<PAGE>
August 25, 2000
Securities and Exchange Commission
ATTN: Filing Desk, Stop 1-4
450 Fifth Street, N.W.
Washington, DC 206549-1004
RE: INDIANA MICHIGAN POWER COMPANY
REGISTRATION STATEMENT ON FORM S-3
FILE NO. 333-88523
Gentlemen:
Pursuant to Rule 424(b)(2) and on behalf of Indiana Michigan Power Company (the
"Company"), submitted herewith is the Prospectus, dated October 15, 1999, as
supplemented by the Prospectus Supplement, dated August 23, 2000, to be used in
connection with the anticipated public offering by the Company of $200,000,000
aggregate principal amount of its Floating Rate Notes, Series B, due 2002.
Very truly yours,
s/s Ann B. Graf
614-223-1649
<PAGE>
Filed Pursuant to Rule 424(b)(2)
Registration Statement 333-88523
PROSPECTUS SUPPLEMENT
(To prospectus dated October 15, 1999)
$200,000,000
INDIANA MICHIGAN POWER COMPANY
Floating Rate Notes, Series B, due 2002
---------------
The Floating Rate Notes will bear interest payable quarterly in arrears
on each March 3, June 3, September 3 and December 3, beginning December 3, 2000.
The annual interest rate on the Floating Rate Notes for each quarterly interest
period will be reset quarterly based on the three-month LIBOR rate plus 0.625%.
The Floating Rate Notes will mature on September 3, 2002. The Floating Rate
Notes may be redeemed on any interest payment date on or after September 3,
2001, at a redemption price equal to the principal amount of the Floating Rate
Notes to be redeemed, plus interest accrued to the redemption date.
The Floating Rate Notes will be unsecured and will rank equally with all
of our other unsecured and unsubordinated indebtedness and will be effectively
subordinated to all of our secured debt, including $310,000,000 of outstanding
first mortgage bonds as of August 23, 2000. We will issue the Floating Rate
Notes only in registered form in multiples of $1,000.
---------------
Per Floating
Rate Note Total
Public offering price (1)....................100% $200,000,000
Underwriting discount.......................0.25% $ 500,000
Proceeds, before expenses,
to Indiana Michigan Power Company.....99.75% $199,500,000
........(1) Plus accrued interest from August 31, 2000, if settlement occurs
after that date.
---------------
........The Floating Rate Notes have not been approved by the SEC or any state
securities commission, nor have these organizations determined that this
prospectus supplement or the accompanying prospectus is accurate or complete.
Any representation to the contrary is a criminal offense.
........The Floating Rate Notes should be delivered on or about August 31, 2000
through the book-entry facilities of The Depository Trust Company.
---------------
Joint Book-Running Managers
Banc of America Securities LLC Merrill Lynch & Co.
Co-Manager
Barclays Capital
---------------
The date of this prospectus supplement is August 23, 2000.
<PAGE>
........You should rely only on the information incorporated by reference or
provided in this Prospectus Supplement or the accompanying Prospectus. We have
not authorized anyone to provide you with different information. We are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this Prospectus
Supplement is accurate as of any date other than the date on the front of the
document.
TABLE OF CONTENTS
Prospectus Supplement
Page
USE OF PROCEEDS........................................................... S-3
SUPPLEMENTAL DESCRIPTION OF THE FLOATING RATE NOTES....................... S-3
Principal Amount, Maturity and Interest............................... S-3
Redemption............................................................ S-4
Certain Definitions................................................... S-5
UNDERWRITING.............................................................. S-5
Prospectus
WHERE YOU CAN FIND MORE
INFORMATION............................................................ 2
THE COMPANY............................................................... 2
PROSPECTUS SUPPLEMENTS.................................................... 3
RATIO OF EARNINGS TO FIXED CHARGES........................................ 3
USE OF PROCEEDS........................................................... 3
DESCRIPTION OF THE NOTES.................................................. 3
General.............................................................. 3
Redemptions.......................................................... 4
Remarketed Notes..................................................... 4
Book-Entry Notes - Registration,
Transfer, and Payment of Interest and Principal................... 4
Note Certificates - Registration, Transfer, and Payment of Interest
and Principal..................................................... 6
Interest Rate........................................................ 6
Fixed Rate Notes............................................... 6
Floating Rate Notes............................................ 6
Events of Default.................................................... 7
Modification of Indenture............................................ 7
Consolidation, Merger or Sale........................................ 8
Legal Defeasance..................................................... 8
Covenant Defeasance.................................................. 8
Governing Law........................................................ 8
Concerning the Trustee............................................... 8
PLAN OF DISTRIBUTION...................................................... 8
By Agents............................................................ 8
By Underwriters...................................................... 9
Direct Sales......................................................... 9
General Information.................................................. 9
LEGAL OPINIONS............................................................ 9
EXPERTS................................................................... 9
<PAGE> S-2
USE OF PROCEEDS
We will use the net proceeds from the sale of the Floating Rate Notes to
pay at maturity our $100 million Floating Rate Notes, Series A, due 2000, which
mature on November 22, 2000, and to repay a portion of our outstanding
short-term indebtedness.
SUPPLEMENTAL DESCRIPTION OF THE FLOATING RATE NOTES
The following description of the particular terms of the Floating Rate
Notes supplements and, to the extent it is not consistent with the description
of the general terms and provisions of floating rate notes under "Description of
the Notes" in the accompanying Prospectus, supersedes such description. There
will be no additional pricing supplement relating to the Floating Rate Notes. We
will issue the Floating Rate Notes under an Indenture, dated as of October 1,
1998, between us and The Bank of New York, as Trustee, as supplemented and
amended and as to be further supplemented and amended.
Principal Amount, Maturity and Interest
The Floating Rate Notes will be limited in aggregate principal amount to
$200,000,000.
The Floating Rate Notes will mature and become due and payable, together
with any accrued and unpaid interest, on September 3, 2002. The Company will pay
interest on the Floating Rate Notes on each March 3, June 3, September 3 and
December 3, commencing on December 3, 2000 through the maturity date of
September 3, 2002. Interest will accrue from the issue date of August 31, 2000
and will be paid to holders of record on the fifteenth calendar day before each
interest payment date. If the scheduled interest payment date (other than the
maturity date) of the Floating Rate Notes falls on a day which is not a Business
Day, such interest payment date will be the following date that is a Business
Day, except that if such Business Day is in the next calendar month, such
interest payment date shall be the immediately preceding Business Day. If the
maturity date of the Floating Rate Notes falls on a day that is not a Business
Day, we will make the required payment of principal and/or interest on the
following day which is a Business Day as if it were made on the date the payment
was due. Interest will not accrue as a result of this delayed payment.
The Floating Rate Notes will bear interest for each quarterly Interest
Period at an annual rate determined by the Calculation Agent, subject to the
maximum interest rate permitted by New York or other applicable state law, as
such law may be modified by United States law of general application. The
interest rate applicable during each quarterly Interest Period will be equal to
LIBOR on the Interest Determination Date for such Interest Period plus 0.625%;
provided, however, that in certain circumstances described below, the interest
rate will be determined without reference to LIBOR. Promptly upon such
determination, the Calculation Agent will notify the trustee for the Floating
Rate Notes, if the trustee is not then serving as the Calculation Agent, of the
interest rate for the new Interest Period. The interest rate determined by the
Calculation Agent, absent manifest error, shall be binding and conclusive upon
the beneficial owners and holders of the Floating Rate Notes, the Company and
the trustee for the Floating Rate Notes.
<PAGE> S-3
If the following circumstances exist on any Interest Determination Date,
the Calculation Agent shall determine the interest rate for the notes as
follows:
(1) In the event no Reported Rate (as defined below) appears on Telerate
Page 3750 (as defined below) as of approximately 11:00 a.m. London time on an
Interest Determination Date, the Calculation Agent shall request the principal
London offices of each of four major banks in the London interbank market
selected by the Calculation Agent (after consultation with the Company) to
provide a quotation of the rate (the "Rate Quotation") at which three month
deposits in amounts of not less than $1,000,000 are offered by it to prime banks
in the London interbank market, as of approximately 11:00 a.m. on such Interest
Determination Date, that is representative of single transactions at such time
(the "Representative Amounts"). If at least two Rate Quotations are provided,
the interest rate will be the arithmetic mean of the Rate Quotations obtained by
the Calculation Agent, plus 0.625%.
(2) In the event no Reported Rate appears on Telerate Page 3750 as of
approximately 11:00 a.m. London time on an Interest Determination Date and there
are fewer than two Rate Quotations, the interest rate will be the arithmetic
mean of the rates quoted at approximately 11:00 a.m. New York City time on such
Interest Determination Date, by three major banks in New York City selected by
the Calculation Agent (after consultation with the Company), for loans in
Representative Amounts in U. S. dollars to leading European banks, having an
index maturity of three months for a period commencing on the second London
Business Day immediately following such Interest Determination Date, plus
0.625%; provided, however, that if fewer than three banks selected by the
Calculation Agent are quoting such rates, the interest rate for the applicable
Interest Period will be the same as the interest rate in effect for the
immediately preceding Interest Period.
Upon the request of a holder of the Floating Rate Notes, the Calculation
Agent will provide to such holder the interest rate in effect on the date of
such request and, if determined, the interest rate for the next Interest Period.
The accrued interest for any period is calculated by multiplying the
principal amount of a Floating Rate Note by an accrued interest factor. The
accrued interest factor is computed by adding the interest factor calculated for
each day in the period to the date for which accrued interest is being
calculated. The interest factor (expressed as a decimal rounded upwards if
necessary) is computed by dividing the interest rate (expressed as a decimal
rounded upwards if necessary) applicable to such date by 360.
All percentages resulting from any calculation of the interest rate on
Floating Rate Notes will be rounded, if necessary, to the nearest one-hundred
thousandth of a percentage point, with five one-millionths of a percentage point
rounded upwards (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or
.0987655) and 9.876544% (or .09876544) being rounded to 9.87654% (or .0987654)),
and all dollar amounts used in or resulting from such calculation will be
rounded to the nearest cent (with one-half cent being rounded upwards).
Redemption
All or part of the Floating Rate Notes may be redeemed from time to time
on any interest payment date on or after September
<PAGE> S-4
3, 2001 at our option, upon not less than 30 nor
more than 60 days' notice, at a redemption price equal to the principal amount
of the Floating Rate Notes to be redeemed plus interest accrued to the
redemption date. The Floating Rate Notes are not subject to the benefits of any
sinking fund.
Certain Definitions
The following definitions apply to the Floating Rate Notes and, to the
extent they are inconsistent with definitions appearing in the accompanying
Prospectus, supersede the definitions in the accompanying Prospectus.
"Business Day" means any day that is not a day on which banking
institutions in New York City are authorized or required by law or regulation to
close.
"Calculation Agent" means The Bank of New York, or its successor
appointed by the Company, acting as calculation agent.
"Interest Determination Date" means the second London Business Day
immediately preceding the first day of the relevant Interest Period.
"Interest Period" means the period commencing on an interest payment
date for the Floating Rate Notes (or commencing on the issue date for the
Floating Rate Notes, if no interest has been paid or duly made available for
payment since that date) and ending on the day before the next succeeding
interest payment date for the Floating Rate Notes.
"LIBOR" for any Interest Determination Date will be the offered rate for
deposits in U. S. dollars having an index maturity of three months for a period
commencing on the second London Business Day immediately following the Interest
Determination Date in amounts of not less than $1,000,000, as such rate appears
on Telerate Page 3750 or a successor reporter of such rates selected by the
Calculation Agent and acceptable to the Company, at approximately 11:00 a.m.
London time on the Interest Determination Date (the "Reported Rate").
"London Business Day" means a day other than a Saturday or Sunday that
is not a day on which banking institutions in London, England and New York, New
York are authorized or obligated by law or executive order to be closed and a
day on which dealings in deposits in U. S. dollars are transacted, or with
respect to any future date are expected to be transacted, in the London
interbank market.
"Telerate Page 3750" means the display designated on page 3750 on Dow
Jones Markets Limited (or such other page as may replace the 3750 page on that
service or such other service as may be nominated by the British Bankers'
Association for the purpose of displaying London interbank offered rates for U.
S. dollar deposits).
We will pay the principal of the Floating Rate Notes and interest payable
at maturity in immediately available funds at the office of The Bank of New
York, 101 Barclay Street, 21 West, New York, New York.
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, we have
agreed to sell to each of the Underwriters named below and each of the
Underwriters has severally agreed to purchase from us the respective principal
amount of Floating Rate Notes set forth opposite its name below:
<PAGE> S-5
Principal
Amount
Underwriter of Notes
----------- ---------
Banc of America Securities LLC $ 80,000,000
Merrill Lynch, Pierce, Fenner & Smith 80,000,000
Incorporated
Barclays Capital Inc. 40,000,000
Total $200,000,000
============
In the Underwriting Agreement, the Underwriters have agreed to the terms
and conditions to purchase all of the Floating Rate Notes offered if any of the
Floating Rate Notes are purchased.
The expenses associated with the offer and sale of the Floating Rate Notes
are expected to be $280,000.
The Underwriters propose to offer the Floating Rate Notes to the public at
the initial public offering price set forth on the cover page of this prospectus
supplement and to certain dealers at such price less a concession not in excess
of 0.15% per Floating Rate Note. The Underwriters may allow, and such dealers
may reallow, a discount not in excess of 0.10% per Floating Rate Note to certain
other dealers. After the initial public offering, the public offering price,
concession and discount may be changed.
Prior to this offering, there has been no public market for the Floating
Rate Notes. The Floating Rate Notes will not be listed on any securities
exchange. The Underwriters have advised us that they intend to make a market in
the Floating Rate Notes. The Underwriters will have no obligation to make a
market in the Floating Rate Notes, however, and may cease market making
activities, if commenced, at any time. There can be no assurance of a secondary
market for the Floating Rate Notes, or that the Floating Rate Notes may be
resold.
We have agreed to indemnify the Underwriters against certain liabilities,
including liabilities under the Securities Act of 1933.
In connection with the offering, the Underwriters may purchase and sell the
Floating Rate Notes in the open market. These transactions may include
over-allotment and stabilizing transactions and purchases to cover syndicate
short positions created in connection with the offering. Stabilizing
transactions consist of certain bids or purchases for the purposes of preventing
or retarding a decline in the market price of the Floating Rate Notes and
syndicate short positions involve the sale by the Underwriters of a greater
number of Floating Rate Notes than they are required to purchase from us in the
offering. The Underwriters also may impose a penalty bid, whereby selling
concessions allowed to syndicate members or other broker dealers in respect of
the securities sold in the offering for their account may be reclaimed by the
syndicate if such Floating Rate Notes are repurchased by the syndicate in
stabilizing or covering transactions. These activities may stabilize, maintain
or otherwise affect the market price of the Floating Rate Notes, which may be
higher than the price that might otherwise prevail in the open market; and these
activities, if commenced, may be discontinued at any time. These transactions
may be effected in the over-the-counter market or otherwise.
The Underwriters or their affiliates engage in transactions with, and have
performed services for, us and our affiliates in the ordinary course of
business.
<PAGE> S-6
PROSPECTUS
INDIANA MICHIGAN POWER COMPANY
ONE SUMMIT SQUARE
FORT WAYNE, INDIANA 46801
(219)425-2111
$300,000,000
UNSECURED NOTES
TERMS OF SALE
The following terms may apply to the notes that we may sell at one or more
times. A pricing supplement will include the final terms for each note. If we
decide to list upon issuance any note or notes on a securities exchange, a
pricing supplement will identify the exchange and state when we expect trading
could begin.
- Mature 9 months to 50 years
- Fixed or floating interest rate
- Remarketing features
- Certificate or book-entry form
- Subject to redemption
- Not convertible, amortized or subject to a sinking fund
- Interest paid on fixed rate notes quarterly or semi-annually
- Interest paid on floating rate notes monthly, quarterly, semi-
annually, or annually
- Issued in multiples of a minimum denomination
The notes have not been approved by the SEC or any state securities commission,
nor have these organizations determined that this prospectus is accurate or
complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is October 15, 1999.
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement we filed with the
SEC. We also file annual, quarterly and special reports and other information
with the SEC. You may read and copy any document we file at the SEC's Public
Reference Room at 450 Fifth Street, N. W., Washington, D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference rooms.
You may also examine our SEC filings through the SEC's web site at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until we sell all the notes.
- Annual Report on Form 10-K for the year ended December 31, 1998; and
- Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999 and
June 30, 1999.
- Current Report on Form 8-K dated June 24, 1999.
- Current Report on Form 8-K dated September 15, 1999.
You may request a copy of these filings, at no cost, by writing or telephoning
us at the following address:
Mr. G. C. Dean
American Electric Power Service Corporation
1 Riverside Plaza
Columbus, Ohio 43215
614-223-1000
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. We are not making an offer of
these notes in any state where the offer is not permitted. You should not assume
that the information in this prospectus or any supplement is accurate as of any
date other than the date on the front of those documents.
THE COMPANY
We generate, sell, purchase, transmit and distribute electric power. We
serve approximately 554,000 retail customers in northern and eastern Indiana and
a portion of southwestern Michigan. We also sell and transmit power at wholesale
to other electric utilities, municipalities, electric cooperatives and power
marketers engaged in the wholesale power market. Our principal executive offices
are located at One Summit Square, Fort Wayne, Indiana 46801 (telephone number
219-425-2111). We are a subsidiary of American Electric Power Company, Inc., a
public utility holding company, and we are a part of the American Electric Power
integrated utility system. The executive offices of American Electric Power
Company, Inc. are located at 1 Riverside Plaza, Columbus, Ohio 43215 (telephone
number 614-223-1000).
<PAGE> 2
PROSPECTUS SUPPLEMENTS
We provide information to you about the notes in three separate
documents that progressively provide more detail: (a) this prospectus provides
general information some of which may not apply to your notes, (b) the
accompanying prospectus supplement provides more specific terms of your notes,
and (c) the pricing supplement provides the final terms of your notes. It is
important for you to consider the information contained in this prospectus, the
prospectus supplement and the pricing supplement in making your investment
decision.
RATIO OF EARNINGS TO FIXED CHARGES
The Ratio of Earnings to Fixed Charges for each of the periods indicated
is as follows:
Twelve Months
Period Ended Ratio
---------------- -----
December 31, 1994 2.23
December 31, 1995 2.31
December 31, 1996 2.62
December 31, 1997 2.55
December 31, 1998 1.98
June 30, 1999 1.65
For current information on the Ratio of Earnings to Fixed Charges,
please see our most recent Form 10-K and 10-Q. See Where You Can Find More
Information.
USE OF PROCEEDS
The net proceeds from the sale of the notes will be used for general
corporate purposes relating to our utility business. These purposes include
redeeming or repurchasing outstanding debt or preferred stock and replenishing
working capital. If we do not use the net proceeds immediately, we temporarily
invest them in short-term, interest-bearing obligations. We estimate that our
construction costs in 1999 will approximate $151,800,000. At September 30, 1999,
our outstanding short-term debt was $190,850,000.
DESCRIPTION OF THE NOTES
General
We will issue the notes under an Indenture dated October 1, 1998 (as
previously supplemented and amended) between us and the Trustee, The Bank of New
York. This prospectus briefly outlines some provisions of the Indenture. If you
would like more information on these provisions, you should review the Indenture
and any supplemental indentures or company orders that we have filed or will
file with the SEC. See Where You Can Find More Information on how to locate
these documents. You may also review these documents at the Trustee's offices at
101 Barclay Street, New York, New York.
The Indenture does not limit the amount of notes that may be issued. The
Indenture permits us to issue notes in one or more series or tranches upon the
approval of our board of directors and as described in one or more company
orders or supplemental indentures. Each series of notes may differ as to their
terms.
The notes are unsecured and will rank equally with all our unsecured
unsubordinated debt. Substantially all of our fixed properties and franchises
are subject to the lien of our first mortgage bonds issued under and secured by
an Indenture of Mortgage and Deed of Trust, dated as of June 1, 1939, as
previously supplemented and amended, between us and
<PAGE> 3
The Bank of New York, formerly Irving Trust Company, as trustee. For current
information on our debt outstanding see our most recent Form 10-K and 10-Q. See
Where You Can Find More Information.
The notes will be denominated in U.S. dollars and we will pay principal
and interest in U.S. dollars. Unless an applicable pricing or prospectus
supplement states otherwise, the notes will not be subject to any conversion,
amortization, or sinking fund. We expect that the notes will be "book-entry,"
represented by a permanent global note registered in the name of The Depository
Trust Company, or its nominee. We reserve the right, however, to issue note
certificates registered in the name of the noteholders.
In the discussion that follows, whenever we talk about paying principal
on the notes, we mean at maturity or redemption. Also, in discussing the time
for notices and how the different interest rates are calculated, all times are
New York City time and all references to New York mean the City of New York,
unless otherwise noted.
The following terms may apply to each note as specified in the
applicable pricing or prospectus supplement and the note.
Redemptions
If we issue redeemable notes, we may redeem such notes at our option
unless an applicable pricing or prospectus supplement states otherwise. The
pricing or prospectus supplement will state the terms of redemption. We may
redeem notes in whole or in part by delivering written notice to the noteholders
no more than 60, and not less than 30, days prior to redemption. If we do not
redeem all the notes of a series at one time, the Trustee selects the notes to
be redeemed in a manner it determines to be fair.
Remarketed Notes
If we issue notes with remarketing features, an applicable pricing or
prospectus supplement will describe the terms for the notes including: interest
rate, remarketing provisions, our right to redeem notes, the holders' right to
tender notes, and any other provisions.
Book-Entry Notes - Registration, Transfer, and Payment of Interest and Principal
Book-entry notes of a series will be issued in the form of a global note
that the Trustee will deposit with The Depository Trust Company, New York, New
York ("DTC"). This means that we will not issue note certificates to each
holder. One or more global notes will be issued to DTC who will keep a
computerized record of its participants (for example, your broker) whose clients
have purchased the notes. The participant will then keep a record of its clients
who purchased the notes. Unless it is exchanged in whole or in part for a note
certificate, a global note may not be transferred, except that DTC, its
nominees, and their successors may transfer a global note as a whole to one
another.
Beneficial interests in global notes will be shown on, and transfers of
global notes will be made only through, records maintained by DTC and its
participants.
DTC has provided us the following information: 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 United States
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered under the
provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds
securities that its participants
<PAGE> 4
("Direct Participants") deposit with DTC. DTC also records the settlement among
Direct Participants of securities transactions, such as transfers and pledges,
in deposited securities through computerized records for Direct Participant's
accounts. This eliminates the need to exchange note certificates. Direct
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations.
Other organizations such as securities brokers and dealers, banks and
trust companies that work through a Direct Participant also use DTC's book-entry
system. The rules that apply to DTC and its participants are on file with the
SEC.
A number of its Direct Participants and the New York Stock Exchange,
Inc., The American Stock Exchange, Inc. and the National Association of
Securities Dealers, Inc. own DTC.
We will wire principal and interest payments to DTC's nominee. We and
the Trustee will treat DTC's nominee as the owner of the global notes for all
purposes. Accordingly, we, the Trustee and any paying agent will have no direct
responsibility or liability to pay amounts due on the global notes to owners of
beneficial interests in the global notes.
It is DTC's current practice, upon receipt of any payment of principal
or interest, to credit Direct Participants' accounts on the payment date
according to their respective holdings of beneficial interests in the global
notes as shown on DTC's records. In addition, it is DTC's current practice to
assign any consenting or voting rights to Direct Participants whose accounts are
credited with notes on a record date. The customary practices between the
participants and owners of beneficial interests will govern payments by
participants to owners of beneficial interests in the global notes and voting by
participants, as is the case with notes held for the account of customers
registered in "street name." However, payments will be the responsibility of the
participants and not of DTC, the Trustee or us.
DTC management is aware that some computer applications, systems and the
like for processing data ("Systems") that are dependent upon calendar dates,
including dates before, on and after January 1, 2000, may encounter "Year 2000
problems". DTC has informed its Direct Participants and other members of the
financial community (the "Industry") that it has developed and is implementing a
program so that its Systems, as the same relate to the timely payment of
distributions (including principal and income payments) to securityholders,
book-entry deliveries and settlement of trades within DTC ("DTC Services"),
continue to function appropriately. This program includes a technical assessment
and a remediation plan, each of which is complete. Additionally, DTC's plan
includes a testing phase, which is expected to be completed within appropriate
time frames.
However, DTC's ability to perform properly its services is also
dependent upon other parties, including but not limited to issuers and their
agents, as well as third party vendors from whom DTC licenses software and
hardware, and third party vendors on whom DTC relies for information or the
provision of services, including telecommunication and electrical utility
service providers, among others. DTC has informed the Industry that it is
contacting (and will continue to contact) third party vendors from whom DTC
acquires services to: (i) impress upon them the importance of such services
being Year 2000 compliant; and (ii) determine the extent of their efforts for
Year 2000 remediation (and, as appropriate,
<PAGE> 5
testing) of their services. In addition, DTC is in the process of developing
such contingency plans as it deems appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided to the Industry for informational purposes only and is not intended to
serve as a representation, warranty or contract modification of any kind.
Notes represented by a global note will be exchangeable for note
certificates with the same terms in authorized denominations only if:
DTC notifies us that it is unwilling or unable to continue as depositary
or if DTC ceases to be a clearing agency registered under applicable law
and a successor depositary is not appointed by us within 90 days; or
we determine not to require all of the notes of a series to be represented
by a global note and notify the Trustee of our decision.
Note Certificates-Registration, Transfer, and Payment of Interest and Principal
If we issue note certificates, they will be registered in the name of
the noteholder. The notes may be transferred or exchanged, pursuant to
administrative procedures in the indenture, without the payment of any service
charge (other than any tax or other governmental charge) by contacting the
paying agent. Payments on note certificates will be made by check.
Interest Rate
The interest rate on the notes will either be fixed or floating. The
interest paid will include interest accrued to, but excluding, the date of
maturity or redemption. Interest is generally payable to the person in whose
name the note is registered at the close of business on the record date before
each interest payment date. Interest payable at maturity or redemption, however,
will be payable to the person to whom principal is payable.
If we issue a note after a record date but on or prior to the related
interest payment date, we will pay the first interest payment on the interest
payment date after the next record date. We will pay interest payments by check
or wire transfer, at our option.
Fixed Rate Notes
A pricing or prospectus supplement will designate the record dates,
payment dates and the fixed rate of interest payable on a note. We will pay
interest quarterly or semi-annually, and upon maturity or redemption. Unless an
applicable pricing or prospectus supplement states otherwise, if any payment
date falls on a day that is not a business day, we will pay interest on the next
business day and no additional interest will be paid. Interest payments will be
the amount of interest accrued to, but excluding, each payment date. Interest
will be computed using a 360-day year of twelve 30-day months.
Floating Rate Notes
Each floating rate note will have an interest rate formula. The
applicable pricing supplement will state the initial interest rate or interest
rate formula on each note effective until the first interest reset date. The
applicable pricing or prospectus supplement will state the method and dates on
which the interest rate will be determined, reset and paid.
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Events of Default
"Event of Default" means any of the following:
- failure to pay for three business days the principal of (or premium,
if any, on) any note of a series when due and payable;
- failure to pay for 30 days any interest on any note of any series
when due and payable;
- failure to perform any other requirements in such notes, or in the
Indenture in regard to such notes, for 90 days after notice;
- certain events of bankruptcy or insolvency; or
- any other event of default specified in a series of notes.
An Event of Default for a particular series of notes does not
necessarily mean that an Event of Default has occurred for any other series of
notes issued under the Indenture. If an Event of Default occurs and continues,
the Trustee or the holders of at least 33% of the principal amount of the notes
of the series affected may require us to repay the entire principal of the notes
of such series immediately ("Repayment Acceleration"). In most instances, the
holders of at least a majority in aggregate principal amount of the notes of the
affected series may rescind a previously triggered Repayment Acceleration.
However, if we cause an Event of Default because we have failed to pay
(unaccelerated) principal, premium, if any, or interest, Repayment Acceleration
may be rescinded only if we have first cured our default by depositing with the
Trustee enough money to pay all (unaccelerated) past due amounts and penalties,
if any.
The Trustee must within 90 days after a default occurs, notify the
holders of the notes of the series of default unless such default has been cured
or waived. We are required to file an annual certificate with the Trustee,
signed by an officer, concerning any default by us under any provisions of the
Indenture.
Subject to the provisions of the Indenture relating to its duties in
case of default, the Trustee shall be under no obligation to exercise any of its
rights or powers under the Indenture at the request, order or direction of any
holders unless such holders offer the Trustee reasonable indemnity. Subject to
the provisions for indemnification, the holders of a majority in principal
amount of the notes of any series may direct the time, method and place of
conducting any proceedings for any remedy available to, or exercising any trust
or power conferred on, the Trustee with respect to such notes.
Modification of Indenture
Under the Indenture, our rights and obligations and the rights of the
holders of any notes may be changed. Any change affecting the rights of the
holders of any series of notes requires the consent of the holders of not less
than a majority in aggregate principal amount of the outstanding notes of all
series affected by the change, voting as one class. However, we cannot change
the terms of payment of principal or interest, or a reduction in the percentage
required for changes or a waiver of default, unless the holder consents. We may
issue additional series of notes and take other action that does not affect the
rights of holders of any series by executing supplemental indentures without the
consent of any noteholders.
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Consolidation, Merger or Sale
We may merge or consolidate with any corporation or sell substantially
all of our assets as an entirety as long as the successor or purchaser expressly
assumes the payment of principal, and premium, if any, and interest on the
notes.
Legal Defeasance
We will be discharged from our obligations on the notes of any series at
any time if:
- we deposit with the Trustee sufficient cash or government securities
to pay the principal, interest, any premium and any other sums due to
the stated maturity date or a redemption date of the note of the series,
and
- we deliver to the Trustee an opinion of counsel stating that the
federal income tax obligations of noteholders of that series will not
change as a result of our performing the action described above.
If this happens, the noteholders of the series will not be entitled to
the benefits of the Indenture except for registration of transfer and exchange
of notes and replacement of lost, stolen or mutilated notes.
Covenant Defeasance
We will be discharged from our obligations under any restrictive
covenant applicable to the notes of a particular series if we perform both
actions described above. See Legal Defeasance. If this happens, any later breach
of that particular restrictive covenant will not result in Repayment
Acceleration. If we cause an Event of Default apart from breaching that
restrictive covenant, there may not be sufficient money or government
obligations on deposit with the Trustee to pay all amounts due on the notes of
that series. In that instance, we would remain liable for such amounts.
Governing Law
The Indenture and notes of all series will be governed by the laws of
the State of New York.
Concerning the Trustee
We and our affiliates use or will use some of the banking services of
the Trustee in the normal course of business.
PLAN OF DISTRIBUTION
We may sell the notes (a) through agents; (b) through underwriters or
dealers; or (c) directly to one or more purchasers.
By Agents
Notes may be sold on a continuing basis through agents designated by us.
The agents will agree to use their reasonable efforts to solicit purchases for
the period of their appointment.
Unless the pricing supplement states otherwise, the notes will be sold
to the public at 100% of their principal amount. Agents will receive commissions
from .125% to .750% of the principal amount per note depending on the maturity
of the note they sell.
The Agents will not be obligated to make a market in the notes. We
cannot predict the amount of trading or liquidity of the notes.
<PAGE> 8
By Underwriters
If underwriters are used in the sale, the underwriters will acquire the
notes for their own account. The underwriters may resell the notes in one or
more transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. The obligations of
the underwriters to purchase the notes will be subject to certain conditions.
The underwriters will be obligated to purchase all the notes of the series
offered if any of the notes are purchased. Any initial public offering price and
any discounts or concessions allowed or re-allowed or paid to dealers may be
changed from time to time.
Direct Sales
We may also sell notes directly. In this case, no underwriters or agents
would be involved.
General Information
Underwriters, dealers, and agents that participate in the distribution
of the notes may be underwriters as defined in the Securities Act of 1933 (the
"Act"), and any discounts or commissions received by them from us and any profit
on the resale of the notes by them may be treated as underwriting discounts and
commissions under the Act.
We may have agreements with the underwriters, dealers and agents to
indemnify them against certain civil liabilities, including liabilities under
the Act.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, us or our affiliates in the ordinary course of their
businesses.
LEGAL OPINIONS
Our counsel, Simpson Thacher & Bartlett, New York, NY, and one of our
lawyers will each issue an opinion about the legality of the notes for us. Dewey
Ballantine LLP, New York, NY will issue an opinion for the agents or
underwriters. From time to time, Dewey Ballantine LLP acts as counsel to our
affiliates for some matters.
EXPERTS
The financial statements and the related financial statement schedule
incorporated in this prospectus by reference from the Company's Annual Report on
Form 10-K for the year ended December 31, 1998 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.
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