Rule 424(b)(2)
File No. 333-54025
CUSIP No.: 19957 R AC7
Pricing Supplement No. 1 Dated June 23, 1998
(To Prospectus dated June 8, 1998 and
Prospectus Supplement dated June 18, 1998)
$150,000,000
COLUMBUS SOUTHERN POWER COMPANY
Unsecured Medium Term Notes, Series B,
Due From Nine Months to Forty-Two Years from Date of Issue
Principal Amount: $60,000,000
Public Offering Price: 100%
Agent's Discount or Commission: .625%
Original Issue Date: 06-26-1998
Stated Maturity: 06-26-2008
Interest Rate: 6.55%
Form: Book-Entry
The Notes are subject to redemption at any time, on not less
than 30 but not more than 60 days' notice by mail prior to the
redemption date, either as a whole or in part at the option of
the Company at a redemption price equal to the greater of (i)
100% of the principal amount of the Notes then outstanding and
(ii) the sum of the present values of the remaining scheduled
payments of principal and interest thereon discounted to the
redemption date on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Treasury Rate (as
defined below) plus 15 basis points, plus, in each case, accrued
interest thereon to the date of redemption.
"Treasury Rate" means, with respect to any redemption date,
the rate per annum equal to the semi-annual 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 Comparable Treasury Price for such
redemption date.
"Comparable Treasury Issue" means the United States Treasury
security selected by an Independent Investment Banker 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.
"Comparable Treasury Price" means, with respect to any
redemption date, (i) the average of the bid and asked prices for
the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) on the third Business Day
preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the
Federal Reserve Bank of New York and designated "Composite 3:30
p.m. Quotations for U.S. Government Securities" or (ii) if such
release (or any successor release) is not published or does not
contain such prices on such third Business Day, the Reference
Treasury Dealer Quotation for such redemption date.
"Independent Investment Banker" means one of the Reference
Treasury Dealers appointed by the Company and reasonably
acceptable to the Trustee.
"Reference Treasury Dealer" means a primary U.S. Government
Securities Dealer in New York City selected by the Company and
reasonably acceptable to the Trustee.
"Reference Treasury Dealer Quotations" means, with respect
to the Reference Treasury Dealer and any redemption date, the
average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case
as a percentage of its principal amount) quoted in writing to the
Trustee by such Reference Treasury Dealer at or before 5:00 p.m.,
New York City time, on the third Business Day preceding such
redemption date.
The Company sold $30,000,000 principal amount of the Notes to
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and $30,000,000 principal amount of the Notes to
Morgan Stanley & Co. Incorporated as principals in this
transaction, in each case for resale to one or more investors at
the Public Offering Price stated above, or in certain
circumstances, at varying prices related to prevailing market
conditions at the time of resale as determined by Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated or Morgan
Stanley & Co. Incorporated, as the case may be.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus Supplement
(To Prospectus Dated June 8, 1998)
$150,000,000
COLUMBUS SOUTHERN POWER COMPANY
Unsecured Medium Term Notes, Series B, Due From Nine Months to
Forty-Two Years from Date of Issue
Columbus Southern Power Company (the "Company") may from time to
time offer its Unsecured Medium Term Notes, Series B (as referred
to in this Prospectus Supplement, the "Notes"), in the aggregate
principal amount of up to $150,000,000. Each Note will mature
from nine months to forty-two years from its date of issue.
The interest rate, if any, Public Offering Price, Stated
Maturity, redemption provisions, if any, and certain other terms
with respect to each Note will be established at the time of
issuance and set forth in a pricing supplement to this Prospectus
Supplement (each a "Pricing Supplement").
The Company may issue Notes that bear interest at fixed rates
("Fixed Rate Notes") or at floating rates ("Floating Rate
Notes"). The interest rate, or formula for the determination of
the interest rate, if any, applicable to each Note and the other
variable terms thereof will be established by the Company on the
date of issue of such Note. The applicable Pricing Supplement
will specify whether a Floating Rate Note is a Regular Floating
Rate Note, a Floating Rate/Fixed Rate Note or an Inverse Floating
Rate Note and whether the rate of interest thereon is determined
by reference to one or more of the CD Rate, the CMT Rate, the
Commercial Paper Rate, the Federal Funds Rate, LIBOR, the Prime
Rate or the Treasury Rate (each, an "Interest Rate Basis"), or
any other interest rate basis or formula, as adjusted by any
Spread and/or Spread Multiplier. Interest on each Floating Rate
Note will accrue from its date of issue and, unless otherwise
specified in the applicable Pricing Supplement, will be payable
monthly, quarterly, semiannually or annually in arrears, as
specified in the applicable Pricing Supplement, on redemption, if
any, and on Stated Maturity. Unless otherwise specified in the
applicable Pricing Supplement, the rate of interest on each
Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually or annually, as specified in the
applicable Pricing Supplement. Interest on each Fixed Rate Note
will accrue from its date of issue and, unless otherwise
specified in the applicable Pricing Supplement, will be payable
semiannually in arrears on March 1 and September 1 of each year,
on redemption, if any, and on Stated Maturity. Interest rates or
formulas and other terms of Notes are subject to change by the
Company, but no such change will affect any Note previously
issued or as to which an offer to purchase has been accepted by
the Company.
Each Tranche of Notes will be represented by one or more global
Notes (each a "Global Note") registered in the name of a nominee
of The Depository Trust Company, as Depository, or another
depository (such a Note, so represented, being called a "Book-
Entry Note"). Beneficial interests in Global Notes representing
Book-Entry Notes will be shown on, and transfers thereof will be
effected only through, records maintained by the Depository's
participants. Book-Entry Notes will not be issuable as
certificated notes except under circumstances described herein.
See "Supplemental Description of the Notes -- Book-Entry Notes".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Price to Agents' Proceeds to
Public(1) Commission(2) Company(2)(3)
Per Note . 100.000% .125%-.750% 99.875%-
99.250%
Total . . . $150,000,000 $187,500- $149,812,500-
$1,125,000 $148,875,000
(1) Unless otherwise specified in the applicable Pricing
Supplement, the price to the public will be 100% of the
principal amount.
(2) The Company will pay to Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Morgan Stanley & Co.
Incorporated, each as agent (together, the "Agents"), a
commission of from .125% to .750% of the principal amount of
any Note, depending upon its Stated Maturity, sold through
such Agent. The Company may also sell Notes to any Agent,
as principal, at a discount for resale to one or more
investors or to another broker-dealer (acting as principal
for purposes of resale) at varying prices related to
prevailing market prices at the time of resale, as
determined by such Agent. Unless otherwise indicated in the
applicable Pricing Supplement, any Note sold to an Agent as
principal shall be purchased by such Agent at a price equal
to 100% of the principal amount thereof less the percentage
equal to the commission applicable to an agency sale of a
Note of identical maturity and may be resold by such Agent.
The Notes may also be sold by the Company directly to
investors, in which case no commission will be payable to
the Agents. The Company has agreed to indemnify the Agents
for certain liabilities, including certain liabilities under
the Securities Act of 1933, as amended. See "Plan of
Distribution" herein.
(3) Before deduction of expenses payable by the Company
estimated at $255,536, including reimbursement of certain
expenses of the Agents.
The Notes are being offered on a continuous basis by the Company
through the Agents which have agreed to use their reasonable best
efforts to solicit offers to purchase Notes. The Company may
sell Notes at a discount to any Agent, as principal, for resale
to one or more investors or other purchasers at varying prices
relating to prevailing market prices at the time of resale, as
determined by such Agent. The Company also may sell Notes
directly to investors on its own behalf. The Notes will not be
listed on any securities exchange, and there is no assurance that
the maximum amount of Notes offered by this Prospectus Supplement
will be sold or that there will be a secondary market for the
Notes. The Company reserves the right to withdraw, cancel or
modify the offer made hereby without notice. The Company or an
Agent may reject an order, whether or not solicited, in whole or
in part. See "Plan of Distribution" herein.
Merrill Lynch & Co. Morgan Stanley Dean Witter
The date of this Prospectus Supplement is June 18, 1998.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE
PRICE OF THE NOTES, INCLUDING OVERALLOTMENT, STABILIZING
TRANSACTIONS AND SYNDICATE SHORT COVERING TRANSACTIONS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "PLAN OF DISTRIBUTION".
SUPPLEMENTAL DESCRIPTION OF THE NOTES
The following 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 Notes
set forth under "Description of New Notes" in the accompanying
Prospectus, to which description reference is hereby made.
Certain capitalized terms used herein are defined under "Descrip-
tion of the New Notes" in the accompanying Prospectus. The
following description of the Notes will apply, unless otherwise
specified in a Pricing Supplement.
General
The Notes will be issued as a series of Debt Securities under the
Note Indenture. The Notes will be limited in aggregate principal
amount to $150,000,000.
The Notes will be issued in fully registered form only, without
coupons. Each Tranche of Notes will be issued initially as one
or more Book-Entry Notes. Except as set forth herein under
"Book-Entry Notes" or in any Pricing Supplement relating to
specific Notes, the Notes will not be issuable as certificated
notes. The authorized denominations of Global Notes will be
$1,000 and any integral multiple thereof.
Each Note will mature from 9 months to 42 years from its date of
issue, as selected by the purchaser and agreed to by the Company.
Each Note may also be subject to redemption at the option of the
Company prior to its Stated Maturity.
The Pricing Supplement relating to a Note will describe the
following terms: (1) the price (expressed as a percentage of the
aggregate principal amount thereof) at which such Note will be
offered (the "Public Offering Price"); (2) the date on which such
Note will be issued (the "Original Issue Date"); (3) the date on
which such Note shall mature (the "Stated Maturity"); (4) if an
interest-bearing note, whether the Note will be a Fixed Rate Note
or a Floating Rate Note; (5) the terms, if any, regarding the
optional or mandatory redemption of such Note, including the
redemption date or dates of such Note, if any, and the price or
prices applicable to such redemption (including any premium); (6)
any applicable discounts or commissions; and (7) any other terms
of such Note not inconsistent with the provisions of the Note
Indenture.
"Business Day" with respect to any Note means any day that (a) in
the Place of Payment (as defined in the Note Indenture) (or in
any of the Places of Payment, if more than one) in which amounts
are payable as specified in the form of such Note and (b) in the
city in which the Trustee administers its corporate trust
business, is not a day on which banking institutions are
authorized or required by law or regulation to close; provided,
however, that with respect to Notes as to which LIBOR is an
applicable Interest Rate Basis, such day is also a London
Business Day. "London Business Day" means a day on which
dealings in U.S. dollars are transacted in the London interbank
market.
Payment of Principal and Interest
General
Unless otherwise specified in the applicable Pricing
Supplement, each interest-bearing Note will bear interest from
its Original Issue Date at the rate per annum, in the case of a
Fixed Rate Note, or pursuant to the interest rate formula, in the
case of a Floating Rate Note, in each case as specified in the
applicable Pricing Supplement, until the principal thereof is
paid or duly made available for payment. Unless otherwise
specified in the applicable Pricing Supplement, interest payments
in respect of Fixed Rate Notes and Floating Rate Notes will be
made in an amount equal to the interest accrued from and
including the immediately preceding Interest Payment Date in
respect of which interest has been paid or duly made available
for payment (or from and including the Original Issue Date, if no
interest has been paid or duly made available for payment) to but
excluding the applicable Interest Payment Date, redemption date
or Stated Maturity, as the case may be (each, an "Interest
Period").
Unless otherwise specified in the applicable Pricing
Supplement, interest on Fixed Rate Notes and Floating Rate Notes
will be payable in arrears on each Interest Payment Date,
redemption date and on Stated Maturity. Payments of interest on
the Notes (other than interest payable at redemption, if any, or
Stated Maturity) will be made, except as provided below, in
immediately available funds to the owners of such Notes (which,
in the case of Global Notes representing Book-Entry Notes, will
be a nominee of the Depository, as hereinafter defined) as of the
Regular Record Date (as defined below) for each Interest Payment
Date; provided, however, that if the Original Issue Date of a
Note issued as a Global Note is after a Regular Record Date and
before the corresponding Interest Payment Date, interest for the
period from and including the Original Issue Date for such Note
to but excluding such Interest Payment Date will be paid on the
next succeeding Interest Payment Date to the owner of such Note
on the related Regular Record Date. Unless otherwise specified
in the applicable Pricing Supplement, a "Regular Record Date"
shall be the fifteenth calendar day (whether or not a Business
Day) immediately preceding the related Interest Payment Date.
Unless otherwise specified in the applicable Pricing
Supplement, the principal of the Notes and any premium and
interest thereon payable at redemption, if any, or Stated
Maturity will be paid in immediately available funds upon
surrender thereof at the office of Bankers Trust Company at Four
Albany Street in New York, New York. Should any Note be issued
other than as a Global Note, interest (other than interest
payable at redemption or Stated Maturity) may, at the option of
the Company, be paid to the person entitled thereto by check
mailed to any such person. See "Book-Entry Notes" herein.
Fixed Rate Notes
Interest on Fixed Rate Notes will be payable on March 1 and
September 1 of each year or on such other date or dates specified
in the applicable Pricing Supplement (each, an "Interest Payment
Date" with respect to Fixed Rate Notes), on redemption, if any,
and on Stated Maturity. Unless otherwise specified in the
applicable Pricing Supplement, interest on Fixed Rate Notes will
be computed on the basis of a 360-day year of twelve 30-day
months.
If any Interest Payment Date, redemption date or Stated
Maturity of a Fixed Rate Note falls on a day that is not a
Business Day, the required payment of principal, premium, if any,
and/or interest will be made on the next succeeding Business Day
as if made on the date such payment was due, and no interest will
accrue on such payment for the period from and after such
Interest Payment Date, redemption date or Stated Maturity, as the
case may be, to the date of such payment on the next succeeding
Business Day.
Floating Rate Notes
Interest on Floating Rate Notes will be determined by
reference to the applicable Interest Rate Basis or Interest Rate
Bases, which may, as described below, include (i) the CD Rate;
(ii) the CMT Rate; (iii) the Commercial Paper Rate; (iv) the
Federal Funds Rate; (v) LIBOR; (vi) the Prime Rate; (vii) the
Treasury Rate; or (viii) such other Interest Rate Basis or
interest rate formula as may be specified in the applicable
Pricing Supplement. The applicable Pricing Supplement will
specify certain terms with respect to which each Floating Rate
Note is being delivered, including: whether such Floating Rate
Note is a "Regular Floating Rate Note," a "Floating Rate/Fixed
Rate Note" or an "Inverse Floating Rate Note," the Fixed Rate
Commencement Date, if applicable, Fixed Interest Rate, if
applicable, Interest Rate Basis or Bases, Initial Interest Rate,
if any, Initial Interest Reset Date, Interest Reset Dates,
Interest Payment Dates, Index Maturity, Maximum Interest Rate
and/or Minimum Interest Rate, if any, and Spread and/or Spread
Multiplier, if any, as such terms are defined below. If one or
more of the applicable Interest Rate Bases is LIBOR or the CMT
Rate, the applicable Pricing Supplement will also specify the
Designated LIBOR Page or the Designated CMT Maturity Index and
designated CMT Telerate Page, respectively, as such terms are
defined below.
The interest rate borne by the Floating Rate Notes will be
determined as follows:
(i) Unless such Floating Rate Note is designated as a
"Floating Rate/Fixed Rate Note" or an "Inverse Floating Rate
Note", or as having an Addendum attached or having
"Other/Additional Provisions" apply, in each case relating
to a different interest rate formula, such Floating Rate
Note will be designated as a "Regular Floating Rate Note"
and, except as described below or in the applicable Pricing
Supplement, will bear interest at the rate determined by
reference to the applicable Interest Rate Basis or Bases (a)
plus or minus the applicable Spread, if any, and/or (b)
multiplied by the applicable Spread Multiplier, if any.
Commencing on the Initial Interest Reset Date, the rate at
which interest on such Regular Floating Rate Note shall be
payable shall be reset as of each Interest Reset Date;
provided, however, that the interest rate in effect for the
period, if any, from the Original Issue Date to the Initial
Interest Reset Date will be the Initial Interest Rate.
(ii) If such Floating Rate Note is designated as a
"Floating Rate/Fixed Rate Note," then, except as described
below or in the applicable Pricing Supplement, such Floating
Rate Note will bear interest at the rate determined by
reference to the applicable Interest Rate Basis or Bases (a)
plus or minus the applicable Spread, if any, and/or (b)
multiplied by the applicable Spread Multiplier, if any.
Commencing on the Initial Interest Reset Date, the rate at
which interest on such Floating Rate/Fixed Rate Note shall
be payable shall be reset as of each Interest Reset Date;
provided, however, that (y) the interest rate in effect for
the period, if any, from the Original Issue Date to the
Initial Interest Reset Date will be the Initial Interest
Rate and (z) the interest rate in effect for the period
commencing on the Fixed Rate Commencement Date to the
redemption date, if any, or Stated Maturity shall be the
Fixed Interest Rate, if such rate is specified in the
applicable Pricing Supplement or, if no such Fixed Interest
Rate is specified, the interest rate in effect thereon on
the day immediately preceding the Fixed Rate Commencement
Date.
(iii) If such Floating Rate Note is designated as
an "Inverse Floating Rate Note," then, except as described
below or in the applicable Pricing Supplement, such Floating
Rate Note will bear interest at the Fixed Interest Rate
minus the rate determined by reference to the applicable
Interest Rate Basis or Bases (a) plus or minus the
applicable Spread, if any, and/or (b) multiplied by the
applicable Spread Multiplier, if any; provided, however,
that, unless otherwise specified in the applicable Pricing
Supplement, the interest rate thereon will not be less than
zero. Commencing on the Initial Interest Reset Date, the
rate at which interest on such Inverse Floating Rate Note
shall be payable shall be reset as of each Interest Reset
Date; provided, however, that the interest rate in effect
for the period, if any, from the Original Issue Date to the
Initial Interest Reset Date will be the Initial Interest
Rate.
The "Spread" is the number of basis points to be added to or
subtracted from the related Interest Rate Basis or Bases
applicable to such Floating Rate Note. The "Spread Multiplier"
is the percentage of the related Interest Rate Basis or Bases
applicable to such Floating Rate Note by which such Interest Rate
Basis or Bases will be multiplied to determine the applicable
interest rate on such Floating Rate Note. The "Index Maturity"
is the period to maturity of the instrument or obligation with
respect to which the related Interest Rate Basis or Bases will be
calculated.
Unless otherwise specified in the applicable Pricing
Supplement, the interest rate with respect to each Interest Rate
Basis will be determined in accordance with the applicable
provisions below. Except as set forth above or in the applicable
Pricing Supplement, the interest rate in effect on each day shall
be (i) if such day is an Interest Reset Date, the interest rate
determined as of the Interest Determination Date (as hereinafter
defined) immediately preceding such Interest Reset Date or (ii)
if such day is not an Interest Reset Date, the interest rate
determined as of the Interest Determination Date immediately
preceding the most recent Interest Reset Date.
The applicable Pricing Supplement will specify whether the
rate of interest on the related Floating Rate Note will be reset
daily, weekly, monthly, quarterly, semiannually or annually or on
such other specified basis (each, an "Interest Reset Period") and
the dates on which such rate of interest will be reset (each, an
"Interest Reset Date"). Unless otherwise specified in the
applicable Pricing Supplement, the Interest Reset Dates will be,
in the case of Floating Rate Notes which reset: (i) daily, each
Business Day; (ii) weekly, the Wednesday of each week (with the
exception of weekly reset Floating Rate Notes as to which the
Treasury Rate is an applicable Interest Rate Basis, which will
reset the Tuesday of each week, except as described below); (iii)
monthly, the third Wednesday of each month; (iv) quarterly, the
third Wednesday of March, June, September and December of each
year; (v) semiannually, the third Wednesday of the two months
specified in the applicable Pricing Supplement; and (vi)
annually, the third Wednesday of the month specified in the
applicable Pricing Supplement; provided however, that, with
respect to Floating Rate/Fixed Rate Notes, the rate of interest
thereon will not reset after the applicable Fixed Rate
Commencement Date. If any Interest Reset Date for any Floating
Rate Note would otherwise be a day that is not a Business Day,
such Interest Reset Date will be postponed to the next succeeding
Business Day, except that in the case of a Floating Rate Note as
to which LIBOR is an applicable Interest Rate Basis and such
Business Day falls in the next succeeding calendar month, such
Interest Reset Date will be the immediately preceding Business
Day.
The interest rate applicable to each Interest Reset Period
commencing on the related Interest Reset Date will be the rate
determined by the Calculation Agent (as hereinafter defined) as
of the applicable Interest Determination Date and calculated on
or prior to the Calculation Date (as hereinafter defined), except
with respect to LIBOR, which will be calculated on such Interest
Determination Date. The "Interest Determination Date" with
respect to the CD Rate, the CMT Rate, the Commercial Paper Rate,
the Federal Funds Rate and the Prime Rate will be the second
Business Day immediately preceding the applicable Interest Reset
Date; and the "Interest Determination Date" with respect to LIBOR
will be the second London Business Day immediately preceding the
applicable Interest Reset Date. With respect to the Treasury
Rate, the "Interest Determination Date" will be the day in the
week in which the applicable Interest Reset Date falls on which
day Treasury Bills (as hereinafter defined) are normally
auctioned (Treasury Bills are normally sold at an auction held on
Monday of each week, unless that day is a legal holiday, in which
case the auction is normally held on the following Tuesday,
except that such auction may be held on the preceding Friday);
provided, however, that if an auction is held on the Friday of
the week preceding the applicable Interest Reset Date, the
"Interest Determination Date" will be such preceding Friday;
provided, further, that if the Interest Determination Date would
otherwise fall on an Interest Reset Date, then such Interest
Reset Date will be postponed to the next succeeding Business Day.
The "Interest Determination Date" pertaining to a Floating Rate
Note the interest rate of which is determined by reference to two
or more Interest Rate Bases will be the most recent Business Day
which is at least two Business Days prior to the applicable
Interest Reset Date for such Floating Rate Note on which each
Interest Rate Basis is determinable. Each Interest Rate Basis
will be determined as of such date, and the applicable interest
rate will take effect on the applicable Interest Reset Date.
Notwithstanding the foregoing, a Floating Rate Note may also
have either or both of the following: (i) a Maximum Interest
Rate, or ceiling, that may accrue during any Interest Period and
(ii) a Minimum Interest Rate, or floor, that may accrue during
any Interest Period. In addition to any Maximum Interest Rate
that may apply to any Floating Rate Note, the interest rate on
Floating Rate Notes will in no event be higher than the maximum
rate permitted by New York law, as the same may be modified by
United States law of general application.
Except as provided below or in the applicable Pricing
Supplement, interest will be payable, in the case of Floating
Rate Notes which reset: (i) daily, weekly or monthly, on the
third Wednesday of each month or on the third Wednesday of March,
June, September and December of each year, as specified in the
applicable Pricing Supplement; (ii) quarterly, on the third
Wednesday of March, June, September and December of each year;
(iii) semiannually, on the third Wednesday of the two months of
each year specified in the applicable Pricing Supplement; and
(iv) annually, on the third Wednesday of the month of each year
specified in the applicable Pricing Supplement (each, an
"Interest Payment Date" with respect to Floating Rate Notes) and,
in each case, on a redemption date, if any, and on Stated
Maturity. If any Interest Payment Date other than on a
redemption date, if any, or on Stated Maturity for any Floating
Rate Note would otherwise be a day that is not a Business Day,
such Interest Payment Date will be postponed to the next
succeeding Business Day, except that in the case of a Floating
Rate Note as to which LIBOR is an applicable Interest Rate Basis
and such Business Day falls in the next succeeding calendar
month, such Interest Payment Date will be the immediately
preceding Business Day. If a redemption date, if any, or Stated
Maturity of a Floating Rate Note falls on a day that is not a
Business Day, the required payment of principal, premium, if any,
and interest will be made on the next succeeding Business Day as
if made on the date such payment was due, and no interest will
accrue on such payment for the period from and after the
redemption date or Stated Maturity to the date of such payment on
the next succeeding Business Day.
All percentages resulting from any calculation on Floating
Rate Notes will be rounded to the nearest one hundred-thousandth
of a percentage point, with five-one millionths of a percentage
point rounded upwards (e.g., 9.876545% (or .09876545) would be
rounded to 9.87655% (or .0987655)), and all amounts used in or
resulting from such calculation on Floating Rate Notes will be
rounded, in the case of United States dollars, to the nearest
cent (with one-half cent being rounded upwards).
With respect to each Floating Rate Note, accrued interest is
calculated by multiplying its principal amount by an accrued
interest factor. Such accrued interest factor is computed by
adding the interest factor calculated for each day in the
applicable Interest Period. Unless otherwise specified in the
applicable Pricing Supplement, the interest factor for each such
day will be computed by dividing the interest rate applicable to
such day by 360, in the case of Floating Rate Notes for which an
applicable Interest Rate Basis is the CD Rate, the Commercial
Paper Rate, the Federal Funds Rate, LIBOR or the Prime Rate, or
by the actual number of days in the year in the case of Floating
Rate Notes for which an applicable Interest Rate Basis is the CMT
Rate or the Treasury Rate. Unless otherwise specified in the
applicable Pricing Supplement, the interest factor for Floating
Rate Notes for which the interest rate is calculated with
reference to two or more Interest Rate Bases will be calculated
in each period in the same manner as if only the applicable
Interest Rate Basis specified in the applicable Pricing
Supplement applied.
The "Calculation Agent" will be set forth in the applicable
Pricing Supplement. Upon request of the Holder of any Floating
Rate Note, the Calculation Agent will disclose the interest rate
then in effect and, if determined, the interest rate that will
become effective as a result of a determination made for the next
succeeding Interest Reset Date with respect to such Floating Rate
Note. Unless otherwise specified in the applicable Pricing
Supplement, the "Calculation Date," if applicable, pertaining to
any Interest Determination Date will be the earlier of (i) the
tenth calendar day after such Interest Determination Date or, if
such day is not a Business Day, the next succeeding Business Day
or (ii) the Business Day immediately preceding the applicable
Interest Payment Date, redemption date or Stated Maturity, as the
case may be.
Unless otherwise specified in the applicable Pricing
Supplement, the Calculation Agent shall determine each Interest
Rate Basis in accordance with the following provisions.
CD Rate. Unless otherwise specified in the applicable
Pricing Supplement, "CD Rate" means, with respect to any Interest
Determination Date relating to a Floating Rate Note for which the
interest rate is determined with reference to the CD Rate (a "CD
Rate Interest Determination Date"), the rate on such date for
negotiable United States dollar certificates of deposit having
the Index Maturity specified in the applicable Pricing Supplement
as published by the Board of Governors of the Federal Reserve
System in "Statistical Release H.15(519), Selected Interest
Rates" or any successor publication ("H.15(519)") under the
heading "CDs (Secondary Market)," or, if not published by 3:00
P.M., New York City time, on the related Calculation Date, the
rate on such CD Rate Interest Determination Date for negotiable
United States dollar certificates of deposit of the Index
Maturity specified in the applicable Pricing Supplement as
published by the Federal Reserve Bank of New York in its daily
statistical release "Composite 3:30 P.M. Quotations for U.S.
Government Securities" or any successor publication ("Composite
Quotations") under the heading "Certificates of Deposit". If
such rate is not yet published in either H.15(519) or Composite
Quotations by 3:00 P.M., New York City time, on the related
Calculation Date, then the CD Rate on such CD Rate Interest
Determination Date will be calculated by the Calculation Agent
and will be the arithmetic mean of the secondary market offered
rates as of 10:00 A.M., New York City time, on such CD Rate
Interest Determination Date, of three leading nonbank dealers in
negotiable United States dollar certificates of deposit in The
City of New York (which may include the Agents or their
affiliates) selected by the Calculation Agent for negotiable
United States dollar certificates of deposit of major United
States money center banks for negotiable United States dollar
certificates of deposit with a remaining maturity closest to the
Index Maturity specified in the applicable Pricing Supplement in
an amount that is representative for a single transaction in that
market at that time; provided, however, that if the dealers so
selected by the Calculation Agent are not quoting as mentioned in
this sentence, the CD Rate determined as of such CD Rate Interest
Determination Date will be the CD Rate in effect on such CD Rate
Interest Determination Date.
CMT Rate. Unless otherwise specified in the applicable
Pricing Supplement, "CMT Rate" means, with respect to any
Interest Determination Date relating to a Floating Rate Note for
which the interest rate is determined with reference to the CMT
Rate (a "CMT Rate Interest Determination Date"), the rate
displayed on the Designated CMT Telerate Page under the caption
"...Treasury Constant Maturities...Federal Reserve Board Release
H.15...Mondays Approximately 3:45 P.M.," under the column for the
Designated CMT Maturity Index for (i) if the Designated CMT
Telerate Page is 7055, the rate on such CMT Rate Interest
Determination Date and (ii) if the Designated CMT Telerate Page
is 7052, the week or the month, as applicable, ended immediately
preceding the week in which the related CMT Rate Interest
Determination Date occurs. If such rate is no longer displayed
on the relevant page or is not displayed by 3:00 P.M., New York
City time, on the related Calculation Date, then the CMT Rate for
such CMT Rate Interest Determination Date will be such treasury
constant maturity rate for the Designated CMT Maturity Index as
published in the relevant H.15(519). If such rate is no longer
published or is not published by 3:00 P.M., New York City time,
on the related Calculation Date, then the CMT Rate on such CMT
Rate Interest Determination Date will be such treasury constant
maturity rate for the Designated CMT Maturity Index (or other
United States Treasury rate for the Designated CMT Maturity
Index) for the CMT Rate Interest Determination Date with respect
to such Interest Reset Date as may then be published by either
the Board of Governors of the Federal Reserve System or the
United States Department of the Treasury that the Calculation
Agent determines to be comparable to the rate formerly displayed
on the Designated CMT Telerate Page and published in the relevant
H.15(519). If such information is not provided by 3:00 P.M., New
York City time, on the related Calculation Date, then the CMT
Rate on the CMT Rate Interest Determination Date will be
calculated by the Calculation Agent and will be a yield to
maturity, based on the arithmetic mean of the secondary market
closing offer side prices as of approximately 3:30 P.M., New York
City time, on such CMT Rate Interest Determination Date reported,
according to their written records, by three leading primary
United States government securities dealers in The City of New
York (which may include the Agents or their affiliates) (each, a
"Reference Dealer") selected by the Calculation Agent (from five
such Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation (or, in the event of equality,
one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for the most recently issued
direct noncallable fixed rate obligations of the United States
("Treasury Notes") with an original maturity of approximately the
Designated CMT Maturity Index and a remaining term to maturity of
not less than such Designated CMT Maturity Index minus one year.
If the Calculation Agent is unable to obtain three such Treasury
Note quotations, the CMT Rate on such CMT Rate Interest
Determination Date will be calculated by the Calculation Agent
and will be a yield to maturity based on the arithmetic mean of
the secondary market offer side prices as of approximately 3:30
P.M., New York City time, on such CMT Rate Interest Determination
Date of three Reference Dealers in The City of New York (from
five such Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation (or, in the event of equality,
one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for Treasury Notes with an
original maturity of the number of years that is the next highest
to the Designated CMT Maturity Index and a remaining term to
maturity closest to the Designated CMT Maturity Index and in an
amount of at least $100 million. If three or four (and not five)
of such Reference Dealers are quoting as described above, then
the CMT Rate will be based on the arithmetic mean of the offer
side prices obtained and neither the highest nor the lowest of
such quotes will be eliminated; provided, however, that if fewer
than three Reference Dealers so selected by the Calculation Agent
are quoting as mentioned herein, the CMT Rate determined as of
such CMT Rate Interest Determination Date will be the CMT Rate in
effect on such CMT Rate Interest Determination Date. If two
Treasury Notes with an original maturity as described in the
second preceding sentence have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the
Calculation Agent will obtain from five Reference Dealers
quotations for the Treasury Note with the shorter remaining term
to maturity.
"Designated CMT Telerate Page" means the display on the Dow
Jones Telerate Service (or any successor service) on the page
specified in the applicable Pricing Supplement (or any other page
as may replace such page on such service) for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519)
or, if no such page is specified in the applicable Pricing
Supplement, page 7052 for the most recent week.
"Designated CMT Maturity Index" means the original period to
maturity of the U.S. Treasury securities (either 1, 2, 3, 5, 7,
10, 20 or 30 years) specified in the applicable Pricing
Supplement with respect to which the CMT Rate will be calculated
or, if no such maturity is specified in the applicable Pricing
Supplement, 2 years.
Commercial Paper Rate. Unless otherwise specified in the
applicable Pricing Supplement, "Commercial Paper Rate" means,
with respect to any Interest Determination Date relating to a
Floating Rate Note for which the interest rate is determined with
reference to the Commercial Paper Rate (a "Commercial Paper Rate
Interest Determination Date"), the Money Market Yield (as
hereinafter defined) on such date of the rate for commercial
paper having the Index Maturity specified in the applicable
Pricing Supplement as published in H.15(519) under the caption
"Commercial Paper-Nonfinancial". In the event that such rate is
not published by 3:00 P.M., New York City time, on the related
Calculation Date, then the Commercial Paper Rate on such
Commercial Paper Rate Interest Determination Date will be the
Money Market Yield of the rate for commercial paper having the
Index Maturity specified in the applicable Pricing Supplement as
published in Composite Quotations under the heading "Commercial
Paper" (with an Index Maturity of one month or three months being
deemed to be equivalent to an Index Maturity of 30 days or 90
days, respectively). If such rate is not yet published in either
H.15(519) or Composite Quotations by 3:00 P.M., New York City
time, on the related Calculation Date, then the Commercial Paper
Rate on such Commercial Paper Rate Interest Determination Date
will be calculated by the Calculation Agent and will be the Money
Market Yield of the arithmetic mean of the offered rates at
approximately 11:00 A.M., New York City time, on such Commercial
Paper Rate Interest Determination Date of three leading dealers
of commercial paper in The City of New York (which may include
the Agents or their affiliates) selected by the Calculation Agent
for commercial paper having the Index Maturity specified in the
applicable Pricing Supplement placed for an industrial issuer
whose bond rating is "Aa", or the equivalent, from a nationally
recognized statistical rating organization; provided, however,
that if the dealers so selected by the Calculation Agent are not
quoting as mentioned in this sentence, the Commercial Paper Rate
determined as of such Commercial Paper Rate Interest
Determination Date will be the Commercial Paper Rate in effect on
such Commercial Paper Rate Interest Determination Date.
"Money Market Yield" means a yield (expressed as a
percentage) calculated in accordance with the following formula:
Money Market Yield = ((D x 360) / (360 - (D x M))) x 100
where "D" refers to the applicable per annum rate for commercial
paper quoted on a bank discount basis and expressed as a decimal,
and "M" refers to the actual number of days in the applicable
Interest Reset Period.
Federal Funds Rate. Unless otherwise specified in the
applicable Pricing Supplement, "Federal Funds Rate" means, with
respect to any Interest Determination Date relating to a Floating
Rate Note for which the interest rate is determined with
reference to the Federal Funds Rate (a "Federal Funds Rate
Interest Determination Date"), the rate on such date for United
States dollar federal funds as published in H.15(519) under the
heading "Federal Funds (Effective)" or, if not published by 3:00
P.M., New York City time, on the related Calculation Date, the
rate on such Federal Funds Rate Interest Determination Date as
published in Composite Quotations under the heading "Federal
Funds/Effective Rate". If such rate is not published in either
H.15(519) or Composite Quotations by 3:00 P.M., New York City
time, on the related Calculation Date, then the Federal Funds
Rate on such Federal Funds Rate Interest Determination Date will
be calculated by the Calculation Agent and will be the arithmetic
mean of the rates for the last transaction in overnight United
States dollar federal funds arranged by three leading brokers of
federal funds transactions in The City of New York (which may
include the Agents or their affiliates) selected by the
Calculation Agent prior to 9:00 A.M., New York City time, on such
Federal Funds Rate Interest Determination Date; provided,
however, that if the brokers so selected by the Calculation Agent
are not quoting as mentioned in this sentence, the Federal Funds
Rate determined as of such Federal Funds Rate Interest
Determination Date will be the Federal Funds Rate in effect on
such Federal Funds Rate Interest Determination Date.
LIBOR. Unless otherwise specified in the applicable Pricing
Supplement, "LIBOR" means the rate determined in accordance with
the following provisions:
(i) With respect to any Interest Determination Date
relating to a Floating Rate Note for which the interest rate
is determined with reference to LIBOR (a "LIBOR Interest
Determination Date"), LIBOR will be either: (a) if "LIBOR
Reuters" is specified in the applicable Pricing Supplement,
the arithmetic mean of the offered rates (unless the
Designated LIBOR Page by its terms provides only for a
single rate, in which case such single rate shall be used)
for deposits in U.S. dollars having the Index Maturity
specified in such Pricing Supplement, commencing on the
applicable Interest Reset Date, that appear (or, if only a
single rate is required as aforesaid, appears) on the
Designated LIBOR Page as of 11:00 A.M., London time, on such
LIBOR Interest Determination Date, or (b) if "LIBOR
Telerate" is specified in the applicable Pricing Supplement
or if neither "LIBOR Reuters" nor "LIBOR Telerate" is
specified in the applicable Pricing Supplement as the method
for calculating LIBOR, the rate for deposits in U.S. dollars
having the Index Maturity specified in such Pricing
Supplement, commencing on such Interest Reset Date, that
appears on the Designated LIBOR Page as of 11:00 A.M.,
London time, on such LIBOR Interest Determination Date. If
fewer than two such offered rates so appear, or if no such
rate so appears, as applicable, LIBOR on such LIBOR Interest
Determination Date will be determined in accordance with the
provisions described in clause (ii) below.
(ii) With respect to a LIBOR Interest Determination
Date on which fewer than two offered rates appear, or no
rate appears, as the case may be, on the Designated LIBOR
Page as specified in clause (i) above, the Calculation Agent
will request the principal London offices of each of four
major reference banks (which may include affiliates of the
Agents) in the London interbank market, as selected by the
Calculation Agent, to provide the Calculation Agent with its
offered quotation for deposits in U.S. dollars for the
period of the Index Maturity specified in the applicable
Pricing Supplement, commencing on the applicable Interest
Reset Date, to prime banks in the London interbank market at
approximately 11:00 A.M., London time, on such LIBOR
Interest Determination Date and in a principal amount that
is representative for a single transaction in U.S. dollars
in such market at such time. If at least two such
quotations are so provided, then LIBOR on such LIBOR
Interest Determination Date will be the arithmetic mean of
such quotations. If fewer than two such quotations are so
provided, then LIBOR on such LIBOR Interest Determination
Date will be the arithmetic mean of the rates quoted at
approximately 11:00 A.M., New York City time, on such LIBOR
Interest Determination Date by three major banks (which may
include affiliates of the Agents) in the City of New York
selected by the Calculation Agent for loans in U.S. dollars
to leading European banks, having the Index Maturity
specified in the applicable Pricing Supplement and in a
principal amount that is representative for a single
transaction in U.S. dollars in such market at such time;
provided, however, that if the banks so selected by the
Calculation Agent are not quoting as mentioned in this
sentence, LIBOR determined as of such LIBOR Interest
Determination Date will be LIBOR in effect on such LIBOR
Interest Determination Date.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is
specified in the applicable Pricing Supplement, the display on
the Reuter Monitor Money Rates Service (or any successor service)
on the page specified in such Pricing Supplement (or any other
page as may replace such page on such service) for the purpose of
displaying the London interbank rates of major banks for U.S.
dollars, or (b) if "LIBOR Telerate" is specified in the
applicable Pricing Supplement or neither "LIBOR Reuters" nor
"LIBOR Telerate" is specified in the applicable Pricing
Supplement as the method for calculating LIBOR, the display on
the Dow Jones Telerate Service (or any successor service) on the
page specified in such Pricing Supplement (or any other page as
may replace such page on such service) for the purpose of
displaying the London interbank rates of major banks for U.S.
dollars.
Prime Rate. Unless otherwise specified in the applicable
Pricing Supplement, "Prime Rate" means, with respect to any
Interest Determination Date relating to a Floating Rate Note for
which the interest rate is determined with reference to the Prime
Rate (a "Prime Rate Interest Determination Date"), the rate on
such date as such rate is published in H.15(519) under the
heading "Bank Prime Loan". If such rate is not published prior
to 3:00 P.M., New York City time, on the related Calculation
Date, then the Prime Rate shall be the arithmetic mean of the
rates of interest publicly announced by each bank that appears on
the Reuters Screen USPRIME1 Page (as hereinafter defined) as such
bank's prime rate or base lending rate as in effect for such
Prime Rate Interest Determination Date. If fewer than four such
rates appear on the Reuters Screen USPRIME1 Page for such Prime
Rate Interest Determination Date, then the Prime Rate shall be
the arithmetic mean of the prime rates or base lending rates
quoted on the basis of the actual number of days in the year
divided by a 360-day year as of the close of business on such
Prime Rate Interest Determination Date by four major money center
banks (which may include affiliates of the Agents) in The City of
New York selected by the Calculation Agent. If fewer than four
such quotations are so provided, then the Prime Rate shall be the
arithmetic mean of four prime rates quoted on the basis of the
actual number of days in the year divided by a 360-day year as of
the close of business on such Prime Rate Interest Determination
Date as furnished in The City of New York by the major money
center banks, if any, that have provided such quotations and by a
reasonable number of substitute banks or trust companies (which
may include affiliates of the Agents) as necessary to obtain four
such prime rate quotations, provided such substitute banks or
trust companies are organized and doing business under the laws
of the United States, or any State thereof, each having total
equity capital of at least $500 million and being subject to
supervision or examination by Federal or State authority,
selected by the Calculation Agent to provide such rate or rates;
provided, however, that if the banks or trust companies so
selected by the Calculation Agent are not quoting as mentioned in
this sentence, the Prime Rate determined as of such Prime Rate
Interest Determination Date will be the Prime Rate in effect on
such Prime Rate Interest Determination Date.
"Reuters Screen USPRIME1 Page" means the display on the
Reuter Monitor Money Rates Service (or any successor service) on
the "USPRIME1" page (or such other page as may replace the
USPRIME1 page on such service) for the purpose of displaying
prime rates or base lending rates of major United States banks.
Treasury Rate. Unless otherwise specified in the applicable
Pricing Supplement, "Treasury Rate" means, with respect to any
Interest Determination Date relating to a Floating Rate Note for
which the interest rate is determined by reference to the
Treasury Rate (a "Treasury Rate Interest Determination Date"),
the rate from the auction held on such Treasury Rate Interest
Determination Date (the "Auction") of direct obligations of the
United States ("Treasury Bills") having the Index Maturity
specified in the applicable Pricing Supplement, as such rate is
published in H.15(519) under the heading "Treasury Bills-auction
average (investment)" or, if not published by 3:00 P.M., New York
City time, on the related Calculation Date, the auction average
rate of such Treasury Bills (expressed as a bond equivalent on
the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) as otherwise announced by the United
States Department of the Treasury. In the event that the results
of the Auction of Treasury Bills having the Index Maturity
specified in the applicable Pricing Supplement are not reported
as provided by 3:00 P.M., New York City time, on the related
Calculation Date, or if no such Auction is held, then the
Treasury Rate will be calculated by the Calculation Agent and
will be a yield to maturity (expressed as a bond equivalent on
the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary
market bid rates, as of approximately 3:30 P.M., New York City
time, on such Treasury Rate Interest Determination Date, of three
leading primary United States government securities dealers
(which may include the Agents or their affiliates) selected by
the Calculation Agent, for the issue of Treasury Bills with a
remaining maturity closest to the Index Maturity specified in the
applicable Pricing Supplement; provided, however, that if the
dealers so selected by the Calculation Agent are not quoting as
mentioned in this sentence, the Treasury Rate determined as of
such Treasury Rate Interest Determination Date will be the
Treasury Rate in effect on such Treasury Rate Interest
Determination Date.
Other/Additional Provisions; Addendum
Any provisions with respect to the Notes, including the
specification and determination of one or more Interest Rate
Bases, the calculation of the interest rate applicable to a
Floating Rate Note, the Interest Payment Dates, Stated Maturity,
any redemption or repayment provisions or any other term relating
thereto, may be modified and/or supplemented as specified under
"Other/Additional Provisions" on the face thereof or in an
Addendum relating thereto, if so specified on the face thereof
and described in the applicable Pricing Supplement.
Risks
An investment in Notes indexed as to interest, if any, to
one or more interest rate or other indices or formulas, either
directly or inversely, entails significant risks that are not
associated with similar investments in a conventional fixed rate
or floating rate debt security. Such risks include, without
limitation, the possibility that such indices or formulas may be
subject to significant changes, that no interest will be payable
in respect of such Notes or will be payable at a rate lower than
one applicable to a conventional fixed rate or floating rate debt
security issued by the Company at the same time. Such risks
depend on a number of interrelated factors, including economic,
financial and political events, over which the Company has no
control. Additionally, if the formula used to determine the
amount of interest, if any, payable with respect to such Notes
contains a multiplier or leverage factor, the effect of any
change in the applicable index or indices or formula or formulas
will be magnified. In recent years, values of certain indices
and formulas have been highly volatile and such volatility may be
expected to continue in the future. Fluctuations in the value of
any particular index or formula that have occurred in the past
are not necessarily indicative, however, of fluctuations that may
occur in the future.
Redemption
Unless otherwise set forth in a Pricing Supplement, the Notes
will be subject to redemption by the Company on and after the
redemption date, if any, fixed at the time of sale and set forth
in the applicable Pricing Supplement. If no redemption date is
indicated with respect to a Note, such Note will not be
redeemable prior to Stated Maturity. On and after the redemption
date with respect to any Note subject to redemption, such Note
will be redeemable in whole or in part at a price determined as
set forth in a Pricing Supplement, together with interest thereon
payable to the date of redemption, on notice given no more than
60 nor less than 30 days prior to the date of redemption.
Book-Entry Notes
Except under the circumstances described below, the Notes will be
issued in whole or in part in the form of one or more Global
Notes that will be deposited with, or on behalf of, The
Depository Trust Company, New York, New York ("DTC"), or such
other depository as may be subsequently designated (the
"Depository"), and registered in the name of a nominee of the
Depository.
Book-Entry Notes represented by a Global Note will not be
exchangeable for certificated notes and, except under the
circumstances described below, will not otherwise be issuable as
certificated notes.
So long as the Depository, or its nominee, is the registered
owner of a Global Note, such Depository or such nominee, as the
case may be, will be considered the sole owner of the individual
Book-Entry Notes represented by such Global Note for all purposes
under the Note Indenture. Payments of principal of and premium,
if any, and any interest on individual Book-Entry Notes
represented by a Global Note will be made to the Depository or
its nominee, as the case may be, as the owner of such Global
Note. Except as set forth below, owners of beneficial interests
in a Global Note will not be entitled to have any of the
individual Book-Entry Notes represented by such Global Note
registered in their names, will not receive or be entitled to
receive physical delivery of any such Book-Entry Note and will
not be considered the owners thereof under the Note Indenture,
including, without limitation, for purposes of consenting to any
amendment thereof or supplement thereto.
If the Depository is at any time unwilling or unable to continue
as depository and a successor depository is not appointed, the
Company will issue individual certificated notes in exchange for
the Global Note representing the corresponding Book-Entry Notes.
In addition, the Company may at any time and in its sole
discretion determine not to have any Notes represented by the
Global Note and, in such event, will issue individual
certificated notes in exchange for the Global Note representing
the corresponding Book-Entry Notes. In any such instance, an
owner of a Book-Entry Note represented by a Global Note will be
entitled to physical delivery of individual certificated notes
equal in principal amount to such Book-Entry Note and to have
such certificated notes registered in his or her name.
Individual certificated notes so issued will be issued as
registered Notes in denominations, unless otherwise specified by
the Company, of $1,000 and integral multiples thereof.
DTC has confirmed to the Company and the Agents the following
information:
1. DTC will act as securities depository for the Global
Notes. The Notes will be issued as fully-registered securities
registered in the name of Cede & Co. (DTC's partnership nominee).
One fully-registered Global Note will be issued for each Tranche
of Notes, in the aggregate principal amount of such Tranche, and
will be deposited with DTC.
2. 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 1934
Act. DTC holds securities that its participants ("Participants")
deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized
book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates.
Direct Participants include securities brokers and dealers,
banks, trust companies, clearing corporations, and certain other
organizations. DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to the DTC system is also
available to others such as securities brokers and dealers,
banks, and trust companies that clear through or maintain a
custodial relationship with a Direct Participant, either directly
or indirectly ("Indirect Participants"). The Rules applicable to
DTC and its Participants are on file with the Securities and
Exchange Commission.
3. Purchases of Notes under the DTC system must be made by
or through Direct Participants, which will receive a credit for
the Notes on DTC's records. The ownership interest of each
actual purchaser of each Note ("Beneficial Owner") is in turn to
be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC
of their purchase, but Beneficial Owners are expected to receive
written confirmations providing details of the transaction, as
well as periodic statements of their holdings, from the Direct or
Indirect Participant through which the Beneficial Owner entered
into the transaction. Transfers of ownership interests in the
Notes are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial
Owners will not receive certificates representing their ownership
interests in Notes, except in the event that use of the book-
entry system for the Notes is discontinued.
4. To facilitate subsequent transfers, all Notes deposited
by Participants with DTC are registered in the name of DTC's
partnership nominee, Cede & Co. The deposit of Notes with DTC
and their registration in the name of Cede & Co. effect no change
in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Notes; DTC's records reflect only the
identity of the Direct Participants to whose accounts such Notes
are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
5. Conveyance of notices and other communications by DTC
to Direct Participants, by Direct Participants to Indirect
Participants, and by Direct Participants and Indirect
Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
6. Redemption notices shall be sent to Cede & Co. If less
than all of the Notes are being redeemed, DTC's practice is to
determine by lot the amount of the interest of each Direct
Participant in such issue to be redeemed.
7. Neither DTC nor Cede & Co. will consent or vote with
respect to the Notes. Under its usual procedures, DTC mails an
Omnibus Proxy to the Company as soon as possible after the record
date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Direct Participants to whose accounts the
Notes are credited on the record date (identified in a listing
attached to the Omnibus Proxy).
8. Principal and interest payments on the Notes will be
made to DTC. DTC's practice is to credit Direct Participants'
accounts on the date on which interest is payable in accordance
with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payment on such
date. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in
bearer form or registered in "street name", and will be the
responsibility of such Participant and not of DTC, the
Underwriters or the Company, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Payment of principal and interest to DTC is the responsibility of
the Company or the Trustee, disbursement of such payments to
Direct Participants shall be the responsibility of DTC, and
disbursement of such payments to the Beneficial Owners shall be
the responsibility of Direct and Indirect Participants.
9. DTC may discontinue providing its services as
securities depository with respect to the Notes at any time by
giving reasonable notice to the Company and the Trustee. Under
such circumstances, in the event that a successor securities
depository is not obtained, certificated notes are required to be
printed and delivered.
10. The Company may decide to discontinue use of the system
of book-entry transfers through DTC (or a successor securities
depository). In that event, certificated notes will be printed
and delivered.
The information in this section concerning DTC and DTC's book-
entry system has been obtained from sources that the Company
believes to be reliable, but the Company takes no responsibility
for the accuracy thereof.
None of the Company, the Trustee or any agent for payment on or
registration of transfer or exchange of any Global Note will have
any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial interests
in such Global Note or for maintaining, supervising or reviewing
any records relating to such beneficial interests.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary describes certain material United States
federal income tax consequences of the ownership of Notes as of
the date hereof. Except where noted, it deals only with Notes
held by initial purchasers who have purchased Notes at the
initial offering price thereof and who hold such Notes as capital
assets and does not deal with special situations, such as those
of dealers in securities or currencies, financial institutions,
tax exempt entities, life insurance companies, persons holding
Notes as a part of a hedging or conversion transaction or a
straddle, United States Holders (as defined below) whose
"functional currency" is not the U.S. dollar, or Non-United
States Holders (as defined below) owning (actually or
constructively) ten percent or more of the combined voting power
of all classes of voting stock of the Company. Persons
considering the purchase, ownership or disposition of Notes
should consult their own tax advisors concerning the federal
income tax consequences in light of their particular situations
as well as any consequences arising under the laws of any other
taxing jurisdiction. Furthermore, the discussion below is based
upon the provisions of the Internal Revenue Code of 1986, as
amended (the "Code") and regulations, rulings and judicial
decisions thereunder as of the date hereof, and such authorities
may be repealed, revoked or modified so as to result in federal
income tax consequences different from those discussed below.
Any special United States federal income tax considerations
relevant to a particular Tranche of the Notes will be provided in
the applicable Pricing Supplement.
United States Holders
As used herein, a "United States Holder" of a Note means a holder
that is (i) a citizen or resident of the United States; (ii) a
corporation or partnership created or organized in or under the
laws of the United States or any political subdivision thereof;
(iii) an estate the income of which is subject to United States
federal income taxation regardless of its source; or (iv) any
trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one
or more U.S. persons have the authority to control all
substantial decisions of the trust. A "Non-United States Holder"
is a holder that is not a United States Holder.
Payments of Interest. Interest on a Note will generally be
taxable to a United States Holder as ordinary income from
domestic sources at the time it is paid or accrued in accordance
with the United States Holder's method of accounting for tax
purposes.
Non-United States Holders
Non-United States Holders will not be subject to United States
federal income taxes, including withholding taxes, on the
interest income on, or gain from the sale or disposition of, any
Note provided that (1) the interest income or gain is not
effectively connected with the conduct by the Non-United States
Holder of a trade or business within the United States, (2) the
Non-United States Holder is not a controlled foreign corporation
related to the Company through stock ownership, (3) the Non-
United States Holder is not a bank whose receipt of interest on a
Note is described in Code Section 881(c)(3)(A), (4) with respect
to any gain, the Non-United States Holder, if an individual, is
not present in the United States for 183 days or more during the
taxable year and (5) the Non-United States Holder provides the
correct certification of his status (which may generally be
satisfied by providing an IRS Form W-8 certifying that the
beneficial owner is not a United States Holder and providing the
name and address of the beneficial owner).
An individual holder of a Note who is a Non-United States Holder
at the time of the holder's death will not be subject to United
States federal estate tax as a result of the holder's death, as
long as any interest received on the Note, if received by the
holder at the time of the holder's death, would not be
effectively connected with the conduct of a trade or business by
such individual in the United States.
Backup Withholding
In general, if a holder other than a corporate holder fails to
furnish a correct taxpayer identification number or certification
of foreign or other exempt status, fails to report dividend and
interest income in full, or fails to certify that such holder has
provided a correct taxpayer identification number and that the
holder is not subject to backup withholding, a 31 percent federal
backup withholding tax may be withheld from amounts paid to such
holder. An individual's taxpayer identification number is such
individual's social security number. The backup withholding tax
is not an additional tax and may be credited against a holder's
regular federal income tax liability or refunded by the IRS where
applicable.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuous basis by the Company
through the Agents, which have agreed to use their reasonable
best efforts to solicit offers to purchase Notes. Initial
purchasers may propose certain terms of the Notes, but the
Company will have the right to accept offers to purchase Notes
and may reject proposed purchases in whole or in part. The
Agents will have the right, in their discretion reasonably
exercised and without notice to the Company, to reject any
proposed purchase of Notes in whole or in part. The Company will
pay each Agent a commission of from .125% to .750% of the
principal amount of Notes sold through it, depending upon Stated
Maturity. The Company also may sell Notes to any Agent, acting
as principal, at a discount to be agreed upon at the time of
sale, for resale to one or more investors or to another broker-
dealer (acting as principal for purposes of resale) at varying
prices related to prevailing market prices at the time of such
resale, as determined by such Agent. An Agent may resell a Note
purchased by it as principal to another broker-dealer at a
discount, provided such discount does not exceed the commission
or discount received by such Agent from the Company in connection
with the original sale of such Note. The Company may also sell
Notes directly to investors on its own behalf at a price to be
agreed upon at the time of sale or through negotiated
underwritten transactions with one or more underwriters. In the
case of sales made directly by the Company, no commission or
discount will be paid or allowed.
No Note will have an established trading market when issued. The
Notes will not be listed on any securities exchange. The Agents
may make a market in the Notes, but the Agents are not obligated
to do so and may discontinue any market-making at any time
without notice. There can be no assurance of a secondary market
for any Notes, or that the Notes will be sold.
The Agents, whether acting as agent or principal, may be deemed
to be "underwriters" within the meaning of the Securities Act of
1933, as amended (the "Securities Act"). The Company has agreed
to indemnify the Agents against certain liabilities, including
certain liabilities under the Securities Act.
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Morgan Stanley & Co. Incorporated and certain
affiliates thereof engage in transactions with and perform
services for the Company and its affiliates in the ordinary
course of business.
In connection with the offering of the Notes, the Agents may
engage in overallotment, stabilizing transactions and syndicate
covering transactions in accordance with Regulation M under the
1934 Act. Overallotment involves sales in excess of the offering
size, which creates a short position for the Agents. Stabilizing
transactions involve bids to purchase the Notes in the open
market for the purpose of pegging, fixing or maintaining the
price of the Notes. Syndicate covering transactions involve
purchases of the Notes in the open market after the distribution
has been completed in order to cover short positions. Such
stabilizing transactions and syndicate covering transactions may
cause the price of the Notes to be higher than it would otherwise
be in the absence of such transactions. Such activities, if
commenced, may be discontinued at any time.
PROSPECTUS
COLUMBUS SOUTHERN POWER COMPANY
$350,000,000
DEBT SECURITIES
Columbus Southern Power Company (the "Company") intends to
offer, from time to time, up to $350,000,000 aggregate principal
amount of unsecured debt securities ("Debt Securities")
consisting of (i) its notes or other unsecured evidences of
indebtedness (collectively, the "New Notes") and (ii) its junior
subordinated deferrable interest debentures (the "New Junior
Subordinated Debentures"). The Debt Securities will be offered
in one or more series in amounts, at prices and on terms to be
determined at the time or times of sale. The title, aggregate
principal amount, denomination, interest rate or rates (or manner
of calculation thereof), time of payment of interest, maturity or
maturities, initial public offering price, if any, redemption
provisions, if any, any listing on a securities exchange and
other specific terms of each series of Debt Securities in respect
of which this Prospectus is being delivered will be set forth in
an accompanying prospectus supplement and/or pricing supplement
thereto ("Prospectus Supplement").
The Prospectus Supplement relating to any series of Debt
Securities will contain information regarding certain United
States income tax considerations, if applicable to such Debt
Securities.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Company may sell the Debt Securities through
underwriters, dealers or agents, or directly to one or more
institutional purchasers. A Prospectus Supplement will set forth
the names of underwriters or agents, if any, any applicable
commissions or discounts and the net proceeds to the Company from
any such sale. See "Plan of Distribution" herein.
The date of this Prospectus is June 8, 1998.
No dealer, salesperson or other person has been authorized
to give any information or to make any representation not
contained in this Prospectus in connection with the offer made by
this Prospectus or any Prospectus Supplement relating hereto,
and, if given or made, such information or representation must
not be relied upon as having been authorized by the Company or
any underwriter, agent or dealer. Neither this Prospectus nor
this Prospectus as supplemented by any Prospectus Supplement
constitutes an offer to sell, or a solicitation of an offer to
buy, by any underwriter, agent or dealer in any jurisdiction in
which it is unlawful for such underwriter, agent or dealer to
make such an offer or solicitation. Neither the delivery of this
Prospectus or this Prospectus as supplemented by any Prospectus
Supplement nor any sale made thereunder shall, under any
circumstances, create any implication that there has been no
change in the affairs of the Company since the date hereof or
thereof.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934 (the "1934 Act") and in
accordance therewith files reports and other information with the
Securities and Exchange Commission (the "SEC"). Such reports and
other information may be inspected and copied at the public
reference facilities maintained by the SEC at 450 Fifth Street,
N.W., Washington, D.C., 20549; Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois, 60661; and 7 World Trade
Center, 13th Floor, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the
SEC, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. The SEC maintains a Web site at http://www.sec.gov
containing reports, proxy and information statements and other
information regarding registrants that file electronically with
the SEC, including the Company. Certain of the Company's
securities are listed on the New York Stock Exchange, where
reports and other information concerning the Company may also be
inspected.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company with the SEC
are incorporated in this Prospectus by reference:
-- The Company's Annual Report on Form 10-K for the year
ended December 31, 1997;
-- The Company's Quarterly Report on Form 10-Q for the
period ended March 31, 1998 and Form 10-Q/A filed May
15, 1998; and
-- The Company's Current Report on Form 8-K dated May 15,
1998.
All documents subsequently filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date
of this Prospectus and prior to the termination of the offering
made by this Prospectus shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the
date of filing of such documents.
Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other
subsequently filed document which is deemed to be incorporated by
reference herein or in a Prospectus Supplement modifies or
supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to
whom a copy of this Prospectus has been delivered, on the written
or oral request of any such person, a copy of any or all of the
documents described above which have been incorporated by
reference in this Prospectus, other than exhibits to such
documents. Written requests for copies of such documents should
be addressed to Mr. G. C. Dean, American Electric Power Service
Corporation, 1 Riverside Plaza, Columbus, Ohio 43215 (telephone
number: 614-223-1000). The information relating to the Company
contained in this Prospectus or any Prospectus Supplement
relating hereto does not purport to be comprehensive and should
be read together with the information contained in the documents
incorporated by reference.
TABLE OF CONTENTS
Page
Available Information . . . . . . . . . . . . . . . . . . . . . 2
Documents Incorporated by Reference . . . . . . . . . . . . . . 2
Table of Contents . . . . . . . . . . . . . . . . . . . . . . . 3
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . 3
Ratio of Earnings to Fixed Charges . . . . . . . . . . . . . . 4
Description of the New Notes . . . . . . . . . . . . . . . . . 4
Description of New Junior Subordinated Debentures . . . . . . 10
Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . 16
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Plan of Distribution . . . . . . . . . . . . . . . . . . . . 16
THE COMPANY
The Company is engaged in the generation, sale, purchase,
transmission and distribution of electric power to approximately
621,000 customers in central and southern Ohio, and in selling
electric power at wholesale to other electric utilities and to
municipally owned distribution systems within its service areas.
Its principal executive offices are located at 215 North Front
Street, Columbus, Ohio 43215 (telephone number: 614-464-7700).
The Company is a subsidiary of American Electric Power Company,
Inc. ("AEP") and is a part of the American Electric Power
integrated utility system (the "AEP System"). The executive
offices of AEP are located at 1 Riverside Plaza, Columbus, Ohio
43215 (telephone number: 614-223-1000).
USE OF PROCEEDS
The Company proposes to use the net proceeds from the sale
of the Debt Securities to redeem or repurchase certain of its
outstanding debt and/or preferred stock, to fund its construction
program, to repay short-term indebtedness incurred in connection
with such redemptions, repurchases or funding its construction
program and for other corporate purposes. Proceeds may be
temporarily invested in short-term instruments pending their
application to the foregoing purposes.
The Company has estimated that its consolidated construction
costs (inclusive of allowance for funds used during construction)
during 1998 will be approximately $118,000,000. At May 15, 1998,
the Company had approximately $49,000,000 of short-term
indebtedness outstanding.
RATIO OF EARNINGS TO FIXED CHARGES
Below is set forth the ratio of earnings to fixed charges
for each of the twelve month periods ended December 31, 1993
through 1997 and March 31, 1998:
12-Month
Period Ended Ratio
December 31, 1993 0.76(a)
December 31, 1994 2.81
December 31, 1995 2.97
December 31, 1996 3.01
December 31, 1997 3.23
March 31, 1998 3.15
(a) Ratio includes the effect of the Loss from Zimmer Plant
Disallowance of $144,533,000 (net of applicable income taxes
of $14,534,000). As a result, earnings for the twelve
months ended December 31, 1993 were inadequate to cover
fixed charges by $21,744,000. If the effect of the Loss
from Zimmer Plant Disallowance were excluded, the ratio
would be 2.46 for the twelve months ended December 31, 1993.
DESCRIPTION OF NEW NOTES
The New Notes will be issued in one or more series under an
Indenture, dated as of September 1, 1997, between the Company and
Bankers Trust Company, as Trustee (the "Note Trustee"), as
heretofore supplemented and amended and as to be further
supplemented and amended from time to time by one or more
supplemental indentures or Company Orders (the "Note Indenture").
Section and Article references used in this "Description of New
Notes" are references to provisions of the Note Indenture unless
otherwise noted. Capitalized terms used in this section and not
otherwise defined have the meanings ascribed to such terms in the
Note Indenture.
All notes (including the New Notes) to be issued under the
Note Indenture are herein sometimes referred to as "Notes".
Copies of the Note Indenture and Company Order pursuant to which
each series of the New Notes may be issued are filed as exhibits
to the Registration Statement.
The following statements include brief summaries of certain
provisions of the Note Indenture under which the New Notes will
be issued. Such summaries do not purport to be complete and
reference is made to the Note Indenture for complete statements
of such provisions. Such summaries are qualified in their
entirety by such reference and do not relate or give effect to
provisions of statutory or common law.
General
The New Notes will be unsecured obligations of the Company
and will rank pari passu with all other unsecured debt of the
Company, except debt that by its terms is subordinated to the
other unsecured debt of the Company. The Note Indenture provides
that the New Notes may be issued thereunder without limitation as
to aggregate principal amount and may be issued thereunder from
time to time in one or more series or one or more Tranches
thereof, as authorized by a Board Resolution and as set forth in
a Company Order or one or more supplemental indentures creating
such series. (Section 2.01).
Substantially all of the fixed properties and franchises of
the Company are subject to the lien of its first mortgage bonds
(the "Bonds") issued under and secured by an Indenture of
Mortgage and Deed of Trust, dated as of September 1, 1940, as
previously supplemented and amended by supplemental indentures,
between the Company and Citibank, N.A., as trustee.
A description of the following terms of each series of New
Notes in respect of which this Prospectus is being delivered will
be contained in a Prospectus Supplement:
(1) the title of such series of the New Notes;
(2) any limit upon the aggregate principal amount of
the New Notes of that series which may be authenticated and
delivered;
(3) the date or dates on which the principal of the
New Notes of the series is payable;
(4) the rate or rates (which may be fixed or variable)
at which the New Notes of the series shall bear interest or
the manner of calculation of such rate or rates, if any;
(5) the date or dates from which such interest shall
accrue, the Interest Payment Dates on which such interest
will be payable or the manner of determination of such
Interest Payment Dates and the record date for the
determination of holders to whom interest is payable on any
such Interest Payment Dates;
(6) the place or places where the principal of, and
premium, if any, and interest, if any, on the New Notes of
that series shall be payable;
(7) the terms, if any, regarding the redemption,
purchase or repayment of such series (whether at the option
of the Company or a holder of the New Notes of such series
and whether pursuant to any sinking fund or analogous
provisions, including payments made in cash in anticipation
of future sinking fund obligations) including redemption,
purchase or repayment date or dates of such series, if any,
and the price or prices and other terms and conditions upon
which New Notes of the series shall be redeemed or
purchased, in whole or in part;
(8) whether the New Notes are issuable as a Global
Security and, in such case, the identity of the Depository
for such series;
(9) the denominations in which the New Notes of the
series shall be issuable; and
(10) any other terms with respect to such series (which
terms shall not be inconsistent with the terms of the Note
Indenture). (Section 2.01)
The New Notes are not convertible into any other security of
the Company. Except as may otherwise be described in a
Prospectus Supplement, the covenants contained in the Note
Indenture do not limit the amount of other debt, secured or
unsecured, which may be issued by the Company. In addition, the
Note Indenture does not contain any provisions that afford
holders of Notes protection in the event of a highly leveraged
transaction involving the Company.
Form, Exchange, Registration and Transfer
Unless otherwise specified in a Prospectus Supplement, New
Notes in definitive form will be issued only as registered Notes
without coupons in such denominations as may be permitted under
the Note Indenture and authorized by the Company in a
supplemental indenture or Company Order. New Notes may be
presented for registration of transfer (with the form of transfer
endorsed thereon duly executed) or exchange, at the office of the
Security Registrar, without service charge and upon payment of
any taxes and other governmental charges as described in the Note
Indenture. Such transfer or exchange will be effected upon the
Company or the Security Registrar being satisfied with the
documents of title and identity of the person making the request.
The Company has appointed the Note Trustee as Security Registrar
with respect to New Notes. The Company may change the place for
registration of transfer and exchange of the New Notes and may
designate one or more additional places for such registration and
exchange. (Sections 2.05 and 4.02).
The Company shall not be required to (i) issue, register the
transfer of or exchange any New Note during a period beginning at
the opening of business 15 days before the day of the mailing of
a notice of redemption of less than all the outstanding New Notes
and ending at the close of business on the day of such mailing or
(ii) register the transfer of or exchange any New Notes or
portions thereof called for redemption in whole or in part.
(Section 2.05).
Payment and Paying Agents
Unless otherwise indicated in a Prospectus Supplement,
payment of principal of and premium, if any, on any New Note will
be made only against surrender to the Paying Agent of such New
Note. Principal of and any premium and interest on any New Note
will be payable at the office of such Paying Agent or Paying
Agents as the Company may designate from time to time, except
that at the option of the Company payment of any interest may be
made by check mailed to the address of the person entitled
thereto as such address shall appear in the Security Register
with respect to such New Note.
Unless otherwise indicated in a Prospectus Supplement, the
Note Trustee initially will act as Paying Agent with respect to
New Notes. The Company may at any time designate additional
Paying Agents or rescind the designation of any Paying Agents or
approve a change in the office through which any Paying Agent
acts. (Sections 4.02 and 4.03).
All moneys paid by the Company to a Paying Agent for the
payment of the principal of and premium, if any, or interest, if
any, on any New Notes that remain unclaimed at the end of two
years after such principal, premium, if any, or interest, if any,
shall have become due and payable, subject to applicable law,
will be repaid to the Company and the holder of such New Note
thereafter will look only to the Company for payment thereof.
(Section 11.04).
Modification of the Note Indenture
The Note Indenture contains provisions permitting the
Company and the Note Trustee, with the consent of the holders of
not less than a majority in principal amount of Notes of each
series that is affected by the modification, to modify the Note
Indenture or any supplemental indenture affecting that series or
the rights of the holders of that series of Notes; provided, that
no such modification may, without the consent of the holder of
each outstanding Note affected thereby, (i) extend the fixed
maturity of any Notes of any series, or reduce the principal
amount thereof, or reduce the rate or extend the time of payment
of interest thereon, or reduce any premium payable upon the
redemption thereof, or reduce the amount of the principal of a
Discount Security (as defined in the Note Indenture) that would
be due and payable upon a declaration of acceleration of the
maturity thereof pursuant to the Note Indenture, (ii) reduce the
percentage of Notes, the holders of which are required to consent
to any such supplemental indenture, or (iii) reduce the
percentage of Notes, the holders of which are required to waive
any default and its consequences. (Section 9.02).
In addition, the Company and the Note Trustee may execute,
without the consent of any holder of Notes, any supplemental
indenture for certain other usual purposes including the creation
of any new series of Notes. (Sections 2.01, 9.01 and 10.01).
Events of Default
The Note Indenture provides that any one or more of the
following described events, which has occurred and is continuing,
constitutes an "Event of Default" with respect to each series of
Notes:
(a) failure for 30 days to pay interest on Notes of
that series when due and payable; or
(b) failure for 3 Business Days to pay principal or
premium, if any, on Notes of that series when due and
payable whether at maturity, upon redemption, pursuant to
any sinking fund obligation, by declaration or otherwise; or
(c) failure by the Company to observe or perform any
other covenant (other than those specifically relating to
another series) contained in the Note Indenture for 90 days
after written notice to the Company from the Note Trustee or
the holders of at least 33% in principal amount of the
outstanding Notes of that series; or
(d) certain events involving bankruptcy, insolvency or
reorganization of the Company; or
(e) any other event of default provided for in a
series of Notes. (Section 6.01).
The Note Trustee or the holders of not less than 33% in
aggregate outstanding principal amount of any particular series
of Notes may declare the principal due and payable immediately
upon an Event of Default with respect to such series, but the
holders of a majority in aggregate outstanding principal amount
of such series may annul such declaration and waive the default
with respect to such series if the default has been cured and a
sum sufficient to pay all matured installments of interest and
principal otherwise than by acceleration and any premium has been
deposited with the Note Trustee. (Sections 6.01 and 6.06).
The holders of a majority in aggregate outstanding principal
amount of any series of Notes have the right to direct the time,
method and place of conducting any proceeding for any remedy
available to the Note Trustee for that series. (Section 6.06).
Subject to the provisions of the Note Indenture relating to the
duties of the Note Trustee in case an Event of Default shall
occur and be continuing, the Note Trustee will be under no
obligation to exercise any of its rights or powers under the Note
Indenture at the request or direction of any of the holders of
the Notes, unless such holders shall have offered to the Note
Trustee indemnity satisfactory to it. (Section 7.02).
The holders of a majority in aggregate outstanding principal
amount of any series of Notes affected thereby may, on behalf of
the holders of all Notes of such series, waive any past default,
except a default in the payment of principal, premium, if any, or
interest when due otherwise than by acceleration (unless such
default has been cured and a sum sufficient to pay all matured
installments of interest and principal otherwise than by
acceleration and any premium has been deposited with the Note
Trustee) or a call for redemption of Notes of such series.
(Section 6.06). The Company is required to file annually with
the Note Trustee a certificate as to whether or not the Company
is in compliance with all the conditions and covenants under the
Note Indenture. (Section 5.03(d)).
Consolidation, Merger and Sale
The Note Indenture does not contain any covenant that
restricts the Company's ability to merge or consolidate with or
into any other corporation, sell or convey all or substantially
all of its assets to any person, firm or corporation or otherwise
engage in restructuring transactions, provided that the successor
corporation assumes due and punctual payment of principal or
premium, if any, and interest on the Notes. (Section 10.01).
Legal Defeasance and Covenant Defeasance
Notes of any series may be defeased in accordance with their
terms and, unless the supplemental indenture or Company Order
establishing the terms of such series otherwise provides, as set
forth below. The Company at any time may terminate as to a
series all of its obligations (except for certain obligations,
including obligations with respect to the defeasance trust and
obligations to register the transfer or exchange of a Note, to
replace destroyed, lost or stolen Notes and to maintain agencies
in respect of the Notes) with respect to the Notes of such series
and the Note Indenture ("legal defeasance"). The Company at any
time also may terminate as to a series its obligations with
respect to the Notes of that series under any restrictive
covenant which may be applicable to that particular series
("covenant defeasance").
The Company may exercise its legal defeasance option
notwithstanding its prior exercise of its covenant defeasance
option. If the Company exercises its legal defeasance option,
the particular series may not be accelerated because of an Event
of Default. If the Company exercises its covenant defeasance
option, a series may not be accelerated by reference to any
restrictive covenant which may be applicable to that particular
series.
To exercise either of its defeasance options as to a series,
the Company must deposit with the Note Trustee or any paying
agent, in trust: moneys or Eligible Obligations, or a
combination thereof, in an amount sufficient to pay when due the
principal of and premium, if any, and interest, if any, due and
to become due on the Notes of such series that are Outstanding
(as defined in the Note Indenture). Such defeasance or discharge
may occur only if, among other things, the Company has delivered
to the Note Trustee an Opinion of Counsel to the effect that the
holders of such Notes will not recognize gain, loss or income for
federal income tax purposes as a result of the satisfaction and
discharge of the Note Indenture with respect to such series and
that such holders will realize gain, loss or income on such
Notes, including payments of interest thereon, in the same
amounts and in the same manner and at the same time as would have
been the case if such satisfaction and discharge had not
occurred. (Section 11.01).
In the event the Company exercises its option to effect a
covenant defeasance with respect to the Notes of any series and
the Notes of that series are thereafter declared due and payable
because of the occurrence of any Event of Default other than an
Event of Default caused by failing to comply with the covenants
which are defeased, the amount of money and Eligible Obligations
on deposit with the Note Trustee may not be sufficient to pay
amounts due on the Notes of that series at the time of the
acceleration resulting from such Event of Default. However, the
Company would remain liable for such payments. (Section 11.01).
Governing Law
The Note Indenture and Notes will be governed by, and
construed in accordance with, the laws of the State of New York.
(Section 13.05).
Concerning the Note Trustee
AEP System companies, including the Company, utilize or may
utilize some of the banking services offered by Bankers Trust
Company in the normal course of their businesses.
DESCRIPTION OF NEW JUNIOR SUBORDINATED DEBENTURES
The New Junior Subordinated Debentures will be issued under
an Indenture, dated as of September 1, 1995, between the Company
and The First National Bank of Chicago, as Trustee (the
"Debenture Trustee"), as heretofore supplemented and amended and
as to be further supplemented and amended from time to time (the
"Debenture Indenture"). Section and Article references used in
this "Description of New Junior Subordinated Debentures" are
references to provisions of the Debenture Indenture unless
otherwise noted. Capitalized terms used in this section and not
otherwise defined have the meanings ascribed to such terms in the
Debenture Indenture.
All junior subordinated deferrable interest debentures
(including the New Junior Subordinated Debentures) issued and to
be issued under the Debenture Indenture are herein sometimes
referred to as "Junior Subordinated Debentures". Copies of the
Debenture Indenture, including the form of Supplemental Debenture
Indenture pursuant to which each series of the New Junior
Subordinated Debentures will be issued are filed as exhibits to
the Registration Statement.
The following statements include brief summaries of certain
provisions of the Debenture Indenture under which Junior
Subordinated Debentures will be issued. Such summaries do not
purport to be complete and reference is made to the Debenture
Indenture for complete statements of such provisions. Such
summaries are qualified in their entirety by such reference and
do not relate or give effect to provisions of statutory or common
law.
General
The New Junior Subordinated Debentures will be unsecured,
subordinated obligations of the Company. The Debenture Indenture
provides that the Junior Subordinated Debentures may be issued
from time to time in one or more series and does not limit the
aggregate principal amount of Junior Subordinated Debentures that
may be issued.
A description of the following terms of each series of New
Junior Subordinated Debentures in respect of which this
Prospectus is being delivered will be contained in a Prospectus
Supplement:
(1) the title of such series of the Junior
Subordinated Debentures;
(2) any limit upon the aggregate principal amount of
the Junior Subordinated Debentures of that series which may
be authenticated and delivered;
(3) the date or dates on which the principal of the
Junior Subordinated Debentures of the series is payable;
(4) the rate or rates (which may be fixed or variable)
at which the Junior Subordinated Debentures of the series
shall bear interest or the manner of calculation of such
rate or rates, if any;
(5) the date or dates from which such interest shall
accrue, the Interest Payment Dates on which such interest
will be payable or the manner of determination of such
Interest Payment Dates and the record date for the
determination of holders to whom interest is payable on any
such Interest Payment Dates;
(6) the right to extend the interest payment periods
and the duration of such extension;
(7) the period or periods within which, the price or
prices at which and the terms and conditions upon which,
Junior Subordinated Debentures of the series may be
redeemed, in whole or in part, at the option of the Company;
(8) the obligation, if any, of the Company to redeem
or purchase Junior Subordinated Debentures of the series
pursuant to any sinking fund or analogous provisions
(including payments made in cash in anticipation of future
sinking fund obligations) or at the option of a holder
thereof and the period or periods within which, the price or
prices at which, and the terms and conditions upon which,
Junior Subordinated Debentures of the series shall be
redeemed or purchased, in whole or in part, pursuant to such
obligation;
(9) the denominations in which the Junior Subordinated
Debentures of the series shall be issuable;
(10) any other terms with respect to such series (which
terms shall not be inconsistent with the terms of the
Debenture Indenture); and
(11) whether the Junior Subordinated Debentures are
issuable as a Global Debenture and, in such case, the
identity of the Depository for such series. (Section 2.01).
Except as may otherwise be described in a Prospectus
Supplement, the covenants contained in the Debenture Indenture
would not afford holders of New Junior Subordinated Debentures
protection in the event of a highly leveraged transaction
involving the Company.
Subordination
The Debenture Indenture provides that payment of the
principal of, premium, if any, and interest on, Junior
Subordinated Debentures, including the New Junior Subordinated
Debentures, is subordinated and subject in right of payment to
the prior payment in full of all Senior Indebtedness (as defined
below) of the Company as provided in the Debenture Indenture. No
payment of principal of (including redemption and sinking fund
payments), premium, if any, or interest on, Junior Subordinated
Debentures may be made if payment of principal, premium, interest
or any other payment on any Senior Indebtedness is not made when
due, any applicable grace period with respect to such default has
ended and such default has not been cured or waived or ceased to
exist, or if the maturity of any Senior Indebtedness has been
accelerated because of a default. Upon any distribution of
assets of the Company 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, premium, if any, and interest due
or to become due on, all Senior Indebtedness must be paid in full
before any payment is made on Junior Subordinated Debentures.
Subject to the payment in full of all Senior Indebtedness, the
rights of the holders of Junior Subordinated Debentures 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 Junior Subordinated
Debentures are paid in full. (Sections 14.01 to 14.04).
The term "Senior Indebtedness" shall mean the principal of,
premium, if any, interest on and any other payment due pursuant
to any of the following, whether outstanding at the date of
execution of the Debenture Indenture or thereafter incurred,
created or assumed:
(a) all indebtedness of the Company evidenced by
notes, debentures, bonds or other securities sold by the
Company for money or other obligations for money borrowed;
(b) all indebtedness of others of the kinds described
in the preceding clause (a) assumed by or guaranteed in any
manner by the Company or in effect guaranteed by the
Company;
(c) all installment purchase agreements entered into
by the Company in connection with revenue bonds issued by an
agency or political subdivision of a state of the United
States of America; and
(d) all renewals, extensions or refundings of
indebtedness of the kinds described in either of the
preceding clauses (a), (b) and (c);
unless, in the case of any particular indebtedness, renewal,
extension or refunding, the instrument creating or evidencing the
same or the assumption or guarantee of the same expressly
provides that such indebtedness, renewal, extension or refunding
is not superior in right of payment to or is pari passu with
Junior Subordinated Debentures. Such Senior Indebtedness shall
continue to be Senior Indebtedness and entitled to the benefits
of the subordination provisions irrespective of any amendment,
modification or waiver of any term of such Senior Indebtedness.
(Sections 1.01 and 14.08).
The Debenture Indenture does not limit the aggregate amount
of Senior Indebtedness that may be issued. As of May 15, 1998,
Senior Indebtedness of the Company aggregated approximately
$906,520,000.
Form, Exchange, Registration and Transfer
Unless otherwise specified in a Prospectus Supplement, New
Junior Subordinated Debentures in definitive form will be issued
only as registered Junior Subordinated Debentures without coupons
in denominations of $25 and in integral multiples thereof
authorized by the Company. New Junior Subordinated Debentures
may be presented for registration of transfer (with the form of
transfer endorsed thereon duly executed) or exchange, at the
office of the Debenture Registrar, without service charge and
upon payment of any taxes and other governmental charges as
described in the Debenture Indenture. Such transfer or exchange
will be effected upon the Company or the Debenture Registrar
being satisfied with the documents of title and identity of the
person making the request. The Company has appointed the
Debenture Trustee as Debenture Registrar with respect to New
Junior Subordinated Debentures. (Section 2.05).
The Company shall not be required to (i) issue, register the
transfer of or exchange any New Junior Subordinated Debenture
during a period beginning at the opening of business 15 days
before the day of the mailing of a notice of redemption of less
than all the outstanding New Junior Subordinated Debentures and
ending at the close of business on the day of such mailing or
(ii) register the transfer of or exchange any New Junior
Subordinated Debentures or portions thereof called for
redemption. (Section 2.05).
Payment and Paying Agents
Unless otherwise indicated in a Prospectus Supplement,
payment of principal of and premium (if any) on any New Junior
Subordinated Debenture will be made only against surrender to the
Paying Agent of such New Junior Subordinated Debenture.
Principal of and any premium and interest on New Junior
Subordinated Debentures will be payable at the office of such
Paying Agent or Paying Agents as the Company may designate from
time to time, except that at the option of the Company payment of
any interest may be made by check mailed to the address of the
person entitled thereto as such address shall appear in the
Debenture Register with respect to such New Junior Subordinated
Debentures.
Unless otherwise indicated in a Prospectus Supplement, the
Debenture Trustee will act as Paying Agent with respect to New
Junior Subordinated Debentures. The Company may at any time
designate additional Paying Agents or rescind the designation of
any Paying Agents or approve a change in the office through which
any Paying Agent acts. (Sections 4.02 and 4.03).
All moneys paid by the Company to a Paying Agent for the
payment of the principal of or premium or interest, if any, on
any New Junior Subordinated Debenture that remain unclaimed at
the end of two years after such principal, premium, if any, or
interest shall have become due and payable, subject to applicable
law, will be repaid to the Company and the holder of such New
Junior Subordinated Debenture will thereafter look only to the
Company for payment thereof. (Section 11.04).
Modification of the Debenture Indenture
The Debenture Indenture contains provisions permitting the
Company and the Debenture Trustee, with the consent of the
holders of not less than a majority in principal amount of Junior
Subordinated Debentures of each series that are affected by the
modification, to modify the Debenture Indenture or any
supplemental indenture affecting that series or the rights of the
holders of that series of Junior Subordinated Debentures;
provided, that no such modification may, without the consent of
the holder of each outstanding Junior Subordinated Debenture
affected thereby, (i) extend the fixed maturity of any Junior
Subordinated Debentures of any series, or reduce the principal
amount thereof, or reduce the rate or extend the time of payment
of interest thereon, or reduce any premium payable upon the
redemption thereof or (ii) reduce the percentage of Junior
Subordinated Debentures, the holders of which are required to
consent to any such supplemental indenture. (Section 9.02).
In addition, the Company and the Debenture Trustee may
execute, without the consent of any holder of Junior Subordinated
Debentures, any supplemental indenture for certain other usual
purposes including the creation of any new series of Junior
Subordinated Debentures. (Sections 2.01, 9.01 and 10.01).
Events of Default
The Debenture Indenture provides that any one or more of the
following described events, which has occurred and is continuing,
constitutes an "Event of Default" with respect to each series of
Junior Subordinated Debentures:
(a) failure for 10 days to pay interest on Junior
Subordinated Debentures of that series when due; provided
that a valid extension of the interest payment period by the
Company shall not constitute a default in the payment of
interest for this purpose; or
(b) failure to pay principal or premium, if any, on
Junior Subordinated Debentures of that series when due
whether at maturity, upon redemption, by declaration or
otherwise, or to make payment required by any sinking or
analogous fund with respect to that series; or
(c) failure by the Company to observe or perform any
other covenant (other than those specifically relating to
another series) contained in the Debenture Indenture for 90
days after written notice to the Company from the Debenture
Trustee or the holders of at least 25% in principal amount
of the outstanding Junior Subordinated Debentures of that
series; or
(d) certain events involving bankruptcy, insolvency or
reorganization of the Company. (Section 6.01).
The Debenture Trustee or the holders of not less than 25% in
aggregate outstanding principal amount of any particular series
of Junior Subordinated Debentures may declare the principal due
and payable immediately upon an Event of Default with respect to
such series, but the holders of a majority in aggregate
outstanding principal amount of such series may annul such
declaration and waive the default with respect to such series if
the default has been cured and a sum sufficient to pay all
matured installments of interest and principal otherwise than by
acceleration and any premium has been deposited with the
Debenture Trustee. (Sections 6.01 and 6.06).
The holders of a majority in aggregate outstanding principal
amount of any series of Junior Subordinated Debentures have the
right to direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee for
that series. (Section 6.06). Subject to the provisions of the
Debenture Indenture relating to the duties of the Debenture
Trustee in case an Event of Default shall occur and be
continuing, the Debenture Trustee will be under no obligation to
exercise any of its rights or powers under the Debenture
Indenture at the request or direction of any of the holders of
the Junior Subordinated Debentures, unless such holders shall
have offered to the Debenture Trustee indemnity satisfactory to
it. (Section 7.02).
The holders of a majority in aggregate outstanding principal
amount of any series of Junior Subordinated Debentures affected
thereby may, on behalf of the holders of all Junior Subordinated
Debentures of such series, waive any past default, except a
default in the payment of principal, premium, if any, or interest
when due otherwise than by acceleration (unless such default has
been cured and a sum sufficient to pay all matured installments
of interest and principal otherwise than by acceleration and any
premium has been deposited with the Debenture Trustee) or a call
for redemption of Junior Subordinated Debentures of such series.
(Section 6.06). The Company is required to file annually with
the Debenture Trustee a certificate as to whether or not the
Company is in compliance with all the conditions and covenants
under the Debenture Indenture. (Section 5.03(d)).
Consolidation, Merger and Sale
The Debenture Indenture does not contain any covenant that
restricts the Company's ability to merge or consolidate with or
into any other corporation, sell or convey all or substantially
all of its assets to any person, firm or corporation or otherwise
engage in restructuring transactions, provided that the successor
corporation assumes due and punctual payment of principal or
premium, if any, and interest on the Junior Subordinated
Debentures. (Section 10.01).
Defeasance and Discharge
Under the terms of the Debenture Indenture, the Company will
be discharged from any and all obligations in respect of the New
Junior Subordinated Debentures (except in each case for certain
obligations to register the transfer or exchange of New Junior
Subordinated Debentures, replace stolen, lost or mutilated New
Junior Subordinated Debentures, maintain paying agencies and hold
moneys for payment in trust) if the Company deposits with the
Debenture Trustee, in trust, moneys or Governmental Obligations
(as defined in the Debenture Indenture), or a combination
thereof, in an amount sufficient to pay all the principal of, and
interest on, New Junior Subordinated Debentures of such series on
the dates such payments are due in accordance with the terms of
the New Junior Subordinated Debentures. Such defeasance or
discharge may occur only if, among other things, the Company has
delivered to the Debenture Trustee an Opinion of Counsel to the
effect that the holders of the New Junior Subordinated Debentures
will not recognize gain, loss or income for federal income tax
purposes as a result of the satisfaction and discharge of the
Debenture Indenture with respect to such series and such holders
will be subject to federal income taxation on the same amounts
and in the same manner and at the same times as if such
satisfaction and discharge had not occurred. (Section 11.01).
Governing Law
The Debenture Indenture and New Junior Subordinated
Debentures will be governed by, and construed in accordance with,
the laws of the State of New York. (Section 13.05).
Concerning the Debenture Trustee
AEP System companies, including the Company, utilize or may
utilize some of the banking and/or capital leasing services
offered by The First National Bank of Chicago in the normal
course of their businesses. Among such services are the making
of short-term loans, generally at rates related to the prime
commercial interest rate.
LEGAL OPINIONS
Opinions with respect to the legality of the Debt Securities
will be rendered by Simpson Thacher & Bartlett, 425 Lexington
Avenue, New York, New York, and 1 Riverside Plaza, Columbus,
Ohio, counsel for the Company, and by Dewey Ballantine LLP, 1301
Avenue of the Americas, New York, New York, counsel for the
Underwriters. Additional legal opinions in connection with the
offering of the Debt Securities may be given by John F. Di
Lorenzo, Jr., Thomas G. Berkemeyer, David C. House or William E.
Johnson, counsel for the Company. Mr. Di Lorenzo is Associate
General Counsel, Mr. Berkemeyer is Assistant General Counsel, and
Messrs. House and Johnson are Attorneys, in the Legal Department
of American Electric Power Service Corporation, a wholly owned
subsidiary of AEP. From time to time, Dewey Ballantine LLP acts
as counsel to affiliates of the Company in connection with
certain matters.
EXPERTS
The financial statements and related financial statement
schedule incorporated in this prospectus by reference from the
Company's Annual Report on Form 10-K have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their
reports, which are incorporated herein by reference, and have
been so incorporated in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities in any of three
ways: (i) through underwriters or dealers; (ii) directly to a
limited number of purchasers or to a single purchaser; or (iii)
through agents. The Prospectus Supplement relating to a series
of the Debt Securities will set forth the terms of the offering
of the Debt Securities, including the name or names of any
underwriters, dealers or agents, the purchase price of such Debt
Securities and the proceeds to the Company from such sale, any
underwriting discounts or agency fees and other items
constituting underwriters' or agents' compensation, any initial
public offering price and any discounts or concessions allowed or
reallowed or paid to dealers. Any initial public offering price
and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time after the initial public
offering.
If underwriters are used in the sale, the Debt Securities
will be acquired by the underwriters for their own account and
may be resold from time to time 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.
The underwriters with respect to a particular underwritten
offering of Debt Securities will be named in the Prospectus
Supplement relating to such offering and, if an underwriting
syndicate is used, the managing underwriters will be set forth on
the cover page of such Prospectus Supplement. Unless otherwise
set forth in the Prospectus Supplement, the obligations of the
underwriters to purchase the Debt Securities will be subject to
certain conditions precedent, and the underwriters will be
obligated to purchase all such Debt Securities if any are
purchased.
Debt Securities may be sold directly by the Company or
through agents designated by the Company from time to time. The
Prospectus Supplement will set forth the name of any agent
involved in the offer or sale of the Debt Securities in respect
of which the Prospectus Supplement is delivered as well as any
commissions payable by the Company to such agent. Unless
otherwise indicated in the Prospectus Supplement, any such agent
will be acting on a reasonable best efforts basis for the period
of its appointment.
If so indicated in the Prospectus Supplement, the Company
will authorize agents, underwriters or dealers to solicit offers
by certain specified institutions to purchase Debt Securities
from the Company at the public offering price set forth in the
Prospectus Supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the
future. Such contracts will be subject to those conditions set
forth in the Prospectus Supplement, and the Prospectus Supplement
will set forth the commission payable for solicitation of such
contracts.
Subject to certain conditions, the Company may agree to
indemnify any underwriters, dealers, agents or purchasers and
their controlling persons against certain civil liabilities,
including certain liabilities under the Securities Act of 1933,
as amended.
