and the
Prospectus as amended or supplemented at the time of delivery of such
letter, with such changes as may be necessary to reflect changes in the
financial statements and other information derived from the accounting
records of the Issuer.
<PAGE>
17
(e) The Issuer agrees that any obligation of a person who has agreed
to purchase Securities to make payment for and take delivery of such
Securities shall be subject to (i) the accuracy, on the related settlement
date fixed pursuant to the Procedures, of the Issuer's representation and
warranty deemed to be made to the Agent pursuant to the last sentence of
subsection (a) of this Section 6 and (ii) the satisfaction, on such
settlement date, of each of the conditions set forth in Sections 5(a) and
(c), it being understood that the judgment of such person with respect to
Sections 5(c)(i), 5(c)(iii) and 5(c)(v) shall be substituted, for purposes
of this Section 6(e), for the judgment of the Agent (provided that in the
case of Section 5(c)(i) such change must, in the reasonable judgment of
such person, be so material and adverse as to make it impracticable to
purchase such Securities), and under no circumstance shall the Agent have
any duty or obligation to exercise the judgment permitted under Section
5(c) on behalf of any such person.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Issuer agrees to indemnify and hold harmless the Agent
against any losses, claims, damages or liabilities, joint or several, to
which the Agent may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, the
Prospectus, or any amendment or supplement thereto, or any related
preliminary prospectus or preliminary prospectus supplement, or the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein (in the case
of the Prospectus, in the light of the circumstances under which they were
made,) not misleading, and will reimburse the Agent for any reasonable
legal or other expenses incurred by the Agent in connection with
investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the Issuer
-------- -------
will not be liable to the Agent in any 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 of such documents in reliance upon and in conformity with written
information furnished to the Issuer by the Agent specifically for use
therein, unless such loss, claim, damage or liability arises out of the
offer or sale of Securities occurring after the Agent has notified the
Issuer in writing that such information should no longer be used therein.
(b) The Agent agrees, severally and not jointly, to indemnify and
hold harmless the Issuer against any losses, claims, damages or liabilities
to which the Issuer may become subject, under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained
<PAGE>
18
in the Registration Statement, the Prospectus or any amendment or
supplement thereto, or any related preliminary prospectus or preliminary
prospectus supplement, 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 (in the case of the
Prospectus, in the light of the circumstances under which they were made,)
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 reliance upon and in conformity with written
information furnished to the Issuer by the Agent specifically for use
therein, and will reimburse any legal or other expenses reasonably incurred
by the Issuer in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are incurred, unless
such loss, claim, damage or liability arises out of the offer or sale of
Securities occurring after the Agent has notified the Issuer in writing
that such information should no longer be used therein. The Issuer
acknowledges that: (i) the statement appearing on page S-2 of the
Prospectus Supplement with respect to stabilizing the market price of the
Securities, (ii) the information appearing in the third, fourth and fifth
sentences of the second paragraph under the heading "Plan of Distribution"
in the Prospectus Supplement, and (iii) the statement in the third sentence
of the fourth paragraph under the heading "Plan of Distribution" in the
Prospectus Supplement constitute the only information furnished in writing
by or on behalf of the Agent for inclusion in the documents referred to in
the foregoing indemnity, and you confirm that such statements are correct.
(c) Promptly after receipt by an indemnified party under this Section
7 of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under subsection (a) or (b) above, notify the indemnifying party 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 under subsections (a) or (b) above, except to the extent that the
indemnifying party has been materially prejudiced by such failure, or from
any liability that it may have to any indemnified party otherwise than
under subsections (a) and (b) above. 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
appoint counsel reasonably satisfactory to such indemnified party to
represent the indemnified party in such action; provided, however, that if
-------- -------
the defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall
have the right to select separate counsel and to participate in, but not to
control, the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the
<PAGE>
19
indemnifying party to such indemnified party of its election so to appoint
counsel to defend such action and approval by the indemnified party of such
counsel, the indemnifying party will not be liable to such indemnified
party under this Section 7 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being
understood, however, that the indemnifying party shall not be liable for
the expenses of more than one separate counsel (plus any local counsel),
approved by the Agent in the case of paragraph (a) of this Section 7,
representing the indemnified parties under such paragraph (a) who are
parties to such action), (ii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of
the action or (iii) the indemnifying party has authorized the employment of
counsel for the indemnified party at the expense of the indemnifying party;
and except that, if clause (i) or (iii) is applicable, such liability shall
be only in respect of the counsel referred to in such clause (i) or (iii).
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of 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 the losses, claims, damages or liabilities
referred to in subsection (a) or (b) above (i) in such proportion as is
appropriate to reflect the relative benefits received by the Issuer on the
one hand and the Agent on the other from the offering pursuant to this
Agreement of the Securities which are the subject of the action or (ii) if
the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Issuer on the one hand and the Agent on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities as well as any other relevant equitable considerations. The
relative benefits received by the Issuer on the one hand and the Agent on
the other shall be deemed to be in the same proportions as the total net
proceeds from the offering pursuant to this Agreement of the Securities
which are the subject of the action (before deducting expenses) received by
the Issuer bear to the total discounts and commissions received by the
Agent from the offering of such Securities pursuant to this Agreement. The
relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Issuer or the Agent and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The Issuer and the Agent agree
that it would not be just and equitable if contribution pursuant to this
<PAGE>
20
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
by an indemnified party as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this subsection (d) shall
be deemed to include any reasonable legal or other expenses incurred by
such indemnified party in connection with investigating or defending any
action or claim which is the subject of this subsection (d).
Notwithstanding the provisions of this subsection (d), the Agent shall not
be required to contribute any amount in excess of the amount by which the
total price at which the Securities which are the subject of the action and
which were distributed to the public through it pursuant to this Agreement
or upon resale of Securities purchased by it from the Issuer exceeds the
amount of any damages which the 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 representation.
(e) The obligations of the Issuer under this Section 7 shall be in
addition to any liability which the Issuer may otherwise have and shall
extend, upon the same terms and conditions, to the person, if any, who
controls the Agent within the meaning of the Act; and the obligations of
the Agent under this Section 7 shall be in addition to any liability which
the Agent may otherwise have and shall extend, upon the same terms and
conditions, to each director of the Issuer (including any person who, with
his consent, is named in the Registration Statement as about to become a
director of the Issuer), to each officer of the Issuer who has signed the
Registration Statement and to each person, if any, who controls the Issuer
within the meaning of the Act.
8. STATUS OF THE AGENT. In soliciting offers to purchase the
Securities from the Issuer pursuant to this Agreement and in assuming its other
obligations hereunder (other than offers to purchase pursuant to Section 11),
the Agent is acting individually and not jointly and is acting solely as agent
for the Issuer and not as principal. The Agent will use its reasonable best
efforts to assist the Issuer in obtaining performance by each purchaser whose
offer to purchase Securities from the Issuer has been solicited by the Agent and
accepted by the Issuer, but the Agent shall have no liability to the Issuer in
the event any such purchase is not consummated for any reason. If the Issuer
shall default on its obligations to deliver Securities to a purchaser whose
offer it has accepted, the Issuer (i) shall hold the Agent harmless against any
loss, claim or damage arising from or as a result of such default by the Issuer,
and (ii) in particular, shall pay to the Agent any commission to which it would
be entitled in connection with such sale.
<PAGE>
21
9. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The
respective indemnities, agreements, representations, warranties and other
statements of the Issuer or its officers and of the Agent 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 the Agent, the Issuer or any of their respective representatives, officers or
directors or any controlling person and will survive delivery of and payment for
the Securities. If this Agreement is terminated pursuant to Section l0 or for
any other reason, the Issuer shall remain responsible for the expenses to be
paid or reimbursed by it pursuant to Section 4(h) and the obligations of the
Issuer under Sections 4(d) and 4(g) and the respective obligations of the Issuer
and the Agent pursuant to Section 7 shall remain in effect. In addition, if any
such termination shall occur either (i) when the Agent shall own any Securities
with the intention of reselling them, but only for the time period specified in
the Purchase Agreement relating to the purchase of such Securities from the
Issuer in the event that a Purchase Agreement is entered into, or such other
time period as to which the Issuer and the Agent may agree, in the event that a
Purchase Agreement is not entered into, or (ii) when the Issuer has accepted an
offer to purchase Securities but the related settlement has not occurred, the
obligations of the Issuer under the second sentence of Section 4(b), under
Sections 4(a), 4(c), 4(e) and 4(f) and, in the case of a termination occurring
as described in (ii) above, under Sections 3(c), 6(a) and 6(e) and under the
last sentence of Section 8, shall also remain in effect.
10. TERMINATION. This Agreement may be terminated for any reason at
any time by the Issuer as to the Agent or by the Agent insofar as this Agreement
relates to the Agent, upon the giving of one day's written notice of such
termination to the other party hereto. Any settlement with respect to Securities
placed by the Agent occurring after termination of this Agreement shall be made
substantially in accordance with the Procedures and the Agent agrees, if
requested by the Issuer, to take the steps therein provided to be taken by the
Agent in connection with such settlement.
11. PURCHASES AS PRINCIPAL. From time to time, the Agent may agree
with the Issuer to purchase Securities from the Issuer as principal and (unless
the Issuer and the Agent may otherwise agree) such purchase shall be made in
accordance with the terms of a separate agreement (a "Purchase Agreement") in
------------------
the form attached hereto as Exhibit C (or any such other written form as may be
---------
agreed to between the Issuer and the Agent) with such additional provisions
relating to the terms of the Securities and of the purchase and sale (and, if
applicable, resale) thereof as shall be set forth in the Purchase Information
delivered pursuant to the Procedures, and the Agent's compensation shall, unless
otherwise agreed between the Issuer and the Agent, be the amount thereof set
forth in the Pricing Supplement. For the purposes of Section 12 of this
Agreement, the term "Purchaser" shall refer to you acting solely as principal
---------
hereunder and not as agent.
<PAGE>
22
12. CONDITIONS TO THE OBLIGATIONS OF A PURCHASER. The obligations of
a Purchaser to purchase Securities pursuant to any Purchase Agreement will be
subject to the accuracy of the representations and warranties on the part of the
Issuer herein as of the date of the respective Purchase Agreement and as of the
settlement date for the sale of such Securities, to the performance and
observance by the Issuer of all covenants and agreements herein and therein
contained on its part to be performed and observed and to the following
additional conditions precedent:
(a) No stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and no
proceedings for that purpose shall have been instituted or threatened.
(b) Except to the extent modified by the respective Purchase
Agreement, the Purchaser shall have received, appropriately updated in a
manner consistent with Section 6 hereof, (i) a certificate of the Issuer,
dated as of the settlement date, to the effect set forth in Section 5(e),
(ii) the opinion or opinions of the general counsel of the Issuer or other
counsel to the Issuer, dated as of the settlement date, to the effect set
forth in Section 5(d), (iii) the opinion of Shearman & Sterling, counsel
for the Purchaser, dated as of the settlement date, to the effect set forth
in Section 5(g) and (iv) a letter of Coopers & Lybrand, dated as of the
settlement date, to the effect set forth in Section 5(f).
(c) The conditions set forth in Section 5(c) shall have been
satisfied.
(d) Subsequent to the execution of any Purchase Agreement, there
shall not have been any decrease in the ratings of any of the Issuer's debt
securities by Moody's or S&P.
13. NOTICES. Except as otherwise provided herein, all notices and
other communications hereunder shall be in writing and shall be deemed to have
been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to Donaldson, Lufkin & Jenrette Securities
Corporation shall be directed to it at 277 Park Avenue, New York, New York
10172, Attention: Syndicate/MTN Department, 9th Floor, fax number: (212) 892-
4298 and notices to the Issuer shall be directed to it at 100 Kachel Boulevard,
Green Hills Corporate Center, Suite 400, P.O. Box 12677, Reading, Pennsylvania
19612-2677, Attention: General Counsel, fax number: (610) 992-3258; or in the
case of any party hereto, to such other address or person as such party shall
specify to each other party by a notice given in accordance with the provisions
of this Section 13. Any such notice shall take effect at the time of receipt.
14. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto, their respective successors and assigns, the
officers and directors and
<PAGE>
23
controlling persons referred to in Section 7 and, to the extent provided in
Section 6(e), any person who has agreed to purchase Securities from the Issuer,
and no other person will have any right or obligation hereunder.
15. GOVERNING LAW; COUNTERPARTS. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, but all such executed counterparts shall together
constitute one and the same Agreement.
If the foregoing correctly sets forth our agreement, please indicate
your acceptance hereof in the space provided for that purpose below.
Very truly yours,
UGI UTILITIES, INC.
By:
_______________________________
Name: John C. Barney
Title: Vice President -
Finance and
Accounting
CONFIRMED AND ACCEPTED,
as of the date first above written:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: ________________________
Name
Title:
<PAGE>
EXHIBIT A
The Issuer agrees to pay the Agent a commission equal to the following
percentage of the principal amount of Securities sold to purchasers solicited by
the Agent:
<TABLE>
<CAPTION>
====================================================================
Commission Rate
(as a percentage of
Term principal amount)
---- -----------------
- --------------------------------------------------------------------
<S> <C>
From 9 months to less than 1 year .125%
- --------------------------------------------------------------------
From 1 year to less than 18 months .150
- --------------------------------------------------------------------
From 18 months to less than 2 years .200
- --------------------------------------------------------------------
From 2 years to less than 3 years .250
- --------------------------------------------------------------------
From 3 years to less than 4 years .350
- --------------------------------------------------------------------
From 4 years to less than 5 years .450
- --------------------------------------------------------------------
From 5 years to less than 6 years .500
- --------------------------------------------------------------------
From 6 years to less than 7 years .550
- --------------------------------------------------------------------
From 7 years to less than 10 years .600
- --------------------------------------------------------------------
From 10 years to less than 15 years .625
- --------------------------------------------------------------------
From 15 years to less than 20 years .700
- --------------------------------------------------------------------
From 20 years to 30 years .750
- --------------------------------------------------------------------
Greater than 30 years To be determined at
the time of sale
====================================================================
</TABLE>
<PAGE>
EXHIBIT B
ADMINISTRATIVE PROCEDURES
The Series B Medium-Term Notes Due More Than Nine Months From Date of
Issue (the "Notes") are to be offered on a periodic basis by UGI Utilities, Inc.
-----
(the "Issuer"). Donaldson, Lufkin & Jenrette Securities Corporation, as agent
------
(the "Agent"), has agreed to use reasonable best efforts to solicit offers to
-----
purchase the Notes. The Agent will not be obligated to purchase Notes for its
own account. The Notes are being sold pursuant to an Agency Agreement, dated
August 1, 1996 (the "Agency Agreement"), between the Issuer and the Agent, and
----------------
will be issued pursuant to an Indenture, dated as of August 1, 1993 (the
"Indenture"), between the Issuer and First Union National Bank, as successor to
---------
First Fidelity Bank, National Association, as trustee (the "Trustee"). The
-------
Notes will rank equally and ratably with all other unsecured and unsubordinated
indebtedness of the Issuer and will have been registered with the Securities and
Exchange Commission (the "Commission"). For a description of the terms of the
----------
Notes and the offering and sale thereof, see the sections entitled "Description
of Notes," "United States Taxation" and "Plan of Distribution" in the Prospectus
Supplement relating to the Notes, dated August 1, 1996 attached hereto and
hereinafter referred to as the "Prospectus Supplement," and the sections
entitled "Description of Debt Securities" and "Plan of Distribution" in the
Prospectus relating to the Notes, dated May 7, 1996, attached hereto and
hereinafter referred to as the "Prospectus."
----------
Unless otherwise specified in the applicable Pricing Supplement, the
Notes will be issued in book-entry form (each, a "Book-Entry Note") and will be
---------------
represented by one or more fully registered global certificates (each, a "Global
------
Note"). Beneficial owners of Book-Entry Notes will not be entitled to receive a
- ----
certificate representing such Notes.
Administrative procedures and specific terms of the offering are
explained below -- Part I indicating procedures applicable to all Notes, Part II
indicating specific procedures for Book-Entry Notes, Part III indicating
specific procedures for Notes issued in certificated form. Administrative and
record keeping responsibilities will be handled for the Issuer by its Treasury
Department. The Issuer will advise the Agent in writing of those persons
handling administrative responsibilities with whom the Agent is to communicate
regarding offers to purchase Notes and the details of their delivery.
Unless otherwise defined herein, terms defined in the Indenture (or
any applicable board resolution or officer's certificate referred to therein
related to the Notes) and the Prospectus Supplement shall be used herein as
therein defined.
<PAGE>
B-2
PART I: ADMINISTRATIVE PROCEDURES APPLICABLE TO ALL NOTES
- ----------------------------------------------------------
ISSUE DATE
Each Note will be dated the date of its authentication. Each Note
will also bear an original issue date (the "Issue Date") which, with respect to
----------
any such Note (or portion thereof), shall mean the date of its original issuance
and shall be specified therein. The Issue Date will remain the same for all
Notes subsequently issued upon transfer, exchange or substitution of a Note,
regardless of their dates of authentication.
PRICE TO PUBLIC; DENOMINATIONS; REGISTRATION
Except as otherwise specified in a Pricing Supplement, each Note will
be issued at 100% of principal amount. The minimum denominations of the Notes
will be $100,000 or any amount in excess thereof that is an integral multiple of
$1,000. Notes will be issued only in fully registered form.
MATURITIES; MINIMUM PURCHASE; CALCULATION OF INTEREST
Each Note will mature on a date, selected by the purchaser and agreed
to by the Issuer, which will be more than nine months from its Issue Date. The
minimum aggregate amount of Notes which may be offered to any purchaser will be
$100,000.
Interest on each interest-bearing Note will be calculated and paid in
the manner described in such Note and in the Prospectus Supplement and the
applicable Pricing Supplement. Unless otherwise set forth therein, interest on
Fixed Rate Notes (including interest for partial periods) will be calculated on
the basis of a 360-day year of twelve 30-day months and will not accrue on the
31st of any month. Interest on Floating Rate Notes, except as otherwise set
forth therein, will be calculated on the basis of actual days elapsed and a year
of 360 days, except that in the case of a Floating Rate Note for which the Base
Rate is the Treasury Rate, interest will be calculated on the basis of the
actual number of days in the year.
REDEMPTION/REPAYMENT
If indicated in the applicable Pricing Supplement, the Notes of a
particular tenor will be subject to redemption in whole or in part (subject to
applicable minimum denominations), at the option of the Issuer, on and after an
initial redemption date as set forth in the applicable Pricing Supplement and in
the applicable Note. The redemption price will be set forth in the applicable
Pricing Supplement and in the applicable Note.
<PAGE>
B-3
If indicated in the applicable Pricing Supplement, the Notes of a
particular tenor will be subject to repayment at the option of the holders
thereof in accordance with the terms of the Notes on a repayment date as set
forth in the applicable Pricing Settlement and in the applicable Note. The
repayment date or dates and repayment price will be set forth in the applicable
Pricing Supplement and in the applicable Note.
PROCEDURES FOR ESTABLISHING THE TERMS OF THE NOTES
The Issuer and the Agent will discuss from time to time the rates to
be borne by the Notes that may be sold as a result of the solicitation of offers
by the Agent. Once the Agent has recorded any indication of interest in Notes
upon certain terms, and communicated with the Issuer, if the Issuer plans to
accept an offer to purchase Notes upon such terms, the Issuer will prepare a
Pricing Supplement to the Prospectus, as then amended or supplemented,
reflecting the terms of such Notes and will arrange to have a copy of the
Pricing Supplement filed with, or transmitted by a means reasonably calculated
to result in filing with, the Commission pursuant to Rule 424(b)(3) under the
Securities Act of 1933, as amended, as soon as practicable but in no event later
than the fifth Business Day following the earlier of the date of determination
of the settlement information described below or the date such Pricing
Supplement is first used. The Issuer will supply one copy of such Pricing
Supplement to the Agent at the address on Annex A attached hereto. No
settlements with respect to Notes upon such terms may occur prior to such
transmitting or filing.
If the Issuer decides to post rates and a decision has been reached to
change interest rates, the Issuer will promptly notify the Agent. The Agent
will forthwith suspend solicitation of purchases. At that time, the Agent will
recommend and the Issuer will establish rates to be so "posted." Following
establishment of posted rates and prior to the transmitting or filing described
in the preceding paragraph, the Agent may only record indications of interest in
purchasing Notes at the posted rates. Once the Agent has recorded any indication
of interest in Notes at the posted rates and communicated with the Issuer, if
the Issuer plans to accept an offer at the posted rate, it will prepare a
Pricing Supplement reflecting such posted rates and, after approval from the
Agent, will arrange to have ten copies of the Pricing Supplement filed with, or
transmitted by means reasonably calculated to result in filing with, the
Commission and will supply one copy of such Pricing Supplement to the Agent at
the address on Annex A attached hereto. No settlements at the posted rates may
occur prior to such transmitting or filing and the Agent will not, prior to such
transmitting or filing, mail confirmations to customers who have offered to
purchase Notes at the posted rates. After such transmitting or filing, sales,
mailing of confirmations and settlements may resume, subject to the provisions
of "Delivery of Prospectus" below.
Outdated Pricing Supplements, and copies of the Prospectus to which
they are attached (other than those retained for files), will be destroyed.
<PAGE>
B-4
SUSPENSION OF SOLICITATION; AMENDMENT OR SUPPLEMENT
As provided in the Agency Agreement, the Issuer may instruct the Agent
to suspend solicitation of offers to purchase at any time. As soon as
reasonably practicable, but in any event not later than one Business Day after
receipt of notice from the Issuer, the Agent will forthwith suspend solicitation
of offers to purchase Securities from the Issuer until such time as the Issuer
has advised the Agent that such solicitation may be resumed.
If the Agent receives the notice from the Issuer contemplated by
Section 3(b) or 4(b) of the Agency Agreement, they will suspend solicitation as
soon as reasonably practicable, but in any event not later than one Business Day
after receipt of notice from the Issuer, and will resume solicitation only as
provided in the Agency Agreement. If the Issuer is required, pursuant to the
second sentence of Section 4(b) of the Agency Agreement, to prepare an amendment
or supplement, it will promptly furnish the Agent with the proposed amendment or
supplement; if the Issuer decides to amend or supplement the Registration
Statement or the Prospectus relating to the Notes (other than by any Pricing
Supplement), it will promptly advise the Agent and will furnish the Agent with
the proposed amendment or supplement in accordance with the terms of the Agency
Agreement. The Issuer will advise the Agent of the filing of any document
required to be filed pursuant to the periodic reporting requirements of the
Securities Exchange Act of 1934, as amended, on the day of such filing and will
furnish one copy of such document to the Agent no later than one Business Day
after such filing. The Issuer will file such amendment or supplement with the
Commission, provide the Agent with copies of any such amendment or supplement,
confirm to the Agent that such amendment or supplement has been filed with the
Commission and advise the Agent that solicitation may be resumed.
Any such suspension shall not affect the Issuer's obligations under
the Agency Agreement; and in the event that at the time the Issuer suspends
solicitation of offers to purchase there shall be any offers already accepted by
the Issuer outstanding for settlement, the Issuer will have the sole
responsibility for fulfilling such obligations. The Issuer will in addition
promptly advise the Agent and the Trustee if such offers are not to be settled
and if copies of the Prospectus as in effect at the time of the suspension may
not be delivered in connection with the settlement of such offers.
ACCEPTANCE OF OFFERS
The Agent will communicate to the Issuer, orally or in writing, of
each reasonable offer to purchase Notes received by it as agent; provided,
--------
however, that if the Issuer has informed the Agent that the Issuer is not
- -------
interested in having the Agent communicate any offers to the Issuer (whether or
not reasonable), the Agent shall be under no obligation to communicate any
offers to the Issuer. The Issuer will have the sole right to accept offers to
purchase Notes and may reject any such offer, in whole or in part. The
<PAGE>
B-5
Agent shall have the right, without notice to the Issuer, to reject any offer
received by it, in whole or in part, if the Agent deems such offer unreasonable.
Prior to accepting any offer the Issuer will have the specific terms of the
Notes approved by the officers authorized by the Board of Directors or by the
members of the Executive/Nominating Committee of the Board of Directors. If the
Issuer accepts or rejects an offer, in whole or in part, the Issuer will
promptly notify the Agent.
CONFIRMATION
For each accepted offer, the Agent will issue a confirmation to the
purchaser, with a separate confirmation to the Issuer's Treasury Department,
setting forth the Purchase Information (as defined under "Details for
Settlement" in Part II for Book-Entry Notes and in Part III for certificated
Notes) and delivery and payment instructions; provided, however, that, in the
-------- -------
case of the confirmation issued to the purchaser, no confirmation shall be
delivered to the purchaser prior to the delivery of the Prospectus referred to
below.
DELIVERY OF PROSPECTUS
A copy of the Prospectus as most recently amended or supplemented on
the date of delivery thereof (except as provided below) will be delivered to a
purchaser by the Agent prior to or simultaneously with the earlier of delivery
of (i) the written confirmation provided for above, and (ii) any Note purchased
by such purchaser. (For this purpose, entry of a Same Day Funds Settlement
System ("SDFS") delivery order through The Depository Trust Company's ("DTC")
---- ---
Participant Terminal System to credit a Book-Entry Note to the account of a
Participant purchasing, or acting for the purchaser of a Book-Entry Note, shall
be deemed to constitute delivery of such Book-Entry Note.) Subject to the
foregoing, it is anticipated that delivery of the Prospectus, confirmation and
Notes to the purchaser will be made simultaneously at settlement. The Issuer
shall ensure that the Agent receives copies of the Prospectus and each amendment
or supplement thereto (including appropriate Pricing Supplements) in such
quantities and within such time limits as will enable the Agent to deliver such
confirmation or Note to a purchaser as contemplated by these procedures and in
compliance with the first sentence of this paragraph. If, since the date of
acceptance of a purchaser's offer, the Prospectus shall have been supplemented
solely to reflect any sale of Notes on terms different from those agreed to
between the Issuer and such purchaser or a change in posted rates not applicable
to such purchaser, such purchaser shall not receive the Prospectus as
supplemented by such new supplement, but shall receive the Prospectus as
supplemented to reflect the terms of the Notes being purchased by such purchaser
and otherwise as most recently amended or supplemented (except for previous
pricing supplements) on the date of delivery of the Prospectus.
<PAGE>
B-6
AUTHENTICITY OF SIGNATURES
The Issuer will cause the Trustee to furnish the Agent from time to
time with the specimen signatures of each of the Trustee's officers, employees
or agents who have been authorized by the Trustee to authenticate Notes, but the
Agent will not have any obligation or liability to the Issuer or the Trustee in
respect of the authenticity of the signature of any officer, employee or agent
of the Issuer or the Trustee on any Note or Global Note.
ADVERTISING EXPENSES
The Issuer will determine with the Agent the amount of advertising
that may be appropriate in offering the Notes. Advertising expenses will be
paid by the Issuer to the extent specified in the Agency Agreement.
BUSINESS DAY
"Business Day" with respect to any Note means, unless otherwise
------------
specified in the applicable Pricing Supplement, any day, other than a Saturday
or Sunday, that meets each of the following applicable requirements: the day is
(i) not a day on which banking institutions are authorized or required by law or
regulation to be closed in The City of New York; and (ii) if such Note is a
LIBOR Note, a London Banking Day.
TRUSTEE NOT TO RISK FUNDS
Nothing herein shall be deemed to require the Trustee to risk or
expend its own funds in connection with any payment made to the Issuer, the
Agent, DTC, or to the holder of any Note, it being understood by all parties
that payments made by the Trustee to the Issuer, the Agent, DTC, or to the
holder of any Note shall be made only to the extent that funds are provided to
the Trustee for such purpose.
PART II: ADMINISTRATIVE PROCEDURES FOR BOOK-ENTRY NOTES
- --------------------------------------------------------
In connection with the qualification of the Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, the Trustee will perform
the custodial, document control and administrative functions described below, in
accordance with its obligations under a Letter of Representations (the "Letter")
------
from the Issuer and the Trustee to DTC dated as of July 11, 1996 and a Medium-
Term Note Certificate Agreement (the "MTN Certificate Agreement") between the
--------------- ---------
Trustee and DTC dated as of December 27, 1989 and its obligations as a
participant in DTC, including DTC's SDFS.
<PAGE>
B-7
ISSUANCE
All Book-Entry Notes having the same Issue Date, interest rate,
Maturity Date and other terms will be represented initially by a single Global
Note in fully registered form without coupons. Each Global Note will be dated
and issued as of the date of its authentication by the Trustee. Each Global
Note will also bear an Issue Date, which will be (i) with respect to an original
Global Note (or any portion thereof), its Issue Date, and (ii) following a
consolidation of Global Notes, the most recent Interest Payment Date to which
interest has been paid or duly provided for on the predecessor Global Notes,
regardless of the date of authentication of such subsequently issued Global
Note. No Global Note will represent any Note in certificated form.
IDENTIFICATION NUMBERS
The Issuer, in cooperation with the Agent, has arranged with the CUSIP
Service Bureau of Standard & Poor's Corporation (the "CUSIP Service Bureau") for
--------------------
the reservation of a series of CUSIP numbers (including tranche numbers), such
series consisting of approximately 900 CUSIP numbers and relating to Global
Notes representing Book-Entry Notes. The Issuer has obtained from the CUSIP
Service Bureau a written list of such reserved CUSIP numbers and has delivered
such list to the Trustee and DTC. The Trustee will assign CUSIP numbers
serially to Global Notes as described below under Settlement Procedure "C." DTC
will notify the CUSIP Service Bureau periodically of the CUSIP numbers that the
Trustee has assigned to Global Notes. The Trustee will notify the Issuer at any
time when fewer than 100 of the reserved CUSIP numbers remain unassigned to
Global Notes; and the Issuer will reserve 900 additional CUSIP numbers for
assignment to Global Notes representing Book-Entry Notes. Upon obtaining such
additional CUSIP numbers, the Issuer shall deliver a list of such additional
CUSIP numbers to the Trustee and DTC.
REGISTRATION
Each Global Note will be registered in the name of Cede & Co., as
nominee for DTC, on the Debt Security Register maintained by the Trustee under
the Indenture. The beneficial owner of a Book-Entry Note (or one or more
indirect participants in DTC designated by such owner) will designate one or
more participants in DTC (the "Participants") to act as agent or agents for such
------------
owner with respect to such Book-Entry Note in connection with the book-entry
system maintained by DTC, and DTC will record in book-entry form, in accordance
with instructions provided by such Participants, a credit balance with respect
to such Book-Entry Note in the account of such Participants. The ownership
interest of such beneficial owner in such Book-Entry Note will be recorded
through the records of such Participants or through the separate records of such
Participants and one or more indirect participants in DTC. So long as Cede &
Co. is the registered owner of a Global Note, DTC
<PAGE>
B-8
will be considered the sole owner and holder of the Book-Entry Notes represented
by such Global Note for all purposes under the Indenture.
TRANSFERS
Transfers of beneficial interest in a Book-Entry Note will be
accomplished by book entries made by DTC and, in turn, by Participants (and, in
certain cases, one or more indirect participants in DTC) acting on behalf of
beneficial transferors and transferees of such Note.
EXCHANGES
The Trustee may upon notice to the Issuer deliver to DTC and the CUSIP
Service Bureau at any time a written notice of consolidation (a copy of which
shall be attached to the Global Note resulting from such consolidation)
specifying (i) the CUSIP numbers of two or more outstanding Global Notes that
represent Book-Entry Notes having the same interest rate, Maturity Date and
other terms, and for which interest (if any) has been paid to the same date,
(ii) a date, occurring at least thirty calendar days after such written notice
is delivered and at least thirty calendar days before the next Interest Payment
Date (if any) for such Notes, on which such Global Notes shall be exchanged for
a single replacement Global Note, and (iii) a new CUSIP number to be assigned to
such replacement Global Note. Upon receipt of such a notice, DTC will send to
its Participants (including the Trustee) a written reorganization notice to the
effect that such exchange will occur on such date. Prior to the specified
exchange date, the Trustee will deliver to the CUSIP Service Bureau a written
notice setting forth such exchange date and the new CUSIP number and stating
that, as of such exchange date, the CUSIP numbers of the Global Notes to be
exchanged will no longer be valid. On the specified exchange date, the Trustee
will exchange such Global Notes for a single Global Note bearing the new CUSIP
number and a new Original Issue Date, which shall be the most recent Interest
Payment Date to which interest has been paid or duly provided for on the
predecessor Global Notes, and the CUSIP numbers of the exchanged Global Notes
will, in accordance with CUSIP Service Bureau procedures, be cancelled and not
immediately reassigned. Notwithstanding the foregoing, if the Global Notes to
be exchanged exceed $100,000,000 in aggregate principal amount, one Global Note
will be authenticated and issued to represent each $100,000,000 of principal
amount of the exchanged Global Notes and an additional Global Note will be
authenticated and issued to represent any remaining principal amount of such
Global Notes (see "Denominations" below).
REDEMPTION
The Trustee will comply with the terms of the Letter with regard to
redemptions of the Book-Entry Notes. In the case of Book-Entry Notes stated by
their terms to be redeemable prior to the Maturity Date, at least 40 calendar
days before the date fixed
<PAGE>
B-9
for redemption (the "Redemption Date"), the Issuer shall notify the Trustee of
---------------
the Issuer's election to redeem such Book-Entry Notes in whole or in part and
the principal amount of such Book-Entry Notes to be so redeemed. At least 30
calendar days but not more than 60 days prior to the Redemption Date, the
Trustee shall notify DTC of the Issuer's election to redeem such Book-Entry
Notes. The Trustee shall notify the Issuer and DTC of the CUSIP numbers of the
particular Book-Entry Notes to be redeemed either in whole or in part. The
Issuer, the Trustee and DTC will confirm the amounts of such principal and any
premium and interest payable with respect to each such Book-Entry Note on or
about the fifth Business Day preceding the Redemption Date of such Book-Entry
Note. The Issuer will pay the Trustee, in accordance with the terms of the
Indenture, the amount necessary to redeem each such Book-Entry Note or the
applicable portion of each such Book-Entry Note. The Trustee will pay such
amount to DTC at the times and in the manner set forth herein. Promptly after
payment to DTC of the amount due on the Redemption Date for such Book-Entry
Note, the Trustee shall cancel any such Global Note redeemed in whole and shall
deliver it to the Issuer with an appropriate debit advice. If a Global Note is
to be redeemed in part, the Trustee will cancel such Global Note and issue a
Global Note which shall represent the remaining portion of such Global Note and
shall bear the CUSIP number of the cancelled Global Note.
DENOMINATIONS
Book-Entry Notes will be issued in principal amounts of $100,000 or
any amount in excess thereof that is an integral multiple of $1,000. Global
Notes will be denominated in principal amounts not in excess of $75,000,000. If
one or more Book-Entry Notes having an aggregate principal amount in excess of
$75,000,000 would, but for the preceding sentence, be represented by a single
Global Note, then one Global Note will be issued to represent each $75,000,000
principal amount of such Book-Entry Note or Notes and an additional Global Note
will be issued to represent any remaining principal amount of such Book-Entry
Note or Notes. In such a case, each of the Global Notes representing such Book-
Entry Note or Notes shall be assigned the same CUSIP number.
INTEREST
The Trustee and the Issuer acknowledge that Standard & Poor's
Corporation will use the information received in the pending deposit message
described under Settlement Procedure "C" to include the amount of any interest
payable and certain other information regarding the related Global Note in the
appropriate daily or weekly bond report published by Standard & Poor's
Corporation.
PAYMENTS OF PRINCIPAL AND INTEREST
(a) Payments of Interest Only. Promptly after each Record Date,
-------------------------
the Trustee will deliver to the Issuer and DTC a written notice specifying by
CUSIP number the
<PAGE>
B-10
amount of interest to be paid on each Global Note on the following Interest
Payment Date (other than an Interest Payment Date coinciding with Maturity) and
the total of such amounts. DTC will confirm the amount payable on each Global
Note on such Interest Payment Date by reference to the daily or weekly bond
reports published by Standard & Poor's Corporation. The Issuer will pay to the
Trustee the total amount of interest due on such Interest Payment Date (other
than at Maturity), and the Trustee will pay such amount to DTC at the times and
in the manner set forth below under "Manner of Payment." If any Interest
Payment Date for a Book-Entry Note is not a Business Day, the payment due on
such day shall be made on the next succeeding Business Day and no interest shall
accrue on such payment for the period from and after such Interest Payment Date.
(b) Payments at Maturity. On or about the first Business Day
--------------------
of each month, the Trustee will deliver to the Issuer and DTC a written list of
principal and interest to be paid on each Global Note maturing in the following
month. The Issuer, the Trustee and DTC will confirm the amounts of such
principal and interest payments with respect to each such Global Note on or
about the fifth Business Day preceding the Maturity of such Global Note. The
Issuer will pay to the Trustee, as the paying agent (the Trustee or any other
party acting as the paying agent being the "Paying Agent"), the principal amount
------------
of such Global Note, together with interest due at such Maturity. Upon
surrender of a Global Note, the Trustee will pay such amounts to DTC at the
times and in the manner set forth below under "Manner of Payment." If any
Maturity of a Global Note representing Book-Entry Notes is not a Business Day,
the payment due on such day shall be made on the next succeeding Business Day
and no interest shall accrue on such payment for the period from and after such
Maturity. Promptly after payment to DTC of the principal and interest and
premium due at the Maturity of such Global Note, the Trustee will cancel and
destroy such Global Note or return such Global Notes to the Issuer in accordance
with the Indenture.
(c) Manner of Payment. The total amount of any principal and
-----------------
interest due on Global Notes on any Interest Payment Date or at Maturity shall
be paid by the Issuer to the Trustee in funds available for use by the Trustee
as of 9:30 a.m., New York City time, on such date. The Issuer will make such
payment on such Global Notes by wire transfer to the Trustee. The Issuer will
confirm instructions regarding payment in writing to the Trustee. Prior to 10:00
a.m., New York City time, on each Maturity Date or as soon as possible
thereafter, following receipt of such funds from the Issuer, the Trustee will
pay by wire transfer (using Fedwire message entry instructions in a form
previously specified by DTC) to an account at the Federal Reserve Bank of New
York previously specified by DTC, in funds available for immediate use by DTC,
each payment of principal (together with interest thereon) due on Global Notes
on any maturity date. On each Interest Payment Date, interest payment shall be
made to DTC in same day funds in accordance with existing arrangements between
the Trustee and DTC. Thereafter, on each such date, DTC will pay, in accordance
with its SDFS operating procedures then in effect, such amounts in funds
available for immediate use to the respective Participants in whose names the
Book-Entry
<PAGE>
B-11
Notes represented by such Global Notes are recorded in the book-entry system
maintained by DTC. NEITHER THE ISSUER NOR THE TRUSTEE SHALL HAVE ANY
RESPONSIBILITY OR LIABILITY FOR THE PAYMENT BY DTC TO SUCH PARTICIPANTS OF THE
PRINCIPAL OF AND INTEREST ON THE BOOK-ENTRY NOTES.
(d) Withholding Taxes. The amount of any taxes required under
-----------------
applicable law to be withheld from any interest payment on a Book-Entry Note
will be determined and withheld by the Participant, indirect participant in DTC
or other person responsible for forwarding payments and materials directly to
the beneficial owner of such Note.
SETTLEMENT
In the event of a purchase of Book-Entry Notes by the Agent, as
principal, appropriate Settlement details, if different from those set forth
below, will be set forth in the Purchase Agreement to be entered into between
the Agent and the Issuer. Unless otherwise agreed, Settlement Procedures with
regard to each Book-Entry Note sold by the Agent, as agent for the Issuer, will
be as follows.
The receipt by the Issuer of immediately available funds in payment
for a Book-Entry Note, the authentication and issuance of the Global Note or
Global Notes representing such Note and entry by the Agent of an SDFS deliver
order through DTC's Participant Terminal System to credit such Note to the
account of a Participant purchasing, or acting for the purchase of, such Note,
shall constitute "settlement" with respect to such Note. All orders accepted by
the Issuer will be settled from one to five Business Days from the date of the
sale pursuant to the timetable for settlement set forth below unless the Issuer
and the purchaser agree to settlement on a later date.
DETAILS FOR SETTLEMENT
For each offer accepted by the Issuer, the Agent will communicate to
the Issuer's Treasury Department by telephone, confirmed by telex, facsimile
machine or other acceptable written means, the following information (the
"Purchase Information"):
--------------------
1. Principal amount of each Note (in authorized denominations)
to be purchased.
2. Issue price, interest rate if fixed or Initial Interest Rate
and interest rate basis if floating, Spread or Spread
Multiplier, maximum or minimum interest rates, interest
calculation dates, Index Maturity, Interest Determination
Date, Interest Reset Date,
<PAGE>
B-12
interest rate reset period, interest payment period, Record
Dates and Interest Payment Dates (as such capitalized terms
are defined in either the Indenture or the Prospectus
Supplement), in each case, to the extent applicable.
3. Any index to determine the amounts of payments of principal
and any premium and interest.
4. Maturity of each Note.
5. Redemption, repayment or sinking fund provisions, if any, of
each Note.
6. If an Original Issue Discount Note, the Yield to Maturity
and the initial accrual period of original issue discount.
7. Issue Date of each Note.
8. Settlement date for each Note.
9. Agent's commission (to be paid in the form of a discount
from the proceeds remitted to the Issuer upon settlement).
The Issue Date of, and the settlement date for, Notes will be the
same. Before accepting any offer to purchase Book-Entry Notes to be settled in
less than three Business Days, the Issuer will verify that the Trustee will have
adequate time to prepare and authenticate the Global Notes.
SETTLEMENT PROCEDURES
Settlement Procedures with regard to each Book-Entry Note sold by the
Issuer through the Agent shall be as follows:
A. The Agent will advise the Issuer by telephone, confirmed by telecopy, of
the Purchase Information with respect to each Book-Entry Note which will be
represented by the Global Note which is to be issued.
B. The Issuer will advise the Trustee by telex, facsimile transmission or by
another mutually acceptable method of the information set forth in
Settlement Procedure "A" above and the name of the Agent. Each such
communication by the Issuer shall constitute a representation and warranty
by the Issuer to the Trustee and the Agent that (i) such Note is then, and
at the time of issuance and sale thereof will be, duly
<PAGE>
B-13
authorized for issuance and sale by the Issuer; (ii) such Note, and the
Global Security representing such Note, will conform with the terms of the
Indenture pursuant to which such Note and Global Security are issued; and
(iii) upon authentication and delivery of such Global Security, the
aggregate initial offering price of all Notes issued under the Indenture
will not exceed $75,000,000 (except for Securities represented by,
authenticated and delivered in exchange for or in lieu of Securities
pursuant to the Indenture).
C. The Trustee will assign a CUSIP number to the Global Note representing such
Book-Entry Note and advise the Issuer by telephone, confirmed by telecopy,
of such CUSIP number. The Trustee will enter a pending deposit message
through DTC's Participant Terminal System, providing the following
settlement information to DTC (which shall route such information to
Standard & Poor's Corporation and Interactive Data Corporation) and the
Agent.
1. The applicable information set forth in Settlement Procedure "A."
2. Initial Interest Payment Date for such Book-Entry Note, number of days
by which such date succeeds the Record Date and the amount of interest
payable on such Interest Payment Date per $1,000 principal amount of
Book-Entry Notes.
3. CUSIP number of the Global Note representing such Book-Entry Note.
4. Whether such Global Note will represent any other Book-Entry Note (to
the extent known at such time).
5. Interest payment periods.
6. Numbers of the participant accounts maintained by DTC on behalf of the
Trustee and the Agent.
D. To the extent it has not already done so, the Issuer will deliver to the
Trustee a Global Note representing such Book-Entry Note.
E. The Trustee will complete and authenticate the Global Note representing
such Book-Entry Note.
F. DTC will credit such Book-Entry Note to the Trustee's participant account
at DTC.
G. The Trustee will enter an SDFS deliver order through DTC's Participant
Terminal System, with respect to each Book-Entry Note represented by the
Global Note to be
<PAGE>
B-14
issued, instructing DTC to (i) debit such Book-Entry Note to the Trustee's
participant account and credit such Book-Entry Note to the Agent's
participant account and (ii) debit the Agent's settlement account and
credit the Trustee's settlement account for an amount equal to the price of
such Book-Entry Note less the Agent's commission. The entry of such a
deliver order shall constitute a representation and warranty by the Trustee
to DTC that (i) the Global Note representing such Book-Entry Note has been
delivered and authenticated and (ii) the Trustee is holding such Global
Note pursuant to the MTN Certificate Agreement.
H. The Agent will enter an SDFS deliver order through DTC's Participant
Terminal System, with respect to each Book-Entry Note represented by the
Global Note to be issued, instructing DTC (i) to debit such Book-Entry Note
to the Agent's participant account and credit such Book-Entry Note to the
participant accounts of the Participant with respect to such Book-Entry
Note and (ii) to debit the settlement accounts of such Participant and
credit the settlement account of the Agent for an amount equal to the price
of such Book-Entry Note.
I. Transfers of funds in accordance with SDFS deliver orders described in
Settlement Procedures "G" and "H" will be settled in accordance with SDFS
operating procedures in effect on the settlement date.
J. The Trustee, upon confirming receipt of such funds, will credit the amount
transferred to the Trustee in accordance with Settlement Procedure "G," in
funds available for immediate use, to a bank account of the Issuer at the
Trustee.
K. The Agent will confirm the purchase of each Book-Entry Note to the
purchaser either by transmitting to the Participant with respect to such
Book-Entry Note a confirmation order or orders through DTC's institutional
delivery system or by mailing a written confirmation to such purchaser, in
each case together with or preceded by a Prospectus, Prospectus Supplement
and Pricing Supplement.
L. The Trustee will send a copy of the Global Note(s) representing such Book-
Entry Note by first-class mail to the Issuer's Treasury Department.
M. On the first Business Day of each month, the Trustee will also send to the
Issuer's Treasury Department a statement setting forth the principal amount
of Book-Entry Notes Outstanding as of that date under the Indenture.
Preparation
of Pricing
Supplement: If the Issuer accepts an offer to purchase a Book Entry
Note, it will prepare a Pricing Supplement reflecting the
terms of such
<PAGE>
B-15
Book-Entry Note and arrange to have delivered to the Agent a
copy of such Pricing Supplement, not later than 5:00 p.m.,
New York City time, on the Business Day following the sale
Date, or if the Issuer and the Agent or purchaser agree to
settlement on the Business Day following the date of
acceptance of such offer, not later than noon, New York City
time, on such date. The Issuer will arrange to have a
Pricing Supplement filed with the Commission not later than
the close of business on the fifth Business Day following
the date on which such Pricing Supplement is first used.
Copies of the Pricing Supplement must be delivered to the Agent and
the Trustee as indicated below:
(1) Donaldson, Lufkin & Jenrette Securities Corporation:
Attn: Syndicate/MTN Department (Carlos Sanchez),
fax number (212) 892-4298;
(2) First Union National Bank:
Attn: Alan G. Finn, fax number (215) 985-7290.
SETTLEMENT PROCEDURES TIMETABLE
For orders of Book-Entry Notes solicited by the Agent, and accepted by
the Issuer for settlement on the first Business Day after the sale date,
Settlement Procedures "A" through "K" set forth above shall be completed as soon
as possible but not later than the respective times (New York City time) set
forth below:
<TABLE>
<CAPTION>
Settlement
Procedure Time
--------- ----
<S> <C> <C>
A-B 11:00 a.m. on the sale date
C 2:00 p.m. on the sale date
D 3:00 p.m. on the Business Day
before settlement date
E 9:00 a.m. on settlement date
F 10:00 a.m. on settlement date
G-H 2:00 p.m. on settlement date
I 4:45 p.m. on settlement date
J-L 5:00 p.m. on settlement date
M monthly
</TABLE>
<PAGE>
B-16
NOTE: THE PROSPECTUS AS MOST RECENTLY AMENDED OR SUPPLEMENTED MUST
ACCOMPANY OR PRECEDE ANY WRITTEN CONFIRMATION GIVEN TO THE CUSTOMER,
PROVIDED THAT THE PRICING SUPPLEMENT SUPPLIED SHALL BE THE PRICING
SUPPLEMENT APPLICABLE TO THE SETTLEMENT, UNLESS A CHANGE OTHER THAN PRICE
SHALL BE INCLUDED IN A LATER PRICING SUPPLEMENT, IN WHICH CASE BOTH SHALL
BE PROVIDED. (SETTLEMENT PROCEDURE K).
If a sale is to be settled more than one Business Day after the sale
date, Settlement Procedures "A," "B" and "C" shall be completed as soon as
practicable but not later than the times specified above on the first Business
Day after the sale date. In connection with a sale which is to be settled more
than one Business Day after the sale date, if the initial interest rate for a
Floating Rate Note is not known at the time that Settlement Procedure "A" is
completed, Settlement Procedures "B" and "C" shall be completed as soon as such
rates have been determined, but no later than 11:00 a.m. and 2:00 p.m.,
respectively, on the second Business Day before the settlement date. Settlement
Procedures "I" and "J" are subject to extension in accordance with any extension
of Fedwire closing deadlines and in the other events specified in the SDFS
operating procedures in effect on the settlement date.
If settlement of a Book-Entry Note is rescheduled or cancelled, the
Issuer shall notify the Trustee no later than 1:00 p.m. New York City time on
the Business Day immediately preceding the scheduled settlement date, and upon
receipt of such notice, the Trustee will deliver to DTC, through DTC's
Participant Terminal System, a cancellation message to such effect by no later
than 2:00 p.m., New York City time, on the Business Day immediately preceding
the scheduled settlement date.
FAILURE TO SETTLE
If the Trustee has not entered an SDFS deliver order with respect to a
Book-Entry Note pursuant to Settlement Procedure "G," then upon written request
(which may be evidence by telecopy transmission) of the Issuer, the Trustee
shall deliver to DTC, through DTC Participation Terminal System, as soon as
practicable, but no later than 2:00 p.m. on any Business Day, a withdrawal
message instructing DTC to debit such Book-Entry Note to the Trustee's
participant account. DTC will process the withdrawal message, provided that the
Trustee's participant account contains a principal amount of the Global Note
representing such Book-Entry Note that is at least equal to the principal amount
to be debited. If withdrawal messages are processed with respect to all the
Book-Entry Notes represented by a Global Note, the Trustee will mark such Global
Note "cancelled," make appropriate entries in the Trustee's records and so
advise the Issuer. The CUSIP number assigned to such Global Note shall, in
accordance with CUSIP Service Bureau procedures, be cancelled and not
immediately reassigned. If withdrawal messages are processed with respect to
one or more, but not all, of the Book-Entry Notes represented by a Global Note,
the Trustee will exchange such Global Notes for two Global Notes, one of which
shall represent such Book-Entry Note
<PAGE>
B-17
or Book-Entry Note and shall be cancelled immediately after issuance and the
other of which shall represent the remaining Book-Entry Notes previously
represented by the surrendered Global Note and shall bear the CUSIP number of
the surrendered Global Note.
If the purchase price for any Book-Entry Note is not timely paid to
the Participants with respect to such Book-Entry Note by the beneficial
purchaser thereof (or person, including an indirect participant in DTC, acting
on behalf of such purchaser), such Participant and, in turn the Agent for such
Book-Entry Note may enter an SDFS deliver order through DTC's Participant
Terminal System debiting such Book-Entry Note to the Agent's participant account
and crediting such Book-Entry Note free to the participant account of the
Trustee and shall notify the Trustee and the Issuer thereof. Thereafter, the
Trustee, (i) will immediately notify the Issuer, once the Trustee has confirmed
that such Book-Entry Note has been credited to its participant account, and the
Issuer shall immediately transfer by Fedwire (in immediately available funds) to
the Agent an amount equal to the price of such Book-Entry Note which was
previously sent by wire transfer to the account of the Issuer maintained at the
Trustee in accordance with Settlement Procedure "J," and (ii) the Trustee will
deliver the withdrawal message and take the related actions described in the
preceding paragraph. The Agent will not be entitled to any commission with
respect to any Book-Entry Note which the purchaser does not accept and make
payment for. Such debits and credits will be made on the settlement date, if
possible, and in any event not later than 5:00 p.m. on the following Business
Day. If such failure shall have occurred for any reason other than failure by
the Agent to perform its obligations hereunder or under the Agency Agreement,
the Issuer will reimburse the Agent on an equitable basis for its loss of the
use of funds during the period when the funds were credited to the account of
the Issuer but only to the extent that, after using reasonable efforts, the
Agent is unable to recoup its loss from a defaulting Purchaser.
Notwithstanding the foregoing, upon any failure to settle with respect
to a Book-Entry Note, DTC may take any actions in accordance with its SDFS
operating procedures then in effect. In the event of a failure to settle with
respect to one or more, but not all, of the Book-Entry Notes to have been
represented by a Global Note, the Trustee will provide, in accordance with
Settlement procedures "D" and "E," for the authentication and issuance of a
Global Note representing the other Book-Entry Notes to have been represented by
such Global Note and will make appropriate entries in its records.
PART III: ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES
INTEREST PAYMENTS
On the fifth Business Day immediately preceding each Interest Payment
Date, the Trustee will furnish the Issuer with the total amount of the interest
payments to be paid on such Interest Payment Date. The Trustee will provide
monthly to the Issuer's Treasury Department a list of the principal and interest
to be paid on Notes maturing in the next
<PAGE>
B-18
succeeding month. The Trustee will assume responsibility for withholding taxes
on interest paid as required by law to the extent holders have not produced a
taxpayer identification number (TIN).
PAYMENT AT MATURITY
Upon presentation of each Note at Maturity, the Trustee (or a duly
authorized Paying Agent) will pay the principal amount thereof, together with
any premium and accrued interest due at Maturity. Such payment will be made in
immediately available funds, provided that the Note is presented in time for the
--------
Trustee (or any such Paying Agent) to make payment in such funds in accordance
with its normal procedures. The Issuer will provide the Trustee (and any such
Paying Agent) with funds available for immediate use for such purpose. Notes
presented at Maturity will be cancelled by the Trustee as provided in the
Indenture.
DETERMINATION OF SETTLEMENT DATE
The receipt of immediately available funds by the Issuer from the
Agent in payment for a Note and the authentication and issuance of such Note
shall, with respect to such Note, constitute "settlement." All offers accepted
by the Issuer will be settled on the fifth Business Day next succeeding the date
of receipt unless otherwise agreed by any purchaser, the Issuer and the Trustee.
The settlement date shall be specified upon receipt of an offer prior to 3:00
p.m., New York City time. On the Business Day prior to the settlement date, the
Issuer will instruct the Trustee to authenticate and deliver the Notes no later
than 2:15 p.m., New York City time, on the settlement day.
DETAILS FOR SETTLEMENT
In the event of a purchase of certificated Notes by the Agent, as
principal, appropriate Settlement details, if different from those set forth
below, will be set forth in the Purchase Agreement to be entered into between
the Agent and the Issuer. Unless otherwise agreed, Settlement Procedures with
regard to certificated Notes sold by the Agent, as agent for the Issuer, will be
as follows.
For each offer accepted by the Issuer, the Agent will communicate to
the Issuer's Treasury Department by telephone, confirmed by telex, facsimile
machine or other acceptable means, the Purchase Information prior to 3:00 p.m.,
New York City time, on the Business Day prior to the applicable settlement date.
For certificated Notes "Purchase Information" shall refer to the terms of the
--------------------
Notes described under "Details of Settlement" in Part II and the following
additional information:
<PAGE>
B-19
1. Exact name in which the Note or Notes are to be registered (the
"registered owner").
-----------------
2. Exact address of the registered owner and, if different, the
address for delivery, notices and payment of principal and
premium and interest.
3. Taxpayer Identification Number (TIN) of the registered owner.
4. Delivery address for each Note.
The Issue Date of, and the settlement date for, Notes will be the
same. Before accepting any offer to purchase Notes to be settled in less than
three Business Days, the Issuer will verify that the Trustee will have adequate
time to prepare and authenticate the Notes.
Immediately after receiving the details for each offer from the Agent
(but in no event later than 3:00 p.m. on the Business Day prior to the
settlement date for such Notes), the Issuer will, after recording the details
and any necessary calculations, communicate the Purchase Information by telex,
facsimile transmission or other acceptable means, to the Trustee. The Trustee
will assign to and enter on each Note a transaction number. Each such
communication by the Issuer shall constitute a representation and warranty by
the Company to the Trustee and the Agent that (i) such Note is then, and at the
time of issuance and sale thereof will be, duly authorized for issuance and sale
by the Issuer; (ii) such Note, and the Global Security representing such Note,
will conform with the terms of the Indenture pursuant to which such Note and
Global Security are issued; and (iii) upon authentication and delivery of such
Global Security, the aggregate initial offering price of all Notes issued under
the Indenture will not exceed $75,000,000 (except for Securities represented by,
authenticated and delivered in exchange for or in lieu of Securities pursuant to
the Indenture).
SETTLEMENT; NOTE DELIVERIES AND CASH PAYMENT
The Issuer will deliver to the Trustee at the commencement of the
program and from time to time thereafter a supply of duly executed Notes
adequate to implement the program. Upon the receipt of appropriate
documentation and instructions from the Issuer the Trustee will cause the Notes
to be completed and authenticated and hold the Notes for delivery against
confirmation from the Issuer of receipt of payment.
The Trustee will deliver the Notes in accordance with instructions
from the Issuer, to the Agent, as the Issuer's agent, for the benefit of the
purchaser against receipt therefor by stamping the delivery receipt with the
date and time received and returned. If the Agent in any instance advances its
own funds, the Issuer shall not use any of the proceeds of such sale to acquire
securities.
<PAGE>
B-20
The Agent, as the Issuer's agent, will deliver the Notes (with the
written confirmation and Prospectus provided for in Part I above) to the
purchaser thereof against payment therefor by such purchaser. Delivery of any
confirmation or Note will be made in compliance with "Delivery of Prospectus" in
Part I.
FAILS
In the event that a purchaser shall fail to accept delivery of and
make payment for a Note on the settlement date, the Agent will notify the
Trustee and the Issuer by telephone, confirmed in writing. If such Note has
been delivered to the Agent, as the Issuer's agent, the Agent shall return such
Note to the Trustee. If funds have been advanced by the Agent for the purchase
of such Note, the Issuer will, immediately upon receipt of confirmation from the
Trustee of receipt of such Note, debit its account for the amount so advanced
and shall refund the payment previously made by the Agent in immediately
available funds. Such payments will be made on the settlement date for such
Note, if possible, and in any event not later than the Business Day following
such settlement date. If any failure described in this paragraph shall have
occurred for any reason other than the failure of the Agent to provide the
Purchase Information to the Issuer or to provide a confirmation to the
purchaser, the Issuer will reimburse the 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 Issuer but only to the extent that, after using reasonable
efforts, the Agent is unable to recoup its loss from a defaulting Purchaser.
Immediately upon receipt of the Note in respect of which the fail
occurred, the Trustee will cause the Debt Security Registrar to make appropriate
entries to reflect the fact that the Note was never issued and the Note will be
cancelled and disposed of as provided in the Indenture.
<PAGE>
ANNEX A
Agent's Address for
Delivery of the Prospectus
with the Pricing Supplement
---------------------------
Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, N.Y. 10172
Attention: Carlos Sanchez, Syndicate/MTN Department
<PAGE>
EXHIBIT C
PURCHASE AGREEMENT
_______, 199_
UGI Utilities, Inc.
100 Kachel Boulevard
Suite 400
P.O. Box 12677
Reading, Pennsylvania 19612-2677
Attention Treasurer:
The undersigned agrees to purchase the following principal amount of
the Securities described in the Agency Agreement dated August 1, 1996 (the
"Agency Agreement"):
- -----------------
Principal $__________
Interest Rate ___%
Maturity Date __________
Discount ___% of Principal Amount
Price to be paid to Issuer
(in immediately
available funds) $__________
Commission to Agent $__________
Settlement Date __________, 199_
Except as otherwise expressly provided herein, all terms used herein
which are defined in the Agency Agreement shall have the same meanings as in the
Agency Agreement.
This Agreement incorporates by reference all of the provisions of the
Agency Agreement (including any amendment entered into pursuant thereto by the
Issuer and the Agent, to the extent applicable), except provisions of the Agency
Agreement relating specifically to solicitation by the Agent, as Agent, and
except that (i) the last sentence of Section 7(d) shall not be applicable; and
(ii) the term "this Agreement", as used in Section 7(d) of the Agency Agreement,
shall be deemed to refer to this Agreement (and not the Agency Agreement) except
that in the sixth sentence such term shall be deemed to refer to the Agency
Agreement. You and we agree to perform, to the extent applicable, our
respective duties and obligations specifically provided to be performed by each
of us in the Procedures.
Our obligation to purchase Securities hereunder is subject to the
accuracy on the above Settlement Date of your representations and warranties
contained in Section 2 of the
<PAGE>
C-2
Agency Agreement (it being understood that such representations and warranties
shall be deemed to be made as of the date of this Purchase Agreement and
references to the Registration Statement and Prospectus shall be deemed to
relate to the Registration Statement and the Prospectus as amended at such
Settlement Date specified above) and to your performance and observance of all
covenants and agreements contained in Sections 4 and 6 thereof. Our obligation
hereunder is also subject to the following conditions:
(a) the satisfaction, at such Settlement Date, of each of the
conditions set forth in subsections (a) and (b) and (d) through (g) of
Section 5 of the Agency Agreement (it being understood that each document
so required to be delivered shall be dated such Settlement Date and that
each such condition and the statements contained in each such document that
relate to the Registration Statement or the Prospectus shall be deemed to
relate to the Registration Statement or the Prospectus, as the case may be,
as amended or supplemented as of the date hereof and at the time of
settlement on such Settlement Date and except that the opinion described in
Section 5(d) shall be modified so as to state that the Securities being
sold on such Settlement Date, when delivered against payment therefor as
provided in the Indenture and this Agreement, will have been duly executed,
authenticated, issued and delivered and will constitute valid and legally
binding obligations of the Issuer enforceable in accordance with their
terms, subject only to the exceptions as to enforcement set forth in clause
(iii) of Section 5(d) of the Agency Agreement, and will conform to the
description thereof contained in the Prospectus and amended or supplemented
at such Settlement Date; and
(b) there shall not have occurred since the date of the most recent
amendment or supplement to the Prospectus (i) any material adverse change
in the financial condition, results of operations, business or prospects of
the Issuer or its subsidiaries taken as a whole; (ii) any downgrading in
the rating of the Securities or any other debt securities of the Issuer by
any "nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act), or any public announcement that any
such organization has under surveillance or review its rating of the
Securities or any other debt securities of the Issuer (other than an
announcement with positive implications of a possible upgrading and no
implication of a possible downgrading, of such rating); (iii) any
suspension or limitation of trading in securities generally on the New York
Stock Exchange, or any setting of minimum prices for trading on such
exchange, or any suspension of trading on any securities of the Issuer on
any exchange or in the over-the counter market if, any such event or any
condition giving rise thereto or existing concurrently therewith makes it
impracticable to proceed with the purchase of the Securities on the terms
and in the manner contemplated by the applicable Pricing Supplement and the
Prospectus; (iv) any banking moratorium declared by Federal or New York
authorities; or (v) any declaration of war by Congress or any other
substantial national or international calamity or emergency if the effect
of any such outbreak, escalation, declaration, calamity or emergency makes
it
<PAGE>
C-3
impractical to proceed with the purchase of the Securities on the terms and
in the manner contemplated by the applicable Pricing Supplement and the
Prospectus.
(c) During the ___-day period following the date hereof you will not,
directly or indirectly, without our prior consent, offer, sell or enter
into any agreement to sell, in a public offering, any debt securities
issued or guaranteed by the Issuer with a maturity of more than one year
and terms substantially similar to those of the Securities being purchased
pursuant to this Agreement.
(d) Prior to the settlement date, you shall have furnished to us the
following information, certificates and documents:
For purposes of the definition of "Marketing Time" in the Agency
Agreement, the time period referred to in such definition shall be ___ days.
If any of the conditions specified herein or in Section 12 of the
Agency Agreement shall not have been fulfilled in all material respects when and
as provided in the Agency Agreement, or if any of the opinions and certificates
mentioned above or in this Purchase Agreement shall not be in all material
respects reasonably satisfactory in form and substance to the Purchaser and its
counsel, the Purchase Agreement and all obligations of the Purchaser thereunder
may be canceled at, or at any time prior to, the respective settlement date by
the Purchaser. Notice of such cancellation shall be given to the Issuer in
writing or by telephone or telegraph confirmed in writing.
In further consideration of our agreement hereunder, you agree that
between the date hereof and the above Settlement Date, you will not offer or
sell, or enter into any agreement to sell, any debt securities of the Issuer in
the United States, other than sales of Securities, borrowings under your
revolving credit agreements and lines of credit, the private placement of
securities and issuances of your commercial paper.
If for any reason our purchase of the above Securities is not
consummated, the respective obligations of you and the undersigned pursuant to
Section 7 shall remain in effect.
<PAGE>
C-4
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
executed counterparts shall together constitute one and the same Agreement.
DONALDSON, LUFKIN & JENRETTE SECURITIES
CORPORATION
By:_________________________________
Name:
Title:
CONFIRMED AND ACCEPTED, as of
the date first above written:
UGI UTILITIES, INC.
By:_________________________________
Name:
Title:
<PAGE>
D-1
EXHIBIT D
FORM OF OFFICERS' CERTIFICATE
TO BE ISSUED PURSUANT TO SECTION 5(E)
[Name of First Officer], [title (the President or a Vice President)], and
[Name of Second Officer], [title (a principal financial or accounting officer)],
of UGI Utilities, Inc., a Pennsylvania corporation (the "Issuer"), pursuant to
------
Section 5(e) of the Agency Agreement dated August 1, 1996 (the "Agency
------
Agreement") between the Issuer and Donaldson, Lufkin & Jenrette Securities
- ---------
Corporation, each hereby certifies on behalf of the Issuer that:
1. The representations and warranties of the Issuer contained in the
Agency Agreement are true and correct on and as of the date hereof.
2. The Issuer has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied under the Agency Agreement
at or prior to the date hereof.
3. No stop order suspending the effectiveness of the Registration
Statement (as defined in the Agency Agreement), as amended or supplemented, or
any part thereof has been issued and, to our knowledge, no proceedings for that
purpose have been instituted or are contemplated by the Securities and Exchange
Commission.
4. Subsequent to [Date of most recent financial statements included or
incorporated by reference in the Prospectus] there has been no material adverse
change in the financial position, results of operation, business or prospects of
the Issuer and its subsidiaries taken as a whole, except as set forth in or
contemplated by the Prospectus (as defined in the Agency Agreement), as amended
or supplemented.
IN WITNESS WHEREOF, we have hereunto signed our names.
Dated: _______________
______________________________
Name:
Title:
_______________________________
Name:
Title:
<PAGE>
Exhibit (4)(i)
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE REGISTERED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE DEPOSITORY TRUST COMPANY, 55 WATER STREET, NEW YORK, NEW YORK ("DTC"), OR
SUCH OTHER DEPOSITORY AS SPECIFIED BELOW (DTC OR SUCH OTHER DEPOSITORY BEING THE
"DEPOSITORY") TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY
TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR
ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITORY. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY THAT IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY, ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
[If this Note is an Original Issue Discount Note, insert any applicable
-------------------------------------------------------
legends required by the Internal Revenue Code of 1986, as amended, or by
Treasury regulations thereunder.]
CUSIP NO. PRINCIPAL AMOUNT: $
REGISTERED NO. FXR-
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FIXED RATE
INTEREST RATE PER ORIGINAL ISSUE DATE: MATURITY DATE:
ANNUM:
INTEREST PAYMENT OPTIONAL RESET DATE: AMORTIZING NOTE:
DATES IF OTHER THAN
MAY 15 AND NOVEMBER
15:
ORIGINAL ISSUE YIELD TO MATURITY: INITIAL ACCRUAL PERIOD
DISCOUNT NOTE: (ONLY APPLICABLE IF NOTE OID COMPUTED UNDER
ISSUED AT ORIGINAL ISSUE (__APPROXIMATE) (__EXACT)
DISCOUNT) METHOD:
OID DEFAULT AMOUNT: ISSUE PRICE: (IF OTHER THAN REPAYMENT AT OPTION OF
(ONLY APPLICABLE IF THE FULL PRINCIPAL AMOUNT) HOLDER:
NOTE ISSUED AT
ORIGINAL ISSUE
DISCOUNT)
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FIXED RATE
<TABLE>
<S> <C> <C>
REDEMPTION AT AUTHORIZED DEPOSITORY IF OTHER
OPTION OF COMPANY: DENOMINATION: $100,000, THAN DEPOSITORY TRUST
and increments of $1,000 COMPANY:
thereafter
PAYING AGENT IF OTHER
THAN FIRST UNION
NATIONAL BANK,
123 SOUTH BROAD
STREET, PHILADELPHIA,
PA 19109:
</TABLE>
UGI UTILITIES, INC., a corporation duly organized and existing under the
laws of the Commonwealth of Pennsylvania (herein called the "Company"), for
value received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum specified above (except to the extent redeemed or repaid prior to
the Maturity Date), at the office or agency of the Company maintained for that
purpose in The City of Philadelphia, Pennsylvania and in The City of New York,
New York, at the option of the Company, on the Maturity Date shown above, or if
such date is not a Business Day (as defined below), the next succeeding Business
Day, and to pay interest on said principal sum, if any, at the Interest Rate Per
Annum (computed on the basis of a 360-day year of twelve 30-day months) shown
above as such Interest Rate Per Annum may be modified above in accordance with
the Interest Rate Reset or otherwise, semiannually on each May 15 and November
15 of each year (unless other Interest Payment Dates are set forth above) (each,
an "Interest Payment Date") until payment of said principal sum has been made or
duly provided for. Each payment of interest shall include interest accrued from
and including the Original Issue Date or the last Interest Payment Date to which
interest has been paid or duly provided for, as the case may be, to but
excluding the next Interest Payment Date or the Maturity Date, as the case may
be; provided, however, that if the Original Issue Date occurs between a Regular
-------- -------
Record Date, as defined below, and the related Interest Payment Date, interest
for the period beginning on the Original Issue Date and ending on such Interest
Payment Date shall be paid on the Interest Payment Date following the next
succeeding Regular Record Date, to the registered holder of this Note (the
"Holder") on such succeeding Regular Record Date. Subject to certain exceptions
provided in the Indenture referred to below, the interest so payable on any
Interest Payment Date shall be paid to the Person in whose name this Note is
registered at the close of business on the Regular Record Date next preceding
such Interest Payment Date, and interest payable on the Maturity Date or upon
redemption or repayment shall be paid to the Person to whom said principal sum
is payable. "Regular Record Date" shall mean, with respect to any Interest
Payment Date, the first calendar day (whether or not a Business Day) of the
month in which such Interest Payment Date occurs. "Business Day" shall mean any
day, other than Saturday or Sunday, that is not a day on which banking
institutions are authorized or required by law or regulation to be closed in The
City of New York.
Payments of interest, if any, shall be made by the Paying Agent to the
Depository in immediately available funds in accordance with existing
arrangements between the Paying Agent and the Depository; payments of principal
of and interest, if any, on the Maturity Date shall be made by the Paying Agent
by wire transfer in immediately available funds to an account specified by the
Depository.
The Company shall pay any administrative costs imposed by banks in
connection with making payments in immediately available funds, but any tax,
assessment or governmental charge imposed upon payments shall be borne by the
Holder in respect of which such payments are made.
-2-
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FIXED RATE
Any payment due on this Note on a day that is not a Business Day shall be
made on the next succeeding Business Day with the same force and effect as if
made on such date, and no additional interest shall accrue as a result of such
delayed payment.
This Note is one of a duly authorized issue of Securities of the Company
(hereinafter called the "Securities"), all issued or to be issued under and
pursuant to an indenture dated as of August 1, 1993 (hereinafter called the
"Indenture"), duly executed and delivered by the Company and First Union
National Bank (formerly, First Fidelity Bank, National Association), as Trustee
(hereinafter, together with any successor trustee or trustees under the
Indenture called the "Trustee"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
obligations, duties and immunities thereunder of the Trustee, the Company, and
the holders of the Securities. As provided in the Indenture, the Securities may
be issued in one or more series, which different series may be issued in various
aggregate principal amounts, may mature at different times, may bear interest,
if any, at different rates, may be subject to different redemption or repayment
provisions, if any, may be subject to different sinking, purchase or analogous
funds, if any, and may otherwise vary as provided for or permitted by the
Indenture. This Note is one of a series of the Securities offered on a periodic
basis by the Company, which series is unlimited in aggregate principal amount,
designated as the Series B Medium-Term Notes (the "Notes") of the Company. The
Notes may mature at different times (but in all instances more than nine months
from their respective dates of issue), bear interest, if any, at different
rates, be redeemable at the option of the Company at different times or not at
all, and be repayable at the option of the Holder at different times or not at
all.
If this Note is an Original Issue Discount Note for United States federal
income tax purposes, as specified above, then, except as otherwise specified
above, upon redemption or repayment (except in the case of an Event of Default
as set forth below) of this Note there shall be payable in lieu of the Principal
Amount, an amount equal to the Amortized Face Amount of this Note. The
"Amortized Face Amount," shall be equal to (a) the Issue Price, as specified
above, plus (b) the portion of the difference between the Issue Price and the
Principal Amount of this Note that has accrued at the Yield to Maturity
specified above (computed in accordance with generally accepted United States
bond yield computation principles) at the date as of which such Amortized Face
Amount is calculated, but in no event shall the Amortized Face Amount exceed the
Principal Amount.
Amortizing Notes are Notes as to which all or a portion of the principal
amount is payable prior to the Maturity Date in accordance with a schedule, by
application of a formula, or by reference to an Index. If this Note is an
Amortizing Note, the terms and conditions, including the terms for payment
hereof, shall be specified above.
This Note indicates whether the Company has the option to reset the
interest rate and, if so, the date or dates on which such interest rate may be
reset (each an "Optional Reset Date"). If the Company has such option with
respect to this Note, the following procedures shall apply.
The Company may exercise such option with respect to this Note by notifying
the Trustee of such exercise at least 50 but not more than 60 days prior to an
Optional Reset Date. Not later than 40 days prior to such Optional Reset Date,
the Trustee shall mail to the Holder a notice ("Reset Notice") setting forth (i)
the election of the Company to reset the interest rate, (ii) such new interest
rate and (iii) the provisions, if any, for redemption during the period from
such Optional Reset Date to the next Optional Reset Date or, if there is no such
next Optional Reset Date, to the Maturity Date (each such period a "Subsequent
Interest Period"), including the date or dates on which or the period or periods
during which and the price or prices at which such redemption may occur during
such Subsequent Interest Period. Upon the transmittal by the Trustee of a Reset
Notice to the Holder, such new interest
-3-
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FIXED RATE
rate shall take effect automatically and, except as modified by the Reset Notice
and as described in the next paragraph, this Note shall have the same terms as
prior to the transmittal of such Reset Notice.
Notwithstanding the foregoing, the Company may, at its option, revoke the
interest rate, as provided for in the Reset Notice, and establish an interest
rate that is higher than the interest rate provided for in the relevant Reset
Notice for the Subsequent Interest Period commencing on such Optional Reset
Date, by causing the Trustee to mail, not later than 20 days prior to an
Optional Reset Date, notice of such higher interest rate to the Holder. Such
notice shall be irrevocable. The Company must notify the Trustee of its
intentions to revoke such a Reset Notice at least 25 days prior to such Optional
Reset Date. If the interest rate is reset on an Optional Reset Date and the
Holder has not tendered this Note for repayment (or has validly revoked any such
tender) pursuant to the next succeeding paragraph, this Note shall bear such
higher interest rate for the Subsequent Interest Period.
If the Company elects to reset the interest rate as described above, the
Holder has the option to elect repayment of this Note by the Company on any
Optional Reset Date at a price equal to the aggregate principal amount hereof
outstanding on, plus any interest accrued to, such Optional Reset Date. In
order for this Note to be so repaid on an Optional Reset Date, the Holder must
follow the procedures set forth below for optional repayment, except that (i)
the period for delivery of this Note or notification to the Trustee shall be at
least 25 but not more than 35 days prior to such Optional Reset Date and (ii) a
Holder who has tendered this Note for repayment pursuant to a Reset Notice may,
by written notice to the Trustee, revoke any such tender until the close of
business on the tenth day prior to such Optional Reset Date.
This Note indicates either (i) that such Note cannot be redeemed prior to
its Maturity Date or (ii) that such Note shall be redeemable, in whole or in
part, at the option of the Company on a specified date or dates prior to such
Maturity Date, at a price or prices specified above, together with interest
accrued to the date of redemption. If this Note is redeemable prior to
Maturity, the Company may redeem this Note either in whole or from time to time
in part by mailing notice to the Holder of such redemption by first class mail
at least 30 days and not more than 60 days prior to the date fixed for
redemption. If fewer than all of the Notes of like terms are to be redeemed,
the Notes to be redeemed shall be selected by the Trustee by such method as the
Trustee shall deem fair and appropriate.
This Note indicates either (i) that this Note cannot be repaid at the
option of the Holder prior to the Maturity Date or (ii) that this Note shall be
repayable at the option of the Holder on a date or dates specified prior to the
Maturity Date, at a price or prices specified above, together with interest
accrued to the date of repayment.
In order for this Note to be repaid at the option of the Holder, the
Company must receive, at least 30 days but not more than 45 days prior to the
repayment date, this Note with the form entitled "Option to Elect Repayment"
hereon duly completed. Exercise of the repayment option by the Holder shall be
irrevocable, except as otherwise described above. The repayment option may be
exercised by the Holder for less than the aggregate principal amount of the Note
then outstanding, provided that the principal amount of the Note remaining
outstanding after repayment is an authorized denomination.
The Depository's nominee will be the Holder and therefore will be the only
entity that can exercise a right of repayment. In order to ensure that the
Depository's nominee will timely exercise a right to repayment with respect to a
particular beneficial interest in a Global Note, the beneficial owner
("Beneficial Owner") of such interest must instruct the broker or other
participant through which it holds a beneficial interest in such Global Note to
notify the Depository of its desire to exercise a right to repayment. Each
Beneficial Owner should consult the broker or other participant through which it
holds a beneficial interest in this Note in order to ascertain the deadline by
which
-4-
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FIXED RATE
such an instruction must be given in order for notice to be timely delivered by
such broker or other participant to the Depository.
This Note is issuable in global or definitive registered form without
coupons in the denominations indicated above. Upon due presentment for
registration of transfer of this Note at the principal office of the Trustee, a
new Note or Notes in an equal aggregate principal amount and like interest rate
and Maturity Date shall be issued to the transferee in exchange therefor,
subject to the limitations provided in the Indenture, without charge except for
any tax or other governmental charge imposed in connection therewith.
The Company may at any time purchase Notes at any price or prices in the
open market or otherwise. Notes so purchased by the Company may be held or
resold or, at the discretion of the Company, surrendered to the Trustee for
cancellation.
In case an Event of Default, as defined in the Indenture, with respect to
the Notes shall have occurred and be continuing, the principal hereof may be
declared, and upon such declaration shall become, due and payable in the manner,
with the effect and subject to the conditions provided in the Indenture.
With respect to a Note issued with an original issue discount, if an Event
of Default with respect to the Notes shall have occurred and be continuing, the
amount of principal of this Note which may be declared due and payable, with the
effect and subject to the conditions provided in the Indenture, shall be
determined in the manner specified under "OID Default Amount" above.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the places, at the respective times and at the rate herein prescribed.
The Company, the Trustee, and any agent of the Company or the Trustee may
deem and treat the Holder hereof as the absolute owner hereof (whether or not
this Note shall be overdue and notwithstanding any notation of ownership or
other writing hereon) for the purposes of receiving payment of or on account of
the principal hereof and subject to the provisions above, interest hereon, and
for all purposes and neither the Company nor the Trustee nor any such agent
shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Note or for any claims based hereon, or otherwise in respect
hereof, or based on or in respect of the Indenture or any indenture supplemental
thereto, against any incorporator, shareholder, officer or director as such,
past, present or future of the Company or of any successor corporation, whether
by virtue of any constitution, statute or rule of law or by the enforcement of
any assessment or penalty or otherwise, all such liabilities being, by the
acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the holders of not less than 51% in aggregate principal amount of the
Securities at the time outstanding of all series to be affected thereby (voting
as one class). The Indenture also contains provisions permitting the holders of
a majority in aggregate principal amount of all of the Securities of each
affected series at the time outstanding, on behalf of all holders of all
Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the
-5-
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FIXED RATE
Holder shall be conclusive and binding upon the Holder and upon all future
holders of any Security issued upon the registration of transfer hereof or in
exchange herefor or in lieu hereof, whether or not notation of such consent or
waiver is made upon this Note.
As set forth in, and subject to, the provisions of the Indenture, no holder
of any Security of this series shall have any right to institute any proceeding
with respect to the Indenture or for any remedy thereunder, unless such holder
shall have previously given to the Trustee written notice of default and the
continuance thereof, the holders of not less than 25% in aggregate principal
amount of the Securities of this series then outstanding shall have made written
request upon the Trustee to institute such action or proceeding in its own name
as trustee thereunder and offered the Trustee such reasonable indemnity as it
may require against the costs, expenses and liabilities to be incurred therein
or thereby, and the Trustee shall not have received from the holders of a
majority in principal amount of the outstanding Securities of this series a
direction inconsistent with such request and the Trustee shall have failed to
institute such proceeding within 60 days; provided, however, that such
-------- -------
limitations do not apply to a suit instituted by the Holder for the enforcement
of a payment of principal or interest on this Note on or after the respective
due dates expressed herein.
Terms used herein which are defined in the Indenture shall have the
respective meanings assigned thereto in the Indenture.
This Note shall be governed by and construed in accordance with the laws of
the State of New York.
This Note shall not be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by the Trustee under
the Indenture referred to below.
-6-
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FIXED RATE
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
UGI UTILITIES, INC.
By: _________________________________________
Vice President
_________________________________________
Secretary or Assistant Secretary
[SEAL]
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION:
This is one of the Securities
of the series designated herein
and referred to in the within-
mentioned Indenture.
FIRST UNION NATIONAL BANK,
as Trustee
By:___________________________
Authorized Officer
-7-
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FIXED RATE
OPTION TO ELECT REPAYMENT
TO BE COMPLETED ONLY IF THIS NOTE IS REPAYABLE
AT THE OPTION OF THE HOLDER AND THE HOLDER
ELECTS TO EXERCISE SUCH RIGHTS
The undersigned hereby irrevocably requests and instructs the Company to
repay the within Note (or portion thereof specified below) pursuant to its terms
at a price equal to the amount referred to therein, together with interest to
the repayment date, to the undersigned, at______________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address of the undersigned)
For this Option to Elect Repayment to be effective, the Company must
receive at the address of the Paying Agent specified therein or at such other
place or places of which the Company shall from time to time notify the holder
of the within Note (the "Holder"), at least 30 days but not more than 45 days,
or if such day is not a Business Day, the next succeeding Business Day, prior to
the repayment date, this Note, with this "Option to Elect Repayment" form duly
completed.
If less than the entire principal amount of the within Note is to be
repaid, specify the portion thereof (which shall be an Authorized Denomination)
which the Holder elects to have repaid: ______________________; and specify the
denomination or denominations (which shall be an Authorized Denomination) of the
Note or Notes to be issued to the Holder for the portion of the within Note not
being repaid (in the absence of any such specification, one such Note shall be
issued for the portion not being repaid): _________________
Date:_______________ __________________________________
Notice: The signature to this
Option to Elect Repayment must
correspond with the name as written
upon the Note in every particular
without alteration or enlargement
or any other change whatsoever.
-1-
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT -- ______________Custodian___________
(Cust) (Minor)
Under Uniform Gifts to Minors Act
_________________________________
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
Please Insert Social Security or
Other Identifying Number of Assignee
________________________________________________________________________________
________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
the within Note of UGI UTILITIES, INC. and does hereby irrevocably constitute
and appoint ____________________________________________________________________
________________________________________________________________________________
attorney to transfer the said Note on the books of the Company, with full power
of substitution in the premises.
DATED: ________________ _________________________
_________________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever.
-2-
<PAGE>
Exhibit (4)(ii)
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE REGISTERED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE DEPOSITORY TRUST COMPANY, 55 WATER STREET, NEW YORK, NEW YORK ("DTC"), OR
SUCH OTHER DEPOSITORY AS SPECIFIED BELOW (DTC OR SUCH OTHER DEPOSITORY BEING THE
"DEPOSITORY") TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY
TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR
ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITORY. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY THAT IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY, ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
[If this Note is an Original Issue Discount Note, insert any applicable
-------------------------------------------------------
legends required by the Internal Revenue Code of 1986, as amended, or by
Treasury regulations thereunder.]
CUSIP NO. PRINCIPAL AMOUNT: $
REGISTERED NO. FLR -
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FLOATING RATE
INITIAL INTEREST RATE: ORIGINAL ISSUE DATE: MATURITY DATE:
INITIAL INTEREST PERIOD: BASE RATE: (IF LIBOR INTEREST RESET PERIOD:
TELERATE OR LIBOR REUTERS
SPECIFY CURRENCY)
INTEREST RESET DATES: INTEREST PAYMENT SPREAD:
SPREAD:
SPREAD MULTIPLIER: INTEREST REGULAR RECORD DATE:
DETERMINATION DATE:
OPTIONAL RESET DATE: MAXIMUM INTEREST MINIMUM INTEREST RATE:
RATE:
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FLOATING RATE
SPREAD RESET: SPREAD MULTIPLIER AUTHORIZED
RESET: DENOMINATION: $100,000,
AND INCREMENTS OF $1,000
THEREAFTER
AMORTIZING OR INDEX INDEX MATURITY: ORIGINAL ISSUE DISCOUNT
NOTE: NOTE:
YIELD TO MATURITY: INITIAL ACCRUAL PERIOD OID DEFAULT AMOUNT:
(ONLY APPLICABLE IF OID COMPUTED UNDER (ONLY APPLICABLE IF NOTE
NOTE ISSUED AT (__APPROXIMATE) (__EXACT) ISSUED AT ORIGINAL
ORIGINAL ISSUE DISCOUNT) METHOD: ISSUE DISCOUNT)
ISSUE PRICE IF OTHER REPAYMENT AT OPTION OF REDEMPTION AT OPTION
THAN THE FULL PRINCIPAL HOLDER: OF THE COMPANY:
AMOUNT:
CALCULATION AGENT IF DEPOSITORY IF OTHER PAYING AGENT IF OTHER
OTHER THAN FIRST UNION THAN DEPOSITORY TRUST THAN FIRST UNION
NATIONAL BANK: COMPANY: NATIONAL BANK,
123 SOUTH BROAD STREET,
PHILADELPHIA, PA 19109:
UGI UTILITIES, INC., a corporation duly organized and existing under the
laws of the Commonwealth of Pennsylvania (herein called the "Company"), for
value received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum set forth above (except to the extent redeemed or repaid prior to
the Maturity Date), at the office or agency of the Company maintained for that
purpose in The City of Philadelphia, Pennsylvania and in The City of New York,
New York, at the option of the Company, on the Maturity Date shown above, or if
such date is not a Business Day (as defined below), the next succeeding Business
Day, and to pay interest, if any, daily, weekly, monthly, quarterly, semi-
annually or annually as specified above under "Interest Reset Period," on the
Interest Payment Dates specified above, commencing with the first such Interest
Payment Date following the Original Issue Date specified above, and on the
Maturity Date or date of redemption or repayment, if any, on said principal sum,
at a rate per annum equal to the Initial Interest Rate specified above until the
first Interest Reset Date specified above following the Original Issue Date
specified above and thereafter at a rate per annum determined in accordance with
the provisions hereof; provided, however, that if the Original Issue Date occurs
-------- -------
between a Regular Record Date, as defined below, and the related Interest
Payment Date, interest for the period beginning on the Original Issue Date and
ending on such Interest Payment Date shall be paid on the Interest Payment Date
following the next succeeding Regular Record Date, to the registered holder of
this Note (the "Holder") on such succeeding Regular Record Date. Interest
payable on this Note on any Interest Payment Date shall include interest accrued
from and including the Original Issue Date, or the last Interest Payment Date to
which interest has been paid or duly provided for, as the case may be, to but
excluding the next Interest Payment Date or the Date of Maturity, as the case
may be; provided, however, that if the Interest Reset Period with respect to
-------- -------
this Note is daily or weekly, interest payable on any Interest Payment Date
shall include interest accrued from and including the Original Issue Date or
from and excluding the Regular Record Date to which interest has been paid or
duly provided for, as the case may be, to and including the Regular Record Date
immediately preceding the applicable Interest Payment
-2-
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FLOATING RATE
Date, or to, but excluding, the Maturity Date or date of redemption or
repayment, as the case may be. Subject to certain exceptions provided in the
Indenture referred to below, the interest so payable on any Interest Payment
Date shall be paid to the Person in whose name this Note is registered at the
close of business on the Regular Record Date next preceding such Interest
Payment Date, and interest payable on the Maturity Date or upon redemption or
repayment shall be paid to the Person to whom said principal sum is payable.
"Regular Record Date" shall mean, with respect to any Interest Payment Date, the
date (whether or not a Business Day) 15 calendar days prior to such Interest
Payment Date. "Business Day" shall mean, unless otherwise specified above, any
day, other than a Saturday or Sunday, that meets each of the following
applicable requirements: the day is (i) not a day on which banking institutions
are authorized or required by law or regulation to be closed in The City of New
York; and (ii) if this Note is a LIBOR Note, any day on which dealings in
deposits in the currency specified above are transacted in the London interbank
market.
Accrued interest on this Note shall be calculated by multiplying the
principal amount of this Note (or, if this Note is an Indexed Note, the amount
designated by the terms hereof) by an accrued interest factor. Such accrued
interest factor shall be computed by adding the interest factors computed for
each day in the period for which accrued interest is being calculated. The
interest factor (expressed as a decimal calculated to seven decimal places,
without rounding) for each day in such period shall be computed by dividing the
applicable interest rate by 360 (in the case of CD Rate Notes, Commercial Paper
Notes, Federal Funds Rate Notes, LIBOR Notes and Prime Rate Notes) or by the
actual number of days in the relevant year (in the case of Treasury Notes).
This Note may provide above for either or both of the following (in each
case expressed as a rate per annum on a simple interest basis): (i) a maximum
limitation on the rate at which interest may accrue during any interest period
("Maximum Interest Rate") and (ii) a minimum limitation on the rate at which
interest may accrue during any interest period ("Minimum Interest Rate"). In
addition to any Maximum Interest Rate that may be applicable, the interest rate
shall in no event be higher than the maximum rate permitted by applicable New
York and United States Federal law.
All percentages resulting from any calculation of the interest rate on this
Note shall be rounded, if necessary, to the nearest 1/100,000 of 1% (.0000001),
with five one-millionths of a percentage point rounded upward, and all currency
amounts used in or resulting from such calculation shall be rounded to the
nearest one-hundredth of a dollar (with .005 of a dollar being rounded upward).
Payments of interest, if any, shall be made by the Paying Agent to the
Depository in immediately available funds in accordance with existing
arrangements between the Paying Agent and the Depository; payments of principal
of and interest, if any, on the Maturity Date shall be made by the Paying Agent
by wire transfer in immediately available funds to an account specified by the
Depository.
The Company shall pay any administrative costs imposed by banks in
connection with making payments in immediately available funds, but any tax,
assessment or governmental charge imposed upon payments shall be borne by the
Holder in respect of which such payments are made.
Any payment due on this Note on a day that is not a Business Day shall be
made on the next succeeding Business Day with the same force and effect as if
made on such date, and no additional interest shall accrue as a result of such
delayed payment; provided that, in the case of an Interest Payment Date with
respect to a LIBOR Note, if such Business Day would fall in the succeeding
calendar month, such payment shall be made on the Business Day immediately
preceding such Interest Payment Date.
This Note is one of a duly authorized issue of Securities of the Company
(hereinafter called the "Securities"), all issued or to be issued under and
pursuant to an indenture dated as of August 1, 1993 (hereinafter called the
"Indenture"), duly executed and delivered by the Company and First Union
National Bank (formerly First Fidelity Bank, National Association), as Trustee
(hereinafter, together with any successor trustee or trustees under the
Indenture called
-3-
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FLOATING RATE
the "Trustee"), to which Indenture and all indentures supplemental thereto
reference is hereby made for a description of the rights, obligations, duties
and immunities thereunder of the Trustee, the Company, and the holders of the
Securities. As provided in the Indenture, the Securities may be issued in one or
more series, which different series may be issued in various aggregate principal
amounts, may mature at different times, may bear interest, if any, at different
rates, may be subject to different redemption or repayment provisions, if any,
may be subject to different sinking, purchase or analogous funds, if any, and
may otherwise vary as provided for or permitted by the Indenture. This Note is
one of a series of the Securities offered on a periodic basis by the Company,
which series is unlimited in aggregate principal amount, designated as the
Series B Medium-Term Notes (the "Notes") of the Company. The Notes may mature at
different times (but in all instances more than nine months from their
respective dates of issue), bear interest, if any, at different rates, be
redeemable at the option of the Company at different times or not at all, and be
repayable at the option of the Holder at different times or not at all.
The interest rate in effect from the Original Issue Date to but excluding
the first Interest Reset Date shall be the Initial Interest Rate specified
above. Subsequently, this Note shall bear interest for each Interest Reset
Period at the interest rate determined by (i) adding to or subtracting from the
Base Rate, the Spread specified above, if any, and/or (ii) multiplying the Base
Rate by the Spread Multiplier specified above, if any, or (iii) any other
specified Base Rate, in any case as specified above. The interest rate for an
Interest Reset Period shall be the interest rate determined as of the
immediately preceding Interest Determination Date. The "Interest Reset Period"
pertaining to any Interest Reset Date is the period from and including such
Interest Reset Date to but excluding the immediately succeeding Interest Reset
Date, or the Date of Maturity, as the case may be. The "Interest Reset Date"
means the date or dates as of which the interest rate shall be reset. The
"Spread" is the number of basis points, and the "Spread Multiplier" is the
percentage used to determine the interest rate. The Spread or Spread Multiplier
may be subject to adjustment from time to time, if and to the extent specified
above.
One of the following Base Rates shall be applicable to this Note as
indicated above: (i) the CD Rate ("CD Rate Notes"), (ii) the Commercial Paper
Rate ("Commercial Paper Rate Notes"), (iii) the Federal Funds Rate ("Federal
Funds Rate Notes"), (iv) LIBOR ("LIBOR Notes"), (v) the Prime Rate ("Prime Rate
Notes"), (vi) the Treasury Rate ("Treasury Rate Notes") or (vii) another Base
Rate, as specified above.
The rate at which interest on this Note is payable shall be adjusted daily,
weekly, monthly, quarterly, semiannually or annually, as specified above under
Interest Reset Period (except that in all instances the interest rate for the
ten days prior to Maturity shall be the rate in effect on the tenth day prior to
Maturity); provided, however, that if an Interest Reset Date would otherwise be
-------- -------
a day that is not a Business Day, such Interest Reset Date shall be postponed to
the next Business Day, except that, in the case of a LIBOR Note, if such
Business Day would fall in the next calendar month, such Interest Reset Date
shall be the immediately preceding Business Day.
The "Interest Determination Date" pertaining to an Interest Reset Period
(i) for CD Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes or
Prime Rate Notes shall be the second Business Day preceding the relevant
Interest Reset Date, (ii) for LIBOR Notes shall be the second London Banking Day
preceding the relevant Interest Reset Date and (iii) for Treasury Rate Notes
shall be the day of the week in which the relevant Interest Reset Date falls on
which treasury bills of the applicable Index Maturity are auctioned. If, as the
result of a legal holiday, a treasury bill auction is held on the Friday
preceding the Interest Reset Date, such Friday shall be the Interest
Determination Date.
The "Calculation Date", where applicable, pertaining to an Interest
Determination Date shall be the earlier of (i) the tenth calendar day after such
Interest Determination Date or, if any such day is not a Business Day, the next
succeeding Business Day or (ii) the Business Day preceding the applicable
Interest Payment Date or date of Maturity, as the case may be.
-4-
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FLOATING RATE
The "Calculation Agent" specified above has been appointed by the Company
to calculate interest rates on this Note as specified above. All determinations
of interest by the Calculation Agent shall, in the absence of manifest error, be
conclusive for all purposes and binding on the Company and the Holder. Upon the
request of any registered Holder or Beneficial Owner of this Note, the
Calculation Agent for this Note shall provide, if determined, the interest rate
then in effect and the interest rate that shall become effective on the next
Interest Reset Date with respect to this Note.
Determination of Interest Rate for CD Rate Notes. If the Base Rate
specified above is "CD Rate," this Note shall bear interest for each Interest
Reset Period at the interest rate calculated with reference to the CD Rate and
the Spread and/or Spread Multiplier, if any, specified above. The "CD Rate"
-------
means, with respect to any Interest Determination Date, the rate on such date
for negotiable certificates of deposit having the applicable Index Maturity, as
published by the Board of Governors of the Federal Reserve System in
"Statistical Release H.15(519), Selected Interest Rate", or any successor
publication of the Board of Governors of the Federal Reserve System
("H.15(519)") under the heading "CDs (Secondary Market)". If such rate is not
published by 9:00 a.m., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, the CD Rate shall be the rate on such
Interest Determination Date for negotiable certificates of deposit of the
applicable Index Maturity, as published by the Federal Reserve Bank of New York
in its daily statistical release, "Composite 3:30 p.m. Quotations for U.S.
Government Securities", or any successor publication of the Federal Reserve Bank
of New York ("Composite Quotations") under the heading "Certificates of
Deposit". If such rate is not published in Composite Quotations by 3:00 p.m.,
New York City time, on the Calculation Date pertaining to such Interest
Determination Date, then the CD Rate for such Interest Determination Date shall
be calculated by the Calculation Agent and shall be the arithmetic mean of the
secondary market offered rates as of 10:00 a.m., New York City time, on such
Interest Determination Date, of three leading nonbank dealers in negotiable U.S.
dollar certificates of deposit in the City of New York, selected by the
Calculation Agent after consultation with the Company, for negotiable
certificates of deposit of major United States money center banks of the highest
credit standing (in the market for negotiable certificates of deposit) with a
remaining maturity closest to the applicable Index Maturity in a denomination of
$5,000,000; provided, however, that if the dealers selected as aforesaid by the
-------- -------
Calculation Agent are not quoting such rates, the interest rate for the period
commencing on the Interest Reset Date shall be the interest rate borne by this
Note on such Interest Determination Date.
CD Rate Notes, like other Notes, are not deposit obligations of a bank and
are not insured by the Federal Deposit Insurance Corporation.
Determination of Interest Rate for Commercial Paper Rate Notes. If the Base
Rate specified above is "Commercial Paper Rate," this Note shall bear interest
for each Interest Reset Period at the interest rate calculated with reference to
the Commercial Paper Rate and the Spread and/or Spread Multiplier, if any,
specified above. The "Commercial Paper Rate" means, with respect to any Interest
---------------------
Determination Date, the Money Market Yield on such Interest Determination Date
of the rate for commercial paper having the applicable Index Maturity, as
published in H.15(519) under the heading "Commercial Paper". If such rate is not
published prior to 9:00 a.m., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the Commercial Paper Rate shall
be the Money Market Yield on such Interest Determination Date of the rate for
commercial paper of the applicable Index Maturity, as published by the Federal
Reserve Bank of New York in Composite Quotations under the heading "Commercial
Paper". If such rate is not published in Composite Quotations by 3:00 p.m., New
York City time, on the Calculation Date pertaining to such Interest
Determination Date, then the Commercial Paper Rate for such Interest
Determination Date shall be calculated by the Calculation Agent and shall be the
Money Market Yield of the arithmetic mean of the offered rates as of 11:00 a.m.,
New York City time, on such Interest Determination Date of three leading dealers
of commercial paper in The City of New York, selected by the Calculation Agent
after consultation with the Company, for commercial paper of the applicable
Index Maturity, placed for industrial issuers whose bond rating (as determined
by a nationally recognized rating agency) is "AA" or the equivalent; provided,
--------
however, that if the dealers selected as aforesaid by the Calculation Agent are
- -------
not quoting such rates, the interest rate for the period commencing on the
Interest Reset Date following such Interest Determination Date shall be the
interest rate borne by this Note on such Interest Determination Date.
-5-
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FLOATING RATE
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
D x 360
Money Market Yield = ----------------- x 100
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the applicable period for which interest is being calculated.
Determination of Interest Rate for Federal Funds Rate Notes. If the Base
Rate specified above is "Federal Funds Rate," this Note shall bear interest for
each Interest Reset Period at the interest rate calculated with reference to the
Federal Funds Rate and the Spread and/or Spread Multiplier, if any, specified
above. The "Federal Funds Rate" means, with respect to any Interest
------------------
Determination Date, the rate on such date for federal funds, as published in
H.15(519) under the heading "Federal Funds (Effective)". If such rate is not
published by 9:00 a.m., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, the Federal Funds Rate shall be the rate on
such Interest Determination Date, as published by the Federal Reserve Bank of
New York in Composite Quotations under the heading "Federal Funds/Effective
Rate". If such rate is not published in Composite Quotations by 3:00 p.m., New
York City time, on the Calculation Date pertaining to such Interest
Determination Date, then the Federal Funds Rate for such Interest Determination
Date shall be calculated by the Calculation Agent and shall be the arithmetic
mean of the rates for the last transaction in overnight federal funds arranged
by three leading brokers of federal funds transactions in The City of New York,
selected by the Calculation Agent after consultation with the Company, as of
9:00 a.m., New York City time, on such Interest Determination Date; provided,
--------
however, that if the brokers selected as aforesaid by the Calculation Agent are
- -------
not arranging such transactions, the interest rate for the period commencing on
the Interest Reset Date following such Interest Determination Date shall be the
interest rate borne by this Note on such Interest Determination Date.
Determination of Interest Rate for LIBOR Notes. If the Base Rate specified
above is "LIBOR Telerate" or "LIBOR Reuters," this Note shall bear interest for
each Interest Reset Period at the interest rate calculated with reference to
LIBOR and the Spread or Spread Multiplier, if any, specified above. "LIBOR"
-----
means, with respect to any Interest Determination Date, the rate determined by
the Calculation Agent in accordance with clause (1) below, if LIBOR Telerate is
specified above as the Base Rate, or clause (2) below, if LIBOR Reuters is
specified above as the Base Rate:
(1) The rate for deposits in United States dollars of the Index
Maturity specified above, commencing on the second London Banking Day
immediately following such Interest Determination Date, that appears on the
Telerate Page 3750 as of 11:00 a.m., London time, on such Interest
Determination Date ("LIBOR Telerate"). "Telerate Page 3750" means the
display designated as Page "3750" on the Telerate Service (or such other
page as may replace page 3750 on that service or such other service or
services as may be designated by the British Bankers' Association for the
purpose of displaying London interbank offered rates for U.S. dollar
deposits).
(2) The arithmetic mean on the offered rates for deposits in U.S.
dollars having the Index Maturity specified above, commencing on the second
London Banking Day immediately following such Interest Determination Date,
that appear on the Reuters Screen LIBO Page as of 11:00 a.m., London time,
on such Interest Determination Date, if at least two such offered rates
appear on the Reuters Screen LIBO Page ("LIBOR Reuters"). "Reuters Screen
LIBO Page" means the display designated as Page "LIBO" on the Reuters
Monitor Money Rate Service (or such other page as may replace the LIBO page
on that service for the purpose of displaying London interbank offered
rates of major banks).
If the Base Rate specified above is "LIBOR," but neither LIBOR Telerate nor
LIBOR Reuters is specified, LIBOR shall be determined as if LIBOR Telerate had
been specified.
-6-
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FLOATING RATE
If (i) in the case where paragraph (1) above applies, no rate appears on
the Telerate Page 3750 or (ii) in the case where paragraph (2) above applies,
fewer than two offered rates appear on the Reuters Screen LIBO Page, LIBOR in
respect of such Interest Determination Date shall be determined by the
Calculation Agent on the basis of the rates at which deposits in U.S. dollars of
the Index Maturity specified above are offered to prime banks in the London
interbank market at approximately 11:00 a.m., London time, on such Interest
Determination Date by four major banks ("Reference Banks") in the London
interbank market, selected by the Calculation Agent, commencing on the second
London Banking Day immediately following such Interest Determination Date in a
principal amount of not less than $1,000,000 that is representative for a single
transaction in such market at such time. The Calculation Agent shall request the
principal London office of each of the Reference Banks to provide a quotation of
its rate. If at least two such quotations are provided, LIBOR for such Interest
Determination Date shall be the arithmetic mean of such quotations. If fewer
than two quotations are provided, LIBOR for such Interest Date shall be the
arithmetic mean of the rates quoted at approximately 11:00 a.m., New York City
time, on such Interest Determination Date by three major commercial or
investment banks (which may include the Agents or any of their respective
affiliates) in The City of New York, selected by the Calculation Agent, for U.S.
dollar loans of the applicable Index Maturity to leading European banks,
commencing on the second London Banking Day immediately following such Interest
Determination Date, in a principal amount of not less than $1,000,000 that is
representative for a single transaction in such market at such time; provided,
--------
however, that if the banks selected as aforesaid by the Calculation Agent are
- -------
not quoting such rates, the interest rate for the period commencing on the
Interest Reset Date following such Interest Determination Date shall be the
interest rate borne by this Note on such Interest Determination Date.
If this Note is a LIBOR Note and specifies that it is indexed to the
offered rates for deposits in a Specified Currency other than United States
Dollars, the method for determining such rates shall be specified above.
Determination of Interest Rate for Prime Rate Notes. If the Base Rate
specified above is "Prime Rate," this Note shall bear interest for each Interest
Reset Period at the interest rate calculated with reference to the Prime Rate
and the Spread and/or Spread Multiplier, if any, specified above. The "Prime
-----
Rate" means, with respect to any Interest Determination Date, the rate on such
- ----
date, as published in H.15(519) under the heading "Bank Prime Loan." If such
rate is not published by 9:00 a.m., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the Prime Rate shall be
determined by the Calculation Agent and shall be the arithmetic mean of the
rates of interest publicly announced by each bank named on the "Reuters Screen
NYMF Page" as such bank's prime rate or base lending rate as in effect for such
Interest Determination Date. "Reuters Screen NYMF Page" means the display
designated as page "NYMF" on the Reuters Monitor Money Rates Service (or such
other page as may replace the NYMF page on that service for the purpose of
displaying prime rates or base lending rates of major United States banks). If
fewer than four but more than one such rate appears on the Reuters Screen NYMF
Page for such Interest Determination Date, the Prime Rate shall be determined by
the Calculation Agent and shall be the arithmetic mean of the prime rates,
quoted on the basis of the actual number of days in the year divided by 360, as
of the close of business on such Interest Determination Date by four major money
center banks in The City of New York selected by the Calculation Agent after
consultation with the Company. If fewer than two such rates appear on the
Reuters Screen NYMF Page, the Prime Rate shall be calculated by the Calculation
Agent and shall be the arithmetic mean of the prime rates in effect for such
Interest Determination Date as furnished in The City of New York by at least
three substitute banks or trust companies organized and doing business under the
laws of the United States, or any state thereof, in each case having total
equity capital of at least $500,000,000 and subject to supervision or
examination by a federal or state authority, selected by the Calculation Agent
after consultation with the Company; provided, however, that if the banks or
-------- -------
trust companies selected as aforesaid by the Calculation Agent are not quoting
such rates, the interest rate for the period commencing on the Interest Reset
Date following such Interest Determination Date shall be the interest rate borne
by this Note on such Interest Determination Date.
Determination of Interest Rate for Treasury Rate Notes. If the Base Rate
specified above is "Treasury Rate," this Note shall bear interest for each
Interest Reset Period at the interest rate calculated with reference to the
Treasury
-7-
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FLOATING RATE
Rate and the Spread and/or Spread Multiplier, if any, specified above. The
"Treasury Rate" means, with respect to any Interest Determination Date, the rate
- --------------
for the auction held on such Interest Determination Date of treasury bills of
the Index Maturity specified above, as published in H. 15(519) under the heading
"U.S. Government Securities - Treasury bills-auction average (investment)". If
such rate is not published by 9:00 a.m., New York City time, on the Calculation
Date pertaining to such Interest Determination Date, the Treasury Rate shall be
the auction average rate for such Interest Determination Date (expressed as a
bond equivalent, rounded to the nearest one-hundredth of a percent, with five
one-thousandths of a percent rounded upward, on the basis of a year of 365 or
366 days, as applicable, and applied on a daily basis) as otherwise announced by
the United States Department of the Treasury. In the event that the results of
the auction of treasury bills having the applicable Index Maturity are not
published or reported as provided above by 3:00 p.m., New York City time, on
such Calculation Date, or if no such auction is held on such Interest
Determination Date, then the Treasury Rate shall be calculated by the
Calculation Agent and shall be a yield to maturity (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and applied
on a daily basis) of the arithmetic mean of the secondary market bid rates, as
of approximately 3:30 p.m., New York City time, on such Interest Determination
Date, of three leading primary United States government securities dealers,
selected by the Calculation Agent after consultation with the Company, for the
issue of treasury bills with a remaining maturity closest to the applicable
Index Maturity; provided, however, that if the dealers selected as aforesaid by
-------- -------
the Calculation Agent are not quoting such rates, the interest rate for the
period commencing on the Interest Reset Date following such Interest
Determination Date shall be the interest rate borne by this Note on such
Interest Determination Date.
If this Note is an Original Issue Discount Note for United States federal
income tax purposes, as specified above, then, except as otherwise specified
above, upon redemption or repayment (except in the case of an Event of Default
as set forth below) of this Note there shall be payable in lieu of the Principal
Amount, an amount equal to the Amortized Face Amount of this Note. The
"Amortized Face Amount," shall be equal to (a) the Issue Price, as specified
above, plus (b) the portion of the difference between the Issue Price and the
Principal Amount of this Note that has accrued at the Yield to Maturity
specified above (computed in accordance with generally accepted United States
bond yield computation principles) at the date as of which such Amortized Face
Amount is calculated, but in no event shall the Amortized Face Amount exceed the
Principal Amount.
Amortizing Notes are Notes as to which all or a portion of the principal
amount is payable prior to the Maturity Date in accordance with a schedule, by
application of a formula, or by reference to an Index. If this Note is an
Amortizing Note, the terms and conditions, including the terms for payment
hereof, shall be specified above.
Indexed Notes are Notes as to which all or certain interest payments
("Indexed Rate Notes") and/or the principal amount payable at Maturity ("Indexed
Principal Notes") are determined by reference to prices, changes in prices, or
differences between prices, of securities, currencies, intangibles, goods,
articles or commodities, either in the United States or foreign jurisdictions,
or by such other objective price, economic or other measures as are specified
above (each such price, economic or other measures as are specified above being
an "Index"). If this Note is an Indexed Note, as specified above, a description
of the Index used in any determination of interest and/or principal payments,
and the method or formula by which interest or principal payments or both shall
be determined by reference to such Index, is specified above.
If this Note is an Indexed Note, and if the determination of the Index
specified above is calculated or announced by a third party (which may be First
Union National Bank) and such third party either suspends the calculation or
announcement of such Index or changes the basis upon which such Index is
calculated (other than changes consistent with the policies in effect at the
time the related Indexed Note was issued and with permitted changes described
above), then such Index shall be calculated for purposes of this Note by another
third party (which may be First Union National Bank) selected by the Company,
subject to the same conditions and controls as applied to the original third
party. If for any reason such Index cannot be calculated on the same basis and
subject to the same conditions and controls as applied to the original third
party, then any indexed interest payments or indexed principal amount payable
with respect to this Note
-8-
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FLOATING RATE
shall be calculated in the manner specified above. All determinations of such
third party shall, in the absence of manifest error, be conclusive for all
purposes and binding on the Company and the Holder.
This Note indicates whether the Company has the option with respect to such
Note to reset the Spread or Spread Multiplier and, if so, the date or dates on
which such Spread or Spread Multiplier, as the case may be, may be reset (each
an "Optional Reset Date"). If the Company has such option with respect to this
Note, the following procedures shall apply.
The Company may exercise such option with respect to this Note by notifying
the Trustee of such exercise at least 50 but not more than 60 days prior to an
Optional Reset Date. Not later than 40 days prior to such Optional Reset Date,
the Trustee shall mail to the Holder a notice ("Reset Notice") setting forth (i)
the election of the Company to reset the Spread or Spread Multiplier, (ii) such
new Spread or Spread Multiplier and (iii) the provisions, if any, for redemption
during the period from such Optional Reset Date to the next Optional Reset Date
or, if there is no such next Optional Reset Date, to the Maturity Date of this
Note (each such period a "Subsequent Interest Period"), including the date or
dates on which or the period or periods during which and the price or prices at
which such redemption may occur during such Subsequent Interest Period. Upon the
transmittal by the Trustee of a Reset Notice to the Holder, such new Spread or
Spread Multiplier shall take effect automatically and, except as modified by the
Reset Notice and as described in the next paragraph, this Note shall have the
same terms as prior to the transmittal of such Reset Notice.
Notwithstanding the foregoing, the Company may, at its option, revoke the
Spread or Spread Multiplier, as provided for in the Reset Notice, and establish
a Spread or Spread Multiplier that is higher than the Spread or Spread
Multiplier provided for in the relevant Reset Notice for the Subsequent Interest
Period commencing on such Optional Reset Date, by causing the Trustee to mail,
not later than 20 days prior to an Optional Reset Date, notice of such higher
Spread or Spread Multiplier to the Holder. Such notice shall be irrevocable. The
Company must notify the Trustee of its intentions to revoke such Reset Notice at
least 25 days prior to such Optional Reset Date. If the Spread or Spread
Multiplier is reset on an Optional Reset Date and the Holder has not tendered
this Note for repayment (or has validly revoked any such tender) pursuant to the
next succeeding paragraph, this Note shall bear such higher Spread or Spread
Multiplier for the Subsequent Interest Period.
If the Company elects to reset the Spread or Spread Multiplier as described
above, the Holder has the option to elect repayment of this Note by the Company
on any Optional Reset Date at a price equal to the aggregate principal amount
hereof outstanding on, plus any interest accrued to, such Optional Reset Date.
In order for this Note to be so repaid on an Optional Reset Date, the Holder
must follow the procedures set forth below for optional repayment, except that
(i) the period for delivery of this Note or notification to the Trustee shall be
at least 25 but not more than 35 days prior to such Optional Reset Date and (ii)
a Holder who has tendered this Note for repayment pursuant to a Reset Notice
may, by written notice to the Trustee, revoke any such tender until the close of
business on the tenth day prior to such Optional Reset Date.
This Note indicates either (i) that such Note cannot be redeemed prior to
its Maturity Date or (ii) that such Note shall be redeemable, in whole or in
part, at the option of the Company on a specified date or dates prior to such
Maturity Date, at a price or prices specified above, together with interest
accrued to the date of redemption. If this Note is redeemable prior to Maturity,
the Company may redeem this Note either in whole or from time to time in part by
mailing notice to the Holder of such redemption by first class mail at least 30
days and not more than 60 days prior to the date fixed for redemption. If fewer
than all of the Notes of like terms are to be redeemed, the Notes to be redeemed
shall be selected by the Trustee by such method as the Trustee shall deem fair
and appropriate.
This Note indicates either (i) that this Note cannot be repaid at the
option of the Holder prior to the Maturity Date or (ii) that this Note shall be
repayable at the option of the Holder on a date or dates specified prior to the
Maturity Date, at a price or prices specified above, together with interest
accrued to the date of repayment.
-9-
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FLOATING RATE
In order for this Note to be repaid at the option of the Holder, the
Company must receive, at least 30 days but not more than 45 days prior to the
repayment date, this Note with the form entitled "Option to Elect Repayment"
hereon duly completed. Exercise of the repayment option by the Holder shall be
irrevocable, except as otherwise described above. The repayment option may be
exercised by the Holder for less than the aggregate principal amount of the Note
then outstanding, provided that the principal amount of the Note remaining
outstanding after repayment is an authorized denomination.
The Depository's nominee will be the Holder and therefore will be the only
entity that can exercise a right of repayment. In order to ensure that the
Depository's nominee will timely exercise a right to repayment with respect to a
particular beneficial interest in a Global Note, the beneficial owner
("Beneficial Owner") of such interest must instruct the broker or other
participant through which it holds a beneficial interest in such Global Note to
notify the Depository of its desire to exercise a right to repayment. Each
Beneficial Owner should consult the broker or other participant through which it
holds a beneficial interest in this Note in order to ascertain the deadline by
which such an instruction must be given in order for notice to be timely
delivered by such broker or other participant to the Depository.
The Notes are issuable in global or definitive registered form without
coupons in the denominations indicated above. Upon due presentment for
registration of transfer of this Note at the principal office of the Trustee, a
new Note or Notes in an equal aggregate principal amount and like interest rate
and Maturity Date shall be issued to the transferee in exchange therefor,
subject to the limitations provided in the Indenture, without charge except for
any tax or other governmental charge imposed in connection therewith.
The Company may at any time purchase Notes at any price or prices in the
open market or otherwise. Notes so purchased by the Company may be held or
resold or, at the discretion of the Company, surrendered to the Trustee for
cancellation.
In case an Event of Default, as defined in the Indenture, with respect to
the Notes shall have occurred and be continuing, the principal hereof may be
declared, and upon such declaration shall become, due and payable in the manner,
with the effect and subject to the conditions provided in the Indenture.
With respect to a Note issued with an original issue discount, if an Event
of Default with respect to the Notes shall have occurred and be continuing, the
amount of principal of this Note which may be declared due and payable, with the
effect and subject to the conditions provided in the Indenture, shall be
determined in the manner specified under "OID Default Amount" above.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the places, at the respective times and at the rate herein prescribed.
The Company, the Trustee, and any agent of the Company or the Trustee may
deem and treat the Holder as the absolute owner hereof (whether or not this Note
shall be overdue and notwithstanding any notation of ownership or other writing
hereon) for the purposes of receiving payment of or on account of the principal
hereof and subject to the provisions above, interest hereon, and for all
purposes and neither the Company nor the Trustee nor any such agent shall be
affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Note or for any claims based hereon, or otherwise in respect
hereof, or based on or in respect of the Indenture or any indenture supplemental
thereto, against any incorporator, shareholder, officer or director as such,
past, present or future of the Company or of any successor corporation, whether
by virtue of any constitution, statute or rule of law or by the enforcement of
any
-10-
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FLOATING RATE
assessment or penalty or otherwise, all such liabilities being, by the
acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the holders of not less than 51% in aggregate principal amount of the
Securities at the time outstanding of all series to be affected thereby (voting
as one class). The Indenture also contains provisions permitting the holders of
a majority in aggregate principal amount of all of the Securities of each
affected series at the time outstanding, on behalf of all holders of all
Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder shall be conclusive
and binding upon the Holder and upon all future Holders and of any Security
issued upon the registration of transfer hereof or in exchange herefor or in
lieu hereof, whether or not notation of such consent or waiver is made upon this
Note.
As set forth in, and subject to, the provisions of the Indenture, no holder
of any Security of this series shall have any right to institute any proceeding
with respect to the Indenture or for any remedy thereunder, unless such holder
shall have previously given to the Trustee written notice of default and the
continuance thereof, the holders of not less than 25% in aggregate principal
amount of the Securities of this series then outstanding shall have made written
request upon the Trustee to institute such action or proceeding in its own name
as trustee thereunder and offered the Trustee such reasonable indemnity as it
may require against the costs, expenses and liabilities to be incurred therein
or thereby, and the Trustee shall not have received from the holders of a
majority in principal amount of the outstanding Securities of this series a
direction inconsistent with such request and the Trustee shall have failed to
institute such proceeding within 60 days; provided, however, that such
-------- -------
limitations do not apply to a suit instituted by the Holder for the enforcement
of a payment of principal or interest on this Note on or after the respective
due dates expressed herein.
Terms used herein which are defined in the Indenture shall have the
respective meanings assigned thereto in the Indenture.
This Note shall be governed by and construed in accordance with the laws of
the State of New York.
This Note shall not be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by the Trustee under
the Indenture referred to below.
-11-
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FLOATING RATE
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
UGI UTILITIES, INC.
By:
___________________________________
Vice President
___________________________________
Secretary or Assistant Secretary
[SEAL]
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION:
This is one of the Securities
of the series designated herein
and referred to in the within-
mentioned Indenture.
FIRST UNION NATIONAL BANK,
as Trustee
By:_______________________
Authorized Officer
-12-
<PAGE>
OPTION TO ELECT REPAYMENT
TO BE COMPLETED ONLY IF THIS NOTE IS REPAYABLE
AT THE OPTION OF THE HOLDER AND THE HOLDER
ELECTS TO EXERCISE SUCH RIGHTS
The undersigned hereby irrevocably requests and instructs the Company to
repay the within Note (or portion thereof specified below) pursuant to its terms
at a price equal to the amount referred to therein, together with interest to
the repayment date, to the undersigned, at _____________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address of the undersigned)
For this Option to Elect Repayment to be effective, the Company must
receive at the address of the Paying Agent specified therein or at such other
place or places of which the Company shall from time to time notify the holder
of the within Note (the "Holder"), at least 30 days but not more than 45 days,
or if such day is not a Business Day, the next succeeding Business Day, prior to
the repayment date, this Note, with this "Option to Elect Repayment" form duly
completed.
If less than the entire principal amount of the within Note is to be
repaid, specify the portion thereof (which shall be an Authorized Denomination)
which the Holder elects to have repaid: ______________________; and specify the
denomination or denominations (which shall be an Authorized Denomination) of the
Note or Notes to be issued to the Holder for the portion of the within Note not
being repaid (in the absence of any such specification, one such Note shall be
issued for the portion not being repaid): ______________________________________
Date:_____________________ ________________________________________
Notice: The signature to this Option to
Elect Repayment must correspond with the
name as written upon the Note in every
particular without alteration or
enlargement or any other change
whatsoever.
-1-
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT -- ______________ Custodian___________
(Cust) (Minor)
Under Uniform Gifts to Minors Act
__________________________________
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
Please Insert Social Security or
Other Identifying Number of Assignee
________________________________________________________________________________
________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
the within Note of UGI UTILITIES, INC. and does hereby irrevocably constitute
and appoint ____________________________________________________________________
________________________________________________________________________________
attorney to transfer the said Note on the books of the Company, with full power
of substitution in the premises.
DATED: ________________ _____________________________________________
_____________________________________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever.
-2-
<PAGE>
Exhibit (4)(iii)
CALCULATION AGENT AGREEMENT
This Agreement (the "Agreement") dated as of August 1, 1996, is made
between UGI Utilities, Inc. (the "Company") and First Union National Bank
("First Union").
The Company proposes to issue and sell its Series B Medium-Term Notes (the
"Notes") pursuant to an Indenture dated as of August 1, 1993, between the
Company and First Union, as Trustee, as supplemented by a Resolution of the
Board of Directors of the Company dated July 30, 1996 (the "Indenture"), in an
aggregate initial offering price of up to $75,000,000. The Company desires to
appoint First Union as Calculation Agent with respect to the Notes to be issued
under the Indenture and First Union is willing to accept the appointment upon
the following terms and conditions:
1. The Company hereby appoints First Union as Calculation Agent (the
"Agent") with respect to the Notes, and the Agent hereby accepts such
appointment and agrees to perform the duties and obligations of Calculation
Agent set forth in the form of Floating Rate Notes providing for floating
interest rates attached hereto as Exhibit A.
2. The Company shall pay all fees (as established in a separate letter
agreement between the Company and the Agent), charges and out-of-pocket expenses
(including reasonable legal fees and expenses) of the Agent for acting under and
pursuant to this Agreement. In addition, the Company shall indemnify and hold
harmless the Agent and its officers, employees and agents from and against any
and all losses, costs, charges, expenses, judgments and liabilities of the
Company or third parties arising out if its acceptance, performance or
administration of this Agreement and the transactions contemplated hereby,
provided, however, that such indemnification shall not apply to any such losses,
costs, charges, expenses, judgments or liabilities caused by the negligence or
willful misconduct of the Agent or its officers, employees or agents. The
provisions of this paragraph 2 shall survive the termination of this Agreement.
3. The duties and obligations of the Agent shall be determined solely by
the express provisions of this Agreement, the Indenture and the Floating Rate
Notes, and no implied covenants or obligations shall be read into any of such
documents against the Agent; and in the absence of negligence or willful
misconduct on the part of the Agent, the Agent may conclusively rely, as to the
truth of the statements expressed therein, upon any documents furnished to the
Agent and conforming to the requirements of this Agreement (including Exhibit A
hereto) and the Indenture, and the Agent may rely and shall be protected in
acting upon any document believed by it to be genuine and to have been signed or
presented by the proper party or parties. The Agent shall not be liable for (i)
any error resulting from the use of or reliance on a source or publication
required to be used under the Indenture or this Agreement (including Exhibit A
hereto) (ii) any error of judgment made in good faith by a responsible officer
or officers of the Agent unless the Agent was negligent in ascertaining the
pertinent facts. No party shall be liable for any default resulting from force
majeure, which shall be deemed to include any circumstances beyond the
reasonable control of the party affected.
<PAGE>
4. In acting under this Agreement the Agent is acting solely as agent of
the Company and does not assume any obligation toward, or any relationship of
agency or trust for or with, any third party.
5. This Agreement shall become effective upon execution by the parties
hereto. The Agent may at any time resign or be removed as Agent on not less
than 60 days prior written notice; provided, however, that such resignation or
removal shall take effect only upon the appointment by the Company of a
successor Agent and the acceptance of such appointment by such successor Agent.
If no successor Agent shall have been so appointed and have accepted appointment
within sixty (60) days after such notice of termination is given, the resigning
Agent may petition any court of competent jurisdiction for the appointment of a
successor Agent. Such court may thereupon, after such notice, if any, as it may
deem proper, appoint a successor Agent. Notwithstanding the foregoing, if the
Agent and the Trustee are the same entity, and if the Trustee is resigning or
being removed, termination of this Agreement shall become effective no later
than the effective date of the resignation or removal, as the case may be, of
the Trustee.
6. Upon termination of this Agreement by either party pursuant to the
provisions of Section 5 or otherwise, the Agent shall be entitled to the payment
of any compensation owed to it by the Company hereunder and to the reimbursement
of all reasonable out-of-pocket expenses incurred in connection with all
services rendered by it hereunder, as provided by Section 2 hereof and the
Company's obligation to make such payment and reimbursement shall survive such
termination. The provisions of Section 2, 3, 4 and 9 hereof shall remain in
effect following such termination.
7. In the event of the termination of this Agreement pursuant to Section
5 hereof, the Company shall promptly appoint a successor Agent. Any successor
Agent appointed by the Company following termination of this Agreement pursuant
to the provisions of section 5 hereof shall execute and deliver to the original
Agent, the Company and the Trustee an instrument accepting such appointment.
8. All notices, demands and formal actions under this Agreement shall be
by telephone, telecopier, telegram or other communications device, promptly
confirmed in writing and mailed or delivered to:
The Agent:
First Union National Bank
123 South Broad Street
Philadelphia, Pennsylvania 19109
Attention: Corporate Trust Department
PA 1249
The Company:
-2-
<PAGE>
UGI Utilities, Inc.
100 Kachel Boulevard
Green Hills Corporate Center
Suite 400
P.O. Box 12677
Reading, Pennsylvania 19612-2677
Telephone: (610) 796-3400
Attention: General Counsel
The parties may, by written notice given under this Agreement, designate
other addresses to which subsequent notices, requests, reports or other
communications shall be directed.
9. This Agreement shall inure to the benefit of and be binding upon the
Agent and the Company, and their respective successors and assigns, and shall
not confer any rights upon any other person, partnership, association or
corporation other than (for purposes only of paragraph 2 hereof) officers,
employees and agents of the Agent. The terms "successors" and "assigns" shall
not include any person, partnership, association or corporation in its capacity
as a purchaser of any Note.
10. If any provision of this Agreement shall be held or deemed to be, or
shall, in fact, be, invalid, inoperative or unenforceable as applied in any
particular case in any jurisdiction or jurisdictions, or in all jurisdictions,
because it conflicts with any provisions of any constitution, statute or rule of
public policy, or for any other reason, such circumstances shall not have the
effect of rendering any provision or provisions of this Agreement invalid,
inoperative or unenforceable in any other case or circumstances, or of rendering
any other provision or provisions of this Agreement invalid, inoperative or
unenforceable to any extent whatsoever.
11. This Agreement may be executed in several counterparts, each of which
shall be regarded as an original and all of which shall constitute one and the
same document.
12. The terms of this Agreement shall not be waived, altered, modified,
amended or supplemented in any manner whatsoever except by written instrument
signed by the parties hereto.
13. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania.
-3-
<PAGE>
14. Capitalized terms used herein have the meanings set forth in the
Indenture.
IN WITNESS WHEREOF, the undersigned have hereunder set their hands as of
the date first above written.
UGI UTILITIES, INC.
By: __________________________
Title: Vice President
FIRST UNION NATIONAL BANK
as Agent
By: __________________________
Title:
-4-
<PAGE>
EXHIBIT A
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE REGISTERED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE DEPOSITORY TRUST COMPANY, 55 WATER STREET, NEW YORK, NEW YORK ("DTC"), OR
SUCH OTHER DEPOSITORY AS SPECIFIED BELOW (DTC OR SUCH OTHER DEPOSITORY BEING THE
"DEPOSITORY") TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY
TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR
ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITORY. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY THAT IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY, ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
[If this Note is an Original Issue Discount Note, insert any applicable
-------------------------------------------------------
legends required by the Internal Revenue Code of 1986, as amended, or by
Treasury regulations thereunder.]
CUSIP NO. PRINCIPAL AMOUNT: $
REGISTERED NO. FLR -
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FLOATING RATE
INITIAL INTEREST RATE: ORIGINAL ISSUE DATE: MATURITY DATE:
INITIAL INTEREST PERIOD: BASE RATE: (IF LIBOR INTEREST RESET PERIOD:
TELERATE OR LIBOR REUTERS
SPECIFY CURRENCY)
INTEREST RESET DATES: INTEREST PAYMENT SPREAD:
SPREAD:
SPREAD MULTIPLIER: INTEREST REGULAR RECORD DATE:
DETERMINATION DATE:
OPTIONAL RESET DATE: MAXIMUM INTEREST MINIMUM INTEREST RATE:
RATE:
-5-
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FLOATING RATE
SPREAD RESET: SPREAD MULTIPLIER AUTHORIZED
RESET: DENOMINATION: $100,000,
and increments of $1,000
thereafter
AMORTIZING OR INDEX INDEX MATURITY: ORIGINAL ISSUE DISCOUNT
NOTE: NOTE:
YIELD TO MATURITY: INITIAL ACCRUAL PERIOD OID DEFAULT AMOUNT:
(ONLY APPLICABLE IF OID COMPUTED UNDER (ONLY APPLICABLE IF NOTE
NOTE ISSUED AT (__APPROXIMATE) (__EXACT) ISSUED AT ORIGINAL
ORIGINAL ISSUE DISCOUNT) METHOD: ISSUE DISCOUNT)
ISSUE PRICE IF OTHER REPAYMENT AT OPTION OF REDEMPTION AT OPTION
THAN THE FULL PRINCIPAL HOLDER: OF THE COMPANY:
AMOUNT:
CALCULATION AGENT IF DEPOSITORY IF OTHER PAYING AGENT IF OTHER
OTHER THAN FIRST UNION THAN DEPOSITORY TRUST THAN FIRST UNION
NATIONAL BANK: COMPANY: NATIONAL BANK,
123 SOUTH BROAD STREET,
PHILADELPHIA, PA 19109:
UGI UTILITIES, INC., a corporation duly organized and existing under the
laws of the Commonwealth of Pennsylvania (herein called the "Company"), for
value received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum set forth above (except to the extent redeemed or repaid prior to
the Maturity Date), at the office or agency of the Company maintained for that
purpose in The City of Philadelphia, Pennsylvania and in The City of New York,
New York, at the option of the Company, on the Maturity Date shown above, or if
such date is not a Business Day (as defined below), the next succeeding Business
Day, and to pay interest, if any, daily, weekly, monthly, quarterly, semi-
annually or annually as specified above under "Interest Reset Period," on the
Interest Payment Dates specified above, commencing with the first such Interest
Payment Date following the Original Issue Date specified above, and on the
Maturity Date or date of redemption or repayment, if any, on said principal sum,
at a rate per annum equal to the Initial Interest Rate specified above until the
first Interest Reset Date specified above following the Original Issue Date
specified above and thereafter at a rate per annum determined in accordance with
the provisions hereof; provided, however, that if the Original Issue Date occurs
-------- -------
between a Regular Record Date, as defined below, and the related Interest
Payment Date, interest for the period beginning on the Original Issue Date and
ending on such Interest Payment Date shall be paid on the Interest Payment Date
following the next succeeding Regular Record Date, to the registered holder of
this Note (the "Holder") on such succeeding Regular Record Date. Interest
payable on this Note on any Interest Payment Date shall include interest accrued
from and including the Original Issue Date, or the last Interest Payment Date to
which interest has been paid or duly provided for, as the case may be, to but
excluding the next Interest Payment Date or the Date of Maturity, as the case
may be; provided, however, that if the Interest Reset Period with respect to
-------- -------
this Note is daily or weekly, interest payable on any Interest Payment Date
shall include interest accrued from and including the Original Issue Date or
from and excluding the Regular Record Date to which interest has been paid or
duly provided for, as the case may be, to and including the Regular Record Date
immediately preceding the applicable Interest Payment
-6-
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FLOATING RATE
Date, or to, but excluding, the Maturity Date or date of redemption or
repayment, as the case may be. Subject to certain exceptions provided in the
Indenture referred to below, the interest so payable on any Interest Payment
Date shall be paid to the Person in whose name this Note is registered at the
close of business on the Regular Record Date next preceding such Interest
Payment Date, and interest payable on the Maturity Date or upon redemption or
repayment shall be paid to the Person to whom said principal sum is payable.
"Regular Record Date" shall mean, with respect to any Interest Payment Date, the
date (whether or not a Business Day) 15 calendar days prior to such Interest
Payment Date. "Business Day" shall mean, unless otherwise specified above, any
day, other than a Saturday or Sunday, that meets each of the following
applicable requirements: the day is (i) not a day on which banking institutions
are authorized or required by law or regulation to be closed in The City of New
York; and (ii) if this Note is a LIBOR Note, any day on which dealings in
deposits in the currency specified above are transacted in the London interbank
market.
Accrued interest on this Note shall be calculated by multiplying the
principal amount of this Note (or, if this Note is an Indexed Note, the amount
designated by the terms hereof) by an accrued interest factor. Such accrued
interest factor shall be computed by adding the interest factors computed for
each day in the period for which accrued interest is being calculated. The
interest factor (expressed as a decimal calculated to seven decimal places,
without rounding) for each day in such period shall be computed by dividing the
applicable interest rate by 360 (in the case of CD Rate Notes, Commercial Paper
Notes, Federal Funds Rate Notes, LIBOR Notes and Prime Rate Notes) or by the
actual number of days in the relevant year (in the case of Treasury Notes).
This Note may provide above for either or both of the following (in each
case expressed as a rate per annum on a simple interest basis): (i) a maximum
limitation on the rate at which interest may accrue during any interest period
("Maximum Interest Rate") and (ii) a minimum limitation on the rate at which
interest may accrue during any interest period ("Minimum Interest Rate"). In
addition to any Maximum Interest Rate that may be applicable, the interest rate
shall in no event be higher than the maximum rate permitted by applicable New
York and United States Federal law.
All percentages resulting from any calculation of the interest rate on this
Note shall be rounded, if necessary, to the nearest 1/100,000 of 1% (.0000001),
with five one-millionths of a percentage point rounded upward, and all currency
amounts used in or resulting from such calculation shall be rounded to the
nearest one-hundredth of a dollar (with .005 of a dollar being rounded upward).
Payments of interest, if any, shall be made by the Paying Agent to the
Depository in immediately available funds in accordance with existing
arrangements between the Paying Agent and the Depository; payments of principal
of and interest, if any, on the Maturity Date shall be made by the Paying Agent
by wire transfer in immediately available funds to an account specified by the
Depository.
The Company shall pay any administrative costs imposed by banks in
connection with making payments in immediately available funds, but any tax,
assessment or governmental charge imposed upon payments shall be borne by the
Holder in respect of which such payments are made.
Any payment due on this Note on a day that is not a Business Day shall be
made on the next succeeding Business Day with the same force and effect as if
made on such date, and no additional interest shall accrue as a result of such
delayed payment; provided that, in the case of an Interest Payment Date with
respect to a LIBOR Note, if such Business Day would fall in the succeeding
calendar month, such payment shall be made on the Business Day immediately
preceding such Interest Payment Date.
This Note is one of a duly authorized issue of Securities of the Company
(hereinafter called the "Securities"), all issued or to be issued under and
pursuant to an indenture dated as of August 1, 1993 (hereinafter called the
"Indenture"), duly executed and delivered by the Company and First Union
National Bank (formerly First Fidelity Bank, National Association), as Trustee
(hereinafter, together with any successor trustee or trustees under the
Indenture called
-7-
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FLOATING RATE
the "Trustee"), to which Indenture and all indentures supplemental thereto
reference is hereby made for a description of the rights, obligations, duties
and immunities thereunder of the Trustee, the Company, and the holders of the
Securities. As provided in the Indenture, the Securities may be issued in one
or more series, which different series may be issued in various aggregate
principal amounts, may mature at different times, may bear interest, if any, at
different rates, may be subject to different redemption or repayment provisions,
if any, may be subject to different sinking, purchase or analogous funds, if
any, and may otherwise vary as provided for or permitted by the Indenture. This
Note is one of a series of the Securities offered on a periodic basis by the
Company, which series is unlimited in aggregate principal amount, designated as
the Series B Medium-Term Notes (the "Notes") of the Company. The Notes may
mature at different times (but in all instances more than nine months from their
respective dates of issue), bear interest, if any, at different rates, be
redeemable at the option of the Company at different times or not at all, and be
repayable at the option of the Holder at different times or not at all.
The interest rate in effect from the Original Issue Date to but excluding
the first Interest Reset Date shall be the Initial Interest Rate specified
above. Subsequently, this Note shall bear interest for each Interest Reset
Period at the interest rate determined by (i) adding to or subtracting from the
Base Rate, the Spread specified above, if any, and/or (ii) multiplying the Base
Rate by the Spread Multiplier specified above, if any, or (iii) any other
specified Base Rate, in any case as specified above. The interest rate for an
Interest Reset Period shall be the interest rate determined as of the
immediately preceding Interest Determination Date. The "Interest Reset Period"
pertaining to any Interest Reset Date is the period from and including such
Interest Reset Date to but excluding the immediately succeeding Interest Reset
Date, or the Date of Maturity, as the case may be. The "Interest Reset Date"
means the date or dates as of which the interest rate shall be reset. The
"Spread" is the number of basis points, and the "Spread Multiplier" is the
percentage used to determine the interest rate. The Spread or Spread Multiplier
may be subject to adjustment from time to time, if and to the extent specified
above.
One of the following Base Rates shall be applicable to this Note as
indicated above: (i) the CD Rate ("CD Rate Notes"), (ii) the Commercial Paper
Rate ("Commercial Paper Rate Notes"), (iii) the Federal Funds Rate ("Federal
Funds Rate Notes"), (iv) LIBOR ("LIBOR Notes"), (v) the Prime Rate ("Prime Rate
Notes"), (vi) the Treasury Rate ("Treasury Rate Notes") or (vii) another Base
Rate, as specified above.
The rate at which interest on this Note is payable shall be adjusted daily,
weekly, monthly, quarterly, semiannually or annually, as specified above under
Interest Reset Period (except that in all instances the interest rate for the
ten days prior to Maturity shall be the rate in effect on the tenth day prior to
Maturity); provided, however, that if an Interest Reset Date would otherwise be
-------- -------
a day that is not a Business Day, such Interest Reset Date shall be postponed to
the next Business Day, except that, in the case of a LIBOR Note, if such
Business Day would fall in the next calendar month, such Interest Reset Date
shall be the immediately preceding Business Day.
The "Interest Determination Date" pertaining to an Interest Reset Period
(i) for CD Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes or
Prime Rate Notes shall be the second Business Day preceding the relevant
Interest Reset Date, (ii) for LIBOR Notes shall be the second London Banking Day
preceding the relevant Interest Reset Date and (iii) for Treasury Rate Notes
shall be the day of the week in which the relevant Interest Reset Date falls on
which treasury bills of the applicable Index Maturity are auctioned. If, as the
result of a legal holiday, a treasury bill auction is held on the Friday
preceding the Interest Reset Date, such Friday shall be the Interest
Determination Date.
The "Calculation Date", where applicable, pertaining to an Interest
Determination Date shall be the earlier of (i) the tenth calendar day after such
Interest Determination Date or, if any such day is not a Business Day, the next
succeeding Business Day or (ii) the Business Day preceding the applicable
Interest Payment Date or date of Maturity, as the case may be.
The "Calculation Agent" specified above has been appointed by the Company
to calculate interest rates on this
-8-
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FLOATING RATE
Note as specified above. All determinations of interest by the Calculation
Agent shall, in the absence of manifest error, be conclusive for all purposes
and binding on the Company and the Holder. Upon the request of any registered
Holder or Beneficial Owner of this Note, the Calculation Agent for this Note
shall provide, if determined, the interest rate then in effect and the interest
rate that shall become effective on the next Interest Reset Date with respect to
this Note.
Determination of Interest Rate for CD Rate Notes. If the Base Rate
specified above is "CD Rate," this Note shall bear interest for each Interest
Reset Period at the interest rate calculated with reference to the CD Rate and
the Spread and/or Spread Multiplier, if any, specified above. The "CD Rate"
-------
means, with respect to any Interest Determination Date, the rate on such date
for negotiable certificates of deposit having the applicable Index Maturity, as
published by the Board of Governors of the Federal Reserve System in
"Statistical Release H.15(519), Selected Interest Rate", or any successor
publication of the Board of Governors of the Federal Reserve System
("H.15(519)") under the heading "CDs (Secondary Market)". If such rate is not
published by 9:00 a.m., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, the CD Rate shall be the rate on such
Interest Determination Date for negotiable certificates of deposit of the
applicable Index Maturity, as published by the Federal Reserve Bank of New York
in its daily statistical release, "Composite 3:30 p.m. Quotations for U.S.
Government Securities", or any successor publication of the Federal Reserve Bank
of New York ("Composite Quotations") under the heading "Certificates of
Deposit". If such rate is not published in Composite Quotations by 3:00 p.m.,
New York City time, on the Calculation Date pertaining to such Interest
Determination Date, then the CD Rate for such Interest Determination Date shall
be calculated by the Calculation Agent and shall be the arithmetic mean of the
secondary market offered rates as of 10:00 a.m., New York City time, on such
Interest Determination Date, of three leading nonbank dealers in negotiable U.S.
dollar certificates of deposit in the City of New York, selected by the
Calculation Agent after consultation with the Company, for negotiable
certificates of deposit of major United States money center banks of the highest
credit standing (in the market for negotiable certificates of deposit) with a
remaining maturity closest to the applicable Index Maturity in a denomination of
$5,000,000; provided, however, that if the dealers selected as aforesaid by the
-------- -------
Calculation Agent are not quoting such rates, the interest rate for the period
commencing on the Interest Reset Date shall be the interest rate borne by this
Note on such Interest Determination Date.
CD Rate Notes, like other Notes, are not deposit obligations of a bank and
are not insured by the Federal Deposit Insurance Corporation.
Determination of Interest Rate for Commercial Paper Rate Notes. If the
Base Rate specified above is "Commercial Paper Rate," this Note shall bear
interest for each Interest Reset Period at the interest rate calculated with
reference to the Commercial Paper Rate and the Spread and/or Spread Multiplier,
if any, specified above. The "Commercial Paper Rate" means, with respect to any
---------------------
Interest Determination Date, the Money Market Yield on such Interest
Determination Date of the rate for commercial paper having the applicable Index
Maturity, as published in H.15(519) under the heading "Commercial Paper". If
such rate is not published prior to 9:00 a.m., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, the Commercial
Paper Rate shall be the Money Market Yield on such Interest Determination Date
of the rate for commercial paper of the applicable Index Maturity, as published
by the Federal Reserve Bank of New York in Composite Quotations under the
heading "Commercial Paper". If such rate is not published in Composite
Quotations by 3:00 p.m., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, then the Commercial Paper Rate for such
Interest Determination Date shall be calculated by the Calculation Agent and
shall be the Money Market Yield of the arithmetic mean of the offered rates as
of 11:00 a.m., New York City time, on such Interest Determination Date of three
leading dealers of commercial paper in The City of New York, selected by the
Calculation Agent after consultation with the Company, for commercial paper of
the applicable Index Maturity, placed for industrial issuers whose bond rating
(as determined by a nationally recognized rating agency) is "AA" or the
equivalent; provided, however, that if the dealers selected as aforesaid by the
-------- -------
Calculation Agent are not quoting such rates, the interest rate for the period
commencing on the Interest Reset Date following such Interest Determination Date
shall be the interest rate borne by this Note on such Interest Determination
Date.
-9-
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FLOATING RATE
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
D x 360
Money Market Yield = ------------------ x 100
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the applicable period for which interest is being calculated.
Determination of Interest Rate for Federal Funds Rate Notes. If the Base
Rate specified above is "Federal Funds Rate," this Note shall bear interest for
each Interest Reset Period at the interest rate calculated with reference to the
Federal Funds Rate and the Spread and/or Spread Multiplier, if any, specified
above. The "Federal Funds Rate" means, with respect to any Interest
------------------
Determination Date, the rate on such date for federal funds, as published in
H.15(519) under the heading "Federal Funds (Effective)". If such rate is not
published by 9:00 a.m., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, the Federal Funds Rate shall be the rate on
such Interest Determination Date, as published by the Federal Reserve Bank of
New York in Composite Quotations under the heading "Federal Funds/Effective
Rate". If such rate is not published in Composite Quotations by 3:00 p.m., New
York City time, on the Calculation Date pertaining to such Interest
Determination Date, then the Federal Funds Rate for such Interest Determination
Date shall be calculated by the Calculation Agent and shall be the arithmetic
mean of the rates for the last transaction in overnight federal funds arranged
by three leading brokers of federal funds transactions in The City of New York,
selected by the Calculation Agent after consultation with the Company, as of
9:00 a.m., New York City time, on such Interest Determination Date; provided,
--------
however, that if the brokers selected as aforesaid by the Calculation Agent are
- -------
not arranging such transactions, the interest rate for the period commencing on
the Interest Reset Date following such Interest Determination Date shall be the
interest rate borne by this Note on such Interest Determination Date.
Determination of Interest Rate for LIBOR Notes. If the Base Rate specified
above is "LIBOR Telerate" or "LIBOR Reuters," this Note shall bear interest for
each Interest Reset Period at the interest rate calculated with reference to
LIBOR and the Spread or Spread Multiplier, if any, specified above. "LIBOR"
-----
means, with respect to any Interest Determination Date, the rate determined by
the Calculation Agent in accordance with clause (1) below, if LIBOR Telerate is
specified above as the Base Rate, or clause (2) below, if LIBOR Reuters is
specified above as the Base Rate:
(1) The rate for deposits in United States dollars of the Index
Maturity specified above, commencing on the second London Banking Day
immediately following such Interest Determination Date, that appears on the
Telerate Page 3750 as of 11:00 a.m., London time, on such Interest
Determination Date ("LIBOR Telerate"). "Telerate Page 3750" means the
display designated as Page "3750" on the Telerate Service (or such other
page as may replace page 3750 on that service or such other service or
services as may be designated by the British Bankers' Association for the
purpose of displaying London interbank offered rates for U.S. dollar
deposits).
(2) The arithmetic mean on the offered rates for deposits in U.S.
dollars having the Index Maturity specified above, commencing on the second
London Banking Day immediately following such Interest Determination Date,
that appear on the Reuters Screen LIBO Page as of 11:00 a.m., London time,
on such Interest Determination Date, if at least two such offered rates
appear on the Reuters Screen LIBO Page ("LIBOR Reuters"). "Reuters Screen
LIBO Page" means the display designated as Page "LIBO" on the Reuters
Monitor Money Rate Service (or such other page as may replace the LIBO page
on that service for the purpose of displaying London interbank offered
rates of major banks).
If the Base Rate specified above is "LIBOR," but neither LIBOR Telerate nor
LIBOR Reuters is specified, LIBOR shall be determined as if LIBOR Telerate had
been specified.
-10-
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FLOATING RATE
If (i) in the case where paragraph (1) above applies, no rate appears on
the Telerate Page 3750 or (ii) in the case where paragraph (2) above applies,
fewer than two offered rates appear on the Reuters Screen LIBO Page, LIBOR in
respect of such Interest Determination Date shall be determined by the
Calculation Agent on the basis of the rates at which deposits in U.S. dollars of
the Index Maturity specified above are offered to prime banks in the London
interbank market at approximately 11:00 a.m., London time, on such Interest
Determination Date by four major banks ("Reference Banks") in the London
interbank market, selected by the Calculation Agent, commencing on the second
London Banking Day immediately following such Interest Determination Date in a
principal amount of not less than $1,000,000 that is representative for a single
transaction in such market at such time. The Calculation Agent shall request
the principal London office of each of the Reference Banks to provide a
quotation of its rate. If at least two such quotations are provided, LIBOR for
such Interest Determination Date shall be the arithmetic mean of such
quotations. If fewer than two quotations are provided, LIBOR for such Interest
Date shall be the arithmetic mean of the rates quoted at approximately 11:00
a.m., New York City time, on such Interest Determination Date by three major
commercial or investment banks (which may include the Agents or any of their
respective affiliates) in The City of New York, selected by the Calculation
Agent, for U.S. dollar loans of the applicable Index Maturity to leading
European banks, commencing on the second London Banking Day immediately
following such Interest Determination Date, in a principal amount of not less
than $1,000,000 that is representative for a single transaction in such market
at such time; provided, however, that if the banks selected as aforesaid by the
-------- -------
Calculation Agent are not quoting such rates, the interest rate for the period
commencing on the Interest Reset Date following such Interest Determination Date
shall be the interest rate borne by this Note on such Interest Determination
Date.
If this Note is a LIBOR Note and specifies that it is indexed to the
offered rates for deposits in a Specified Currency other than United States
Dollars, the method for determining such rates shall be specified above.
Determination of Interest Rate for Prime Rate Notes. If the Base Rate
specified above is "Prime Rate," this Note shall bear interest for each Interest
Reset Period at the interest rate calculated with reference to the Prime Rate
and the Spread and/or Spread Multiplier, if any, specified above. The "Prime
-----
Rate" means, with respect to any Interest Determination Date, the rate on such
- ----
date, as published in H.15(519) under the heading "Bank Prime Loan." If such
rate is not published by 9:00 a.m., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the Prime Rate shall be
determined by the Calculation Agent and shall be the arithmetic mean of the
rates of interest publicly announced by each bank named on the "Reuters Screen
NYMF Page" as such bank's prime rate or base lending rate as in effect for such
Interest Determination Date. "Reuters Screen NYMF Page" means the display
designated as page "NYMF" on the Reuters Monitor Money Rates Service (or such
other page as may replace the NYMF page on that service for the purpose of
displaying prime rates or base lending rates of major United States banks). If
fewer than four but more than one such rate appears on the Reuters Screen NYMF
Page for such Interest Determination Date, the Prime Rate shall be determined by
the Calculation Agent and shall be the arithmetic mean of the prime rates,
quoted on the basis of the actual number of days in the year divided by 360, as
of the close of business on such Interest Determination Date by four major money
center banks in The City of New York selected by the Calculation Agent after
consultation with the Company. If fewer than two such rates appear on the
Reuters Screen NYMF Page, the Prime Rate shall be calculated by the Calculation
Agent and shall be the arithmetic mean of the prime rates in effect for such
Interest Determination Date as furnished in The City of New York by at least
three substitute banks or trust companies organized and doing business under the
laws of the United States, or any state thereof, in each case having total
equity capital of at least $500,000,000 and subject to supervision or
examination by a federal or state authority, selected by the Calculation Agent
after consultation with the Company; provided, however, that if the banks or
-------- -------
trust companies selected as aforesaid by the Calculation Agent are not quoting
such rates, the interest rate for the period commencing on the Interest Reset
Date following such Interest Determination Date shall be the interest rate borne
by this Note on such Interest Determination Date.
Determination of Interest Rate for Treasury Rate Notes. If the Base Rate
specified above is "Treasury Rate," this Note shall bear interest for each
Interest Reset Period at the interest rate calculated with reference to the
Treasury
-11-
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FLOATING RATE
Rate and the Spread and/or Spread Multiplier, if any, specified above. The
"Treasury Rate" means, with respect to any Interest Determination Date, the rate
-------------
for the auction held on such Interest Determination Date of treasury bills of
the Index Maturity specified above, as published in H. 15(519) under the heading
"U.S. Government Securities - Treasury bills-auction average (investment)". If
such rate is not published by 9:00 a.m., New York City time, on the Calculation
Date pertaining to such Interest Determination Date, the Treasury Rate shall be
the auction average rate for such Interest Determination Date (expressed as a
bond equivalent, rounded to the nearest one-hundredth of a percent, with five
one-thousandths of a percent rounded upward, on the basis of a year of 365 or
366 days, as applicable, and applied on a daily basis) as otherwise announced by
the United States Department of the Treasury. In the event that the results of
the auction of treasury bills having the applicable Index Maturity are not
published or reported as provided above by 3:00 p.m., New York City time, on
such Calculation Date, or if no such auction is held on such Interest
Determination Date, then the Treasury Rate shall be calculated by the
Calculation Agent and shall be a yield to maturity (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and applied
on a daily basis) of the arithmetic mean of the secondary market bid rates, as
of approximately 3:30 p.m., New York City time, on such Interest Determination
Date, of three leading primary United States government securities dealers,
selected by the Calculation Agent after consultation with the Company, for the
issue of treasury bills with a remaining maturity closest to the applicable
Index Maturity; provided, however, that if the dealers selected as aforesaid by
-------- -------
the Calculation Agent are not quoting such rates, the interest rate for the
period commencing on the Interest Reset Date following such Interest
Determination Date shall be the interest rate borne by this Note on such
Interest Determination Date.
If this Note is an Original Issue Discount Note for United States federal
income tax purposes, as specified above, then, except as otherwise specified
above, upon redemption or repayment (except in the case of an Event of Default
as set forth below) of this Note there shall be payable in lieu of the Principal
Amount, an amount equal to the Amortized Face Amount of this Note. The
"Amortized Face Amount," shall be equal to (a) the Issue Price, as specified
above, plus (b) the portion of the difference between the Issue Price and the
Principal Amount of this Note that has accrued at the Yield to Maturity
specified above (computed in accordance with generally accepted United States
bond yield computation principles) at the date as of which such Amortized Face
Amount is calculated, but in no event shall the Amortized Face Amount exceed the
Principal Amount.
Amortizing Notes are Notes as to which all or a portion of the principal
amount is payable prior to the Maturity Date in accordance with a schedule, by
application of a formula, or by reference to an Index. If this Note is an
Amortizing Note, the terms and conditions, including the terms for payment
hereof, shall be specified above.
Indexed Notes are Notes as to which all or certain interest payments
("Indexed Rate Notes") and/or the principal amount payable at Maturity ("Indexed
Principal Notes") are determined by reference to prices, changes in prices, or
differences between prices, of securities, currencies, intangibles, goods,
articles or commodities, either in the United States or foreign jurisdictions,
or by such other objective price, economic or other measures as are specified
above (each such price, economic or other measures as are specified above being
an "Index"). If this Note is an Indexed Note, as specified above, a description
of the Index used in any determination of interest and/or principal payments,
and the method or formula by which interest or principal payments or both shall
be determined by reference to such Index, is specified above.
If this Note is an Indexed Note, and if the determination of the Index
specified above is calculated or announced by a third party (which may be First
Union National Bank) and such third party either suspends the calculation or
announcement of such Index or changes the basis upon which such Index is
calculated (other than changes consistent with the policies in effect at the
time the related Indexed Note was issued and with permitted changes described
above), then such Index shall be calculated for purposes of this Note by another
third party (which may be First Union National Bank) selected by the Company,
subject to the same conditions and controls as applied to the original third
party. If for any reason such Index cannot be calculated on the same basis and
subject to the same conditions and controls as applied to the original third
party, then any indexed interest payments or indexed principal amount payable
with respect to this Note
-12-
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FLOATING RATE
shall be calculated in the manner specified above. All determinations of such
third party shall, in the absence of manifest error, be conclusive for all
purposes and binding on the Company and the Holder.
This Note indicates whether the Company has the option with respect to such
Note to reset the Spread or Spread Multiplier and, if so, the date or dates on
which such Spread or Spread Multiplier, as the case may be, may be reset (each
an "Optional Reset Date"). If the Company has such option with respect to this
Note, the following procedures shall apply.
The Company may exercise such option with respect to this Note by notifying
the Trustee of such exercise at least 50 but not more than 60 days prior to an
Optional Reset Date. Not later than 40 days prior to such Optional Reset Date,
the Trustee shall mail to the Holder a notice ("Reset Notice") setting forth (i)
the election of the Company to reset the Spread or Spread Multiplier, (ii) such
new Spread or Spread Multiplier and (iii) the provisions, if any, for redemption
during the period from such Optional Reset Date to the next Optional Reset Date
or, if there is no such next Optional Reset Date, to the Maturity Date of this
Note (each such period a "Subsequent Interest Period"), including the date or
dates on which or the period or periods during which and the price or prices at
which such redemption may occur during such Subsequent Interest Period. Upon
the transmittal by the Trustee of a Reset Notice to the Holder, such new Spread
or Spread Multiplier shall take effect automatically and, except as modified by
the Reset Notice and as described in the next paragraph, this Note shall have
the same terms as prior to the transmittal of such Reset Notice.
Notwithstanding the foregoing, the Company may, at its option, revoke the
Spread or Spread Multiplier, as provided for in the Reset Notice, and establish
a Spread or Spread Multiplier that is higher than the Spread or Spread
Multiplier provided for in the relevant Reset Notice for the Subsequent Interest
Period commencing on such Optional Reset Date, by causing the Trustee to mail,
not later than 20 days prior to an Optional Reset Date, notice of such higher
Spread or Spread Multiplier to the Holder. Such notice shall be irrevocable.
The Company must notify the Trustee of its intentions to revoke such Reset
Notice at least 25 days prior to such Optional Reset Date. If the Spread or
Spread Multiplier is reset on an Optional Reset Date and the Holder has not
tendered this Note for repayment (or has validly revoked any such tender)
pursuant to the next succeeding paragraph, this Note shall bear such higher
Spread or Spread Multiplier for the Subsequent Interest Period.
If the Company elects to reset the Spread or Spread Multiplier as described
above, the Holder has the option to elect repayment of this Note by the Company
on any Optional Reset Date at a price equal to the aggregate principal amount
hereof outstanding on, plus any interest accrued to, such Optional Reset Date.
In order for this Note to be so repaid on an Optional Reset Date, the Holder
must follow the procedures set forth below for optional repayment, except that
(i) the period for delivery of this Note or notification to the Trustee shall be
at least 25 but not more than 35 days prior to such Optional Reset Date and (ii)
a Holder who has tendered this Note for repayment pursuant to a Reset Notice
may, by written notice to the Trustee, revoke any such tender until the close of
business on the tenth day prior to such Optional Reset Date.
This Note indicates either (i) that such Note cannot be redeemed prior to
its Maturity Date or (ii) that such Note shall be redeemable, in whole or in
part, at the option of the Company on a specified date or dates prior to such
Maturity Date, at a price or prices specified above, together with interest
accrued to the date of redemption. If this Note is redeemable prior to
Maturity, the Company may redeem this Note either in whole or from time to time
in part by mailing notice to the Holder of such redemption by first class mail
at least 30 days and not more than 60 days prior to the date fixed for
redemption. If fewer than all of the Notes of like terms are to be redeemed,
the Notes to be redeemed shall be selected by the Trustee by such method as the
Trustee shall deem fair and appropriate.
This Note indicates either (i) that this Note cannot be repaid at the
option of the Holder prior to the Maturity Date or (ii) that this Note shall be
repayable at the option of the Holder on a date or dates specified prior to the
Maturity Date, at a price or prices specified above, together with interest
accrued to the date of repayment.
-13-
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FLOATING RATE
In order for this Note to be repaid at the option of the Holder, the
Company must receive, at least 30 days but not more than 45 days prior to the
repayment date, this Note with the form entitled "Option to Elect Repayment"
hereon duly completed. Exercise of the repayment option by the Holder shall be
irrevocable, except as otherwise described above. The repayment option may be
exercised by the Holder for less than the aggregate principal amount of the Note
then outstanding, provided that the principal amount of the Note remaining
outstanding after repayment is an authorized denomination.
The Depository's nominee will be the Holder and therefore will be the only
entity that can exercise a right of repayment. In order to ensure that the
Depository's nominee will timely exercise a right to repayment with respect to a
particular beneficial interest in a Global Note, the beneficial owner
("Beneficial Owner") of such interest must instruct the broker or other
participant through which it holds a beneficial interest in such Global Note to
notify the Depository of its desire to exercise a right to repayment. Each
Beneficial Owner should consult the broker or other participant through which it
holds a beneficial interest in this Note in order to ascertain the deadline by
which such an instruction must be given in order for notice to be timely
delivered by such broker or other participant to the Depository.
The Notes are issuable in global or definitive registered form without
coupons in the denominations indicated above. Upon due presentment for
registration of transfer of this Note at the principal office of the Trustee, a
new Note or Notes in an equal aggregate principal amount and like interest rate
and Maturity Date shall be issued to the transferee in exchange therefor,
subject to the limitations provided in the Indenture, without charge except for
any tax or other governmental charge imposed in connection therewith.
The Company may at any time purchase Notes at any price or prices in the
open market or otherwise. Notes so purchased by the Company may be held or
resold or, at the discretion of the Company, surrendered to the Trustee for
cancellation.
In case an Event of Default, as defined in the Indenture, with respect to
the Notes shall have occurred and be continuing, the principal hereof may be
declared, and upon such declaration shall become, due and payable in the manner,
with the effect and subject to the conditions provided in the Indenture.
With respect to a Note issued with an original issue discount, if an Event
of Default with respect to the Notes shall have occurred and be continuing, the
amount of principal of this Note which may be declared due and payable, with the
effect and subject to the conditions provided in the Indenture, shall be
determined in the manner specified under "OID Default Amount" above.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the places, at the respective times and at the rate herein prescribed.
The Company, the Trustee, and any agent of the Company or the Trustee may
deem and treat the Holder as the absolute owner hereof (whether or not this Note
shall be overdue and notwithstanding any notation of ownership or other writing
hereon) for the purposes of receiving payment of or on account of the principal
hereof and subject to the provisions above, interest hereon, and for all
purposes and neither the Company nor the Trustee nor any such agent shall be
affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Note or for any claims based hereon, or otherwise in respect
hereof, or based on or in respect of the Indenture or any indenture supplemental
thereto, against any incorporator, shareholder, officer or director as such,
past, present or future of the Company or of any successor corporation, whether
by virtue of any constitution, statute or rule of law or by the enforcement of
any assessment or penalty or otherwise, all such liabilities being, by the
acceptance hereof and as part of the consideration
-14-
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FLOATING RATE
for the issue hereof, expressly waived and released.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the holders of not less than 51% in aggregate principal amount of the
Securities at the time outstanding of all series to be affected thereby (voting
as one class). The Indenture also contains provisions permitting the holders of
a majority in aggregate principal amount of all of the Securities of each
affected series at the time outstanding, on behalf of all holders of all
Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder shall be
conclusive and binding upon the Holder and upon all future Holders and of any
Security issued upon the registration of transfer hereof or in exchange herefor
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Note.
As set forth in, and subject to, the provisions of the Indenture, no holder
of any Security of this series shall have any right to institute any proceeding
with respect to the Indenture or for any remedy thereunder, unless such holder
shall have previously given to the Trustee written notice of default and the
continuance thereof, the holders of not less than 25% in aggregate principal
amount of the Securities of this series then outstanding shall have made written
request upon the Trustee to institute such action or proceeding in its own name
as trustee thereunder and offered the Trustee such reasonable indemnity as it
may require against the costs, expenses and liabilities to be incurred therein
or thereby, and the Trustee shall not have received from the holders of a
majority in principal amount of the outstanding Securities of this series a
direction inconsistent with such request and the Trustee shall have failed to
institute such proceeding within 60 days; provided, however, that such
-------- -------
limitations do not apply to a suit instituted by the Holder for the enforcement
of a payment of principal or interest on this Note on or after the respective
due dates expressed herein.
Terms used herein which are defined in the Indenture shall have the
respective meanings assigned thereto in the Indenture.
This Note shall be governed by and construed in accordance with the laws of
the State of New York.
This Note shall not be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by the Trustee under
the Indenture referred to below.
-15-
<PAGE>
UGI UTILITIES, INC.
GLOBAL SERIES B MEDIUM-TERM NOTE
FLOATING RATE
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
UGI UTILITIES, INC.
By: ____________________________________
Vice President
____________________________________
Secretary or Assistant Secretary
[SEAL]
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION:
This is one of the Securities
of the series designated herein
and referred to in the within-
mentioned Indenture.
FIRST UNION NATIONAL BANK,
as Trustee
By:_______________________
Authorized Officer
-16-
<PAGE>
OPTION TO ELECT REPAYMENT
TO BE COMPLETED ONLY IF THIS NOTE IS REPAYABLE
AT THE OPTION OF THE HOLDER AND THE HOLDER
ELECTS TO EXERCISE SUCH RIGHTS
The undersigned hereby irrevocably requests and instructs the Company to
repay the within Note (or portion thereof specified below) pursuant to its terms
at a price equal to the amount referred to therein, together with interest to
the repayment date, to the undersigned, at _____________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address of the undersigned)
For this Option to Elect Repayment to be effective, the Company must
receive at the address of the Paying Agent specified therein or at such other
place or places of which the Company shall from time to time notify the holder
of the within Note (the "Holder"), at least 30 days but not more than 45 days,
or if such day is not a Business Day, the next succeeding Business Day, prior to
the repayment date, this Note, with this "Option to Elect Repayment" form duly
completed.
If less than the entire principal amount of the within Note is to be
repaid, specify the portion thereof (which shall be an Authorized Denomination)
which the Holder elects to have repaid: ______________________; and specify the
denomination or denominations (which shall be an Authorized Denomination) of the
Note or Notes to be issued to the Holder for the portion of the within Note not
being repaid (in the absence of any such specification, one such Note shall be
issued for the portion not being repaid): ______________________________________
________________________
Date:_____________________ _______________________________________
Notice: The signature to this Option
to Elect Repayment must correspond with
the name as written upon the Note in
every particular without alteration or
enlargement or any other change
whatsoever.
-17-
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT -- ______________Custodian___________
(Cust) (Minor)
Under Uniform Gifts to Minors Act
_____________________________________
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
Please Insert Social Security or
Other Identifying Number of Assignee
________________________________________________________________________________
________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
the within Note of UGI UTILITIES, INC. and does hereby irrevocably constitute
and appoint ____________________________________________________________________
______________________________________________ attorney to transfer the said
Note on the books of the Company, with full power of substitution in the
premises.
DATED: ________________ __________________________________
__________________________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever.
-18-
<PAGE>
Exhibit (4)(iv)
UGI UTILITIES, INC.
SERIES B MEDIUM-TERM NOTES
OFFICERS' CERTIFICATE
PURSUANT TO SECTIONS 2.1, 2.3 AND 10.5 OF THE INDENTURE
Pursuant to resolutions of the Board of Directors of UGI Utilities, Inc.
(the "Company") adopted July 30, 1996 (certified copies of which are attached to
this Certificate as Exhibit A), and in accordance with Sections 2.1 and 2.3 of
the Indenture, dated as of August 1, 1993 (the "Indenture"), between the Company
and First Union National Bank (formerly First Fidelity Bank, National
Association), as Trustee, the undersigned, as Vice President and Secretary of
the Company, hereby certify that a series of securities entitled "Series B
Medium-Term Notes" (the "Notes") has been authorized to be issued from time to
time after the date hereof under the Indenture and there is hereby established
under the Indenture, a series as designated, unlimited in aggregate principal
amount, with the terms and in substantially the forms set forth in Exhibits B-1
and B-2 hereto, for Fixed Rate and Floating Rate Notes, respectively, with the
specific interest rates, interest rate formulas, maturities and other terms to
be set forth in related Pricing Supplements to the Prospectus dated May 1, 1996,
as supplemented by the Prospectus Supplement thereto, dated August 1, 1996
(collectively, the "Prospectus Supplement"), in accordance with the
Administrative Procedures set forth in Exhibit B to the Agency Agreement dated
August 1, 1996 between the Company and Donaldson, Lufkin & Jenrette Securities
Corporation (copies of the Prospectus Supplement and Exhibit B to the Agency
Agreement are attached to this Certificate as Exhibits C and D, respectively).
Each of the undersigned (i) has read and is familiar with the covenants and
conditions in the Indenture pertaining to the establishment of a series of
securities to be issued under the Indenture, (ii) has, among other things,
discussed said covenants and conditions with counsel for the Company, (iii) has
made such examination as, in his opinion, is necessary to enable him to express
an informed opinion as to whether or not such covenants and conditions have been
complied with in connection with the establishment of a series of securities
under the Indenture, and (iv) in his opinion, such covenants and conditions have
been complied with.
Dated: August 1, 1996
____________________________________
Brendan P. Bovaird
Vice President and General Counsel
____________________________________
Barton D. Whitman
Secretary
<PAGE>
EXHIBIT A
UGI UTILITIES, INC.
SECRETARY'S CERTIFICATE
The undersigned certifies that:
1. He is the duly elected and acting Secretary of UGI Utilities, Inc., a
Pennsylvania corporation (the "Company"), and as such is authorized to
execute and deliver this Certificate on behalf of the Company.
2. Below is a true and correct copy of resolutions duly adopted by the
Board of Directors of the Company at a meeting called, convened and
held on July 30, 1996 at which a quorum was present and acting
throughout.
RESOLVED, that establishment by the Company of a new series of
securities entitled "Series B Medium-Term Notes" (the "Notes"),
unlimited in aggregate principal amount, for issuance from time to
time pursuant to the Indenture dated as of August 1, 1993, between the
Company and First Union National Bank, (formerly, First Fidelity
Bank), as Trustee (the "Indenture"); such Notes to be issued initially
in an aggregate principal amount of up to $75,000,000 (or, if any
Notes are issued at a substantial discount from the principal amount
payable at maturity, such principal amount as shall result in an
aggregate initial offering price of $75,000,000), with maturities of
more than nine months from the date of issuance, is approved.
RESOLVED, the form of Prospectus Supplement presented to this
Board (draft dated July 3, 1996) relating to the Notes is approved.
RESOLVED, First Union National Bank, or such other qualified
financial institution as may be selected by the Treasurer of the
Company is appointed to act as Trustee, Paying Agent and Registrar for
the Notes under the Indenture.
RESOLVED, the Chairman of the Board of Directors, the President
or any Vice President and the Treasurer or any Assistant Treasurer or
the Secretary or any Assistant Secretary (all of whom may sign by
facsimile signature) are each authorized to execute on behalf of the
Company and under its corporate seal (which may be in facsimile) up to
$75,000,000 principal amount of Notes in the form as may be approved
by the officers executing the Notes, and the Trustee is hereby
authorized and directed to authenticate and deliver the Notes as
provided in the Indenture.
RESOLVED, the Notes are to be issued in the form of one or more
Global Securities.
<PAGE>
RESOLVED, it is desirable that the Notes be qualified or
registered for sale in various states and foreign jurisdictions; and
the President or any Vice President, and the Secretary, Assistant
Secretary, Treasurer or any Assistant Treasurer of the Company are to
determine the states in which appropriate action shall be taken to
qualify or register for sale all or such part of the Notes as such
officers may deem advisable; and such officers are hereby authorized
on behalf of the Company in its name to take any and all action as may
be necessary or desirable to effect the registration or qualification
(or exemption therefrom) of all or any part of the Notes for issue,
offer, sale or trade under the Blue Sky or securities or other
applicable laws of the states of the United States of America or other
jurisdictions, and in connection therewith to execute, acknowledge,
verify, deliver, file, or cause to be published any applications,
reports, surety bonds, consents of service of process, appointments of
attorneys to receive service of process, issuer's covenants,
resolutions and other papers, documents and instruments as may be
required under such laws and to take any and all further action as may
be necessary or desirable to maintain any such registration,
qualification or exemption for as long as may be necessary or
desirable or as may be required by law.
RESOLVED, in connection with the immediately preceding
resolution, any and all resolutions appointing or authorizing any
officers or agencies of any jurisdiction of the United States and of
such other jurisdictions as such officers and counsel for the Company
may deem advisable, as agents for the service of process upon the
Company which may be required by the securities laws of such
jurisdiction in order to permit the Notes to be offered or sold
therein, for the purpose of offering or selling the Notes therein, are
hereby adopted in the form prescribed, as fully as if set out verbatim
herein, and any officer of this Company is authorized to certify that
any such resolution has been adopted at this meeting, and the
Secretary or the Assistant Secretary of the Company shall cause a copy
of such resolutions so certified, upon the authority of this
resolution, to be filed in the minute books of this Board.
RESOLVED, the engagement of Donaldson, Lufkin & Jenrette
Securities Corporation as agent for the solicitation of offers for the
Notes, is approved, ratified and confirmed.
RESOLVED, the form of Agency Agreement between the Company and
Donaldson, Lufkin & Jenrette Securities Corporation (the "Agent") (the
"Agency Agreement") submitted to this Board (draft dated July 10,
1996) is approved, and the President or any Vice President or the
Treasurer of the Company is authorized to execute and deliver, in the
name and on behalf of the Company, the Agency Agreement, with any
changes and additions as the officer of the Company executing the
Agency Agreement and counsel for the Company may approve.
<PAGE>
RESOLVED, in connection with the offering of the Notes,
notwithstanding the limitations placed on the authority of the
Executive/Nominating Committee by its Charter adopted by this Board on
May 21, 1991 (which withholds from the Executive/Nominating Committee
of this Board the authority to increase the long-term indebtedness of
the Company), this Board hereby authorizes a majority of the members
of the Executive/Nominating Committee of this Board acting with or
without a meeting, or, subject to the limitations on aggregate
principal amount set forth below, the Chairman of the Board or the
President and the Treasurer or the Assistant Treasurer of the Company,
acting together (the "Authorized Officers"), to establish the terms
and conditions of the Notes to be issued from time to time, including
without limitation, (i) the precise principal amount of the Notes to
be sold (subject initially to a maximum aggregate principal amount of
$75,000,000 or, if any Notes are issued at a substantial discount from
the principal amount payable at maturity, such principal amount as
shall result in an aggregate initial offering price of $75,000,000),
(ii) the offering price of the Notes to purchasers, (iii) the amount
of the commissions to the Agent, (iv) the sale price of the Notes to
the Agent, (v) the interest rate or interest rate formula (including
applicable base rate), or mechanism to determine interest or principal
payments by reference to indices, applicable to the Notes, (vi) the
interest payment dates and exact maturity date of the Notes, (vii) the
redemption and repayment provisions and prices, if any, and (viii) if
other than the principal amount thereof, the portion of the principal
amount of any Note which shall be payable upon declaration of
acceleration of maturity or provable in bankruptcy.
RESOLVED, in connection with the offering of the Notes, this
Board hereby authorizes the Authorized Officers to establish the terms
and conditions for up to $20,000,000 principal amount of Notes in any
fiscal quarter of the Company.
RESOLVED, all actions previously taken by any officer or other
representative of the Company consistent with the purposes and intent
of the foregoing resolutions are approved, ratified and confirmed.
RESOLVED, any officer of the Company is authorized to execute
such other agreements, certificates, consents, corporate papers and
other documents, borrow such funds, make such payments and take all
other action that such officer and counsel for the Company may deem
necessary or desirable to carry out the intent and purposes of the
foregoing resolutions.
<PAGE>
3. These resolutions have not been amended, modified or rescinded and
remain in full force and effect on the date of this certificate.
Dated: August 1, 1996
[Corporate Seal] _______________________________
Barton D. Whitman
Secretary
<PAGE>
UGI UTILITIES, INC.
SERIES B MEDIUM-TERM NOTES
OFFICERS' CERTIFICATE
PURSUANT TO SECTIONS 2.1, 2.3 AND 10.5 OF THE INDENTURE
Exhibit B-1 to Exhibit (c)(4)(iv) is incorporated by reference to Exhibit
(c)(4)(i) to UGI Utilities, Inc. Current Report on Form 8-K dated August 1,
1996.
Exhibit B-2 to Exhibit (c)(4)(iv) is incorporated by reference to Exhibit
(c)(4)(ii) to UGI Utilities, Inc. Current Report on Form 8-K dated August 1,
1996.
Exhibit D to Exhibit (c)(4)(iv) is incorporated by reference to Exhibit (c)(1)
to UGI Utilities, Inc. Current Report on Form 8-K dated August 1, 1996.
<PAGE>
Exhibit C
---------
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MAY 7, 1996)
$75,000,000
LOGO
SERIES B MEDIUM-TERM NOTES
DUE MORE THAN NINE MONTHS FROM DATE OF ISSUE
UGI Utilities, Inc. (the "Company") may offer from time to time pursuant to
this Prospectus Supplement its Series B Medium-Term Notes (the "Notes"), with
an aggregate initial offering price of up to $75,000,000, subject to reduction
as a result of the sale of other debt securities of the Company. The terms of
each Note will be established prior to issuance and set forth in one or more
pricing supplements to this Prospectus Supplement (each a "Pricing
Supplement"). The Notes may bear interest at either fixed or floating rates
and will have Maturity Dates more than nine months from their respective dates
of issue, as specified in a Pricing Supplement. Interest on each Fixed Rate
Note will be payable on May 15 and November 15 of each year and at Maturity,
unless otherwise specified in the applicable Pricing Supplement. Interest on
each Floating Rate Note will be payable on the Interest Payment Dates and at
Maturity as set forth in the applicable Pricing Supplement. A Note may provide
that the principal thereof will be amortized over the life of such Note. See
"Description of Notes."
Except as otherwise specified in the applicable Pricing Supplement, Notes
will be represented by a Global Note registered in the name of a nominee of
The Depository Trust Company ("DTC"), New York, New York, and beneficial
interests in Global Notes will be shown on, and transfers thereof will be
effected only through, records maintained by such depository and its
participants. A beneficial interest in a Global Note may be exchanged for
Notes in certificated form only under limited circumstances. See "Description
of Notes--Book-Entry System."
Unless otherwise specified in the applicable Pricing Supplement, Notes will
be issued only in registered form in authorized denominations of $100,000 or
any amount in excess thereof that is an integral multiple of $1,000. See
"Description of Notes--General."
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT,
ANY PRICING SUPPLEMENT HERETO OR THE PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO AGENT'S DISCOUNT PROCEEDS TO
PUBLIC(1) OR COMMISSION(2) COMPANY(2)(3)
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note...... 100.000% .125 -- .750% 99.875% -- 99.250%
- ------------------------------------------------------------------------------
$74,906,250 --
Total......... $75,000,000 $93,750 -- $562,500 $74,437,500
- ------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
(1) The Notes will be issued at 100% of their principal amount unless
otherwise set forth in the applicable Pricing Supplement.
(2) The Company will pay a discount or commission to Donaldson, Lufkin &
Jenrette Securities Corporation, as agent (the "Agent"), in the form of a
discount off the principal amount of any Note sold through such Agent,
ranging from .125% to .750%, depending on the stated maturity of the Note
(except that the Company and the Agent may agree to a higher commission
for maturities in excess of 30 years). The Company may also sell Notes to
the Agent at a discount for resale to investors and other purchasers at
varying prices related to prevailing market prices at the time of resale,
as determined by the Agent. The Company has agreed to indemnify the Agent
against certain liabilities, including liabilities under the Securities
Act of 1933, as amended (the "Securities Act").
(3) Before deducting expenses payable by the Company estimated at $270,000.
---------------
The Notes are being offered on a periodic basis by the Company through the
Agent, who has agreed to use reasonable best efforts to solicit offers to
purchase the Notes. In addition, the Notes may be sold to the Agent, as
principal, for resale to investors and other purchasers. The Company also may
sell the Notes directly to investors on its own behalf, in which case no
commission will be paid. The Notes will not be listed on any securities
exchange, and there can be no assurance that the Notes offered by this
Prospectus Supplement will be sold or that there will be a secondary market
for the Notes. The Company reserves the right to withdraw, cancel or modify
the offer made hereby without notice. The Company or the Agent, when
soliciting an offer, may reject such offer in whole or in part. See "Plan of
Distribution."
---------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
The date of this Prospectus Supplement is August 1, 1996.
<PAGE>
IN CONNECTION WITH THE DISTRIBUTION OF THE NOTES, THE AGENT MAY OVERALLOT OR
EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE COMPANY
UGI Utilities, Inc. ("Utilities" or the "Company") is a public utility
company that owns and operates (i) a natural gas distribution utility serving
14 counties in eastern and southcentral Pennsylvania, and (ii) an electric
utility serving parts of Luzerne and Wyoming Counties in northeastern
Pennsylvania. Utilities is a wholly owned subsidiary of UGI Corporation.
DESCRIPTION OF NOTES
The following description of the terms of the Notes supplements and, to the
extent inconsistent therewith, replaces the description of the general terms
and provisions of Debt Securities set forth under "Description of Debt
Securities" in the accompanying Prospectus, to which reference is hereby made.
The following description of the material terms of the Notes does not purport
to be complete and is subject to, and qualified in its entirety by reference
to, the Indenture and to the specific terms of Notes that are set forth in the
applicable Pricing Supplement.
A glossary of certain terms used herein is set forth in Appendix A to this
Prospectus Supplement. Capitalized terms used in this Prospectus Supplement
that are not defined in the glossary have the meanings given in the Indenture
or in the accompanying Prospectus.
THE FOLLOWING DESCRIPTION WILL APPLY TO EACH NOTE UNLESS OTHERWISE SPECIFIED
IN THE APPLICABLE PRICING SUPPLEMENT.
GENERAL
The Notes offered by this Prospectus Supplement are part of a series of Debt
Securities established under the Indenture and will be limited to an aggregate
$75,000,000 initial offering price, subject to reduction as a result of the
sale of other debt securities of the Company covered by the Registration
Statement (as defined in the accompanying Prospectus).
The Notes constitute a new series of Debt Securities that may be issued by
the Company pursuant to the Indenture. At the date of this Prospectus
Supplement, an aggregate amount of $118,000,000 of Debt Securities (none of
which were Notes) was outstanding under the Indenture. The Company may issue
additional Notes, medium-term notes of another series or other Debt Securities
(in each case unlimited as to principal amount) under the Indenture. The
Company may also issue additional medium-term notes or other debt securities
under one or more additional indentures.
The Notes will be offered on a periodic basis and will have Maturity Dates
more than nine months from their respective dates of issue, as agreed to by
the purchaser and the Company. If so specified in the applicable Pricing
Supplement, an issue of Notes will be subject to redemption at the option of
the Company or repayment at the option of the holder prior to the Maturity
Date. Unless otherwise specified in the applicable Pricing Supplement, the
Notes will not be subject to any sinking fund.
Each Note will bear interest from its date of issue at either (i) a fixed
rate (a "Fixed Rate Note"), which may be zero (a "Zero-Coupon Note"), or (ii)
a floating rate or rates, determined by reference to a Base Rate (a "Floating
Rate Note"), which may be adjustable by a Spread and/or a Spread Multiplier.
S-2
<PAGE>
Each Note will be issued in fully registered form without coupons and will
be represented by a global security (a "Global Note") registered in the name
of a nominee of DTC or another depository (DTC or such other depository as is
specified in the Pricing Supplement is herein referred to as the
"Depository"). Unless otherwise specified in the applicable Pricing
Supplement, the Depository will be DTC. All Notes issued on the same day and
having the same terms may be represented by one or more Global Notes. A
beneficial interest in a Global Note will be shown on, and transfers thereof
will be effected only through, records maintained by the Depository and its
participants. A beneficial interest in a Global Note may be exchanged for
Notes in certificated form only in the limited circumstances set forth in
"Book-Entry System" below. Except as indicated below, payments of principal of
and interest, if any, on Notes represented by a Global Note will be made by
the Company or the Paying Agent to the Depository. See "Payment of Principal
and Interest" and "Book-Entry System" below.
The authorized denominations of Notes will be $100,000 or any amount in
excess thereof that is an integral multiple of $1,000.
Reference is made to the Pricing Supplement relating to an issue of Notes
for the following:
(1) The aggregate principal amount of such Notes (and, if such Notes are
issued other than at par, the percentage of their principal amount at which
such Notes will be issued) and the date on which such Notes will be issued.
(2) The Maturity Date of such Notes.
(3) Whether such Notes will be Fixed Rate Notes or Floating Rate Notes;
whether any such Notes will be Amortizing Notes; and whether such Notes
will be Indexed Notes and, if so, the special terms thereof.
(4) If such Notes will be Fixed Rate Notes, the rate at which such Notes
will bear interest, if any; whether any such Notes will be Discount Notes
or Zero-Coupon Notes; and whether and in what manner such rate may change
prior to the Maturity Date of such Notes.
(5) If such Notes will be Floating Rate Notes, the Base Rate, whether any
such Notes will be Discount Notes, the Initial Interest Period and the
Initial Interest Rate (or formula for determining the same), the Interest
Reset Periods and Interest Reset Dates, the Index Maturity, any Spread or
Spread Multiplier, whether any such Spread or Spread Multiplier may change
before the Maturity Date of such Notes, the Interest Determination Dates
and Interest Payment Dates, any Maximum Interest Rate and/or Minimum
Interest Rate and any other terms relating to the particular method of
calculating the interest rate on such Notes.
(6) Whether such Notes may be redeemed at the option of the Company, or
repaid at the option of the holders, prior to their Maturity Date and, if
so, the provisions relating to such redemption or repayment, including
whether such notes may be so redeemed or repaid at a premium.
(7) Whether the interest rate, Spread or Spread Multiplier on such Notes
may be reset upon the occurrence of certain events or at the option of the
Company and, if so, the provisions relating to such reset.
(8) Any material United States federal income tax consequences of the
purchase, ownership and disposition of such Notes (other than or in
addition to those set forth below under "United States Taxation").
(9) Any other terms of such Notes not inconsistent with the provisions of
the Indenture.
PAYMENT OF PRINCIPAL AND INTEREST
Payments of interest on a Global Note (other than interest payable at
Maturity) will be made by the Paying Agent or the Company to the Depository in
immediately available funds in accordance with existing arrangements between
the Paying Agent and the Depository. Payments of principal of and interest, if
any, on a Global Note at Maturity will be made by the Paying Agent or the
Company by wire transfer in immediately
S-3
<PAGE>
available funds to an account specified by the Depository. Beneficial Owners
of a Global Note will be paid in accordance with the procedures of the
Depository and the applicable Participant (as defined below) therein, as in
effect from time to time. See "Book-Entry System" below.
The Company will pay any administrative costs imposed by banks in connection
with making payments on the Global Notes in immediately available funds, but
any tax, assessment or governmental charge imposed upon payments will be borne
by the holders of the Notes in respect of which such payments are made.
Any payment required to be made in respect of a Note on a date that is not a
Business Day for such Note will be made on the next succeeding Business Day
with the same force and effect as if made on such date, and no additional
interest will accrue as a result of such delayed payment; provided that, in
the case of an Interest Payment Date with respect to a LIBOR Note, if such
Business Day would fall in the succeeding calendar month, such payment will be
made on the Business Day immediately preceding such Interest Payment Date. If
any Note is issued between a Regular Record Date and the related Interest
Payment Date, interest for the period beginning on the date of issue of such
Note and ending on such Interest Payment Date will be paid on the Interest
Payment Date following the next succeeding Regular Record Date to the
registered holder on such succeeding Regular Record Date.
Except as set forth in the applicable Pricing Supplement, the amount of any
Discount Note payable in the event of redemption by the Company or repayment
at the option of the holder, in lieu of the stated principal amount due on the
Maturity Date, will be the Amortized Face Amount of such Discount Note at the
date of such redemption or repayment. The amount of any Discount Note payable
in the event of declaration of acceleration ("OID Default Amount") will be set
forth in the applicable Pricing Supplement.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from and including its date of issue
to but excluding the date of Maturity at the interest rate set forth or
described in the applicable Pricing Supplement, except that such rate of
interest may be subject to adjustment from time to time if and to the extent
provided for in such Pricing Supplement. The Interest Payment Dates for each
Fixed Rate Note (other than a Zero-Coupon Note) will be each May 15 and
November 15 and the date of Maturity. Each payment of interest on a Fixed Rate
Note will include interest accrued from and including the date of issue or the
last Interest Payment Date to which interest has been paid or duly provided
for, as the case may be, to but excluding the next Interest Payment Date or
the date of Maturity, as the case may be. Interest on Fixed Rate Notes will be
computed on the basis of a 360-day year of twelve 30-day months.
FLOATING RATE NOTES
Each Floating Rate Note will bear interest for the period ("Initial Interest
Period") from and including its date of issue to but excluding the first
Interest Reset Date for such Note at the interest rate set forth or described
in the applicable Pricing Supplement ("Initial Interest Rate"). Subsequently,
each Floating Rate Note will bear interest for each Interest Reset Period at
the interest rate determined by (i) adding to or subtracting from the
applicable interest rate basis ("Base Rate") applicable to such Note, the
Spread, if any, and/or (ii) multiplying the Base Rate by the Spread
Multiplier, if any, or (iii) any other specified Base Rate, in any case as set
forth in the applicable Pricing Supplement. The interest rate for an Interest
Reset Period will be the interest rate determined as of the immediately
preceding Interest Determination Date. The "Interest Reset Period" pertaining
to any Interest Reset Date is the period from and including such Interest
Reset Date to but excluding the immediately succeeding Interest Reset Date, or
the date of Maturity, as the case may be. The "Interest Reset Date" means the
date or dates as of which the interest rate on a Floating Rate Note will be
reset. The "Spread" is the number of basis points, and the "Spread Multiplier"
is the percentage used to determine the interest rate, that in either case may
be specified in the applicable Pricing Supplement. The Spread or Spread
Multiplier on a Floating Rate Note may be subject to adjustment from time to
time, if and to the extent specified in the applicable Pricing Supplement.
S-4
<PAGE>
One of the following Base Rates will be applicable to a Floating Rate Note:
(i) the CD Rate ("CD Rate Notes"), (ii) the Commercial Paper Rate ("Commercial
Paper Rate Notes"), (iii) the Federal Funds Rate ("Federal Funds Rate Notes"),
(iv) LIBOR ("LIBOR Notes"), (v) the Prime Rate ("Prime Rate Notes"), (vi) the
Treasury Rate ("Treasury Rate Notes") or (vii) another Base Rate, as set forth
in the applicable Pricing Supplement.
The interest rate on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semiannually or annually, as specified in the applicable
Pricing Supplement. The following table sets forth the Interest Reset Dates
and Interest Payment Dates with respect to Floating Rate Notes (except that in
all instances the interest rate for the ten days immediately prior to Maturity
will be the rate in effect on the tenth day prior to Maturity):
<TABLE>
<CAPTION>
INTEREST RESET PERIOD INTEREST RESET DATES INTEREST PAYMENT DATES
- --------------------- -------------------- ----------------------
<S> <C> <C>
Daily Each Business Day Third Wednesday of each month or of
each February, May, August and
November (or as specified in the
Pricing Supplement)
Weekly (other than Each Wednesday Third Wednesday of each month or of
Treasury Rate Notes) each February, May, August and
November (or as specified in the
Pricing Supplement)
Weekly (Treasury Rate Each Tuesday (except as Third Wednesday of each month or of
Notes) provided under "Treasury each February, May, August and
Rate Notes" below) November (or as specified in the
Pricing Supplement)
Monthly Third Wednesday of each Third Wednesday of each month or of
month each February, May, August and
November (or as specified in the
Pricing Supplement)
Quarterly Third Wednesday of each Third Wednesday of each February,
February, May, August and May, August and November
November
Semiannually Third Wednesday of each of Third Wednesday of each of two
two months specified in the months specified in the Pricing
Pricing Supplement Supplement
Annually Third Wednesday of month Third Wednesday of month specified
specified in the Pricing in the Pricing Supplement
Supplement
</TABLE>
Notwithstanding the preceding table, if an Interest Reset Date would otherwise
be a day that is not a Business Day, such Interest Reset Date will be
postponed to the next Business Day, except that, in the case of a LIBOR Note,
if such Business Day would fall in the next calendar month, such Interest
Reset Date will be the immediately preceding Business Day.
Each payment of interest on a Floating Rate Note will include interest
accrued from and including the date of issue or the last Interest Payment Date
to which interest has been paid or duly provided for, as the case may be, to
but excluding the next Interest Payment Date or the date of Maturity, as the
case may be; provided that, in the case of a Floating Rate Note that resets
daily or weekly, each payment of interest will include the interest accrued
from and including the date of issue or from and excluding the last Regular
Record Date to which interest has been paid or duly provided for, as the case
may be, to and including the Regular Record Date immediately preceding the
applicable Interest Payment Date or to but excluding the date of Maturity, as
the case may be.
Accrued interest on a Floating Rate Note will be calculated by multiplying
the principal amount of such Note (or, in the case of a Floating Rate Note
that is an Indexed Principal Note, the amount designated by the
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terms thereof) by an accrued interest factor. Such accrued interest factor
will be computed by adding the interest factors calculated for each day in the
period for which accrued interest is being calculated. The interest factor
(expressed as a decimal calculated to seven decimal places, without rounding)
for each day in such period will be computed by dividing the applicable
interest rate by 360 (in the case of CD Rate Notes, Commercial Paper Rate
Notes, Federal Funds Rate Notes, LIBOR Notes and Prime Rate Notes) or by the
actual number of days in the relevant year (in the case of Treasury Rate
Notes).
A Floating Rate Note may provide for either or both of the following (in
each case expressed as a rate per annum on a simple interest basis): (i) a
maximum limitation on the rate at which interest may accrue during any
interest period ("Maximum Interest Rate") and (ii) a minimum limitation on the
rate at which interest may accrue during any interest period ("Minimum
Interest Rate"). In addition to any Maximum Interest Rate that may be
applicable, the interest rate will in no event be higher than the maximum rate
permitted by applicable New York and United States federal law. Under
applicable New York and United States federal law as of the date of this
Prospectus Supplement, the maximum permitted rate of interest on Notes, with
certain exceptions, is 25% per annum.
All percentages resulting from any calculation of the interest rate on a
Floating Rate Note will be rounded, if necessary, to the nearest 1/100,000 of
1% (.0000001), with five one-millionths of a percentage point rounded upward,
and all currency amounts used in or resulting from such calculation on
Floating Rate Notes will be rounded to the nearest one-hundredth of a dollar
(with .005 of a dollar being rounded upward).
The "Interest Determination Date" pertaining to an Interest Reset Period (i)
for CD Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes or
Prime Rate Notes will be the second Business Day preceding the relevant
Interest Reset Date, (ii) for LIBOR Notes will be the second London Banking
Day preceding the relevant Interest Reset Date and (iii) for Treasury Rate
Notes will be the day of the week in which the relevant Interest Reset Date
falls on which treasury bills of the applicable Index Maturity are auctioned.
If, as the result of a legal holiday, a treasury bill auction is held on the
Friday preceding the Interest Reset Date, such Friday will be the Interest
Determination Date.
The "Calculation Date," where applicable, pertaining to an Interest
Determination Date will be the earlier of (i) the tenth calendar day after
such Interest Determination Date or, if any such day is not a Business Day,
the next succeeding Business Day or (ii) the Business Day preceding the
applicable Interest Payment Date or date of Maturity, as the case may be.
The Company will appoint an agent ("Calculation Agent") to calculate
interest rates on Floating Rate Notes. Unless otherwise specified in the
applicable Pricing Supplement, First Union National Bank will be the
Calculation Agent for each Floating Rate Note. All determinations of interest
by the Calculation Agent will, in the absence of manifest error, be conclusive
for all purposes and binding on the Company and the holders of Floating Rate
Notes. Upon the request of any registered holder or Beneficial Owner of a
Floating Rate Note, the Calculation Agent for such Note will provide, if
determined, the interest rate then in effect and the interest rate that will
become effective on the next Interest Reset Date with respect to such Note.
CD Rate Notes. CD Rate Notes will bear interest at the interest rates
(calculated with reference to the CD Rate and the Spread and/or the Spread
Multiplier, if any) specified in the applicable Pricing Supplement.
The "CD Rate" means, with respect to any Interest Determination Date, the
rate on such date for negotiable certificates of deposit having the applicable
Index Maturity, as published by the Board of Governors of the Federal Reserve
System in "Statistical Release H.15(519), Selected Interest Rates," or any
successor publication of the Board of Governors of the Federal Reserve System
("H.15(519)") under the heading "CDs (Secondary Market)." If such rate is not
published by 9:00 a.m., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, the CD Rate will be the rate on such
Interest Determination Date for negotiable certificates of deposit of the
applicable Index Maturity, as published by the Federal Reserve Bank of New
York in its daily statistical release, "Composite 3:30 p.m. Quotations for
U.S. Government Securities," or any
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successor publication of the Federal Reserve Bank of New York ("Composite
Quotations") under the heading "Certificates of Deposit." If such rate is not
published in Composite Quotations by 3:00 p.m., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, then the CD
Rate for such Interest Determination Date will be calculated by the Calculation
Agent and will be the arithmetic mean of the secondary market offered rates as
of 10:00 a.m., New York City time, on such Interest Determination Date, of
three leading nonbank dealers in negotiable U.S. dollar certificates of deposit
in The City of New York, selected by the Calculation Agent after consultation
with the Company, for negotiable certificates of deposit of major United States
money center banks of the highest credit standing (in the market for negotiable
certificates of deposit) with a remaining maturity closest to the applicable
Index Maturity in a denomination of $5,000,000; provided that, if the dealers
selected as aforesaid by the Calculation Agent are not quoting such rates, the
interest rate for the period commencing on the Interest Reset Date following
such Interest Determination Date will be the interest rate borne by such CD
Rate Notes on such Interest Determination Date.
CD Rate Notes, like other Notes, are not deposit obligations of a bank and
are not insured by the Federal Deposit Insurance Corporation.
Commercial Paper Rate Notes. Commercial Paper Rate Notes will bear interest
at the interest rates (calculated with reference to the Commercial Paper Rate
and the Spread and/or the Spread Multiplier, if any) specified in the
applicable Pricing Supplement.
The "Commercial Paper Rate" means, with respect to any Interest Determination
Date, the Money Market Yield on such date of the rate for commercial paper
having the applicable Index Maturity, as published in H.15(519) under the
heading "Commercial Paper." If such rate is not published prior to 9:00 a.m.,
New York City time, on the Calculation Date pertaining to such Interest
Determination Date, the Commercial Paper Rate will be the Money Market Yield on
such Interest Determination Date of the rate for commercial paper of the
applicable Index Maturity, as published by the Federal Reserve Bank of New York
in Composite Quotations under the heading "Commercial Paper." If such rate is
not published in Composite Quotations by 3:00 p.m., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, then the
Commercial Paper Rate for such Interest Determination Date will be calculated
by the Calculation Agent and will be the Money Market Yield of the arithmetic
mean of the offered rates as of 11:00 a.m., New York City time, on such
Interest Determination Date of three leading dealers of commercial paper in The
City of New York, selected by the Calculation Agent after consultation with the
Company, for commercial paper of the applicable Index Maturity, placed for
industrial issuers whose bond rating (as determined by a nationally recognized
rating agency) is "AA" or the equivalent; provided that, if the dealers
selected as aforesaid by the Calculation Agent are not quoting such rates, the
interest rate for the period commencing on the Interest Reset Date following
such Interest Determination Date will be the interest rate borne by such
Commercial Paper Rate Notes on such Interest Determination Date.
"Money Market Yield" will be a yield calculated in accordance with the
following formula:
Money Market Yield = D x 360
------------- x 100
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the applicable period for which interest is being
calculated.
Federal Funds Rate Notes. Federal Funds Rate Notes will bear interest at the
interest rates (calculated with reference to the Federal Funds Rate and the
Spread and/or the Spread Multiplier, if any) specified in the applicable
Pricing Supplement.
The "Federal Funds Rate" means, with respect to any Interest Determination
Date, the rate on such date for federal funds, as published in H.15(519) under
the heading "Federal Funds (Effective)." If such rate is not
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published by 9:00 a.m., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, the Federal Funds Rate will be the rate
on such Interest Determination Date, as published by the Federal Reserve Bank
of New York in Composite Quotations under the heading "Federal Funds/Effective
Rate." If such rate is not published in Composite Quotations by 3:00 p.m., New
York City time, on the Calculation Date pertaining to such Interest
Determination Date, then the Federal Funds Rate for such Interest
Determination Date will be calculated by the Calculation Agent and will be the
arithmetic mean of the rates for the last transaction in overnight federal
funds arranged by three leading brokers of federal funds transactions in The
City of New York, selected by the Calculation Agent after consultation with
the Company, as of 9:00 a.m., New York City time, on such Interest
Determination Date; provided that, if the brokers selected as aforesaid by the
Calculation Agent are not arranging such transactions, the interest rate for
the period commencing on the Interest Reset Date following such Interest
Determination Date will be the interest rate borne by such Federal Funds Notes
on such Interest Determination Date.
LIBOR Notes. LIBOR Notes will bear interest at the interest rates
(calculated with reference to LIBOR and the Spread and/or the Spread
Multiplier, if any) specified in the applicable Pricing Supplement.
"LIBOR" means, with respect to any Interest Determination Date, the rate
determined by the Calculation Agent in accordance with either clause (1) or
clause (2) below, as specified in the applicable Pricing Supplement:
(1) The rate for deposits in U.S. dollars of the Index Maturity specified
in the applicable Pricing Supplement, commencing on the second London
Banking Day immediately following such Interest Determination Date, that
appears on the Telerate Page 3750 as of 11:00 a.m., London time, on such
Interest Determination Date ("LIBOR Telerate"). "Telerate Page 3750" means
the display designated as page "3750" on the Telerate Service (or such
other page as may replace the page 3750 on that service or such other
service or services as may be designated by the British Bankers'
Association for the purpose of displaying London interbank offered rates
for U.S. dollar deposits).
(2) The arithmetic mean of the offered rates for deposits in U.S. dollars
having the Index Maturity specified in the applicable Pricing Supplement,
commencing on the second London Banking Day immediately following such
Interest Determination Date, that appear on the Reuters Screen LIBO Page as
of 11:00 a.m., London time, on such Interest Determination Date, if at
least two such offered rates appear on the Reuters Screen LIBO Page ("LIBOR
Reuters"). "Reuters Screen LIBO Page" means the display designated as Page
"LIBO" on the Reuters Monitor Money Rate Service (or such other page as may
replace the LIBO page on that service for the purpose of displaying London
interbank offered rates of major banks).
If neither LIBOR Telerate nor LIBOR Reuters is specified in the applicable
Pricing Supplement, LIBOR will be determined as if LIBOR Telerate had been
specified.
If (i) in the case where paragraph (1) above applies, no rate appears on the
Telerate Page 3750 or (ii) in the case where paragraph (2) above applies,
fewer than two offered rates appear on the Reuters Screen LIBO Page, LIBOR in
respect of such Interest Determination Date will be determined by the
Calculation Agent on the basis of the rates at which deposits in U.S. dollars
of the Index Maturity specified in the applicable Pricing Supplement are
offered to prime banks in the London interbank market at approximately 11:00
a.m., London time, on such Interest Determination Date by four major banks
("Reference Banks") in the London interbank market, selected by the
Calculation Agent, commencing on the second London Banking Day immediately
following such Interest Determination Date in a principal amount of not less
than $1,000,000 that is representative for a single transaction in such market
at such time. The Calculation Agent will request the principal London office
of each of the Reference Banks to provide a quotation of its rate. If at least
two such quotations are provided, LIBOR for such Interest Determination Date
will be the arithmetic mean of such quotations. If fewer than two quotations
are provided, LIBOR for such Interest Determination Date will be the
arithmetic mean of the rates quoted at approximately 11:00 a.m., New York City
time, on such Interest Determination Date by three major commercial or
investment banks (which may include the Agents or any of their respective
affiliates) in The City of New York, selected by the Calculation Agent, for
U.S. dollar loans of the applicable Index Maturity to leading European banks,
commencing on the second London Banking Day immediately following such
Interest
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Determination Date, in a principal amount of not less than $1,000,000 that is
representative for a single transaction in such market at such time; provided
that, if the banks selected as aforesaid by the Calculation Agent are not
quoting such rates, the interest rate for the period commencing on the
Interest Reset Date following such Interest Determination Date will be the
interest rate borne by such LIBOR Notes on such Interest Determination Date.
If any LIBOR Note is indexed to the offered rates for deposits in a currency
other than U.S. dollars, the applicable Pricing Supplement will set forth the
method for determining such rates.
Prime Rate Notes. Prime Rate Notes will bear interest at the interest rates
(calculated with reference to the Prime Rate and the Spread and/or the Spread
Multiplier, if any) specified in the applicable Pricing Supplement.
The "Prime Rate" means, with respect to any Interest Determination Date, the
rate on such date, as published in H.15(519) under the heading "Bank Prime
Loan." If such rate is not published by 9:00 a.m., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, the Prime
Rate will be determined by the Calculation Agent and will be the arithmetic
mean of the rates of interest publicly announced by each bank named on the
"Reuters Screen NYMF Page" as such bank's prime rate or base lending rate as
in effect for such Interest Determination Date. "Reuters Screen NYMF Page"
means the display designated as page "NYMF" on the Reuters Monitor Money Rates
Service (or such other page as may replace the NYMF page on that service for
the purpose of displaying prime rates or base lending rates of major United
States banks). If fewer than four but more than one such rate appears on the
Reuters Screen NYMF Page for such Interest Determination Date, the Prime Rate
will be determined by the Calculation Agent and will be the arithmetic mean of
the prime rates, quoted on the basis of the actual number of days in the year
divided by 360, as of the close of business on such Interest Determination
Date by four major money center banks in The City of New York, selected by the
Calculation Agent after consultation with the Company. If fewer than two such
rates appear on the Reuters Screen NYMF Page, the Prime Rate will be
calculated by the Calculation Agent and will be the arithmetic mean of the
prime rates in effect for such Interest Determination Date as furnished in The
City of New York by at least three substitute banks or trust companies
organized and doing business under the laws of the United States, or any state
thereof, in each case having total equity capital of at least $500,000,000 and
subject to supervision or examination by a federal or state authority,
selected by the Calculation Agent after consultation with the Company;
provided that, if the banks or trust companies selected as aforesaid by the
Calculation Agent are not quoting such rates, the interest rate for the period
commencing on the Interest Reset Date following such Interest Determination
Date will be the interest rate borne by such Prime Rate Notes on such Interest
Determination Date.
Treasury Rate Notes. Treasury Rate Notes will bear interest at the interest
rates (calculated with reference to the Treasury Rate and the Spread and/or
the Spread Multiplier, if any) specified in the applicable Pricing Supplement.
The "Treasury Rate" means, with respect to any Interest Determination Date,
the rate for the auction held on such Interest Determination Date of treasury
bills of the Index Maturity specified in the applicable Pricing Supplement, as
published in H.15(519) under the heading "U.S. Government Securities--Treasury
bills-auction average (investment)." If such rate is not published by 9:00
a.m., New York City time, on the Calculation Date pertaining to such Interest
Determination Date, the Treasury Rate will be the auction average rate for
such Interest Determination Date (expressed as a bond equivalent, rounded to
the nearest one-hundredth of a percent, with five one-thousandths of a percent
rounded upward, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) as otherwise announced by the United States
Department of the Treasury. In the event that the results of the auction of
treasury bills having the applicable Index Maturity are not published or
reported as provided above by 3:00 p.m., New York City time, on such
Calculation Date, or if no such auction is held on such Interest Determination
Date, then the Treasury Rate will be calculated by the Calculation Agent and
will be a yield to maturity (expressed as a bond equivalent on the basis of a
year of 365 or 366 days, as applicable, and applied on a daily basis) of the
arithmetic mean of the secondary market bid rates, as of
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approximately 3:30 p.m., New York City time, on such Interest Determination
Date, of three leading primary United States government securities dealers,
selected by the Calculation Agent after consultation with the Company, for the
issue of treasury bills with a remaining maturity closest to the applicable
Index Maturity; provided that, if the dealers selected as aforesaid by the
Calculation Agent are not quoting such rates, the interest rate for the period
commencing on the Interest Reset Date following such Interest Determination
Date will be the interest rate borne by such Treasury Rate Notes on such
Interest Determination Date.
AMORTIZING NOTES
The Company may from time to time offer "Amortizing Notes," which are Notes
as to which all or a portion of the principal amount is payable prior to the
Maturity Date in accordance with a schedule, by application of a formula, or
by reference to an Index. The terms and conditions of any Amortizing Notes,
including the terms for payment thereof, will be set forth in the applicable
Pricing Supplement.
INDEXED NOTES
The Company may from time to time offer "Indexed Notes," which are Notes as
to which all or certain interest payments ("Indexed Rate Notes") and/or the
principal amount payable at Maturity ("Indexed Principal Notes") are
determined by reference to prices, changes in prices, or differences between
prices, of securities, currencies, intangibles, goods, articles or
commodities, either in the United States or foreign jurisdictions, or by such
other objective price, economic or other measures as are specified in the
applicable Pricing Supplement (each an "Index"). A description of the Index
used in any determination of interest and/or principal payments, and the
method or formula by which interest or principal payments or both will be
determined by reference to such Index, will be set forth in the applicable
Pricing Supplement.
If the determination of an Index is calculated or announced by a third party
(which may be First Union National Bank) and such third party either suspends
the calculation or announcement of such Index or changes the basis upon which
such Index is calculated (other than changes consistent with policies in
effect at the time the related Indexed Note was issued and with permitted
changes described in the applicable Pricing Supplement), then such Index will
be calculated for purposes of such Indexed Note by another third party (which
may be First Union National Bank) selected by the Company, subject to the same
conditions and controls as applied to the original third party. If for any
reason such Index cannot be calculated on the same basis and subject to the
same conditions and controls as applied to the original third party, then any
indexed interest payments or indexed principal amount payable with respect to
such Indexed Note will be calculated in the manner set forth in the applicable
Pricing Supplement. All determinations of such third party will, in the
absence of manifest error, be conclusive for all purposes and binding on the
Company and the holders of Indexed Notes.
SUBSEQUENT INTEREST PERIODS--INTEREST RATE RESET
The Pricing Supplement relating to each Note will indicate whether the
Company has the option with respect to such Note to reset the interest rate,
in the case of a Fixed Rate Note, or to reset the Spread or Spread Multiplier,
in the case of a Floating Rate Note, and, if so, the date or dates on which
such interest rate or such Spread or Spread Multiplier, as the case may be,
may be reset (each an "Optional Reset Date"). If the Company has such option
with respect to any Note, the following procedures will apply.
The Company may exercise such option with respect to a Note by notifying the
Trustee of such exercise at least 50 but not more than 60 days prior to an
Optional Reset Date for such Note. Not later than 40 days prior to such
Optional Reset Date, the Trustee will mail to the holder of such Note a notice
("Reset Notice") setting forth (i) the election of the Company to reset the
interest rate in the case of a Fixed Rate Note, or the Spread or Spread
Multiplier in the case of a Floating Rate Note, (ii) such new interest rate or
such new Spread or Spread Multiplier, as the case may be, and (iii) the
provisions, if any, for redemption during the period from such Optional Reset
Date to the next Optional Reset Date or, if there is no such next Optional
Reset Date, to the Maturity Date of such Note (each such period a "Subsequent
Interest Period"), including the date or dates on
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which or the period or periods during which and the price or prices at which
such redemption may occur during such Subsequent Interest Period. Upon the
transmittal by the Trustee of a Reset Notice to the registered holder of a
Note, such new interest rate or such new Spread or Spread Multiplier, as the
case may be, will take effect automatically and, except as modified by the
Reset Notice and as described in the next paragraph, such Note will have the
same terms as prior to the transmittal of such Reset Notice.
Notwithstanding the foregoing, the Company may, at its option, revoke the
interest rate in the case of a Fixed Rate Note, or the Spread or Spread
Multiplier in the case of a Floating Rate Note, as provided for in the Reset
Notice, and establish an interest rate, Spread or Spread Multiplier that is
higher than the interest rate, Spread or Spread Multiplier provided for in the
relevant Reset Notice for the Subsequent Interest Period commencing on such
Optional Reset Date, by causing the Trustee to mail, not later than 20 days
prior to an Optional Reset Date for a Note, notice of such higher interest
rate, Spread or Spread Multiplier to the holder of such Note. Such notice will
be irrevocable. The Company must notify the Trustee of its intentions to
revoke a Reset Notice at least 25 days prior to the applicable Optional Reset
Date. Each Note with respect to which the interest rate, Spread or Spread
Multiplier is reset on an Optional Reset Date and with respect to which the
holder of such Note has not tendered such Note for repayment (or has validly
revoked any such tender) pursuant to the next succeeding paragraph will bear
such higher interest rate, Spread or Spread Multiplier for the Subsequent
Interest Period.
If the Company elects to reset the interest rate, Spread or Spread
Multiplier of a Note as described above, the holder of such Note will have the
option to elect repayment of such Note by the Company on any Optional Reset
Date at a price equal to the aggregate principal amount thereof outstanding
on, plus any interest accrued to, such Optional Reset Date. In order for a
Note to be so repaid on an Optional Reset Date, the holder thereof must follow
the procedures set forth below under "Redemption and Repayment" for optional
repayment, except that (i) the period for delivery of such Note or
notification to the Trustee will be at least 25 but not more than 35 days
prior to such Optional Reset Date and (ii) a holder who has tendered a Note
for repayment pursuant to a Reset Notice may, by written notice to the
Trustee, revoke any such tender until the close of business on the tenth day
prior to such Optional Reset Date.
BOOK-ENTRY SYSTEM
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources (including DTC) that the Company believes to be
reliable. The Company takes no responsibility for the accuracy thereof.
Upon issuance, all Book-Entry Notes of like tenor and having the same
original issue date will be represented by a single global security. Each
global security will be deposited with, or on behalf of, DTC, as Depository
and will be registered in the name of DTC or its nominee as described below.
Beneficial Owners of Book-Entry Notes will not receive certificates
representing their interests in the Notes purchased, except under the limited
circumstances described under "Discontinuance of DTC Services." A global
security representing Book-Entry Notes may not be transferred except by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or to a successor
Depository or its nominee.
The Depository. Initially, DTC will act as Depository for the Notes. The
Agent is a Direct Participant (as defined herein) of DTC. DTC has advised the
Company as follows:
The Notes will be issued as fully-registered securities in the name of
Cede & Co. (DTC's partnership nominee).
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing
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agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the settlement
among Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for
physical movement of securities certificates.
"Direct Participants" include securities brokers and dealers, banks,
trust companies, clearing corporations, and certain other organizations.
DTC is owned by a number of its Direct Participants and by the New York
Stock Exchange, Inc., the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to others such as securities brokers and dealers, banks, and
trust companies that clear through or maintain a custodial relationship
with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Participants are on
file with the Securities and Exchange Commission.
Purchases of Notes under the DTC system must be made by or through Direct
Participants, which will receive a credit for Notes on DTC's records. The
ownership interest of each actual Beneficial Owner is in turn to be
recorded on the Direct and Indirect Participants' records. Beneficial
Owners will not receive written confirmation from DTC of their purchase,
but Beneficial Owners are expected to receive written confirmation
providing details of the transaction, as well as periodic statements of
their holdings, from the Direct or Indirect Participant through which the
Beneficial Owner entered into the transaction. Transfers of ownership
interests in the Notes are to be accomplished by entries made on the books
of Participants acting on behalf of Beneficial Owners. Beneficial Owners
will not receive certificates representing their ownership interests in
Notes, except in the event that use of the book-entry system for the Notes
is discontinued.
To facilitate subsequent transfers, all Notes deposited by Participants
with DTC are registered in the name of DTC's partnership nominee, Cede &
Co. The deposit of Notes with DTC and their registration in the name of
Cede & Co. effect no change in beneficial ownership. DTC has no knowledge
of the actual Beneficial Owners of the Notes; DTC's records reflect only
the identity of the Direct Participants to whose accounts such Notes are
credited, which may or may not be the Beneficial Owners. The Participants
will remain responsible for keeping account of their holdings on behalf of
their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to Beneficial Owners will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If fewer than all of the
Notes are being redeemed, DTC's practice is to determine by lot the amount
of the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the
Notes. Under its usual procedures, DTC mails an Omnibus Proxy to the
Company as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Notes are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Principal and interest payments on the Notes will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on each payable date in
accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payment on such payable
date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of such Participant and
not of DTC, the Trustee, or the Company, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
principal and interest to DTC is the responsibility of the Company or the
Trustee; disbursement of such payments to Direct Participants shall be the
responsibility of DTC; and disbursement of such payments to the Beneficial
Owners shall be the responsibility of Direct and Indirect Participants.
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None of the Company, the Agent, the Trustee, any paying agent or any other
agent of the Company or the Trustee will have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests in Book-Entry Notes or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
Discontinuance of DTC Services. DTC may discontinue providing its services
as Depository with respect to the Notes at any time by giving reasonable
notice to the Company or the Trustee. The Company may decide to discontinue
use of the system of book-entry transfers through DTC. Under either
circumstance, if a successor Depository is not obtained, Note certificates
will be printed and delivered as provided in the Indenture.
Note certificates issued in exchange for a global security shall be
registered in the name or names of such person or persons as the Depository
shall instruct the Trustee. It is expected that such instructions will be
based upon directions received by the Depository from its Participants with
respect to ownership of beneficial interests in such global security.
REDEMPTION AND REPAYMENT
The Pricing Supplement relating to each Note will indicate either (i) that
such Note cannot be redeemed prior to its Maturity Date or (ii) that such Note
will be redeemable, in whole or in part, at the option of the Company on a
specified date or dates prior to such Maturity Date, at a price or prices set
forth in the applicable Pricing Supplement, together with interest accrued to
the date of redemption. The Company may redeem any of the Notes that are
redeemable either in whole or from time to time in part, upon not less than 30
nor more than 60 days' notice. If less than all of the Notes of like terms are
to be redeemed, the Notes to be redeemed shall be selected by the Trustee by
such method as the Trustee shall deem fair and appropriate.
The Pricing Supplement relating to each Note will indicate either (i) that
such Note cannot be repaid at the option of the holder prior to its Maturity
Date or (ii) that such Note will be repayable at the option of the holder
thereof on a date or dates specified prior to its Maturity Date, at a price or
prices set forth in the applicable Pricing Supplement, together with interest
accrued to the date of repayment.
In order for a Note to be repaid prior to its Maturity Date at the option of
the holder thereof, the Company must receive, at least 30 days but not more
than 45 days prior to the repayment date, the Note with the form entitled
"Option to Elect Repayment" thereon duly completed. Exercise of the repayment
option by the holder of a Note will be irrevocable, except as otherwise
described above under "Subsequent Interest Periods--Interest Rate Reset." The
repayment option may be exercised by the holder of a Note for less than the
aggregate principal amount of the Note then outstanding, provided that the
principal amount of the Note remaining outstanding after repayment is an
authorized denomination.
With respect to a Global Note, the Depository's nominee will be the holder
of such Global Note and therefore will be the only entity that can exercise a
right to repayment. See "Book-Entry System" above. In order to ensure that the
Depository's nominee will exercise a right to repayment in a timely manner
with respect to a particular beneficial interest in a Global Note, the
Beneficial Owner of such interest must instruct the broker or other
participant through which it holds a beneficial interest in such Global Note
to notify the Depository of its desire to exercise a right to repayment. Each
Beneficial Owner should consult the broker or other Direct or Indirect
Participant through which it holds a beneficial interest in a Global Note in
order to ascertain the deadline by which such an instruction must be given in
order for notice to be delivered by such broker or other Direct or Indirect
Participant to the Depository in a timely manner.
REPURCHASE
The Company may at any time purchase Notes at any price or prices in the
open market or otherwise. Notes so purchased by the Company may be held or
resold or, at the discretion of the Company, surrendered to the Trustee for
cancellation.
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RISKS OF INDEXED NOTES
An investment in an Indexed Note may entail significant risks that are not
associated with a similar investment in a debt instrument that has a fixed
principal amount, is denominated in U.S. dollars and bears interest at either
a fixed rate or a floating rate determined by reference to nationally
published interest rate references. The risks of a particular Indexed Note
will depend on the terms of such Indexed Note, but may include, without
limitation, the possibility of significant changes in the prices of
securities, currencies, intangibles, goods, articles or commodities, either in
the United States or foreign jurisdictions, or of other objective price,
economic or other measures making up the relevant Index ("Underlying Assets").
Such risks generally depend on factors over which the Company has no control,
such as economic and political events and the supply of and demand for the
Underlying Assets. In recent years, currency exchange rates and prices for
various Underlying Assets have been highly volatile, and such volatility can
be expected to continue in the future. Fluctuations in any such rates or
prices that have occurred in the past are not necessarily indicative, however,
of fluctuations that may occur during the term of any Indexed Note.
In considering whether to purchase Indexed Notes, investors should be aware
that the calculation of amounts payable in respect of Indexed Notes may
involve reference to prices that are published solely by third parties or
entities that are not subject to regulation under the laws of the United
States.
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT DESCRIBE
ALL THE RISKS OF AN INVESTMENT IN INDEXED NOTES, AND THE COMPANY DISCLAIMS ANY
RESPONSIBILITY TO ADVISE PROSPECTIVE INVESTORS OF SUCH RISKS AS THEY EXIST AT
THE DATE OF THIS PROSPECTUS SUPPLEMENT OR AS SUCH RISKS MAY CHANGE FROM TIME
TO TIME. THE RISK OF LOSS AS A RESULT OF THE LINKAGE OF PRINCIPAL OR INTEREST
PAYMENTS ON INDEXED NOTES TO AN INDEX AND TO THE UNDERLYING ASSETS CAN BE
SUBSTANTIAL. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN FINANCIAL AND
LEGAL ADVISORS AS TO THE RISKS OF AN INVESTMENT IN INDEXED NOTES. INDEXED
NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE UNSOPHISTICATED
WITH RESPECT TO TRANSACTIONS IN THE UNDERLYING ASSETS RELEVANT TO SUCH INDEXED
NOTES.
UNITED STATES TAXATION
The following summary is based on the United States Internal Revenue Code of
1986, as amended ("Code"), regulations (including proposed regulations and
temporary regulations) promulgated thereunder, rulings, official
pronouncements and judicial decisions, all as in effect on the date of this
Prospectus Supplement and all of which are subject to change, possibly with
retroactive effect, or to different interpretations. This summary provides
general information only and does not purport to address all of the United
States federal income tax consequences that may be applicable to a holder of a
Note. It also does not address all of the tax consequences that may be
relevant to certain types of holders subject to special treatment under the
United States federal income tax law, such as individual retirement and other
tax-deferred accounts, dealers in securities, life insurance companies, tax-
exempt organizations, persons holding Notes as a position in a straddle for
tax purposes, as part of a "synthetic security" or as part of another other
integrated investment comprised of a Note and one or more other investments,
or United States persons (as defined below) whose functional currency is other
than the U.S. dollar. It also does not discuss the tax consequences to
subsequent purchasers of Notes and is limited to investors who hold Notes as a
capital asset. The United States federal income tax consequences of
purchasing, holding or disposing of a particular Note will depend, in part, on
the particular terms of such Note as set forth in the applicable Pricing
Supplement. The material United States federal income tax consequences of
purchasing, holding or disposing of Amortizing Notes, Floating Rate Notes or
Indexed Notes will be set forth in the applicable Pricing Supplement. A person
considering the purchase of Notes or making any election under the Code or the
regulations with respect to such Notes should consult its own tax advisor
concerning the application of the United States federal income tax law to its
particular situation, as well as any tax consequences arising under the law of
any state, local or non-U.S. tax jurisdiction.
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UNITED STATES PERSONS
For purposes of the following discussion, "United States person" means an
individual who is a citizen or resident of the United States, an estate or
trust subject to United States federal income taxation without regard to the
source of its income, or a corporation, partnership or other entity created or
organized in or under the law of the United States or any state or the
District of Columbia. The following discussion pertains only to a holder of a
Note who is a Beneficial Owner of such Note and who is a United States person.
Payments of Interest on Notes Other Than Discount Notes. Except as discussed
below under "Discount Notes" and "Short-Term Notes," a payment of interest on
a Note will be taxable to a holder as ordinary interest income at the time it
is accrued or received in accordance with the holder's method of tax
accounting.
Purchase, Sale, Exchange or Retirement of Notes. A holder's tax basis in a
Note generally will be the cost of the Note to such holder, increased by any
original issue discount, market discount or acquisition discount (all as
defined below) previously included in the holder's gross income (as described
below), and reduced by any amortized premium (as described below) and any
principal payments and payments of stated interest that are not payments of
qualified stated interest (as defined below).
Upon the sale, exchange or retirement of a Note, a holder generally will
recognize gain or loss equal to the difference between (i) the amount realized
on such sale, exchange or retirement, except to the extent such amount is
attributable to accrued interest and (ii) the holder's tax basis in the Note.
Except with respect to (i) gain attributable to market discount (as described
below) and (ii) gain on the disposition of a Short-Term Note (as defined
below), gain or loss so recognized will be capital gain or loss and will be
long-term capital gain or loss if, at the time of the sale, exchange or
retirement, the Note was held for more than one year. Under current law, long-
term capital gains of individuals are, under certain circumstances, taxed at
lower rates than items of ordinary income.
Interest Rate Reset. If so specified in the Pricing Supplement relating to
an issue of Notes, the Company may have the option to reset the interest rate,
in the case of a Fixed Rate Note, or to reset the Spread or the Spread
Multiplier, in the case of a Floating Rate Note. See "Description of Notes--
Subsequent Interest Periods--Interest Rate Reset." The treatment of a holder
of Notes with respect to which such an option has been exercised and who does
not elect to have the Company repay such Notes on the applicable Optional
Reset Date or Maturity Date will depend on the terms established for such
Notes by the Company pursuant to the exercise of such option ("revised
terms"). Depending on the particular circumstances, such holder may be treated
as having surrendered such Notes for new Notes with the revised terms in
either a taxable exchange or a recapitalization qualifying for nonrecognition
of gain or loss.
Discount Notes. The following is a summary of the material United States
federal income tax consequences to holders of Discount Notes, based on the
original issue discount provisions of the Code as in effect on the date hereof
and on certain regulations promulgated thereunder relating to original issue
discount ("OID Regulations").
For United States federal income tax purposes, original issue discount is
the excess of the stated redemption price at maturity of each Discount Note
over its issue price if such excess is greater than or equal to a de minimis
amount (generally 1/4 of 1% of the Discount Note's stated redemption price at
maturity multiplied by the number of complete years to maturity from the issue
date). The issue price of an issue of Discount Notes that is issued for cash
will be equal to the first price at which a substantial amount of the Notes in
such issue is sold. The stated redemption price at maturity of a Discount Note
is the sum of all payments provided by the Discount Note, other than payments
of "qualified stated interest." Under the OID Regulations, "qualified stated
interest" includes stated interest that is unconditionally payable in cash or
property (other than debt instruments of the issuer) at least annually at a
single fixed rate of interest or at current values of (i) a single qualified
floating rate, or (ii) a single objective rate. A "qualified floating rate" is
any floating rate where variations in such rate can reasonably be expected to
measure contemporaneous variations in the cost of newly borrowed funds (e.g.,
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LIBOR). An "objective rate" is a rate that is not itself a qualified floating
rate but which is determined using a single formula that is fixed throughout
the term of the Notes and which is based upon one or more qualified rates or
that is based on changes in the price of actively traded property (or an index
of the prices of such property). Interest is payable at a single fixed rate
only if the rate appropriately takes into account the length of the interval
between payments. Except as described below with respect to Short-Term Notes (
as defined below), a holder of a Discount Note will be required to include
original issue discount in income as it accrues before the receipt of cash
attributable to such income, regardless of such holder's method of accounting
for tax purposes.
Special rules may apply where variable rate debt instruments are subject to
interest rate caps, floors or certain other interest rate adjustment features.
The amount of original issue discount includible in income by the initial
holder of a Discount Note is the sum of the daily portions of original issue
discount with respect to such Note for each day during the taxable year on
which such holder held such Note ("accrued original issue discount").
Generally, the daily portion of the original issue discount is determined by
allocating to each day in any "accrual period" a ratable portion of the
original issue discount allocable to such accrual period. Under the OID
Regulations, the "accrual periods" for a Discount Note may be selected by each
holder, may be of any length, and may vary in length over the term of the
Discount Note, provided that each accrual period is no longer than one year
and each scheduled payment of principal or interest occurs either on the first
day or on the final day of an accrual period. The amount of original issue
discount allocable to each accrual period is the excess (if any) of (i) the
product of a Discount Note's adjusted issue price at the beginning of such
accrual period and its yield to maturity (determined on the basis of
compounding at the close of each accrual period and adjusted for the length of
such accrual period) over (ii) the amount of the qualified stated interest, if
any, payable on such Discount Note and allocable to such accrual period. The
"adjusted issue price" of a Discount Note at the beginning of any accrual
period generally is the sum of the issue price of a Discount Note plus the
accrued original issue discount allocable for all prior accrual periods,
reduced by any prior payment on the Discount Note other than a payment of
qualified stated interest. Under these rules, a holder of a Discount Note
generally will have to include in income increasingly greater amounts of
original issue discount in successive accrual periods.
If the tax basis of a Discount Note, immediately after its purchase, exceeds
its adjusted issue price (the amount of such excess being considered
"acquisition premium") but is not greater than its stated redemption price at
maturity, the amount includible in income in each taxable year as original
issue discount is reduced (but not below zero) by that portion of the
acquisition premium properly allocable to such year.
If a holder purchases a Discount Note for an amount in excess of the stated
redemption price at maturity, the holder does not include any original issue
discount in income and generally may be subject to the "bond premium" rules
discussed below. See "Amortizable Bond Premium." If a holder has a tax basis
in a Discount Note that is less than the adjusted issue price, the difference
will be subject to the market discount provisions discussed below. See "Market
Discount."
Under the OID Regulations, a holder of a Note may elect to include in gross
income all interest that accrues on such Note using the constant yield method.
For this purpose, interest includes stated interest, acquisition discount,
original issue discount, de minimis original issue discount, market discount,
de minimis market discount, and unstated interest, as adjusted by any
amortizable bond premium or acquisition premium. Special rules apply with
respect to elections made with respect to Notes issued with amortizable bond
premium or market discount. Once made with respect to a Note, the election
cannot be revoked without the consent of the Service. A holder considering an
election under these rules should consult its own tax advisor.
Market Discount. If a holder purchases a Note (other than a Discount Note)
for an amount that is less than its issue price, or in the case of a
subsequent purchaser, its stated redemption price at maturity, or purchases a
Discount Note for less than its "revised issue price" (as defined under the
Code) as of the purchase date, the amount of the difference will be treated as
"market discount," unless such difference is less than a specified de minimis
amount. Under the market discount rules of the Code, a holder will be required
to treat any partial
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principal payment (or, in the case of a Discount Note, any payment that does
not constitute fixed periodic interest) on, or any gain realized on the sale,
exchange or retirement of, a Note as ordinary income to the extent of the
market discount that has not previously been included in income and is treated
as having accrued on such Note at the time of such payment or disposition.
Further, a disposition of a Note by gift (and in certain other circumstances)
could result in the recognition of market discount income, computed as if such
Note had been sold at its then fair market value. In addition, a holder who
purchases a Note with market discount may be required to defer the deduction
of all or a portion of the interest paid or accrued on any indebtedness
incurred or continued to purchase or carry such Note until the Maturity of the
Note or its earlier disposition in a taxable transaction.
Market discount is considered to accrue ratably during the period from the
date of acquisition to the Maturity Date of a Note, unless the holder elects
to accrue market discount under the rules applicable to original issue
discount. A holder may elect to include market discount in income currently as
it accrues, in which case the rules described above regarding the deferral of
interest deductions will not apply.
Amortizable Bond Premium. Generally, if a holder's tax basis in a Note held
as a capital asset exceeds the stated redemption price at maturity of such
Note, such excess may constitute amortizable bond premium that the holder may
elect to amortize under the constant interest rate method over the period from
its acquisition date to the Note's Maturity Date. Under certain circumstances,
amortizable bond premium may be determined by reference to an early call date.
Short-Term Notes. In general, an individual or other cash method holder of a
Note that matures one year or less from the date of its issuance (a "Short-
Term Note") is not required to accrue original issue discount on such Note
unless it has elected to do so. Holders who report income for federal income
tax purposes under the accrual method, however, and certain other holders,
including banks, dealers in securities and electing holders, are required to
accrue original issue discount (unless the holder elects to accrue
"acquisition discount" in lieu of original issue discount) on such Note.
"Acquisition discount" is the excess of the remaining stated redemption price
at maturity of the Short-Term Note over the holder's tax basis in the Short-
Term Note at the time of the acquisition. In the case of a holder who is not
required and does not elect to accrue original issue discount on a Short-Term
Note, any gain recognized on the sale, exchange or retirement of such Short-
Term Note will be ordinary income to the extent of the original issue discount
accrued through the date of sale, exchange or retirement. Such a holder will
be required to defer, until such Short-Term Note is sold or otherwise disposed
of, the deduction of a portion of the interest expense on any indebtedness
incurred or continued to purchase or carry such Short-Term Note. Original
issue discount or acquisition discount on a Short-Term Note accrues on a
straight-line basis unless an election is made to use the constant yield
method (based on daily compounding).
The market discount rules will not apply to a Short-Term Note having market
discount.
NON-UNITED STATES PERSONS
Subject to the discussion of backup withholding below, payments of principal
of (and premium, if any, on) and interest (including original issue discount)
on Notes by the Company or its agent (in its capacity as such) to any holder
who is a Beneficial Owner of a Note but is not a United States person will not
be subject to United States federal withholding tax; provided, in the case of
premium, if any, and interest (including original issue discount) that (i)
such holder does not actually or constructively own 10% of more of the total
combined voting power of all classes of stock of the Company entitled to vote,
(ii) such holder is not a controlled foreign corporation for United States tax
purposes that is related to the Company through stock ownership, and (iii)
either (A) the Beneficial Owner of the Note certifies to the Company or its
agent, under penalties of perjury, that it is not a United States person and
provides its name and address or (B) a securities clearing organization, bank
or other financial institution that holds customers' securities in the
ordinary course of its trade or business (a "financial institution") certifies
to the Company or its agent, under penalties of perjury, that the
certification described in clause (A) hereof has been received from the
Beneficial Owner by it or by another financial institution acting for the
Beneficial Owner.
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If a holder of a Note who is not a United States person is engaged in a
trade or business in the United States and premium, if any, or interest
(including original issue discount) on the Note is effectively connected with
the conduct of such trade or business, such holder, although exempt from
United States withholding tax, as discussed in the preceding paragraph (or by
reason of the delivery of properly completed Form 4224), will be subject to
United States federal income tax on such premium, if any, and interest
(including original issue discount) in the same manner as if it were a United
States person.
Subject to the discussion of "backup" withholding below, any capital gain
realized upon the sale, exchange or retirement of a Note by a holder who is
not a United States person will not be subject to United States federal income
or withholding taxes unless (i) such gain is effectively connected with a
United States trade or business of the holder, or (ii) in the case of an
individual, such holder is present in the United States for 183 days or more
in the taxable year of the retirement or disposition and certain other
conditions are met.
Notes held by an individual who is neither a citizen nor a resident of the
United States for United States federal income tax purposes at the time of
such individual's death will not be subject to United States federal estate
tax, provided that the income from the Notes was not or would not have been
effectively connected with a United States trade or business of such
individual and that such individual qualified for the exemption from United
States federal withholding tax (without regard to the certification
requirements) described above.
BACKUP WITHHOLDING AND INFORMATION REPORTING
"Backup" withholding and information reporting requirements may apply to
certain payments of principal of (and premium, if any, on) and interest
(including original issue discount) on a Note and to certain payments of
proceeds of the sale or retirement of a Note. The Company, its agent, a
broker, the Trustee or any Paying Agent, as the case may be, will be required
to withhold tax from any payment that is subject to backup withholding at a
rate of 31% of such payment if the holder fails to furnish its taxpayer
identification number (social security number or employer identification
number), to certify that such holder is not subject to backup withholding, or
to otherwise comply with the applicable requirements of the backup withholding
rules. Certain holders (including, among others, all corporations) are not
subject to the backup withholding and reporting requirements.
Under current regulations, backup withholding and information reporting will
not apply to payments made by the Company or any agent thereof (in its
capacity as such) to a holder of a Note who has provided the required
certification under penalties of perjury that it is not a United States person
as set forth in clause (iii) in the first paragraph under "Non-United States
Persons" or has otherwise established an exemption (provided that neither the
Company nor such agent has actual knowledge that the holder is a United States
person or that the conditions of any other exemption are not in fact
satisfied).
Any amounts withheld under the backup withholding rules from a payment to a
holder may be claimed as a credit against such holder's United States federal
income tax liability.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE, DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT
TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF
THE NOTES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND
OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX
LAWS.
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PLAN OF DISTRIBUTION
The Notes are being offered on a periodic basis for sale by the Company
through Donaldson, Lufkin & Jenrette Securities Corporation, the Agent, who
has agreed to use its reasonable best efforts to solicit offers to purchase
the Notes. Unless otherwise specified in the applicable Pricing Supplement,
the Company will pay the Agent a commission of .125% to .750% of the principal
amount of each Note sold through the Agent, depending on the maturity of such
Note (except that the Company and the Agent may agree to a higher commission
for maturities in excess of 30 years). The Company may sell Notes to the Agent
at a discount for resale to investors at varying prices related to prevailing
market prices at the time of resale, to be determined by the Agent. The
Company may also sell the Notes directly to investors on its behalf. In the
case of sales made directly by the Company no commission will be payable. The
Company has agreed to reimburse the Agent for certain expenses.
The Company may also sell Notes to the Agent, as principal. Unless otherwise
specified in the applicable Pricing Supplement, any Note sold to the Agent as
principal will be purchased by the Agent at a price equal to 100% of the
principal amount thereof (or, in the case of a Note issued with Original Issue
Discount, the public offering price), less a percentage equal to the
commission applicable to an agency sale of a Note of identical maturity. Notes
may be resold by the Agent to investors or other purchasers from time to time
in one or more transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined by the Agent at the time
of sale, or may be sold to certain dealers as described below. After the
initial public offering of Notes to be resold to investors and other
purchasers, the public offering price (in the case of Notes to be resold at a
fixed offering price), concession and discount may be changed. In addition,
the Agent may sell Notes to any dealer at a discount. The Company reserves the
right to sell Notes directly on its behalf in those jurisdictions where it is
authorized to do so. No commission will be allowed or be payable on any sales
made directly by the Company.
The Company will have the sole right to accept offers to purchase Notes and
may reject any proposed purchase of Notes in whole or in part. The Agent will
have the right to reject any offer to purchase Notes received by it, in whole
or in part, if it deems the offer unreasonable.
No Note will have an established trading market when issued. The Notes will
not be listed on any securities exchange. The Agent may make a market in the
Notes, but the Agent is not obligated to do so and may discontinue any market-
making at any time without notice. There can be no assurance of a secondary
market for any Notes, or that the Notes will be sold.
The Company has agreed to indemnify the Agent against certain liabilities,
including liabilities under the Securities Act, and to contribute to payments
the Agent may be required to make in respect thereof. The Agent may be deemed
to be an "underwriter" within the meaning of the Securities Act.
In the ordinary course of its business, Donaldson, Lufkin & Jenrette
Securities Corporation and/or its affiliates have engaged, and may in the
future engage, in investment banking transactions with the Company and its
affiliates.
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APPENDIX A
GLOSSARY
Set forth below is a glossary of certain of the terms used in this
Prospectus Supplement. Capitalized terms used herein that are not defined in
the following glossary have the meanings given in the Indenture or in the
accompanying Prospectus. Page references refer to pages of this Prospectus
Supplement.
"Amortized Face Amount" of a Discount Note means the amount equal to (a) the
issue price of such Discount Note set forth in the applicable Pricing
Supplement plus (b) the portion of the difference between the issue price and
the stated principal amount of such Discount Note that has accrued at the
Yield to Maturity set forth in the Pricing Supplement (computed in accordance
with generally accepted United States bond yield computation principles) at
the date as of which the Amortized Face Amount is calculated, but in no event
will the Amortized Face Amount of such Discount Note exceed its stated
principal amount.
"Amortizing Notes" has the meaning set forth on page S-10.
"Base Rate" has the meaning set forth on page S-4.
"Beneficial Owner" of a Global Note means the actual owner of an interest
therein.
"Business Day" with respect to any Note means, unless otherwise specified in
the applicable Pricing Supplement, any day, other than a Saturday or Sunday,
that is (i) not a day on which banking institutions are authorized or required
by law or regulation to be closed in The City of New York and (ii) if such
Note is a LIBOR Note, a London Banking Day.
"Calculation Agent" has the meaning set forth on page S-6.
"Calculation Date" has the meaning set forth on page S-6.
"CD Rate" has the meaning set forth on page S-7.
"CD Rate Notes" has the meaning set forth on page S-5.
"Certificated Note" has the meaning set forth on page S-3.
"Commercial Paper Rate" has the meaning set forth on page S-7.
"Commercial Paper Rate Notes" has the meaning set forth on page S-5.
"Composite Quotations" has the meaning set forth on page S-7.
"Depository" has the meaning set forth on page S-3.
"Discount Note" means (i) a Note, including any Zero-Coupon Note, that has
been issued at an Issue Price lower, by more than a de minimis amount (as
determined under United States federal income tax rules applicable to original
issue discount instruments), than the principal amount thereof and (ii) any
other Note that for United States federal income tax purposes would be
considered an original issue discount note.
"DTC" has the meaning set forth on the cover page.
"Federal Funds Rate Notes" has the meaning set forth on page S-5.
"Federal Funds Rate" has the meaning set forth on page S-8.
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"Fixed Rate Note" has the meaning set forth on page S-3.
"Floating Rate Note" has the meaning set forth on page S-3.
"Global Note" has the meaning set forth on page S-3.
"H.15(519)" has the meaning set forth on page S-7.
"Index" has the meaning set forth on page S-10.
"Index Maturity" for any Floating Rate Note means the period of maturity of
the instrument or obligation from which the Base Rate is calculated.
"Indexed Notes", "Indexed Principal Notes" and "Indexed Rate Notes" have the
meanings set forth on page S-10.
"Initial Interest Period" has the meaning set forth on page S-4.
"Initial Interest Rate" has the meaning set forth on page S-4.
"Interest Determination Date" has the meaning set forth on page S-6.
"Interest Payment Date" with respect to any Note means a date (other than at
Maturity) on which, under the terms of such Note, regularly scheduled interest
will be payable.
"Interest Reset Date" has the meaning set forth on page S-5.
"Interest Reset Period" has the meaning set forth on page S-5.
"LIBOR," "LIBOR Telerate" and "LIBOR Reuters" have the meanings set forth on
page S-8.
"LIBOR Notes" has the meaning set forth on page S-5.
"London Banking Day" means any day on which dealings in deposits in the
currency specified in the applicable pricing supplement are transacted in the
London interbank market.
"Maturity" means the date on which the outstanding principal amount of a
Note becomes due and payable in full in accordance with its terms, whether at
its Maturity Date or by declaration of acceleration, call for redemption,
repayment or otherwise.
"Maturity Date" with respect to any Note means the date on which such Note
is scheduled to mature, as specified thereon.
"Maximum Interest Rate" has the meaning set forth on page S-6.
"Minimum Interest Rate" has the meaning set forth on page S-6.
"Money Market Yield" has the meaning set forth on page S-8.
"Notes" has the meaning set forth on the cover page.
"OID Regulations" has the meaning set forth on page S-16.
"Optional Reset Date" has the meaning set forth on page S-11.
"Participants" has the meaning set forth on page S-12.
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"Prime Rate" has the meaning set forth on page S-9.
"Prime Rate Notes" has the meaning set forth on page S-5.
"Reference Banks" has the meaning set forth on page S-9.
"Regular Record Date" with respect to any Interest Payment Date for a Fixed
Rate Note means the first calendar day (whether or not a Business Day) of the
month in which such Interest Payment Date occurs; and with respect to any
Interest Payment Date for a Floating Rate Note means the date (whether or not
a Business Day) 15 calendar days prior to such Interest Payment Date.
"Reset Notice" has the meaning set forth on page S-11.
"Reuters Screen LIBO Page" has the meaning set forth on page S-8.
"Reuters Screen NYMF Page" has the meaning set forth on page S-9.
"Spread" and "Spread Multiplier" have the meanings set forth on page S-5.
"Subsequent Interest Period" has the meaning set forth on page S-11.
"Telerate Page 3750" has the meaning set forth on page S-8.
"Treasury Rate" has the meaning set forth on page S-10.
"Treasury Rate Notes" has the meaning set forth on page S-5.
"Underlying Assets" has the meaning set forth on page S-14.
"Zero Coupon Note" has the meaning set forth on page S-3.
References herein to "U.S. dollars" or "$" are to the currency of the United
States.
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