Prospectus Supplement
(To Prospectus Dated February 27, 1996)
$100,000,000
Kentucky Power Company
First Mortgage Bonds, Designated Secured Medium Term Notes,
Due From Nine Months to Forty Years from Date of Issue
Kentucky Power Company (the "Company") may from time to time offer
its First Mortgage Bonds, Designated Secured Medium Term Notes (the
"New Bonds"), in the aggregate principal amount of up to
$100,000,000, subject to reduction as a result of the sale of other
Debt Securities as described in the accompanying Prospectus. Each
New Bond will mature from nine months to forty years from its date
of issue.
Each New Bond will bear interest at a fixed rate. Unless otherwise
indicated in a pricing supplement to this Prospectus Supplement (a
"Pricing Supplement"), interest on each New Bond will be payable
semiannually in arrears on each April 1 and October 1 and at
redemption, if any, or Stated Maturity.
The interest rate, Issue Price, Stated Maturity, Interest Payment
Dates, redemption provisions, if any, and certain other terms with
respect to each New Bond will be established at the time of
issuance and set forth in a Pricing Supplement.
Each series of New Bonds will be represented by a global security
("Global Security") registered in the name of a nominee of The
Depository Trust Company, as Depository, or another depository
(such a New Bond, so represented, being called a "Book-Entry
Security"). Beneficial interests in Global Securities representing
Book-Entry Securities will be shown on, and transfers thereof will
be effected only through, records maintained by the Depository's
participants. Book-Entry Securities will not be issuable as
Certificated Securities except under the circumstances described
herein. See "Supplemental Description of the New Bonds--Book-Entry
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 SUPPLEMENT, ANY PRICING SUPPLEMENT HERETO OR THE
ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Price to Agents' Proceeds
Public(1) Commissions(2) to Company(2)(3)
Per New Bond . . 100.000% .125%-.750% 99.875%-99.250%
Total. . . . . . $100,000,000 $125,000-$750,000 $99,875,000-$99,250,000
(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 Salomon Brothers Inc and Morgan
Stanley & Co. Incorporated, each as agent (together, the
"Agents"), a commission of from .125% to .750% of the
principal amount of any New Bond, depending upon its
Stated Maturity, sold through an Agent. The Company may
also sell New Bonds 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 New Bond 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 New Bond of identical maturity and may
be resold by such Agent. The New Bonds 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 $255,888 including reimbursement of certain
expenses of the Agents.
The New Bonds 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 New Bonds.
The Company may sell New Bonds at a discount to either Agent, as
principal, for resale to one or more investors or other purchasers
at varying prices related to prevailing market prices at the time
of resale, as determined by such Agent. The Company also may sell
New Bonds directly to investors on its own behalf. The New Bonds
will not be listed on any securities exchange, and there is no
assurance that the maximum amount of New Bonds offered by this
Prospectus Supplement will be sold or that there will be a
secondary market for the New Bonds. 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.
Salomon Brothers Inc Morgan Stanley & Co.
Incorporated
The date of this Prospectus Supplement is March 14, 1996.<PAGE>
IN CONNECTION WITH THIS OFFERING, THE AGENTS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES
OF THE NEW BONDS OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
____________________
SUPPLEMENTAL DESCRIPTION OF THE NEW BONDS
The following description of the particular terms of the New Bonds
supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the New Bonds
set forth under "Description of New Bonds" in the accompanying
Prospectus, to which description reference is hereby made. Certain
capitalized terms used herein are defined under "Description of New
Bonds" in the accompanying Prospectus.
General
The New Bonds will be issued in one or more series of New Bonds
under the Mortgage. The New Bonds will be limited in aggregate
principal amount to $100,000,000, subject to reduction as a result
of the sale of other Debt Securities as described in the
accompanying Prospectus.
The New Bonds will be issued in fully registered form only, without
coupons. Each series of New Bonds will be issued initially as a
Book-Entry Security. Except as set forth herein under "Book-Entry
Securities" or in any Pricing Supplement relating to specific New
Bonds, the New Bonds will not be issuable as Certificated
Securities. The authorized denominations of the New Bonds will be
$1,000 and any integral multiple thereof.
Each New Bond will mature from 9 months to 40 years from its date
of issue, as selected by the purchaser and agreed to by the
Company. Each New Bond may also be subject to redemption at the
option of the Company prior to its Stated Maturity (as defined
below).
The Pricing Supplement relating to a New Bond will describe the
following terms: (i) the price (expressed as a percentage of the
aggregate principal amount thereof) at which such New Bond will be
issued (the "Issue Price"); (ii) the date on which such New Bond
will be issued (the "Original Issue Date"); (iii) the date on which
such New Bond will mature (the "Stated Maturity"); (iv) the rate
per annum at which such New Bond will bear interest, and the
Interest Payment Dates (as defined below); (v) any applicable
discounts or commissions; (vi) whether such New Bond may be
redeemed at the option of the Company prior to Stated Maturity and,
if so, the provisions relating to such redemption; and (vii) any
other terms of such New Bond not inconsistent with the provisions
of the Mortgage.
"Business Day" with respect to any New Bond means any day, other
than a Saturday or Sunday, which is not a day on which banking
institutions or trust companies in The City of New York, New York
or the city in which is located any office or agency maintained for
the payment of principal of or premium, if any, or interest on such
New Bond are authorized or required by law, regulation or executive
order to remain closed.
Payment of Principal, Premium, if any, and Interest
Payments of interest on the New Bonds (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 New Bonds (which, in the case of Global Securities
representing Book-Entry Securities, will be a nominee of the
Depository, as defined below) as of the Regular Record Date (as
defined below) for each Interest Payment Date; provided, however,
that if the Original Issue Date of a New Bond issued as a Global
Security 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 New Bond to but
excluding such Interest Payment Date will be paid on the next
succeeding Interest Payment Date to the owner of such New Bond on
the related Regular Record Date.<PAGE>
Unless otherwise specified in the applicable Pricing Supplement,
the principal of the New Bonds 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 New Bond be issued other than as a Global Security,
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 Securities" herein.
If, with respect to any New Bond, any Interest Payment Date,
redemption date or Stated Maturity is not a Business Day, payment
of amounts due on such New Bond on such date may be made on the
next succeeding Business Day, and, if such payment is made or duly
provided for on such Business Day, no interest shall accrue on such
amounts for the period from and after such Interest Payment Date,
redemption date or Stated Maturity, as the case may be, to such
Business Day.
The "Regular Record Date" with respect to a New Bond (unless
otherwise specified in the applicable Pricing Supplement) will be
the March 15 or September 15, as the case may be, next preceding an
Interest Payment Date for New Bonds or if such March 15 or
September 15 is not a Business Day, the next preceding Business
Day.
Each New Bond issued as a Global Security will bear interest from
its Original Issue Date at the fixed interest rate per annum stated
on the face thereof until the principal amount thereof is paid or
made available for payment. Unless otherwise set forth in the
applicable Pricing Supplement, interest on each New Bond will be
payable semiannually in arrears on each April 1 and October 1 (each
such date, an "Interest Payment Date") and at redemption, if any,
or Stated Maturity. Each payment of interest in respect of an
Interest Payment Date shall include interest accrued through the
day before such Interest Payment Date. Interest on New Bonds will
be computed on the basis of a 360-day year of twelve 30-day months.
Redemption
The Pricing Supplement relating to each New Bond will indicate
either that such New Bond cannot be redeemed prior to Stated
Maturity or that such New Bond will be redeemable at the option of
the Company in whole or in part, under the terms and conditions and
at the prices specified therein, together with accrued interest to
the date of redemption. Any such redemption may be made upon not
less than 30 days' notice.
Book-Entry Securities
Except under the circumstances described below, the New Bonds will
be issued in whole or in part in the form of one or more Global
Securities 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 Securities represented by a Global Security will not be
exchangeable for Certificated Securities and, except under the
circumstances described below, will not otherwise be issuable as
Certificated Securities.
So long as the Depository, or its nominee, is the registered owner
of a Global Security, such Depository or such nominee, as the case
may be, will be considered the sole owner of the individual Book-
Entry Securities represented by such Global Security for all
purposes under the Mortgage. Payments of principal of and premium,
if any, and any interest on individual Book-Entry Securities
represented by a Global Security will be made to the Depository or
its nominee, as the case may be, as the Owner of such Global
Security. Except as set forth below, owners of beneficial
interests in a Global Security will not be entitled to have any of
the individual Book-Entry Securities represented by such Global
Security registered in their names, will not receive or be entitled
to receive physical delivery of any such Book-Entry Securities and
will not be considered the Owners thereof under the Mortgage,
including, without limitation, for purposes of consenting to any
amendment thereof or supplement thereto.<PAGE>
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 Securities in exchange for the
Global Security or Securities representing the corresponding Book-
Entry Securities. In addition, the Company may at any time and in
its sole discretion determine not to have any New Bonds represented
by one or more Global Securities and, in such event, will issue
individual Certificated Securities in exchange for the Global
Securities representing the corresponding Book-Entry Securities.
In any such instance, an owner of a Book-Entry Security represented
by a Global Security will be entitled to physical delivery of
individual Certificated Securities equal in principal amount to
such Book-Entry Security and to have such Certificated Securities
registered in its name. Individual Certificated Securities so
issued will be issued as registered New Bonds 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
Securities. The New Bonds will be issued as fully-registered
securities registered in the name of Cede & Co. (DTC's
partnership nominee). One fully-registered Global Security will
be issued for each series of the New Bonds, each in the aggregate
principal amount of such series, 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 Securities
Exchange Act of 1934. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the
settlement among Participants of securities transactions, such
as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants'
accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities
brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations. DTC is owned by
a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the
DTC system is also available to others such as securities brokers
and dealers, banks, and trust companies that clear through or
maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). The
Rules applicable to DTC and its Participants are on file with the
Securities and Exchange Commission.
3. Purchases of New Bonds under the DTC system must be made by
or through Direct Participants, which will receive a credit for
the New Bonds on DTC's records. The ownership interest of each
actual purchaser of each New Bond ("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 New Bonds 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 New Bonds, except in the event that
use of the book-entry system for the New Bonds is discontinued.
4. To facilitate subsequent transfers, all New Bonds deposited
by Participants with DTC are registered in the name of DTC's
partnership nominee, Cede & Co. The deposit of New Bonds 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 New Bonds; DTC's records reflect
only the identity of the Direct Participants to whose accounts
such New Bonds 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.<PAGE>
6. Redemption notices shall be sent to Cede & Co. If less than
all of the New Bonds within an issue 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 New Bonds. 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
New Bonds are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
8. Principal and interest payments on the New Bonds 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 Agents 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 New Bonds 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 Securities 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 Securities 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.
The Agents are Direct Participants of DTC.
None of the Company, the Trustee or any agent for payment on or
registration of transfer or exchange of any Global Security 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 Security 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 United States federal
income tax consequences of the ownership of New Bonds as of the
date hereof. Except where noted, it deals only with New Bonds held
by initial purchasers who have purchased New Bonds at the initial
offering price thereof and who hold such New Bonds as capital
assets and does not deal with special situations, such as those of
dealers in securities or currencies, financial institutions, life
insurance companies, persons holding New Bonds 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 New
Bonds 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.
United States Holders
As used herein, a "United States Holder" of a New Bond means a
holder that is a citizen or resident of the United States, a
corporation or other entity created or organized in or under the
laws of the United States or any political subdivision thereof, or
an estate or trust the income of which is subject to United States
federal income taxation regardless of its source. A "Non-United
States Holder" is a holder that is not a United States Holder.
Payments of Interest. Except as set forth below, interest on a New
Bond 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.
New Bonds with a maturity of one year or less will be subject to
special tax rules that apply to the timing of inclusion in income
of interest on such obligations ("Short-Term Securities"). An
obligation which is issued for an amount less than its "stated
redemption price at maturity" will generally be considered to be
issued at a discount for federal income tax purposes. Under
Treasury Regulations addressing debt instruments issued with
original issue discount ("OID"), all payments (including all stated
interest) with respect to a Short-Term Security will be included in
the stated redemption price at maturity and, thus, holders will be
taxable on discount in lieu of stated interest. This discount will
be equal to the excess of the stated redemption price at maturity
over the initial offering price to the public at which a
substantial amount of the New Bonds is sold (for purposes of this
section of the Prospectus Supplement, the "issue price"), unless a
holder elects to compute this discount as acquisition discount
using tax basis instead of issue price. In general, individuals
and certain other cash method holders of a Short-Term Security are
not required to include accrued discount in income before receiving
cash unless an election is made to do so. United States Holders
who report income for federal income tax purposes on the accrual
method and certain other holders, including banks and dealers in
securities, are required to include discount on such Short-Term
Securities in income on a straight-line method (as ordinary income)
unless an election is made based on daily compounding. The amount
of discount which accrues in respect of a Short-Term Security while
held by a United States Holder will be added to such holder's tax
basis for such New Bond to the extent included in income.
Sale, Exchange and Retirement of New Bonds. Upon the sale,
exchange or retirement of a New Bond, a United States Holder will
recognize gain or loss equal to the difference between (i) the
amount realized upon the sale, exchange or retirement (excluding
any amount attributable to accrued but unpaid "qualified stated
interest," which will be taxable as such) and (ii) the adjusted tax
basis of the New Bond. A United States Holder's tax basis in a New
Bond will, in general, be the United States Holder's cost therefor,
increased by any discount included in income by the United States
Holder and reduced by any cash payments on the New Bond other than
"qualified stated interest" payments. (In general, "qualified
stated interest" includes interest at a single fixed rate
unconditionally payable at least annually, other than interest on
Short-Term Securities.) Except as described below with respect to
certain Short-Term Securities, such gain or loss will be capital
gain or loss and will be long-term capital gain or loss if at the
time of sale, exchange or retirement the New Bond has been held for
more than one year. Under current law, net capital gains of
individuals are, under certain circumstances, taxed at lower rates
than items of ordinary income. The deductibility of capital losses
is subject to limitations.
In the case of a cash basis holder who does not include discount
income currently, any gain realized on the sale, exchange or
retirement of the Short-Term Security will be ordinary interest
income to the extent of the discount accrued on a straight-line
basis (or, if elected, according to a constant yield method based
on daily compounding) through the date of sale, exchange or
retirement. In addition, such non-electing holders which are not
subject to the current inclusion requirement described above will
be required to defer deductions for any interest paid on
indebtedness incurred or continued to purchase or carry such Short-
Term Securities in an amount not exceeding the deferred interest
income, until such deferred interest income is realized.
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 (including any OID) on any New Bond provided that (1) the
interest income 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,
and (3) the Non-United States Holder provides the correct
certification of his status (which may generally be satisfied by
providing an Internal Revenue Service Form W-8 certifying that the
beneficial owner is not a United States Holder and providing the
name and address of the beneficial owner). Non-United States
Holders will not be subject to United States federal income taxes
on any gain from the sale or disposition of any New Bond provided
that (1) the 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, if an individual,
is not present in the United States for 183 days or more during the
taxable year, and (3) certain other conditions are met.
An individual holder of a New Bond who is not a citizen or resident
of the United States 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 New Bond,
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 Internal
Revenue Service where applicable.
PLAN OF DISTRIBUTION
The New Bonds 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 New Bonds.
Initial purchasers may propose certain terms of the New Bonds, but
the Company will have the right to accept offers to purchase New
Bonds 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 New Bonds in whole or in part. The Company will pay
each Agent a commission of from .125% to .750% of the principal
amount of New Bonds sold through it, depending upon Stated
Maturity. The Company also may sell New Bonds 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 New Bond 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 New Bond. The Company may also sell New Bonds 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 New Bond will have an established trading market when issued.
The New Bonds will not be listed on any securities exchange. The
Agents may make a market in the New Bonds, 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 New Bonds, or that the New Bonds 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.
Salomon Brothers Inc 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.
[96FN0027.KPC]
