PROSPECTUS SUPPLEMENT FILED PURSUANT TO RULE 424 (b) (5)
(TO PROSPECTUS DATED JANUARY 7, 1999) REGISTRATION NO. 333-69237
[GRAPHIC]
$500,000,000
CAROLINA POWER & LIGHT COMPANY
EXTENDIBLE NOTES DUE OCTOBER 28, 2009
---------------
The Extendible Notes have the following principal terms:
o The Notes will mature on October 28, 2009.
o During the period from and including the date of original issuance to but
excluding July 28, 2000, the interest rate on the Notes will be reset and
payable monthly at a rate equal to the one month LIBOR plus a spread of .33%.
During this initial period, interest will be payable monthly on the 28th of
each month, commencing November 28, 1999.
o During each subsequent period designated by us, interest shall accrue and be
payable either at a floating interest rate or at a fixed interest rate, in
each case as determined by us and Merrill Lynch.
o The spread that will be applicable to the Notes during each subsequent period
will result in an interest rate that will enable Merrill Lynch to remarket
tendered Notes at 100% of their principal amount on the date commencing that
subsequent period.
o On July 28, 2000 and on each successive date prescribed for the remarketing of
the Notes, unless you affirmatively elect not to tender your Notes by
following the procedures set forth in this prospectus supplement, your Notes
will be automatically tendered, or deemed tendered to Merrill Lynch, for a
purchase price equal to 100% of their principal amount, plus accrued interest.
o If we cannot agree with Merrill Lynch on the spread with respect to any
subsequent period, we must repurchase and retire all of the Notes on the date
then prescribed for the remarketing of the Notes at a price equal to 100% of
their principal amount, plus accrued interest.
o If Merrill Lynch is unable to remarket some or all of the Notes tendered on
the date then prescribed for the remarketing of the Notes, we must purchase
and retire any remaining unsold tendered Notes at a price equal to 100% of
their principal amount, plus accrued interest.
o We may not redeem the Notes prior to July 28, 2000. The Notes are redeemable
by us on July 28, 2000. After July 28, 2000, the Notes may be redeemable by us
or repayable at the option of the holders, as described in this prospectus
supplement.
o The Notes are senior unsecured debt securities and are effectively subordinate
to our outstanding and future first mortgage bonds and secured debt.
o The Notes will be first issued in denominations and integral multiples of
$1,000.
o The Notes will not be listed on any national securities exchange or Nasdaq.
---------------
Neither the SEC nor any state securities commission has approved or
disapproved of these securities or determined if this prospectus supplement or
the attached prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
---------------
Merrill Lynch will sell the Notes to the public at varying prices
relating to prevailing market prices at the time of sale. We will receive net
proceeds of 99.875% of the principal amount of the Notes sold, which equals
aggregate net proceeds of $499,375,000 before deducting expenses payable by us,
estimated at $250,000.
Merrill Lynch is offering the Notes subject to prior sale and on the
condition that they accept our delivery of the Notes. We expect the Notes to be
ready for delivery in book-entry form only through the facilities of The
Depository Trust Company on or about October 28, 1999.
---------------
MERRILL LYNCH & CO.
---------------
The date of this prospectus supplement is October 25, 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT
PAGE
-----
<S> <C>
Summary Information ............................................. S-1
Use of Proceeds ................................................. S-3
Description of the Notes ........................................ S-3
Certain United States Federal Income Tax Considerations ......... S-15
Underwriting .................................................... S-18
Legal Matters ................................................... S-19
PROSPECTUS
About This Prospectus ........................................... 2
Where You Can Find More Information ............................. 2
Documents Incorporated By Reference ............................. 2
Our Company and Address ......................................... 3
Ratio of Earnings to Fixed Charges .............................. 3
Application of Proceeds ......................................... 3
Description of the Securities ................................... 4
Description of First Mortgage Bonds ............................. 4
Description of Senior Notes ..................................... 8
Description of Debt Securities .................................. 17
Global Securities ............................................... 24
Plan of Distribution ............................................ 25
Experts ......................................................... 26
Legal Opinions .................................................. 26
</TABLE>
---------------
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We
have not authorized any other person to provide you with different information.
If anyone provides you with different or inconsistent information, you should
not rely on it. We are not making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted.
You should assume that the information appearing in this prospectus
supplement and the accompanying prospectus is only accurate as of their
respective dates. Our business, financial condition, results of operations and
prospects may have changed since the respective dates of these documents.
i
<PAGE>
SUMMARY INFORMATION
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this prospectus supplement and the
accompanying prospectus and in the financial statements or other documents
incorporated by reference.
CAROLINA POWER & LIGHT COMPANY
We are primarily engaged in the generation, transmission, distribution
and sale of electricity in portions of North Carolina and South Carolina. We
also provide natural gas distribution and service in portions of North Carolina
through a wholly-owned subsidiary.
RECENT DEVELOPMENTS
On October 20, 1999, our shareholders approved the restructuring of CP&L
so that it will become a wholly-owned subsidiary of CP&L Holdings, Inc., a
newly formed holding company. The holders of our common stock will become the
holders of the outstanding common stock of CP&L Holdings, through a one-for-one
share exchange. The restructuring is expected to be completed in the first
quarter of 2000. Our outstanding indebtedness, including the Notes offered by
this prospectus supplement and the accompanying prospectus, will continue as
outstanding obligations of CP&L after the restructuring.
On August 22, 1999, we announced an agreement whereby CP&L Holdings will
acquire all of the outstanding shares of Florida Progress Corporation for
approximately $5.3 billion in stock and cash. The transaction is expected to be
completed by September, 2000. Completion of the transaction is subject to the
satisfaction or waiver of customary closing conditions, including obtaining all
necessary regulatory approvals. Florida Progress is a diversified utility
holding company with assets of $6.3 billion. Its principal subsidiary is
Florida Power Corporation, which serves 1.3 million customers in Florida.
Florida Progress' diversified operations include rail services, marine
operations and coal mining.
For the quarter ended September 30, 1999, operating revenues were $1.0
billion, up 6.3% from the same period of 1998. Net income during this period
was $147.9 million, or $0.97 per share, compared to $186.0 million, or $1.29
per share for the same period of 1998. The largest factor in the quarterly
earnings decrease was lost revenue and damages associated with Hurricanes Floyd
and Dennis. A decline in revenues from industrial customers and the completion
of the North Carolina Natural Gas Corporation acquisition were also significant
factors contributing to the decrease. Our wholly-owned natural gas distribution
subsidiary had a net loss of $2.2 million, which included goodwill
amortization; these third quarter results are consistent with past seasonal
business patterns. Our diversified businesses had an after-tax operating loss
of $8.8 million, compared with an after-tax loss of $5.2 million for the same
period of 1998.
For the twelve months ending September 30, 1999, operating revenues were
$3.3 billion, up 1.6% from the prior period. Net income during this period was
$364.4 million, or $2.47 per share, compared to $422.0 million, or $2.91 per
share for the prior twelve months. The decrease in earnings was primarily the
result of lower revenues from industrial customers, the impact of Hurricanes
Floyd and Dennis, milder weather, and increased losses from diversified
business operations.
S-1
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SUMMARY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------------
1999 1998
------------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Income Statement Data
Operating Revenues ........................... $ 1,525.7 $ 1,510.4
Net Income ................................... $ 155.4 $ 152.0
Ratio of Earnings to Fixed Charges(a) ......... 4.36x 4.39x
<CAPTION>
TWELVE MONTHS ENDED
DECEMBER 31,
----------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------- ------------- ------------- ------------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Income Statement Data
Operating Revenues ........................... $ 3,130.0 $ 3,024.1 $ 2,995.7 $ 3,006.6 $ 2,876.6
Net Income ................................... $ 399.2 $ 388.3 $ 391.3 $ 372.6 $ 313.2
Ratio of Earnings to Fixed Charges(a) ......... 4.38x 4.17x 4.12x 3.67x 3.31x
</TABLE>
CAPITALIZATION AT JUNE 30, 1999
<TABLE>
<CAPTION>
ACTUAL RATIO ADJUSTED(C) RATIO
------------- ----------- ------------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Long-term Debt(b) .................................. $ 2,716.4 47.23% $ 2,803.8 44.68%
Preferred Stock -- Redemption Not Required ......... 59.4 1.03 59.4 0.95
Common Stock Equity(d) ............................. 2,975.6 51.74 3,411.6 54.37
---------- ----- ---------- -----
Total Capitalization ............................. $ 5,751.4 100% $ 6,274.8 100%
========== ===== ========== =====
</TABLE>
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(a) Ratios for the periods ending June 30 represent the ratios for the twelve
month periods ending on those dates.
(b) Excludes current portion of long-term debt of $201.6 million at June 30,
1999.
(c) It is currently anticipated that the Notes will be classified as short-term
debt and therefore they have not been included in the adjusted long-term
debt balance. CP&L has long-term revolving credit facilities totaling $750
million, which enable CP&L to reclassify certain short-term obligations as
long-term debt. Accordingly, the Notes and other short-term obligations
may be reclassified. As adjusted reflects the following adjustments:
(1) Additional commercial paper borrowings of $86.3 million.
(2) Issuance of additional shares related to the North Carolina Natural Gas
merger of $360.1 million.
(3) Increase in retained earnings of $70.5 million.
(4) ESOP share releases in July, August, September, and October.
(d) Includes reductions of $144.3 million and $141.6 million representing
unearned ESOP common stock at June 30, 1999 and October 25, 1999,
respectively. Also includes reductions of $7.6 million and $7.1 million
representing unearned restricted stock at June 30, 1999 and October 25,
1999, respectively.
S-2
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USE OF PROCEEDS
We will use the net proceeds from the sale of the Notes to reduce the
outstanding balance of our commercial paper and other short-term indebtedness,
and for general corporate purposes. On October 25, 1999, the balance of our
outstanding commercial paper and other short-term indebtedness was
approximately $473 million, and the weighted average portfolio yield of that
balance was 5.41%.
DESCRIPTION OF THE NOTES
The Notes will be issued as a separate series of senior unsecured debt
securities under an Indenture, expected to be dated on or about October 28,
1999 (as amended, modified or supplemented from time to time, the "Indenture"),
between us and The Chase Manhattan Bank, as trustee (the "Trustee"). The
following summary of certain provisions of the Notes and of the Indenture does
not purport to be complete and is qualified in its entirety by reference to the
Indenture, a copy of the form of which has been filed as an exhibit to the
Registration Statement referred to in the accompanying prospectus. Capitalized
terms used but not defined in this prospectus supplement or in the accompanying
prospectus have the meanings given to them in the Indenture. This description
of the particular terms of the Notes supplements, and, to the extent
inconsistent therewith, replaces, the description of the general terms and
provisions of the Debt Securities and the Indenture set forth in the
accompanying prospectus under the heading "Description of Debt Securities." The
Notes are "Debt Securities" as the term is used in the accompanying prospectus.
The term "Debt Securities," as used under this caption, refers to all Debt
Securities issuable from time to time under the Indenture.
GENERAL
The Notes will be senior unsecured obligations and will rank equally with
all of our other senior unsecured indebtedness from time to time outstanding,
as described in "Description of Debt Securities" in the accompanying
prospectus. The Indenture does not limit the aggregate principal amount of Debt
Securities that may be issued thereunder. Debt Securities may be issued under
the Indenture from time to time as a single series or in two or more separate
series up to the aggregate principal amount from time to time authorized for
each series. We may, from time to time, without the consent of the holders of
the Notes, provide for the issuance of Notes or other Debt Securities under the
Indenture in addition to the Notes offered by this prospectus supplement.
The Notes will be effectively subordinate to all currently outstanding
and future first mortgage bonds and any other senior secured indebtedness of
ours. The first mortgage bond holders have a first lien on substantially all of
our assets. As of the date of this prospectus supplement, we had an aggregate
principal amount of $1,866,130,000 First Mortgage Bonds outstanding, some of
which have been issued to provide security for holders of other senior
indebtedness. The Indenture does not limit the amount of First Mortgage Bonds
or other secured senior indebtedness that we may issue.
The Notes will be limited initially to $500,000,000 in aggregate
principal amount, and the Notes will mature, unless previously redeemed, on
October 28, 2009 ("Stated Maturity"). We may "reopen" the Notes series and
issue additional Notes. Each Note will bear interest as described below for the
Initial Spread Period and any Subsequent Spread Period (each as defined below).
Interest on each Note held in book-entry form will be payable on each Interest
Payment Date (as defined below) specified for the Initial Spread Period and any
Subsequent Spread Period, in each case to the person in whose name such Note is
registered at the close of business on the calendar day (whether or not a
Business Day) next preceding such Interest Payment Date. Interest payable on
any Interest Payment Date or Stated Maturity or date of earlier redemption or
repayment will be the amount of interest accrued from and including the date of
original issuance or from and including the most recent Interest Payment Date
on which interest has been paid to but excluding such Interest Payment Date or
Stated Maturity or date of earlier redemption or repayment, as the case may be.
Principal of and
S-3
<PAGE>
interest on the Notes will be payable, and the transfer of Notes will be
registrable, at the Corporate Trust Office of the Trustee or at any other
office or agency designated by us for such purpose.
The Notes will be issued only in fully registered, book-entry form. See
"-- Form, Denomination and Registration" below.
On and after the initial Remarketing Reset Date (as defined below), the
Notes are subject to mandatory or optional redemption by us, in whole or in
part, on such dates, in the circumstances and at the redemption prices
described below. See " -- Redemption of the Notes" below. The Notes will not be
subject to a sinking fund.
After the initial Remarketing Reset Date, if we so elect, the Notes will
be repayable at the option of the holders thereof, in whole or in part, on such
dates, in the circumstances and at the repayment price described below. See
"-- Repayment at the Option of the Holders."
If the Stated Maturity for the Notes falls on a day that is not a
Business Day, the related payment of principal and interest will be made on the
next succeeding Business Day as if it were made on the date such payment was
due, and no interest will accrue on the amounts so payable for the period from
and after such date to the next succeeding Business Day.
The term "Business Day" means any day other than a Saturday or Sunday or
a day on which banking institutions in The City of New York are required or
authorized to close and, in the case of Notes in the Floating Rate Mode (as
defined below), that is also a London Business Day. The term "London Business
Day" means any day on which dealings in deposits in U.S. dollars are transacted
in the London interbank market.
All percentages resulting from any calculation of any interest rate for
the Notes will be rounded, if necessary, to the nearest one hundred thousandth
of a percentage point, with five one millionths of a percentage point rounded
upward and all dollar amounts will be rounded to the nearest cent, with
one-half cent being rounded upward.
INITIAL SPREAD PERIOD
The "Initial Spread Period" will be the period from and including the
date of original issuance of the Notes, currently expected to be October 28,
1999, to but excluding the initial "Remarketing Reset Date" for the Notes. The
initial Remarketing Reset Date will be July 28, 2000.
During the Initial Spread Period for the Notes, interest on the Notes
will be payable in arrears monthly, on the 28th day of each month, commencing
November 28, 1999 (each such date an "Interest Payment Date" in respect of the
Initial Spread Period), except as described below. The interest rate on the
Notes will be reset monthly on the 28th day of each month, commencing November
28, 1999 (the "Interest Reset Date" in respect of the Initial Spread Period),
and the Notes will bear interest at a per annum rate (computed on the basis of
the actual number of days elapsed over a 360-day year) equal to LIBOR (as
defined below) for the applicable Interest Reset Period (as defined below),
plus the Initial Spread (as defined below). The "Initial Interest Reset Period"
will be the period from and including the date of original issuance of the
Notes to but excluding November 28, 1999. Thereafter, each "Interest Reset
Period" during the Initial Spread Period will be the monthly period from and
including the most recent Interest Reset Date to but excluding the next
succeeding Interest Reset Date or Remarketing Reset Date, as the case may be.
S-4
<PAGE>
The spread applicable to the Notes during the Initial Spread Period will
be .33% (the "Initial Spread"), and the interest rate mode used for the Initial
Spread Period will be the "Floating Rate Mode." Thus, the interest rate per
annum for the Notes during the Initial Interest Reset Period will be equal to
LIBOR, determined as of October 26, 1999, plus the Initial Spread. The interest
rate per annum for each succeeding Interest Reset Period during the Initial
Spread Period will equal LIBOR for such Interest Reset Period plus the Initial
Spread, calculated as described below under " -- Subsequent Spread Periods --
Floating Rate Mode."
If, during the Initial Spread Period, any Interest Payment Date,
redemption date, Interest Reset Date or Remarketing Reset Date would otherwise
be a day that is not a Business Day, such Interest Payment Date, redemption
date, Interest Reset Date or Remarketing Reset Date will be postponed to the
next succeeding day that is a Business Day, except that if such Business Day is
in the next succeeding calendar month, such Interest Payment Date, redemption
date, Interest Reset Date or Remarketing Reset Date shall be the next preceding
Business Day.
SUBSEQUENT SPREAD PERIODS
The Spread (as defined below) will be determined in the manner described
below for each period from and including each Remarketing Reset Date to but
excluding each next succeeding Remarketing Reset Date or, as the case may be,
Stated Maturity (a "Subsequent Spread Period"). A Subsequent Spread Period will
be one or more periods of at least three months (or any integral multiple of
three months), but not more than the period remaining to the Stated Maturity of
the Notes as designated by us, and commencing on the 28th day of January,
April, July or October (or as otherwise specified by us and the Remarketing
Agent on the applicable Duration/Mode Determination Date (as defined below) in
connection with the establishment of each Subsequent Spread Period), as
applicable (each such date, a "Remarketing Reset Date"); provided, however,
that no Subsequent Spread Period may end on or after the Stated Maturity.
Interest on the Notes during each Subsequent Spread Period shall accrue
and be payable, as applicable, either:
o at a floating interest rate (the Notes being in the "Floating Rate
Mode" and the interest rate being a "Floating Rate"), or
o at a fixed interest rate (the Notes being in the "Fixed Rate Mode"
and the interest rate being a "Fixed Rate"),
in each case as determined by us and the Remarketing Agent in accordance with
the Remarketing Agreement and the applicable Remarketing Agency Agreement (each
as defined below). The "Spread" that will be applicable to the Notes during
each Subsequent Spread Period will be the percentage (a) recommended by the
Remarketing Agent so as to result in a rate that, in the reasonable opinion of
the Remarketing Agent, will enable tendered Notes to be remarketed by the
Remarketing Agent at 100% of the principal amount thereof, as described under
"-- Tender of Notes; Remarketing Agency Agreement" below, and (b) agreed to by
us.
Unless notice of redemption of the Notes as a whole has been given, the
following terms will be established by 3:00 p.m., New York City time, on the
eighth Business Day prior to the Remarketing Reset Date which commences such
Subsequent Spread Period (the "Duration/Mode Determination Date"):
o duration,
o redemption dates,
o redemption type (I.E., par, premium or make-whole),
o redemption prices (if applicable),
S-5
<PAGE>
o repayment dates,
o Remarketing Reset Date,
o Interest Reset Dates,
o Interest Payment Dates,
o interest rate mode (I.E., Fixed Rate Mode or Floating Rate Mode),
o optional repayment terms, if any, and
o any other relevant terms for each Subsequent Spread Period.
In addition, the Spread for each Subsequent Spread Period will be established
by 3:00 p.m., New York City time, on the fourth Business Day prior to the
Remarketing Reset Date commencing such Subsequent Spread Period (the "Spread
Determination Date").
We will, not less than ten nor more than twenty calendar days prior to
any Duration/Mode Determination Date:
o inform The Depository Trust Company ("DTC") that the Notes are
subject to mandatory, automatic tender on the Remarketing Reset Date
(subject to the right to elect not to tender), and
o request that DTC notify its participants of such Duration/Mode
Determination Date and of the procedures that must be followed if any
beneficial owner of a Note wishes to retain such Note as described
under " -- Tender of Notes; Remarketing Agency Agreement" below.
In the event that DTC or its nominee is no longer the holder of record of the
Notes, we will notify the holders of the Notes of such information within such
period of time. This will be the only notice given by us or the Remarketing
Agent with respect to such Duration/Mode Determination Date and procedures for
electing not to tender Notes.
If we cannot agree with the Remarketing Agent on the Spread for any
Subsequent Spread Period, then we are required unconditionally to repurchase
and retire all of the Notes on the Remarketing Reset Date at a price equal to
100% of the principal amount of the Notes, together with accrued and unpaid
interest, if any, thereon to but excluding the Remarketing Reset Date.
FLOATING RATE MODE
If the Notes are to be reset to the Floating Rate Mode, as agreed to by
the Remarketing Agent and us on a Duration/Mode Determination Date, then during
the corresponding Subsequent Spread Period:
o the interest rate on the Notes will be reset monthly, quarterly or
semiannually (each, an "Interest Reset Period") and interest on the
Notes will be payable either monthly, quarterly or semiannually on
such dates (each such date, an "Interest Payment Date" in respect of
such Subsequent Spread Period), in each case as specified by the
Remarketing Agent and us on the applicable Duration/Mode
Determination Date, and
o the Notes will bear interest at a per annum rate (computed on the
basis of the actual number of days elapsed over a 360-day year) equal
to LIBOR for the applicable Interest Reset Period, plus the
applicable Spread, as determined on the relevant Spread Determination
Date.
Unless otherwise specified on the applicable Duration/Mode Determination Date
for Notes in the Floating Rate Mode, interest on such Notes will be payable, in
the case of Notes which reset:
S-6
<PAGE>
o monthly, on the 28th day of each month,
o quarterly, on the 28th day of each January, April, July and October,
or
o semiannually, on the 28th day of each April and October.
The first day of an Interest Reset Period is referred to in this prospectus
supplement as an "Interest Reset Date" in respect of the Subsequent Spread
Period and, unless otherwise specified on the applicable Duration/
Mode Determination Date, will be, in the case of Notes which reset:
o monthly, on the 28th day of each month,
o quarterly, on the 28th day of each January, April, July and October,
or
o semiannually, on the 28th day of each April and October.
The interest rate in effect on each day will be:
o if such day is an Interest Reset Date, the interest rate determined
as of the Floating Rate Determination Date (as defined below)
immediately preceding such Interest Reset Date, or
o if such day is not an Interest Reset Date, the interest rate
determined as of the Floating Rate Determination Date immediately
preceding the most recent Interest Reset Date.
If any Interest Payment Date (other than at Stated Maturity), redemption
date, repayment date, Interest Reset Date or Remarketing Reset Date in the
Floating Rate Mode would otherwise be a day that is not a Business Day, such
Interest Payment Date, redemption date, repayment date, Interest Reset Date or
Remarketing Reset Date will be postponed to the next succeeding day that is a
Business Day, except that if such Business Day is in the next succeeding
calendar month, such Interest Payment Date, redemption date, repayment date,
Interest Reset Date or Remarketing Reset Date shall be the next preceding
Business Day.
The interest rate applicable to each Interest Reset Period commencing on
the related Interest Reset Date will be the rate determined as of the
applicable Floating Rate Determination Date. The "Floating Rate Determination
Date" will be the second London Business Day immediately preceding the
applicable Interest Reset Date.
For the Initial Spread Period and if the Notes are reset to the Floating
Rate Mode for a Subsequent Spread Period, LIBOR will be determined by the Rate
Agent (as defined under " -- Tender of Notes; Remarketing Agency Agreement"
below) as of the applicable Floating Rate Determination Date in accordance with
the following provisions:
(i) LIBOR will be determined on the basis of the offered rates for
deposits in U.S. dollars of not less than U.S. $1,000,000 of the
applicable Index Maturity, commencing on the second London Business Day
immediately following such Floating Rate Determination Date, which
appears on Telerate Page 3750 (as defined below) as of approximately
11:00 a.m., London time, on such Floating Rate Determination Date.
"Telerate Page 3750" means the display designated on page "3750" on
Bridge Telerate, Inc. (or such other page as may replace the 3750 page on
that service, any successor service or such other service or services as
may be nominated by the British Bankers' Association for the purpose of
displaying London interbank offered rates for U.S. dollar deposits). If
no rate appears on Telerate Page 3750, LIBOR for such Floating Rate
Determination Date will be determined in accordance with the provisions
of paragraph (ii) below.
(ii) With respect to a Floating Rate Determination Date on which no
rate appears on Telerate Page 3750 as of approximately 11:00 a.m., London
time, on such Floating Rate Determination Date, the Rate Agent shall
request the principal London offices of each of four major reference
banks in
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the London interbank market selected by the Rate Agent to provide the
Rate Agent with a quotation of the rate at which deposits of the
applicable Index Maturity in U.S. dollars, commencing on the second
London Business Day immediately following such Floating Rate
Determination Date, are offered by it to prime banks in the London
interbank market as of approximately 11:00 a.m., London time, on such
Floating Rate Determination Date in a principal amount equal to an amount
of not less than U.S. $1,000,000 that is representative for a single
transaction in such market at such time.
If at least two such quotations are provided, LIBOR for such
Floating Rate Determination Date will be the arithmetic mean of such
quotations as calculated by the Rate Agent.
If fewer than two quotations are provided, LIBOR for such Floating
Rate Determination Date will be the arithmetic mean of the rates quoted
as of approximately 11:00 a.m., New York City time, on such Floating Rate
Determination Date by three major banks in The City of New York selected
by the Rate Agent (after consultation with us) for loans in U.S. dollars
to leading European banks of the applicable Index Maturity commencing on
the second London Business Day immediately following such Floating Rate
Determination Date and in a principal amount equal to an amount of not
less than U.S. $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 Rate Agent are not quoting as mentioned in
this sentence, LIBOR for such Floating Rate Determination Date will be
LIBOR determined with respect to the immediately preceding Floating Rate
Determination Date, or in the case of the first Floating Rate
Determination Date, LIBOR for the Initial Interest Reset Period.
The Index Maturity applicable to Notes in the Floating Rate Mode will be,
in the case of Notes resetting:
o monthly, one month,
o quarterly, three months, or
o semiannually, six months.
FIXED RATE MODE
If the Notes are to be reset to the Fixed Rate Mode, as agreed to by us
and the Remarketing Agent on a Duration/Mode Determination Date, then the
applicable Fixed Rate for the corresponding Subsequent Spread Period will be
determined by 4:00 p.m., New York City time, on the third Business Day prior to
the Remarketing Reset Date for such Subsequent Spread Period (the "Fixed Rate
Determination Date"), in accordance with the following provisions. The Fixed
Rate will be determined by adding:
o the applicable Spread (as determined by the Remarketing Agent and
agreed to by us on the immediately preceding Spread Determination
Date) and
o the yield to maturity determined by 4:00 p.m., New York City time,
on the Fixed Rate Determination Date (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 applicable United States Treasury security,
selected by the Rate Agent after consultation with the Remarketing
Agent, as having a maturity comparable to the duration selected for
the following Subsequent Spread Period, which would be used in
accordance with customary financial practice in pricing new issues of
corporate debt securities of comparable maturity to the duration
selected for the following Subsequent Spread Period.
Interest in the Fixed Rate Mode will be computed on the basis of a
360-day year of twelve 30-day months. Such interest will be payable
semiannually in arrears on the Interest Payment Dates (I.E., April 28 and
October 28, unless otherwise specified by us and the Remarketing Agent on the
applicable Duration/Mode
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Determination Date) at the applicable Fixed Rate, as determined on the Fixed
Rate Determination Date, beginning on the applicable Remarketing Reset Date and
continuing for the duration of the relevant Subsequent Spread Period.
If any Interest Payment Date, redemption date or repayment date in the
Fixed Rate Mode would otherwise be a day that is not a Business Day (in either
case, other than any Interest Payment Date, redemption date or repayment date
that falls on a Remarketing Reset Date, in which case each such date will be
postponed to the next succeeding day that is a Business Day), the related
payment of principal and interest will be made on the next succeeding Business
Day as if it were made on the date such payment was due, and no interest will
accrue on the amounts so payable for the period from and after such date to the
next succeeding Business Day.
TENDER OF NOTES; REMARKETING AGENCY AGREEMENT
We have entered into a Remarketing Agreement with respect to remarketing
of the Notes (the "Remarketing Agreement") by the Remarketing Agent. If we
agree with the Remarketing Agent on the Spread on the Spread Determination Date
with respect to any Subsequent Spread Period, we will enter into a Remarketing
Agency Agreement (the "Remarketing Agency Agreement") with the Remarketing
Agent on such Spread Determination Date. On the Remarketing Reset Date which
commences such Subsequent Spread Period, each Note will be automatically
tendered, or deemed tendered, to the Remarketing Agent for remarketing by the
Remarketing Agent on the Remarketing Reset Date at 100% of the principal amount
thereof (the "Purchase Price") unless the beneficial owner of such Note, at
such owner's option, upon giving notice as provided below (the "Hold Notice"),
elects not to tender such Note. If the Notes are held in book-entry form,
subject to the second succeeding paragraph, the Purchase Price will be paid by
the Remarketing Agent in accordance with the standard procedures of DTC, which
currently provide for payments in same-day funds. Interest accrued on such
Notes with respect to the preceding interest period will be paid in the manner
described under "Form, Denomination and Registration." Beneficial owners that
tender Notes through a broker, dealer, commercial bank, trust company or other
institution, other than the Remarketing Agent, may be required to pay fees or
commissions to such institution. If a beneficial owner has an account at the
Remarketing Agent and tenders Notes through such account, the beneficial owner
will not be required to pay any fee or commission to the Remarketing Agent. It
is currently anticipated that Notes so purchased by the Remarketing Agent will
be remarketed by it.
The Hold Notice must be received by the Remarketing Agent (through DTC if
held in book-entry form) during the period commencing at 3:00 p.m., New York
City time, on the Duration/Mode Determination Date and ending at 12:00 noon,
New York City time, on the third Business Day prior to the Remarketing Reset
Date for such Subsequent Spread Period (the "Notice Date"); provided, however,
that if we are unable to agree with the Remarketing Agent on the Spread for
such Subsequent Spread Period, any Hold Notices received will be null and void.
In order to ensure that a Hold Notice is received on a particular day, the
beneficial owner of Notes must direct his broker or other designated direct or
indirect participant (as defined herein) to give such Hold Notice before the
broker's cut-off time for accepting instructions for that day. Different firms
may have different cut-off times for accepting instructions from their
customers. Accordingly, beneficial owners should consult the brokers or other
direct or indirect participants through which they own their interests in the
Notes for the cut-off times for such brokers or participants. See " -- Form,
Denomination and Registration" below. Except as otherwise provided below, a
Hold Notice shall be irrevocable. If a Hold Notice is not received for any
reason by the Remarketing Agent with respect to any Note by 12:00 noon, New
York City time, on the Notice Date, the beneficial owner of such Note shall be
deemed to have elected to tender such Note for purchase by the Remarketing
Agent. All of the Notes, whether or not tendered, shall bear interest upon the
same terms.
The Remarketing Agent will attempt, on a reasonable efforts basis, to
remarket the tendered Notes at a price equal to 100% of the aggregate principal
amount so tendered. There is no assurance that the
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Remarketing Agent will be able to remarket the entire principal amount of Notes
tendered in a remarketing. The obligations, if any, of the Remarketing Agent
will be subject to certain conditions and termination events customary in our
offerings of debt securities, including a condition that no material adverse
change in our or our subsidiaries' consolidated financial condition, taken as a
whole, shall have occurred since the Spread Determination Date. If the
Remarketing Agent is unable to remarket some or all of the tendered Notes and,
in its sole discretion, elects not to purchase such tendered Notes, we are
obligated unconditionally to purchase and retire on the Remarketing Reset Date
the remaining unsold tendered Notes at a price equal to 100% of the principal
amount thereof, plus accrued and unpaid interest, if any, thereon to the
applicable Remarketing Reset Date.
No beneficial owner of any Note shall have any rights or claims against
the Remarketing Agent as a result of the Remarketing Agent not purchasing such
Notes.
Notwithstanding anything to the contrary contained herein, the
Remarketing Agent shall have the option, but not the obligation, to purchase
any Notes tendered to it that it is not able to remarket. If the Remarketing
Agent is unable to remarket the entire principal amount of all Notes tendered
on any Remarketing Reset Date and, in its sole discretion, the Remarketing
Agent elects not to purchase such tendered Notes, it will promptly notify us
and the Trustee. We or our affiliates may offer to purchase Notes in a
remarketing, provided that the Spread and related interest rate established
with respect to the Notes in connection with such remarketing are not different
than they would otherwise be if we or our affiliates had not purchased such
Notes.
The term "Remarketing Agent" means the nationally recognized
broker-dealer selected by us to act as Remarketing Agent. Pursuant to the
Remarketing Agreement, Merrill Lynch, Pierce, Fenner & Smith Incorporated has
agreed to act as Remarketing Agent. The term "Rate Agent" means the entity
selected by us as our agent to determine:
o LIBOR and the interest rate on the Notes for any Interest Reset
Period, and/or
o the yield to maturity on the applicable United States Treasury
security that is used in connection with the determination of the
applicable Fixed Rate, and the ensuing applicable Fixed Rate.
Pursuant to the Remarketing Agreement, Merrill Lynch has agreed to act as Rate
Agent in respect of any Notes in the Fixed Rate Mode, and pursuant to a
Calculation Agency Agreement, The Chase Manhattan Bank has agreed to act as the
Rate Agent in respect of any Notes in the Floating Rate Mode. In our sole
discretion, we may change the Remarketing Agent and the Rate Agent for any
Subsequent Spread Period at any time on or prior to 3:00 p.m., New York City
time, on the Duration/Mode Determination Date relating thereto.
Each of the Rate Agents and the Remarketing Agent, in its individual or
any other capacity, may buy, sell, hold and deal in any of the Notes. Either of
such parties may exercise any vote or join in any action which any beneficial
owner of Notes may be entitled to exercise or take with like effect as if it
did not act in any capacity under the Remarketing Agency Agreement. Either of
such parties, in its individual capacity, either as principal or agent, may
also engage in or have an interest in any financial or other transaction with
us as freely as if it did not act in any capacity under the Remarketing Agency
Agreement or the Calculation Agency Agreement, as the case may be.
REDEMPTION OF THE NOTES
The Notes may not be redeemed prior to the initial Remarketing Reset
Date. On each Remarketing Reset Date (including the initial Remarketing Reset
Date) and on those Interest Payment Dates or other dates specified as
redemption dates by us on the Duration/Mode Determination Date in connection
with any Subsequent Spread Period, the Notes may be redeemed, at our option, in
whole or in part, upon notice thereof
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given at any time during the 30 calendar day period ending on the eighth
Business Day prior to the redemption date (or fifteen Business Days prior to the
redemption date in the case of a partial redemption), in accordance with the
redemption type selected on the Duration/Mode Determination Date. The Notes are
also subject to redemption in whole or in part as provided above under " --
Subsequent Spread Periods" and " -- Tender of Notes; Remarketing Agency
Agreement." If less than all of the outstanding Notes are to be redeemed, the
Notes to be redeemed shall be selected by such method as we shall deem fair and
appropriate. If DTC or its nominee is the record holder of the Notes, however,
we will give notice to DTC, and DTC will determine the principal amount to be
redeemed from the account of each direct participant in accordance with its
rules and procedures. A direct or indirect participant may determine to redeem
from some beneficial owners (which may include a participant holding Notes for
its own account) without redeeming from the accounts of other beneficial owners.
The redemption type to be chosen by us and the Remarketing Agent on the
Duration/Mode Determination Date with respect to any Subsequent Spread Period
may be one of the following:
o "Par Redemption," meaning redemption at a redemption price equal to
100% of the principal amount thereof, plus unpaid interest thereon,
if any, accrued to the redemption date,
o "Premium Redemption," meaning redemption at a redemption price or
prices greater than 100% of the principal amount thereof, plus unpaid
interest thereon, if any, accrued to the redemption date, as
determined on the Duration/Mode Determination Date, or
o "Make-Whole Redemption," meaning redemption at a redemption price
equal to the Make-Whole Amount with respect to such Notes.
In connection with any optional redemption of any Note, "Make-Whole
Amount" means an amount equal to the greater of:
o 100% of its principal amount plus accrued interest, if any, thereon
to the date of redemption, or
o the sum of the present values of the remaining scheduled payments of
principal and interest thereon discounted to the date of redemption
on a semiannual basis (assuming a 360-day year consisting of twelve
30-day months) at the applicable Treasury Yield plus the Reinvestment
Spread.
Unless otherwise specified by the Remarketing Agent and us on any Duration/Mode
Determination Date, the redemption type will be Par Redemption. Furthermore,
the redemption in part of any Notes must be in increments of $1,000 or integral
multiples thereof.
"Treasury Yield" means, with respect to any redemption date applicable to
any of the Notes, the rate per annum equal to the semiannual equivalent yield
to maturity of the Comparable Treasury Issue, assuming a price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the applicable Comparable Treasury Price for such redemption date.
"Comparable Treasury Issue" means, with respect to the Notes subject to
redemption, the United States Treasury security selected by the Remarketing
Agent as having a maturity comparable to the remaining term of the Notes that
would be utilized, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt securities of
comparable maturity to the remaining term of the Notes.
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"Comparable Treasury Price" means, with respect to any redemption date
applicable to the Notes subject to redemption:
o the average of the applicable Reference Treasury Dealer Quotations
for such redemption date, after excluding the highest and lowest of
such applicable Reference Treasury Dealer Quotations, or
o if the Trustee obtains fewer than four such Reference Treasury
Dealer Quotations, the average of all such Quotations, or
o if only one Reference Treasury Dealer Quotation is received, such
Quotation.
"Reference Treasury Dealer" means, with respect to the Notes subject to
redemption, at least four primary U.S. Government securities dealers in New
York City as selected by us, which may include the Remarketing Agent or an
affiliate thereof.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date for the Notes subject to
redemption, the average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue for the Notes (expressed in each case
as a percentage of its principal amount) quoted in writing to the Trustee by
such Reference Treasury Dealer at 5:00 p.m. on the third business day preceding
such redemption date.
"Reinvestment Spread" means, with respect to the Notes subject to
redemption, a number, expressed as a number of basis points or as a percentage,
selected by us and agreed to by the Remarketing Agent on the Duration/Mode
Determination Date.
REPAYMENT AT THE OPTION OF THE HOLDERS
The Notes will not be subject to repayment at the option of the holders
thereof prior to the initial Remarketing Reset Date. Thereafter, if we elect on
the Duration/Mode Determination Date preceding a Subsequent Spread Period, the
Notes will be subject to repayment at the option of the holders thereof during
such Subsequent Spread Period, on such date(s) as we may select, in whole or in
part in increments of $1,000 or integral multiples thereof, at a repayment
price equal to 100% of the unpaid principal amount to be repaid, together with
unpaid interest accrued thereon to but excluding the date of repayment. So long
as DTC or its nominee is the record holder of the Notes, beneficial owners that
desire to have all or any portion of their Notes repaid must instruct their
broker or other designated direct or indirect participant to direct DTC or its
nominee to exercise the repayment option on their behalf by forwarding the
instructions to the Trustee, not more than 60 nor less than 30 calendar days
prior to the date scheduled for repayment or within such other notice period as
may be specified on the applicable Duration/Mode Determination Date.
In order to ensure that such instructions are received by the Trustee on
a particular day, the applicable beneficial owner must so direct his broker or
other designated direct or indirect participant through which it owns its
interest before the deadline set by such broker or direct or indirect
participant for accepting instructions for that day. Different firms may have
different deadlines for accepting instructions from their customers.
Accordingly, beneficial owners should consult the broker or direct or indirect
participant through which they own their interests for the respective deadlines
for such broker or direct or indirect participant. All instruction given to
participants from beneficial owners of global notes relating to the option to
elect repayment shall be irrevocable. In addition, at the time such
instructions are given, each such beneficial owner shall cause the broker or
direct or indirect participant through which it owns its interest to transfer
such beneficial owner's interest in the global note or notes representing the
related book entry Notes, on DTC's records, to the Trustee. See " -- Form,
Denomination and Registration."
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FORM, DENOMINATION AND REGISTRATION
The Notes will be issued only in fully registered form, without coupons,
in minimum denominations of $1,000 and any integral multiple of $1,000 in
excess thereof. The Notes will be deposited with, or on behalf of, DTC. The
Notes will be represented by one or more global notes registered in the name of
Cede & Co., as nominee of DTC. The interests of beneficial owners in the global
notes will be represented through financial institutions acting on their behalf
as direct or indirect participants in DTC.
Ownership of beneficial interests in a global note will be limited to
persons who have accounts with DTC ("direct participants") or persons 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"). Ownership of beneficial interests in the
global notes will be shown on, and the transfer of these ownership interests
will be effected only through, records maintained by DTC or its nominee (with
respect to interests of direct participants) and the records of direct
participants (with respect to interests of persons other than direct
participants).
So long as DTC, or its nominee, is the registered owner or holder of a
global note, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the Notes represented by such global note for all
purposes under the Indenture and the Notes. In addition, no beneficial owner of
an interest in a global note will be able to transfer that interest except in
accordance with DTC's applicable procedures (in addition to those under the
Indenture referred to herein).
Payments on global notes will be made to DTC or its nominee, as the
registered owner thereof. Neither we, the Trustee nor any paying agent will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in the global
notes or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
We expect that DTC or its nominee will credit direct participants'
accounts on the payable date with payments in respect of a global note in
amounts proportionate to their respective beneficial interest in the principal
amount of such global note as shown on the records of DTC or its nominee,
unless DTC has reason to believe that it will not receive payment on the
payable date. We also expect that payments by direct participants to owners of
beneficial interests in such global note held through such participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers registered in "street name."
Such payments will be the responsibility of such participants.
Transfers between direct and indirect participants in DTC will be
effected in accordance with DTC rules. The laws of some states require that
certain persons take physical delivery of securities in definitive form.
Consequently, the ability to transfer beneficial interests in a global note to
such persons may be limited. Because DTC can only act on behalf of direct
participants, who in turn act on behalf of indirect participants and certain
banks, the ability of a person having a beneficial interest in a global note to
pledge such interest to persons or entities that do not participate in the DTC
system, or otherwise take actions in respect of such interest, may be affected
by the lack of a physical certificate of such interest.
We believe that it is the policy of DTC that it will take any action
permitted to be taken by a holder of Notes only at the direction of one or more
direct participants to whose account interests in the global notes are credited
and only in respect of such portion of the aggregate principal amount of the
Notes as to which such direct participant or participants has or have given
such direction.
The Indenture provides that if:
o the Depository notifies us that it is unwilling or unable to
continue as Depository,
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o if the Depository ceases to be eligible under the Indenture and a
successor depository is not appointed by us within 90 days, or
o an Event of Default with respect to the Notes shall have occurred
and be continuing, and the holders of a majority in aggregate
principal amount of the Notes determine to discontinue the system of
book-entry transfers through DTC (or a successor depository),
the global notes will be exchanged for Notes in definitive form of like tenor
and of an equal aggregate principal amount, in authorized denominations. Such
definitive Notes shall be registered in such name or names as the Depository
shall instruct the Trustee. Interest on Notes held in definitive form will be
payable on each Interest Payment Date specified for the Initial Spread Period
and any Subsequent Spread Period, in each case to the person in whose name such
Note is registered at the close of business on the 15th calendar day (whether
or not a Business Day) preceding such Interest Payment Date. It is expected
that such instructions may be based upon directions received by the Depository
from direct participants with respect to ownership of beneficial interests in
global notes.
DTC has advised us as follows: 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 agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC holds securities that its direct participants
deposit with DTC and facilitates the settlement among participants of
securities transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in direct 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, including Merrill Lynch,
and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and
the National Association of Securities Dealers, Inc. The rules applicable to
DTC and its direct and indirect participants are on file with the Commission.
Although DTC has agreed to the foregoing procedures in order to
facilitate transfers of interests in the global notes among direct and indirect
participants of DTC, it is under no obligation to perform or continue to
perform such procedures, and such procedures may be discontinued at any time.
Neither we nor the Trustee will have any responsibility for the performance by
DTC or its direct or indirect participants of their respective obligations
under the rules and procedures governing their operations.
DTC management is aware that some computer applications, systems, and the
like for processing data that are dependent upon calendar dates, including
dates before, on, and after January 1, 2000, may encounter Year 2000 problems.
DTC has informed its participants and other members of the financial community
that it has developed and is implementing a program so that its systems, as the
same relate to the timely payment of distributions (including principal and
income payments) to securityholders, book-entry deliveries, and settlement of
trades within DTC, continue to function appropriately. This program includes a
technical assessment and a remediation plan, each of which is complete.
Additionally, DTC's plan includes a testing phase, which is expected to be
completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as DTC's direct and indirect participants, third party vendors from whom
DTC licenses software and hardware, and third party vendors on whom DTC relies
for information or the provision of services, including telecommunication and
electrical utility service providers, among others. DTC has informed the
financial community that it is contacting (and will continue to contact) third
party vendors from whom DTC acquires services to impress upon them the
importance of such services being Year 2000 compliant, and determine the extent
of their efforts for Year 2000 remediation (and, as appropriate, testing) of
their services. In addition, DTC is in the process of developing such
contingency plans as it deems appropriate.
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According to DTC, the foregoing information with respect to DTC has been
provided to the financial community for informational purposes only and is not
intended to serve as a representation, warranty, or contract modification of
any kind.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the Notes is based
upon the Internal Revenue Code of 1986, as amended (the "Code"), regulations
promulgated thereunder ("Treasury Regulations"), and rulings and decisions now
in effect, all of which are subject to change (prospectively or retroactively).
The following discussion deals only with Notes held as capital assets and does
not purport to deal with persons in special tax situations, such as financial
institutions, banks, insurance companies, regulated investment companies,
dealers in securities or currencies, persons holding Notes as a hedge against
currency risks or as a position in a "straddle" for tax purposes, or persons
whose functional currency is not the United States dollar. It also does not
deal with holders other than original purchasers (except where otherwise
specifically noted). Persons considering the purchase of the Notes should
consult their own tax advisors concerning the application of United States
Federal income tax laws to their particular situations as well as any
consequences of the purchase, ownership and disposition of the Notes arising
under the laws of any other taxing jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of a Note
that is for United States Federal income tax purposes:
o a citizen or resident of the United States,
o a corporation (including an entity treated as a corporation for
United States Federal income tax purposes) created or organized in or
under the laws of the United States or any State thereof or the
District of Columbia,
o an estate the income of which is subject to United States Federal
income taxation regardless of its source, or
o a trust whose administration is subject to the primary supervision
of a United States court and which has one or more United States
persons who have the authority to control all substantial decisions
of such trust.
As used herein, the term "non-U.S. Holder" means a beneficial owner of a Note
that is not a U.S. Holder. If a partnership holds Notes, the tax treatment of a
partner will generally depend on the status of the partner and the activities
of the partnership. Partners of partnerships holding Notes should consult their
tax advisors.
U.S. HOLDERS
PAYMENTS OF INTEREST
The Notes should constitute variable rate debt instruments ("VRDIs") and
the interest payments received should be considered "qualified stated interest"
under section 1.1275-5 of the Treasury Regulations. Based on this treatment,
the interest received will be taxable to a U.S. Holder as ordinary interest
income at the time such payments are accrued or received in accordance with the
U.S. Holder's regular method of tax accounting.
DISPOSITION OF A NOTE
Based on the foregoing treatment, upon the sale, exchange or retirement
of a Note, a U.S. Holder generally will recognize taxable gain or loss in an
amount equal to the difference, if any, between the amount
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realized upon the sale, exchange or retirement (other than amounts representing
accrued and unpaid interest which will be taxable as interest income) and such
U.S. Holder's adjusted tax basis in the Note. A U.S. Holder's adjusted tax
basis in a Note is generally equal to such U.S. Holder's initial investment in
such Note.
CONSEQUENCES TO NON-TENDERING HOLDERS
A U.S. Holder who does not tender his Notes to the Remarketing Agent on
the Remarketing Reset Date will continue to be subject to tax on the interest
payable with respect to such Notes as described above. It is unclear whether,
for United States Federal income tax purposes, a U.S. Holder who does not
tender his Notes to the Remarketing Agent on the Remarketing Reset Date will be
deemed to have exchanged his Notes for "new" or modified notes on the
Remarketing Reset Date. Even if there was a deemed exchange, however, a U.S.
Holder who had acquired the Notes at original issuance at the initial issue
price should not recognize any gain or loss because his adjusted tax basis in
the Notes would equal the purchase price. A U.S. Holder would, however, start a
new holding period with respect to "new" or modified notes received in such a
deemed exchange.
OTHER POSSIBLE TREATMENT OF THE NOTES
While we intend to treat the Notes as VRDIs issued without original issue
discount ("OID"), it is possible that the Internal Revenue Service ("IRS") will
take the position that the Notes are either (i) VRDIs issued with OID, or (ii)
contingent payment debt instruments. In the event the IRS was successful in
either assertion, holders of the Notes could experience U.S. federal income tax
consequences significantly different from those discussed herein. Prospective
purchasers of Notes are urged to consult their tax advisors as to the potential
application of, and the consequences of applying, the Treasury Regulations
governing VRDIs issued with OID and contingent payment debt instruments.
INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, information reporting requirements will apply to certain
payments of principal and interest and to the proceeds of sales of Notes made
to U.S. Holders other than certain exempt recipients (such as corporations). A
31% backup withholding tax will apply to such payments if the U.S. Holder:
o fails to provide a taxpayer identification number ("TIN"),
o furnishes an incorrect TIN,
o is notified by the IRS that it has failed to properly report
payments of interest and dividends, or
o under certain circumstances, fails to certify, under penalty of
perjury, that it has furnished a correct TIN and has not been
notified by the IRS that it is subject to backup withholding.
We will furnish annually to the IRS and to record holders of the Notes
(other than with respect to certain exempt holders) information relating to the
interest accruing and paid on the Notes during the calendar year.
Any amounts withheld under the backup withholding rules generally will be
allowed as a refund or a credit against a U.S. Holder's United States Federal
income tax liability provided the required information is furnished to the IRS.
NON-U.S. HOLDERS
A non-U.S. Holder will not be subject to United States Federal income or
withholding taxes on payment of principal, premium (if any) or interest on a
Note, provided that such non-U.S. Holder is not:
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o a direct or indirect 10% or greater shareholder of ours,
o a controlled foreign corporation related to us, or
o a bank receiving interest described in section 881(c)(3)(A) of the
Code.
To qualify for the exemption from taxation, the last United States payor in the
chain of payment prior to payment to the non-U.S. Holder (the "Withholding
Agent") must have received in the year in which a payment of interest or
principal occurs, or in either of the two preceding calendar years, a statement
that:
o is signed by the beneficial owner of the Note under penalties of
perjury,
o certifies that such owner is not a U.S. Holder, and
o provides the name and address of the beneficial owner.
The statement may be made on an IRS Form W-8 or a substantially similar form,
and the beneficial owner must inform the Withholding Agent of any change in the
information on the statement within 30 days of such change. If a Note is held
through a securities clearing organization or certain other financial
institutions, the organization or institution may provide a signed statement to
the Withholding Agent. However, in such case, the signed statement must be
accompanied by a copy of the IRS Form W-8 or the substitute form provided by
the beneficial owner to the organization or institution. The Treasury
Department is considering implementation of further certification requirements
aimed at determining whether the issuer of a debt obligation is related to
holders thereof.
Generally, a non-U.S. Holder will not be subject to United States Federal
income taxes on any amount which constitutes gain upon retirement or
disposition of a Note, provided that:
o the gain is not effectively connected with the conduct of a trade or
business in the United States by the non-U.S. Holder, and
o in the case of an individual non-U.S. Holder, such holder is present
in the United States for fewer than 183 days in the taxable year of
the retirement or disposition and is not subject to certain
provisions of the Code that apply to United States expatriates.
The Notes will not be includible in the estate of a non-U.S. Holder
provided that the individual is not a direct or indirect 10% or greater owner
of ours, and that at the time of such individual's death, payments in respect
of the Notes would not have been effectively connected with the conduct by such
individual of a trade or business in the United States.
BACKUP WITHHOLDING
Backup withholding of United States Federal income tax at a rate of 31%
may apply to payments made in respect of the Notes to registered owners who are
not "exempt recipients" and who fail to provide certain identifying information
(such as the registered owner's taxpayer identification number) in the required
manner. Generally, individuals are not exempt recipients, whereas corporations
and certain other entities generally are exempt recipients. Payments made in
respect of the Notes to a U.S. Holder must be reported to the IRS, unless the
U.S. Holder is an exempt recipient or establishes an exemption. Compliance with
the identification procedures described in the preceding section would
establish an exemption from backup withholding for those non-U.S. Holders who
are not exempt recipients.
In addition, upon the sale of a Note to (or through) a broker, the broker
must withhold 31% of the entire purchase price, unless either:
o the broker determines that the seller is a corporation or other
exempt recipient, or
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o the seller provides, in the required manner, certain identifying
information and, in the case of a non-U.S. Holder, certifies that
such seller is a non-U.S. Holder (and certain other conditions are
met).
Such a sale must also be reported by the broker to the IRS, unless either:
o the broker determines that the seller is an exempt recipient, or
o the seller certifies its non-U.S. status (and certain other
conditions are met).
Certification of the registered owner's non-U.S. status would normally be made
on an IRS Form W-8 under penalties of perjury, although in certain cases it may
be possible to submit other documentary evidence.
Any amounts withheld under the backup withholding rules from a payment to
a beneficial owner generally would be allowed as a refund or a credit against
such beneficial owner's United States Federal income tax liability provided the
required information is furnished to the IRS.
NEW WITHHOLDING REGULATIONS
The Treasury Department has issued regulations which make certain
modifications to the withholding, backup withholding and information reporting
rules described above. These regulations attempt to unify certification
requirements and modify reliance standards. The IRS has announced that these
regulations will generally be effective for payments made after December 31,
2000, subject to certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding these regulations.
UNDERWRITING
Merrill Lynch, Pierce, Fenner & Smith Incorporated, as underwriter, has
agreed, subject to the terms and conditions set forth in the Underwriting
Agreement, to purchase the Notes from us at a price equal to 99.875% of the
principal amount thereof. We estimate that the total expenses of the offering,
not including the underwriting discount, will be approximately $250,000 for
among other things, printing, rating agencies and legal and accounting fees.
Merrill Lynch has advised us that it proposes to offer the Notes from
time to time for sale in negotiated transactions or otherwise, at prices
determined at the time of sale. Merrill Lynch may effect such transactions by
selling Notes to or through dealers and such dealers may receive compensation
in the form of underwriting discounts, concessions or commissions from Merrill
Lynch and any purchasers of Notes for whom they may act as agent. Merrill Lynch
and any dealers that participate with Merrill Lynch in the distribution of the
Notes may be deemed to be underwriters, and any discounts or commissions
received by them and any profit on the resale of Notes by them may be deemed to
be underwriting compensation.
The Notes are a new issue of securities with no established trading
market. We do not intend to apply for listing of the Notes on a national
securities exchange or Nasdaq. We have been advised by Merrill Lynch that it
intends to make a market in the Notes as permitted by applicable laws and
regulations, but it is not obligated to do so and may discontinue market making
at any time without notice. No assurance can be given as to the liquidity of
the trading market for the Notes.
Merrill Lynch is permitted to engage in certain transactions that
maintain or otherwise affect the price of the Notes. Such transactions may
include over-allotment transactions and purchases to cover short positions
created by Merrill Lynch in connection with the offering. If Merrill Lynch
creates a short position in the Notes in connection with the offering (i.e., if
it sells Notes in an aggregate principal amount exceeding that
S-18
<PAGE>
set forth on the cover page of this prospectus supplement), Merrill Lynch may
reduce that short position by purchasing Notes in the open market.
In general, purchases of a security to reduce a short position could
cause the price of the security to be higher than it might be in the absence of
such purchases.
Neither we nor Merrill Lynch makes any representation or prediction as to
the direction or magnitude of any effect that the transactions described above
may have on the price of the Notes. In addition, neither we nor Merrill Lynch
makes any representation that Merrill Lynch will engage in such transactions or
that such transactions, once commenced, will not be discontinued without
notice.
We have agreed to indemnify Merrill Lynch against certain civil
liabilities, including liabilities under the Securities Act of 1933, as
amended, or to contribute to payments Merrill Lynch may be required to make in
respect thereof.
In the ordinary course of their respective businesses, Merrill Lynch and
its affiliates have engaged, and may in the future engage, in investment
banking transactions with us and our subsidiaries.
LEGAL MATTERS
William D. Johnson, our Senior Vice President and Corporate Secretary,
Hunton & Williams of Raleigh, North Carolina, and Nelson, Mullins, Riley &
Scarborough, L.L.P. of Columbia, South Carolina, will pass on certain legal
matters relating to the Notes. Merrill Lynch will be advised about issues
relating to the offering by their own legal counsel, Winthrop, Stimson, Putnam
& Roberts of New York, New York. As of September 30, 1999, Mr. Johnson owned
14,133 shares of our common stock. Mr. Johnson is acquiring additional shares
of common stock at regular intervals as a participant in our Stock Purchase --
Savings Plan.
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<PAGE>
PROSPECTUS
[GRAPHIC]
CAROLINA POWER & LIGHT COMPANY
$1,500,000,000
FIRST MORTGAGE BONDS
SENIOR NOTES
DEBT SECURITIES
------------------------------------------------------------------
We will provide specific terms of these securities, and the manner in which
they are being offered, in supplements to this Prospectus. You should read this
Prospectus and any supplement carefully before you invest. We cannot sell any
of these securities unless this Prospectus is accompanied by a Prospectus
Supplement.
------------------------------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this Prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
------------------------------------------------------------------
This Prospectus is dated January 7, 1999
<PAGE>
ABOUT THIS PROSPECTUS
This Prospectus is part of a Registration Statement that we filed with the
Securities and Exchange Commission ("SEC") utilizing a "shelf" registration
process. Under this shelf process, we may sell any combination of the
securities described in this Prospectus in one or more offerings up to a total
dollar amount of $1,500,000,000. We may offer any of the following securities:
First Mortgage Bonds, Senior Notes and other Debt Securities.
This Prospectus provides you with a general description of the securities we
may offer. Each time we sell securities, we will provide a Prospectus
Supplement that will contain specific information about the terms of that
offering. This Prospectus Supplement may also add, update or change information
contained in this Prospectus. The Registration Statement we filed with the SEC
includes exhibits that provide more detail on descriptions of the matters
discussed in this Prospectus. You should read this Prospectus and the related
exhibits filed with the SEC and any Prospectus Supplement together with
additional information described under the heading WHERE YOU CAN FIND MORE
INFORMATION.
WHERE YOU CAN FIND MORE
INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov or our web site at
http://www.cplc.com. You may also read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. The SEC's public reference room in Washington is located at
450 5th Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms.
DOCUMENTS INCORPORATED BY
REFERENCE
The SEC allows us to "incorporate by reference" the information we file with
it, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is an
important part of this Prospectus, and information that we file later with the
SEC will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
until we sell all of the securities being registered.
o Annual Report on Form 10-K for the year ended December 31, 1997;
o Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30, and
September 30, 1998;
You may request a copy of these filings at no cost, by writing or calling us at
the following address:
Robert F. Drennan, Jr., Manager
Investor Relations and
Funds Management
Treasury Department
Carolina Power & Light Company
411 Fayetteville Street
Raleigh, North Carolina 27601-1748
Telephone: (919) 546-7474
You should rely only on the information incorporated by reference or provided
in this Prospectus or any Prospectus Supplement. We have not authorized anyone
else to provide you with different information. We are not making any offer of
these securities in any state where the offer is not permitted. You should not
assume that the information in this Prospectus or any Prospectus Supplement is
accurate as of any date other than the date on the front of those documents.
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<PAGE>
OUR COMPANY AND ADDRESS
Our Company is a public service corporation formed under the laws of North
Carolina in 1926 and is primarily engaged in the generation, transmission,
distribution and sale of electricity in portions of North Carolina and South
Carolina. Our principal executive offices are located at 411 Fayetteville
Street, Raleigh, North Carolina 27601-1748, telephone 919-546-6111.
RATIO OF EARNINGS TO FIXED
CHARGES
The following tables set forth our historical ratio of earnings to fixed
charges for the periods indicated:
<TABLE>
<CAPTION>
FOR THE TWELVE MONTHS ENDED DECEMBER 31
- -----------------------------------------------------------
1997 1996 1995 1994 1993
- --------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
4.17x 4.12x 3.67x 3.31x 3.23x
</TABLE>
<TABLE>
<CAPTION>
FOR THE TWELVE MONTHS ENDED
SEPTEMBER 30
- --------------------------
1998 1997
- --------------- ----------
<S> <C>
4.57x 4.11x
</TABLE>
"Earnings" consists of income before income taxes and fixed charges. "Fixed
charges" consists of interest on indebtedness (including capitalized interest)
and a share of rental expense deemed to be representative of interest.
APPLICATION OF PROCEEDS
Unless we state otherwise in any Prospectus Supplement, we will use the net
proceeds from the sale of the offered securities:
o to finance our ongoing construction and maintenance program;
o to redeem, repurchase, repay, or retire outstanding indebtedness;
o to finance future acquisitions of other entities or their assets; and
o for other general corporate purposes.
We may temporarily invest any proceeds that are not immediately applied in U.S.
government or agency obligations, commercial paper, bank certificates of
deposit, or repurchase agreements collateralized by U.S. government or agency
obligations, or we may deposit the proceeds with banks.
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<PAGE>
DESCRIPTION OF THE SECURITIES
This Prospectus describes certain general terms of the offered securities.
When we offer to sell a particular series, we will describe the specific terms
in a Prospectus Supplement. The securities will be issued under indentures,
selected provisions of which we have summarized below. The summary is not
complete. The forms of the indentures have been filed as exhibits to the
Registration Statement, and you should read the indentures for provisions that
may be important to you. In the summaries below, we have included references to
section numbers of the applicable indentures so that you can easily locate
these provisions. Capitalized terms used in the following summaries have the
meanings specified in the applicable indentures unless otherwise defined below.
DESCRIPTION OF FIRST MORTGAGE BONDS
GENERAL
We will issue the First Mortgage Bonds under a Mortgage and Deed of Trust,
dated as of May 1, 1940, with The Bank of New York (formerly Irving Trust
Company) (the "Mortgage Trustee") and Frederick G. Herbst (W.T. Cunningham,
successor), as Trustees. The Mortgage and Deed of Trust is supplemented by
supplemental Indentures. In the following discussion, we will refer to the
Mortgage and Deed of Trust and all Indentures supplemental to the Mortgage and
Deed of Trust together as the "Mortgage." We will refer to all of our bonds,
including those already issued and those to be issued under this shelf
registration process or otherwise issued in the future, as "First Mortgage
Bonds." The information we are providing you in this Prospectus concerning the
First Mortgage Bonds and the Mortgage is only a summary of the information
provided in those documents. You should consult the First Mortgage Bonds
themselves, the Mortgage and other documents for more complete information on
the First Mortgage Bonds. These documents appear as exhibits to the Registration
Statement, or will appear as exhibits to a Current Report on Form 8-K, which we
will file, and which will be incorporated by reference into this Prospectus.
You should consult the Prospectus Supplement relating to any particular
issue of the First Mortgage Bonds for the following information:
o the designation, series and aggregate principal amount of the First
Mortgage Bonds;
o the percentage of the principal amount for which we will issue and sell
the First Mortgage Bonds;
o the date of maturity for the First Mortgage Bonds;
o the rate at which the First Mortgage Bonds will bear interest and the
method of determining that rate;
o the dates on which interest is payable;
o the denominations in which we will authorize the First Mortgage Bonds to
be issued, if other than $1,000 or integral multiples of $1,000;
o whether we will offer First Mortgage Bonds in the form of global bonds
and, if so, the name of the depositary for any global bonds;
o redemption terms;
o and any other specific terms.
Unless the applicable Prospectus Supplement states otherwise, the
covenants contained in the Mortgage will not afford holders of First Mortgage
Bonds protection in the event we have a change in control.
FORM AND EXCHANGES
Unless otherwise specified in the applicable Prospectus Supplement, we
will issue the First Mortgage Bonds as registered bonds without coupons.
Holders may exchange them, free of charge, for other First Mortgage Bonds of
different authorized denominations, in the same aggregate principal amount.
Holders may also transfer the First Mortgage Bonds free of charge except for
any stamp taxes or other governmental charges that may apply.
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<PAGE>
INTEREST AND PAYMENT
The Prospectus Supplement for any First Mortgage Bonds we issue will state
the interest rate, the method of determination of the interest rate, and the
date on which interest is payable. Unless the Prospectus Supplement states
otherwise, principal and interest will be paid at The Bank of New York in New
York City.
We have agreed to pay interest on any overdue principal and, to the extent
enforceable under law, on any overdue installment of interest on the First
Mortgage Bonds at the rate of 6% annually. For more information, see Mortgage,
Section 78.
REDEMPTION AND PURCHASE OF FIRST MORTGAGE BONDS
If the First Mortgage Bonds are redeemable, the redemption terms will
appear in the Prospectus Supplement. We may declare redemptions on at least
thirty (30) days notice
o for the maintenance and replacement fund;
o for the sinking fund if we chose to establish a sinking fund for a
designated series of First Mortgage Bonds;
o with certain deposited cash;
o with the proceeds of released property; or
o at our option, unless otherwise specified in the applicable supplemental
Indenture and the Prospectus Supplement.
If we have not deposited the redemption funds with the Mortgage Trustee
when we give notice of redemption, the redemption shall be subject to the
deposit of those funds on or before the redemption date. Notice of redemption
will not be effective unless the Mortgage Trustee has received the redemption
funds.
Cash that is deposited under any Mortgage provisions may be applied to the
purchase of First Mortgage Bonds of any series, with certain exceptions.
For more information, see Mortgage, Article X.
MAINTENANCE AND REPLACEMENT FUND
Each year we will spend 15% of our adjusted gross operating revenues for
maintenance of and replacements for the mortgaged property and certain
automotive equipment of the Company. If we spend more for these purposes in a
given year, we may credit that amount against the 15% requirement in any
subsequent year. If a regulatory authority does not permit us to spend as much
as 15% of our adjusted gross revenues for these purposes, we will spend only
the amount permitted. We may meet the annual requirements for the maintenance
and replacement fund in any of the following ways:
o by depositing cash with the Mortgage Trustee;
o by certifying expenditures for maintenance and repairs;
o by certifying gross property additions;
o by certifying gross expenditures for certain automotive equipment; or
o by taking credit for First Mortgage Bonds and prior lien bonds that have
been retired.
Cash deposited with the Trustee to meet maintenance and replacement
requirements
o may be withdrawn on expenditures for gross property additions;
o may be withdrawn on waiver of the right to issue First Mortgage Bonds; or
o may be applied to the purchase or redemption of First Mortgage Bonds of
any series we may designate.
For further discussion, see "Redemption and Purchase of First Mortgage
Bonds" above.
We have reserved the right to amend the Mortgage, at our sole discretion,
to eliminate the maintenance and replacement fund payments with respect to any
First Mortgage Bonds of the Twenty-third Series and any subsequently created
series, including all series offered by this Prospectus. No consent or other
action by the holders of any such First Mortgage Bonds is required. For more
information, see Mortgage, Section 38; Twenty-second Supplemental Indenture,
Section 7.
5
<PAGE>
SECURITY
All First Mortgage Bonds are secured by the Mortgage, which constitutes,
in the opinion of our Vice President -- Legal and Corporate Secretary, a first
mortgage lien on all our present properties. This lien is subject to:
o leases of small portions of our property to others for uses which, in the
opinion of our counsel, do not interfere with our business;
o leases of certain property which we own but do not use in our electric
utility business; and
o certain excepted encumbrances, minor defects and irregularities.
This lien does not cover the following property:
o merchandise, equipment, materials or supplies held for sale, and fuel,
oil and similar consumable materials and supplies;
o vehicles and automobiles;
o cash, securities, receivables and all contracts, leases and operating
agreements that are not pledged or required to be pledged; and
o electric energy and other products.
The Mortgage contains provisions subjecting to the lien of the Mortgage
certain other property that is acquired after the date of the delivery of the
Mortgage. These provisions for subjecting additional property to the lien of
the Mortgage are limited in the case of consolidation, merger or sale of
substantially all of our assets. For more information, see Mortgage, Article
XV.
The Trustees will have a lien upon the mortgaged property, prior to the
First Mortgage Bonds, for the payment of their reasonable compensation and
expenses and for indemnity against certain liabilities. For more information,
see Mortgage, Section 96.
ISSUANCE OF ADDITIONAL FIRST MORTGAGE BONDS
We may issue an unlimited principal amount of First Mortgage Bonds under
the Mortgage (except as described in the next paragraph). We may issue First
Mortgage Bonds of any series from time to time based on any of the following:
o 70% of property additions after adjustments to offset retirement of
property;
o retirement of First Mortgage Bonds or prior lien bonds; or
o deposit of cash.
With certain exceptions in the case of retirement of First Mortgage Bonds
or prior lien bonds, we may issue First Mortgage Bonds only if adjusted net
earnings for 12 out of the preceding 15 months, before interest and income
taxes, is at least twice the annual interest requirements on, or at least 10%
of the principal amount of, the sum of all First Mortgage Bonds outstanding at
the time, including the additional First Mortgage Bonds we may issue under this
shelf registration process or other First Mortgage Bonds we may issue in the
future, and all indebtedness of prior or equal rank. Adjusted net earnings is
net of provision for repairs, maintenance and retirement of property equal to
the maintenance and replacement fund requirements for this period. Cash
deposited for the issuance of First Mortgage Bonds may be withdrawn to the
extent of 70% of property additions after adjustments to offset retirement of
property or retirement of First Mortgage Bonds or prior lien bonds. For further
discussion, see "Modification of the Mortgage" below.
Property additions must consist of electric property, or property used or
useful in connection with electric property, acquired after December 31, 1939.
Property additions may not include securities, vehicles or automobiles. We have
reserved the right to amend the Mortgage, at our sole discretion, to make
available as property additions any form of space satellites, including solar
power satellites, space stations and other similar facilities. We estimate
that, as of November 30, 1998, approximately $2.9 billion of net property
additions were available for the issuance of First Mortgage Bonds. Therefore,
using the 70% test described above, the available net property additions
provide a basis for issuing approximately $2.1 billion of additional First
Mortgage Bonds as of November 30, 1998.
6
<PAGE>
The Mortgage includes restrictions on the issuance of First Mortgage Bonds
against property subject to liens and upon the increase of the amount of any
liens. For more information, see Mortgage, Sections 4-7, 20-30 and 46;
Twenty-third Supplemental Indenture, Section 5.
DIVIDEND RESTRICTIONS
Unless otherwise specified in the Prospectus Supplement, in the case of
First Mortgage Bonds issued under this shelf registration process, and so long
as any First Mortgage Bonds are outstanding, cash dividends and distributions
on our common stock, and purchases by us of our common stock, are restricted to
aggregate net income available for them, since December 31, 1948, plus
$3,000,000, less the amount of all preferred and common stock dividends and
distributions, and all common stock purchases, since December 31, 1948.
No portion of our retained earnings at November 30, 1998 is restricted by
this provision. For further discussion, see "Modification of the Mortgage"
below.
MODIFICATION OF THE MORTGAGE
Bondholders' rights may be modified with the consent of the holders of 70%
of the First Mortgage Bonds. If less than all series of the First Mortgage
Bonds are affected, the modification must also receive the consent of the
holders of 70% of the First Mortgage Bonds of each series affected. We have
reserved the right to amend the Mortgage, at our sole discretion, to substitute
66 2/3% for the percentage requirements stated above. In general, no
modification of the terms of payment of principal or interest, and no
modification affecting the lien or reducing the percentage required for
modification (except as noted above), is effective against any holder of the
First Mortgage Bonds without that holder's consent. For more information, see
Mortgage, Article XVIII; Thirteenth Supplemental Indenture, Section 5.
We may reserve the right to amend the Mortgage, at our sole discretion,
for any of the following purposes:
o to reduce the percentage of the holders of the First Mortgage Bonds who
must consent to certain modifications of the Mortgage to a majority of
the bondholders adversely affected;
o to except from the lien of the Mortgage all property not funded or
eligible to be funded under the Mortgage for the issuance of First
Mortgage Bonds, the release of property or any other purpose under the
Mortgage;
o to ease the requirements of the net earnings test (see the first
paragraph of the Section entitled "Issuance of Additional First Mortgage
Bonds" above by allowing the calculation to be made for 12 months within
the last 18, rather than the last 15, months;
o to allow the release of property from the lien of the Mortgage at cost or
at the value of the property at the time it became funded property;
o to simplify the release of unfunded property from the lien of the
Mortgage, if after the release we will have at least one dollar ($1) in
unfunded property remaining;
o to increase the amount of funded property that may be released or retired
on the basis of the retirement of First Mortgage Bonds from 100% to 143%
of the principal amount of such First Mortgage Bonds; and
o to eliminate the requirements regarding amounts to be accrued, expended
or appropriated for maintenance or property retirements.
Additionally, we may choose to modify the dividend covenant applicable to
a particular series of First Mortgage Bonds. See "Dividend Restrictions" above.
The purpose for a modification of the applicable dividend covenant would be to
provide that we may declare and pay dividends in cash or property on our common
stock only out of surplus or out of net profits for the preceding fiscal year.
Dividends may not be paid out of net profits, however, if our capital has been
diminished to an extent specified in the Mortgage.
DEFAULTS AND NOTICE THEREOF
An "Event of Default" means, with respect to any series of First Mortgage
Bonds, any of the following:
o default in payment of principal of such series of First Mortgage Bonds;
o default for 30 days in payment of interest on such series of First
Mortgage Bonds;
o default in payment of interest on or principal of prior lien bonds
continued beyond applicable grace periods;
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<PAGE>
o default for 60 days in payment installments of funds for retirement of
First Mortgage Bonds, including the maintenance and replacement funds;
o certain events in bankruptcy, insolvency or reorganization; and
o default for 90 days after notice in performance of any other covenants.
For more information, see Mortgage, Section 65.
If the Trustees deem it to be in the interest of the holders of the First
Mortgage Bonds, they may withhold notice of default, except in payment of
principal, interest or funds for retirement of First Mortgage Bonds. For more
information, see Mortgage, Section 66; Third Supplemental Indenture, Section
15.
If a default occurs, holders of 25% of the First Mortgage Bonds may
declare all principal and interest immediately due and payable. If the default
has been cured, however, the holders of a majority of the First Mortgage Bonds
may annul the declaration and destroy its effect. For more information, see
Mortgage, Section 67. No holder of First Mortgage Bonds may enforce the lien of
the Mortgage unless the holder has given the Trustees written notice of a
default and unless the holders of 25% of the First Mortgage Bonds have
requested the Trustees in writing to act and have offered the Trustees
reasonable opportunity to act. For more information, see Mortgage, Section 80.
The Trustees are not required to risk their funds or to incur personal
liability if there is a reasonable ground for believing that repayment to the
Trustees is not reasonably assured. For more information, see Mortgage, Section
94. Holders of a majority of the First Mortgage Bonds may establish the time,
method and place of conducting any proceedings for any remedy available to the
Trustees, or exercising any trust or power conferred upon the Trustees. For
more information, see Mortgage, Section 71.
EVIDENCE TO BE FURNISHED TO THE MORTGAGE TRUSTEE UNDER THE MORTGAGE
We will demonstrate compliance with Mortgage provisions by providing
written statements from our officers or persons we select. For instance, we may
select an engineer to provide a written statement regarding the value of
property being certified or released, or an accountant regarding net earnings
certificate, or counsel regarding property titles and compliance with the
Mortgage generally. In certain major matters, applicable law requires that an
accountant or engineer must be independent. (See Section 314(d) of the Trust
Indenture Act of 1939.) We must file certificates and other papers each year
and whenever certain events occur. Additionally, we must provide evidence from
time to time demonstrating our compliance with the conditions and covenants
under the Mortgage.
CONCERNING THE MORTGAGE TRUSTEE
In the regular course of business, we obtain short-term funds from The
Bank of New York and various other banks.
DESCRIPTION OF SENIOR NOTES
GENERAL
We may issue one or more new series of Senior Notes under a Senior Note
Indenture between us and a Senior Note Trustee whom we will name. The
information we are providing you in this Prospectus concerning the Senior Note
Indenture and related documents is only a summary of the information provided
in those documents. You should consult the Senior Notes themselves, the Senior
Note Indenture, any Supplemental Senior Note Indentures and other documents for
more complete information on the Senior Notes. These documents appear as
exhibits to this Registration Statement, or will appear as exhibits to a
Current Report on Form 8-K, which we will file later, and which will be
incorporated by reference into this Prospectus.
Until the Release Date, all of the Senior Notes will be secured by one or
more series of First Mortgage Bonds, which we will issue and deliver to the
Senior Note Trustee. For more information, see "Security" and "Release Date"
below.
ON THE RELEASE DATE, THE SENIOR NOTES
o WILL CEASE TO BE SECURED BY FIRST MORTGAGE BONDS;
o WILL BECOME UNSECURED OBLIGATIONS OF THE COMPANY; AND
o WILL RANK AS EQUAL WITH OTHER UNSECURED INDEBTEDNESS OF THE COMPANY,
INCLUDING SENIOR DEBT SECURITIES.
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The Senior Note Indenture provides that, in addition to the Senior Notes
offered under this shelf registration process, additional Senior Notes may be
issued later, without limitation as to aggregate principal amount. Before the
Release Date, however, the amount of Senior Notes that we may issue cannot
exceed the amount of First Mortgage Bonds that we are able to issue under the
Mortgage. For more information, see "Description of First Mortgage Bonds -
Issuance of Additional First Mortgage Bonds" above.
You should consult the Prospectus Supplement relating to any particular
issue of Senior Notes for the following information:
o the title of the Senior Notes;
o any limit on aggregate principal amount of the Senior Notes or the series
of which they are a part;
o the date on which the principal of the Senior Notes will be payable;
o the rate, including the method of determination if applicable, at which
the Senior Notes will bear interest, if any; and
-- the date from which any interest will accrue;
-- the dates on which we will pay interest; and
-- the record date for any interest payable on any interest payment date;
o the place where
-- the principal of, premium, if any, and interest on the Senior Notes will
be payable;
-- you may register transfer of the Senior Notes;
-- you may exchange the Senior Notes;
-- you may serve notices and demands upon us regarding the Senior Notes;
o the Security Registrar for the Senior Notes and whether the principal of
the Senior Notes is payable without presentment or surrender of them;
o the terms and conditions upon which we may elect to redeem any Senior
Notes;
o the terms and conditions upon which the Senior Notes must be redeemed or
purchased due to our obligations pursuant to any sinking fund or other
mandatory redemption provisions, or at the holder's option, including any
applicable exceptions to notice requirements;
o the denominations in which we may issue Senior Notes;
o the manner in which we will determine any amounts payable on the Senior
Notes which are to be determined with reference to an index or other fact
or event ascertainable outside the Senior Note Indenture;
o the currency, if other than United States currency, in which payments on
the Senior Notes will be payable;
o terms according to which elections can be made by us or the holder
regarding payments on the Senior Notes in currency other than the
currency in which the notes are stated to be payable;
o the portion of the principal amount of the Senior Notes payable upon
declaration of acceleration of their maturity;
o if payments are to be made on the Senior Notes in securities or other
property, the type and amount of the securities and other property or the
method by which the amount shall be determined;
o the terms applicable to any rights to convert Senior Notes into or
exchange them for our securities or those of any other entity;
o if we issue Senior Notes as Global Securities,
-- any limitations on transfer or exchange rights or the right to obtain
the registration of transfer;
-- any limitations on the right to obtain definitive certificates for the
Senior Notes; and
-- any other matters incidental to the Senior Notes;
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o whether we are issuing the Senior Notes as bearer securities;
o any limitations on transfer or exchange of Senior Notes or the right to
obtain registration of their transfer, and the terms and amount of any
service charge required for registration of transfer or exchange;
o any exceptions to the provisions governing payments due on legal
holidays, or any variations in the definition of Business Day with
respect to the Senior Notes;
o any addition to the Events of Default applicable to any Senior Notes and
any additions to our covenants for the benefit of the holders of the
Senior Notes;
o if we are issuing any Senior Notes prior to the Release Date, the
designation of the series of Senior Note First Mortgage Bonds to be
delivered to the Senior Note Trustee for security for the Senior Notes;
o any other terms of the Senior Notes not in conflict with the provisions
of the Senior Note Indenture; and
o any other collateral security, assurance or guarantee for such Notes.
For more information, see Section 301 of the Senior Note Indenture.
Senior Notes may be sold at a substantial discount below their principal
amount. You should consult the applicable Prospectus Supplement for a
description of certain special United States federal income tax considerations
which may apply to Senior Notes sold at an original issue discount or
denominated in a currency other than dollars.
Unless the applicable Prospectus Supplement states otherwise, the
covenants contained in the Senior Note Indenture will not afford holders of
Senior Notes protection in the event we have a change in control or are
involved after the Release Date in a highly-leveraged transaction.
SECURITY
Until the Release Date, described in the following section, all of the
Senior Notes will be secured by one or more series of First Mortgage Bonds,
which we will issue and deliver to the Senior Note Trustee. For more
information on the First Mortgage Bonds, see "Description of First Mortgage
Bonds" above. When we issue a series of Senior Notes prior to the Release Date,
we will simultaneously issue and deliver to the Senior Note Trustee, as
security for all of the Senior Notes, a series of Senior Note First Mortgage
Bonds. These First Mortgage Bonds will have the same stated interest rate (or
interest calculated in the same manner), interest payment dates, stated
maturity and redemption provisions, and will be in the same aggregate principal
amount as the series of Senior Notes we are issuing. For more information, see
Sections 401, 402 and 403 of the Senior Note Indenture. Payments we make to the
Senior Note Trustee on a series of Senior Notes will satisfy our obligations
with respect to the corresponding payments due on the related series of Senior
Note First Mortgage Bonds.
Each series of Senior Note First Mortgage Bonds will be a series of First
Mortgage Bonds, all of which are secured
by a lien on certain property we own. For more discussion of the lien, see
"Description of First Mortgage Bonds -- Security" above. In certain
circumstances prior to the Release Date, we may reduce the aggregate principal
amount of Senior Note First Mortgage Bonds held by the Senior Note Trustee. In
no event, however, may we reduce that amount to an amount lower than the
aggregate outstanding principal amount of the Senior Notes then outstanding.
For more information, see Section 409 of the Senior Note Indenture. Following
the Release Date, we will close the Mortgage and not issue any additional First
Mortgage Bonds under the Mortgage. For more information, see Section 403 of the
Senior Note Indenture.
RELEASE DATE
ON THE RELEASE DATE, THE SENIOR NOTE FIRST MORTGAGE BONDS WILL NO LONGER
SECURE THE SENIOR NOTES, AND THE SENIOR NOTES WILL BECOME OUR UNSECURED GENERAL
OBLIGATIONS. For more information, see Section 407 of the Senior Note
Indenture. The Release Date means the date that we have repaid, redeemed or
otherwise retired all of our First Mortgage Bonds, other than the Senior Note
First Mortgage Bonds securing the Senior Notes. The Senior Note Trustee will
give the Senior Note holders notice when the Release Date occurs. See
"Description of Senior Notes--Defeasance" below for a discussion of another
situation in which outstanding Senior Notes would not be secured by Senior Note
First Mortgage Bonds.
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FORM, EXCHANGE, AND TRANSFER
Unless the applicable Prospectus Supplement states otherwise, we will
issue Senior Notes only in fully registered form without coupons and in
denominations of $1,000 and integral multiplies of that amount. For more
information, see Sections 201 and 302 of the Senior Note Indenture.
Holders may present Senior Notes for exchange or for registration of
transfer, duly endorsed or accompanied by a duly executed instrument of
transfer, at the office of the Security Registrar or at the office of any
Transfer Agent we may designate. Exchanges and transfers are subject to the
terms of the Senior Note Indenture and applicable limitations for global
securities. We may designate ourselves the Security Registrar. No charge will
be made for any registration of transfer or exchange of Senior Notes, but we
may require payment of a sum sufficient to cover any tax or other governmental
charge the holder must pay in connection with the transaction. Any transfer or
exchange will become effective upon the Security Registrar or Transfer Agent,
as the case may be, being satisfied with the documents of title and identity of
the person making the request. For more information, see Section 305 of the
Senior Note Indenture.
The applicable Prospectus Supplement will state the name of any Transfer
Agent, in addition to the Security Registrar initially designated by the
Company for any Senior Notes. We may at any time designate additional Transfer
Agents or withdraw the designation of any Transfer Agent or make a change in
the office through which any Transfer Agent acts. We must, however, maintain a
Transfer Agent in each place of payment for the Senior Notes of each series.
For more information, see Section 702 of the Senior Note Indenture.
We will not be required to
o issue, register the transfer of, or exchange any Senior Note or any
Tranche of any Senior Note during a period beginning at the opening of
business 15 days before the day of mailing of a notice of redemption of
any Senior Note called for redemption and ending at the close of business
on the day of mailing; or
o register the transfer of, or exchange any Senior Note selected for
redemption except the unredeemed portion of any Senior Note being
partially redeemed.
For more information, see Section 305 of the Senior Note Indenture.
PAYMENT AND PAYING AGENTS
Unless the applicable Prospectus Supplement states otherwise, we will pay
interest on a Senior Note on any interest payment date to the person in whose
name the Senior Note is registered at the close of business on the regular
record date for the interest payment. For more information, see Section 307 of
the Senior Note Indenture.
Unless the applicable Prospectus Supplement provides otherwise, we will
pay principal and any premium and interest on Senior Notes at the office of the
Paying Agent whom we will designate for this purpose. Unless the applicable
Prospectus Supplement states otherwise, the corporate trust office of the
Senior Note Trustee in New York City will be designated as our sole Paying
Agent for payments with respect to Senior Notes of each series. Any other
Paying Agents initially designated by us for the Senior Notes of a particular
series will be named in the applicable Prospectus Supplement. We may at any
time add or delete Paying Agents or change the office through which any Paying
Agent acts. We must, however, maintain a Paying Agent in each place of payment
for the Senior Notes of a particular series. For more information, see Section
702 of the Senior Note Indenture.
All money we pay to a Paying Agent for the payment of the principal and
any premium or interest on any Senior Note which remains unclaimed at the end
of two years after payment is due will be repaid to us. After that date, the
holder of that Senior Note may look only to us for these payments. For more
information, see Section 703 of the Senior Note Indenture.
REDEMPTION
You should consult the applicable Prospectus Supplement for any terms
regarding optional or mandatory redemption of Senior Notes. Except for the
provisions in the applicable Prospectus Supplement regarding Senior Notes
redeemable at the holder's option, Senior Notes may be redeemed only upon
notice by mail not less than 30 nor more than 60 days prior to the redemption
date. Further, if less than all the Senior Notes of a series, or any Tranche of
a series, are to be redeemed, the Senior Notes to be redeemed will be selected
by the method provided for the particular series. In the absence of a selection
provision, the Trustee will select a fair and appropriate method of random
selection. For more information, see Sections 503 and 504 of the Senior Note
Indenture.
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A notice of redemption we provide may state:
o that redemption is conditioned upon receipt by the Paying Agent on or
before the redemption date of money sufficient to pay the principal and
any premium and interest on the Senior Notes; and
o that if the money has not been received, the notice will be ineffective
and we will not be required to redeem the Senior Note.
For more information, see Section 504 of the Senior Note Indenture.
CONSOLIDATION, MERGER, AND SALE OF ASSETS
We may not consolidate with or merge into any other person, nor may we
transfer or lease substantially all of our assets and property to any person,
unless:
o the corporation formed by the consolidation or into which we are merged,
or the person which acquires by conveyance or transfer, or which leases,
substantially all of our property and assets
o is organized and validly existing under the laws of any domestic
jurisdiction and the person;
o expressly assumes our obligations on the Senior Notes and under the
Senior Note Indenture; and
o prior to the Release Date, expressly assumes our obligations under the
Senior Note First Mortgage Bonds and under the Mortgage;
o immediately after the transaction becomes effective, no Event of Default,
and no event which would become an Event of Default, shall have occurred
and be continuing; and
o we will have delivered to the Senior Note Trustee an Officer's
Certificate and Opinion of Counsel as provided in the Senior Note
Indenture.
For more information, see Section 1201 of the Senior Note Indenture.
EVENTS OF DEFAULT
"Event of Default" under the Senior Note Indenture with respect to Senior
Notes of any series means any of the following:
o failure to pay any interest due on the Senior Notes within 30 days;
o failure to pay principal or premium when due on a Senior Note;
o breach of or failure to perform any other covenant or warranty in the
Senior Note Indenture with respect to the particular series of Senior
Notes for 60 days (subject to extension under certain circumstances for
another 120 days) after we receive notice from the Senior Note Trustee,
or we and the Senior Note Trustee receive notice from the holders of at
least 33% in principal amount of the Senior Notes of that series
outstanding under the Senior Note Indenture according to the provisions
of the Senior Note Indenture;
o prior to the Release Date, the occurrence of a Default under the Mortgage
(see "Description of the First Mortgage Bonds -- Events of Default"
above);
o certain events of bankruptcy, insolvency or reorganization; and
o any other Event of Default set forth in the applicable Prospectus
Supplement.
For more information, see Section 901 of the Senior Note Indenture.
An Event of Default with respect to a particular series of Senior Notes
does not necessarily constitute an Event of Default with respect to the Senior
Notes of any other series issued under the Senior Note Indenture.
If an Event of Default with respect to a particular series of Senior Notes
occurs and is continuing, either the Senior Note Trustee or the holders of at
least 33% in principal amount of the outstanding Senior Notes of that series
may declare the principal amount of all of the Senior Notes of that series to
be due and payable immediately. If the Senior Notes of that series are discount
notes or similar Senior Notes, only the portion of the principal amount as
specified in the applicable Prospectus Supplement may be immediately due and
payable. If an Event of Default occurs and is continuing with respect to all
series of Senior Notes (including all Events of Default relating to bankruptcy,
insolvency or reorganization),
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the Senior Note Trustee or the holders of at least 33% in principal amount of
the outstanding Senior Notes of all series, considered together, may declare an
acceleration of the principal amount of all Senior Notes. In the event of an
acceleration prior to the Release Date with respect to all Senior Notes, the
Trustee will make a demand for acceleration of all amounts due under all of the
Senior Note First Mortgage Bonds, but this demand will only result in such an
acceleration if allowed by the acceleration provisions of the First Mortgage.
At any time after a declaration of acceleration with respect to the Senior
Notes of a particular series, and before a judgment or decree for payment of
the money due has been obtained, and before the acceleration of the Senior Note
First Mortgage Bonds, the Event or Events of Default giving rise to the
declaration of acceleration will, without further action, be deemed to have
been waived, and the declaration and its consequences will be deemed to have
been rescinded and annulled, if
o we have paid or deposited with the Senior Note Trustee a sum sufficient
to pay
-- all overdue interest on all Senior Notes of the particular series;
-- the principal of and any premium on any Senior Notes of that series
which have become due otherwise than by the declaration of acceleration
and any interest at the rate prescribed in the Senior Notes;
-- interest upon overdue interest at the rate prescribed in the Senior
Notes, to the extent payment is lawful;
-- all amounts due to the Senior Note Trustee under the Senior Note
Indenture; and
o any other Event of Default with respect to the Senior Notes of the
particular series, other than the failure to pay the principal of the
Senior Notes of that series which has become due solely by the
declaration of acceleration, has been cured or waived as provided in the
Senior Note Indenture.
For more information, see Section 902 of the Senior Note Indenture.
The Senior Note Indenture includes provisions as to the duties of the
Senior Note Trustee in case an Event of Default occurs and is continuing.
Consistent with these provisions, the Senior Note Trustee will be under no
obligation to exercise any of its rights or powers at the request or direction
of any of the holders, unless those holders have offered to the Senior Note
Trustee reasonable indemnity. For more information, see Section 1003 of the
Senior Note Indenture. Subject to these provisions for indemnification, the
holders of a majority in principal amount of the outstanding senior notes of
any series may direct the time, method and place of conducting any proceeding
for any remedy available to the Senior Note Trustee, or exercising any trust or
power conferred on the Senior Note Trustee, with respect to the Senior Notes of
that series. For more information, see Section 912 of the Senior Note
Indenture.
No Senior Note holder may institute any proceeding regarding the Senior
Note Indenture, or for the appointment of a receiver or a trustee, or for any
other remedy under the Senior Note Indenture unless
o the holder has previously given to the Senior Note Trustee written notice
of a continuing Event of Default of that particular series,
o the holders of a majority in principal amount of the outstanding Senior
Notes of all series with respect to which an Event of Default is
continuing have made a written request to the Senior Note Trustee, and
have offered reasonable indemnity to the Senior Note Trustee to institute
the proceeding as trustee, and
o the Senior Note Trustee has failed to institute the proceeding, and has
not received from the holders of a majority in principal amount of the
outstanding Senior Notes of that series a direction inconsistent with the
request, within 60 days after notice, request and offer of reasonable
indemnity.
For more information, see Section 907 of the Senior Note Indenture.
The preceding limitations do not apply, however, to a suit instituted by a
Senior Note holder for the enforcement of payment of the principal of or any
premium or interest on the Senior Note on or after the applicable due date
stated in the Senior Note. For more information, see Section 908 of the Senior
Note Indenture.
We must furnish annually to the Senior Note Trustee a statement by an
appropriate officer as to that officer's knowledge of our compliance with all
conditions and covenants under the Senior Note Indenture. Our compliance is to
be determined without regard to any grace period or notice requirement under
the Senior Note Indenture. For more information, see Section 706 of the Senior
Note Indenture.
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MODIFICATION AND WAIVER
The Company and the Senior Note Trustee, without the consent of the
holders of the Senior Notes, may enter into one or more supplemental Senior
Note Indentures for any of the following purposes:
o to evidence the assumption by any permitted successor of our covenants in
the Senior Note Indenture and the Senior Notes;
o to add one or more covenants or other provisions for the benefit of the
holders of outstanding Senior Notes or to surrender any right or power
conferred upon us by the Senior Note Indenture;
o to add any additional Events of Default;
o to change or eliminate any provision of the Senior Note Indenture or add
any new provision to it (but if this action will adversely affect the
interests of the holders of any particular series of Senior Notes in any
material respect, the action will become effective with respect to that
series only when there is no Senior Note of that series remaining
outstanding under the Senior Note Indenture);
o to provide collateral security for the Senior Notes;
o to establish the form or terms of Senior Notes according to the
provisions of the Senior Note Indenture;
o to evidence the acceptance of appointment of a successor Senior Note
Trustee under the Senior Note Indenture with respect to one or more
series of the Senior Notes and to add to or change any of the provisions
of the Senior Note Indenture as necessary to provide for the
administration of the trusts under the Senior Note Indenture by more than
one trustee;
o to provide for the procedures required to permit using a noncertificated
system of registration for any Senior Notes series;
o to change any place where
-- the principal of and any premium and interest on any Senior Notes is
payable,
-- any Senior Notes may be surrendered for registration of transfer or
exchange, or
-- notices and demands to or upon us regarding Senior Notes and the Senior
Note Indenture may be served; or
o to cure any ambiguity or inconsistency (but any of these changes or
additions will not adversely affect the interests of the holders of
Senior Notes of any series in any material respect).
For more information see Section 1301 of the Senior Note Indenture.
The holders of at least a majority in aggregate principal amount of the
outstanding Senior Notes of any series may waive
o compliance by us with certain provisions of the Senior Note Indenture
(see Section 607 of the Senior Note Indenture); and
o any past default under the Senior Note Indenture, except a default in the
payment of principal, premium, or interest, and certain covenants and
provisions of the Senior Note Indenture that cannot be modified or
amended without consent of the holder of each outstanding Senior Note of
the series affected (see Section 913 of the Senior Note Indenture).
The Trust Indenture Act of 1939 may be amended after the date of the
Senior Note Indenture to require changes to the Senior Note Indenture. In this
event, the Senior Note Indenture will be deemed to have been amended so as to
effect the changes, and we and the Senior Note Trustee may, without the consent
of any holders, enter into one or more Supplemental Senior Note Indentures to
evidence or effect the amendment. For more information, see Section 1301 of the
Senior Note Indenture.
Except as provided in this section, the consent of the holders of a
majority in aggregate principal amount of the outstanding Senior Notes,
considered as one class, is required to change in any manner the Senior Note
Indenture pursuant to one or more supplemental Senior Note Indentures. If less
than all of the series of Senior Notes outstanding are directly affected by a
proposed supplemental Senior Note Indenture, however, only the consent of the
holders of a majority in aggregate principal amount of the outstanding Senior
Notes of all series directly affected, considered as one class, will be
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required. Furthermore, if the Senior Notes of any series have been issued in
more than one Tranche and if the proposed supplemental Senior Note Indenture
directly affects the rights of the holders of one or more, but not all
Tranches, only the consent of the holders of a majority in aggregate principal
amount of the outstanding Senior Notes of all Tranches directly affected,
considered as one class, will be required. In addition, an amendment or
modification
o may not, without the consent of the holder of the Senior Note
-- change the maturity of the principal of, or any installment of principal
of or interest on, any Senior Note,
-- reduce the principal amount or the rate of interest, or the amount of
any installment of interest, or change the method of calculating the
rate of interest,
-- reduce any premium payable upon the redemption of the Senior Note,
-- reduce the amount of the principal of any Senior Note originally issued
at a discount from the stated principal amount that would be due and
payable upon a declaration of acceleration of maturity,
-- change the currency or other property in which a Senior Note or premium
or interest on a Senior Note is payable,
-- impair the right to institute suit for the enforcement of any payment on
or after the stated maturity (or, in the case of redemption, on or after
the redemption date) of any Senior Note; or
o may not reduce the percentage of principal amount requirement for consent
of the holders for any supplemental Senior Note Indenture, or for any
waiver of compliance with any provision of or any default under the
Senior Note Indenture, or reduce the requirements for quorum or voting,
without the consent of the holder of each outstanding Senior Note of each
series or Tranche effected;
o may not prior to the Release Date
-- impair the interest of the Senior Note Trustee in the Senior Note First
Mortgage Bonds,
-- reduce the principal amount of any series of Senior Note First Mortgage
Bonds to an amount less than that of the related series of Senior Notes,
or
-- alter the payment provisions of the Senior Note First Mortgage Bonds in
a manner adverse to the holders of the Senior Notes; and
o may not modify provisions of the Senior Note Indenture relating to
supplemental Senior Note Indentures, waivers of certain covenants and
waivers of past defaults with respect to the Senior Notes of any series,
or any Tranche of a series, without the consent of the holder of each
outstanding Senior Note affected.
A supplemental Senior Note Indenture will be deemed not to affect the
rights under the Senior Note Indenture of the holders of any series or Tranche
of the Senior Notes if the supplemental Senior Note Indenture
-- changes or eliminates any covenant or other provision of the Senior Note
Indenture expressly included solely for the benefit of one or more other
particular series of Senior Notes or Tranches thereof; or
-- modifies the rights of the holders of Senior Notes of any other series
or Tranches with respect to any covenant or other provision.
For more information, see Section 1302 of the Senior Note Indenture.
If we solicit from holders of the Senior Notes any type of action, we may
at our option by board resolution fix in advance a record date for the
determination of the holders entitled to vote on the action. We shall have no
obligation, however, to do so. If we fix a record date, the action may be taken
before or after the record date, but only the holders of record at the close of
business on the record date shall be deemed to be holders for the purposes of
determining whether holders of the requisite proportion of the outstanding
Senior Notes have authorized the action. For that purpose, the outstanding
Senior Notes shall be computed as of the record date. Any holder action shall
bind every future holder of the same security and the holder of every security
issued upon the registration of transfer of or in exchange for or in lieu of
the security in respect of anything done or permitted by the Senior Note
Trustee or us in reliance on that action, whether or not notation of the action
is made upon the security. For more information, see Section 104 of the Senior
Note Indenture.
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DEFEASANCE
Unless the applicable Prospectus Supplement provides otherwise, any Senior
Note, or portion of the principal amount of a Senior Note, will be deemed to
have been paid for purposes of the Senior Note Indenture, and, at our election,
our entire indebtedness in respect to the Senior Note (or portion thereof) will
be deemed to have been satisfied and discharged, if we have irrevocably
deposited with the Senior Note Trustee or any Paying Agent other than us in
trust money, certain Eligible Obligations, or a combination of the two,
sufficient to pay principal of any premium and interest due and to become due
on the Senior Note or portions thereof. For more information, see Section 801
of the Senior Note Indenture. For this purpose, unless the applicable
Prospectus Supplement provides otherwise, Eligible Obligations include direct
obligations of, or obligations unconditionally guaranteed by, the United
States, entitled to the benefit of full faith and credit of the United States,
and certificates, depositary receipts or other instruments which evidence a
direct ownership interest in these obligations or in any specific interest or
principal payments due in respect to those obligations.
RESIGNATION OF SENIOR NOTE TRUSTEE
The Senior Note Trustee may resign at any time by giving written notice to
us or may be removed at any time by an action of the holders of a majority in
principal amount of outstanding Senior Notes delivered to the Senior Note
Trustee and us. No resignation or removal of the Senior Note Trustee and no
appointment of a successor trustee will become effective until a successor
trustee accepts appointment in accordance with the requirements of the Senior
Note Indenture. So long as no Event of Default or event which would become an
Event of Default has occurred and is continuing, and except with respect to a
Senior Note Trustee appointed by an action of the holders, if we have delivered
to the Senior Note Trustee a resolution of our Board of Directors appointing a
successor trustee and the successor trustee has accepted the appointment in
accordance with the terms of the Senior Note Indenture, the Senior Note Trustee
will be deemed to have resigned and the successor trustee will be deemed to
have been appointed as trustee in accordance with the Senior Note Indenture.
For more information, see Section 1010 of the Senior Note Indenture.
NOTICES
We will give notices to holders of Senior Notes by mail to their addresses
as they appear in the Security Register. For more information, see Section 106
of the Senior Note Indenture.
TITLE
The Senior Note Trustee and its agents, and we and our agents, may treat
the person in whose name a Senior Note is registered as the absolute owner of
that Note, whether or not that Senior Note may be overdue, for the purpose of
making payment and for all other purposes. For more information, see Section
308 of the Senior Note Indenture.
GOVERNING LAW
The Senior Note Indenture and the Senior Notes will be governed by, and
construed in accordance with, the law of the State of New York. For more
information, see Section 112 of the Senior Note Indenture.
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DESCRIPTION OF DEBT SECURITIES
GENERAL
We may issue one or more new series of Debt Securities under a Debt
Security Indenture between us and a Debt Security Trustee whom we will name.
The information we are providing you in this Prospectus concerning the Debt
Security Indenture and related documents is only a summary of the information
provided in those documents. You should consult the Debt Securities themselves,
the Debt Security Indenture, any Supplemental Debt Security Indentures and
other documents for more complete information on the Debt Securities. These
documents appear as exhibits to this Registration Statement, or will appear as
exhibits to a Current Report on Form 8-K, which we will file later, and which
will be incorporated by reference into this Prospectus.
The applicable Prospectus Supplement may state that a particular series of
Debt Securities will be subordinated obligations of the Company. In the
following discussion we will refer to any of these subordinated obligations as
the Subordinated Debt Securities. Unless the applicable Prospectus Supplement
provides otherwise, we will use separate indentures (called Subordinated Debt
Security Indentures in the following discussion) for any Subordinated Debt
Securities we may issue.
You should consult the Prospectus Supplement relating to any particular
issue of Debt Securities for the
following information:
o the title of the Debt Securities;
o any limit on aggregate principal amount of the Debt Securities or the
series of which they are a part;
o the date on which the principal of the Debt Securities will be payable;
o the rate, including the method of determination if applicable, at which
the Debt Securities will bear interest, if any; and
-- the date from which any interest will accrue;
-- the dates on which we will pay interest; and
-- the record date for any interest payable on any interest payment date;
o the place where
-- the principal of, premium, if any, and interest on the Debt Securities
will be payable;
-- you may register transfer of the Debt Securities;
-- you may exchange the Debt Securities;
-- you may serve notices and demands upon us regarding the Debt
Securities;
o the Security Registrar for the Debt Securities and whether the principal
of the Debt Securities is payable without presentment or surrender of
them;
o the terms and conditions upon which we may elect to redeem any Debt
Securities;
o the terms and conditions upon which the Debt Securities must be redeemed
or purchased due to our obligations pursuant to any sinking fund or other
mandatory redemption provisions, or at the holder's option, including any
applicable exceptions to notice requirements;
o the denominations in which we may issue Debt Securities;
o the manner in which we will determine any amounts payable on the Debt
Securities which are to be determined with reference to an index or other
fact or event ascertainable outside the Debt Security Indenture;
o the currency, if other than United States currency, in which payments on
the Debt Securities will be payable;
o terms according to which elections can be made by us or the holder
regarding payments on the Debt Securities in currency other than the
currency in which the Debt Securities are stated to be payable;
o the portion of the principal amount of the Debt Securities payable upon
declaration of acceleration of their maturity;
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o if payments are to be made on the Debt Securities in securities or other
property, the type and amount of the securities and other property or the
method by which the amount shall be determined;
o the terms applicable to any rights to convert Debt Securities into or
exchange them for our securities or those of any other entity;
o if we issue Debt Securities as Global Securities,
-- any limitations on transfer or exchange rights or the right to obtain
the registration of transfer;
-- any limitations on the right to obtain definitive certificates for the
Debt Securities; and
-- any other matters incidental to the Debt Securities;
o whether we are issuing the Debt Securities as bearer securities;
o any limitations on transfer or exchange of Debt Securities or the right
to obtain registration of their transfer, and the terms and amount of any
service charge required for registration of transfer or exchange;
o any exceptions to the provisions governing payments due on legal
holidays, or any variations in the definition of Business Day with
respect to the Debt Securities;
o any addition to the Events of Default applicable to any Debt Securities
and any additions to our covenants for the benefit of the holders of the
Debt Securities; and
o any other terms of the Debt Securities not in conflict with the
provisions of the Debt Security Indenture.
For more information, see Section 301 of the Debt Security Indenture.
Debt Securities may be sold at a substantial discount below their
principal amount. You should consult the applicable Prospectus Supplement for a
description of certain special United States federal income tax considerations
which may apply to Debt Securities sold at an original issue discount or
denominated in a currency other than dollars.
Unless the applicable Prospectus Supplement states otherwise, the
covenants contained in the Debt Security Indenture will not afford holders of
Debt Securities protection in the event we have a change in control or are
involved in a highly-leveraged transaction.
SUBORDINATION
The applicable Prospectus Supplement may provide that a series of Debt
Securities will be Subordinated Debt Securities, subordinate and junior in
right of payment to all our senior Indebtedness. The indenture under which
these securities will be issued is referred to as the Subordinated Debt
Security Indenture.
No payment of principal of (including redemption and sinking fund
payments), or any premium or interest on, the Subordinated Debt Securities may
be made if
o any Senior Indebtedness is not paid when due,
o any applicable grace period with respect to default in payment of Senior
Indebtedness has ended, and the default has not been cured or waived, or
o the maturity of any Senior Indebtedness has been accelerated because of
a default.
Upon any distribution of our assets to creditors upon any dissolution,
winding-up, liquidation or reorganization, whether voluntary or involuntary or
in bankruptcy, insolvency, receivership or other proceedings, all principal of,
and any premium and interest due or to become due on all senior indebtedness
must be paid in full before the holders of the Subordinated Debt Securities are
entitled to payment. For more information, see Section 1502 of the Subordinated
Debt Security Indenture. The rights of the holders of the Subordinated Debt
Securities will be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions applicable to Senior
Indebtedness until all amounts owing on the Subordinated Debt Securities are
paid in full. For more information, see Section 1504 of the Subordinated Debt
Security Indenture.
As defined in the Subordinated Debt Security Indenture, the term "Senior
Indebtedness" means
o obligations (other than non-recourse obligations and the indebtedness
issued under the Subordinated Debt Security Indenture) of, or guaranteed
or assumed by, us
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-- for borrowed money (including both senior and subordinated indebtedness
for borrowed money, but excluding the Subordinated Debt Securities); or
-- for the payment of money relating to any lease which is capitalized on
the consolidated balance sheet of the Company and our subsidiaries in
accordance with generally accepted accounting principles; or
o indebtedness evidenced by bonds, debentures, notes or other similar
instruments.
In the case of any such indebtedness or obligations, Senior Indebtedness
includes amendments, renewals, extensions, modifications and refundings,
whether existing as of the date of the Subordinated Debt Security Indenture or
subsequently incurred by us.
The Subordinated Debt Security Indenture does not limit the aggregate
amount of Senior Indebtedness that we may issue.
FORM, EXCHANGE, AND TRANSFER
Unless the applicable Prospectus Supplement states otherwise, we will
issue Debt Securities only in fully registered form without coupons and in
denominations of $1,000 and integral multiplies of that amount. For more
information, see Sections 201 and 302 of the Debt Security Indenture.
Holders may present Debt Securities for exchange or for registration of
transfer, duly endorsed or accompanied by a duly executed instrument of
transfer, at the office of the Security Registrar or at the office of any
Transfer Agent we may designate. Exchanges and transfers are subject to the
terms of the Debt Security Indenture and applicable limitations for global
securities. We may designate ourselves the Security Registrar. No charge will
be made for any registration of transfer or exchange of Debt Securities, but we
may require payment of a sum sufficient to cover any tax or other governmental
charge the holder must pay in connection with the transaction. Any transfer or
exchange will become effective upon the Security Registrar or Transfer Agent,
as the case may be, being satisfied with the documents of title and identity of
the person making the request. For more information, see Section 305 of the
Debt Security Indenture.
The applicable Prospectus Supplement will state the name of any Transfer
Agent, in addition to the Security Registrar initially designated by the
Company, for any Debt Securities. We may at any time designate additional
Transfer Agents or withdraw the designation of any Transfer Agent or make a
change in the office through which any Transfer Agent acts. We must, however,
maintain a Transfer Agent in each place of payment for the Debt Securities of
each series. For more information, see Section 602 of the Debt Security
Indenture.
We will not be required to
o issue, register the transfer of, or exchange any Debt Securities or any
Tranche of any Debt Securities during a period beginning at the opening
of business 15 days before the day of mailing of a notice of redemption
of any Debt Securities called for redemption and ending at the close of
business on the day of mailing; or
o register the transfer of, or exchange any Debt Securities selected for
redemption except the unredeemed portion of any Debt Securities being
partially redeemed.
For more information, see Section 305 of the Debt Security Indenture.
PAYMENT AND PAYING AGENTS
Unless the applicable Prospectus Supplement states otherwise, we will pay
interest on a Debt Security on any interest payment date to the person in whose
name the Debt Security is registered at the close of business on the regular
record date for the interest payment. For more information, see Section 307 of
the Debt Security Indenture.
Unless the applicable Prospectus Supplement provides otherwise, we will
pay principal and any premium and interest on Debt Securities at the office of
the Paying Agent whom we will designate for this purpose. Unless the applicable
Prospectus Supplement states otherwise, the corporate trust office of the Debt
Security Trustee in New York City will be designated as our sole Paying Agent
for payments with respect to Debt Securities of each series. Any other Paying
Agents initially designated by us for the Debt Securities of a particular
series will be named in the applicable Prospectus Supplement. We may at any
time add or delete Paying Agents or change the office through which any Paying
Agent acts. We must, however, maintain a Paying Agent in each place of payment
for the Debt Securities of a particular series. For more information, see
Section 602 of the Debt Security Indenture.
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All money we pay to a Paying Agent for the payment of the principal and
any premium or interest on any Debt Security which remains unclaimed at the end
of two years after payment is due will be repaid to us. After that date, the
holder of that Debt Security may look only to us for these payments. For more
information, see Section 603 of the Debt Security Indenture.
REDEMPTION
You should consult the applicable Prospectus Supplement for any terms
regarding optional or mandatory redemption of Debt Securities. Except for the
provisions in the applicable Prospectus Supplement regarding Debt Securities
redeemable at the holder's option, Debt Securities may be redeemed only upon
notice by mail not less than 30 nor more than 60 days prior to the redemption
date. Further, if less than all the Debt Securities of a series, or any Tranche
of a series, are to be redeemed, the Debt Securities to be redeemed will be
selected by the method provided for the particular series. In the absence of a
selection provision, the Trustee will select a fair and appropriate method of
random selection. For more information, see Sections 403 and 404 of the Debt
Security Indenture.
A notice of redemption we provide may state:
o that redemption is conditioned upon receipt by the Paying Agent on or
before the redemption date of money sufficient to pay the principal of
and any premium and interest on the Debt Securities; and
o that if the money has not been received, the notice will be ineffective
and we will not be required to redeem the Debt Securities.
For more information, see Section 404 of the Debt Security Indenture.
CONSOLIDATION, MERGER, AND SALE OF ASSETS
We may not consolidate with or merge into any other person, nor may we
transfer or lease substantially all of our assets and property to any person,
unless:
o the corporation formed by the consolidation or into which we are merged,
or the person which acquires by conveyance or transfer, or which leases,
substantially all of our property and assets
-- is organized and validly existing under the laws of any domestic
jurisdiction; and
-- expressly assumes our obligations on the Debt Securities and under the
Debt Security Indenture.
o immediately after the transaction becomes effective, no Event of Default,
and no event which would become an Event of Default, shall have occurred
and be continuing; and
o we will have delivered to the Debt Security Trustee an Officer's
Certificate and Opinion of Counsel as provided in the Debt Security
Indenture.
For more information, see Section 1101 of the Debt Security Indenture.
EVENTS OF DEFAULT
"Event of Default" under the Debt Security Indenture with respect to Debt
Securities of any series means any of the following:
o failure to pay any interest due on the Debt Securities within 30 days;
o failure to pay principal or premium when due on a Debt Security;
o breach of or failure to perform any other covenant or warranty in the
Debt Security Indenture with respect to the particular series of Debt
Securities for 60 days (subject to extension under certain circumstances
for another 120 days) after we receive notice from the Debt Security
Trustee, or we and the Debt Security Trustee receive notice from the
holders of at least 33% in principal amount of the Debt Securities of
that series outstanding under the Debt Security Indenture according to
the provisions of the Debt Security Indenture;
o certain events of bankruptcy, insolvency or reorganization; and
o any other Event of Default set forth in the applicable Prospectus
Supplement.
For more information, see Section 801 of the Debt Security Indenture.
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An Event of Default with respect to a particular series of Debt Securities
does not necessarily constitute an Event of Default with respect to the Debt
Securities of any other series issued under the Debt Security Indenture.
If an Event of Default with respect to a particular series of Debt
Securities occurs and is continuing, either the Debt Security Trustee or the
holders of at least 33% in principal amount of the outstanding Debt Securities
of that series may declare the principal amount of all of the Debt Securities
of that series to be due and payable immediately. If the Debt Securities of
that series are discount securities or similar Debt Securities, only the
portion of the principal amount as specified in the applicable Prospectus
Supplement may be immediately due and payable. If an Event of Default occurs
and is continuing with respect to all series of Debt Securities (including all
Events of Default relating to bankruptcy, insolvency, or reorganization), the
Debt Security Trustee or the holders of at least 33% in principal amount of the
outstanding Debt Securities of all series, considered together, may declare an
acceleration of the amount payable.
At any time after a declaration of acceleration with respect to the Debt
Securities of a particular series, and before a judgment or decree for payment
of the money due has been obtained, the Event of Default giving rise to the
declaration of acceleration will, without further action, be deemed to have
been waived, and the declaration and its consequences will be deemed to have
been rescinded and annulled, if
o we have paid or deposited with the Debt Security Trustee a sum sufficient
to pay
-- all overdue interest on all Debt Securities of the particular series;
-- the principal of and any premium on any Debt Securities of that series
which have become due otherwise than by the declaration of acceleration
and any interest at the rate prescribed in the Debt Securities;
-- interest upon overdue interest at the rate prescribed in the Debt
Securities, to the extent payment is lawful; and
-- all amounts due to the Debt Security Trustee under the Debt Security
Indenture; and
o any other Event of Default with respect to the Debt Securities of the
particular series, other than the failure to pay the principal of the
Debt Securities of that series which has become due solely by the
declaration of acceleration, has been cured or waived as provided in the
Debt Security Indenture.
For more information, see Section 802 of the Debt Security Indenture.
The Debt Security Indenture includes provisions as to the duties of the
Debt Security Trustee in case an Event of Default occurs and is continuing.
Consistent with these provisions, the Debt Security Trustee will be under no
obligation to exercise any of its rights or powers at the request or direction
of any of the holders, unless those holders have offered to the Debt Security
Trustee reasonable indemnity. For more information, see Section 903 of the Debt
Security Indenture. Subject to these provisions for indemnification, the
holders of a majority in principal amount of the outstanding Debt Securities of
any series may direct the time, method and place of conducting any proceeding
for any remedy available to the Debt Security Trustee, or exercising any trust
or power conferred on the Debt Security Trustee, with respect to the Debt
Securities of that series. For more information, see Section 812 of the Debt
Security Indenture.
No Debt Securities holder may institute any proceeding regarding the Debt
Security Indenture, or for the appointment of a receiver or a trustee, or for
any other remedy under the Debt Security Indenture unless
o the holder has previously given to the Debt Security Trustee written
notice of a continuing Event of Default of that particular series;
o the holders of a majority in principal amount of the outstanding Debt
Securities of all series with respect to which an Event of Default is
continuing have made a written request to the Debt Security Trustee, and
have offered reasonable indemnity to the Debt Security Trustee to
institute the proceeding as trustee; and
o the Debt Security Trustee has failed to institute the proceeding, and has
not received from the holders of a majority in principal amount of the
outstanding Debt Securities of that series a direction inconsistent with
the request, within 60 days after notice, request and offer of reasonable
indemnity.
For more information, see Section 807 of the Debt Security Indenture.
The preceding limitations do not apply, however, to a suit instituted by a
Debt Security holder for the enforcement of payment of the principal of or any
premium or interest on the Debt Securities on or after the applicable due date
stated in the Debt Securities. For more information, see Section 808 of the
Debt Security Indenture.
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We must furnish annually to the Debt Security Trustee a statement by an
appropriate officer as to that officer's knowledge of our compliance with all
conditions and covenants under the Debt Security Indenture. Our compliance is
to be determined without regard to any grace period or notice requirement under
the Debt Security Indenture. For more information, see Section 606 of the Debt
Security Indenture.
MODIFICATION AND WAIVER
We and the Debt Security Trustee, without the consent of the holders of
the Debt Securities, may enter into one or more Supplemental Debt Security
Indentures for any of the following purposes:
o to evidence the assumption by any permitted successor of our covenants in
the Debt Security Indenture and the Debt Securities;
o to add one or more covenants or other provisions for the benefit of the
holders of outstanding Debt Securities or to surrender any right or power
conferred upon us by the Debt Security Indenture;
o to add any additional Events of Default;
o to change or eliminate any provision of the Debt Security Indenture or
add any new provision to it (but if this action will adversely affect the
interests of the holders of any particular series of Debt Securities in
any material respect, the action will become effective with respect to
that series only when there is no Debt Securities of that series
remaining outstanding under the Debt Security Indenture);
o to provide collateral security for the Debt Securities;
o to establish the form or terms of Debt Securities according to the
provisions of the Debt Security Indenture;
o to evidence the acceptance of appointment of a successor Debt Security
Trustee under the Debt Security Indenture with respect to one or more
series of the Debt Securities and to add to or change any of the
provisions of the Debt Security Indenture as necessary to provide for the
administration of the trusts under the Debt Security Indenture by more
than one trustee;
o to provide for the procedures required to permit using a noncertificated
system of registration for any Debt Securities series;
o to change any place where
-- the principal of and any premium and interest on any Debt Securities is
payable,
-- any Debt Securities may be surrendered for registration of transfer or
exchange; or
-- notices and demands to or upon us regarding Debt Securities and the Debt
Security Indenture may be served; or
o to cure any ambiguity or inconsistency (but only changes or additions
that will not adversely affect the interests of the holders of Debt
Securities of any series in any material respect).
For more information see Section 1201 of the Debt Security Indenture.
The holders of at least a majority in aggregate principal amount of the
outstanding Debt Securities of any series may waive
o compliance by us with certain provisions of the Debt Security Indenture
(see Section 607 of the Debt Security Indenture); and
o any past default under the Debt Security Indenture, except a default in
the payment of principal, premium, or interest, and certain covenants and
provisions of the Debt Security Indenture that cannot be modified or
amended without consent of the holder of each outstanding Debt Security
of the series affected (see Section 813 of the Debt Security Indenture).
The Trust Indenture Act of 1939 may be amended after the date of the Debt
Security Indenture to require changes to the Debt Security Indenture. In this
event, the Debt Security Indenture will be deemed to have been amended so as to
effect the changes, and we and the Debt Security Trustee may, without the
consent of any holders, enter into one or more Supplemental Debt Security
Indentures to evidence or effect the amendment. For more information, see
Section 1201 of the Debt Security Indenture.
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Except as provided in this section, the consent of the holders of a
majority in aggregate principal amount of the outstanding Debt Securities,
considered as one class, is required to change in any manner the Debt Security
Indenture pursuant to one or more supplemental Debt Security Indentures. If
less than all of the series of Debt Securities outstanding are directly
affected by a proposed supplemental Debt Security Indenture, however, only the
consent of the holders of a majority in aggregate principal amount of the
outstanding Debt Securities of all series directly affected, considered as one
class, will be required. Furthermore, if the Debt Securities of any series have
been issued in more than one Tranche and if the proposed supplemental Debt
Security Indenture directly affects the rights of the holders of one or more,
but not all, Tranches, only the consent of the holders of a majority in
aggregate principal amount of the outstanding Debt Securities of all Tranches
directly affected, considered as one class, will be required. In addition, an
amendment or modification
o may not, without the consent of the holder of the Debt Securities
-- change the maturity of the principal of, or any installment of principal
of or interest on, any Debt Securities;
-- reduce the principal amount or the rate of interest, or the amount of
any installment of interest, or change the method of calculating the
rate of interest;
-- reduce any premium payable upon the redemption of the Debt Securities;
-- reduce the amount of the principal of any Debt Security originally
issued at a discount from the stated principal amount that would be due
and payable upon a declaration of acceleration of maturity;
-- change the currency or other property in which a Debt Security or
premium or interest on a Debt Security is payable; or
-- impair the right to institute suit for the enforcement of any payment on
or after the stated maturity (or in the case of redemption, on or after
the redemption date) of any Debt Securities;
o may not reduce the percentage of principal amount requirement for consent
of the holders for any supplemental Debt Security Indenture, or for any
waiver of compliance with any provision of or any default under the Debt
Security Indenture, or reduce the requirements for quorum or voting,
without the consent of the holder of each outstanding Debt Security of
each series or Tranche effected; and
o may not modify provisions of the Debt Security Indenture relating to
supplemental Debt Security Indentures, waivers of certain covenants and
waivers of past defaults with respect to the Debt Securities of any
series, or any Tranche of a series, without the consent of the holder of
each outstanding Debt Security affected.
A supplemental Debt Security Indenture will be deemed not to affect the
rights under the Debt Security Indenture of the holders of any series or
Tranche of the Debt Securities if the supplemental Debt Security Indenture
-- changes or eliminates any covenant or other provision of the Debt
Security Indenture expressly included solely for the benefit of one or
more other particular series of Debt Securities or Tranches thereof; or
-- modifies the rights of the holders of Debt Securities of any other
series or Tranches with respect to any covenant or other provision.
For more information, see Section 1202 of the Debt Security Indenture.
If we solicit from holders of the Debt Securities any type of action, we
may at our option by board resolution fix in advance a record date for the
determination of the holders entitled to vote on the action. We shall have no
obligation, however, to do so. If we fix a record date, the action may be taken
before or after the record date, but only the holders of record at the close of
business on the record date shall be deemed to be holders for the purposes of
determining whether holders of the requisite proportion of the outstanding Debt
Securities have authorized the action. For that purpose, the outstanding Debt
Securities shall be computed as of the record date. Any holder action shall
bind every future holder of the same security and the holder of every security
issued upon the registration of transfer of or in exchange for or in lieu of
the security in respect of anything done or permitted by the Debt Security
Trustee or us in reliance on that action, whether or not notation of the action
is made upon the security. For more information, see Section 104 of the Debt
Security Indenture.
DEFEASANCE
Unless the applicable Prospectus Supplement provides otherwise, any Debt
Security, or portion of the principal amount of a Debt Security, will be deemed
to have been paid for purposes of the Debt Security Indenture, and, at our
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election, our entire indebtedness in respect to the Debt Security (or portion
thereof) will be deemed to have been satisfied and discharged, if we have
irrevocably deposited with the Debt Security Trustee or any Paying Agent other
than us in trust money, certain Eligible Obligations, or a combination of the
two, sufficient to pay principal of any premium and interest due and to become
due on the Debt Securities or portions thereof. For more information, see
Section 701 of the Debt Security Indenture. For this purpose, unless the
applicable Prospectus Supplement provides otherwise, Eligible Obligations
include direct obligations of, or obligations unconditionally guaranteed by,
the United States, entitled to the benefit of full faith and credit of the
United States, and certificates, depositary receipts or other instruments which
evidence a direct ownership interest in these obligations or in any specific
interest or principal payments due in respect to those obligations.
RESIGNATION OF DEBT SECURITY TRUSTEE
The Debt Security Trustee may resign at any time by giving written notice
to us or may be removed at any time by an action of the holders of a majority
in principal amount of outstanding Debt Securities delivered to the Debt
Security Trustee and us. No resignation or removal of the Debt Security Trustee
and no appointment of a successor trustee will become effective until a
successor trustee accepts appointment in accordance with the requirements of
the Debt Security Indenture. So long as no Event of Default or event which
would become an Event of Default has occurred and is continuing, and except
with respect to a Debt Security Trustee appointed by an action of the holders,
if we have delivered to the Debt Security Trustee a resolution of our Board of
Directors appointing a successor trustee and the successor trustee has accepted
the appointment in accordance with the terms of the Debt Security Indenture,
the Debt Security Trustee will be deemed to have resigned and the successor
trustee will be deemed to have been appointed as trustee in accordance with the
Debt Security Indenture. For more information, see Section 910 of the Debt
Security Indenture.
NOTICES
We will give notices to holders of Debt Securities by mail to their
addresses as they appear in the Security Register. For more information, see
Section 106 of the Debt Security Indenture.
TITLE
The Debt Security Trustee and its agents, and we and our agents may treat
the person in whose name a Debt Security is registered as the absolute owner of
that Debt Security, whether or not that Debt Security may be overdue, for the
purpose of making payment and for all other purposes. For more information, see
Section 308 of the Debt Security Indenture.
GOVERNING LAW
The Debt Security Indenture and the Debt Securities will be governed by,
and construed in accordance with, the law of the State of New York. For more
information, see Section 112 of the Debt Security Indenture.
GLOBAL SECURITIES
We may issue some or all of the First Mortgage Bonds, Senior Notes or Debt
Securities of any series as Global Securities. We will register each Global
Security in the name of a depositary identified in the applicable Prospectus
Supplement. The Global Securities will be deposited with a depositary or
nominee or custodian for the depositary and will bear a legend regarding
restrictions on exchanges and registration of transfer as discussed below and
any other matters to be provided pursuant to the Mortgage and applicable
Indenture.
As long as the depositary or its nominee is the registered holder of a
Global Security, that person will be considered the sole owner and holder of
the Global Security and the securities represented by it for all purposes under
the securities and the Mortgage, Senior Note Indenture and Debt Security
Indenture. Except in limited circumstances, owners of a beneficial interest in
a Global Security
o will not be entitled to have the Global Security or any securities
represented by it registered in their names;
o will not receive or be entitled to receive physical delivery of
certificated securities in exchange for the Global Security; and
o will not be considered to be the owners or holders of the Global Security
or any securities represented by it for any purposes under the securities
or the Mortgage, Senior Note Indenture or Debt Security Indenture.
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We will make all payments of principal and any premium and interest on a
Global Security to the depositary or its nominee as the holder of the Global
Security. The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. These laws
may impair the ability to transfer beneficial interests in a Global Security.
Ownership of beneficial interests in a Global Security will be limited to
institutions having accounts with the depositary or its nominee, called
"participants" for purposes of this discussion, and to persons that hold
beneficial interests through participants. When a Global Security is issued,
the depositary will credit on its book entry, registration and transfer system
the principal amounts of securities represented by the Global Security to the
accounts of its participants. Ownership of beneficial interests in a Global
Security will be shown only on, and the transfer of those ownership interests
will be effected only through, records maintained by
o the depositary, with respect to participant's interests or;
o any participant, with respect to interests of persons held by the
participants on their behalf.
Payments by participants to owners of beneficial interests held through
such participants will be the responsibility of such participants. The
depositary may from time to time adopt various policies and procedures
governing payments, transfers, exchanges, and other matters relating to
beneficial interests in a Global Security. None of the following will have any
responsibility or liability for any aspect of the depositary or any
participant's records relating to, or for payments made on account of,
beneficial interest in a Global Security, or for maintaining, supervising or
reviewing any records relating to these beneficial interests:
o the Company;
o the Trustee under the Mortgage;
o the Trustee under the Senior Note Indenture;
o the Trustee under the Debt Security Indenture; or
o any agent of each of the above.
PLAN OF DISTRIBUTION
We may sell the securities in any of three ways:
o through underwriters or dealers;
o directly through a limited number of institutional purchasers or to a
single purchaser; or
o through agents.
The applicable Prospectus Supplement will set forth the terms under which
the securities are offered, including
o the names of any underwriters, dealers or agents;
o the purchase price and the net proceeds to us from the sale;
o any underwriting discounts and other items constituting underwriters
compensation;
o any initial public offering price; and
o any discounts or concessions allowed, re-allowed or paid to dealers.
We or any underwriters or dealers may change from time to time any initial
public offering price and any discounts or concessions allowed or re-allowed or
paid to dealers.
If we use underwriters in the sale, the securities will be acquired by the
underwriters for their own account and may be resold in one or more
transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of the sale. Unless the
applicable Prospectus Supplement states otherwise, the obligations of any
underwriter to purchase the securities will be subject to certain conditions,
and the underwriter will be obligated to purchase the securities, except that
in certain cases involving a default by an underwriter, less than all of the
securities may be purchased. If we sell securities through an agent, the
applicable Prospectus Supplement will state the name and
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any commission payable by us to the agent. Unless the Prospectus Supplement
states otherwise, any agent of the Company will be acting on a best efforts
basis for the period of its appointment.
The applicable Prospectus Supplement will state whether we will authorize
agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase securities at the public offering price set forth in
the Prospectus Supplement pursuant to delayed delivery contracts providing for
payment and delivery on a specified future date. These contracts will be
subject to the conditions set forth in the Prospectus Supplement. Additionally,
the Prospectus Supplement will set forth the commission payable for
solicitation of these contracts.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act of 1933.
EXPERTS
The financial statements and the related financial statement schedules
incorporated in this prospectus by reference from the Company's Annual Report
on Form 10-K for the year ended December 31, 1997 have been audited by Deloitte
& Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance
upon the report of such firm given upon their authority as experts in
accounting and auditing.
LEGAL OPINIONS
William D. Johnson of our legal department and Hunton & Williams of
Raleigh, North Carolina, our outside counsel, will issue opinions about the
legality of the offered securities for us. Any underwriters will be advised
about other issues relating to any offering by their own legal counsel,
Winthrop, Stimson, Putnam & Roberts of New York, New York.
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$500,000,000
[GRAPHIC LOGO CP&L APPEARS HERE]
CAROLINA POWER & LIGHT COMPANY
EXTENDIBLE NOTES
DUE OCTOBER 28, 2009
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PROSPECTUS SUPPLEMENT
--------------------------------
MERRILL LYNCH & CO.
OCTOBER 25, 1999
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